Iran and its northwestern neighbor, Armenia, have signed a new contract for the construction of the third power transmission line that will enable the two countries to exchange more electricity.

According to Iranian media, the contract was signed by Ali Salehabadi, managing director of the Export Development Bank of Iran (EDBI), and Aram Ananian, managing director of Armenia’s High Voltage Electricity Network (HVEN) company in Tehran on Sunday.

According to the contract, EDBI will provide €83 million of the total €107.9 million needed to build the power line. The project is scheduled to be implemented in 18 months to pave the way for the exchange of electricity between Iran and Armenia.

Speaking to reporters on the sidelines of the contract signing ceremony, the managing director of EDBI said, “Suitable grounds for the conclusion of this contract were provided in a trip to Armenia and through negotiations with that country’s Energy Ministry officials and prime minister, and the contract was signed today with HVEN company.”

He added that Iran and Armenia have been cooperating for gas and power swap, and overall relations between the two countries have expanded in parallel to the increase in the volume of their bilateral trade.

“Commissioning of the new power line between Iran and Armenia will further strengthen trade ties between the two countries and even Georgia can take advantage of this electricity transmission line,” he said.

Salehabadi further noted that construction of the line will soon start by Iran's SANIR company with the goal of promoting relations between the two countries, especially in the field of bilateral trade.

The managing director of Armenia’s HVEN, for his part, told reporters that high-ranking officials from both countries had emphasized the importance of this contract since three years ago and “today, we witnessed the signing of the contract in Tehran.”

Ananian added that the existing electricity transmission lines between Iran and Armenia are capable of transmitting 300 megawatts (MW) of electricity and cannot be used for the exchange of more power.

“After construction of the third line, it would be possible for the two countries to exchange 700 MW of electricity, thus increasing total volume of power exchanged between the two sides to 1,000 MW,” he added.

The Armenian official stated that the third Iran-Armenia power transmission line will be also connected to national power grids in Armenia, Georgia, Russia and Turkey, adding, “The third line will make it possible for Iran's national power grid to get connected to national power grid of Turkey through the power grids of Georgia and Armenia.”