Armenia
1
(Please check against delivery)
Statement by H.E. Mr. Armen Baibourtian
Deputy Minister of Foreign Affairs of the Republic of Armenia
at the 14th Session of the Commission on Sustainable Development
10 May 2006
Mr. Chairman/Madam Chair,
Distinguished Delegates,
Economic development in a context of sustainable development is being viewed under an
optional correlation of economic, human and natural resources potential. In the recent
past, long-term plans of social and economic development reflected this idea, but
nowadays with the spread of globalization these proportions are quite often breached. And
that is quite natural.
Being a country in transition with developing economy and landlocked at the same time,
Armenia appeared among countries with a certain vulnerability risk. In this situation, the
utmost priorities for the country became economic stabilization and social issues, such as
poverty reduction, sustainable employment, food security and so on. In this context the
measures taken by my government had to be target-oriented while addressing economic,
social and environmental concerns.
As in many countries the issue of poverty reduction is an urgent priority on the agenda of
the Government of Armenia, which is encouraged and supported by the international
community. The full Poverty Reduction Strategy Paper process in Armenia began in 2000
and the international participation has been significant both in financial and technical
terms. At the same time it is consistent with the overall country development scenarios
aimed at economic growth conducive to poverty reduction, human development and
public administration reform. Qualitatively the long-term development goal can be
described as a transition from the category of low- income countries to the category of
high- income countries to be accomplished in a possible short period of time.
In a quantitative measurement it is destined to provide stable economic growth rates in a
long-term perspective as the base for improving the quality of life, reductio n of poverty
and social development.
Other systematic economic or social goals, such as poverty and inequality reduction,
development of social sphere, income regulation policy, etc. should be subordinated to the
goal of maximizing the long-term economic growth rates, which means that policy
changes are welcome here by taking into account their possible influence on the economic
development. But at the same time they should not lead to changes in the already formed
basis of the economic system in Armenia ? open economy, liberalized systems of financial
and trade regulations, absence of centralized regulation of prices, low inflation and
macroeconomic stability policy. Besides, the experience of developing, and particularly of
a country in transition shows, that the prevalence of the private sector, favorable
macroeconomic and liberal legislative environment are necessary, but not sufficient
preconditions of economic growth. Integration, together with investment growth,
2
acquisition of knowledge and technologies will lead to the decrease in the level of
corruption, improvement of public and corporate governance and business environment.
The higher is the level of integration, the more benefits a country can gain through
integration into such structures.
Mr. Chairman,
Let me now briefly present the economic situation and energy sector as one of the basic
pillars for sustainable development of our society.
The production of Gross Domestic Product (GDP) in 2005 ensured the growth by 11.6 per
cent in comparison with 2004 with certain shifts in the structure of GDP. Thus, there was
an increase of the specific weight of the construction (from 10.7 to 21.6% and the specific
weight of the agriculture decreased essentially by 6.2 %. So the task is now to create
favorab le conditions for the development of the real sector, especially for development of
industry and increase in investment volume into these spheres. In 2005 the specific weight
of the main basic branches of goods production in GDP structure such as the industry,
agriculture and construction increased by 1.9 percentage points and made 59.1%.
The growth of volume of the industrial output stimulated the production and distribution
of the electric power, gas and water that made up 110.7%, and processing ind ustry-
109.7%. There is a problem of unequal rates of economic development between the capital
city and the regions and that?s why the Government elaborates now on special projects of
rural development to exclude differentiation of the general social and economic situation
of the population.
Over 2005 in the structure of services rendered to the population the greatest specific
weight was attributed to transport sector (29.1%) and communications ? 25.7%. As a
positive achievement there was increase of specific weight in public health service in the
total volume of services.
As a result of the policy carried out in foreign trade Armenia managed to maintain leading
growth rates of export as compared to import, its diversification and establishment of new
economic relations. In 2005 the balance of trade remained negative and the share of CIS
countries in our export volume constituted 18.9 %, as compared to 17.3% in 2004, and the
share of EU ? 46.6% as compared to 35.3% in 2004.
