The Minister of Economy, Levan Davitashvili declares, that the International Monetary Fund shared the proposal of the Government of Georgia on providing guaranteed tariffs for the energy sector. Accordingly, after reaching an agreement, a new model of financing power plants will be adopted.
On the recommendation of the IMF, in 2017, the Georgian government announced a moratorium on signing new PPA contracts with HPPs, as the IMF saw high fiscal risks in these contracts.
"We have been working with the fund on the agreement of a specific financing scheme for 4-5 months, which is shared by the IMF, and this is exactly why we devoted a lot of time, and the energy sector is waiting for this, that guarantees will appear from the state to facilitate the financing of renewable energy projects", said Levan Davitashvili.
Giorgi Margebadze, executive director of the Association of Small and Medium Hydroelectric Power Plants points out, the current financing model Feed-in-Premium tariff, does not work, because European financial institutions refuse to finance new hydropower plants in Georgia under this tariff policy.
According to him, PPA (Power Purchase Agreements) tariffs will provide guaranteed purchase of electricity. Under this agreement, the investor receives a revenue of 6 cents per kilowatt-hour of electricity. As he explained PPA tariffs will be valid for the first 5 years.
