The Eurasian Fund for Stabilisation and Development and the Government of Armenia have signed an agreement to finance the Irrigation System Modernisation Project

21 October 2015

Yerevan, 16 October 2015. The Eurasian Fund for Stabilisation and Development (EFSD) will provide an investment loan of US $40 million to finance the Irrigation System Modernisation Project. Chairman of the Management Board of Eurasian Development Bank Dmitry Pankin and Minister of Finance of Armenia Gagik Khachatryan signed an agreement on that on October 16, in Yerevan. The execution of the agreement followed a meeting with Prime Minister of Armenia Ovik Abraamyan to discuss the Fund’s activity in Armenia.

Under the agreement signed, a five-year project to modernise irrigation systems will be launched in 2016. The total amount of financing will be US $50 million, including a US $40 million concessional loan provided by the EFSD and US $10 million cofinancing provided by Armenia. The project preparation was supported with a grant of the Trust Fund for Institutional Development in the Region of Europe and Central Asia (ECAPDEV).

The project is part of the third stage of the long-term national programme to restore and restructure the irrigation and drainage network in Armenia. The first two projects under the programme have been implemented by the World Bank and are highly appreciated by the authorities.

Modernisation of Armenia’s irrigation systems will cover several areas at a time. The first one is related to replacement of existing mechanical irrigation with flow irrigation with 8 flow irrigation systems totalling 70 km to be built. The second one entails rehabilitation of 8 km of main and 54 km of secondary canals. The third one will support modernisation of around 278 km of on-farm distribution networks.

If implemented, the project will generate annual savings of electricity, network operation and maintenance costs amounting to nearly US $2 million. Some preliminary estimates show that the area of irrigated land is expected to reach 10,433 ha, with about 114,000 people benefiting from the project.

An important condition for irrigation system modernisation is improved efficiency of water user association management and ensuring sustainable outcomes of all planned changes and innovations. To this end, the project includes activities to assist the Government of Armenia in improving the collection of fees for irrigation services while reducing the cost of irrigation water supply and ensuring better quality irrigation. The project is also to promote introduction of new irrigation technologies. An important part of the institutional component will be related to demonstration sites for cutting-edge irrigation technologies.

Additional Information
Eurasian Development Bank is an international financial institution founded by Russia and Kazakhstan in January 2006 with the mission to facilitate the development of market economies, sustainable economic growth and the expansion of mutual trade and other economic ties in its member states. The member states of the Bank are the Republic of Armenia, the Republic of Belarus, the Republic of Kazakhstan, the Kyrgyz Republic, the Russian Federation, and the Republic of Tajikistan. 
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The Eurasian Fund for Stabilisation and Development (EFSD) amounting to US$8.513 billion was formed as the EurAsEC Anti-Crisis Fund on 9 June 2009 by the governments of six countries: Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia, and Tajikistan. The objectives of the Fund are to assist its member countries in overcoming the consequences of the global financial crisis, ensure their economic and financial stability, and foster integration processes in the region. The Fund's member countries signed the Fund Management Agreement with Eurasian Development Bank giving it the role of the Fund's Resources Manager. 

ECAPDEV or the Trust Fund for Institutional Development in the Region of Europe and Central Asia was set up in 2011 with the funds of the Government of the Russian Federation and is managed by the World Bank. The objectives of ECAPDEV grants are to improve the quality of investment project preparation and build the institutional capacity of agencies engaged in their implementation.

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