Wednesday, July 25, 2007

List of Topics

* The Great Armenian Economic Boom

Armenia leads the way in economic development, ahead of all other Republics of the Former Soviet Union. Foreign Direct Investment (FDI) is at the head of the charge. But is it all what the Armenian authorities would have you to believe?

Click the link for more ………. The Great Armenian Economic Boom

* Who owns the Yerevan Water Utility?

If you are following my efforts with the World Bank’s Department of Institutional Integrity, for them to send a team to Armenia and investigate the Municipal Development Project, then you will see that I make an issue about a ‘Security Agreement’ which the Yerevan Water & Sewerage Company should have entered into with the Ministry of Finance & Economy, pledging its assets against the World Bank loan. This is of considerable significance, and our children will thank us - if we can succeed?

Click the link for more ............. Who Owns the Yerevan Water Utility

* The Never-Ending Sugar Saga

Running up to the recent Parliamentary elections the media was filled with all manner of impressive new investment projects for Armenia; oil exploration, a new oil refinery, production of high-tech products, and the return of the Armenian sugar industry. The latter is of particular interest -

Click the link for more ……… The Never-Ending Sugar Saga

* A New Ethanol Industry for Armenia

The World Bank in Armenia refers to ethanol as a high-quality ecologically clean renewable fuel substitute. It’s made from a variety of vegetable Feedstock and now it’s cheaper and better than gasoline. Through the past five years, a World Leader in Ethanol Technology has studied the potential for Armenia and is now ready to invest in a Sustainable Armenian Ethanol Industry, using Sugar Beets as the Agricultural Feedstock.

Click the link for more ………A New Ethanol Industry for Armenia

* Going Underground

Walking through Yerevan’s North Eastern Parkway and trying to navigate a passage around the Nalbandian Street construction site, I was prompted to think more deeply about why our authorities had decided to apparently spend a not insignificant amount of money and the best part of two years, digging up two major intersections to make a couple of pedestrian underpasses.
Click the link for more ……… Going Underground

* A Parliamentary Commission Study

In January 2004, an 'Ad-Hoc' Parliamentary Commission initiated a study into the World Bank financed Municipal Development Project. The International Operator was involved in a wide-ranging program of Fraud and Corruption, plus a scheme to Embezzle Tens of Millions of Dollars of Public Funds

Click the link for more …………… Municipal Development Project

* Pumping up the Pressure

In 2004 a study into the Yerevan Water Company found that the Company Management was abusing the water system by pumping up the pressure in the distribution pipeline. After a period of lobbying the water authorities, a program to upgrade Yerevan’s system of Booster Pumps was agreed and the water pressure in the distribution pipeline was reduced to its original design level.

Click the link for more ………Pumping Up the Pressure

* Heating 21 Schools in Syunik Marz

This program is associated with the work with the Armenian State Water Committee, when the water authorities were persuaded to reduce the water pressure in Yerevan’s distribution pipeline and to upgrade the system of Booster Pumps.

Click on link for more ………. Heating 21 Schools in Syunk Marz

* My First Taste of Armenia

My first taste of Armenia was actually in Russia, when I spent several months with Bagrad, an Artic fellow doing business in Voronezh. Bagrad and I did a bit of business together and in 1992 he and his wife spent a few weeks at my home in the UK.

Click the Link for More ............ My first Taste of Armenia

The Great Armenian Economic Boom

Armenia leads the way in economic development, ahead of all other Republics of the Former Soviet Union. Foreign Direct Investment (FDI) is at the head of the charge; imports continue to grow, the balance of payments and inflation are both under control and the Dram is as strong as it has ever been. This is all confirmed in yearly reports of the World Bank and the International Monetary Fund.

FDI in particular has been seen on every Yerevan street corner for some years, and now can be seen on the surrounding hilltops, where all manner of construction projects continue to spring up – higher and higher. They have banners slung over their upper floor windows offering modern apartments, or shop and office space, all of which are for sale or for rent. This is to meet the needs of the long list of Foreign Investors, who have been coming in droves to Armenia for the past several years and who continue to beat at the door to get on board the Armenian economic bandwagon. The opportunities to make it rich in Armenia are endless.

They teem through Yerevan’s streets, soaking up the aura of success; Americans, Brits, Italians, French; even Japanese and Koreans; they are all flocking to Armenia to be a part of this economic revolution. All the major high street names are clambering for pole positions in the newly constructed commercial centers, eager to stay ahead of their international competitors. Luckily for Armenia, the authorities have not been overwhelmed by the invasion; they manage to maintain a level of calm. Thankfully, because of their cautious response to this investor onslaught, moderation has been maintained.

