A Year of Working: Results

On May 13, was held the press conference of the RA Minister of Energy and Natural Resources Yervand Zakharyan, during which the Minister presented projects implemented and works done in the system during the last year.

During the reporting period, most of the works done in the field of energy were directed to the implementation of the provisions of the Presidential Decree "About Establishing of the RA Concept of the Energy Security Ensuring" and the “Armenia's Energy Security Ensuing Concept” / approved by the RA Government, in July, 2014 /ensuing from the Decree.

According to the Minister, have continued the infrastructures and lines modernization and new infrastructures and lines construction projects essential for the energy system with the international financial organizations KfW Bank, World Bank and the Asian Development Bank.

According to the agreements already achieved will be reconstructed the 220 kV "Haghtanak”, 110 kV "Charentsavan 3" and "Vanadzor-1" substations,  /the project’s cost 40,0 million US dollars/, as well as, "Agarak 2" and "Shinuhayr" substations, will begin the works of SCADA management and communication system’s second phase of introduction /the project cost of 37.0 million US dollars/. It is also planned the construction of Iran-Armenia and Armenia-Georgia 400 kV power transmission lines.

From the most important projects of the energy system the Minister touched upon the works carried out in the field of nuclear energy.

He said, the ANPP's second power unit extension agreements, signed between Russia and Armenia, already ratified, according to which, the Russian side will provide a preferential loan of 270 million US dollars(a 15-year repayment period, interest rate of 3%)  and 30 million of US dollars as a grant for the plant's operating unit extension to 2027.

Yervand Zakharyan has also noted, that in September, 2014, under the auspices of the International Atomic Energy Agency, was held the regular meeting (of donor countries) of international support, aimed to enhance the security level of the second unit of the Armenian NPP.

Today by the coordination of the National Security Council and within the framework of RA-EU cooperation is being developed the document "The Strategy of the Management of Radioactive Waste and Spent Fuel in RA".

Yervand Zakharyan stressed the importance of the construction of a new nuclear                    power plant project and informed that the negotiations with the potential investors are ongoing, including the China National Nuclear Corporation.

 Yervand Zakaryan said that the construction of a new nuclear power plant is    planned to start in 2018.

The Minister also referred to the projects implementing in the sphere of renewable energy and energy efficiency and noted that, there is a great potential in this area, which should be use targeted and effectively.

Last year were made a number of changes to the RA Law on Energy to promote the development of energy sector, according to which the compulsory purchase of electricity produced by renewable energy sources has been extended up to 20 years /except for the hydropower/.

In June, 2014, was been confirmed the participation of Armenia in the expansion plan of the renewable energy  in the low-income countries (SREP) of the Climate Investment Funds (CIF),  within the framework of which,  the World Bank will provide a grant of 8.5 million US dollars for the Geothermal exploratory drilling program.

The Investment Agreement was signed in March, 2015, which will allow to carry out projects in the energy saving sector by the Eastern Europe Energy Efficiency and Environment Partnership E5P Fund allocations.

Yervand Zakharyan also spoke about the financial situation of the energy system. According to him, at the beginning of 2014, it became clear, that the system is in a critical financial condition.

In the conditions of underpayment by the "Electric Networks of Armenia", it has significantly worsened the financial condition of the state companies.

There were involved short-term loans from the commercial banks for the fulfillment of required expenditures.

There has been developed the recovery plan already for the energy system’s companies in order to rectify the financial situation as soon as possible.

According to that, it is need to reach such a state that companies' activities be self cost recovery and through the refund of sums given outside being paid off the companies' loans and payables.

There is set a strict control on daily expenditures and procurement process in the companies by the Ministry.

As a result of the measures taken it became possible to alleviate the situation and not to endanger the normal functioning of companies, the reliable and safe electricity production.

The issues regarding the improvement of the difficult financial situation of the "Electric Networks of Armenia", as well as the improvement of investment efficiency and the quality of services provided to consumers, the reduction of energy losses and modernization of the electrical energy accounting system were discussed with "Inter RAO UES" OJSC.

The procedure of the electrical energy production, import, export and projected balance sheet of the delivery to the distributing electrical networks was approved by the order of Yervand Zakharyan, and the energy balance made up according to this will be put into the basis of the calculations of tariffs, to avoid further distractions and to prevent the emergence of damages.

There has been developed a program aimed to the investments productivity and the customer service quality improvement, the energy losses reduction and accounting system’s modernization.

The project was submitted to the RA Government, RA Public Services Regulatory Commission and "Electric Networks of Armenia" CJSC.

The "Electric Networks of Armenia" CJSC confirmed its action plan of the 2015-2018 years directed to the technological and commercial energy losses reduction based on these measures. The implementation of intended measures will ensure reduction of losses minimum of 2 percent.

From the programs carried out successfully and in time during the last year, Yervand Zakharyan has mentioned the capital repair works of the new gas and steam power unit of the Yerevan TPP, as well as the ANPP recharging, annual planned repair and the security improvement works.

