Chinese company Pegasus EastWest has purchased a 230 MW Combined Cycle Thermal Power Plant (TPP) in Gardabani, Georgia’s Kvemo Kartli region for $290 million USD.
Georgia’s Energy Minister and representatives from Pegasus EastWest signed an agreement in Georgia’s capital Tbilisi today outlining the deal.
Pegasus EastWest is a Hong Kong-based international, privately-held entity that focuses on developing businesses in the world's fastest growing emerging markets.
"We have been talking about [privatising Gardabani thermal power plant] for a long time. We did this to strengthen the [national currency] Lari. The plant cost $230 million USD for state and now the country will get $290 million USD instead,” said Georgia’s Energy Minister Kakha Kaladze.
Privatisation of Gardabani TPP was part of the idea of privatising state assets to help the country break free from the national currency crisis.
Months ago Georgian authorities hinted about the possible sale of Governmental buildings and assets as a way to get more money into the economy. At the time Georgia’s Economy Minister estimated money from the sale of Governmental buildings would bring about $300-350 million USD into the Georgian economy.
Construction of the Gardabani TPP started in January 2014. The project was jointly financed by the Partnership Fund (PF), a state-owned shareholding company and its daughter company Georgian Oil and Gas Corporation (GOGC).
The TPP is expected to begin producing power in autumn 2015.
Meanwhile, in the first three months of 2015, Foreign Direct Investments (FDIs) reduced in Georgia’s energy sector, noted the country's National Statistics Office (Geostat). Minister Kaladze explained this had happened because of the Lari devaluation, which had caused "serious problems” for companies operating in the energy field.
"The Lari devaluation mainly affected distribution companies. In fact, all companies that are represented in the market are operating at a loss. Some energy companies have recently applied to the Energy Regulatory Commission and asked to revise tariffs. The Commission will make a final decision in September,” Kaladze said.
Despite the reduction of FDIs in Georgia’s energy sector, regionally FDIs increased in the Adjara region. In Q1 2015 FDIs in Adjara amounted to $76.4 million USD. In the same period of 2014 FDIs reached $54 million USD.
Georgia's energy sector generated 39.4 percent of the total amount of FDIs, followed by tourism (38.4 percent) and construction (19.2 percent).
The largest investors to Adjara region were Turkey, Norway and Great Britain.