Sound familiar? – Of course not; it is all a hoax.

The truth is that there is virtually NO Foreign Direct Investment in Armenia. State companies and other assets have been transferred to state officials, who represent themselves through a variety of foreign entities. They are often in Russia, or in South America, but are also in North America, in Europe, and no doubt in a number of other overseas locations. The operations are often facilitated through a variety of financial mechanisms, which show tens of millions, or even hundreds of millions of dollars worth of investment, but in fact are worthless pieces of paper. The actual construction work, which is done by local workers, is financed by the local currency, which is squeezed out of the Armenian common folk every day, and in ever-increasing amounts. That money often comes from relatives who have found no other alternative but to become part of the Diaspora living abroad, and their donations increasingly figure into the economic boom equation.

The value of the Dram has been driven upward through recent years to increase profits for those who are involved in this FDI scam, and they are the same people who monopolise imports of the most saleable and profitable goods and materials. The fact that exports suffer as a result is of little concern; the prime objective is to take advantage of the domestic market, which is totally under the control of the authorities.

The only real Foreign Direct Investments in Armenia have been the Ararat Gold Recovery Company and the diamond polishing plant. The gold company is owned and run by an Indian group, and although the diamond polishing plant is owned by an Armenian, he actually lives and operates outside of Armenia. Some years ago, the same very wealthy and patriotic Armenian investor purchased the central universal store, and despite major modernisation, the store remains closed. That is testament to the attractiveness of Foreign Investment in Armenia today.

Diamond exports, which have been the backbone of Armenian exports, have been forced into decline through recent years, and now that the price of gold has increased to recent highs of more than $600 per ounce, from the $180 per ounce it was when the Ararat factory was built in 1997, the Armenian Authorities have decided to drive one of their most prominent Foreign Investors out of the Republic and to impose Armenian ownership.

The FDI bubble is about to burst, nearly all state assets have been “Privatized by Foreign Investors”. There is nothing left, and there is no sign of the foreigners rushing to become a part of the Armenian Economic Boom.

But this should not be cause for concern; the Armenian authorities have yet another ploy in the pipeline to maintain the impetus, and the signs are that the World Bank and the IMF are ready to stay on board, even though they have long known that Armenia’s economic roller coaster will soon be rattling off its rails.

Who Owns the Yerevan Water Utility?

If you are following my efforts with the World Bank’s Department of Institutional Integrity, for them to send a team to Armenia and investigate my claim of fraud, corruption and embezzlement under the Municipal Development Project, then you will see that I make an issue about a ‘Security Agreement’ which the Yerevan Water & Sewerage Company should have entered into with the Ministry of Finance & Economy, pledging its assets against the World Bank loan.

This might seem to be of little significance - but the wider implications need to be understood. So, through this Blog, which covers matters of interest, rather than through my ‘Blowing the World Bank Whistle’ Blog, which is designed to release facts, I will expound on why the Security Agreement is so important.

The World Bank finances water projects in many parts of the World, and they inevitably involve ‘International Operators’, as do the water projects for Yerevan. Those operators are usually subsidiary companies of one of the four major water companies, which are referred to as the ‘Water Barons’, and they have been making massive profits, in no small way thanks to World Bank projects. Three of those four Water Barons have been in Armenia for the past seven or eight years – ACEA (Italy) SAUR (France) and now Veolia (France). Scandals often follow these projects; the price of water goes up and often there is no noticeable improvement in water supply. Moreover, there are reports of where water supply situations have actually deteriorated as a result of these World Bank projects.

But one major philosophical aspect of the approach to providing water has recently been challenged by the international community; most notably of late by the United Nations. The international community has acknowledged that water is not a ‘Commodity’, to be bought and sold, such as wheat, or rice, or even oil. Water is a ‘Human Resource’ that people have the right to, and those who are responsible for providing that resource have an obligation to do so in the most effective way for the water consumer, even if the cost to provide the resource needs to be subsidized in one way or another.

The World Bank has been very reluctant to subscribe to this approach, and in some cases continues even to press for privatization of water resources and the utilities.

This is the crux of the need to pay attention to the Yerevan Water & Sewerage Company security agreement with the Ministry of Finance & Economy, in which the water company is obliged to pledge ‘All its Assets’ against the World Bank loan.

In 2002 the Yerevan Water & Sewerage Company assets were re-valued by a local auditing company, in accordance with a Government Decree. The revaluation was done in a competent manner, but the water company manipulated the results in their accounts, to show a massive over-valuation for the ‘Non-Fixed Assets’, which are worth very little, and a miniscule amount for the ‘Fixed Assets’ which include all the buildings and infrastructure, including the major pipework systems.

