Western sanctions prevent Rosneft's investment plans in Armenia
By Mushvig Mehdiyev
Armenian government will have to find a new business partner for its outdated rubber plant.
Russia's oil giant Rosneft has suspended its Nairit plan and decided to withdraw from the large business deal with Armenia after it faced the Western sanctions.
Armenian authorities nodded to sit for business talks after the largest company Rosneft revealed its intention to buy Nairit rubber plant last year. The company even reported its $500 million investment plan for Nairit.
Weakening economy pushes the Armenian government to desperately look for foreign money to heal it. Several spheres of industry including energy, mining, gas are currently controlled by the foreign companies.
The government accepted the Nairit deal as a "hope" to drive out the dark clouds over country's economy and enthusiastically tried to complete the deal as soon as possible.
But the crisis in Ukraine and Russia's reported interference in its western neighbor's internal affairs changed the course of events. Western forces started to impose sanctions on Russia to make it step back from aggravating the situation in Ukraine.
Sanctions seriously tackled the Russian economy, as caused the Russian ruble to reach record lows. The impact of the fall in the northern giant's economy didn't bypass its close ally Armenia.
West's unexpected sanctions on the large Russian companies including VTB Bank, Gazprom, and Rosneft made them face huge financial losses and suffer from weakening positions on world markets.
Rosneft refused to sign contract on purchase of Nairit rubber plant and large investments in the plant.
Armenian Energy Minister Yervand Zakharyan officially stated on September 19 that the Russian oil company Rosneft has not made any offer to buy Nairit plant. He said the company ignored to respond to the ministry's appeals regarding the business talks.
Zakharyan added that the latest agreement with Rosneft has been made in August, 2014 and it unfortunately failed to come into force as still hanging in the air.
He noted that it was no longer possible to pay salaries at Nairit chemical rubber plant of Armenia's capital city Yerevan. He recalled that Armenia's state-run energy companies Yerevan Thermal Power Plant and Vorotan Hydro Cascade have partially paid the Nairit employees' salaries.
"The complaints and demands of the workers over their unpaid salaries are completely fair," Zakharyan added.
Note that 2,261 employees of Nairit rubber plant couldn't get their full salaries as the plant has ceased production since April, 2010.
Armenian economy strongly depends on Russia's economic capabilities. Any stumbling facing Russian economy immediately reflects on Armenia. Logically, Rosneft's refusal to buy Nairit plant axed Armenian authority's plans as it pinned a great hope on the failed business deal.