In the framework of the visit of the German President, Mr. Frank-Walter Steinmeier to Georgia, the Ministry of Finance of Georgia signed EU-supported loan agreements and a financing agreement with KfW and AFD worth of EUR 181.8 million onOctober 7th 2019 on:
1) “Support of Georgia’s Energy Sector Reform” via EU-backed Policy Based Loan II, with KfW; (PBL II) EUR 60 mln
2) “Support of Georgia’s Energy Sector Reform” via EU-backed Policy Based Loan II, with AFD; (PBL II) EUR 60 mln
3) “Communal Water Infrastructure Batumi”, with KfW; EUR 60 mln
4) “Energy efficiency measures and approach to EU-Energy efficiency standards” Phase II, with KfW; EE Batumi EUR 1.8 mln grant.
The signing took place under participation of the Parliamentary State Secretary in the German Federal Ministry for Economic Affairs and Energy, Mr. Thomas Bareiß, the French Ambassador Diego Colas and the Ambassador of the EU to Georgia, Mr Carl Hartzell. The joined efforts of Germany, France and the EU to support Georgias Energy Sector Reform receive significant grant contribution from the EU.
“PBL II” is the second year of the four year program envisaging financial support to the Energy Sector Reform of Georgia, jointly financed by KfW and AFD. Two defined directions under PBL are a) regional integration of the energy market in compliance with EU Energy Community (EUEC) treaty to strengthen Georgia’s position as a regional energy hub and b)Energy Efficiency (especially in buildings), the National Energy Efficiency Action Plan (NEEAP, released 2017) and the definition and implementation of respective Energy Efficiency Standards. In addition to KfW and AFD funding, EU has provided grant funding through its Neighborhood Investment Platform (NIP) in the amount of EUR 8,44 mln. for the Energy Efficiency measures in support of the program;
“Communal Water Infrastructure Batumi Project” is a continuation of the Project Phases I – IV. The present program envisages the rehabilitation and further extension of communal water infrastructure in the Self-Governing City of Batumi; theobjective of the program is to expand investments to suburbs of Batumi and to expand sewage treatment measures. This is to improve the living conditions in the city and to contribute to the further development of the tourism potential of Batumi;
“Energy Efficiency Measures and approach to EU-Energy efficiency standards” Phase II, is an additional grant fund provided by German Government via KfW for rehabilitation of kindergartens within the municipality of Batumi.
On October 7th 2019 the Minister of Finance of Georgia, H.E. Mr. Ivane Matchavariani and KfW’s Head of Department Asia and Europe of KfW Development Bank, Mr. Stephan Opitz,have signed Loan Agreements of EUR 60 mln for the “Support of Georgia’s Energy Sector Reform” and of EUR 60 mln for “Communal Water Infrastructure Batumi Project in Batumi. A 2nd Loan Agreement of EUR 60 mln to support Georgia’s Energy Sector Reform was signed on the same day by the Minister of Finance of Georgia, H.E. Mr. Ivane Matchavariani, the French Ambassador in Georgia, H.E. - Diego Colas, and AFD’s regional director for Eastern Europe and Central Asia, Cécile Couprie.
The EU allocates a grant contribution of EUR 8,44 mln through its Neighbourhood InvestmentPlatform (NIP) to support the Sector Reformagreement. The grant will support theestablishing of a strategic, institutional, and financial vision and framework for Energy Efficiency in Georgia, especially in the building sector. It will also promote energy efficiency through a reform program that moves Georgia from a centralized electricity market to an organised market as envisaged by EU’s Third Energy Package. The program’s implementation period will last until 2021.
Further support to prepare the Sector Reform was granted by the Governments of Germany via the Federal Ministry of Cooperation and Sustainable Development (BMZ) and of France via the Agence Française de Développement (AFD).
To kick-start the sector development for Energy Efficiency in buildings and to support the implementation of EU-Energy Efficiency in Georgia, BMZ also mobilized significant additional grants for investments into Energy Efficiency Measures in social infrastructure(Kindergartens) in Batumi. Therefore, a grant agreement of additional EUR 1,8 mln (EUR 5.6 mln as Initial grant) was signed today by Minister of Finance of Georgia, H.E. Mr. Ivane Matchavariani and Head of Department Asia and Europe of KfW Development Bank, Mr. Stephan Opitz.
