Infrastructure Sector News of Armenia

January 22, 2025 WB to provide $40mln loan to Armenia for reconstruction of three  power substations

The World Bank, through the International Bank for Reconstruction and Development, will provide Armenia with a $40 million loan to support the Enabling the Energy Transition project, which will facilitate the  implementation of the country's Energy Sector Development Strategy  until 2040. The National Assembly of the Republic of Armenia is  discussing the draft agreement with the IBRD, submitted for  ratification by the Government of the Republic of Armenia, at a  plenary session on January 22.

As Deputy Minister of Territorial Administration and Infrastructure  of the Republic of Armenia Kristine Galechyan noted in her speech,  the agreement was signed on August 6 and 8, 2024.

The credit resources will be used to modernize the Shahumyan-2,  Marash and Yeghegnadzor substations, which are on the balance sheet  of High-Voltage Power Transmission Lines of Armenia CJSC.

The Shahumyan-2 substation, built in 1964, has a capacity of 250 MW.  The Marash substation, commissioned in 1978, has a capacity of 375  MW.

The Yeghegnadzor substation, with a capacity of 126 MVA, was built in  1966. The equipment at these substations has been in operation for  over 40 years and there is an urgent need for its modernization.

In particular, it is planned to upgrade relay protection to modern  microprocessor relays, as well as to carry out restoration and  construction work on reinforced concrete structures, trenches and  earthen supports.

The deputy minister also reported that the credit funds are provided  for a period of 25 years, 15 of which are on preferential terms. She  noted that Armenia had previously attracted loans from the Asian  Development Bank and KfW Bank for the implementation of similar  programs.

Source:finport.am

January16, 2025 Armenia to get EUR 66mln loan, EUR 3mln from Germany for renewable  energy development

On January 16, the Government of Armenia approved a proposal to sign a financial cooperation agreement with the Government of the Federal Republic of Germany for 2023.

As stated in the explanatory note to the document, the agreement  provides the relevant legal framework that serves as the basis for  concluding separate financing or loan agreements and cooperation  between the parties.

The agreement provides for a loan of up to 26,000,000 euros from KFW  (German Development Bank) under the program and a grant of up to  2,000,000 euros for related activities necessary for the  implementation and consulting of the above- mentioned project.

In addition, the German government provides the Armenian government  or other borrowers, which will be jointly selected by the two  governments, with the opportunity to receive a preferential loan of  up to EUR 40,000,000 under the program , which is provided through KFW  within the framework of the Community Development Cooperation, as  well as a grant of up to EUR 1,000,000 for related activities  necessary for the implementation of the above- mentioned project and  consulting services.

It is noted that the Government of the Republic of Armenia exempts  KFW from direct taxes payable in the Republic of Armenia in  connection with the conclusion and implementation of the programs.

The agreement is a framework agreement, within the framework of which  it is planned to sign separate agreements on financing or lending for  the above-mentioned programs in the future.

Source:finport.am

January 9, 2025 EIB to grant EUR 10.1mln to Armenia for energy efficiency programme  in Yerevan

Armenia will receive grant funds from the European Investment Bank (EIB) for the implementation of the second energy efficiency program in Yerevan. On January 9, the government approved the draft on ratification of the relevant agreement with the EIB on an investment grant.

As stated in the explanatory note to the document, the document was  signed on November 12, 2024. The goal of the project is to reduce the  energy consumption of buildings and support energy efficiency and  renewable energy measures, which will include the necessary work to  improve the general technical condition of clinics and kindergartens.

The total cost of the project is 38 million euros, which will be  financed from the following sources: EIB loan funds - 25 million  euros, grant funds from the EU Neighborhood Investment Program - 10.1  million euros, technical support from the European Union Neighborhood  Investment Program - 650,000 euros, other expenses under the European  Union Neighborhood Investment Program - 250,000 euros. The Yerevan  Municipality's own funds will amount to 2 million euros.

