news - FMO to strengthen Armenia's renewable energy sector

FMO supports the first major international financing for Armenia’s power sector by providing $65 million for a $140 million financing package arranged by IFC, a member of the World Bank Group, for the Vorotan Hydropower Cascade. The financing aims to help strengthen the country’s renewable electricity sector.

The ContourGlobal Hydro Cascade CJSC financing also includes a loan of $45 million from IFC and $30 million from DEG, the German Investment and Development Corporation. The company is a subsidiary of Contour Global, an international power-generation company that acquired the 404-MW Vorotan Cascade, one of the country’s main power generating facilities, in 2015.

The project supports Contour Global’s acquisition and an important rehabilitation program for the next 6 years of the Vorotan hydro complex located on the Vorotan River in Southern Armenia. Vorotan includes three hydropower plants and contributes to around 15 percent of the country’s electricity generation: these hydros also provide for important grid stability services.

Ara Hovsepyan, General Manager of ContourGlobal Hydro Cascade, said, “We are very pleased to have completed these innovative long-term financings for Vorotan and we would like to thank our partners at IFC, FMO, DEG and for their commitment to the project.  We would also like to thank the Government of Armenia for their work to facilitate these transactions.  These financings provide a stable, long-term capital structure which allows us to continue our work making sure that the operational performance, safety, reliability and efficiency of this plant are maintained at world-class standards.”

“With this rehabilitation programme for the Vorotan hydro complex being made possible, critical renewable generation assets of Armenian’s energy matrix will be upgraded and improved during the next six years, ensuring a higher qualitative performance for the next decades. We are grateful to all the Armenian authorities involved in developing and supporting this program and the overall financing of the Vorotan transaction. At FMO, we are proud to work again with Contour Global on one of their renewable energy investments, which are based on a professional, long term commitment while complying with world-class operational, environmental and social standards”, added Mrs. Linda Broekhuizen, Chief Investment Officer of FMO. 

“Supporting renewable energy is IFC’s top priority and is part of our commitment to address climate change,” said Wiebke Schloemer, IFC Regional Industry Head of Infrastructure for Europe, the Middle East and North Africa. “Globally, we have seen how private businesses can help spur the development of energy infrastructure. The upgrade of Armenia's Vorotan complex will help provide clean energy for tens of thousands of people. This investment is also expected to open the door to additional private investment in the country’s vital infrastructure.”

Imported fuel covers around 90 percent of the Armenia’s energy needs. The hydro power project is expected to bolster Armenia’s supply of locally-generated renewable energy, considered key with demand for power on the rise. The financing is expected to help generate around 1,150 gigawatt hours of electricity annually, which is enough to provide power to around 450,000 residential customers. The project is also expected to help combat climate change, preventing the release of greenhouse gases (compared to thermal generators).