Since 2006 German Government through KfW Development Bank is heavily investing in rehabilitation of municipal infrastructure in Batumi. The Communal Infrastructure Program phases I-IV gave significant hint to development of the touristic potential of Batumi and Adjara region. Overall investment volume till now is around EUR 140 mln including EU NIF grants. Under the current program KfW finances extension and technological upgrade of the existing Waste Water Treatment Plant (catchment of phosphorus and methane gas) as well as the extensions of water and wastewater networks to additional districts in Batumi.
“We are delighted to witness today the signing of the two Loan Agreements and a Grant Agreement with our Georgian partners. It is another step into the future for Georgia’sEnergy Market and for a sustainable development of communal infrastructure in the country, considering its importance not only for Georgia but also for the whole region. In particular I would like to underline the importance of our Cooperation with our French colleagues from the AFD as another example for bundling capacities to achieve a joined goal. The EU as trusted partner plays another key role for a successful development in Georgiaand the South Caucasus.
The EU via its NIP- facility has contributed not only to this program but to a number of infrastructure projects including energy and communal infrastructure in Georgia financed by German Financial Cooperation with regional importance. Among them are: Black Sea Energy Transmission Project and Jvari substation construction project. We believe that our joint contribution plays a significant role inthe further development of the country’s economy”, said KfW’s Stephan Opitz. Once again we would like to express our gratitude to all signatory parties to this Agreement.
“It is also a great honour to contribute to the enforcement of such expected reforms in the energy sector. They will not only lead to a significant modernisation for the Georgian electricity market but will also be a most encouraging milestone in the efforts of the country to promote sustainable development and green economy, through the promotion of voluntarist public policies in favour of Energy Efficiency.
We are delighted to strengthen our collaboration in the energy sector with the Government of Georgia through this ambitious program. We also extremely value to team up with our German partners from KfW as their long involvement in the energy field in Georgia is a great asset for fostering the successful implementation of the program. Finally, we are more than glad that this project benefits from the full assistance of the European Union which is a key supporter of the efforts that Georgia has constantly deployed over the past years to promote the modernisation of its energy sector ” said Cécile Couprie, AFD’s regional Director for Eastern Europe and Central Asia”.
"The EU is happy to continue its long-standing assistance to Georgian energy reform, jointly with our trusted partners KfW and AFD. Their respective financing agreements signed today, backed by EU grant contribution, provide an important support for Georgia on its pro-European path towards sustainable energy market with focus on energy efficiency.
With our combined efforts, we work closely with the Government and other stakeholders on enabling large-scale improvement of energy efficiency in buildings.
We now count on the Parliament to swiftly adopt the necessary legislation and the Government to mobilise the capacity for its implementation, in order for Georgian citizens and businesses to enjoy the economic, health and environmental benefits of energy efficiency."
KfW Development Bank
KfW Development Bank is one of the leading financiers of development in Georgia and in the Caucasus Region. The aim of KfW´s work on behalf of the German Government is to assist in improving economic and social conditions in Georgia and the other countries of the South Caucasus. Accordingly, KfW financesinvestments in economic and social infrastructure and promotes the private sector - in particular small and medium enterprises.
KfW´s activities in Georgia started already in 1993. Since then more than EUR 1.3 billionhave been invested in different sectors, among them are energy, financial, municipal infrastructure, environment and health sectors. App. EUR 500 million of the whole investment () is attributed to the energy sector of Georgia.
The French Development Agency (AFD)
AFD is an inclusive public financial institution and the main actor in France’s development policy. AFD finances many sectors – energy, health, biodiversity, water, transport and urban development, digital technologies, training – and supports the transition to a safer, more equitable and more sustainable world. Through its network of 85 agencies, AFD operates in 115 countries. In 2018, it earmarked EUR 11.4bn to finance these projects.
AFD’s commitment in Georgia was first materialized by the opening in 2016 of its South Caucasus Office in Tbilisi. Since then, AFD and the Government of Georgia have established a flourishing collaboration that has for the moment being led to an active portfolio of 250million of euros of engagements, in the sectors of energy, water and sanitation, agriculture and social welfare.