Expert: Government should invest in re-activation of Nairit Plant

 Government should not stay aside and leave the development of the most important sectors of economy to the discretion of economic entities, Vazgen Safayan, the head of the Union of Local Manufacturers of Armenia told ArmInfo. 

"It is necessary to launch cooperation of the government and private sector where the government as shareholder invites business representatives to cooperate," Safaryan said. "After repaying the $220 million debt to Russia, the Republic of Armenia is now the sole owner of Nairit Plant. Making certain investments in re-activation of the chemical giant, the Government will improve its creditworthiness in the eyes of potential investors," Safaryan said.  

Earlier, Yervand Zakharyan, Minister of Energy and Natural Resources, announced at the National Assembly on October 28 that Armenian Government has no reasons to doubt the results of the audit conducted in Nairit plant by the World Bank. According to him, currently the Yerevan Nairit Plant is idle. The Armenia's Government is interested in reactivation of Nairit Chemical Plant if the potential investor is found. 

Earlier, the employees of the Nairit Plant announced their intention to fight for reactivation of the plant and for cancellation of the "illegal" agreement of assignment of claims in respect of penalties and fines from their wages to Nairit-2 enterprise.  They said that in August 2015 the Armenian Government completely repaid the arrears in wages owed to all former employees of the Plant. At the same time, the employees were forced to sign an agreement of assignment of claims in respect of penalties and fines from their wages to the Nairit-2 enterprise. As regards the re- launch of the plant, Hrach Tadevosyan, the chairman of the trade union of Nairit Plant, said that the specialists of the enterprise have presented three programs for the plant operation with different capacities. "The most expensive program implies investments worth $97 mln instead of $350-400 million specified in the audits of the World Bank," said Tadevosyan. "Donor countries such as the United States, Germany, France and Japan have rubber manufacturers and it is not beneficial for them to have such a competitor as Nairit Plant," the employees said.  Former spokesperson of the Plant Anush Haroutiunyan told ArmInfo that over 400 employees pf the Plant appealed to the president of the Armenia on October 29 for assistant in reactivation of the plant and cancellation of the "illegal" agreement of assignment of claims in respect of penalties and fines from their wages to Nairit-2 enterprise.  

At the moment the debts of Nairit Plant amount to 50 billion AMD (about 130 million USD). To note, Nairit Plant has been idle since April 2010. The Plant's shares were given as security against the CIS InterStateBank's 70 mln USD loan provided in 2006 for 5 years - till late Dec 2011 - at 12.5% p.a. In 2006, 90% of Nairit Plant's shares were sold to Rhinoville Property Limited (UK). The latter owns an 89,999% stake in the plant, Armenian Ministry of Energy and Natural Resources - 4,496%, Gazprom Armenia CJSC (previously ArmRusgasprom) - 3,596%, and Yerevan Thermal Power Plant - 1,907%. 

In 2015 the World Bank conducted a financial and technical audit at Nairit Plant at the request of the Armenian Government. The WB considers the re-launch of the plant to be inexpedient because it will need at least $250 mln. But even if investors are found, the WB experts do not think the product will be competitive, because it will have a high prime cost. Most experts say that the results of the WB audit can be considered as recommendations to the Plant's bankruptcy process.