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Changes in Georgian Energy Sector

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Changes in Georgian Energy Sector

  1. 1. Ministry of Energy and Natural Resources of GeorgiaHydropower Potential and Investment Opportunities in Georgia
  2. 2. INTRODUCTION Economy International Recognition • Open and dynamically growing • World’s Top Reformer country economy according to Ease of Doing • Minimum bureaucracy and liberal Business (WB/IFC) regulations • Government’s strong • Diversified economic growth commitment for further reforming Regional Energy Hub • Reliable transit country • Net electricity exporter to all four neighboring countries • Rapidly expandable energy markets • Construction of additional electricity export infrastructurewww.menr.gov.ge 2
  3. 3. ELECTRICITY BALANCE Seasonal Asymmetry of Generation and Current Projected Consumption Winter Summer 15% LOW LOW 100% HIGH HIGH 85% Generation Thermal & Import Hydro Consumption TW/h 2004 2005 2006 2007 2008 2009 2010 2011 Generation 6.9 7.1 7.6 8.3 8.6 8.9 10.1 10.1 Hydro 6.0 6.0 5.4 6.9 7.3 7.7 9.3 7.9 Thermal 0.9 1.0 2.2 1.5 1.3 1.2 0.8 2.2 Net Export -1.2 -1.3 -0.7 0.2 0.3 0.5 1.3 0.5 Consumption 8.1 8.3 8.3 8.1 8.3 7.9 8.8 9.6 Distribution 5.7 5.9 5.9 5.9 6.0 5.9 6.4 7.4 Direct Customers 1.7 1.9 2.0 2.0 2.1 1.7 2.1 1.8 Transmission Losses 0.7 0.5 0.4 0.2 0.2 0.3 0.3 0.4www.menr.gov.ge 3
  4. 4. EXISTING HYDRO POTENTIAL  Vast untapped hydro resources  Top country in water resources per capita  In total 26,000 rivers  300 rivers in terms of energy production  Only 18% of total hydro potential is utilized  HPP Greenfield potential of 20 TWhwww.menr.gov.ge 4
  5. 5. EASY REGULATORY FRAMEWORK  Greenfield projects based on Build-Own-Operate (B-O-O) principle  Totally deregulated newly built HPPs - investor is free to choose the market and the price  No special fee for the grid connection  Free third-party access to the grid  No license required for export and no tariff set  Guaranteed purchase offered by GoG for three months  Priority access for transmission to Turkey (Long term contract with TSO) with new HPPswww.menr.gov.ge 5
  6. 6. PERMITS AND LICENSES Construction Generation Permit License Ministry of Economy GNEWRC & Sustainable Development Above 13MW* Issued within 60 working days Issued within 30 working days * HPPs with less than 13 MW do not require Generation Licensewww.menr.gov.ge 6
  7. 7. EXPORT OPPORTUNITIES  Georgia’s hydro potential can be used to offset part of the growing demand of neighboring as well as of European countries  Over the last three decades Turkish demand for electricity has grown at an average rate of 7.6% per annum  By 2013 Turkey is expected to be a net importer of electricity  The peak demand season (summer) in many of neighboring countries occurs in Georgia’s peak supply season – when river flows are at their highest  Increased profits from carbon credits saleswww.menr.gov.ge 7
  8. 8. EXPORT ORIENTED PROJECTS  40 HPP on-going Projects • Total installed capacity of 2506 MW and annual generation up to 10.2 TWH • Projected investment USD 4.1 bln. • Construction works to be finished in 2014-2017  Major companies operating in Georgia • Anadolu (Turkey) • Peri (Georgia) • Ağaoğlu (Turkey) • Trans Electrica Ltd.(India) • Energo Pro (Czech) • Clean Energy Group (Norway) • KGM (Georgia)  10 new HPP constructions ongoing • Rusmetal (Georgia); and etc  15 new HPP constructions will be launched in 2012www.menr.gov.ge 8
  9. 9. INFRASTRUCTURE WITH NEIGHBORING COUNTRIES Georgian power grid is connected to the grids of all of neighboring countries Construction of new high voltage 500/400 KV line to Turkey will be finished by 2012 Construction of additional interconnection with Turkey is under negotiation Existing Transmission lines • Russia 1155 MW Existing & Planned Transmission Lines • Turkey 2000 MW • Armenia 835 MW • Azerbaijan 1150 MW 9
  10. 10. INVESTMENT OPPORTUNITIES  Currently, 41 HPP projects (each up to 100 MW) are offered to potential investors  Investor is free to choose and apply for construction of up to 7 potential HPPs from the list  Investor is not limited with the list  Terms and conditions of EOI for HPPs more than 100 MW capacity is subject of Government’s resolutionwww.menr.gov.ge 10
  11. 11. HPPs PRE FEASIBILITY STUDY INCLUDES Financials/Ratios Technical Projection Income Statement HPPs Technical Data Cash Flow Hydrological Data Balance Sheet Topographic NPV Maps IRR Other Necessary Datawww.menr.gov.ge 11
  12. 12. LARGE-SIZE HYDRO PROJECT Namakhvani HPP (Cascade Type)  Installed capacity – 450 MW;  Av. Annual Generation – 1,6 TWh;  Estimated investment cost – USD 800 mln. Namakhva Tvishi Joneti ni Installed capacity 100 MW 250 MW 100 MW Annual average 386 GWh 941 GWh 354 GWh generation Height of dam 56.5 m 111.0 m 31.0 m Concrete Type of dam CVC gravity Rock fill arch Type of diversion Tunnel Tunnel Channel Gated over Tunnel, In river, Type of spillway Expression of interests on: dam gated gated Maximal water head 36.3 m 83.0 m 32.0 m Number of turbines 2 units 3 units 2 units A. Consultancy services and, Type of turbines Kaplan Francis Kaplan 2 x 110, 1 x 2 x 50 B. EPC contractor Power of units [MW] 2 x 50 30 MWwww.menr.gov.ge 12
  13. 13. INVESTMENT SUPPORTING FACTORS  Liberal Tax Legislation • Only 6 taxes effective in Georgia • Low and flat tax rates • Internationally accepted methods and practices • Minimum bureaucracy • Light administrative burden to taxpayers  Georgia has in force 36 OECD model Double Taxation Avoidance Treaties  List of treaties is expanding rapidly, additional 9 Treaties are in line for official signature or ratificationwww.menr.gov.ge 13
  14. 14. INVETSMENT ADVANTEGES  Deregulated power sector with very impressive turnaround since 2004  Distribution companies privatized and operating at high profit  Significant existing private investment in generation assets  GoGs strong support and commitment aimed at developing hydropower resources  Simplified Procedures  Diversified & Expanding export markets including EUwww.menr.gov.ge 14
  15. 15. Thank You!www.menr.gov.ge 15

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