Finance Minister Tigran Davtian signed a relevant agreement with the head of the Yerevan office of the European Bank for Reconstruction and Development (EBRD). The London-based institution will finance one-third of the project.
Under the agreement, another 5 million-euro loan, repayable in 15 years, will be provided by the European Investment Bank. The European Union will allocate the remaining 5 million euros in the form of a grant. The government formally pledged to guarantee the repayment of those loans last August.
Officials said on Wednesday the money will be used for badly needed capital investments in the subway network built almost 30 years ago. In particular, the Yerevan metro plans to partly replace its aging fleet of rail cars, install new water removal pumps and upgrade its electricity supply systems. Use of electricity by the network is due to shrink by half as a result.
The metro, which has only one line consisting of ten stations, received 1.7 billion drams ($4.4 million) in government funding for capital repairs in 2008 and is expected to remain heavily dependent on state subsidies in the foreseeable future. Its limited reach has always put it in a disadvantaged position vis-à-vis other public transportation means, notably privately owned minibuses. Only an estimated 60,000 Yerevan residents presently use it on a daily basis.
Yerevan’s existing architectural master plan calls for the construction of four new metro stations by 2020, which officials say would cost some $160 million. The metro’s chief executive, Paylak Yayloyan, told RFE/RL that the government is negotiating with the Asian Development Bank to secure funding for one of those stations.