US Ambassador John Heffern: Energy Deal With U.S. Firm ‘Critical For Armenia’

YERVAN (RFE/RL) — John Heffern, the U.S. ambassador in Yerevan, has expressed hope that the Armenian government will not annul the planned sale of Armenia’s largest hydroelectric complex to a U.S. energy company.

In an interview with the 1in.am news service, Heffern warned that scrapping the $250 million deal finalized in January would send a “very unfortunate signal” to big Western investors and call into question Armenia’s ability to do business with them.

Under the takeover agreement signed on January 29, the New York-based group ContourGlobal was to pay $180 million for three hydroelectric plants making up the Vorotan Hydro Cascade and invest another US$70m in their modernization. The takeover, strongly welcomed by the U.S. government, was supposed to be formally completed by mid-April.

However, Armenia’s new Prime Minister Hovik Abrahamian, who took over on April 13, put the brakes on the deal, demanding changes in its terms. The Armenian press has since been rife with speculation that Russia is pressing Yerevan to cancel the deal and sell Vorotan to a Russian energy company instead.

Davit Harutiunian, the chief of the government staff, denied such claims on June 26. Harutiunian told RFE/RL’ Armenian service (Azatutyun.am) that the Armenian side wants to renegotiate the deal only because it believes that some of its provisions run counter to Armenian law. He said Abrahamian assured Heffern at a recent meeting that Yerevan remains “interested in selling the plants to the American company.”

Heffern would not be drawn on contentious details of the Vorotan deal criticized by Armenian opposition parties and former President Robert Kocharian, arguing that the U.S. Embassy in Armenia is not a party to the accord. Still, he described ContourGlobal as a “responsible company” and stressed the importance of what would be the first-ever major Western involvement in the Armenian energy sector.

“It’s a complicated deal because it’s a big deal. It’s the first Western investment in the Armenian energy sector,” Heffern told 1in.am. He said he therefore hopes that the deal will go through.

Heffern also emphasized that Vorotan’s planned sale is a “different kind of a deal” compared to energy agreements concluded by the authorities in Yerevan until now.

Those agreements have left much of Armenia’s energy sector under the control of Russia’s Gazprom and RAO Unified Energy Systems giants. The latter have acquired most of their Armenian assets through highly controversial swap arrangements, in return for Moscow writing off Yerevan’s debts and supplying Russian natural gas to Armenia at discount prices.