Japan Bank for International Cooperation (JBIC) has signed a loan agreement totalling ¥15.918bn with the government of Armenia for the Yerevan Combined Cycle Co-generation Power Plant Project.


The proceeds of this loan will finance the procurement of machinery and equipment, construction and civil works and consulting services that are necessary for constructing a gas-fired combined cycle thermal power plant (205MW class) in the land adjacent to the Yerevan Thermal Power Plant on the southern outskirts of Yerevan. The project is aimed at enhancing the power supply capacity of Armenia, thereby easing possible power shortages in the future and serving to develop the foundation supporting the economic growth of the country.


In Armenia, many of the power plants, including Yerevan Thermal Power Plant, were constructed during the Soviet era and have been operational for 30 years or longer. Due to wear and tear, their power supply capacity and reliability have considerably deteriorated. Whereas national peak demand stands at 1,177MW, the current supply capacity is only 1,266MW.


Considering the need to secure a reserve margin and to meet the growing power demand expected in the coming years (peak demand is projected to reach 1,350MW in 2008), there is concern that Armenia will face a serious power shortage in the future. In the meantime, about 50% of the power demand is accounted by the capital city of Yerevan, the country’s economic and industrial hub and home to one third of the population, or some 1.1mn people. The construction of a gas-fired power plant, which takes a relatively shorter period of time, in the vicinity of Yerevan, the city of greatest demand, is thus highly and urgently called for.


Under the project, the combined-cycle technology, which is highly effective in power generation, is adopted for the first time in Armenia. Aside from that, the newly constructed plant will serve as a co-generation plant that supplies heat to neighbouring factories and residences. The project will thus support the country’s efforts to decrease fuel consumption in a bid to save energy and conserve resources, and to reduce air pollutants to alleviate environmental burdens.


The Caucasus region including Armenia occupies a geographically significant position: it lies not only in the corridor linking Europe and Central Asia, but also has a strategic location connecting Russia and the Middle East. Supporting the enhancement of the basis for economic growth in Armenia has great importance for securing stability in the neighbouring region.
Economic and social infrastructures in Armenia were mostly constructed during the Soviet era and have severely deteriorated. In particular, infrastructure development in the power sector is one of the priority development agenda. JBIC provided an ODA loan to Armenia in 1999, which was intended to support the rehabilitation and expansion of power transmission and distribution facilities across the nation. By extending this second ODA loan to support the power sector which plays a significant role in improving the foundation for economic growth, on which will rest the country’s transition to a market-oriented economy, JBIC will help the Armenian economy get on the stable path toward growth.