If the company assets are pledged against a security agreement, the company has an obligation to repay the Municipal Development Project credit. On the contrary, if the security agreement is not in place, the water company has no obligation to repay the loan. Or as things stand at the moment, with only the non-fixed Assets pledged, the Company is obliged only to the extent of the value of the non-fixed Assets, which are virtually worthless.

Today, thanks to financial jiggery-pokery by the Italian operator A. Utilities, highly valuable fixed assets are not only free from the security burden, they are valued at such a low figure that any potential ‘Buyer’ can pick up the Yerevan water utility for a song.

So when the Yerevan water utility becomes yet another part of Armenia’s Foreign Direct Investment (FDI) statistic - ‘Privatized’ by one of our state cronies, through one of their international ‘Front’ organizations, and ‘Rubber-Stamped’ by the Government, our children will finish up paying back the $30 million dollars World Bank credit - for the privilege of knowing that the owner of the water company can go on making massive profits ………… ‘Year-in-and-Year-out’.

So, through my action with the World Bank, one of the items for consideration is the valuation of the Yerevan Water & Sewerage Company assets. Hopefully, the Bank will respond to my claim and have this and other problems investigated, so that Yerevan’s water utility will remain our children’s property, and our children’s children’s property, for years to come. – Or maybe we are already too late?

The Never-Ending Sugar Saga

Running up to the recent Parliamentary elections the media was filled with all manner of impressive new investment projects for Armenia; oil exploration, a new oil refinery, a new atomic power station, production of high-tech products, and the return of the Armenian sugar industry.

The latter is of particular interest because in 1999 a serious effort began to determine the possibility of re-establishing the Armenian sugar industry. Armenian sugar production ended in 1988 when the Spitak earthquake destroyed the sugar factory.

In 2000 the U.S. Trade Development Agency (USTDA) signed an agreement to part-finance a study to determine the feasibility of re-establishing the sugar industry and for the next eighteen months more than a dozen international specialists studied every aspect of re-establishing the Armenian sugar industry. They were a team of sugar technologists, supported by agro-technologists, meteorologists, seismologists, and marketing and finance experts.

The data from the study was passed on to an internationally recognised auditing firm, whose experts developed a comprehensive financial model, to determine which parameters would be needed for a sustainable sugar industry. The result was that, with minimal support from the Armenian government, a very sustainable Armenian sugar industry could be developed, assuming a ‘Strategic Sugar Industry Partner and Investor’ could be found.

In January 2002 a Government Commission was established, Headed by Mr Hovik Abrahamyan, Minister for Territorial Administration and in response to a directive from president Kocharyan. The project was selected out of three projects as being most suitable for Armenia and the Minister Abrahamyan committed the Government’s support to the project.

A company was established as a vehicle to develop the project and a search began for a suitable Strategic Sugar Industry Partner and Investor. More than 8 companies applied and after a selection process, agreement was reached with ‘Sudeco International Limited’ (Sudeco), one of the most prominent internationally recognised sugar industry specialist companies. Sudeco made a formal proposal to the Armenian Government, committing more than $20 million to the project and to managing the project for the first 5 years of production.

Sudeco designs and manufactures the latest sugar technology machinery and equipment, which was included in a totally new sugar factory and refinery, to be built on a 62-hectare site at Akhuryan, fully approved by the regional and local authorities.

Numerous Ministers, including Karen Tschmaritian (Trade & industry) David Lokian (Agriculture) Hovik Abrahamyan (Territorial Administration), Serge Sargsian (Co-Chairman for Armenian – Russian economic development), provided letters of support to the project, which all turned out to be worthless. In March 2003, President Kocharyan wrote to the Prime Minister of the Russian Federation, asking him to look at the possibility of Russian finance for the project. That was later understood to be the con of all cons.

Armenia imports more than 100,000 tons of sugar each year and the Armenian sugar industry is worth more than 100 million dollars, with profits in excess of 30 million dollars. A new Armenia sugar industry would provide work places for some 20,000 farmers and factory workers in the devastated northern earthquake zone. Moreover, sugar beets add valuable soil nutrition and their re-introduction into the northern agricultural Shirak and Lori plains would be a tremendous help in halting the soil deterioration that has been going on for the past nearly 20 years, during which time the soil has been bombarded year in and year out with the single potato crop.

In November 2004, it became evident that, despite a number of very attractive financing opportunities for the project, the Armenian authorities simply will not allow a new Armenian sugar industry. The authorities will not support a project that will improve the lives of thousands of the Armenian working class for fear of sacrificing their millions of dollars of yearly gains.

