Negotiations heat up over Zvartnots Airport expansion plan

Zvartnots Airport, Yerevan, Armenia

By Mark Dovich

Armenia has indicated the 20% internal rate of return it grants to Corporación América Airports remains a key sticking point in ongoing talks over a major expansion plan for Zvartnots, the country’s main airport.

The Armenian government is seeking to lower that figure, which refers to the compounded annual rate of return the Luxembourg-based conglomerate earns every year for its investments, before greenlighting the construction of a second terminal, Deputy Prime Minister Mher Grigoryan revealed Wednesday.

“The negotiations are quite difficult, since we believe it is impossible to continue under the current concession agreement, since there are parameters that are unacceptable for Armenia,” Grigoryan told lawmakers at a parliamentary question-and-answer session.

In 2001, the Armenian government signed a 30-year concession agreement with Corporación América Airports, the world’s largest private airport operator. Since then, the conglomerate, which is ultimately controlled by the Argentine Armenian billionaire Eduardo Eurnekian, has invested more than $160 million in the facility.

Zvartnots smashed its all-time passenger traffic record last year at more than 5.3 million people, representing a year-on-year increase of 46%. Observers say that is mainly due to the rerouting of traffic to and from Russia through Armenia following the imposition of international sanctions and other restrictions on Russia’s aviation sector in response to its full-scale invasion of Ukraine two years ago.

In an earnings report earlier this year, Corporación América Airports said it was prepared to invest an additional $400 million in Zvartnots for the construction of a second terminal to handle increased traffic, if it can finalize an expansion agreement with the Armenian government.

There was no immediate reaction to Grigoryan’s call to agree to a lower internal rate of return.

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