Hrazdan: This Former Center of Industry is Turning into a Jobless Ghost Town
61-year-old Sousanna Petrosyan dreams that one day the Hrazdan Mash machinery plant will once again provide jobs to area residents.
Once a center of Soviet industry employing thousands, 21,200 of Hrazdan’s 59,500 residents are unemployed today.
Most, like Sousanna Petrosyan are women. Most jobless men have left to seek work overseas.
28% of residents live below the poverty line.
Periodic rumors that the plant will reopen buoy her spirits, and she’s convinced that despite her age, she’ll get a job at the factory if it does. Her husband will be able to return from working overseas and her son will also find work at Hrazdan Mash, she says.
Petrosyan worked at Hrazdan Mash from1982 until it closed its doors in 1989, when the Soviet Union collapsed. In 1988, she was transferred to the company’s Dvin factory at Kotchorni. Her husband also worked at Hrazdan Mash. The couple spent their best years working at this industrial giant located in the town of Hrazdan.
Petrosyan says they were able to purchase their apartment and furnish it while working at the factory. They haven’t worked since the plant closed. She stayed at home, and her husband started to travel to Russia for work. He now drives a taxi in St. Petersburg.
“In our day they would tell us ‘live children, but not like us’. I now say, ‘live children, and live like us’,” says Mrs. Petrosyan referring to the Hovhannes Tumanyan poem.
In Soviet Armenia, Hrazdan, the provincial capital of Kotayk, was the fourth largest manufacturing center in the country. Hundreds worked here - town residents, people from neighboring villages, and those from Yerevan.
Ashot Grigoryan has worked at HrazJek OJSC (Hrazdan Energy Company) for 44 years. He’s a shift manager at the plant and remembers that in the 1980s special buses and trains would ferry workers from Yerevan.
“There were 120,000 people in Hrazdan during the Soviet years. The plants then closed, and many left. Not even a half of Hrazdan is left today,” Grigoryan recounts.
72-year-old Mher Arakelyan witnessed the construction of Hrazdan, He worked at HrazdanShin Trust from 1968-1994 as a truck driver transporting building material to construct large apartment houses in Hrazdan. The plant no longer operates.
There were several other factories that operated in Hrazdan until 1990, including the Djarati Milk Complex, The Kechark and Hrazdan Mekena production units, the Panel Home Construction Combinat, and the Hrazdan Cement Plant.
24 businesses now operate in the town. The Hrazdan Energy Company and the Hrazdan Cement Plant are the only two Soviet-era survivors.
The Hrazdan Municipality provided Hetq with a list of the top ten manufacturers in the town and the annual taxes they pay the town.
Gazprom Armenia pays 60.03% of Hrazdan’s municipal taxes, followed by Mika Cement CJSC (23.46%), Patnesh CJSC (5.65%), Hrazdan Road Construction OJSC (3.5%),Vil-Line LLC (2.88%), Kechark OJSC (1.67%), Mining Richness (1.57%), Green Farmer LLC (0.95%) and Investment Media Group (0.30%).
Hrazdan Mash: From 17,000 Workers to 82 Today
Hrazdan Mash, which was founded on the remnants of the Hrazdan Mining Chemical Plant of the 1970s, was supposed to serve as a regional center for the repair of military equipment and radio electronics; i.e., a leading air defense plant. Its various units produced a range of items – agricultural equipment, consumer goods, and specialized goods. Most of the work contracts came from the Soviet defense apparatus. When the Soviet Union collapsed, so did Hrazdan Mash. It racked up large debts and declared bankruptcy. In 1998, Armenia’s parliament privatized the plant which was then divvied up and reorganized.
The largest company formed due to the reorganization is Patnesh CJSC, founded in 2001. The Armenian government owns all its shares, and management is in the hands of the defense ministry.
Economist, Ashot Ohanyan, a former Hrazdan Mash payroll supervisor who’s now the director of the Clean Armenia NGO, recounts that the plant employed 17,000 at its peak in 1987 when it produced 176 million Russian Rubles worth of goods. Patnesh CJSC, its successor, employs 82.
Hrazdan Cement Plant: In Bankers’ Hands
|In Soviet Armenia, 80% of Hrazdan Cement Plant’s output went towards the construction of military facilities throughout the Soviet Union.|
The Hrazdan Cement Plant began operating as a division of the Hrazdan Mining Chemical Plant in 1970. It was then restructured into the Hrazdan Cement Plant in1977.
For many years the plant was operated by Mika Cement, the company owned by Mika Baghdasarov. When Baghdasarov’s business empire floundered, the cement company went belly up and wound up in the hands of its creditor, VTB Bank. It was declared bankrupt on November 30, 2017 and was put up for sale. Its debt amounted to AMD 933 million.
