The FINANCIAL — The European Bank for Reconstruction and Development (EBRD) has arranged a USD 65 million syndicated loan to Wissol Petroleum Georgia to support the expansion of gas filling stations in Georgia that offer compressed natural gas (CNG), an environmentally-friendly alternative to conventional fuels. During the first five months of 2014 the EBRD has issued EUR 120 million for Georgia. The Bank plans to invest over EUR 200-250 million in Georgia.
The loan consists of an “A” loan of up to USD 40 million for the EBRD’s own account, and a “B” loan of up to USD 25 million, to be syndicated to the Dutch development bank FMO. This is the first corporate sector syndication in Georgia with a local private partner and an international bank.
The syndicated loan will support the ambitious investment programme of Wissol, which aims to open up to 38 new CNG filling stations that will use advanced equipment. The programme will also improve the infrastructure of the company’s existing stations, providing CNG along with other fuels and using modern energy efficiency technologies, thus helping the Wissol stations to meet higher environmental standards.
Gas installation for medium sized cars costs GEL 2,000 and for expensive cars – GEL 3,000 and up. Natural gas cars need to be checked every three years for which drivers pay GEL 60. Besides these basic costs, using natural gas cuts transportation costs by half.
“Last year we invested slightly under EUR 120 million in Georgia. This year, in the first five months alone we invested slightly more than EUR 120 million. I hope that by the end of the year we will be able to have around EUR 200 and 250 million, which will be twice more than in the previous year. Many things can happen, but this will be my target,” Bruno Balvanera, EBRD Director for the Caucasus, Moldova and Belarus, told The FINANCIAL.
Compressed natural gas (CNG), the fuel of the future, has been available at Wissol since September, 2007. Compressed Natural Gas or CNG is an environmentally clean alternative to fuels for it reduces harmful pollutants and exhaust emissions.
Wissol Gas CNG is sold for GEL 1.05.
At the moment Wissol Gas successfully operates 7 CNG refueling stations in Tbilisi, Telavi, Zestaponi, Sachkhere and Khashuri.
“The most important pillar of our strategy is to support the private sector. We have been working with Wissol for a long time. We know them. We have had different transactions with them in the past. We believe in their professionalism, in their vision, management, customer service. Now they have decided to invest and we are financing them. We are following them. They decided it now. It is a good time to invest in Georgia, to expand their activities and to go toward alternative fuel for cars. We agree with them and are supportive of their initiative,” said Balvanera.
According to Balvanera, the main criteria while deciding to finance the corporate sector are the following: the project needs to be successful and profitable. “We spend a lot of time in the scrutiny of different scenarios of the financial viability of the company. We look into different prices, cost, assumptions, and we need to be confident to see that the project is going to be successful. The second criterion is that we pay a lot of attention to ensuring that every single project that we do is environmentally friendly. This project is really environmentally friendly, because it is reducing the consumption of traditional fuel for cars and is replacing them with more environmentally friendly ones.”
“This is a significant event not only for Wissol Group, but for the Georgian economy as a whole. We are proud to be the first Georgian company from the corporate sector to obtain a syndicated loan. The facility will enable us to create more jobs, to bring cleaner and safer fuel to the public and to improve energy efficiency in our everyday operations,” said Samson Pkhakadze, Wissol Group President.
According to Pkhakadze, the company was working to accept the loan for two years. In his words, the Ukrainian unrest had a negative impact on the international institution’s attitude towards the region.
Pkhakadze kept confidential the terms of the loan but said that the rates are lower than from local banks.
“It take us two years because we are very careful, we looked at every single detail. Every time we make an investment, we are pretty sure that this is going to be a good investment, both in Georgia and overall in all the countries where we work,” said Balvanera.
“The EBRD has never changed the view of the project or the view of the country. We are fully committed. The Ukrainian unrest has created some uncertainties, but the EBRD remains very committed. What it has affected, is that some western commercial banks have taken a little bit more of a precautious view of the region. So, they decided that it was not the right place to finance this project. Fortunately the EBRD has a big portfolio of potential investors. We started discussing with Dutch FMO, which is a very strong fund that is focused on supporting the development of these markets. So, the Ukrainian events did affect this specific case, but there is always a second chance, which we found,” Balvanera explained.
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