CENN — Daily Digest – 06/25/2004

CENN – June 25, 2004 Daily Digest – Armenia
Table of Contents:
1. EU freezing 100m euros aid to Armenia re refusal to shut down ANPP
2. Germany to help Armenia improve water supplies
3. Armenia, Iran Boost Energy Cooperation
4. Germany to provide fresh loans to Armenia
5. Armenia hopes for Iranian credit to build hydro plant

1. EU freezing 100m euros aid to Armenia re refusal to shut down

Source: Bellona, UK, June 23, 2004

EU is freezing 100m euros of aid to Armenia after refusal to shut down its
nuclear plant.

“Our position of principle is that nuclear power plants should not be built
in highly active seismic zones,” stated Alexis Loeber, head of the EU’s
delegation in Armenia. The European Union, as part of its general policy
seeking the closure of elderly nuclear plants constructed in territories of
the former Soviet Union, agreed to give the grant aid ($122m) to Armenia for
finding alternative energy sources and for helping with decommissioning
costs at the plant. In return, the government in Yerevan would commit to a
definite date for the plant’s closure. “We cannot force Armenia to close the
plant,” says the EU’s Mr Loeber. “We feel that should definitely be well in
advance of the end of Metsamor’s design lifecycle in 2016.” The Metsamor
plant has no secondary containment facilities, a safety requirement of all
modern reactors, BBC reported.

Another concern is that due to border and railway closures with surrounding
territories, nuclear material to feed the plant is flown into Armenia from
Russia. “It is the same as flying around a potential nuclear bomb,” says Mr
Loeber. “It’s an extremely hazardous exercise.” Areg Galstyan, the country’s
deputy minister of power, says $50m has been spent on upgrading safety at
Metsamor. “It was a big mistake to shut the plant in 1988,” says Mr
Galstyan. “It created an energy crisis and the people and economy suffered.
Electricity industry specialists say that due to the expansion and updating
of existing thermal and hydro-energy plants, the country has become an
electricity exporter in recent years. A major new power source will come on
stream in 2006 when a pipeline supplying gas from neighboring Iran is due to
be completed, BBC reported.

At the same time PACE prepared four documents urging to close the station.
Despite some calls of international organizations to close the station, the
Armenian government did not respond to them. European Union many times
suggested Armenia to close Metsamor but Armenia rejected them. As a result,
European Union had to impose an economic sanction on Armenia by refusing to
allocate $100 million.

Armenian Trade Minister Chshmaritian reiterated Yerevan’s rejection of the
offer, saying that as much as $1 billion is needed for safely shutting down
Metsamor safely and putting in place an alternative source of inexpensive
energy. He added the Armenia-EU body decided to set up a working group that
will look into the issue in detail and present its findings by the end of
this year, Baku Today reports.

The Metsamor Nuclear Power plant produced 1.9 billion kilowatt hours of
electricity in 2003, or 36 percent of the total generation of electricity in
Armenia. ZAO Inter RAO UES, a subsidiary of Russia’s Unified Energy System,
and Armenia signed a contract in September 2003 to hand over trust
management of the plant to Inter RAO UES.

2. Germany to help Armenia improve water supplies

Source: Public Television of Armenia, Yerevan, June 22, 04

[Presenter] Armenian and German businessmen are preparing cooperation plans.
The Armenian side is presenting in Berlin proposals to increase the volume
of commodity turnover. Armenian legislation is more liberal on protecting
investment and ensuring economic competition.

[Correspondent Hermine Bagdasaryan from Berlin] An additional 8m euros to
improve water supplies to Armenia’s distant districts – Armenian Prime
Minister Andranik has reached this agreement with German Minister of
Economic Cooperation and Development Heidemarie Wieczorek-Zeul. This is not
the beginning of German support, but a continuation of several years of a
programme of improvement for the republic’s water supply, assisting small
and medium-sized businesses and developing alternative sources of energy.

Minister Zeul asked Andranik Markaryan about the Caucasus Initiative
programme, expressing concern that only Armenia and Georgia are involved in
it. Our neighbours [Azerbaijan] politicize our joint cooperation in the
ecological and economic sectors although Armenia has declared its readiness
for cooperation without any conditions, Andranik Markaryan said.

