Two hydro power plants (HPPs)-namely, Meghri and Gharachikar-will be built on the Arax River with Armenian-Iranian cooperation. The groundbreaking ceremony of Meghri HPP was held on November 8 on the Armenian side of the border, reported News.am. The agreement on the hydro power plant construction received in 2007-2008. Two inter-governmental agreements have been ratified by the parliaments of both countries. Meghri HPP will have an installed capacity 130 megawatts and produce about 800 million kW/h electricity per year. The plant will be constructed in compliance with the internationally accepted environmental standards. The investor from the Iranian side is "Tavan Ab Araz Company" which, in line with the already-signed agreement, will resolve all matters connected with Meghri HPP's construction and starting of its operation. The construction will be carried out within 5 years and, 15 years thereafter, the plant will be transferred to the Armenian side at no cost. Also, an agreement is reached whereby solely local manpower will be used for the plant's construction.

The history of construction of two hydro-power plants on the Arax (Araz) River lasted nearly 10 years, with estimated in 2001 construction cost about US$60-80million. After signing on March 19, 2007 the interstate agreement between Armenia and Iran, the Armenian Energy Minister Armen Movsisyan announced the construction of 2 power plants with capacity of 140 megawatts each, with estimated construction cost about US$140million and construction start in 2008. And finally, according to the latest announcement of Minister, the construction of two 130 megawatts power stations will start in early 2011 with estimated cost US$323million... A distinctive feature of the License Agreement between two countries is that the Armenian side does not finance and build these power stations, and everything is done by the Iranian side. The Armenian part of the station, which is called Meghri HPP must be given to Armenia without indemnity after 20 years, which include 5-year construction period and 15-year exploitation and payback period through the sale of electricity to Iran. Construction will be implemented by the Iranian company Farad-Sepasad, which will solve on its own all the financial and organization problems concerning the construction and the exploitation of Meghri HPP. Meghri HPP energy output is planned to be about 800 million kWh/year, and it must be founded jointly that at the transmission time the electromechanical and hydro mechanical devices have resources for the 10-year effective operation, and the tunnel (18.2km) and engineering structures have resources for 30 years. Along with the construction of hydroelectric power stations, parties are going to start building of a new additional third high-voltage (400kV) transmission line which will increase the power transmission between the two countries to 1000MVt. The construction of this third high-voltage line and "Noravan" substation will cost about € 108 million and will be implemented during 18 months. The length of the transmission line in Armenia is approximately 275 kilometres (from the border of Iran to "Noravan" substation- 80 kilometres, from "Noravan" substation to Hrazdan fifth energy block - 195 kilometres) and 163 kilometres in Iran.

At the August 20 sitting, the Armenian government made an amendment to the RA government's Protocol Decision on Approval of the List of Measures Proceeding from the Speech of RA Prime Minister at the National Assembly. In particular, the section "Implementation of New Energy Projects of Regional Significance" in the decision's appendix was laid down in a new version and the construction of Meghri hydropower plant was included in the list. The construction work is to be done in 2010-2015. According to the RA Government Press and PR Department, the necessity to make the indicated amendment arose in connection with the Memorandum on Mutual Understanding on the Construction of the Meghri Hydrpower Plant which was signed between the energy ministries of Armenia and Iran during the Armenian president's visit to Iran. Approving the decision, RA Prime Minister Tigran Sargsyan addressed the problems related to the financial stability of Armenia's energy sector. He proposed taking a protocol decision for ensuring the financial stability of the energy system. "For preventing a rise in the tariff of power sold to ultimate consumers, there is a necessity to fill the financial gaps in the energy system at the expense of state enterprises operating in the sector," the prime minister said.