Disputes over the legitimacy of the sale of Armenia's Vorotan dam cascade to U.S. company Contour Global Hydro Cascade (CGHC) continue in Armenia. The three-level dam cascade on the River Vorotan (Syunik Province) will have an output of 404.2MW, an average of 1.16 billion kilowatt hours annually. The Armenian government and CGHC signed a contract: the U.S. company will pay $180 million for the cascade in six years and $70 million of investments for its modernization. Any of the sides has the right to cancel the deal if they fail to implement it in 75 days.
The deal was supposed to be signed in mid-April. Justice Minister Ovannes Manukyan said that the process was slow because the list of facilities for privatization needed clarifying. Absence of explanations provoked speculations about foreign influence. U.S. Ambassador to Armenia John A. Heffern warned Armenia about the consequences of refusing to sign the document. In his words, it would become a signal for Western investors. Realization of the document would, on the other hand, demonstrate the opportunities and potential of Armenia in making deals, proving the readiness of Armenia for major contracts.
Grayr Manukyan, an economic columnist of 1in.am, is adamant that the real reason for the problems with the contract is pressure from the Kremlin. The latter, in his words, does not want the U.S. to strengthen its economic influence in Armenia.
The key dispute is the legality of the deal, the cascade was sold without parliament's approval. The Vorotan cascade was not on the list of enterprises for privatization and the government skipped the parliamentary procedure when signing it. The vagueness of the deal is so obvious that two Armenian ex-presidents have spoken out against it. "By selling the Vorotan cascade, Armenia lost its sovereignty. It is nothing but a crime of the century," said Levon Ter-Petrosyan. According to Robert Kocharyan, the best energy asset of Armenia was being sold in a very dubious manner: "The people responsible for the sale will hardly have a chance to avoid responsibility. It is a very ambiguous acquisition for the purchaser too."
Experts explain that the economic activation of the U.S. and interest of American business in strategic energy facilities of Armenia is a response to Armenia's plans to join the Eurasian Economic Union. The logic of foreign players is fair, it is aimed at preserving and expanding influence in Armenia. The only thing unclear is the logic of Yerevan. What interests do the Armenian authorities have?
Alexander Karapetyan, an ex-member of the Energy Ministry, said that the government had decided to refrain from privatization of the Vorotan cascade, a regulator of the energy system, according to studies of experts in the 2000s. "If the facility operates to make profit, it will not regulate peaks and falls in the energy system properly. Its output depends on the needs of the system. It is the key facility of our system, it has great strategic value."
In this case, the foreign political element does not serve Armenian interests, which require the Vorotan dam cascade to remain under state control.
