A Shady $600 Million Power Plant: Armenia Strikes Deal With Offshore Company
By Kristine Aghalaryan
hetq.am - 25/11/2014
Armenia to provide numerous concessions to a company owned by a
Georgian businessman with criminal past
In June of this year, the Armenian government struck a deal with
Anaklia IEP Holding that gives the green light to the Georgian company
to build and operate a 540 megawatt natural gas-fired power plant
The electricity produced by the plant, to be built in Vanadzor,
will go to Georgia.
After the agreement was signed the ministry issued a statement that
in return Armenia would offer tax breaks and guarantee supplies of
sufficient gas to the plant.
Replying to a Hetq inquiry regarding the proposed project, the ministry
stated: "The construction of the planned for gas electricity plant is
targeted to develop our production capacities, to raise the level of
Armenia's electric security and sustainability, as well as the levels
of our electricity exports."
According to the agreement, Anaklia IEP will build two sub-stations
each producing 270 megawatts of electricity.
In his reply to Hetq, ministry chief of staff Karen Ghahramanyan noted
that the Georgian company will be investing all of the US$600 million.
"Anaklia IEP will be assuming all of the risks regarding the completion
of the project and our government will assist in certain issues
like issuing certain allowances according to the law, guaranteeing a
non-discriminatory approach regarding utility hook-ups, safeguarding
investments, and supplying agreed upon gas levels," Ghahramanyan added.
The project must be completed not later than 36 months after Armenia's
Public Services Regulatory Commission issues a license and the
first sub-station must be finished no later than 18 months after
Public Services Regulatory Commission spokesperson Mariam Stepanyan
has told Hetq that Anaklia Energy has still not filed a request for
A new company, Anaklia Energy LLC, has been formed in Armenia to
implement the project. It is 100% owned by Teymuraz Karchava who also
serves as the president of the board of Anaklia IEP Holding.
Who is Teymuraz Karchava?
This Georgian businessman, registered as residing in Tbilisi, has
an interesting biography. He lived in Russia until 2004 and owns the
VIP National Club (a high-class casino and restaurant complex).
He was then charged with bribing a Russian finance ministry official
and faking certain documents. It turns out that Karchava entered
Russia using a fake passport. He was found innocent of the bribery
charge but sentence to 21 months on the fake passport charge.
According to Georgian sources, Karchava then left Russia for London.
While he owns more than ten companies according to Georgia's corporate
registry, Karchava is a little-known figure there.
Karchava's name came to light in 2009 regarding the Anaklia port
project. With the backing of former Georgia president Mikhail
Saakashvili, a project was launched to build a sea port in the
country's western Anaklia district, near the border with Abkhazia. But
he couldn't come through with the financing and another company took
over and began the construction. By that time Saakashvili had halted
the Anaklia project and floated the idea of building a port and city
In 2012, the Georgian government unilaterally dissolved its agreement
with Karchava's company and fined it US$100 million for violating the
construction deadlines. Karchava and the Georgian government battled
it out in the Georgian courts. In an interview, Karchava claimed
that the government was building a justice office and youth camp on
lands envisaged for his project - the construction of transportation
After Bidzina Ivanishvili came to power, the new Georgian government
backtracked and decided to go ahead with the Anaklia project and
On August 6, 2014, the Georgia government announced a tender bid for
the project. On August 14 (before it was clear what company would
construct the port, the Armenian government signed the natural gas
electricity plant deal with Karchava's company.
According to the Anaklia Energy plan, the electricity produced in
Armenia will be supplied to this port whose future is still uncertain.
Furthermore, in the addendum to the Armenian government's August 14
decision, the corporate address of Anaklia IEP Holding is noted as -
Suite 7, 55, Park Lane, Mayfair, London, W1K 1NA, UK.
However, according to a Hetq search of the British Virgin Islands
Register of Companies, Anaklia IEP is actually registered in the
British Virgin Islands and was incorporated on December 27, 2013.
Controversial former Armenian energy minister involved
More surprising is the fact that the company has no recorded history of
operating in the energy sector' let alone constructing such as plant.
Despite the company's scanty track-record, the Armenian government has
guaranteed to provide one million cubic meters of natural gas after the
plant has gone on line. At the time the agreement was signed as cubic
meter was going for $230.82 (before VAT). The Armenian government has
also agreed to postpone VAT payments for any company imports needed
to build the plant. When electricity is later exported to Georgia,
the Armenian government has promised to set a zero VAT rate.
Of greater concern is that the main player in this deal was former
Armenian energy minister Armen Movsisyan, who now serves as a
It was under his tenure as energy minister that the Nairi Rubber
Plantand Vanadzor's Kimprom wound up in the off-shore labyrinth of
shady deals in the first place.
Photo (from left): Teymuraz Karchava, former Armenian Energy and
Natural Resources Minister Armen Movsisyan
Nino Bakradze from Georgia contributed in the preparation of this