Georgian Railway develops HPP project in Caucasus highlands
09 December, 2010
Georgian Railway develops HPP project in Caucasus highlands

Georgian Railway LLC gets interested in Hydro Power Plant construction to ensure cheap electricity supply and enjoy profit from electricity export.
Georgia is supposed to export ten –times more electricity after the Black Sea  high voltage transmission line [of 500 kilowatt capacity] that is under construction at the moment, will be through by May of 2012. The growing Turkish demand for electricity lays ground to consume huge quantities of electricity export in the region irrespective of its price.
And if

today the comparatively expensive electricity generated by the newly constructed Hydro Power Plants (HPP) remains un-exported in Georgia as cannot compete with the cheaper electricity generated by old HPPs [constructed during soviet epoch of past century] during summer time [when there is s surplus of electricity generation in Georgia] all electricity are guaranteed to enjoy export after the new transmission line comes true in 2012.
To boost HPP construction Georgian government addressed to a new policy of attracting investments in paper-projects via IPO [Initial Public Offering] at international stock exchanges. One of the upcoming HPP projects slated for IPO is a 400 megawatt [installed capacity] Menskra HPP projected to be constructed in Mestia, Svaneti region, utmost highlands of  Caucasus Mountains.
The project tentative price is USD 500 million and Georgian Railway LLC, the state owned enterprises, is the project developer. Georgian Railway after successful allocation of USD 250 million worth Eurobonds this past summer at London Stock Exchange attracted attention of US investment funds in fall. Now the enterprise plans to attract investments to finance the Menskra HPP project via IPO.
According to Aleko Khetaguri, Minister of Energy of Georgia, the state will implement primary investments in the project, and then either enjoys the profit out of the electricity export or divests its shares. Georgian Railway Construction, a daughter company of Georgian Railway, is implementing the HPP project. 
“Georgian Railway is a big electricity consumer and it is interested to have its own supplier on one hand, on the other hand it can export electricity and enjoy profit,” Khetaguri said.
According to Archil Giorgadze, a Spokesperson of Georgian Railway, irrespective success of Georgian energy system it faces deficit in winter and needs to import electricity. Moreover, during winter Georgian local electricity generation is basically depending on thermal power station-generation that is much more expensive than the HPP-generated electricity. The Menskra-based HPP creates a unique opportunity to construct a HPP regulating this seasonal effect.
According to feasibility study, the landscape of the river Menskra enables to construct a HPP with a specific arch that will not be dependent on seasonal inflow of river. It will accumulate water reserves in summer and enable HPP to generate electricity in winter thus escaping electricity deficit.
Georgian Railway believes that attraction portfolio-investments via IPO is the best world experience when the idea is based on goods figures and has already started negotiations with international investment banks including JP Morgan, HSBC, UBC, CT Bank, and others to secure high-skilled consultations.
Feasibility study on Menskra HPP is scheduled to be completed by March of 2011 that will lay ground to IPO. Construction works are supposed to start by 2012.
Khetaguri assures that interest of investors rather increased than decreased due to underway financial crisis [due to increasing electricity demand of Turkey] that is a precondition to successful attraction of investors to Georgian HPP projects via IPO.

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