The Nenskra Project Looks Immature
16 January, 2015
The Nenskra Project Looks Immature
The to-be-built Nenskra Hydro Power Plant with an investment price tag of 1 billion USD and a 280 mega-watt capacity looks pretty immature and non-transparent. The project initiators promise to start public discussions as soon as the company managing the project asks for the construction permit. However, as the project is initiated by the state, sector pundits say the state had to assess the project beforehand.

“The 280 mega-watt Nenskra HPP will be constructed on the river Nenskra in the
Upper Svaneti region. The HPP will produce 1.2 billion kilowatts per hour annually and the construction work will be completed within five years.”

By the end of December 2014, the state-owned Partnership Fund of Georgia and Korean company K Water signed an agreement on the construction of Nenskra HPP in the Georgian highland region of Svaneti. The project requires 1 billion USD of investment and is touted as safe for the environment. An extra benefit is that it does not require any resettlement procedures.
“For the project’s implementation, the PF management worked for several months intensively. The general project was prepared and a road for launching construction was built,” Irakli Kovzanadze, CEO of the PF said after the signing ceremony. He then added, “It’s very important that the construction of this plant will not cause problems such as the resettlement of people or environmental concerns.”
According to Kovzanadze, the plant will supply the local market with electricity and will help replace imports in the fall and winter seasons. The 280 mega-watt Nenskra HPP will be constructed on the river Nenskra in the Upper Svaneti region. The HPP will produce 1.2 billion kilowatts annually and the construction work will be completed within five years. International Finance Corporation (IFC) is the project’s advisor. The Korea Water Resources Corporation is a governmental agency specializing in comprehensive water resource development, providing both public and industrial water in South Korea. Apart from South Korea, K Water implements international projects in various countries both in Asia and Europe.
Nenskra HPP idea was initiated under the previous government in 2011 and the state-owned Georgian Railway was intent to undertake the project but the idea failed. Nenskra’s technical parameters and investment cost has also changed gradually. Initially it was touted as a 200 megawatt HPP investment worth 600 million USD. Now both the capacity and the investment cost have increased, but sector pundits find them unrealistic.
“I believe the stated investment price tag of 1 billion USD is far too high for the 280 megawatt project,” Revaz Arveladze, President of the Energy Academy of Georgia, said in an interview with Georgian Journal. “Based on current international prices, such a project may cost half of this. Today the construction of a one-megawatt plant requires about 1,500-1,700 USD. Now that the Nenskra project is expected to be a 280-megawatt project, its price comes out to a cost of more than 3,500 USD per megawatt. That is extremely high and indeed raises some questions.”
Arveladze also questions whether Nenskra HPP can generate 1.2 billion kilowatt/annually and thinks the calculation is superficial and incorrect. A 280-megawatt hydro plant is considered quite large for Georgia where the biggest hydro plant is Enguri with a capacity of 1,300 megawatts and where the second largest, Vardnil HPP, is only 220 megawatts. Arveladze also doubts that such a large power station can be as harmless to the environment as Kovzandze has promised.
“After its construction, Nenskra HPP will be the second largest hydro plant in Georgia and it is impossible that such a large project could not have an impact on the environment. Maybe it really is as positive as is touted but the problem is that these details are closed to the public. As a rule, the government either sends such big projects to us for assessment and research or puts it up for open discussion via websites or other means. But nobody has put Nenskra up for discussion yet. Therefore I have very scanty information to assess the project thoroughly and that makes me wary. And based on the few details that I am aware of, I find the project to be immature,” Arveladze said.
According to the PF, the Nenskra project will be put up for public discussions soon after the Korean company asks for the construction permit. But it cannot specify how soon. Details of the project are not completely clear at this point they say, and the possible impact of the Nenskra project on the environment will be assessed within the legal framework of the procedures necessary for the construction permit. What is clear at the moment is that the initial capital of the Nenskra project stands at 200 million USD and the PF will be financing 10 percent of this sum. The remaining 800 million USD will be provided by the Korean company later.

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