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Kristine Aghalaryan

A Shady $600 Million Power Plant: Armenia Strikes Deal with Offshore Company

Armenia to provide numerous concessions to a company owned by a Georgian businessman with criminal past

In June of this year, the Armenian government struck a deal with Anaklia IEP Holding that gives the green light to the Georgian company to build and operate a 540 megawatt natural gas-fired power plant in Armenia.

The electricity produced by the plant, to be built in Vanadzor, will go to Georgia.

After the agreement was signed the ministry issued a statement that in return Armenia would offer tax breaks and guarantee supplies of sufficient gas to the plant.

Replying to a Hetq inquiry regarding the proposed project, the ministry stated: “The construction of the planned for gas electricity plant is targeted to develop our production capacities, to raise the level of Armenia’s electric security and sustainability, as well as the levels of our electricity exports.”

According to the agreement, Anaklia IEP will build two sub-stations each producing 270 megawatts of electricity.

In his reply to Hetq, ministry chief of staff Karen Ghahramanyan noted that the Georgian company will be investing all of the US$600 million.

“Anaklia IEP will be assuming all of the risks regarding the completion of the project and our government will assist in certain issues like issuing certain allowances according to the law, guaranteeing a non-discriminatory approach regarding utility hook-ups, safeguarding investments, and supplying agreed upon gas levels,” Ghahramanyan added.

The project must be completed not later than 36 months after Armenia’s Public Services Regulatory Commission issues a license and the first sub-station must be finished no later than 18 months after such issuance.

Public Services Regulatory Commission spokesperson Mariam Stepanyan has told Hetq that Anaklia Energy has still not filed a request for a license.

A new company, Anaklia Energy LLC, has been formed in Armenia to implement the project. It is 100% owned by Teymuraz Karchava who also serves as the president of the board of Anaklia IEP Holding.

Who is Teymuraz Karchava?

This Georgian businessman, registered as residing in Tbilisi, has an interesting biography. He lived in Russia until 2004 and owns the VIP National Club (a high-class casino and restaurant complex).

He was then charged with bribing a Russian finance ministry official and faking certain documents. It turns out that Karchava entered Russia using a fake passport.  He was found innocent of the bribery charge but sentence to 21 months on the fake passport charge.

According to Georgian sources, Karchava then left Russia for London. While he owns more than ten companies according to Georgia’s corporate registry, Karchava is a little-known figure there.

Karchava’s name came to light in 2009 regarding the Anaklia port project. With the backing of former Georgia president Mikhail Saakashvili, a project was launched to build a sea port in the country’s western Anaklia district, near the border with Abkhazia. But he couldn’t come through with the financing and another company took over and began the construction. By that time Saakashvili had halted the Anaklia project and floated the idea of building a port and city at Lazika.

In 2012, the Georgian government unilaterally dissolved its agreement with Karchava’s company and fined it US$100 million for violating the construction deadlines. Karchava and the Georgian government battled it out in the Georgian courts.  In an interview, Karchava claimed that the government was building a justice office and youth camp on lands envisaged for his project – the construction of transportation infrastructure.

After Bidzina Ivanishvili came to power, the new Georgian government backtracked and decided to go ahead with the Anaklia project and not Lazika.

On August 6, 2014, the Georgia government announced a tender bid for the project. On August 14 (before it was clear what company would construct the port, the Armenian government signed the natural gas electricity plant deal with Karchava’s company.

According to the Anaklia Energy plan, the electricity produced in Armenia will be supplied to this port whose future is still uncertain.

Furthermore, in the addendum to the Armenian government’s August 14 decision, the corporate address of Anaklia IEP Holding is noted as - Suite 7, 55, Park Lane, Mayfair, London, W1K 1NA, UK.

However, according to a Hetq search of the British Virgin Islands Register of Companies, Anaklia IEP is actually registered in the British Virgin Islands and was incorporated on December 27, 2013.

Controversial former Armenian energy minister involved

More surprising is the fact that the company has no recorded history of operating in the energy sector’ let alone constructing such as plant.

Despite the company’s scanty track-record, the Armenian government has guaranteed to provide one million cubic meters of natural gas after the plant has gone on line. At the time the agreement was signed as cubic meter was going for $230.82 (before VAT). The Armenian government has also agreed to postpone VAT payments for any company imports needed to build the plant. When electricity is later exported to Georgia, the Armenian government has promised to set a zero VAT rate.

Of greater concern is that the main player in this deal was former Armenian energy minister Armen Movsisyan, who now serves as a presidential advisor.

It was under his tenure as energy minister that the Nairi Rubber Plantand Vanadzor’s Kimprom wound up in the off-shore labyrinth of shady deals in the first place.

Photo (from left): Teymuraz Karchava, former Armenian Energy and Natural Resources Minister Armen Movsisyan

Nino Bakradze from Georgia contributed in the preparation of this article.

Comments (2)

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Ինչ կա զարմանալու - Рыбак рыбака издали находит ...
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Карчава молодец, везучий черт))...

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