U.K. firm to acquire Georgia’s 256-MW Vartsikhe cascade

Georgia’s Cabinet has approved a memorandum of understanding allowing the sale of the 256-MW Vartsikhe hydropower cascade to British steel maker Stemcor UK Ltd. for US$57 million.

The Georgia government and Stemcor, owner of the Zestaponi Ferro Alloy Plant in Georgia, are to sign the memorandum, which includes provision for Stemcor to pay the 63 million lari (US$36.3 million) debt of the recently acquired Zestaponi, the Georgian Times reported.

Georgia Finance Minister Irakli Chogovadze said the hydropower cascade — Vartsikhe 1, 2, 3, and 4 of 64 MW each — is being sold without a privatization auction due to the need for Zestaponi to be supplied with uninterrupted electricity. Georgia has been conducting a program of hydro plant privatization, most recently selling six projects totaling 361.4 MW to Energo-Pro of the Czech Republic. (HNN 6/23/06)

Additionally, Stemcor said it would take part in the privatization auction of manganese mining company JS Tchiaturmarganetsi (or Chiaturmanganumi), which is to have a starting bid price of US$20 million.

Chogovadze said it is more profitable if one company owns both Zestaponi and Tchiaturmarganetsi, UNA-Georgia reported. In 2005, Russia’s EvrAzHolding withdrew from a privatization deal for both Tchiaturmarganetsi and Vartsikhe cascade, reportedly due to falling manganese prices.

In a 2002 study of Georgia hydro project refurbishment, the United States Agency for International Development listed the Vartsikhe projects — built in 1976, 1978, 1980, and 1987 — among the top 21 candidates for refurbishment work.

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