As a result, the capital's administration hopes to reduce energy  costs, increase seismic safety, improve the comfort and quality of  life of tourists, reduce CO2 emissions and extend the service life of  renovated buildings.

In general, as a result of the Project's implementation, it will be  possible to reduce the energy consumption of about 38 public  buildings (6 clinics and 32 kindergartens) by about 65%.

<At the same time, the draft investment grant agreement <The Second  Yerevan Energy Efficiency Program> between the Republic of Armenia  and the European Investment Bank does not contain provisions  providing for financial obligations for the Republic of Armenia>, the  document says.

Source:finport.am

January 9, 2025 Sisian-Kajaran section of North-South project planned to be completed by end of 2031

On January 9, at its regular session, the Armenian government approved the draft law on ratification of the financial agreement between the Republic of Armenia and the European Investment Bank <Armenia. Sisian-Kajaran Road Section Program> <European Fund for Sustainable Development + Special Investment Window 1> with a budget of 236 million euros.

ArmInfo reported earlier that in 2025, it is planned to begin  construction work on a new road section with a length of about 60 km  Sisian-Kajaran (including the Bargushat tunnel) of the 4th tranche of  the North- South road corridor.

The works will be carried out in three sections: the northern section  - 27.12 km long; the Bargushat tunnel section, 8.65 km long, and the  southern section, 24.25 km long. In total, as noted in May 2024 by  the Ministry of Territorial Administration and Infrastructure, the  construction of the three sections of the road section will require  708 million euros in credit funds. The southern section was planned  to be implemented with joint financing from the EBRD and the European  Investment Bank (EIB). According to the initial plan presented by the  EBRD, the necessary credit funds to finance the southern section  amount to 373 million euros, of which 236 million euros are planned  to be attracted from the EBRD, and the remaining 137 million euros  the RA authorities wanted to borrow from the EIB. As stated in the  explanation to today's document, within the framework of the program,  an asphalt concrete road with a width of 11.1 m (including reinforced  shoulders), 3 traffic lanes (3.30 m), 27 bridges with a length of 4.7  km and 9 tunnels with a total length of 12.5 km will be built, the  longest of which is the Bargushat tunnel with a length of 8.6 km (the  tunnel section will be financed separately).

The funds provided by the document will be used to finance the  construction of the northern and southern sections of the  Sisian-Kajaran road. The project will also be co-financed by the  European Bank for Reconstruction and Development and the Asian  Development Bank, each in the amount of 236 million euros.

The contract also sets out requirements for mitigating environmental  and social impacts, the effects of climate change, as well as  measures to ensure road safety in accordance with EU directives.

The project is scheduled for completion by December 2033 (completion  of construction: December 2031, quality guarantee period: December  2033).

The amount of the loan provided is 236 million euros. The terms of  the loan are as follows: the term of use of funds is 5 years after  the entry into force of the agreement; the funds will be provided in  several tranches (maximum 20 tranches, not less than 5 million euros  each); the interest rate - fixed or floating - is set separately for  each tranche based on the Borrower's application.

The floating interest rate is equal to the 6-month EURIBOR rate plus  a fixed margin (the margin is fixed by the Bank in the installment  offer). Loan servicing payments (interest and principal repayment)  will be made semi-annually, on March 20 and September 20 of each  year; repayment period - each tranche will have its own repayment  schedule based on the Borrower's application. The loan repayment  period may be 4-30 years, and the grace period - from 1 month to 5  years.

<North-South> is one of the largest projects in the history of  independent Armenia. This road will reduce the distance from the  Iranian border to the Georgian border from 556 to 490 kilometers. The  road will significantly facilitate access to the Black Sea not only  for Armenia, but also for Iran. As of May 2024, the investment  program has been implemented by 10%, and the amount of loans  attracted as of the end of May 2024 amounted to $800.7 million.

Source:finport.am