Debts of Nairit Plant amount to 126 bln AMD

ArmInfo. At the moment the debts of Nairit Plant amount to 126 billion AMD, Yervand Zakharyan, Armenian Minister of Energy and Natural Resources, said at parliamentary hearings on July 28. 79 bln AMD of the specified amount is the debt to the CIS Interstate Bank, 23 bln AMD - to the Yerevan TPP, 10 bln AMD is the tax debt, 1.3 bln AMD is the debt to Gazprom Armenia CJSC, 1.2 bln AMD - to Electric Networks of Armenia, and the wage arrears total 5.4 bln AMD.

"The cause of the current debt situation at Nairit Plant is the fact that from 2007 till 2010 the Plant sold its key product - the chloroprene rubber - at a price that was lower than the prime cost of the product," said the minister without explaining why the Plant did so. According to him, the average prime cost of 1 ton of chloroprene rubber manufactured at Nairit Plant in 2007 was $3.7 thsd, in 2008 - $4.6 thsd, and in 2009 - $6 thsd. The rubber was sold for $3-3.5 thsd per ton. As a result, in 2007 the Plant's loss totaled 5.5 bln AMD, in 2008 - 8.4 bln AMD, in 2009 - 15.6 bln AMD, and in 2010 - 24.6 bln AMD.

"This means that Nairit Plant was operating at a loss for years, and the owner that had received the Plant without any debts accumulated 50 bln AMD debts in 2007-2010", said Zakharyan. He added that in 2008 the debt was 17.5 bln AMD. In 2009 and 2010, the debt amounted to 43.5 and 50.0 bln AMD, respectively. "In such a situation, continuing the production is tantamount to suicide. But the owner continued the production, raising loans and accumulating debts to the energy companies. So, the owner has killed itself and created serious problems for the power generating companies, especially for the Yerevan TPP," said the minister.

To recall, Nairit Plant has been idle since April 2010. The Plant's shares were given as security against the CIS InterStateBank's 70 mln USD loan provided in 2006 for 5 years - till late Dec 2011 - at 12.5% p.a. In 2006, 90% of Nairit Plant's shares were sold to Rhinoville Property Limited (UK) for 40 mln USD. In January 2014, the Moscow Court satisfied the InterStateBank's claim on seizing the specified 90% of shares for the debts. The remaining 10% of shares belong to the Armenian Government. 1,700 employees of Nairit Plant were fired on Feb 6. A total of 478 employees remain at the Plant now to ensure the security of the Plant.

To note, the Government of Armenia is keen to apply to the CIS InterStateBank with a proposal to write off the Nairit Plant's debts.  On July 2, the Government approved a draft agreement with InterStateBank on it. The draft agreement suggests that InterStateBank should delegate the debt of the major shareholder of the plant - "Rhinoville Property Ltd" - to the Armenian state company Armgazprom for a symbolic price - $100. 

By ArmInfo's data, the Government is not going to re-launch the Plant, whose capital assets do not meet the up-to-date technological requirements. So, the activity of Nairit Plant, the erstwhile leader of Armenian industry that once had monopoly positions on rubber production, is apparently coming to its end.