A company called Hrazdan Cement Corporation, registered on December 19, 2017, became the new owner. The company was founded in Artsakh by G M Holding Ltd. which is said to build gas supply facilities. GM Holding was founded by Vitali Grigoryan and Arsen Mikayelyan. Grigoryan, who lives in Russia, owns HayBusinessBank. Mikayelyan is president of the bank’s board of trustees and a confidant of Armenian President Serzh Sargsyan.
Samvel Karapetyan Transfers Hrazdan Energy Offshore
|In 1969, the Hrazdan Thermal Power Plant produced 300 megawatts of electricity, increasing output to 810 and 1,110 megawatts, becoming the largest electricity producer in Armenia.|
Construction on the power plant began in 1963 and started operating in 1966. It has strategic significance for Armenia since it provides most of the country’s domestic electricity needs when the Metsamor nuclear power plant is shut down for repairs or fuel recharge.
The Hrazdan thermal power plant now produces electricity for domestic consumption when there is a shortage – mostly in the fall and winter, and when the nuclear plant is idle. The plant also produces electricity that is exported to Iran and Georgia.
In 2004, the plant (then operating under the name State Regional Electric Station of Hrazdan) was turned over to the Russian government in 2004, as part of a package deal to pay off Armenia’s national debt to Moscow. It was then renamed HrazJek (Hrazdan Energy Company). Ashot Manukyan, Armenia’s current Minister of Energy Infrastructures and Natural Resources, served as its director from 2011-2015.
Inter RAO Group, a diversified energy holding that manages assets in Russia, Europe and the CIS, obtained 75% of the plant’s shares on December 31,2015. 25% went to Liorman Holding Ltd. Inter RAO has since sold all its shares to Liorman Holding.
|Hrazdan Thermal Power Plant|
Liorman Holding was also a shareholder of Energy Networks of Armenia until April of 2017. 70% of its shares then was transferred to Tashir Capital, owned by Samvel Karapetyan. Liorman Holding has various offshore company links with Karapetyan.
Hrazdan Energy now employs 600.
5th Energy Block Leaves Hrazdan Energy in the Dust
|Construction of Hrazdan’s 5th Energy Block is directly connected to the construction of the Armenian-Iranian gas pipeline. The electricity is produces is exported to Iran, in return for Iranian gas imports.
The largest manufacturer in Hrazdan today is Hrazdan Energy’s 5th Energy Block, that is operated by Gazprom Armenia CJSC. All of Gazprom Armenia’s stock is owned by Russia’s Gazprom. The Russian government controls over 50% of the company’s shares.
The decision to build Hrazdan’s 5th Energy Block, which opened in December 2013, was taken in the late 1970s. Soviet Armenia was granted permission to build the facility by the Soviet Council of Ministers at an estimated cost of 343.7 million Soviet rubles.
Construction on Hrazdan-5 was halted in the early 1990s. Newly independent, Armenia faced an energy crisis. Work recommenced in 1993, when a $57.5 loan was granted by the European Bank for Reconstruction and Development. Work was again halted in 1997 due to insufficient funds.
In 2006, as part of an agreement between the Armenian government and Gazprom CJSC, HayRusGazArt CJSC acquired the assets of Hrazdan Energy’s 5th Energy Block, assuming the obligation to modernize and finish its construction. Some $465.2 million was invested in the project.
Data released by Armenia’s Public Services Regulatory Commission in 2017 shows that the 5th Energy Block had outstripped Hrazdan Energy in terms of electricity output. Hrazdan Energy produced 316.9million kilowatts per hour, while the 5th Energy Block produced 992.6 million.
One-Third of Hrazdan Residents are Unemployed
|Hrazdan was registered as a town in 1959|
Thousands of workers once walked down Hrazdan’s Factory Street to reach the town’s industrial section. The one-kilometer street, once in good shape, is now difficult to traverse, especially during the spring pot hole season. Today, only 2,000 workers use the route to get to their jobs.
Replying to a Hetq inquiry as to whether the municipality has any programs in place to reenergize industry, Hrazdan Mayor Aram Danielyan stated: “We will renovate the streets leading to the factories, allocate land to newly created legal entities to build solar power stations and a green house, and issue new building permits.”
All this falls within the purview of the municipality; it’s the job of local government. Factory Street, however, remains in a state of disrepair.
None of the industrial giants still operating in Hrazdan conduct any social programs for town residents. Mayor Danielyan also confirms this.
Danielyan named some new businesses that have opened shop in Hrazdan during the past five years – Mining Richness, Green Farmer LLC, Solar Station, Investment Media Group, and several that make bread, pastries, clothing, rugs, cement bricks, aluminum roofing and stone items.
These are small enterprises that don’t employ many people.
With on-third of its population unemployed, a diminishing tax base, and no prospects of large-scale businesses setting up shop in the area, Hrazdan faces an uncertain future.