Construction works to modernize Meghri border crossing expected to start by the end of 2022 – EBRD President’s interview

YEREVAN, SEPTEMBER 20, ARMENPRESS. The construction works aimed at modernizing the Meghri border checkpoint of Armenia are expected to start by the end of this year. The project is implemented with the support of the European Bank for Reconstruction and Development (EBRD) and the European Union. The construction will finish within three years. New buses to be purchased with EBRD’s support will arrive in Yerevan in the first half of 2023.

EBRD President Odile Renaud-Bassoanswered to the questions of ARMENPRESS about the investments, major projects implemented by the Bank in Armenia.

- Mrs. Odile Renaud-Basso, how do you assess cooperation with Armenia? Many joint projects are being implemented, in which fields do you see work to be done in Armenia, and what new projects are expected? So far, how many projects have been implemented in Armenia with the support of the bank and at what cost?

- This year, we are celebrating 30 years of operations in Armenia, where we have achieved a lot since opening our resident office in 1992. To date, the EBRD has invested more than €2 billion in 201 projects, 91% of which investment is in the private sector. In Armenia, we are focusing on supporting the financial sector development, transport infrastructure improvement, and policy support to improve business environment through better corporate governance, and more active public-private dialogue facilitated by the Investment Council of Armenia. We are also supporting the development of value-added industrial companies and invest in sustainable energy projects. Through our investments in Amber Capital (EU-Armenia SME Fund), we are actively involved in kick-starting private equity businesses. Together with Armenia’s financial sector, we aim to further improve access to finance, extending our traditional SME and micro-finance lines to rural areas. We are also committed to developing local money and capital markets. Where possible, we will aim to utilize local currency financing.

During my visit to Yerevan, we signed loans to our partner banks for on lending to small and medium-sized enterprises under the small and medium-sized enterprise (SME) competitiveness programme. We are also set to provide a loan for on-lending to women-led micro, small and medium-sized enterprises (MSMEs). Just before my visit, the Bank provided a loan to Telecom Armenia for energy efficient investments that are improving access to fast and reliable internet for 450,000 households. As we speak, the Bank is disbursing a loan to Yerevan municipality to purchase greener, more efficient and modern buses for the city.

- Recently, with the support of the European Bank for Reconstruction and Development, a new bridge was opened in Bagratashen. It became known about the reconstruction and modernization project of Meghri border crossing, what do you say in this regard, how do you assess the implementation and progress of these projects? What new projects are expected with the support of the bank in the field of infrastructures?

- I was delighted to see Prime Ministers of Armenia and Georgia inaugurate the Friendship Bridge. It is also encouraging that an infrastructural project of this magnitude was completed within the budget, and within the originally determined timeline, which is a rarity in infrastructure projects not only in the Caucasus, but in different parts of the world as well. Considering this achievement despite the Covid-19 and the war, I am certain that there is a strong capacity in Armenia for successful implementation of such projects.

Modernization of Meghri border crossing is a very important project in the southern region of Syunik, where we have teamed up with the European Union to finance the modernization of the Border Crossing Point. From what I know, the State Revenue Committee of Armenia is currently in the process of assessing submitted bids. Construction works are expected to start by the end of this year and we expect them to finish within three years.

- New buses will be purchased for Yerevan with the support of the bank, what details can you tell about this project, what standards has the bank set, do you know when the buses will be in Yerevan, what are your expectations?

- We signed the Yerevan bus project in November 2021 under the EBRD Green Cities programme, which aims at supporting municipalities to develop and invest in a coherent program of projects for the green transition, covering several areas of urban development – transport, waste management, water management, etc. The project value is €25 million, of which €20 million is an EBRD loan, and €5 million comes from the E5P (Eastern Europe Energy Efficiency and Environment Partnership) grant financed by a range of donors, prominently the European Union.

The supply contract for the purchase of buses was signed and first tranches of EBRD Loan grant were disbursed. The project is on track and residents of Yerevan will see these new buses in the streets of the capital in the first half of 2023.

- What projects are being implemented in Armenia with the support of the bank in the fields of industry, agriculture, trade, renewable energy, how do you assess their progress and what developments are expected in the near future?

- We are helping to address challenges in the industrial sectors through support for improvements to the business environment, strengthening corporate governance and increasing access to finance for local micro, small and medium size enterprises (MSMEs). We are identifying investments in industries with export potential, including in areas highlighted by the authorities’ recent programme of export promotion.

We are also supporting the agricultural sector by targeting investments along the whole value chain. Agricultural sector of Armenia is a significant contributor to the country’s economy. It also employs the largest share of population – about the third, which raises a real productivity challenge. This is also true for other countries in the Caucasus.

There is a potential for improvement of the sector’s productivity through investments in sustainable technologies, agricultural infrastructure and knowledge transfer. The potential is also there for the introduction of energy and resource efficient technologies. Agriculture accounts for 80% of water withdrawal, pointing to a potential water efficiency issue in the sector.

We are helping gradually improve the productivity of this sector with sustained financing for investment in relevant technologies to small and medium-sized enterprises. This is done through the branches of our local partner banks across the country.

Renewables are at the core of our strategy for Armenia. Since 2019, we have been supporting the preparation of up to 105 MW solar capacity since, and have committed to finance the first utility scale solar plant.

The government’s Energy Sector Development Strategic Plan 2040 includes development of up to 1,000 MW Solar capacity by 2030 and up to 500 MW Wind capacity by 2040. Over past few years, the government has also improved the public private partnership law.

We stand ready to further support these initiatives which will undoubtedly increase energy independence of the country and contribute to grow the private sector and attract foreign investments.

- EBRD is also focused on improving the business environment in Armenia, how do you assess the business environment in Armenia and what programs are being implemented to create new opportunities for Armenian businessmen?

- Armenia was one of the first countries where the EBRD set up an investment Council in 2007. With the help of the UK Good Governance Fund, we continue to support the improvement of Armenia’s business and investment climate through the Investment Council, which is celebrating 15 years of successful operations this month.

One of our programmes in this regard is our SME Development Council which is led by the Deputy Prime Minister and serves as a bridging platform for public-private policy dialogue.

At the same time, Investment Council staff provides expert economic and legal input for legislative changes. So far, the council has facilitated 25 reforms that have been adopted over the past few years.

Our partners from the government have always been very cooperative and supportive of the Investment Council’s work. The positive feedback that we receive fills us with confidence that we are set to further improve the business environment through this fruitful cooperation.