Considering the development dynamics of the technologies applying in the fuel and energy market and in the energy system in recent years, as well as the regional integration expansion trends, there was the necessity to combine the energy system’s projects of strategic significance, as a result of which, they developed the document named by “The Ways of Long-Term Until 2036 Development of the Energy System”, which is important for the sector and has already being discussed with interested parties and will soon be submitted to the Government for the approval.

The Minister said, that all the mentioned programs and measures aimed at providing the uninterrupted, safe and reliable operation of the Armenia's energy system, as well as the high-quality and reliable power supply for the state needs at affordable prices everyday and in emergency situations.

Besides, the development of the energy projects will contribute to the integration of Armenia into the regional energy systems and will enable to act as a transit country for electricity.

The Minister also spoke about the situation created around "Nairit".

According to him, since March 2009, the plant does not worked and accumulated large debts, including about 5.5 billion drams for more than 2,400 plant employees salaries and fees (some of whom were in forced to stay idle), years and not worked for salaries and for the years not worked and around 6 billion drams are the compulsory fees defined by the legislation (tax liabilities, social contributions, etc.), while the bulk of the accumulated debt is of the Interstate Bank.

A part of the accumulated salaries of the employees, for the years the plant has not worked, by the assignment of the RA Government was paid by the borrowings provided to "Nairit Plant" CJSC by the companies of the energy sector.

The 1900 employees, who were unemployed from November 2014, have been discharged in order to prevent the accumulation of debt.

There were remained 480 employees, who will carry out the maintenance and safety of the plant.

As the Minister has said, currently the measures are being taken, for the finding of funds for the partially payment of Nairit’s employees salaries, as well as, for the removal of the mortgaged estate, after which, it is planned to alienate the unused equipments of the plant and to pay the unpaid salaries by this funds.

To overcome this situation, the RA Government has requested the World Bank and by its means was carried out a technical and financial study in "Nairit", the final report and recommendation of which will be presented during the coming month.

Yervand Zakharyan has also referred to the works carried out in the field of the mineral resources.

By the State Inspectorate of the RA Ministry of Energy and Natural Resources were carried out checks in about 191 mining companies during the reporting period. In the result of inspections there were been compiled 109 acts, which were been submitted to the appropriate territorial tax inspectorates of the RA Ministry of Finance.

 There have also been compiled 19 references, regarding to the assessment of the materials regarding the primary geological prospecting and materials contained in geotechnical statements, and they were been submitted to mineral resources agency.

The regulations were been drawn towards the 4 mining companies, which geological exploration works were been implemented inappropriately to the work projects and work programs. The regulations also were been presented to the mineral resources agency. 

The notice-recommendations (warning of termination of the mineral rights),   were been sent to 125 mining companies, in order to eliminate the identified shortcomings within the time prescribed, the mining industry, the 15 of which had not eliminated shortcomings specified in a notice-recommendations within the time prescribed, resulting in there was filed a petition by the inspection in the manner prescribed by law to start the process for termination of mining right.

The 96-notifications of assignments were given. As a result of inspections there have been drawn also acts and protocols concerning violations found, and have been made decisions in regard towards over the 109 mining companies with the administrative penalty, thus, during the reporting period 10,700,000 Armenian drams have been debited to the state budget.

 There were been discovered 44 cases of illegal mining activities, about which has been reported to the competent authorities in the manner prescribed.

As the Minister has said, despite the works done, there are still deficiencies and shortcomings in the field.

Today the subsoil is using unefficiently and with the gross violations of normative framework. In many cases, the works are not done or are done in small volumes in the areas provided for the study.

There had been organized meetings with the heads of the companies implementing study and extraction works of the metallic minerals in the area of the country to discuss the current situation, as well as, the issues of performing contractual obligations.  

The Minister also has noted, that the Arm WGS-84 common coordinate system is not fully embedded in the mining sector yet.

One of the existing shortcomings also is the presence of many tailings and dumps formed in the result of the mining and mineral processing, which are not studied, and this issues need for the legislative solution.

In order to regulate the problem, there have jointly signed a “Memorandum of Intents’’, between the RA Government and the “Cronimet Mining” company, “Zangezur Copper Plant” CJSC, VSEI Enterprises Group and “ALIOTIG” LLC, was been organized  an interdepartmental working group, which has developed the RA low project.

The National Strategy Project of the Management of Minerals in the Republic of Armenia has been drafted and submitted to the Commission created in the RA National Security Council.

In order to rectify the gaps and legislative inconsistencies in the existing legislation was developed the “RA Low on Amendments and Supplements to the Mining Code of the Republic of Armenia”, which was introduced to the World Bank for the opinion.

According to the Minister, the legislative reforms and programs implemented in the sphere, are aimed at the correcting the situation and the effective utilization of the mineral resources in Armenia.