Russian INTER RAO UES Directly Interested in Additional Water Outlets from Lake Sevan

Russian INTER RAO UES Directly Interested in Additional Water Outlets from Lake Sevan


On 4 July the Armenian Parliament approved water outlets from Lake Sevan with the majority of votes exceeding the maximum admissible volume by 10 million cum per year despite the facts and substantiations submitted by the experts, S.O.S Sevan public initiative and 'Yelq' opposition fraction, and despite the protest demonstrations organized by Sevan littoral community residents.

Who are these additional water outlets beneficial for? Who is interested not to have the level of Lake Sevan increased? The reply to this question was partially held in 'Yelq' MP Lena Nazaryan's speech, who pointed out at huge water losses in the irrigation system and illegal buildings on the shore of Lake Sevan, which are at the risk of flooding

This material is dedicated to Sevan-Hrazdan hydrocascade, which uses the water from Lake Sevan for electricity production. After RA Law 'On Lake Sevan' entered into force in 2001, water outlets from Lake Sevan are only permitted for irrigation purposes. The locks of Sevan-Hrazdan canal are opened only for irrigation season, a period of time which is prescribed each year with the governmental resolution. Only in this period of tine Sevan-Hrazdan hydrocascade may use the water, which first passes through the cascade of power stations and then is used for irrigation.

Sevan-Hrazdan hydrocascade was transferred by the Armenian Government to the ownership of the Russian state-owned company INTER RAO UES in 2003 at the expense of Armenia's debt to Russia for nuclear energy supplied by Russia to Armenian Nuclear Power Station. Its appraised value made up only US $ 25 million. For this purpose, 'International Energetic Corporation' CJSC ("IEC" CJSC) was incorporated: it should be mentioned that the experts assessed the value of the cascade in the amount of US $ 500 million, i.e. 20 times more than the appraised value.

This transaction was extremely harmful for Armenia; as such a low price for the cascade didn't enable to pay off the debts for the nuclear energy. Later, the financial management of the Armenian Nuclear Power Plant was passed on to Russia, which Russia uses only to pay off its expenses.

The asset portfolio of 'International Energetic Corporation' includes 7 hydropower stations of Sevan-Hrazdan hydrocascade located on the Hrazdan River in the Republic of Armenia. The station also uses the natural flow of the Hrazdan River, as well as the irrigation water outlets out of Lake Sevan. All the HPPs in the cascade are in a good working order.
The capacity of the cascade equals to 561 MW, while production and technological potential equals to 500 million kWph, which accounts for around 10% of the internal consumption of the electricity in the Republic of Armenia.

On 24 March 2011 "RusHydro" OJSC obtained the shares of ("IEC" CJSC). Currently, according to the well-known Russian publication “Коммерсант”, "RusHydro" company is ready to sell 90% of the shares of Sevan-Hrazdan, as First Deputy Chairman of this energy holding George Rizhinashvili told the “КоммерсантЪ”. Under him, "RusHydro" company had recognized the Armenian HPPs as non-core, and in the upcoming 2-3 months the company will carry out their assessment and form a portfolio of proposals from potential buyers. The company specified that relevant negotiations were initiated still in 2016. "RusHydro" company has attracted funding for the technical re-equipment of the HPP, but the new strategy of the holding "doesn't envisage increase of foreign assets portfolio".

The sources of the “КоммерсантЪ” outline that the electricity production in the cascade had decreased in 2016 because of low-water rivers. Nevertheless, it complies with the truth only partially. In fact, one of the most important factors is the limitation of the water outlets out of Lake Sevan approved by the law, but this fact is not mentioned either in any Russian publication, or the website of RusHydro company. Most probable, it’s not profitable for the company to present this limitation to the potential buyers.

Thus, the attractiveness of Sevan-Hrazdan hydrocascade should be increased for its profitable sale and therefore to add the volumes of produced electricity, at least artificially. So it turns out, if there is no buyer found in the nearest future, the owners of RusHydro Company will want to increase the productivity of the cascade at the expense of additional water outlets out of Lake Sevan.

Thus, the management board of “RusHydro” CJSC is a direct stakeholder: Nikolay Shulginov, Chairman of the Management Board - General Director, Boris Bogush - Member of the Board, First Deputy Director General — Chief Engineer,
Andrey Kazachenkov - Member of the Board, First Deputy Director General, Sergey Kirov - Member of the Board, First Deputy Director General, Vladimir Markin - Member of the Board, First Deputy Director General and George Rizhinashvili - Member of the Management Board, First Deputy Director General.

Another stakeholder is ‘Electric Networks of Armenia’ CJSC, which is interrelated with INTER RAO UES and is a part of this company since 2006. On 30 September 2015 INTER RAO CJSC and Tashir Company Group signed an agreement on the purchase of electricity and energy assets. Director General here is Karen Harutyunyan. Other stakeholders are the European Bank for Reconstruction and Development and the Asian Development Bank, which have provided each a loan of US $ 25 million for re-equipment and increase in the productivity of 7 HPPs in Sevan-Hrazdan hydrocascade.

16:07 August 07, 2017


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