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Armenia Exchanges Electricity for Iranian Gas
Kommersant Daily, March 17, 2005, YerevanYesterday, Gazprom Deputy Chairman of the Board Alexander Ryazanov promised the Armenian President Robert Kocharyan during their meeting in Yerevan to begin the construction of Armenian section of the Iran-Armenia pipeline, so Razdan thermoelectric power plant could receive Iranian gas. On the same day RAO UES of Russia Deputy Chairman of the Board Andrey Rappoport promised to assist in finding means to build the fifth block of the Razdan power plant. Representatives of two Russian monopolies were supposed to persuade the Armenian president that Russia would help secure its power supply, in view of the upcoming visit of President Vladimir Putin to Yerevan.

Iran-Armenia pipeline, length 140 km, including the reconstruction of the currently functioning Kadjaran-Yerevan pipeline is estimated by $220 million. Armrosgazprom (45 percent owned by Gazprom) became the subcontractor to construct the 41 km on Armenia’s territory a week ago. Iran committed to supply Armenia 36 billion cubic meters of gas in the next 20 years.

Yesterday, the parties confirmed the agreement on gas to be directed from Iran to Razdan power plant in return for electricity according to the rate of 1 million cubic meters of gas to 3 million kilowatt-hour. Alexander Ryazanov said that construction in Armenia will begin on April 1. In response, Kommersant source in Armenian presidential administration said that Kocharyan suggested Gazprom to finance reconstruction of the gas pipeline currently active on the territory of Armenia. The possible ways of Gazprom’s participation in the project are not being publicized. Nevertheless, it is known that the finances for the whole project ($220 million) have not been drawn yet. Therefore, there remains a possibility that Gazprom may count on a share in the future property.

Earlier, RAO Chairman of the Board Anatoly Chubais said that the power holding was looking at the possibility of participating together with Gazprom in the construction of Iran-Armenia pipeline. That is why negotiations between the head of the Federal Grid Company and RAO Deputy Chairman of the Board Andrey Rapport are not accidental. The Federal Grid Company press service announced yesterday that no concrete decisions had yet been made.

All offers of the Russian business before Putin’s visit to Yerevan, scheduled for March 25th, are aimed at convincing the Armenia president of the fact that Russia will support all large-scale projects that would secure power supply to the Republic. It looks like in exchange for that the Russians will want a guarantee of preservation of the military base near Yerevan, where the Russian military could relocate in case of withdrawal from Georgia.

A few hours before the meeting with the president, Rapport passed the technical and economical offer of RAO regarding the construction of the fifth block of Razdan power plant, completed before March 15, to the Energy Ministry of Armenia. Razdan power plant produces 20 percent of all Armenia’s electrical energy. It should be financed by the scheme of project financing, however, in case of approval of the offer, RAO is willing to help find investors.