During the recent years the monetary incomes of the population registered the growth of
115.6%, and expenditure ? 118.2%. The positive tendency of excess of incomes continues
to grow. In 2005 the estimated number of economically active population made 1203.3
thousand people. The officia lly registered unemployment rate made 8.1% showing a
decrease in comparison with 2004 by 1.5%.
Thus the economic activity results in the Republic of Armenia during the recent years
reaffirmed the tendency of the economic growth stability.
Sustainable, co mpetitive and secure energy policy will not be successfully pursued
without open and competitive energy markets. Access to energy at reasonable prices is
critical to industry, transport and general social and economic development and is a
fundamental element for implementation of the Poverty Reduction Strategic Program.
Expensive and unreliable energy supplies will pose a serious threat to national economy
and will have a negative impact on the living standards of the population.
3
Analysis and assessment of opportunities to diversify supplies, achieve regional
integration are considered critical elements of Armenia?s Energy Sector Development
Strategy. The policy and strategy that is carried out currently in energy sector of Armenia,
as well as EU Neighborhood Policy are aimed at implementation of the balanced policy in
the region related to free access to electrical and gas networks, trade and transit. The
projects on rehabilitation and modernization of Electricity Transmission and Distribution
Networks have been successfully implemented and are being continued through the
financial assistance of international organizations. It is planned to fully complete
transmission and HV networks rehabilitation and implement the projects on improvement
of interconnections with neighboring countries.
The Energy Sector Development Strategy of Armenia was adopted by the Government of
Armenia in June 2005. The primary objective of the mentioned strategy is to formulate
strategic goals for the development of energy system in Armenia till 2025. It aims to
identify the avenues to achieve those goals, based on the principles adopted by the
international community for sustainable development and is aimed towards the following
goals:
· Achieving sustainable economic development in Armenia;
· Enhancing the energy independence and security of the country, including
diversification of imported and domestic energy resources;
· Ensuring efficient use of domestic energy resources and development of renewable
energy sources and energy savin g.
The Strategy is aimed at the resolution of the following primary problems:
· Providing reliable energy supply at low rates to satisfy the fundamental needs of
all customers, while enhancing energy conservation, input of energy efficient
technologies in all branches of economy;
· Avoiding methods of importing the primary sources that might expose the security
and economy of Armenia;
· Ensuring the safe operation of the Armenian Nuclear Power Plant as its energy can
be replaced with adequate advanced base- load capacities so that decommissioning
can proceed without undesirable economic and energy security impacts;
· Ensuring sustainable energy supply based on the principles of sustainable
development and in compliance with the international environmental commitments
of the Republic of Armenia;
· Creation of an electric energy system that is export-oriented and generates high
added value.
In fact, an effective energy policy means to meet expected energy demand and decrease
import dependency, to replace ageing infrast ructures by making cost-effective investments
in order to reduce the waste of energy and lead to a more reasonable and rational use of
energy.
A special aspect of securing energy safety issue is reservation of high risks
for owners of the existing Thermal Power Plants, as well as for potential investors that
intend to construct new ones. Such risks are related to the absence of gas transportation
pipelines div ersified by supply routes of natural gas, and the limited transmission capacity
of the single pipeline in operation that passes through the territory of Georgia.
In the meantime, taking into consideration the importance and sensitivity of securing the
energy safety for Armenia, high emphasis should be laid on the development of its own
renewable energy sources, such as hydro, wind, solar and geothermal energy. Two funds
4
for construction of small hydro power plants and the development of renewable energy
sources have been established and are successfully advancing. The results of geotechnical
investigations have been presented to the World Bank for approval and earmarking grant
funds from the Global Environmental Fund for the construction of geothermal power
plant.
Approaches to decouple economic growth resulting from increasing energy consumption,
to contribute to security of energy supply and help limit the country?s growing dependence
on imported energy, ensure energy security and independence needs development of its
own and renewable energy sources and energy efficiency programs. Energy efficiency
needs to become a global priority.
