Monday, September 26 2016 17:52
Alina Hovhannisyan

Expert: $70mln needed for re-launching Nairit plant

ArmInfo. Operation of Nairit plant, a large industrial giant, will ensure additional 10% or around $10 mln into the country's GDP, Head of the Union of Local Producers, economist Vazgen Safaryan stated at today's press conference.

He said that according to experts' calculations around $70 mln are needed to restart the plant. Safaryan considers that operation of the plant should be based on joint work with Yerevan TPP (to receive steam and electricity for internal use) and on Iranian gas, which may be received on barter agreement. "If we launch Nairit we may receive 12 thousand tons of rubber, 6 thousand tons of caustic soda, around 2.5 thousand tons of hydrochlorid acid and 500 kg of special glue", he stated.  At the same time the expert focused on small and medium businesses, the number of which is around 70 thousand but the budget revenues do not exceed 3% (around 17 bln drams). According to the expert small and medium enterprises of chemical industry may develop if there are large industrial complexes. "Up to 30 small and medium enterprises of the field may operate based on production of one big industrial object", he stressed.

In Safaryan's opinion the state should take on the main job of rehabilitation of industrial complexes. The expert brought the English model of industrial sector development when in case enterprise operates inefficiently the government purchases the shares and via capitalization modernizes it unless the industrial cycle is fully recovered.  After this the government sells the shares keeping the blocking share holding (25%). In this context the expert considers reasonable to follow the British model.

At the same time the Head of the Union of Producers informed that Russian Rostekh industrial corporation has stated about its intention to import from Armenia 40 thousand tons of rubber. "Rostekh has conducted audit to decide whether it is reasonable to invest in Nairit to receive the necessary amount of product. In this context I advised them to base on their own research and not to follow World Bank specialists' opinion. I have also informed them that cheap rubber may be produced in cooperation with Yerevan Thermal Power Plant based on Iranian gas", Safaryan informed at the same time noting that the Russian side has not informed about its final decision yet.

According to him the Union of Local Producers is going to present its business plan to the new government of Armenia.

To note, Nairit plant has been idle since 2014. At the moment the debts of Nairit Plant amount to 50 billion AMD (about 130 million USD).  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). The latter owns an 89,999% stake in the plant, Armenian Ministry of Energy and Natural Resources - 4,496%, Gazprom Armenia CJSC (previously ArmRusgasprom) - 3,596%, and Yerevan Thermal Power Plant - 1,907%. In 2015 the World Bank conducted a financial and technical audit at Nairit Plant at the request of the Armenian Government. The WB considers the re- launch of the plant to be inexpedient because it will need at least $250 mln.

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