YEREVAN -- The Armenian government has announced it has decided to use only 60 percent of a $270 million Russian loan designed to finance the ongoing modernization of its Soviet-era nuclear power plant at Metsamor.
The plant's sole functioning reactor went into service in 1980 and was due to be decommissioned by 2017.
However, a previous government in 2014 decided to extend the life of the 420-megawatt reactor by 10 years after failing to attract foreign investment for the construction of a new nuclear plant.
In 2015, the Russian government agreed to provide Armenia with a $270 million loan and a $30 million grant to upgrade the Metsamor nuclear power plant.
The modernization work, led by Russia’s Rosatom nuclear energy agency, was due to be completed by the end of 2019, but the process fell behind schedule, preventing the full disbursement of the Russian funds.
Armenia's infrastructure minister on June 11 said the country had used only $107 million of the Russian money.
Suren Papikian said Moscow had offered to extend the loan agreement by two years under the condition that Armenia agreed to use 80 percent of the money to commission equipment and services from Russian companies.
The government of Prime Minister Nikol Pashinian backed Papikian's proposal to reject the Russian offer and to finance the remaining work through government bond sales.
Pashinian’s government said it planned to spend 63 billion drams ($130 million) to upgrade the facility over the next two years.
Pashinian said that the government will now be free to select the suppliers for Metsamor, which he said will "substantially" lower the costs.
Armenia's sole nuclear plant, located 35 kilometers west of Yerevan, generates roughly 40 percent of the country's electricity.
The European Union and the United State have long pressed for its closure, saying that it does not meet modern safety standards.