GARRY LEVESLEY: “WE WOULD DO EVERYTHING TO SUPPORT THE ENERGY SECURITY OF ARMENIA”
Monday 17 February 2014 09:59
Photo: Press service of the Armenian government
Exclusive interview of Contour Global’s Executive Vice President for
Europe Garry Levesley to Mediamax
– The agreement on buying Vorotan Hydroelectric Power Plant Complex by
“Contour Global Hydro Cascade” is the largest investment that U.S. has
ever made in the Armenia and the first one in energy field. Your
company has power stations in 17 countries. What exactly attracted
the company to make such a large-scale investment in Armenia?
– ContourGlobal is a New York based international power-generation
company with approximately 3500 MW in operations or under construction
in 17 countries and on four continents. Out total assets worldwide
are worth more than US$ 3.5bln at present.
This acquisition will add to ContourGlobal’s growing presence in
Eastern Europe, where it owns power generation facilities in Bulgaria,
Ukraine, Romania, and Poland, and will contribute to ContourGlobal’s
renewable energy portfolio, which currently comprises approximately
1000 MW of hydro, wind, solar and biogas production in Latin America,
Europe and Africa.
We base our portfolio investments on what makes sense for the client
and location. Armenia has a well functioning and reliable electricity
generation and distribution system that has been re-organized by the
Government of Armenia under the guidance of the World Bank. The Vorotan
HPP is one of the major hydro power plants in Armenia contributing
with 15% to the total electricity production in country.
Its production will always be in demand since the hydro energy is
among the lower-cost energy types and, by Armenian law, will be
consumed solely in the internal market.
– It was reported earlier that besides your company, 4 more companies
including a Russian one were interested in the Vorotan Hydroelectric
Complex. The Complex is the first company producing energy in Armenia
which was sold not to a Russian but an American company. How did
you manage in some sense to “break through the Russian monopoly”
in Armenian energy field?
– We were approached by the Armenian Government to consider the
purchase and then investing into the modernization of the Vorotan
hydro power plant, they may also have approached other interested
companies however we are not aware if they did, and if they did who
they approached.
For over a year, we have done an extensive research of the Vorotan
facilities, in particular, through technical, financial and legal due
diligence performed by some of the leading international companies
for us. We have based our decision to acquire the Vorotan on business
development, economic benefit and country investment climate factors,
including political stability – all of which we assessed as quite
positive and encouraging for a private company like ours to engage in
the business. We hope our investment will prove to be successful in
the years to come and, as I mentioned during the brief meeting with
the Prime Minister Tigran Sargsyan, will also encourage more western
companies to consider doing business and investing in Armenia.
– Your company obliged to invest around USD70mln in modernization of
the Hydroelectric Complex within coming 6 years. Would you speak in
more detail exactly what modernization programs will be implemented
and in what areas?
– Under the terms of the agreement, the ContourGlobal Hydro Cascade
closed joint stock company (CJSC), a direct and wholly owned local
subsidiary of the ContourGlobal, will own and operate the three
hydroelectric facilities located on the Vorotan river and will supply
power to the Armenian grid under a long-term (25 years) power purchase
agreement.
ContourGlobal will also invest $70 million over the next six years
in a refurbishment program to modernize the plants and improve their
operational performance, safety, reliability, and efficiency. We
expect the modernization to create 150 near-term jobs in addition to
more than 150 long-term technicians employed at the plants.
Before we embark on any investment though, in accordance with the
signed Assets Purchase Agreement (APA), we have to prepare, present
and get the approval of the Public Services Regulatory Commission for
the Vorotan refurbishment and modernization program. At present, we
think the rehabilitation programme will be primarily focused on the
upgrading and replacement of the main Electro-Mechanical equipment,
including turbines, generators, electrical switch gear and control
systems. The goal is to improve the reliability, efficiency and
longevity of the plants, of course each plant has its own specific
needs which we are assessing in detail but this is the general scope.
For example, the work in Spandaryan station is likely to be primarily
focused on improving the control, monitoring and communications from
the plant. Our initial technical assessment in Shamb revealed that
there was a vibration problem with one of the units that would be
investigated further prior to the replacement of the main turbine
equipment. In Tatev station, we presume the work will be focused on
refurbishment or replacement of the main generation equipment.
This does not mean, however, that the $70mln program will be the only
investment the company does within the time-span of its operation
of Vorotan. We are contractually committed to keeping the plant
functioning uninterruptedly, in accordance with high international
norms and practice, inlcuding from the point of view of health and
safety and environmental standards.
– Vorotan Complex provides 15% of the energy produced in Armenia and
that’s why it’s an object of strategic significance for Armenia.
Taking into account Armenia’s being blockaded and Russia’s dominant
position in the country’s energy sector, how are you going to support
the country’s energy security?
– This acquisition represents the largest single U.S. private
investment in Armenia’s history and the first U.S. investment
in Armenia’s energy sector. The Vorotan Hydro Cascade accounts for
roughly 15 percent of the installed capacity of Armenia’s electricity
system and provides sufficient energy to power 250,000 homes. We
are committed to keeping the plant functioning uninterruptedly,
in accordance with high international norms and practice.
The company is not just encouraged by the business opportunities
but also understands the responsibility that we have taken on our
shoulders, and we would do everything to further support the energy
security of Armenia. We also understand that there are expansion
opportunities on the cascade that the Government has asked us to
looking to the economic feasibility of, we will do this in due course
and if they prove feasible this could lead to an expansion of the
complex in future years.
– Armenia sells energy to neighboring countries including Iran. In
this regard, can purchasing Vorotan Complex become some kind of a
bridge between U.S.-Iran relations? Do you plan to sell energy to Iran?
– ContourGlobal Hydro Cascade (CJSC) will not be involved in any energy
sale or swaps with the Islamic Republic of Iran. In this regard, I
should mention that we, as an American based company investing outside
of the US, are bound by the laws and regulations of the US Government.
– Do you see any possibilities for cooperation with Turkey?
– As a multinational company that has grown rapidly in the past 8
years to own and operate 33 different energy-type plants worldwide,
including Eastern Europe, we are, of course, interested in further
promoting our business in the region, not just Turkey. At present,
though, we are focused on finalizing the Vorotan deal and establishing
a well-functioning and high standard operation in Armenia. In future,
we do not exclude considering attractive investment opportunities in
the region, including doing more investments in Armenia and, in fact,
further towards the East, too.
From: A. Papazian
http://www.mediamax.am/en/news/interviews/9146/