Armenia amends loan agreement on Kaps reservoir construction with KFW

ArmInfo. Armenia amends the loan agreement with KFW and extends the term of access to  loan funds.

As stated in the explanatory note to the document, the contract for  the execution of construction works (duration 34 months) within the  framework of the project was signed on April 21, 2023, and the start  was given on June 9. Completion of construction works is scheduled  for the second quarter of 2026, several more months will be required  for testing, detection of defects, execution of documents for  delivery and post-warranty payment. Without the above-mentioned  letter of consent, it will be impossible to secure financing for the  construction, and given the fact that all payments under the Project  are made exclusively through direct payments to KFW, it is necessary  to extend the period of access to these credit funds until December  30, 2026.

It is noted that the postponement of the date does not entail  additional financial obligations for the state budget of the Republic  of Armenia.

On August 27, 2020, the Government of Armenia approved the Action  Plan for the acquisition and resettlement of land within the  framework of the program, according to which the Kaps reservoir will  be built. It was reported that in the 90s, the work was stopped, and  the village of Jradzor, which was initially planned to be resettled,  continued to live in the expected flood zone all this time. As Deputy  Minister of Territorial Administration and Infrastructure Vache  Terteryan stated at the time, a loan agreement for 60 million euros  was signed with KfW in 2014 for the implementation of this project.  And since, according to Terteryan, some of the village's buildings  will be flooded already at the first stage, Jradzor should be  resettled already at the first stage of construction. The new  village, which will be located next to the reservoir, is planned to  be populated by about 350 residents. According to the deputy  minister, residents were offered two options: the allocation of  certificates and the construction of a new settlement.

On May 18, 2023, the foundation of the reservoir was officially laid.  The project is financed by a KfW loan and co-financing from the  Government of the Republic of Armenia. The total budget of the  project is 95.2 million euros, including 68.5 million euros in  borrowed funds. At the first stage, it is planned to build a  reservoir with a total volume of 25 million cubic meters, with a  further increase in the maximum volume of the reservoir to 60 million  cubic meters. The construction will be carried out by the Chinese  company Shanxi Construction Investment Group. At the first stage, the  water supply level of the Shirak main and Akhuryan right-bank canals  and about 17,000 hectares of land under their management will be  increased.  In addition, it will be possible to replace mechanical  irrigation of 2,280 hectares of land with gravity irrigation, which  will save 1.3 million kWh of electricity annually. With a reservoir  volume of 60 million cubic meters. it will be possible to increase  the area of irrigated land in the Shirak region by another 920  hectares, and in the Talin district of the Aragatsotn region, to  replace mechanical irrigation of about 6,600 hectares of land with  gravity irrigation, which will save 11.0 million kWh of electricity  annually. The program is being implemented by the Territorial  Development Fund of Armenia.