And it would be foolhardy to believe the recent stories about 'Sugar Sam's' new sugar factory. Even though he may personally want to develop sugar production in Armenia; and that possibility should not be disregarded - They will not let him!

A thought for Juan

How many of us can remember back to the good old days when we used to huddle up around the coal fire in the evenings, chatting away, playing cards, maybe a bit of rough and tumble, or just sitting and watching the goggle box.

Then mother would come in from the kitchen and slide a plate of sliced bread between us, which we would one by one, and almost without thinking, attach to the end of our forks and toast over the hot coals.

There were those of us that quite enjoyed this pastime, and we became rather proficient at the art – on with the bread and after a couple minutes and a few dextrous twists of the wrist, off would come a slice of nicely crisped and evenly browned toast.

But there were others amongst us who no matter how hard they tried simply could not come up with an evenly toasted piece of bread. One corner would be over done and the other would look like it had hardly seen the light of day.

Then there was the other category of open fire toaster who had absolutely no interest whatsoever; not in the process and certainly not in the toast. He would simply hang his piece of bread on his fork, in whatever manner it happened to end up, and then he’d poke his piece of bread somewhere in the general direction of the fire and wait until he sensed the smell of the burning bread, or he would see the flames out of the corner of his eye. Then he’d pull his charred offering away from the heat, blowing out any flames; he’d turn over what would be left of the already sorry excuse for a piece of toast to be and he’d repeat the process on the other side. When both sides had been well and truly charred, he would use the edge of his fork, or take a knife, and nonchalantly scrape off the blackened coating in to the fire. For him, it was of little consequence whether, or not the charred and scraped remains of his surrogate piece of toast had sufficient substance to support the butter and the jam that awaited it.

My friends mother was of the third category; not altogether because she had no interest in the toast, but more because she had much greater interest in a whole range of other household affairs. Anyway, the result was the same, the toast always finished up a burnt offering, which she would scrape without second a thought and put to one side ready to burn the next in line.

One day, when I was round at my friends house, his mother was waving her slice of bread in the direction of the coals, chatting with my friend and his little sister Katy, when suddenly the phone rang. In those days the phone was exclusively the parent’s domain, it was of course on a fixed line, and theirs was in the hall, as it was in most homes. So my friend’s mother had to break away from her toast to answer the phone.

Katy, who was about five years old, saw her chance to become a first time toaster, never having been trusted with the responsibility up to that time. Mummy, she excitedly exclaimed, let me do it! Mummy was already half way to the phone in the hall and without thinking she handed Katy the toasting fork, complete with its half toasted piece of bread. Katy sat in front of the fire and carefully positioned the bread up to the coals. Turning and twisting the bread, keen to make sure that her mother would be proud of her first toasting effort, Katy carefully went through the entire toasting experience.

My friend and I looked on with great interest, seeing that this was a moment Katy would remember for the rest of her life – as did most of us. Then she jumped up with a gleam across her face; more from excitement than from the heat of the fire. She ran out to the hall, where her mother was still chattering away on the phone; she waved the charred offering toward her mother and asked: “Is this ready for scraping yet?”

When I think back to that time, I find myself wondering: Why is it that those who have the opportunity to be part of worthwhile cause, so often finish up producing charred remains? Is it simply that, like Katy, they have seen that that is what is expected of them?

Katy of course learned that burning the toast is not absolutely necessary. But if others can’t, or don’t want to learn like Katy did, then maybe they could try to improve the scraping process, so that those waiting for their supper, instead of repeatedly having to stomach charred vestiges, or even worse, to going without, would be able to look forward to something altogether more appetizing.

Juan – What do you think?

A New Ethanol Industry for Armenia

Background Information

The groundwork needed to determine the feasibility of a new Armenian Ethanol Industry has been done, through a prolonged period and by many of the very best international specialists, although the original objective was not the production of ethanol.

Re-establishing the Armenian Sugar Industry was the original objective, when during 2000 and 2001 a U.S. Trade Development Agency funded Feasibility Study determined that a new Armenian sugar industry would be financially sustainable and it would improve the lives of thousands of Armenians living in the most depressed regions.

But the Armenian authorities turned down offers from Serious Foreign Investors to build a New Armenian Sugar Industry.

In 2003, Sudeco International Ltd. (Sudeco), one of the World's most prominent sugar industry specialist companies, submitted a proposal to the Armenian Government to build a sugar factory and refinery. Sudeco’s project cost was significantly lower than that estimated by the feasibility study, the proposal featured all new machinery and equipment, with the very latest technology, and Sudeco committed to manage the development stages of a new Armenian sugar industry, through to full production capacity - and beyond.

