ArmInfo. RA Prime Minister Nikol Pashinyan received the members of the delegation of the German Reconstruction Credit Institute (KfW), the Premier's press service reports.
Projects implemented in the energy sector of Armenia with the participation of the bank and the possibility of implementing new projects were discussed.
The Prime Minister emphasized the continuous development of cooperation between Armenia and Germany and noted that the cooperation between the Government of Armenia and KfW plays an important role in these relations.
Thomas Eisenbach, head of the energy and resource management department of the German Reconstruction Credit Institute (KfW) in Asia, emphasized that KfW is ready to support the Armenian government in the implementation of new projects. Referring to the current projects implemented with Armenia in various fields, the representative of KfW particularly emphasized the implementation of joint projects. According to him, the joint programs will contribute to the continuous development of the sector.
Then the interlocutors touched on a number of issues related to the progress of the projects and the implementation of new programs.
KfW Development Bank has been operating in Armenia since 1998 and today is the largest lender to the Armenian economy. The cumulative (accumulated) amount of KfW investments in the Armenian economy over the past years has amounted to about 1.1 billion euros. On behalf of the Federal Government of Germany, it supports projects in the areas of: sustainable economic development, training and employment; climate and energy, just transition; sustainable urban development; protection of natural resources.
As stated on the KfW website, the Bank currently mainly finances investments that help ensure a sustainable energy supply for the country. This includes creating an integrated electricity grid between Armenia, Georgia and Iran, as well as promoting renewable energy and energy efficiency.
One of the bank's most important projects in Armenia is the completion of the Kaps reservoir. The reservoir, unfinished due to the 1988 earthquake, with a design capacity of 110 million cubic meters of water, is located in the Shirak region, 22 km north-west of the city of Gyumri, in the valley of the Akhuryan River. The program, with a total budget of 70 million euros, is financed by the KfW German Development Bank. The loan agreement came into force on June 29, 2019, the deadline for using the funds was set until December 30, 2019, but was then extended until June 30, 2024. At the first stage of the program, it is planned to complete the construction of a reservoir with a capacity of 25 million cubic meters of water. At the second phase, it is planned to increase the infrastructure capacity to 60 mln. cubic meters. The project provides for the construction of auxiliary structures for the Kaps reservoir dam, equipping hydrological observation points of the Akhuryan River (from Lake Arpi to the Akhuryan Reservoir), construction of additional stations, and creation of a centralized database (SCADA system).
Another major project is the Caucasus Power Transmission Network program, which provides for the construction of an Armenia-Georgia power transmission line and substation to organize parallel synchronous operation of the power systems of the two countries. According to independent experts, the project will start working after 2025 at best. Difficulties with organizing parallel operation are associated with the delay in the construction of infrastructure, including the converter station. Within the framework of the program, work is planned on the construction of the 400/220/10 kV Ddmashen substation, 400/500 kV overhead power line, and the Ayrum converter station.
This project is an integral part of the North-South energy corridor, designed to unite the electric power systems of Iran, Armenia, Georgia and Russia. And if the construction of the Iran-Armenia power line has so far been completed by 40-50%, then the parties have not started the construction of a similar power line with Georgia. The terms of reference for the program were developed by the German KfW bank, which finances the program, and the FICHTNER company, which won the tender to identify a project consultant. According to the terms of reference, the project was divided into several stages. At the first stage, it was planned to modernize an electrical substation with a voltage of 220 kV, build a new substation with a voltage of 400 kV, and also build a new overhead power line to the Georgian border. The cost of this program is estimated at 188 million euros.
According to FICHTNER the preliminary cost of the entire program for synchronizing the power systems of Armenia and Georgia is 326.9 million euros, 10% of which should be part of the Georgian contribution. To finance the "Armenian section" of the program, three loan agreements were signed in 2014-2015. In particular, 165 million euros were allocated in the form of a loan by the KfW German bank, another 10 million euros were allocated by the European Investment Bank and the same amount were provided by grant funds from the European Commission. The Armenian side took upon itself the tax burden.
Back in 2017, the Armenian government, based on the expediency of managing the public debt, froze the project based on the decision of the technical commission. However, in 2019, the government decided to implement the program in full. Due to the delay in the implementation of the project, which was initially scheduled for 2019, it was decided to extend the loan repayment period until 2025.