For renewable energy to fulfill its potential it is essential that the policy framework be
supportive and, in particular, stimulate increasing competitiveness of such energy sources.
Renewable Energy Certificate System is not applied in Armenia, meanwhile for
stimulating the development of domestic energy resources by the Article 5 of the Section 2
(State Policies and the Energy Sector) of the Law on Energy of the Republic of Armenia a
highest priority in the Energy Sector is assigned to the utilization of the domestic energy
resources. All electricity (capacity) generated at small hydro power plants, as well as from
renewable sources of energy within the next 15 years shall be purchased pursuant to the
Market Rules by the Article 59 of the Section 11 ?Transitional provisions? of the same
Law, and provisions made for supplying Hydro Power Plants with sufficient volumes of
water in order to generate the planned volumes of electricity.
In the end of 2004 the Law on Energy Efficiency and Renewable Energy was adopted.
This law creates additional favorable conditions for the development of renewable energy.
The Public Services Regulatory Commission of the Republic of Armenia has also adopted
a number of regulations in pursuit of the establishment of an attractive investment climate
for the development of renewable energy sources.
Taking into account the goals of United Nations Millennium Declaration, the
Johannesburg Plan of Implementation and the decisions of the Fourteen Session of the
Commission on Sustainable Development, promotion and development of sustainable
energy strategies for the ECE region is designed. Necessary assistance to member
countries to improve energy conservation and efficiency, particularly to the countries that
are in transition with the aim to reduce energy-related health and environmental impacts,
including greenhouse gas emissions, to facilitate the development and implementation of
new environmentally- sound and economically- viable technologies, to increase the use of
renewable energy resources and the volumes of energy efficiency investment projects are
envisaged under the Strategic Framework for the Biennium 2008-2009. From that point of
view we find expedient that we consider the possibilities to implement concrete pilot
projects related to the creation of ?Clean energy zones? in several regions of Armenia.
Assistance and active participation of UN experts in the implementation of this project at
any stages will be highly welcomed.
Thank you for your attention.
(Please check against delivery)
Statement by H.E. Mr. Armen Baibourtian
Deputy Minister of Foreign Affairs of the Republic of Armenia
at the 14th Session of the Commission on Sustainable Development
10 May 2006
Mr. Chairman/Madam Chair,
Distinguished Delegates,
Economic development in a context of sustainable development is being viewed under an
optional correlation of economic, human and natural resources potential. In the recent
past, long-term plans of social and economic development reflected this idea, but
nowadays with the spread of globalization these proportions are quite often breached. And
that is quite natural.
Being a country in transition with developing economy and landlocked at the same time,
Armenia appeared among countries with a certain vulnerability risk. In this situation, the
utmost priorities for the country became economic stabilization and social issues, such as
poverty reduction, sustainable employment, food security and so on. In this context the
measures taken by my government had to be target-oriented while addressing economic,
social and environmental concerns.
As in many countries the issue of poverty reduction is an urgent priority on the agenda of
the Government of Armenia, which is encouraged and supported by the international
community. The full Poverty Reduction Strategy Paper process in Armenia began in 2000
and the international participation has been significant both in financial and technical
terms. At the same time it is consistent with the overall country development scenarios
aimed at economic growth conducive to poverty reduction, human development and
public administration reform. Qualitatively the long-term development goal can be
described as a transition from the category of low- income countries to the category of
high- income countries to be accomplished in a possible short period of time.
In a quantitative measurement it is destined to provide stable economic growth rates in a
long-term perspective as the base for improving the quality of life, reductio n of poverty
and social development.
Other systematic economic or social goals, such as poverty and inequality reduction,
development of social sphere, income regulation policy, etc. should be subordinated to the
goal of maximizing the long-term economic growth rates, which means that policy
changes are welcome here by taking into account their possible influence on the economic
development. But at the same time they should not lead to changes in the already formed
basis of the economic system in Armenia ? open economy, liberalized systems of financial
and trade regulations, absence of centralized regulation of prices, low inflation and
macroeconomic stability policy. Besides, the experience of developing, and particularly of
a country in transition shows, that the prevalence of the private sector, favorable
macroeconomic and liberal legislative environment are necessary, but not sufficient
preconditions of economic growth. Integration, together with investment growth,
2
acquisition of knowledge and technologies will lead to the decrease in the level of
corruption, improvement of public and corporate governance and business environment.
