IFC and MIGA, members of the World Bank Group, are arranging a landmark $202 million debt finance and guarantee package for Armenia’s first greenfield project-financed power plant, to help bolster the country’s power generation and drive economic growth.
Two-thirds of electricity in Armenia comes from imported fuel. The country relies on dated low-efficiency thermal power plants to generate a significant part of its electricity. A modern 250-megawatt combined-cycle gas turbine power plant in the south of Yerevan will help increase efficiency for gas-fired electricity generation, producing up to 2,000 gigawatt hours annually and ensuring a reliable power supply. It will also help lower gas costs and cut greenhouse gas emissions.
IFC is the lead arranger of the package, which includes a $42 million loan for IFC’s own account and $121 million from IFC’s innovative syndications platform, the Managed Co-Lending Portfolio Program, plus parallel loans from the Asian Development Bank, the OPEC Fund for International Development, and the German development finance institution DEG (Deutsche Investitions-und Entwicklungsgesellschaft mbH). MIGA is providing a guarantee of up to $39 million to help Renco Spa manage non-commercial risks.
The funding will go to ArmPower, established by a consortium comprising German Siemens Project Ventures GmbH (part of Siemens Financial Services), Italian Renco Spa, and SIMEST Spa (CDP Group), an Italian development finance institution.
Renco will also act as the engineering, procurement and construction contractor for the plant. Its CEO, Giovanni Rubini, said: “Renco has been present in Armenia for 20 years and we are very satisfied to have reached a critical milestone in the development of a project of strategic importance for the technological and energy growth of the country. We are committed to starting the work as soon as possible to complete the commissioning of the plant within schedule.”
“Reliable electricity ensures access to basic services and is an important engine of economic growth, job creation, and poverty reduction. This project is part of the World Bank Group’s fundamental efforts to help ensure a reliable power supply in Armenia,” said Jan van Bilsen, IFC Regional Manager for the South Caucasus. “We are committed to continue seeking opportunities to strengthen the country’s power sector to drive further development and growth.”
The project is the result of joint efforts within the World Bank Group, following World Bank-supported reforms in Armenia’s power sector that helped establish an independent regulator and diversify ownership of assets. The World Bank also funded an upgrade of the country’s aging and outdated power transmission network.
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