YEREVAN /ARКА/. The Armenian government has given its approval to a draft law that ratifies the loan agree- ment for the “Caucasus Transmission Network IV” with the German devel- opment bank KfW. During the government meeting on August 13, a draft presidential decree was also approved, which endorses the grant agreement for the second phase of the EU’s “Caucasus Transmission Network” initiative. According to the rationale behind the decision, the €120 million loan agreement was signed between Arme- nia and KfW on March 19, 2026. Additionally, several loan and grant agreements have been finalized under the “Caucasus Transmission Network (Armenia-Georgia Power Line/Substa- tions)” program. The program aims to link the power systems of Armenia and Geor- gia through a 500/400/220 kV high- voltage direct current (HVDC) con- verter station, which will be situated in Ayrum, close to the Armenian-Geor- gian border. The station’s ultimate ca- pacity is set to reach 1,050 MW. On the Georgian side, the connec- tion will be made from the Marneuli substation via a 500 kV overhead pow- er line, while on the Armenian side, it will connect from the 400/220 kV sub- station in Ddmashen through a 400 kV overhead power line. Consequently, the electricity ex- change capacity between Armenia and Georgia is expected to rise from the current 200 MW to 350 MW in the initial phase, and eventually to 1,050 MW, depending on the demand in the regional market. The justification states that the construction of new overhead power lines will enhance the quality of elec- tricity supply, foster mutually benefi- cial regional cooperation in the energy sector, and lay the groundwork for es- tablishing parallel operations with the power systems of CIS countries. Currently, the power systems of Armenia and Georgia are connected by three transmission lines: Alaverdi (220 kV), Ashotsk-Ninotsminda (110 kV), and Lalvar (110 kV). The Caucasus Power Transmission Network program envisages the creation of a new high- voltage interconnection: a 400 kV line and a converter station in Ayrum will be built on the Armenian side, which will be connected to the Georgian power system via a 500 kV line.