The loan, on-lent to the Georgian State Elektrosystem (GSE), the state-owned electricity transmission company, will finance the construction of a 315 km high voltage electricity line between Zestaponi in western Georgia and Gardabani in the eastern part of the country. The project will include the construction of a back-to-back converter station in Akhaltsikhe, close to Turkish border, which will interconnect the Georgian and Turkish power networks.

The project, which is the one of the largest infrastructure investments in Georgia, is co-financed with the European Investment Bank, the European Union Neighbouring Investment Facility and the German Kreditanstalt für Wiederaufbau (KfW). Technical assistance funds aimed at improving the regulatory framework for electricity market in Georgia are provided by the EBRD Shareholders’ Special Fund.

The new power line will considerably improve the reliability of electricity supply and boost energy security in Georgia and in the wider region. In addition, by interconnecting the Georgian and Turkish power grids the project will enable Georgia to export its excess of energy available in summer time from existing and future hydropower plants. The improved infrastructure will boost the development of green hydro power plants in Georgia and in the neighbouring countries by providing access to new export markets such as Turkey.

“The EBRD is pleased to support this important project for Georgia and the whole region. The Black Sea High Voltage line will increase the reliability of power supply in the Caucasus and will provide a new opportunity for electricity trading in the region. Moreover this project will open the door to future investments in the electricity generation sector, in particular in renewable energy, for which the Caucasus region has huge potential,” said EBRD President Thomas Mirow at the signing ceremony that took place today in the Georgian capital Tbilisi.

“This is the one of the largest infrastructure projects undertaken by Georgia which will benefit the country in the short term with the construction works for the high voltage line. When operational in 2012, the line will also generate revenues from export of electricity and foster further investments in particular for the construction of new hydro power plants”, added Aleksander Khetaguri, Georgia’s Minister of Energy.

Since the beginning of its operations in Georgia, the Bank has committed over €700 million in approximately 120 projects in the financial, corporate, infrastructure and energy sectors, mobilising additional investment in excess of €2.7 billion.