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EBRD makes its first loans to Azerbaijan and Georgia: both investments benefit power sector
The European Bank for Reconstruction and Development (EBRD) has signed loans to Azerbaijan and Georgia, the first for each of the two countries of the former Soviet Union.
Azerbaijan will be able to increase its fuel oil exports and reduce gas imports as a result of a US$ 53.24 million (ECU 42.59 million equivalent) loan, signed today in London, which will enable the country to complete the construction of the Yenikend Hydropower Station located in the north-west of Azerbaijan on the Kura River.
Stijn Albregts, Director of the Azerbaijan Team at the EBRD, said: "This project, the first in Azerbaijan to be financed by an international financial institution, enables the country to substitute electricity generated by oil-fired power plants with hydropower. It will have a profound impact on Azerbaijan's foreign exchange position. The project will also provide equipment and know-how to ensure that the plant is operating safely and necessary maintenance and repair works are carried out."
The completion of Yenikend will increase hydropower generation by 520 GWh per year. The fuel savings (120,000 tonnes of fuel oil which will become available for export to the regional market, and 25 million cubic metres of natural gas) will generate for Azerbaijan additional foreign exchange in excess of loan servicing requirements of about US$ 10 million annually. Technical cooperation from various bilateral and multilateral sources will provide Azerenerji, the state power utility, with advice on energy policy, restructuring and tariff structures and tariff-setting procedures, as well as energy savings training. The EBRD will also provide technical cooperation in the areas of management, accounting and financial monitoring to help the utility to operate on a commercial basis.
Georgia will be able to rehabilitate its Rioni Hydropower Station and the Gardabani Thermal Power Station from the proceeds of a US$ 18.1 million (ECU 15.0 million equivalent) EBRD loan, which was signed in Tbilisi on 19 December. The project will provide badly needed additional electric energy to industries to fuel the country's economic recovery, increase efficiency of the power system, and partly substitute renewable hydro power for imported fossil fuel.
The project will also assist in the restructuring of the power sub-sector into commercially oriented companies, charging users cost-based tariffs and ensuring effective bill collection. In addition, the project includes advisory services for demand-side energy conservation measures and "twinning" arrangements with Western utilities to improve operational efficiency and commercial operation.
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