ArmInfo. Armenia will secure a 120 million euro loan from KfW Bank to finance the Caucasus Power Transmission Network project, which involves constructing the Armenia-Georgia high-voltage power line. The loan agreement was approved during the government session on August 13 and will be submitted to the National Assembly for ratification in accordance with established legislative procedures.
According to the explanatory note accompanying the draft resolution, these funds represent the fourth tranche of financing secured for the initiative. Several previous loan and grant agreements have been signed to support the project, including: December 9, 2014: Loan and grant agreements totaling 75 million euros and 10.2 million euros, respectively; December 11, 2015: Agreements totaling 83 million euros; May 30, 2016: A 10 million euro grant agreement under the EU Neighbourhood Investment Facility; December 15, 2015: A 10 million euro loan agreement with the European Investment Bank and July 15, 2020: A 550,000 euro grant agreement signed by KfW, the RA Ministry of Finance, and the RA Ministry of Territorial Administration and Infrastructure to provide expert assessment services for High-Voltage Electric Wires CJSC.
The goal of the project is to connect the Armenian and Georgian power systems by constructing high- voltage transmission lines and 500/400/220 kV DC converter stations with a final capacity of 1,050 MW. This substation will be located near the Georgian border in Ayrum, Armenia. On the Georgian side, the connection will be established via a 500 kV line using an overhead line from the Marneuli substation, and on the Armenian side, via a 400 kV overhead line from the 400/220 kV substation located in Ddmashen. As a result, the initial capacity of electricity exchange between Armenia and Georgia is planned to increase from the current 200 MW to 350 MW, and subsequently, depending on regional market demand, to 1,050 MW. The construction of new overhead power lines will significantly improve service quality, significantly facilitate the development of mutually beneficial regional cooperation in the energy sector, and create the preconditions for organizing parallel operation with the energy systems of CIS countries.
As part of the project, a consulting agreement was concluded with Fichtner GmbH & Co. KG. With the latter's support, tenders were held to select general contractors for three project lots. For Lot 1, Andritz Hydro GmbH (Austria) and China National Electric Engineering Co. Ltd (China) submitted bids. Following a review of the financial bids submitted by China National Electric Engineering Co. Ltd, the Client's working group and the Consultant jointly prepared a draft financial bid evaluation report, which was approved by KfW in accordance with the established procedure. According to the Financial Report, China National Electric Engineering Co. Ltd. Ltd., which offered the lowest price (EUR 63,882,628.00 excluding VAT), was declared the winner of the tender. A contract for the second lot, based on the results of the tender, was signed with the Indian company KEC International Limited for the amount of EUR 70 million excluding VAT. An advance payment (EUR 17.5 million) was paid to KEC, which was accepted as the start date of work under the contract. The work provided for in the contract is being carried out. According to the signed contract, the period for completing the work for Lot 2 is 42 months.
Regarding Lot 3, the bid was submitted by State Grid Corporation of China - CET (SGCC-CET). The technical proposal evaluation report, prepared jointly by the working group of the Customer and the Consultant, was approved in accordance with the established procedure, according to which the applicant meets the main technical requirements and, accordingly, proceeds to the next stage. Then, the financial proposal of SGCC-CET was opened, according to which The price for a 350 MW module was EUR 288,506,937.99 (excluding VAT), while the price for the later-submitted 500 MW module was EUR 405,966,798.23 (excluding VAT).
The total available budget for loan and grant funds allocated for the project is EUR 323.75 million. By government decision, a draft presidential decree was also approved to attract a EUR 15 million grant for the same purposes. The construction of the Armenia-Georgia high-voltage transmission line is aimed at creating a reliable North-South (Armenia-Georgia-Iran) energy corridor. The project has been repeatedly delayed, but is being financed with the support of the German KfW bank and the Armenian state budget. The project's completion date has been repeatedly pushed back due to technical and logistical delays. While the Iran- Armenia transmission line is 80 percent complete, construction is expected to begin in earnest. The Armenia-Georgia power transmission line project participants have not yet begun construction.
