COMPLETE REHABILITATION OF ASHNAK SUBSTATION AND YEREVAN THERMAL POWER PLANT TO COST $69.16 MILLION

YEREVAN, March 31. / ARKA /. The complete rehabilitation of the Ashnak
substation and the Yerevan Thermal Power Centert through replacement
of all key equipment will cost $69.16 million, World Bank Country
manager for Armenia, Laura Bailey told a news conference today.

She said it will help reduce the number and duration of equipment
failures caused by technical reasons, and, thus, improve the
reliability of power supply for thousands of electricity consumers.

She said $17.6 million will be allocated by the Armenian government
and the remaining $52 million will come as a World Bank loan.

The US$52 million loan for the Electricity Transmission Network
Improvement Project (ETNIP) for Armenia was approved by the World
Bank Board of Executive Directors on March 30. The new project will
improve the reliability of the power transmission network and system
management, and support the Government’s efforts in ensuring adequate
electricity supply across the country.

The World Bank will provide a US$52 million IBRD loan of variable
spread with a 14.5-year grace period and the total repayment term of
25 years.

Ashnak substation was commissioned in 1983 and has undergone no major
rehabilitation since then. This substation is essential for ensuring
reliable power supply to consumers in Eastern and North-Eastern parts
of Armenia, including a large dairy products company, an asphalt plant,
and a diamond polishing and jewelry production factory, which employ
around 3,500 people.

Rehabilitation of the substation of the Yerevan Thermal Power Center,
which accounts for 20 percent of total annual electricity generation
in Armenia will help reduce the incidence of equipment failures. The
overall cost of meeting the electricity demand in the country will
significantly increase if it is disconnected from the grid due to
failure of its substation. The substation was commissioned in 1965,
and has not been rehabilitated since then.

Ms. Bailey said under the second component – improvement of the
power system management – establishment of a back-up dispatch
center is envisaged which will allow improving the management of the
power system. Specifically, it is important for ensuring continuous
management and control of the power system in case the primary dispatch
center (located in down-town Yerevan) fails due to technical or other
reasons. The back-up dispatch center will allow to immediately restore
the control and management of the power system in case of such failure.

“Armenia’s power system will need around 500 MW of new gas-fired
generation capacity to preclude the emergence of a supply capacity
gap by 2020,” said Arthur Kochnakyan, World Bank Task Team Leader of
the Project.

“Preparation of a new electricity generation project is another
critical activity that will be implemented within this project. The
Government plans to construct a new combined cycle gas turbine,
which will require a number of preparatory activities for which no
financing is available,’ he said.

Since joining the World Bank in 1992 and IDA in 1993, the commitments
to Armenia total approximately US$2,118.730 million.”-0-