Publication: Eurasia Daily Monitor Volume: 3 Issue: 45

Yerevan seeks investors to replace Metsamor nuclear plant

The Armenian government has pledged to press ahead with the realization of its extremely ambitious plans to build a new nuclear power station in place of the aging Metsamor plant, which is due to be shut down by 2016. Underlining the seriousness of its intentions, it has asked parliament allow it to start looking for foreign and/or private investors interested in participating in the project. Government officials insist that continued use of atomic energy for peaceful purposes is vital for the landlocked country’s energy security, dismissing concerns expressed by environment protection groups.

The Metsamor plant was built in the late 1970s and closed for safety reasons in the aftermath of the catastrophic 1988 earthquake that devastated much of northwestern Armenia. The Soviet-era facility, located about 30 kilometers west of Yerevan, was brought back into service in 1995, ending severe power shortages suffered by the newly independent state for several consecutive years. It currently accounts for nearly 40% of Armenia’s electricity output.

The European Union and the United States tried in vain to prevent the first-ever reactivation of a nuclear plant in the world, saying that Metsamor’s sole operating reactor fails to meet modern safety standards. The EU considers the VVER 440-V230 light-water-cooled reactor to be one of the “oldest and least reliable” of 66 such facilities built in the former Soviet Union and Eastern Europe. The EU and the United States had essentially no choice but to acquiesce Metsamor’s reactivation and help Armenia to significantly boost its safety. They have each spent tens of millions of dollars for that purpose over the past decade.

Officials from the International Atomic Energy Agency (IAEA) also regularly inspect the Armenian nuclear plant. “I think the cooperation [between Armenia and IAEA] has been good,” the head of the United Nations nuclear watchdog, Mohamed ElBaradei, said during a visit to Armenia in July 2005. “I think there has been a commitment to continue to strengthen safety at Metsamor.” ElBaradei added that the Armenian authorities intend to keep the reactor operational “for around ten years,” a time frame that has since been repeatedly reaffirmed by the Energy Ministry in Yerevan.

The administration of President Robert Kocharian successfully withstood EU pressure to decommission the plant in 2004. Whether the Europeans approve of its desire to have a new, more modern plan is not yet known. “The European Union has only been informed about our plans. We have had no discussions on it,” Deputy Energy Minister Areg Galstian said in an interview with the Hayots Ashkhar daily published on March 2.

Galstian and other government officials estimate that construction of the new nuclear plant will cost at least $1 billion, a sum that roughly equals Armenia’s state budget for this year. They admit that the project cannot be implemented without foreign participation, which they say is rendered impossible by the Armenian government’s legal monopoly on nuclear energy.

The government asked parliament earlier this year to remove a clause upholding that monopoly from an Armenian law on energy. However, it was forced to temporarily withdraw the proposal on March 1 after facing unusually strong resistance from the National Assembly, which is dominated by Kocharian supporters. Many lawmakers, including speaker Artur Baghdasarian, whose Orinats Yerkir Party is a member of the governing coalition, worry that the proposed amendment is a mere prelude to Metsamor’s partial or full sale to Russia. Unified Energy Systems, Russia’s state-run power monopoly, was already granted control over Metsamor’s finances in 2003 in return for clearing its $40 million debt to Russian suppliers of nuclear fuel. The concerns publicly voiced by Baghdasarian and his colleagues reflect a growing public sense that the Russian presence in Armenia’s energy sector is already disproportionately strong and should not turn into a stranglehold.

Government officials were at pains last week to allay these fears, ruling out Metsamor’s sale. “That amendment is meant for the new nuclear plants to be built after its passage and has nothing to do with Metsamor,” Energy Minister Armen Movsisian assured reporters. “I believe that presenting the opposite to the people is populism.”

It is unclear which foreign country or firm might be interested in making large-scale investments in the would-be Armenian plant. Galstian, Movsisian’s deputy, acknowledged that no potential foreign investor has so far expressed readiness to participate in the project. He said the government would make public its nuclear energy strategy in greater detail “in two or three months.”

It will hardly convince local environmentalists, who have long argued that a country located in a seismically active zone must not have any nuclear facilities in principle. They say the authorities should instead increasingly rely on renewable sources of energy such as wind, the sun, and especially water. According to Energy Ministry estimates, those sources could potentially meet as much as 70% of Armenia’s energy needs. Hydroelectric plants built on the country’s fast-flowing mountain rivers already provide more than a quarter of Armenian electricity. Building more such plants would clearly cost far less than replacing Metsamor with another nuclear facility. The Kocharian administration has yet to explain why it prefers the latter option.

(Hayots Ashkhar, March 2; Hayastani Hanrapetutyun, March 2; RFE/RL Armenia Report, February 28; July 28, 2005)