Armenia Rejects Some Russian Financing, Seeks Autonomy in Its Effort to Modernize the Metsamor Nuclear Power Plant

On June 16, 2020, it was reported that the Armenian government had rejected 40% of a $270 million Russian financing package for the ongoing modernization of the country’s Soviet-era Metsamor nuclear power plant (NPP).  The decision arrives despite Moscow’s offer to extend the timeframe of the loan by two years under the condition that Armenian officials agree to use at least 80% of the funds to commission equipment and services from Russian companies.  Instead, the Armenian government decided to provide a $131 million loan from the state budget for ongoing work on the NPP.

Thus far, the project to extend the life of the nuclear plant has been underpinned by Russian financing and, as a consequence, it has also been beholden to Russian contractors and vendors that have been the cause of consistent delays.  This recent decision appears to be part of an effort by Armenia to diversify its options for the sourcing of equipment and services and mitigate those, especially during a period where coronavirus is expected to make these problems worse.

Upgrades were initially expected to be completed by 2019 and Armenia’s debt repayment to begin by 2020. Although Moscow has provided an extension on repayment, the project could be delayed beyond this extension and still leave Yerevan liable for repayment of an unfinished project.  The Russian loan was originally granted in 2015 alongside a $30 million grant from Russia’s state nuclear energy company Rosatom to update and extend the lifespan of the Metsamor plant to 2026 (the nuclear plant was originally scheduled to be decommissioned in 2017).