Government approves draft 83 million euro loan agreement with KfW

YEREVAN, December 4. /ARKA/. The government of Armenia approved Thursday a draft loan agreement with German state-owned KfW bank to the tune of 83 million euros for financing the second phase of the Caucasus Power Line program.

Finance minister Gagik Khachatryan said the loan is to be repaid within 15 years. It will be provided with a 5-year grace period and a fixed interest rate that will be approved at the time of the signing the agreement.

He said the loan will be used to build a substation in Ddmashen, new power lines, to rehabilitate and reconstruct power grids and to purchase new equipment and machinery. Part of the loan will be paid for consulting services.

The total cost of the Caucasus Power Lines program is 320 million euros. It is being implemented in three phases -the first was launched in 2014 and will end in 2018, the second phase will end in 2021 and the third in 2026.

In the first phase Armenian and Georgian energy systems will be united through a high-voltage direct current (HVDC) line to be built in Armenian Ayrum on the border with Georgia. The new substation and the transmission line will enable Armenian and Georgian power grids to work in the same mode and make electricity swaps.

The total cost of the first phase of the project is 105.2 million euros. This phase is co-financed by the European Investment Bank (10 million euro loan), the EU Neighborhood Investment (a 10 million euro grant) and German KfW bank -83 million euros. The agreement with KfW was signed in 2014 December. -0-