The agenda of the Armenian delegation also included economic events. More
than 200 businessmen have arrived in Berlin to take part in the
Armenian-German economic cooperation forum and industrial exhibition.

3. Armenia, Iran Boost Energy Cooperation

Source: Public Television of Armenia, Yerevan, June 21, 2004

(Presenter) The Araks river is in the focus of the Armenian-Iran
cooperation. Armenia and Iran agreed to jointly use the river’s hydro
(electrical generating) potential nine years ago. A joint commission was set
up on in 2000 and after three years a scheme to use the river has been
confirmed. The project includes the construction of two power stations, one
on Armenian and one on Iranian territory. The Armenian Energy Ministry
discussed the preparation of the joint Armenian-Iran programmes and the
issues of the construction of the Megri hydro-electric power station during
the meeting held in Syunik District.

(Correspondent over video of power grids) The preparation works on the
construction power stations on the Araks river are being completed. The
construction site has already been confirmed. The sides will sign an
agreement in two months and the station’s ground stone will be laid in
summer 2005. The power station will be constructed by Iranian financial
means, estimated at about 40m dollars. This amount we (Armenia) shall return
in the form of energy produced in the new power station. This is the third
Armenian-Iran joint project. The first one was the Armenian-Iran
high-voltage power station which was commissioned last year. The second
line’s construction followed the first one which is under construction and
will be completed in the autumn.

There are seven Armenian-Iran joint programmes in the energy industry. The
construction of the Armenian-Iran gas pipeline’ will also start soon. The
agreement has already been signed, the financial sources are being confirmed
and the preparation works are being completed. The construction of oil
processing and chemical plants are possible plans.

(Armenian Energy Minister, Armen Movsesyan, captioned) These seven
programmes which we have with Iran in the energy industry are quite large,
serious programmes. I think that all these programmes will be implemented.

(Correspondent) Apart from the security issues in the field of energy, these
programmes will also promote the development of other districts and the
resolution of social problems, in particular, employment issues.

4. Germany to provide fresh loans to Armenia

Source: ArmenPress, June 22, 2004

YEREVAN, JUNE 22, ARMENPRESS: Armenian prime minister Andranik Margarian who
has left today for Germany on a three-day working visit to participate in
German-Armenian Economic Cooperation Conference is expected to discuss with
German minister for economic cooperation and development Heidemarie
Witschorek-Zoll, who is also the German co-chairman of inter-governmental
commission for cooperation, a range of issues pertaining to German-Armenian
economic cooperation.

An agreement on release of a package of German credits to Armenia in the
next 3-4 years is supposed to be sealed in 2005. Armenian finance and
economy minister Vartan Khachatrian said today before flying to Berlin that
after the end of the visit an agreement will be signed in Yerevan on the
release of 7.5 millions German loan for the support to building of
hydro-power plants, 1.5 million of which will be allocated as a grant.

Khachatrian also said that a German KwF bank plans to release a 30 million
euros loan to Armenian for upgrading the privatized Yerevan power plant.

5. Armenia hopes for Iranian credit to build hydro plant

Source: Interfax, June 22, 2004

Armenia is hoping to receive a credit from Iran to build a hydroelectric
plant on the Araks river, the cost of which is estimated at $140 million,
Armenian Energy Minister Armen Movsisian told journalists.

He said that Armenia plans to repay the credit with supplies of electricity
to Iran.

The minister said that there are plans to build two identical hydroelectric
plants on the Araks river – the Megrin Hydroelectric Plant on Armenian
territory and the Karachilar Hydroelectric Plant in Iran. Movsisian said
that in the coming two months a feasibility study would be prepared for the
construction of Megrin Hydroelectric Plant. Construction is set to begin in
mid-2005 and an agreement with Iran will be signed by the end of this year.

The minister said that the plant will have a capacity of 140 megawatts and
will produce 841 million kWh of electricity per year. For comparison he said
that 30 small hydro plants are operating in Armenia, producing a total of
600 million kWh of electricity per year. He said that the new plant would be
the best in Armenia as regards its technical and economic parameters and in
time it is planned to build a whole chain of plants on the Araks River
together with Iran.

The Armenian government and Energy Ministry are currently working on a
program to develop alternative energy production, to ensure Armenia’s
security in the event of Armenian Nuclear Power Plant closing. The main
emphasis in this program is being placed on developing hydro production.

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