Armenia avoids electricity price hikes for repayment of nuclear station repair loan – for now

Prices will remain the same for electricity in Armenia in 2020, despite the inclusion in the cost of the tariff of the repayment of a loan received from Russia to repair the country’s Metsamor nuclear power plant.

• Metsamor – nuclear power plant

• Armenian nuclear power station made safer – International Atomic Energy Agency

Repayment of $270 million loan, much-needed repairs loom over Armenian nuclear reactor

Chairman of the Commission for the Regulation of Public Services Garegin Baghramyan announced on December 25 that though the tariff will remain the same, the country now faces the repayment of the principal on the $270 million loan – $21 million.

Were this amount to be covered by the electric tariff, one kilowatt-hour would rise in price by 2 drams [$1 is equivalent to 479 drams].

Baghramyan said an agreement was reached with the government and Ministry of Territorial Administration and Infrastructure to organise a power generation timetable that would be more efficient, and would thus allow the former price to be maintained.

Deputy Minister of Territorial Administration and Infrastructure Hakob Vardanyan announced that the Armenian nuclear plant will be under repair for 65 days in 2020, and said a cooling tower will be repaired at the station, which will help protect the station more effectively from overheating. Next year, work will begin on the reactor itself, and will extend the station’s life.

All repairs at the station will be carried out by Russian companies.

Electricity price increase inevitable

Energy security expert Vahe Davtyan believes that an increase in electricity tariffs in Armenia is inevitable.

“In general, we are dealing with the problem of inefficient management of the country’s energy system. To solve the problem, two models are possible. The first is subsidization…from the state budget, and most likely, this particular model will be applied. And the second model is the provision of tax breaks to electric networks.

“In both the first and second cases, we are dealing with a rather deep problem, which, in general, will affect the entire economy of the country.  It is clear that an increase in electricity tariffs in Armenia is inevitable.”

Davtyan added that to counter this problem, the management of the country’s energy system must be improved and aim to lower the cost of electricity produced while increasing consumption within the republic, as well as increasing exports.

About the Armenian Metsamor nuclear power plant

For more than twenty years, the Armenian or Metsamor nuclear power plant has been the main generator of the republic’s energy security system, providing about 40 percent of the electricity generated in Armenia.

This is the only nuclear power plant in the South Caucasus.  The building of the nuclear power plant is able to withstand an earthquake of magnitude nine: important given Armenia’s location in an unstable seismic zone.

The facility was commissioned in 1977.  After the devastating earthquake in the north of the country in 1988, the Council of Ministers of the USSR and the Council of Ministers of the Armenian SSR decided to stop the operation of the nuclear power plant.  This was due to the likelihood of after shocks.

However, five years later, in 1993, the authorities of independent Armenia decided to restart the second power unit of the station.  In the absence of other real sources of electricity, this was the only way out of the energy crisis that began in the country after the collapse of the USSR and the blockade by Turkey and Azerbaijan.