ARMENIAN HYDROPOWER INFRASTRUCTURE AND FINANCIAL SERVICES TO BENEFIT FROM GERMAN LOAN
by Natalia Leshchenko

World Market Research Center
Global Insight
May 19, 2008

Armenia’s Finance Minister Tigran Davtian and German Ambassador to
Armenia Andrea Viktorin signed an agreement on 16 May giving Armenia
some 74 million euro ($117US million) in fresh low-interest loans
designed to improve its energy and water infrastructure and financial
services, Radio Liberty reports. The largest share of the loans, 64
million euro, will be used to upgrade Armenia’s largest hydro-electric
plant Gurmush, and build two high-voltage power transmission lines
in the country’s northern region Shirak and further into Georgia to
create a joint South Caucasus electricity transmission system that
could potentially be linked to Russia and Iran at some point. Another
6 million euro is to be used to develop Armenia’s expanding mortgage
banking sector, the second such instalment from Germany.

Significance:The loans, repayable in 40 years, will be disbursed
by Germany’s government and state-owned bank KfW in the next two
years. Germany’s assistance to Armenia since 1993 has amounted to
almost 340 million euro. Both the hydropower plant and the transmission
networks currently belong to Russian company UES as a result of
privatisation deals; new resources and associated improvements should
have a positive effect on the company’s performance, as well as the
energy infrastructure in Armenia.