Sudeco agreed to make a significant investment into the multi-million dollar project, to produce 110 thousand tons of sugar each year. A comprehensive Business Plan was developed, a brand new factory and refinery was designed, including the latest Sudeco 'Continuous-Flow' technology, and arrangements were made to build a new factory and refinery on a 62-hectare site at Akhuryan, near to Gyumri.

Through 2002 and 2003, Agricultural Specialists came to Armenia from the UK, America, Germany and India, to determine the requirements for the major Agro-Development Program needed to effectively re-introduce sugar beets into Armenia's Northern agricultural plains. Discussions were held with the USDA, the USAID and IFAD, all of which expressed an interest to support the Agro-Development Program.

But Armenia's sugar market is one of the many Import Monopolies, and although the project was Approved by a Government Commission, the Government did not stand by its written commitments of support. So Armenia's farmers did not get their new sugar industry.

Now Armenia can draw on that groundwork to Build a New Armenian Ethanol Industry - Producing Ethanol from Sugar Beets

A New Armenian Ethanol Industry will give local producers the opportunity to supply Armenia's fuel importers with a significant proportion of their gasoline - Cheaper, Cleaner - and Domestically Produced.

Armenia depends on imports for energy, including fuel products which are strategically vital, for daily life, for commerce and for security reasons. Armenian Ethanol Production will replace a substantial part of those vital fuel imports and keep Millions of Dollars within the Republic.

A New Ethanol Industry will Target the Earthquake Zone and will respond to three priority objectives:

  1. It will establish the Domestic Production of an Ecologically Clean Renewable Fuel Substitute
  2. It will create a wide range of new opportunities – in the Agricultural sector, at the factory and in a multitude of support activities which will develop around the new industry
  3. The Thousands of Work Opportunities will Reduce the Poverty Level in the Earthquake Zone

World Ethanol Development

World Ethanol Production has been projected to increase by a factor of Three Times from 20 million tons in 2003, to 60 million tons in 2010

Brazil has been using Ethanol for the past 30 Years

Brazil has developed Ethanol through the past 30 years as an alternative to petrol. Brazil now produces 18 million tons of ethanol each year and uses as much ethanol as it does gasoline.

America is catching up fast

America has followed the Brazilian trend and is expanding its ethanol production at a rate of 20% each year. Today America produces almost as much ethanol as Brazil.

Europe also getting involved

Europe has recently embarked on an Ethanol Development Progam, with plants already operating in France, Spain, Sweden and the UK.

Subsidies and Special Directives

In 2000, the EU introduced a Biofuel Directive and as a result European Ethanol Production is projected to expand to more than 12 million tons per year by 2009.

Ethanol development is also important for Far Eastern countries. China has the World's largest Ethanol Refinery, producing up to 800, 000 tons a year, whilst Japan's imports of Ethanol are expected to increase beyond 6 million tons by 2012.

What is Ethanol made from?

Brazil makes its ethanol from Sugar Cane whereas America uses Corn and Europe uses Sugar Beet as the agricultural feedstock.

How is Ethanol used?

Brazilian vehicles are flexi-fuel and run on almost pure ethanol, - switching to petrol when ethanol is not available. America mixes 15% ethanol with its petrol - and standard petrol engines run nicely on the mixture without modification. Europe is developing both philosophies.

Irrespective of how it is used - the ethanol fuel is ecologically cleaner than unblended petrol.

Ethanol can be a New ‘Core’ Industry for Armenia

Ethanol has been proven as a Realistic Alternative to Gasoline - and now Armenia has a real opportunity to establish a new ‘Core Industry' - to produce this Ecologically Clean Fuel Substitute.

The Reasons for Producing Ethanol

Brazil has a massive surplus capacity to grow sugar cane, so they developed the production of ethanol, which turned out to be a marvelous idea and very cost-effective. America uses enormous amounts of fuels and is burdened with ever-increasing fuel imports. So they developed ethanol production in an attempt to reduce their reliance on imported fuels. Europe is more concerned about the environment, so it developed ethanol production to take advantage of the distinct ecological benefits.

Armenia has a multitude of reasons to develop an ethanol industry. Firstly, Armenia is landlocked and ethanol will reduce the dependence on imported fuels; Secondly, to create work opportunities in the most depressed regions; Thirdly to reduce Armenia's 'Ecological Footprint'; Fourthly and most importantly, to stop soil degradation in the Northern agricultural plains through the re-introduction of sugar beets.

