30 October 2025
Authors: Matteo Caroli, Leopoldo Mandelli, Luca Silla, Amerigo Silvestri
Abstract:
In December 2016, the government of the Republic of Armenia (RA) signed a memorandum of understanding (MoU) with an Italian medium-sized construction company, Renco S.p.A Group (RESpa). The MoU detailed the indicative commitments of the three pivotal counterparts potentially involved: the Armenian government (the project promoter), RESpa (the project’s main initial developer) and the to-be-established project company (the special purpose vehicle – SPV or “project company”). The MoU, based on a Build-Own-and-Operate (BOO) project financing contractual framework, defined the preliminary responsibilities concerning the design, construction, operation and maintenance of a 250MW gas-fired combined cycle power plant in Yerevan, Armenia’s capital city (the “project”). The new plant was originally expected to replace part of the energy production of an old nuclear power plant which needed to be refurbished. For RESpa and its top management, the Chairman and the CEO, the MoU constituted a real turning point and great opportunity to improve RESpa’s track record and market position as an emerging international EPC (engineering, procurement and construction) player in the energy sector. However, the project encompassed various challenges for RESpa in terms of technical and industrial complexity, legal and commercial matters and, above all, considerable potential employment of capital and financial resources. On the one hand, the CEO and the management team were aware of the opportunity and prestige created by the MoU, but, on the other hand, they knew all too well that the project would generate a variety of critical risks which, if not managed properly, could damage the company’s reputation and stress its financial position. RESpa and its management were therefore required to find an efficient and winning solution to seek industrial and financial partners without losing visibility vis-à-vis Armenian political decision-makers, competitors and other market players. The key success factors for RESpa were identifying the most suitable project working organisation, project partners, several co-investors and the right risk strategy to cover operational and political risks.
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