European bank allots hydro, grid aid to post-conflict Georgia

The European Investment Bank (EIB) is allocating more than 200 million euros (US$256.2 million) to the government of Georgia, including hydropower funding, to help the eastern European republic recover from its August conflict with Russia.

EIB took part in a Georgia Donors’ Conference in Brussels in which international financial institutions said they would invest to promote economic and social progress in post-conflict Georgia.

“In particular, the EIB is considering financing projects relating to the generation or transportation of energy, i.e. high-voltage transmission lines, 56 million euros (US71.7 million), and hydropower plants, 90 million euros (US$115.3 million),” an EIB statement said.

The bank said it also was looking at providing loans of 65 million (US$83.3 million) for railways and 11 million euros (US$14 million) for reconstruction of the runway at Tbilisi airport.

EIB said it expects to co-finance the investments in equal amounts with the European Bank for Reconstruction and Development (EBRD).

“Both banks will seek grant support from the European Commission, e.g. under the Neighborhood Investment Fund (NIF), and other sources as and when appropriate to accompany our loans and to further soften our loan terms,” EIB said.

The bank noted a high-voltage lines project already is being prepared with financing including an 8 million euro (US$10.2 million) grant from NIF for technical assistance that already has been approved. The 56 million euro (US$71.7 million) loans from EIB and EBRD would be added to a 100 million euro (US$128 million) loan from KfW Bankengruppe.

German lender KfW Entwicklungsbank already seeks consultants to help expand Georgia’s transmission system, called a pre-condition for development of Georgia’s hydropower resources. (HNN 10/16/08)

Norway previously announced it would provide 235 million kroner (US$302.5 million) to Georgia including assistance for hydropower development. (HNN 10/24/08) The United States also announced at least US$1 billion in aid to help Georgia rebuild after its conflict with Russia over the separatist enclave of South Ossetia. (HNN 9/4/08)

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