The development into ethanol has already been done and although some questions still remain, in the right circumstances ethanol can be an attractive proposition. Armenia can now become a part of the ethanol revolution.

The principal of using ethanol as a fuel additive would no doubt be best for Armenia - especially for the first few years of production.

What is the Cost of Ethanol?

The cost to produce ethanol is made up of two prime factors;

Firstly; the processing cost

Secondly; the cost to get the agricultural feedstock to the factory

Making Ethanol from Sugar Beets is Cheaper

The processing cost for sugar beets is similar to that for corn but less than for sugar cane - and by using recently developed ‘Continuous Flow’ technology the processing cost can be reduced to the absolute minimum.

Making Ethanol from Sugar Beets is Best for the Farmer

On a Hectare-to-Hectare basis, Sugar Beet is the most land-efficient agro-based feedstock for ethanol production.

A hectare planted with sugar beets produces more ethanol than a hectare planted with sugar cane and more than twice as much ethanol as a hectare planted with corn.

The Economic Research Service of the U. S. Department of Agriculture

  • 7.85 Tons of ethanol are produced from each hectare of Sugar Beets
  • 6.75 Tons of ethanol are produced from each hectare of Sugar Cane
  • 3.40 Tons of ethanol are produced from each hectare of Corn.

Plus, Growing Sugar Beets requires Less outlay and provides More Income for the Farmer

Farmer receipts for sugar beets are considerably greater than for both sugar cane and for corn, plus the cost of growing sugar beet compares very favourably.

Ethanol is a Very Attractive Proposition - All Round

These factors make a new Armenian ethanol industry a very attractive proposition – for the factory, for the farmer and ultimately for the Armenian economy.

Establishing Ethanol Production must include Two Major Components:

Firstly: A New Ethanol Processing Plant.

Secondly: A Wide-Ranging Agro-Development Program

New Ethanol Processing Plant

Sudeco proposes building a New Ethanol Processing Plant to produce 30,000 Tons of ethanol each year. This is a very worthwhile quantity and will provide a 15% ethanol additive to the 200,000 Tons of gasoline presently used in Armenia.

The Factory should be Located near to the centre of the sugar beet region, so agreement has been reached with the Akhuryan authorities to use a 30-hectare site next to the railroad near to Akhuryan.

The Latest Continuous Flow Technology should be used to keep production costs to the very minimum.

The factory will have an Independent Power Supply to ensure continuous thermal and electrical energy supplies for the production processes.

International and local Emissions Standards need to be observed throughout all stages of the production process.

There will be Sugar Beet Depots for reception of the beets, and quality will be chaecked in laboratory facilities, before the beets are stock-piled ready for processing.

The Ethanol will be mixed with Petrol at the factory - and pumped into railway cisterns. The factory will be located near to the main railroad lines which bring imported petrol from the Black sea. And they go through the earthquake zone.

The Ethanol will need to be Stored in Tanks - because the operation is seasonal and it will be necessary to maintain continuous supply right through the non-operational period.

Future Increase in Production Capacity will be built in to meet any increases there may be in the demand for ethanol and in the supplies of sugar beets.

The Agro-Development Program

There are a number of reasons why the Agro-Development Program is so Important

Armenia has been 20 Years without Sugar Beets

The Spitak earthquake of 1988 destroyed the Armenian sugar factory and since then sugar beets have not been grown in large quantities in Armenia.

Re-introducing sugar beets after a period of nearly 20 years will be a wide-ranging commitment, - especially taking into account the implications of land privatisation of the mid 90’s.

Armenia’s Farmers have been totally dependent on Potatoes - as the only realistic means to make a worthwhile income. The incessant cultivation of potatoes has led to Very Serious Soil Degradation - reducing the ‘Black Soils’ of the northern agricultural plains to a light brown sandy substance. If nothing is done to halt the process the degradation will simply continue.

The USDA Knows the Importance of Sugar Beets

Studies by the U.S. Department of Agriculture have shown that when sugar beets are taken out of crop rotation, the result is inevitably a Degradation of soil quality, which is followed by lower crop yields - and reduced quality of the farm produce.

Armenia needs to stop the Rot and an effort is now vitally important to prevent further deterioration. The lands in the earthquake region have already suffered too much since the absence of sugar beets.

Sugar Beets are not Potatoes and the farmers cannot simply grow a few tons and sell them on the wholesale market like they do potatoes, so they are waiting for their new sugar beet market. The new ethanol factory will give Armenian farmers the Market they Need, but they will only get that market if they guarantee to grow tens of thousands of tons of sugar beets.