The higher is the level of integration, the more benefits a country can gain through
integration into such structures.
Mr. Chairman,
Let me now briefly present the economic situation and energy sector as one of the basic
pillars for sustainable development of our society.
The production of Gross Domestic Product (GDP) in 2005 ensured the growth by 11.6 per
cent in comparison with 2004 with certain shifts in the structure of GDP. Thus, there was
an increase of the specific weight of the construction (from 10.7 to 21.6% and the specific
weight of the agriculture decreased essentially by 6.2 %. So the task is now to create
favorab le conditions for the development of the real sector, especially for development of
industry and increase in investment volume into these spheres. In 2005 the specific weight
of the main basic branches of goods production in GDP structure such as the industry,
agriculture and construction increased by 1.9 percentage points and made 59.1%.
The growth of volume of the industrial output stimulated the production and distribution
of the electric power, gas and water that made up 110.7%, and processing ind ustry-
109.7%. There is a problem of unequal rates of economic development between the capital
city and the regions and that?s why the Government elaborates now on special projects of
rural development to exclude differentiation of the general social and economic situation
of the population.
Over 2005 in the structure of services rendered to the population the greatest specific
weight was attributed to transport sector (29.1%) and communications ? 25.7%. As a
positive achievement there was increase of specific weight in public health service in the
total volume of services.
As a result of the policy carried out in foreign trade Armenia managed to maintain leading
growth rates of export as compared to import, its diversification and establishment of new
economic relations. In 2005 the balance of trade remained negative and the share of CIS
countries in our export volume constituted 18.9 %, as compared to 17.3% in 2004, and the
share of EU ? 46.6% as compared to 35.3% in 2004.
During the recent years the monetary incomes of the population registered the growth of
115.6%, and expenditure ? 118.2%. The positive tendency of excess of incomes continues
to grow. In 2005 the estimated number of economically active population made 1203.3
thousand people. The officia lly registered unemployment rate made 8.1% showing a
decrease in comparison with 2004 by 1.5%.
Thus the economic activity results in the Republic of Armenia during the recent years
reaffirmed the tendency of the economic growth stability.
Sustainable, co mpetitive and secure energy policy will not be successfully pursued
without open and competitive energy markets. Access to energy at reasonable prices is
critical to industry, transport and general social and economic development and is a
fundamental element for implementation of the Poverty Reduction Strategic Program.
Expensive and unreliable energy supplies will pose a serious threat to national economy
and will have a negative impact on the living standards of the population.
3
Analysis and assessment of opportunities to diversify supplies, achieve regional
integration are considered critical elements of Armenia?s Energy Sector Development
Strategy. The policy and strategy that is carried out currently in energy sector of Armenia,
as well as EU Neighborhood Policy are aimed at implementation of the balanced policy in
the region related to free access to electrical and gas networks, trade and transit. The
projects on rehabilitation and modernization of Electricity Transmission and Distribution
Networks have been successfully implemented and are being continued through the
financial assistance of international organizations. It is planned to fully complete
transmission and HV networks rehabilitation and implement the projects on improvement
of interconnections with neighboring countries.
The Energy Sector Development Strategy of Armenia was adopted by the Government of
Armenia in June 2005. The primary objective of the mentioned strategy is to formulate
strategic goals for the development of energy system in Armenia till 2025. It aims to
identify the avenues to achieve those goals, based on the principles adopted by the
international community for sustainable development and is aimed towards the following
goals:
· Achieving sustainable economic development in Armenia;
· Enhancing the energy independence and security of the country, including
diversification of imported and domestic energy resources;
· Ensuring efficient use of domestic energy resources and development of renewable
energy sources and energy savin g.
