RusHydro plans to sell its 560-MW Sevan-Hrazdan Cascade located in Armenia

RusHydro intends to sell its 560-MW Sevan-Hrazdan Cascade located on the Hrazdan River in Armenia, according to Nikolay Shulginov, RusHydro chief executive officer.

Local news outlets quote a TASS news agency report in which Shulginov made the comments during his attendance at the St. Petersburg International Economic Forum on June 2. But, the CEO would not name potential buyers or disclose RusHydro’s asking price for Sevan-Hrazdan.

Shulginov said RusHydro has been negotiating with potential buyers.

“One of them emerged but then vanished,” he said. “Another one has now popped up. We are now holding negotiations.”

The Sevan-Hrazdan Cascade is the largest hydropower generating facility in Armenia and supplies about 15% of the country’s electricity. The system, built between 1930 and 1962, consists of seven small to medium size run-of-river hydropower stations located in a 70-km-long stretch along Hrazadan River and its tributaries between Sevan Lake and Yerevan.

RusHydro said in the first quarter of 2017, electricity generation by the Sevan-Hrazdan Cascade decreased by 46.6% to 38 GWh.

Sevan-Hrazdan Cascade’s mean annual output is around 500 GWh and water from its channels supplies about 70% of the country’s irrigation for agricultural. Its seven power generation plants include: 34.2-MW Sevan, 81.6-MW Hrazdan, 224-MW Argel, 70.6-MWArzni, 100-MW Kanaker, 44-MW Yerevan-1 and 5-MW Yerevan-3.

Cascade ownership

International Energy Corp. (IEC), in May 2003, was incorporated in the Republic of Armenia and took ownership of the cascade later that year in July. IEC obtained a generation license in September 2003. Inter RAO Co., a Russian state-owned company, owned IEC until it was purchased in 2010.

In 2003, the government of Armenia gave Sevan-Hrazdan Cascade to Inter RAO Co. for US$25 million as partial payment towards a $40 million debt Armenia had to Russia from importing fuel for generating nuclear energy.

RusHydro is 67% state owned and in 2004, RusHydro was incorporated in Russia as part of the state program for power sector reform.

In 2010, RusHydro subsidiary HydroInvest acquired Inter RAO’s ownership in IEC and currently holds 90% of IEC shares.

RusHydro acquired the cascade in 2011 and in 2013, RusHydro secured a US$25 million loan from the Asian Development Bank to modernize projects in the cascade.

S&P rating

Unrelated to the sale of Sevan-Hrazdan Cascade, on June 2, RusHydro announced that it has been informed by Standard & Poor’s Global Ratings that the agency decided to withdraw RusHydro’s long-term corporate credit rating on Russia national scale. The last issued rating was ruAA+.

Withdrawal of the rating on Russia national scale is not related to and does not affect RusHydro’s credit rating on international scale, according to S&P.

The decision to withdraw the ratings was taken in light of a change in Russian law that has had the effect of making S&P Global Ratings’ Russia national scale credit ratings ineligible for regulatory purposes after July 14, 2017.

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