It is a Chicken and Egg situation

The factory will need 300,000 tons of sugar beets to produce 30,000 tons of ethanol. That means that 4,285 hectares of land will need to be planted with sugar beets each year, and so assuming a 3-year crop rotation, 12,855 hectares of land will be needed for the proposed ethanol Program.

But as long as there is no factory the farmers will not grow sugar beets and as long as there are no sugar beets there will be no factory.

Sudeco has Studied the Problem

Sudeco has been studying this problem for several years and knows that it should be attended to as soon as possible. Today ethanol production can be the answer - using sugar beets as the feedstock material.

Sugar Beets will bring Enormous Benefits

The inclusion of sugar beets in a crop rotation introduces valuable nutrition which will halt the ongoing soil deterioration.

The sugar beet leaves are also a great benefit - and can be used as a fertilizer or as animal feed.

Improved Quality and Yield of the Potato Crop will inevitably follow re-introduction of sugar beets in the crop rotation cycle, because of the nutritions sugar beets add to the soil.

Animal Husbandry will be given a Great Boost because the pulp residue from the processed beets makes a large volume of High Value Animal Feed.

ATTENTION !! This is a Most Competitive Option.

Sudeco has already Developed and Used Innovative ‘Biotechnology' in which the Sugar Beet Leaves, the Pulp, and other Organic Materials are used in a process to make Methane. The Methane is then transferred to a Continuous Heat and Power (CHP) engine which Generates Electrical Energy, Hot Water and Hot Air, which are used for ALL the Process Power Inputs. In this way, the Factory Produces ALL its Own Power, Free of Charge. No Boilers are Needed - which Eliminates the Expensive Fuel Usually Used to fire them. Energy is the Single Most Expensive Input Expense in Ethanol Production.

In recent years, hailstones have been common in the Northern regions of Armenia through the growing months of June and July. And unlike potatoes, hailstones do NOT harm sugar beets.

There are more than 45,000 hectares of irrigated Land Available - in the northern agricultural region of Armenia, plenty to start a very worthwhile ethanol industry and sufficient for future expansion.

Major Investments have already paved the way

The Spitak earthquake destroyed the majority of the irrigation infrastructure in the region, including numerous water reservoirs and hundreds of kilometres of water channels.

But most of those irrigation systems have now been reinstated thanks to nearly $200 million dollars worth of investments from the World Bank and other Governmental and non-Governmental organizations.

Plus, other important components of the region’s infrastructure have been built or re-furbished, including numerous apartment buildings, schools, clinics and roads.

Armenia now needs to build on that Investment

Despite all that money spent and despite all the work that has been done, the soils will simply continue to deteriorate if there isn’t proper crop management.

A new Ethanol industry is the Ideal Opportunity for Armeniato grow sugar beet in rotation with potatoes and re-introduce the nutrition which is now so urgently needed for the soils.

A new ethanol industry therefore represents the ideal opportunity to revitalize agriculture in the region and build on the considerable investments already committed.

Ethanol can also precipitate other agro-related fuel substitutes. Brazil’s buses are already running on a bio diesel mixture, which they make from Soya and other bean crops. These crops will undoubtedly fit in nicely with sugar beets and potatoes, so a future bio diesel project could become a real opportunity.

Sudeco has looked at the Initial indicators - and initial studies show that a New Armenian Ethanol Industry will not only be Financially Viable but it will undoubtedly bring Tremendous Economic and Social Benefits to the Earthquake Region of the Republic.

Enormous Economic and Social Benefits

Because despite all the tremendous efforts to date in the Shirak and Lori regions, the number of unemployed and those living under the poverty level are still amongst the highest in Armenia.

Tremendous Work Opportunities

A new and substantial ethanol industry will create Tremendous Work Opportunities, during the factory construction period and on through the Long Years of Ethanol Production at the factory. But the greatest benefits will be seen as a result of Revitalizing the Vitally Important Agro-Industry.

Living standards for up to 15,000 families Will Improve because of the new Armenian Ethanol Industry, using sugar beets as raw material.

Armenia's farmers now need the Fuel Importers to agree to purchasing 15% of their gasoline requirements locally and for the Armenian Government to add their backing, through Ministry of Agriculture cooperation and with help securing support for the Agro-Development program.

Together with Sudeco, we continue to Lobby the Government, Hoping for a Positive Response

Going Underground

Walking through Yerevan’s North Eastern Parkway and trying to navigate a passage around the Nalbandian Street construction site, I was prompted to think more deeply about why our authorities had decided to apparently spend a not insignificant amount of money and the best part of two years, digging up two major intersections to make a couple of pedestrian underpasses.

