Armenia secures funding to modernise controversial nuclear reactor

By bne IntelliNews November 21, 2014

bne -


The Armenian government has secured a Russian loan to extend the life of Metsamor, the controversial nuclear power plant which covers 40% of the country’s energy needs. Russia will lend Armenia $270mn for repairing and re-equipping the second unit of the plant, which will extend the facility’s operation from 2016 to 2026.

The finance minister, Gagik Khachatryan, stated that the loan (flagged a few months ago but only confirmed on November 19) is granted for a period of 10 years at a rate of 3% per annum, with the first payment scheduled for January 15, 2019.

On November 18 the facility was reconnected to the national power grid following a 45-day break to improve security and for refuelling, an operation that the Energy and Natural Resources Yervand Zakharyan said  cost $7mn.

Metsamor stands out in a barren landscape some 30km from the capital Yerevan, a living though decrepit reminder of the USSR’s nuclear adventure. Built in the 1976 in a highly seismic area, the plant was closed in 1989 following a deadly earthquake measuring 6.9 on the Richter scale in 1988 that killed some 25,000 people and devastated much of northern Armenia. 

One of its reactors was reactivated in 1995 amid an energy crisis brought on by the 1988-1994 war with Azerbaijan, and has controversially remained open ever since. Natural resources-deprived and with closed borders with Turkey and Azerbaijan, Armenia remains heavily dependent on Metsamor, which, as a testament to its reputation, means “black swamp” in Armenian. 

The plant's old age and its location have fuelled debate over whether the facility should be shut down. In fact, Armenia is the last country outside of Russia that still uses a Chernobyl-type Soviet-model pressurized water reactor dating back to the 1960s.

The European Union (EU) has repeatedly asked for “the earliest possible closure” of the facility, arguing that the plant is a threat to the region. In 2000 it offered €138mn to the Armenian government to support the facility’s decommission, but Yerevan rejected the offer.

Calls for the facility’s closure faced opposition by the government, which argues that the plant has undergone considerable upgrades and had been passed as “acceptable” by the International Atomic Energy Agency (IAEA). The  IAEA mission in 2011 also stated that the plant can withstand a 8 magnitude earthquake.

However, the Armenian government is also seeking funding, estimated as much as $5bn, for its plan to construct a new facility that can operate at double the generation capacity of the Soviet-built plant. 

Armenia decision to extend the plant’s lifespan on September 13, 2013 sparked public outcry both nationally and internationally.

“The longer the reactor works, the more fragile it becomes; it loses flexibility, and the accident risk increases,” argued Hakob Sanasarian, chairman of Greens Union of Armenia Chair. He labelled the decision to prolong Metsamor’s life “sabotage against the nation”. Former Prime Minister Hrant Bagratian also voiced concerns and stated that Armenia could “face a danger worse than Chernobyl one day".



Related Articles

COMMMENT: Great challenges for Eurasia call for decisive solutions

Juha Kähkönen of the IMF - The Caucasus and Central Asia (CCA) region continues to navigate a wave of external shocks – the slump in global prices of oil and other key commodities, the slowdown ... more

IMF calls for Central Asia to tighten monetary policy

Naubet Bisenov in Almaty -   Caucasus and Central Asian (CCA) countries need to tighten their monetary policy to anchor inflation expectations, but excess tightening may weaken financial ... more

COMMENT: Once I lived the life of a millionaire…

Peter Szopo of Erste Asset Management -   No, the title of this column is not the first line of the autobiography of an erstwhile emerging markets investor – although it could be. Somebody who ... more

Notice: Undefined index: subject_id in /var/www/html/application/controllers/IndexController.php on line 335