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Purchase and Sale of Electricity, Cooperation in the Field of Joint



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The Main Aspects And Problems Of Armenia

4. Purchase and Sale of Electricity, Cooperation in the Field of Joint 
Production: Goals and Challenges 
Another important area of cooperation in the field of energy is the purchase, sale, 
exchange, and joint production of electricity. One of the main agreements in this 
area between the Republic of Armenia and the Islamic Republic of Iran was signed 
in 1995. The document provided for the construction of a joint hydroelectric power 
station on the Araz River. At the same time, an agreement was reached on the 
construction of the Iran-Armenia high-voltage transmission line. As a result of the 
technical work arising from the contract, in early May 1997, the station connecting 
the power systems of the two countries was put into operation. As a result, by the 
end of 1997, Armenia received 330 million kWh of energy from Iran. 
Electricity issues were also discussed during Armenian Energy Minister Armen 
Movsesyan's visit to Iran in early October 2003. After a meeting with Iranian 
Energy Minister Neutral, a memorandum was signed on the construction of a joint 
hydropower plant on the Aras River (
Azerbaycan Dış İşleri Bakanlığı Arşivi, 
2003/8, p.38). The memorandum reaffirmed the agreement on equal payment of 
funds for the construction of the plant. However, it was not ruled out that the parties 
would turn to foreign sources of funding in case of financial problems. The analysis 
of the processes that took place at that time proves that this approach reflected the 
position of Armenia. Thus, during the period in question, the price of crude oil on 
world markets was rising rapidly, and the financial capacity of the Islamic Republic 
of Iran was strengthening. Thus, in the budget of the Islamic Republic of Iran, the 
price of a barrel of crude oil for March 2003-March 2004 was estimated at $ 21. 
The war in Iraq has pushed up the price of crude oil on world markets, and the IRI's 
foreign exchange reserves have been highly profitable (
Azerbaycan Dış İşleri 
Bakanlığı Arşivi, 2003/8, p.36). During the discussions in this direction, Armenia 
tried to pay for the construction by Iran. Because the economic situation of this 


Çankırı Karatekin Üniversitesi 
İktisadi ve İdari Bilimler 
Fakültesi Dergisi 
Cankırı Karatekin University 
Journal of the Faculty of Economics 
and Administrative Sciences 
country was getting worse day by day, foreign debts were increasing. The Islamic 
Republic of Iran, on the other hand, did not consider such projects to be 
economically viable, and the steps taken were simply aimed at keeping Armenia 
for various purposes. This is since Iran has not fully assumed the financing of such 
projects. In this case, Armenia kept open the issue of attracting funds for future 
construction from the Russian Federation by including the issue of a third party in 
the memorandums. 
The parties announced the signing of an agreement on the project next year. The 
Armenian side proposed to build a hydroelectric power plant on the Aras River at 
the expense of Iran and to repay the debt incurred after its commissioning with 
electricity produced at this station. During a meeting with Iranian Minister of 
Economy and Finance Tahmaseb Mazaheri on October 9, 2003, Armenian Energy 
Minister Movsesyan called on Iran to closely participate in energy projects in the 
country, noting the possibility of Iran's participation in the establishment of a power 
transmission network in Armenia (
Azerbaycan Dış İşleri Bakanlığı Arşivi, 2003/8, 
p.37). However, as noted above, these projects were more important to Iran as an 
instrument of political pressure. The agreement on the exchange of electricity, 
signed in 2003 by the President of the Islamic Republic of Iran Mahmoud 
Ahmadinejad and Robert Kocharian, should be evaluated in this regard. The Islamic 
Republic of Iran was well aware that every rial invested in Armenia had long been 
lost, and that such projects were not economically viable. One of the archival 
documents reads: 

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