24 Nov 2022 21:00

Armenia set to pay additional $35 mln to Gazprom to have operations restored at Unit 5 of Hrazdan TPP

YEREVAN. Nov 24 (Interfax) - In a bid to have the Gazprom-owned and currently halted power unit (Unit No. 5) of the Hrazdan Thermal Power Plant recommissioned, the Armenian government issued a decision at Thursday's meeting to approve annual payments to Gazprom Armenia, which will get $34.79 million in compensation of revenue lost due to insufficient demand for electricity.

According to the published decision, the government has endorsed a draft protocol on amending the 2013 agreement signed with the Russian government on the sale of shares and further activities of CJSC ArmRosgazprom (now CJSC Gazprom Armenia). The protocol was drafted together with the Russian side after two years of negotiations. The agreement on it was reached in June 2022.

The operation of Unit No. 5 of the Hrazdan TPP has been halted since 2019 due to insufficient demand for generated power.

Of the designated amount, $31.79 million are targeted for the return of Gazprom investment, and $3 million for compensating the expenditure for servicing Unit No. 5, the government said in its decision.

"The insufficient output of Power Unit No. 5 is attributed to the absence of commercial contracts and the protracted period of the construction of the Iran-Armenia power line. As a result, PJSC Gazprom did not only see its investments compensated but also encountered an increase in loan commitments to $100 million," the decision says.

The Armenian government has said it hopes that this annual compensation will help restart Unit No. 5 and will also create opportunities for the price on gas supplies to Armenia to remain stable over the next ten years.

The protocol will be submitted for approval to the Armenian president and will take effect after ratification in the country's parliament.