The sale of Armenia's hydro plants along the Vorotan river to a U.S.-based company marks the U.S.' first investment in the Armenian energy sector, according to local media Monday.
Armenia's decision to sell the Vorotan Hydro Cascade, with a power generation capacity of 405 megawatts, to U.S.-based ContourGlobal was finalized on Monday after a revised deal was signed in the capital Yerevan, according to various local media sources.
The $180 million agreement is also the largest single private investment by the U.S. in Armenia.
Armenia's energy and natural resources minister along with top representatives from ContourGlobal holdings companies signed the agreement.
ContourGlobal Hydro Cascade, a direct and wholly owned subsidiary of ContourGlobal, will own and operate the plants and supply power to the Armenian grid under a long-term power purchase agreement.
The company also plans on modernizing the plants and improving their operational performance, safety, reliability, and efficiency through a $70 million refurbishment program over a six year period.
On Jan. 29, 2014, both sides had signed the original deal allowing the purchase of the plants including modernizing the Vorotan Hydro Cascade, but the deal wasn't finalized due to technical and pricing issues.
About 15 percent of Armenia’s installed electricity generation capacity comes from the Vorotan Hydro Cascade, supplying power to 250,000 homes.
Armenian prime minister was quoted as referring to the agreement as an important step towards strengthening bilateral economic relations between Armenia and the U.S.
- Russian grip on Armenian energy
Armenia has no domestic oil and natural gas reserves and has to import its energy needs from neighboring countries.
The country imports all oil needs from Georgia, Iran, Europe and Russia and exclusively meets its gas needs from Russia while it receives the majority of its nuclear fuel from Russia also.
As the country is mostly dependent on Russia for its energy demands, and since about 80 percent of Armenia's energy system is estimated to be under Russian control, speculation has arisen that the deal has angered Moscow.
By Zeynep Beyza Karabay
Anadolu Agency
zeynep.karabay@aa.com.tr