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Iran, Armenia make series of trade, investment deals

Electrical generation, gas pipelines and hydro power are all being considered, as sanctions on Iran have been dropped

By Najam Abbas


Armenia is negotiating a series of major trade and investment deals with Iran, in the wake of international sanctions being lifted.

These include:

Iran-Armenia railway

— Iranian gas transit through Armenia

— Armenia-Iran power transmission line

— North-South highway between Armenia and Iran

— Joint hydro power projects

— A cross-border railway

From September 23-25, Armenian Prime Minister Hovik Abrahamyan will discuss the Armenia-Iran Railway on a visit to China in an effort to attract Chinese investment in the project, Armenian News Agency NewsAm reported Sep.1.

The Iran- Armenia railway is planned to be built over six years, and the project cost is estimated at $3.5 billion. To complete the project,Iran has to build the Julfa (Iran)-Meghri (Armenia) portion, a 90 kilometer (55.9 mile) stretch of railway line. Iran is prepared to construct the line up to the Armenian border on its own. However, the stretch of 120 kilometers (74.6 miles) on the Armenian side requires much greater investment and resources due to the need to dig tunnels through the mountainous terrain, NewsAm reported Sept. 1, adding that the chairman of the China Civil Engineering Construction Corporation (CCECC), Wu Wanliang, has expressed interest in participating in building the southern railway of Armenia.

Iranian envoy to Yerevan, Mohammad Reis, hopes that Armenia can serve as the land link to facilitate transportation between the Persian Gulf and the Black Sea. He told journalists on Aug. 23 that an Armenian-Iranian intergovernmental commission is working on the issues related to the creation of an infrastructure for the Iranian gas transit to the West through Armenia.

Iran’s Vice President Eshaq Jahangiri is scheduled to visit Armenia in October to revive a number of joint infrastructure projects. During the visit, the timeline and other details of the construction of the third power transmission line between Armenia and Iran will be agreed upon, so that its construction could be started in late 2015 with completion scheduled in 2018. Other issues to come under discussion include the development of trade, expanding in economic relations and extending communication links, Armenian energy officials told journalists in mid-August.

Electric power

Presently, there are two transmission lines of 220 KW, each running from Iran to Armenia. Iran’s Export Bank will allocate $93 million, the Bank’s Executive Director, Ali Saleh Abadi on Wednesday told Azerbaijan’s Vest Az agency. Bahman Salehi head of the Iranian Water and Power Company said the first batch of equipment for power line will be delivered to Armenia, Armenia’s Arka news agency reported on Aug 28. The 400 KW transmission line, costing $160 million, is intended to increase the ability to meet the electricity needs of the two countries.

“Constructing this line will allow an increase of the electricity transmission capacity between Iran’s and Armenia’s energy grids from 350 MW to 1,000 MW, Armenian energy expert, Emil Sahakyan, told the Aravot newspaper on Friday, citing government sources.

According to the Armenian Energy Minister, Yervand Zakharyan, Armenia will link up with the Georgian electric grid through the Georgian border station at Aryum. This has been financed by loan agreements with European donors in a project to build a 500 kilowatt transmission line with substations that will allow Armenia to serve as a hub for electricity transit between Georgia, Armenia and Iran.

The second tier of Iranian-Armenian cooperation would allow Armenia to serve as a passage route for Iran in its partnership with the Eurasian Economic Union. The EEU was formed in January 2015 by Russia, Belarus, Kazakhstan and Armenia, while Kyrgyzstan also joined in May 2015. Among the five members of EEU, Armenia has a 44 kilometer (27.3 mile) direct land link with Iran while Kazakhstan and Iran share the Caspian Sea. Andrey Slepnev, minister of trade under the Eurasian Economic Commission [EEC], told journalists Wednesday that the EEC is expected to start this autumn a joint study with Iran regarding prospects of establishing a Free Trade Zone. Slepnev also discussed those prospects with Armenian business circles recently.

Commentators in Armenia anticipate strategic openings which their contiguous borders with Iran may bring for them in the coming years. Gagik Sargsyan wrote in the Caucasian Institute report in April that as a landlocked country Armenia pins hopes the prospects of having a new rail link connecting to Iran, which will put Armenia along the route connecting the Persian Gulf and countries of Central Asia, Middle East, India and China. Armenia has road connections with Iran which serve as an important link to enable Georgia’s economic cooperation with Iran.

Arsen Ghazaryan, chairman of the Armenian Chamber of Commerce and Industry, emphasizes that it is in the interest of both Iran and Armenia to seriously consider the development of the North-South Corridor which foresees (a) the establishment of rail link between the two countries, and, (b) the North-South highway connecting Iran with Armenia and Georgia, wrote Sputnik news agency quoting told Sputnik Armenia on Aug.5.

Gas pipeline

Armenia is also seeking to diversify its sources to receive secure energy supplies. As option one, the arrangement is the Russian gas pipeline linking Armenia through Georgia, while the second option is the Iran- Armenia pipeline. The Armenian president was in Moscow on Monday to secure Russian gas supplies for the winter on a discount, the RIA Novosti agency reported. In recent years,Iran has been swapping gas in exchange for electricity supplies from Armenia. The two countries intend to expand their gas-for- electricity exchange program over the next three to five years.

Iran is also trying to revive its hydro power generation plant project with Armenia, to provide increased energy resources as the Iranian industries gradually increases their activities. In this context, another project in the pipeline is the Megrhi Hydro-electric power station on the Araks River between Iran and Armenia. The construction of the 130 MW capacity Megrhi power project is estimated to cost $350 million which will be extended by Iran’s Export Development Bank in exchange for a supply of 800 million KW hours of electricity annually for fifteen years, Vest Az agency reported on Sept 2.

At present Iran exports electricity to six countries. It has contiguous borders with Turkey, Armenia, Azerbaijan, Pakistan, Afghanistan, and Iraq. At the same time it also imports electricity from Turkmenistan and Armenia, Tehran Times reported Aug 13.

According to Houshang Falahatian, Iran’s deputy energy minister, Iran aims to triple its annual electricity exports from the currently 8 billion kilowatt hours (Bkwh) to 25 Bkwh in the next three years. Iran expects that, once it gets the increased capacity transmission lines from Armenia, they can also be potentially connected in the coming years to the electricity grid with Georgia and even Russia.

Anadolu Agency

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