Putting aside the question of whether there is an actual need for the underpasses, and putting aside the fact that the work is undoubtedly being financed by one or another of the international donor organisations, when I look at any development project in Armenia I recently find myself asking – What is in it for them?

Of course, they will need a reason to persuade a donor to provide the money in the first place, and a couple of pedestrian underpasses would seem to fit that bill. Then having agreed the finance, the state will find a preferred construction company to build the underpasses, probably one with Karabagh roots, and there will understandably be a healthy profit in it for them. And the work will no doubt be done for a fraction of the value of the financing, to make sure that there will be leftovers to be handed around. That of course is how the authorities manage to support their excessive life styles.

But there has to be something else that gives these pedestrian underpasses priority over other seemingly more profitable ventures, such as ‘privatizing’ another state asset, or building another Northern Prospect.

A little brain racking was sufficient to come up with the answer.

Of course any self respecting underpass should have a full range of amenities; shops, stalls, cafes, all of which will no doubt be sold or leased to the not-so-fortunates who no longer qualify for their places under the sun. They will no doubt soon be pressured into paying an arm and a leg for the privilege of being driven underground.

I wonder if Yerevan’s so thoughtful authorities will think about providing convenience facilities in their new underground emporiums. Or will that be overlooked in the same way as they overlook the need to provide police control for the traffic chaos that has been the daily treat for Yerevan’s commuters, as a result of their philanthropy.

And who will be surprised if Yerevan soon becomes the proud possessor of two privatized underpasses?

Time will tell

A Parliamentary Commission Study

The Municipal Development Project

In January 2004, an 'Ad-Hoc' Parliamentary Commission initiated a study into the World Bank financed Municipal Development Project. The Authorized Representative of A. Utilities was involved in a wide-ranging program of Fraud and Corruption, plus a scheme to Embezzle Tens of Millions of Dollars of Public Funds

Click the link for more …………… Municipal Development Project

Pumping Up the Pressure

In 2004 a study into the Yerevan Water Company found that the International Operator for the World Bank financed Municipal Development Project was abusing the Yerevan water system by pumping up the pressure in the distribution pipeline.

It started in 2002, when the Yerevan Water & Sewerage Company introduced a blanket system of water meters for Yerevan’s domestic consumers, who were subsequently required to pay for the metered water they used, rather than a fixed monthly sum. As a result, consumers discontinued their normal practice of leaving their taps open, fearful that their monthly water account would become excessive. In that way, the flow of water was restricted and the water pressure in the distribution pipeline system increased. By 2004 the pressure had increased by a factor of three, major pipeline failures had increased to four times more than in 2001, and ever-increasing amounts of water spewed out of the ailing distribution pipeline system.

The water company explained that the increased pressure would enable them to eliminate the booster pumps, which were old and expensive to operate; and that would provide important cost reductions. The plan, however was to make a case that the distribution pipeline system was no longer serviceable and that further loans of more than $400 million would be needed for it to be replaced.

Yerevan’s distribution pipeline system is indeed old; the large diameter steel pipes are in various states of disrepair and they will not tolerate a three-fold pressure increase. The water company management was fully aware of this, as were the Armenian water authorities, and so was the World Bank.

Booster Pumps are an integral part of Yerevan’s water distribution system; they are located near to high-rise apartment buildings to deliver water to residents living on the upper floors. The Booster Pumps also allow the pressure in the large diameter pipework distribution system to be maintained at the low level of two atmospheres – specifically to minimise the incidents of pipeline failures.

The findings of the study were discussed and eventually the newly appointed Head of the State Water Committee agreed that the water pressure in the distribution pipeline should be returned to its design level and that Yerevan’s system of 800 Booster Pumps should be upgraded to operate efficiently.

A local fund developed a project to replace the entire system of old, inefficient pumps with new, reliable and efficient pumps. The Head of the State Water Committee agreed that grant funding would be beneficial, especially as donor organizations had expressed an interest to finance the project. A pilot project was approved and three new booster pumps were produced and installed. The pilot project proved that efficient booster pumps would provide ‘Round-the-Clock’ water more cheaply and reliably than the original pumps that operated for four hours each day.

In January 2007, the Yerevan water company announced that it would be replacing 500 old booster pumps with new, reliable, efficient booster pumps. It is however interesting that the company appears not to want to take advantage of the opportunity to use grant funding for the project, which would help to reduce the financial burden on Yerevan’s water consumers, who are continually being asked to pay more for their water – without reason.