Jamestown Foundation
May 29 2009
Armenia Presses Ahead with Nuclear Power Plant Construction
Eurasia Daily Monitor Volume: 6 Issue: 103
May 29, 2009 05:21 PM
By: Emil Danielyan
Armenia is pressing ahead with its ambitious plans to build a new
nuclear power station to replace the aging Soviet-era facility at
Metsamor slated for decommissioning by 2017. The Armenian government
has commissioned an Australian engineering company to manage the
project. However, the key question of who will provide the funding
needed for the plant’s construction remains unanswered.
The authorities in Yerevan formally agreed in 2007 to close the
Metsamor plant after several years of pressure from the United States
and the European Union, which considered it to be inherently
unsafe. The E.U. in particular, had classified the VVER 440 Model V230
light water-cooled reactors as the "oldest and least reliable"
category of all the 66 Soviet reactors built in Eastern Europe and the
former Soviet Union.
Metsamor had two such reactors when it began operating at full
capacity in 1980. They both were brought to a halt shortly after the
1988 catastrophic earthquake that devastated much of northwestern
Armenia. Dismissing the Western concerns and those of local
environmentalists, the country’s first post-communist government
reactivated one of the reactors in 1995 to end a severe energy crisis
caused by the war with Azerbaijan and broader turmoil within the
region. The U.S. and the E.U. have since spent substantial sums on
upgrading the facility’s equipment and financing other safety
measures.
Successive Armenian governments have maintained that Metsamor, which
generates over 40 percent of the country’s electricity, will be
decommissioned only when they find an alternative source of
inexpensive energy. For the administration of former President Robert
Kocharian, a new nuclear plant meeting modern safety standards was
considered as the most viable alternative. Kocharian’s successor,
Serzh Sargsyan, strongly supports the idea, having declared its
realization as a top economic priority after taking office in April
2008. Significantly, the U.S. also supports it in principle. The first
$2 million feasibility study on the project conducted last year was
also financed by the U.S. government.
In December 2008, Yerevan tendered for the right to design the new
atomic reactor and oversee its construction. The Sydney-based company
WorleyParsons, one of the world’s largest providers of engineering
services to the energy sector, was declared as its winner on May 12
(Statement by the Armenian State Procurements Agency, May
12). WorleyParsons and the Armenian government are currently working
out the precise details of the project management and will shortly
sign a relevant agreement. In early April, the Armenian parliament
passed a bill regulating the various aspects of the plant’s
construction.
On May 18 the Armenian Energy Minister Armen Movsisian said, "The next
step will be to design the future block, after which we will enlist
and select potential investors." He further explained: "That will be
followed by the design work and the construction process itself."
According to Movsisian the construction will start "at the end of next
year or at the beginning of 2011" and take at least five years (RFE/RL
Armenia Report, May 18).
The estimated cost of the project, approximately $5 billion, is
equivalent to 40 percent of Armenia’s GDP in 2008 and twice the volume
of its 2009 state budget, meaning that foreign investment is the only
realistic source of funding. Attracting such investment during the
current global economic crisis will be an extremely difficult
task. Thus far, only the Russian Federal Agency on Atomic Energy
(Rosatom) and its state-owned Atomstroyexport company have publicly
expressed interest in the large-scale project. The Armenian and
Russian governments formed a joint task force in 2007 to examine the
issue. The results of its work have still not been publicly disclosed.
With a projected capacity of 1,000-1,200 megawatts, the new nuclear
plant will be more than twice as powerful as Metsamor’s functioning
reactor, leaving Armenia with a potentially massive electricity
surplus which energy officials hope to export to neighboring
countries. On May 7 the Yerevan business daily Kapital quoted the
chairman of the ArmRosGazprom national gas distribution company, Karen
Karapetian, as saying that Georgia, Turkey and Iran will increasingly
face electricity shortages in the coming years and that Armenia is in
a position to alleviate the deficit. Karapetian said Armenian energy
exports to these countries might eventually exceed 6 billion kilowatt
hours annually, a figure equaling the total Armenian electricity
output in 2008.
Armenia is already scheduled to supply Iran with large quantities of
electricity to be generated using Iranian natural gas. It began
importing that gas on May 14, around six months after the official
inauguration of the second and final Armenian section of a gas
pipeline connecting the two nations (Arminfo, May 14). Speaking to the
Armenpress news agency on May 21, Movsisian reasserted that Armenia
will soon start selling electricity to Turkey, despite the absence of
diplomatic relations. He said the Turkish government is currently
making the final technical preparations for the electricity supply,
which will initially involve 1.5 billion kilowatt hours annually.
The Armenian energy minister has repeatedly stated in recent months
that domestic and Turkish utility firms signed an agreement to that
effect during President Abdullah Gul’s historic visit to Yerevan in
September 2008. Turkish government officials have pointedly refused to
offer any public confirmation of that deal. Nonetheless, the current
uncertain prospects surrounding the normalization of Turkish-Armenian
relations hardly bode well for any energy cooperation between Ankara
and Yerevan.
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