Armenia signs PPP law to boost investment

On July 16, Armenian president Armen Sarkissian signed into law new legislation on public-private partnerships (PPPs), which it is hoped will unlock more foreign investment in the country.

The long-awaited legislation was created with the assistance of the World Bank, the EBRD and the IMF. Deputy minister of economic development and investments Avag Avanesyan told fDi: “While Armenia has done a number of PPPs – in water, energy and airports –  there was no regulation on how to do it. So [this legislation] can help bring important know-how.

“We believe that as soon as we identify those public investments that need to be done it’s going to be significant. We are looking at the new law as an important tool for attracting FDI.” 

Mr Avanesyan highlighted renewable energy and general energy as the most obvious areas of opportunity for PPPs, along with hard and soft infrastructure. In 2018, the government awarded Spanish solar energy project developer Fotowatio Renewable Ventures the contract to build a 55-megawatt solar park in eastern Armenia. This was part of its broader ambitions to develop the solar energy sector in a country that sees an average of 2700 hours of sunlight a year.

The government will be working to identify the most attractive and viable projects, and the first PPPs carried out under the new law will most likely be done in partnership with international financial institutions, according to Mr Avanesyan.  

“We are not looking at PPPs as a free lunch – that’s usually a bad idea – but what it enables us to do is transfer the management [of assets or services that are] better managed by the private sector to the private sector, starting from the long-term management contracts of the roads and ending with completely new infrastructure both in greenfield and brownfield. And we believe that this can be one of the main attractors of FDI in large-scale public projects,” he said.

Regarding the start date of the first projects, Mr Avanesyan said: “It all depends on how fast we can identify [the priority projects], how fast we can do the analysis on the economic rate of return and the business case analysis and how fast we can find private partners.

 “We don’t believe that too many projects, for example, 10 to 20, can come in one year – [we have] a population of 3 million people, to be realistic – but one or two big ones per year can be achieved.”