"The agreement provides for cooperation in the construction of a new nuclear power unit in Armenia," Armenian Energy Minister Armen Movsisian told AFP after a signing ceremony during a visit by Russian President Dmitry Medvedev.

"A joint venture will be created with (Russian state atomic agency) Rosatom which will provide the new block with equipment for the reactor," he said.

Armenian lawmakers last year approved the construction of the new 1,060-megawatt reactor unit, expected to cost up to five billion dollars (four billion euros), despite international concerns over the ageing plant.

Armenia relies on the plant, 30 kilometres (20 miles) west of the capital Yerevan, for 40 percent of its electricity needs.

The European Union has pleaded with Armenia to shut down the plant, which is in an area prone to earthquakes, and in 2004 offered to provide 100 million euros in compensatory aid.

But Armenian officials say the country cannot afford to do without the plant, which also provides electricity for export to neighbouring Iran.

earlier related report
No 'risk' from Iran's Russian-built nuclear plant: US
Washington (AFP) Aug 21, 2010 - The United States sees no "proliferation risk" from Iran's Russian-built first nuclear power plant at Bushehr that was loaded with fuel Saturday, the State Department said.

The Russian involvement in the reactor, intended for civilian purposes, "underscores that Iran does not need an indigenous enrichment capability if its intentions are purely peaceful," State Department spokesman Darby Holladay told AFP.

"We recognize that the Bushehr reactor is designed to provide civilian nuclear power and do not view it as a proliferation risk," he said.

The reactor, said Holladay, is "under IAEA (International Atomic Energy Agency) safeguards and Russia is providing the needed fuel and taking back the spent nuclear fuel, which would be the principal source of proliferation concerns."

A White House official stressed, however, that US views on the Bushehr reactor "should not be confused with the world's fundamental concerns with Iran's overall nuclear intentions, particularly its pursuit of uranium enrichment."

After more than three decades of construction delays, engineers on Saturday finally began loading the Russia-supplied atomic fuel in the nuclear power plant in the presence of UN inspectors.

Western nations led by Washington suspect that Iran's nuclear program masks a weapons drive, a charge strongly denied by Tehran.

Russia's supply of fuel to Iran is the "model" that Washington and its P5-plus-one partners -- permanent UN Security Council members Britain, China, France, Russia and the United States, plus Germany -- have endorsed, Holladay said.

But he added: "It is important to remember that the IAEA's access to Bushehr is separate from and should not be confused with Iran's broader obligations to the IAEA on this score, as the IAEA has consistently reported Iran remains in serious violation of its obligations."

In June, Russia backed a fourth round of UN sanctions against Iran over its uranium enrichment program, the most controversial part of its atomic drive.

Iran says it is enriching uranium to power nuclear reactors so they can eventually generate around 20,000 megawatts of electricity.

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