In October 2011, EDB as the ACF Resources Manager received an application from the Government of Armenia for a US$ 400 million credit for the reconstruction of the country’s gas-chemical industry. This official application to the ACF confirmed preliminary inquiries about a loan for the same purposes that were received earlier. The leading company in this sector is “Nairit”, located in the city of Yerevan. In the USSR period it used to meet most of the Soviet demand for synthetic rubber. After an accident in May 2009 the company practically ceased its activities, and in 2010 it was shut down. Meanwhile, the company has retained some of its skilled staff and R&D potential as reflected in potentially patentable products, which could be in demand on the world markets. Based on the decision made by the ACF Council on 4th June 2011, the ACF Resources Manager, with the participation of experts in the gas-chemical industry, had meticulously examined the industry’s general condition, the outlook for the recovery of its exports both to the CIS and to broader world markets, including the potential to enter new markets, and risks associated with enterprise’s modernization (managerial, financial, environmental, logistical, etc.)
It is too early to say on what schedule this credit will be disbursed, since the work on defining specific tasks for the industry’s rehabilitation is still underway. The general rehabilitation plan is charted by the State Program for the modernization of Armenia’s gas-chemical industry approved by the Government on 8th September 2011. Currently the question of who would contract this credit is under consideration. Plans exist to attract a strategic investor for the reconstruction of the sector’s flagship enterprise. The decision on the amount of the credit and the schedule for its disbursement in accordance with ACF’s regulations will be taken by the ACF Council, on the basis of recommendations provided by the ACF Council of Experts and by the ACF Resources Manager. It is expected that the meeting of the ACF Council will take place before the end of 2011, although the official date for the meeting has not been set.
If the ACF Council decides to extend the credit for the purposes of modernizing Armenia’s gas-chemical industry, the applicant, in the context of ACF's established disbursement procedures will prepare a detailed documentation package, which will include a feasibility study, an Environmental Action Plan and a marketing strategy for the industry. These documents will include recommendations for specific works necessary for the reconstruction of this industry. It is important, for example, to correctly evaluate the cost of implementing a complex of modern environmental measures, since the production of synthetic rubber is accompanied by harmful emissions. The disbursement of credit resources will be based on detailed documentation mentioned above and the Loan Agreement which will be concluded between the borrower and the Bank as the ACF Resources Manager.
