The American Contour Global buys the complex of HPS’s of Vorotan

During the recent session of the RA committee on regulating public services it was agreed to sell Vorotan’s HPS’s complex to the American Contour Global company. The latter will pay approximately 180 million USD. The American company will own the HPS’s of Spandaryan (built in 1989), Shamb (built in 1979), Tatev (built in 1970) as well as premises belonging to the complex. The complex is quite worn out and needs to be reconstructed. The Ministry of Energy previously reported that the parties were discussing possible sale of a part or the whole package of shares of the Vorotan chain of HPPs to Contour Global, which was going to invest in modernization of the chain. The operating lifetime of the state-owned CJSC Vorotan chain of HPPs launched 40 years ago has almost expired. The KfW Bank (Germany) has lent 51 mln EUR to upgrade the chain. The Minister says that full modernization requires $200 mln. The designed capacity of the chain is 400 MW. In Jan- Sept 2013 Vorotan chain of HPPs reduced the power output by 9.7% to 733.6 mln KW/h versus 812 mln over the same period of 2012. Contour Global was founded in 2005 by current CEO Joseph Brandt, along with Reservoir Capital Group, a $4 billion USD New York-based investment fund. In its short 6-year history, CG has grown through Greenfield and acquisitions and has become an important player in the energy markets. Today, the company is uniquely positioned to continue its expansion through various ongoing growth projects. Contour Global owns 33 power plants in 17 countries. The company has 1,650 employees. Vorotan has always been considered as a negotiation object during the Armenian-Russian gas relations. Most probably, it wasn’t very tempting to the Russians. Certain experts connect the interest of the US to Vorotan with Armenia’s decision to join the Customs Union.

However, having known how thoroughly Americans have been studying the terms of purchase we can assume that the decision has been made much sooner than Sargsyan’s statement on the Customs Union. American companies prior to making investments take into account the study of the Overseas Private Investment Corporation, OPIC, adjacent to the US government. And it takes at least 2-3 years for the Corporation to come up with its conclusion and its guarantees to invest. It is not ruled out that the efforts of Armenia to integrate with Europe also affected the decision of the US. By the way, this is the second purchase of the US based on OPIC conclusion. The first one was Armenia Marriott Hotel.

 By G. Khachatryan