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Gazprom Plans to Export Electricity to Georgia

Gazprom, reduced the price of gas supplied  to  Armenia by 13%, received guarantees of exports of electricity generated by  Razdan thermal power station to  Iran and Georgia.

In addition, the power plant received sales guarantees for generated power  in the country, although transmission lines  have not yet completed.

Yesterday, Alexander Novak, Minister of Energy of the Russian Federation, and Yervand Zakharyan, Minister of Energy of Armenia, signed a protocol of changes in the intergovernmental agreement on prices for Russian gas reached in 2013. According to the protocol, the base price of gas is reduced from $ 189 to $ 165 per 1 thousand cubic meters. However, the dollar price seems high to Yerevan:  yesterday, Armenian President Serzh Sargsyan at the meeting with Vladimir Putin said that “during the crisis currency fluctuations very painfully affect the rates.” But reduced   the price “Gazprom” managed to get  guarantees of its energy assets efficiency in the country. The protocol on the terms of sale of shares of “Gazprom Armenia” (100% owned by “Gazprom”) signed in 2013 has been amended, on which the company will receive priority access to access to 400 kV “Armenia – Georgia” power transmission line after its commissioning. But before the transmission line is commissioned, Yerevan guarantees “Gazprom Armenia” sales of at least 1 billion kilowatt hours per year, including 500 million kilowatt-hours on the domestic market. The Armenian government approved this amendment on August 18.

Gazprom in 2013 completed construction of the fifth unit of the 480 MW Hrazdan thermal power station. However, the internal energy market in Armenia is not so attractive – primarily due to difficulties with the tariffs. The government’s attempt in the early summer to raise electricity prices by 6.93 drams ($ 0,015)  per 1 kWh provoked spontaneous demonstrations in Yerevan and put the country on the brink of a political crisis. The government had to promise to compensate for the difference between the new and old rates.

Now the tariff for electricity generated by the fifth unit of Razdan TPP  is 40,1 drams ($ 0.083) per 1 kWh. While exports to neighboring countries for the local generation is hindered: electrical power  is delivered  only to  Iran, but in the framework of a barter agreement. Yerevan TPP working on Iranian gas, sells energy  to Iran at the rate of 3 kWh per 1 cubic meter,  in 2014 in total 1.16 billion kWh was exported. The thermal power station sells  excess electricity  at a very low price in the domestic market. At the same time,  in 2014 consumption in Georgia increased by 6.2% to 10.77 billion kWh, but the local energy system is based on hydroelectric power stations, so the country is experiencing power shortages as well as excess . Now “Inter RAO” earns  from exports: in 2014 a total of 627 million kWh was exported to Georgia from  the Russian Federation, while  imports amounted to 160 million kWh.