YEREVAN, March 12. /ARKA/. At a meeting on Thursday, the Armenian government approved the signing of a €120 million loan agreement with the German bank KfW for the “Caucasus Transmission Network – NIF” project to connect the power systems of Armenia and Georgia. Additionally, a €15 million grant agreement with KfW was approved for the “EU Caucasus Transmission Network – NIF. Phase II” project.
According to the decision’s rationale, the program aims to connect the power systems of Armenia and Georgia via a 500/400/220 kV high-voltage direct current (HVDC) converter station located in Ayrum, Armenia, near the Georgian border (with a final capacity of 1,050 MW).
On the Georgian side, the connection will be established from the Marneuli substation via a 500 kV overhead power line, and on the Armenian side, from the 400/220 kV substation in Ddmashen via a 400 kV line.
As a result, the electricity exchange capacity between Armenia and Georgia is planned to increase from the current 200 MW in the first stage to 350 MW, and subsequently, based on regional market demand, to 1050 MW.
The government stated that the construction of new transmission lines will significantly improve service quality, significantly stimulate the development of mutually beneficial regional cooperation in the energy sector, and create the preconditions for establishing parallel operation with the power grids of CIS countries.
At the same time, under this loan agreement, the 2026 state budget of the Republic of Armenia has allocated AMD 45.6 billion for this program, of which AMD 43.5 billion is loan funds and AMD 2.1 billion is co-financing.
About KfW
KfW (Kreditanstalt für Wiederaufbau) is a German bank that works to ensure economic and social progress in developing countries and countries with economies in transition, with the aim of improving the standard of living. Its shareholders are the German government and the country’s administrative-territorial units.
KfW has been operating in Armenia since 1998, implementing financial programs in the areas of lending to micro, small, and medium-sized enterprises, energy, infrastructure, and municipal administration.