The Strategy is aimed at the resolution of the following primary problems:
· Providing reliable energy supply at low rates to satisfy the fundamental needs of
all customers, while enhancing energy conservation, input of energy efficient
technologies in all branches of economy;
· Avoiding methods of importing the primary sources that might expose the security
and economy of Armenia;
· Ensuring the safe operation of the Armenian Nuclear Power Plant as its energy can
be replaced with adequate advanced base- load capacities so that decommissioning
can proceed without undesirable economic and energy security impacts;
· Ensuring sustainable energy supply based on the principles of sustainable
development and in compliance with the international environmental commitments
of the Republic of Armenia;
· Creation of an electric energy system that is export-oriented and generates high
added value.
In fact, an effective energy policy means to meet expected energy demand and decrease
import dependency, to replace ageing infrast ructures by making cost-effective investments
in order to reduce the waste of energy and lead to a more reasonable and rational use of
energy.
A special aspect of securing energy safety issue is reservation of high risks
for owners of the existing Thermal Power Plants, as well as for potential investors that
intend to construct new ones. Such risks are related to the absence of gas transportation
pipelines div ersified by supply routes of natural gas, and the limited transmission capacity
of the single pipeline in operation that passes through the territory of Georgia.
In the meantime, taking into consideration the importance and sensitivity of securing the
energy safety for Armenia, high emphasis should be laid on the development of its own
renewable energy sources, such as hydro, wind, solar and geothermal energy. Two funds
4
for construction of small hydro power plants and the development of renewable energy
sources have been established and are successfully advancing. The results of geotechnical
investigations have been presented to the World Bank for approval and earmarking grant
funds from the Global Environmental Fund for the construction of geothermal power
plant.
Approaches to decouple economic growth resulting from increasing energy consumption,
to contribute to security of energy supply and help limit the country?s growing dependence
on imported energy, ensure energy security and independence needs development of its
own and renewable energy sources and energy efficiency programs. Energy efficiency
needs to become a global priority.
For renewable energy to fulfill its potential it is essential that the policy framework be
supportive and, in particular, stimulate increasing competitiveness of such energy sources.
Renewable Energy Certificate System is not applied in Armenia, meanwhile for
stimulating the development of domestic energy resources by the Article 5 of the Section 2
(State Policies and the Energy Sector) of the Law on Energy of the Republic of Armenia a
highest priority in the Energy Sector is assigned to the utilization of the domestic energy
resources. All electricity (capacity) generated at small hydro power plants, as well as from
renewable sources of energy within the next 15 years shall be purchased pursuant to the
Market Rules by the Article 59 of the Section 11 ?Transitional provisions? of the same
Law, and provisions made for supplying Hydro Power Plants with sufficient volumes of
water in order to generate the planned volumes of electricity.
In the end of 2004 the Law on Energy Efficiency and Renewable Energy was adopted.
This law creates additional favorable conditions for the development of renewable energy.
The Public Services Regulatory Commission of the Republic of Armenia has also adopted
a number of regulations in pursuit of the establishment of an attractive investment climate
for the development of renewable energy sources.
Taking into account the goals of United Nations Millennium Declaration, the
Johannesburg Plan of Implementation and the decisions of the Fourteen Session of the
Commission on Sustainable Development, promotion and development of sustainable
energy strategies for the ECE region is designed. Necessary assistance to member
countries to improve energy conservation and efficiency, particularly to the countries that
are in transition with the aim to reduce energy-related health and environmental impacts,
including greenhouse gas emissions, to facilitate the development and implementation of
new environmentally- sound and economically- viable technologies, to increase the use of
renewable energy resources and the volumes of energy efficiency investment projects are
envisaged under the Strategic Framework for the Biennium 2008-2009. From that point of
view we find expedient that we consider the possibilities to implement concrete pilot
projects related to the creation of ?Clean energy zones? in several regions of Armenia.
Assistance and active participation of UN experts in the implementation of this project at
any stages will be highly welcomed.
Thank you for your attention.
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