YEREVAN (RFE/RL) — A German-Italian consortium planning to build a new thermal power plant in Armenia has secured over $200 million in funding from the World Bank Group and other multilateral lenders.

The ArmPower consortium consists of a subsidiary of Germany’s Siemens group and two Italian companies. One of them, Renco, will also act as the engineering, procurement and construction contractor for the new Yerevan-based plant that will further diversify foreign ownership in the Armenian energy sector.

Renco had supposedly launched the project with a ground-breaking ceremony in March 2017 attended by then President Serzh Sarkisian. The start of the construction was delayed, however.

Armenia’s current government froze Renco’s contract with the Sarkisian administration shortly after taking office in May 2018. It said the deal is not beneficial for the Armenian side and must be renegotiated.

The two sides signed a revised deal in November. Energy Minister Garegin Baghramian said concessions made by the Italian firm will allow Armenia to save $160 million in energy expenses over the next 25 years.

Baghramian also said that electricity to be generated by the new plant will be cheaper than power supplies coming from two other gas-powered facilities that currently meet roughly one-third of the country’s energy needs.

The Washington-based International Finance Corporation (IFC), a member of the World Bank Group, also stressed the project’s economic importance for Armenia on Monday. “A modern 250-megawatt combined-cycle gas turbine power plant in the south of Yerevan will help increase efficiency for gas-fired electricity generation,” it said in a statement.

The statement said the funding for the project includes a “$42 million loan for IFC’s own account” as well as “$121 million from IFC’s innovative syndications platform … plus parallel loans from the Asian Development Bank, the OPEC Fund for International Development, and the German development finance institution DEG.”

In addition, it said, the Multilateral Investment Guarantee Agency (MIGA), which is also part of the World Bank Group, will provide up to $39 million in loan guarantees to “help Renco manage non-commercial risks.”

“We are committed to starting the work as soon as possible to complete the commissioning of the plant within schedule,” Renco’s chief executive, Giovanni Rubini, was quoted as saying.

Rubini said in November that the construction will take just over two years.

Renco has done business in Armenia since the early 2000s. It has not been involved in the local energy sector until now, investing instead in luxury housing, hotels and office buildings. But the company has built, installed or operated power generation and distribution facilities in other parts of the world.

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