TBILISI

The Asian Development Bank (ADB) has approved a $100 million loan to support Georgia’s electricity transmission sector.

The bank said that the funds would improve the operational structure, corporate governance, and financial management of the country’s electricity transmission company and its subsidiary.

“This is a flagship programme for Georgia, focusing on improving the financial and corporate governance of two major energy sector state-owned enterprises (SOEs),” Yevgeniy Zhukov, the ADB’s Director General for Central and West Asia, said. “We expect this to set the path for other Georgian SOEs to follow and ADB stands ready to support the government’s broader SOE reform agenda and economic growth.”

The loan is a part of the Electricity Transmission Sector Reforms Programme and is aimed to support the joint-stock company Georgian State Electrosystem  (GSE) and its subsidiary EnergoTrans in order to reduce their dependency on government funding.

GSE and EnergoTrans rely heavily on government funding and external borrowing and have accumulated substantial debt to support upgrades and the expansion of transmission infrastructure.

The government has taken several steps to reform GSE, including approving a new company charter and an independent supervisory board that adopted codes and frameworks based on international best practices and local laws. The government has also enhanced GSE’s investment planning, debt management capacity, and resilience to external shocks through capitalisation and increased revenue generation.

ADB’s program will continue to support reforms to improve GSE’s operational structure and efficiency, corporate governance and institutional environment, and financial sustainability.

“This programme will help improve the financial sustainability and performance of Georgia’s energy sector and free up fiscal space to allow the government to better allocate resources to critical areas such as the COVID-19 economic recovery,” Adnan Tareen, ADB principal energy specialist, said.

Georgia joined the ADB in 2007 and the bank has since become one of the country’s largest multilateral development partners with committed loans amounting to $3.92 billion and technical assistance projects worth $28.9 million. The ADB’s key development priorities in Georgia include expanding trade, creating more jobs, and combatting poverty by developing economic corridors.