The FINANCIAL — TBC Bank has funded over 10 energy projects, amounting to GEL 150 million. An additional 4 projects are in the pipeline. Meanwhile the Bank has taken on the responsibility of getting involved in the further development of the Georgian energy sector. In regard to this, the Bank initiated and organized a conference which brought together decision-making bodies to discuss the challenges and opportunities of one of Georgia’s most promising business sectors.
The energy conference was attended by the Ministry of Energy of Georgia, Partnership Fund, representatives of all the major energy companies, and representatives of EBRD and USAID. The goal of the conference was to discuss the challenges and future development opportunities of Georgia’s energy sector. It was also aimed at sharing experience between the members of the Government, major players of the sector and field specialists. TBC Bank is a leading Georgian bank in terms of financing the energy sector.
“The energy conference will enable us to fully reveal the challenges and opportunities of the field from the standpoint of regulating bodies and representatives of the companies operating in the energy sector in Georgia or abroad. It is notable that TBC Bank is the host of such a significant event, as the role of the banking sector is of utmost importance in the development of the Georgian energy sector.
It is the first time that an energy conference of such a scale has been initiated and organized by the commercial bank,” said Vakhtang Butskhrikidze, Director General at BTC Bank.
In Butskhrikidze’s words, the Bank recently financed over 10 energy projects with a total capacity of more than GEL 150 million. As he said, this is just the beginning, and the Bank wants to further increase its participation. Butskhrikidze believes that the conference will contribute to this.
“An additional 3-4 energy projects are in the pipeline. The Georgian energy sector has great prospects. Its consumption is increasing annually. In recent years, we have reached a threshold where demand exceeded supply. The development of the energy sector and increase of supply are therefore one of the most important directions. Accordingly, we will be actively involved in this process,” Butskhrikidze said.
With 7% of the total FDI portfolio, the energy sector is the sixth most attractive business field for foreign investors. During the first three quarters of 2014 FDI in the energy sector amounted to GEL 93 million. Kakha Kaladze, Minister of Energy of Georgia who opened the conference, said that over 10 hydro power stations will be constructed in Georgia in 2015.
“We are starting the implementation of various huge projects. 800-megawatt projects are being undertaken. Adjar Energy, the projects of TATA Group, and Dariali HPP will be included in the development. In addition, Neskras, Nabakhvani, Oni, and Tskhenistkali Hydro Power Plants are scheduled to be constructed this year. Small-scale hydro power plants will also be constructed. The combined cost of the projects is over USD 2 billion,” said Kaladze.
According to Kaladze, Indian TATA Group is investing a huge sum in the energy sector. In addition there are active investors from Turkey, Norway, the USA and other countries.
“Many important, interesting projects have been implemented in recent years. Significant changes were implemented on the regulations side. In turn this has been reflected in investments. We are all very happy that local business is being so active in this field. The role of the international financial institutions and local banks is very important for our country’s development,” the Minister said.
As Kaladze said, the Ministry of Energy is actively engaged in attracting foreign investment. He equated the energy independence of Georgia with the independence of the whole country.
“Gaining energy independence from import is a long-term perspective. Energy consumption is increasing by 7-8% annually. Existing projects are being completed together with Hudon Hydro Power station,” said Kaladze.
“Today, unfortunately, Georgia is energy dependent on its neighbouring countries. Annually, especially in winter, we import from our neighbouring countries. However, Georgia has a real possibility to gain energy independence. Moreover, the generated electricity could be not only consumed by the local market, but also exported to neighbouring countries,” he added.
In 2014 Georgia imported 300 million kilowatt-hours of electricity more than in 2013. Import totalled over 800 million kilowatt-hours. In Kaladze’s words, consumption is increasing so much that this year the country will see the same figures, despite the fact that some stations, including Dariali, will begin to be used.
“A stable investment environment and legislation are the most important things for investors. Legislation must take into account the fair and legal interests of the investors. Investors should feel stability during the payback period of investments. On its side GNERC has implemented a new tariff methodology. We tried to find a bright and clear set of rules while creating the tariff regulation. It is important for investors to be aware of what the investment return rate is, the costs reflected in the tariff, when and how a company’s revenue can be corrected, as well as other details,” said Irina Milorava, Chairman of the Georgian National Energy Regulatory Commission (GNERC).
Milorava said that large energy investment projects are co-funded by the overwhelming majority of financial institutions. Against this background, the banks are particularly active in the energy sector, because it is one of the most dynamically developing and, therefore, promising and attractive sectors for private investors, as well as the banking sector.
“The situation in the region is being reflected in the country’s investment environment. However, even given this situation the country should be able to maintain and develop the investment environment. It should minimize the impact of external factors on investment in the country. Today in Georgia, and more specifically, in the energy sector, there is a good investment environment. However, this does not mean that everything in this direction has already been achieved. The aim of the conference was to inform society together with the existing and potential investors about events for the development of the sector. Participants also identified the issues on which state agencies should continue to work to improve the investment environment,” Milorava told The FINANCIAL.
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