The Ministry of Finance of Armenia and the regional director of KfW discussed the progress of projects implemented with the bank`s support

ArmInfo. Armenian Deputy Finance Minister Edgar Mkrtchyan met with Jens Hagen, Regional Director for the South Caucasus at KfW Bank for Reconstruction and Development.

According to the Ministry of Finance's press service, during the meeting, the parties discussed the progress of ongoing projects in the energy, water, and related sectors, touching on practical mechanisms for effectively overcoming challenges arising during their implementation. Particular attention was paid to the Caucasus Power Transmission Network project, as well as the potential for implementing projects in Armenia using the debt swap mechanism employed by the German government.

Concluding the meeting, the parties emphasized the importance of increasing the effectiveness of joint projects and reaffirmed their commitment to strengthening the existing partnership.

KfW Development Bank has been operating in Armenia since 1998 and is currently the largest lender to the Armenian economy. KfW's cumulative investments in the Armenian economy over the past few years have amounted to approximately €1.1 billion. On behalf of the German Federal Government, it supports projects in the following areas: sustainable economic development, training, and employment; climate and energy; just transition; sustainable urban development; and the protection of natural resources.

According to KfW's website, the Bank currently primarily finances investments that ensure a sustainable energy supply for the country. This includes the creation of an integrated electricity grid between Armenia, Georgia, and Iran, as well as the promotion of renewable energy sources and energy efficiency.

One of the Bank's most important projects in Armenia is the completion of the Kaps Reservoir. The reservoir, unfinished due to the 1988 earthquake, has a designed capacity of 110 million cubic meters of water and is located in the Shirak region, 22 km northwest of Gyumri, in the Akhuryan River valley. The program, with a total budget of €70 million, is financed by the German development bank KfW. The loan agreement entered into force on June 29, 2019, with a final disbursement deadline of December 30, 2019, but was subsequently extended to June 30, 2024. The first phase of the program plans to complete the construction of a reservoir with a capacity of 25 million cubic meters of water. The second phase is planned to increase the infrastructure to 60 million cubic meters. The project includes the construction of auxiliary structures for the Kaps Reservoir dam, equipping hydrological observation stations on the Akhuryan River (from Lake Arpi to the Akhuryan Reservoir), constructing additional stations, and creating a centralized database (SCADA system).

Another major project is the "Caucasus Power Transmission Network" program, which envisions the construction of a power transmission line and substation between Armenia and Georgia to ensure the parallel, synchronous operation of the two countries' power systems. Difficulties in organizing parallel operation are associated with delays in the construction of infrastructure, including a converter station. The program includes construction of the 400/220/10 kV Ddmashen substation, a 400/500 kV overhead power line, and the Ayrum converter station.

This project is part of the North-South Energy Corridor, designed to connect the power systems of Iran, Armenia, Georgia, and Russia. While construction of the Iran-Armenia power line is 40-50% complete, the parties have not yet begun construction of a similar power line with Georgia. The program's technical specifications were developed by the German bank KfW, which is financing the program, and FICHTNER, which won the tender to select the project consultant. According to the technical specifications, the project was divided into several stages. The first stage involved modernizing the 220 kV substation and constructing a new 400 kV substation. and construct a new overhead power line to the Georgian border. The cost of this program is estimated at €188 million.