Russia to Take over Medzamor Finances

YEREVAN (RFE/RL)–Russia will take over financial management of Armenia’s Medzamor nuclear power station in exchange for clearing its $40 million debt to Russian suppliers of nuclear fuel–officials from the two countries announced on Wednesday.

Following months of difficult negotiations–the deal was made during a two-day meeting of the intergovernmental Russian-Armenian Commission on Economic Cooperation–and was signed by the commission’s two co-chairmen–Russian Industry Minister Ilya Klebanov and Armenian Defense Minister Serge Sarkisian.

"I would now say that all financial matters have been resolved," Klebanov told journalists at the official ceremony.

Under the terms of the deal finalized during President Robert Kocharian’s recent visit to Moscow–Russia’s Ministry of Atomic Energy and RAO Unified Energy Systems utility will repay $32 million in Medzamor’s outstanding debts to the Russian TVEL nuclear operator. They will also raise at least $8 million needed for fresh fuel deliveries.

The Russia’s are to recoup their expenses with proceeds from the sale of Medzamor’s relatively cheap electricity to the Hayenergo national power grid and the low-voltage energy distribution network. They will not only control the plant’s cash flows–but also be able to collect substantial sums owed to it by consumers.

The deal came after the Armenian government failed to raise funds needed to buy fresh nuclear fuel and repay Medzamor’s old debts. Faced with the possibility of serious power shortages–the government had to reactivate the plant’s sole nuclear reactor late last month without its planned partial refueling. The remaining fuel allows the Soviet-era facility can generate electricity until next May.

Medzamor accounts for roughly 40 percent of Armenia’s annual energy production.

A similar equities-for-debt deal was made to repay Yerevan’s separate $100 million debt to Moscow–with five state-run Armenian enterprises placed under Russian control late last year. Sarkisian and Klebanov said the bilateral commission has formed an ad hoc "investment group" that will discuss ways of revitalizing those assets.

The most significant of them is the Hrazdan thermal power plant–the largest in Armenia.

According to Klebanov–the Russian-Armenian commission has succeeded in strengthening economic ties between the two allied states. Critics–however–say that the debt agreemen’s will only deepen Armenia’s dependence on Russia for energy.

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