European bank invests in construction of Georgia’s 87-MW Paravani

TBILISI, Georgia 9/27/11 (Pennwell) — The European Bank for Reconstruction and Development (EBRD) has agreed to invest US$5 million in Georgia Urban Energy LLC, a unit of Turkey’s Anadolu Group that is developing the 87-MW Paravani hydroelectric project on Georgia’s Paravani River.

The 5 percent equity transaction is part of a larger EBRD investment that includes a US$63.5 million loan for Paravani. EBRD and the World Bank’s International Finance Corp. (IFC) are providing a US$115.5 million credit to Georgia Urban Energy to co-finance the construction and operation of Paravani.

The total US$167 million run-of-river project is to be built in the Samtskhe/Javakheti Region of southwestern Georgia and will be linked through a converter substation in Akhaltsikhe, Georgia, and by transmission lines to the Georgia and Turkey electricity grids. The substation is part of the EBRD-funded Black Sea High Voltage Transmission Line project that connects the two grids.

Dewey & LeBoeuf, which advised Georgia Urban Energy on the EBRD equity investment, also advised the developer on debt financing of the project, with loans from EBRD, IFC, and Turkish Industrial Development Bank.

Olivier Descamps, EBRD managing director for the region, said the project is a landmark transaction as the first cross-border private power generation project in Georgia. Anadalou Group Chief Executive Officer Tuncay Ozilhan said the group has a target of 2,000 MW in generation investments in Turkey and neighboring countries.

EBRD creates clean energy fund, including hydro, in region

EBRD also announced it is making a 40 million euro (US$54.4 million) equity contribution to establish the Clean Energy Transition Fund, which has a target size of 200 million euros (US$272.3 million).

The fund is to increase available capital in Turkey and neighboring countries in the western Balkans and the Caucasus to develop cleaner energy resources. The bank said the fund would focus on hydropower, wind, geothermal, biomass, and solar generation.

EBRD said the fund will seek to make 10 to 15 equity investments with individual investment ranging from 5 million to 30 million euros (US$6.8 million to US$40.8 million). At least 70 percent of operations are to be in Turkey, with the remainder in the western Balkans and the Caucasus.

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