YEREVAN (RFE/RL)—An investment fund set up recently by wealthy Russian entrepreneurs of Armenian descent plans to build a major hydroelectric plant in Armenia in what will be the first business project financed by it, it was announced on Thursday.

The Armenian government gave the green light to the project, saying that it will boost the country’s energy security. The decision took the form of formal approval of a framework agreement with the fund called the Investors Club of Armenia (ICA).

“This is the first major project of the Investors Club of Armenia which has been discussed in detail ever since the creation of the fund,” Energy Minister Ashot Manukyan said at a weekly cabinet meeting.

The fund was officially presented in March at a ceremony in Yerevan attended by Prime Minister Karen Karapetyan. The latter has close rapports with its key founders, notably the Armenian-born billionaire Samvel Karapetian (no relation).

Minister for Economic Development Suren Karayan said in April that the fund’s investments in the Armenian economy should total around $300 million this year. One of Karayan’s deputies told reporters last month that the first ICA-funded projects relating to renewable energy will be launched this fall.

The new hydroelectric plant is due to be built on the Debed river flowing through Armenia’s northern Lori province. It will be located near Shnogh, a village 20 kilometers south of the country’s border with Georgia.

Manukyan told fellow cabinet members that the “modern and sophisticated” facility will absorb at least $150 million in investments and have a capacity of 76 megawatts. Power generated by it will account for 5 percent of Armenian electricity production, the energy minister said.

The ICA says on its website that the Shnogh plant’s construction will take three years. The framework agreement with the Russian-Armenian investors commits the government to guaranteeing that Armenia’s national electric utility will buy 500 million kilowatt/hours of electricity annually form the future plant.

Incidentally, the utility belongs to Samvel Karapetian’s Tashir Group. The Russian-Armenian tycoon also owns Armenia’s largest thermal power plant and shopping malls in Yerevan. The “Forbes” magazine estimates his personal fortune at $3.5billion, suggesting that he is the richest ethnic Armenian in the world.

The ICA website also reveals that the fund would like to at least partly finance the planned construction of a 100-megawatt hydroelectric plant on the Arax river marking Armenia’s border with Iran. The Armenian and Iranian governments have long been trying to implement the project.

Manukian on Thursday stressed hydropower’s importance for Armenia’s energy security. He said the Shnogh plant and smaller hydroelectric facilities currently under construction will raise renewable energy’s share in Armenian electricity output to around 50 percent.

Hydroelectric plants produced nearly one-third of Armenia’s electricity last year. The proportion stood at only 20 percent a decade ago. It has risen rapidly thanks to more than 150 small and privately owned hydroelectric plants built along fast-flowing mountainous rivers.

Hydropower is much cheaper than electricity supplied by thermal-power plants mainly using Russian natural gas.