The European Investment Bank (EIB) lends EUR 80 million to the Republic of Georgia to finance the extension and upgrading of the country’s high voltage transmission network and its interconnection with the electricity grid in neighbouring Turkey.

Ms Eva Srejber, EIB Vice-President responsible for lending in Eastern Partner Countries (EPC), including Georgia stated: “ The EIB is pleased to support this flagship project that will improve Georgia’s quality and security of energy supply, as well as increase its possibilities for exporting and transiting electricity, notably from existing and new hydro-power plants. ”

The project covers the construction of a 246 km long 500 kV link from Gardbani, close to Tbilisi, to Zestaponi, central-western Georgia, the construction of a 700 MW back-to-back converter station near Akhaltsikhe on the Turkish border and of a 165 km long 400 kV interconnection line from Akhaltsikhe to the Turkish electricity grid.

The Government of Georgia (GoG) has embarked on a strategy to privatise more than 80 small and large green-field sites for hydro-power development. The project is a key element in the GoG’s energy sector strategy as it will provide the capacity required for power exports to Turkey. The implementation of the project is expected to have a signalling effect to attract private hydro-power plant investors to Georgia.

As the project will facilitate transmission of electricity produced through hydro-power, EIB funds will contribute to the reduction of greenhouse gas emissions. In addition, the project forms part of the Black Sea Electricity Ring (Russia – Ukraine – Romania – Bulgaria – Turkey – Georgia), which aims at promoting interoperability and operational reliability of electricity connections with non-EU Member States, and is hence of common EU interest.

In Georgia, the project will be co-financed by the KfW, EBRD, a grant from the Neighbourhood Investment Facility and from the budgetary resources of the Republic of Georgia.

Background:

The EIB can lend up to EUR 3.7 billion with a Community Guarantee to projects in Russia, Eastern European and Southern Caucasus countries within the period 2007 - 2013. There is no ex-ante allocation of the overall amount by country. Under this mandate, the EIB is prepared to consider support to sound projects in the areas of transport, energy, telecommunications and environmental infrastructure, as well as to certain structures for lending to small and medium sized enterprises (SMEs).

In addition, EIB has recently set up the Eastern Partners Facility (EPF) in an amount of EUR 1.5 billion that will complement the afore-mentioned mandate for the 2007-2013 period and will enable the Bank to support notably EU Foreign Direct Investments (FDI) in the region.

In Georgia, apart from the current loan, the EIB is currently preparing loans totalling some EUR 200 million in the fields of water supply and sanitation, transport infrastructure, SMEs and energy efficiency, as well as renewable energy.