US embassy cable - 05YEREVAN728

UNCLAS SECTION 01 OF 02 YEREVAN 000728 
 
SIPDIS 
 
COMMERCE FOR 3150/PBRADLEY/BSMITH 
COMMERCE FOR 4201/ITA/IEP/OEERIS/BISNIS/EHOUSE 
EMBASSIES - PLEASE PASS FCS 
DEPT FOR EUR/CACEN, EB/CBA 
ANKARA ALSO FOR CFC/ SNYDER/BALLINGER 
PASS TDA-STEIN, OPIC, EXIM-TUMMINIA/PANARO 
 
E.O. 12958: N/A 
TAGS: KTDB, BBSR, BEXP, BTIO, AM 
SUBJECT: (IMI) ARMENIA, COMMERCIAL NEWS SUMMARY: 
APRIL 2005 
 
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SUMMARY 
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1.  This cable outlines press reporting on commercial 
developments in Armenia for April 2005.  Major 
headlines include: 
 
-- EBRD to double its project-financing program in 
Armenia during 2005; 
 
-- Japan finances modernization of the Yerevan Thermal 
Power Plant; 
 
-- Germany to lend 7.5 million euros for the 
development of Armenia's renewable energy; 
 
-- The Export-Import Bank of the United States expands 
support to Armenia; 
 
-- Germany's Bayerische Landesbank to fund an upgrade 
of an Armenia-based foil mill; and 
 
-- Armenia's 2004 foreign investment figures. 
End Summary. 
 
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EBRD TO DOUBLE FINANCING IN ARMENIA DURING 2005 
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2.  The European Bank for Reconstruction and 
Development (EBRD) will double its project-financing 
program to 15 million euros in 2005, according to the 
EBRD regional director.  The EBRD plans to sign 12 
contracts with local private sector companies involved 
in the energy, industrial, agricultural and banking 
sectors. 
 
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JAPAN FINANCES MODERNIZATION OF YEREVAN POWER PLANT 
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3.  The Government of Japan will provide a USD 150 
million loan to Armenia to build a new unit at the 
Yerevan Thermal Power Plant.  The loan, repayable over 
40 years, will finance the purchase of machinery and 
equipment, construction work and consulting services. 
The Japan Bank for International Cooperation will 
oversee the entire process.  The Government of Armenia 
expects that by 2009 the new gas-fired facility will 
replace the aging Yerevan Thermal Power Plant that 
currently produces a large part of Armenian 
electricity. 
 
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GERMANY TO LEND 7.5 MILLION EUROS FOR RENEWABLE ENERGY 
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4.  Germany will provide 7.5 million euros in loans to 
help develop Armenia's renewable energy.  According to 
the Armenian Ministry of Finance and Economy, over the 
next two years, Germany will provide 6 million euros to 
finance the modernization of small hydro power plants, 
and 1.5 million euros to finance consulting and 
training services.  The agreement also envisages a 
German-Armenian investment fund to finance Armenia's 
small Hydro Power Plants through local commercial 
banks. 
 
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U.S. EXPORT-IMPORT BANK EXTENDS SUPPORT TO ARMENIA 
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5.  The Export-Import Bank of the United States (Ex-Im 
Bank) announced the extension of its loan guarantee, 
export credit insurance and direct loan programs to 
Armenia.  The Bank adopted changes to its policy in 
Armenia, effective March 25, 2005, based on risk rating 
changes made by the U.S. Interagency Country Risk 
Assessment System (ICRAS).  Ex-Im Bank is now available 
in Armenia for short- and medium-term programs in the 
public sector. 
 
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GERMAN BANK TO FUND UPGRADE OF ARMENIA-BASED FOIL MILL 
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6.  Germany's Bayerische Landesbank lent Russia's 
leading aluminum producer RUSAL 46.6 million euros to 
finance an upgrade of the RUSAL Armenal Foil Mill, a 
Yerevan-based subsidiary of RUSAL.  RUSAL and German 
export loan agency Euler Hermes are the guarantors of 
the loan.  In October 2004, RUSAL signed an agreement 
with German rolling mill manufacturer Achenbach to 
commence Armenal's upgrade.  The first stage of the 
upgrade project is expected to be complete by autumn 
2005.  The total investment in the mill's upgrade is 
expected to be 70 million euros. 
 
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ARMENIA'S 2004 FOREIGN INVESTMENT FIGURES 
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7.  According to the Armenian Ministry of Trade and 
Economic Development the total amount of foreign 
investments in Armenia in 2004 grew by 17.9 percent to 
USD 467.8 million.  Foreign direct investment in 2004 
increased by 47.7 percent to USD 226.7 million.  Among 
the largest foreign investors are Greece (USD 75 
million), Russia (USD 67 million), Germany (USD 38 
million), France (USD 32 million), Argentina (USD 30 
million) and the United States (USD 24 million). 
EVANS