EBRD and IFC finance hydro power modernisation in Georgia
30 June, 2011
EBRD and IFC finance hydro power modernisation in Georgia

International Finance Corporation,  member of the World Bank Group, and the European Bank for Reconstruction and Development are helping Georgia reduce its dependence on carbon-based electricity and increase its energy self-sufficiency by investing USD115.5 million in the Paravani hydropower plant. 

The IFC and EBRD will provide Georgia Urban Energy, a subsidiary of Turkey’s Anadolu Endustri Holding with a loan to co-finance the construction and operation of its 87 Megawatt Paravani Hydro power Plant (HPP) in the south west of Georgia.

The USD

115 million worth credit includes USD 52 million and USD 40.5 million disbursed by the EBRD and IFC respectively, syndicating further USD 23 million with commercial banks. As part of the project financing, the EBRD will also take USD 5 million equity in Georgian-Urban Energy.

The 87megawatt Parvani hydropower plant is the first investment and project financing by IFC and EBRD in the renewable-energy sector in Georgia, international financial institutions informed Georgian Journal on June 23, 2011.

The development of Georgia’s large hydro resources will help the country to reduce carbon-based generation and also cut dependence on imported fuels in winter months.

“This project confirms the EBRD’s determination to continue making significant investments in renewable energy in a drive to boost competitiveness of economies in the region, improve Georgian energy security and also mitigate the impact of climate change,” Nandita Parshad, the EBRD’s Director for Power and Energy Utilities, said. “This first private power generation project in Georgia complements our overall strategy for Georgia and our recent investment in the high voltage transmission network in Georgia.”

This strategic support by these lenders is supposed to pioneer the investors to Georgian market and strengthen the relationship between Turkey and Georgia.

Hursit Zorlu, Chief Financial Officer of Anadolu Group, said that the Paravani project is expanding Anadolu’s renewable-energy generation capacity. “It will also benefit the Turkish electricity market to which Paravani hydropower plant will be able to export green energy,” he added.

The project will provide Georgia with electricity during the winter months, when the country is energy deficient, and export to Turkey in the summer, when Georgia has excess capacity.

According to Gulrez Hoda, IFC Director for Infrastructure and Natural Resources in Europe, Middle East and North Africa, one of IFC’s key priorities is climate-change mitigation and the Pravani HPP is a ground-breaking project “that supports Georgia’s efforts to increase renewable energy output, avoid carbon emissions, and achieve energy self-sufficiency”.

In fiscal 2010, the IFC increased investments in renewable energy to 72% of commitments in the power sector, up from 28% in fiscal 2008. IFC has financed more than USD2.3 billion in renewable energy projects since 2005.

Around 20% of the EBRD’s annual investments are dedicated to sustainable energy projects. Under its Sustainable Energy Initiative [started in 2006] the Bank has financed around EUR 5 billion in about 300 projects yielding 27 million tonnes of carbon reductions.

The EBRD remains a committed partner in Georgia. In 2010 the EBRD’s investments totaled EUR 348.6 million. Since the beginning of its operations in Georgia, the EBRD has invested approximately EUR 1 billion in over 120 projects, with 70% of the projects representing investments into the private sector.

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