Armenia amends Vedi reservoir construction agreement with FDA  

ArmInfo. Armenia is making another change to the agreements with the French Development Agency (FDA) on the Vedi Reservoir construction project. On January 16, the Cabinet of Ministers approved proposals to sign Supplement No. 3 to the loan agreement No. CAM 1002 01 Y dated January 26, 2016 between the Government of the Republic of Armenia and the FDA.

As stated in the explanatory note to the current document, 98% of the  construction work has been completed within the framework of the  project,  implemented by the Territorial Development Fund of Armenia (back in  late February 2022, Minister of Territorial Administration and  Infrastructure Gnel Sanosyan stated that about 80% of the main work  on the construction of the dam had been carried out, and the  construction of the reservoir would be completed by the end of 2022 -  ed.).

Of the main reservoir facilities, excavation work has been completed  on the construction of the main (large) and small dams, spillway, as  well as the installation of concrete and hydromechanical equipment  for the culvert. The installation of the SCADA system and power  supply is nearing completion. After the technical completion  specified in the current contract (December 31, 2024), work remains  unfinished on setting up the SCADA and power supply systems, as well  as laying the asphalt concrete pavement at the facility, which will  be completed in early 2025, subject to favorable weather conditions.

At the same time, based on the FDA's appeal dated December 12, 2024  to the Deputy Prime Minister of Armenia Tigran Khachatryan, which  proposed amendments No. 3 to the loan agreement No. CAM 1002 01 Y  dated January 26, 2016, on extending the technical completion date  until the end of the defect elimination period at the Vedi reservoir  (May 31, 2028), based on the best international practice (FDA, which  was not initially provided for in the current loan agreement.

In addition, in the above letter, FDA emphasized the importance of  continuing the involvement of the Supervisory Engineer until the end  of the Defects Remediation Period in order to properly supervise the  post-construction works.

It is worth noting that according to the second amendment to the  Credit Agreement, signed on July 28, 2023, the loan issuance (use)  date is set for March 1, 2025, and the amount to be withdrawn is ?1  million.  By Amendment No. 3 to the agreement, FDA also proposes to  change the precondition for withdrawal specified in the agreement,  setting the amount of the percentage spent on the previously  withdrawn amount at 50% instead of the previous 80%. This amendment  provision will allow the Borrower to make the last payment before the  end of the payment date (01.03.2025), avoiding an extension of the  Payment Deadline, which may entail penalties provided for in the  Credit Agreement.

Another point of the amendment stipulates that, in parallel with the  extension of the terms of the Credit Agreement, the program  "Development of irrigated agriculture in the Ararat and Armavir  regions" (water component) will also be extended, the necessary  expenses for the maintenance of which will be covered by the Credit  funds.

On January 26, 2016, the French Development Agency allocated a loan  of 75 million euros to the Republic of Armenia to finance the  construction of the Vedi reservoir (co-financing by the RA government  will be 15 million euros), within the framework of which it is  planned to build a reservoir with a volume of 29.4 cubic meters and a  water surface of 120 hectares. The sources of water will be the  rivers of the Ararat region - Vedi and Khosrov. It was noted that the  full implementation of the program will make it possible to alleviate  the water shortage in the Ararat Valley, as well as switch from  mechanical irrigation to a gravity supply system, which, in turn,  will lead to energy savings. As a result of the program, water intake  from Lake Sevan will be reduced by 19 million cubic meters (ensuring  uninterrupted and reliable irrigation of about 3220 hectares of  land), and the area of irrigated land will increase by about 300  hectares. After the reservoir is operational, 11 pump stations will  be shut down, and another 3 will be partially shut down, the annual  savings will amount to about 1 billion drams or 19 million kWh of  electricity. Losses of intra-grid facilities will be reduced by  20-25%. The program was originally planned to be completed within  four years.