Described by the government of Georgia as "historic," a deal signed on April 10 by the Georgian Energy Ministry and Georgian Urban Energy, a Turkish company, envisions the construction of the Paravani hydro power station (HPP) in Samtshe-Javakhe-ti, in south-west Georgia.
This new investment, which will total USD 100m, is expected to solve the country's energy security challenge for the long-term and generate thousands of new jobs for the region's population during the construction works.
"Since Georgia gained independence, we have not constructed a hydro power plant of such a large capacity," President Mikheil Saakashvili said speaking in a live televised address made in his administration, which hosted the signing ceremony.
"In the next four years - which is the remainder of my presidential term - my government and I plan to develop large-scale hydro power resources equal to Enguri station," Saakashvili said.
Under the agreement, electricity generated by Paravani HPP, will be consumed locally, while in summer it will be exported to Turkey and Azerbaijan.
Georgia is nearly self-sufficient in electric power. The electricity generated by Georgia's stations - five grand HPPs and 78 small ones - is enough for its population and the country needs electricity imports only seasonally.
The 78 MW Paravani HPP will have an annual capacity of approximately 340m kW/h. In 2007 Georgia exported 625m kWh of electricity and imported 433m kWh. This means that the implementation of Paravani project alone project, it is expected that the Turkish company will invest in other energy projects.
According to official statistics, in 2008 the energy sector was the second most popular investment target in Georgia following transport and telecommunications. Last year investment will decrease Georgia's electricity import needs approximately five times.
Considering the country's potential, the government of Georgia voiced its intention last year to have power exports of around USD lb in several years in order to boost state assets.
Turzan Aksoli, a member of Turkish Anadolu Group, who represented the Turkish side at the ceremony on Friday, said construction works for Paravani HPP would start this August if licensing procedures are completed in July.
"Turkish businessmen have invested capital in a number of [economic] sectors including food and processing enterprises in Georgia. It's vital for us that there is a stable political climate in the country so that investors feel free to operate businesses," Aksoli said.
After completing the Paravani USD 253m, around 20 per cent of total investment.
Being Georgia's top trading partner, Turkey ranked third among countries with the highest share in foreign direct investment in 2008 with USD 165m, 12.8 percent of total FDI.
This year Turkey plans to invest a total of USD lb in Georgia, according to Kursad Tuzman, State Minister of Turkey.
While heading a 150-member business delegation at the Georgian-Turkish Business Forum in Tbilisi and Batumi from February 23 to 25, Tuzman said: "Investments will be made in different economic fields, such as agribusiness, energy, food industry, and others.. .We can minimize the damage caused by the economic crisis by improving commercial relations with the country."
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