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Armenia, Iran To Build Power Plant Amid Increased Ties

Armenian Energy Minister Armen Movsisian
Armenian Energy Minister Armen Movsisian
YEREVAN -- Armenian Energy Minister Armen Movsisian says Iran and Armenia will start building two major hydroelectric power stations on their border in the coming weeks, RFE/RL's Armenian Service reports.

The announcement, made by Movsisian on September 16, ends years of negotiations.

Movsisian said he and his Iranian counterpart Majid Namju will launch the start of construction work on the Arax River, which separates the two countries, immediately after signing an agreement in Yerevan.

The dates of Namju's visit to Armenia are still being "clarified," Movsisian said. Other officials told RFE/RL that Namju will likely arrive before the end of the month.

The Armenian government formally approved the agreement and authorized Movsisian to sign it at a meeting earlier in the day. Prime Minister Tigran Sarkisian hailed the impending launch of the "important" commercial project that will give a major boost to Armenian-Iranian commercial ties.

The agreement envisages two power plants being built on either side of the Armenian-Iranian border and have a capacity of 130 megawatts each. They are both to be built by the Iranian company Farad-Sepasad within the next five years.

Movsisian said Armenia will finance its share of the project, which he estimated at $323 million, with future electricity supplies to Iran. "The Iranians will build, exploit the facility [located on the Armenian side of the border], and recoup their investments with electricity to be generated there," he told RFE/RL.

"We will need 15 years to pay back the [Iranian] investments with electricity supplies," he said, adding that the plant will then become the property of Armenia.

"This is going to be a cascade [of two hydroelectric stations] whose first facility will be located in Armenia," Movsisian explained. "That is, water will first flow to and be used on the Armenian side and only then reach to the Iranian plant."

Energy has been the focal point of Armenian-Iranian economic cooperation. It gained momentum in late 2008 with the inauguration of a natural gas pipeline connecting the two countries. Armenia began receiving small amounts of Iranian gas through that pipeline in May last year, but the volume of those deliveries is expected to soar in the next few years.

Movsisian said in July that the planned construction of a third high-voltage transmission line connecting the Armenian and Iranian power grids and another Armenian-Iranian fuel pipeline will also get under way by the end of this year.

Meanwhile in Tehran, Iranian officials reaffirmed their strong interest in deepening political and economic ties with neighboring Armenia during Armenian Foreign Minister Eduard Nalbandian's visit to Tehran that ended late on September 15.

The leaders did not comment on the free-trade agreement currently being discussed by the two sides, although they did speak on the dispute over the breakaway Azerbaijani region of Nagorno-Karabakh as well as the tension between Tehran and the West over Iran's controversial nuclear program.

Nalbandian met with Iranian President Mahmud Ahmadinejad, Foreign Minister Manuchehr Mottaki, and the secretary of the country's Supreme National Security Council, Saeed Jalili, during the one-day trip.

The Armenian Foreign Ministry said on September 16 that Ahmadinejad and Nalbandian expressed their "satisfaction with multifaceted cooperation between the two countries" and "readiness to develop it further."

A ministry statement singled out joint commercial projects implemented and planned by Yerevan and Tehran.

The multimillion-dollar projects involving energy and transportation were high on the agenda of talks with Mottaki. "The interlocutors reaffirmed their readiness to develop bilateral relations based on mutual benefit," the ministry statement read.

The Fars news agency reports that Nalbandian described those relations as "warm and excellent" at a news conference with his Iranian counterpart. Another Iranian news agency, IRNA, quoted Mottaki as saying that both sides are "determined to enhance the level of our political, economic, and cultural cooperation."

Neither minister made any mention of the free-trade agreement. Armenian government officials this week denied Iranian media reports saying the deal would be signed during Armenian Economy Minister Armen Yeritsian's upcoming visit to Iran. They added that the free-trade terms proposed by the Iranians are unacceptable to Yerevan.

Reports from Tehran said the two foreign ministers also discussed the Nagorno-Karabakh dispute between Armenia and Azerbaijan, with Nalbandian again praising Iran's "balanced" position on the issue.

Mottaki also briefed Nalbandian on the status of Iran's standoff with the West stemming from its nuclear program. Nalbandian said Armenia is "closely monitoring" the situation and hopes for "a mutually acceptable solution" to it, according to the Armenian Foreign Ministry.

Successive Armenian governments have avoided any criticism of Tehran's nuclear ambitions, underscoring Iran's perceived importance for their landlocked country's security and economic development. Unresolved bitter disputes with the two other Muslim neighbors, Azerbaijan and Turkey, make Iran one of Armenia's two gateways to the outside world.

Visiting Germany in June, Armenian President Serzh Sarkisian publicly stated that the nuclear crisis will not be resolved unless the West addresses "Iran's sense of being in danger." He also held up the Armenian-Iranian projects as a model for regional cooperation.

By the same token, close ties with Armenia have been a key element of Iranian policy towards the South Caucasus, not least because of Iran's traditional rivalry with Turkey and uneasy rapport with Azerbaijan. In a recent interview with, Mottaki said Armenia "occupies a special place" in his country's regional policy.