Improving the security of supply in Georgia: KfW finances construction of first underground gas storage facility

• KfW provides EUR 150 million promotional loan
• Reduction in gas imports
• 80% of Georgian households to benefit

On behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), KfW today signed a EUR 150 million promotional loan with the state-owned Georgian Oil and Gas Corporation (GOGC) for the construction of the first underground gas storage facility in Georgia. The total investment in the project amounts to some EUR 220-250 million and is to be financed by KfW, together with the European Investment Bank (EIB) and the GOGC. The capacity of the future gas storage facility close to the capital of Tbilisi will be around 400 million cubic metres, equivalent to 10-15% of Georgia’s annual gas consumption. The project will help reduce dependence on gas imports from neighbouring countries. Georgia’s gas supply is based exclusively on imports from Azerbaijan (90%) and Russia (10%). The measure is being taken pursuant to a requirement for the Georgian government to create domestic gas storage facilities as part of the EU Association Agreement.

“To date, Georgia is the only country in the Black Sea region without gas storage facilities. With the construction of the first underground gas storage facility, Georgia is significantly improving its energy supply and creating the conditions for investment and economic growth through increased energy security,” says Dr Joachim Nagel, member of KfW Group’s Executive Board.

80 per cent of Georgian households are connected to the gas network and will benefit from the measure. The project will complement KfW’s highly successful involvement in the Georgian energy sector up to the present. The Georgian electricity transmission sector has been supported with financing for transmission lines and substations for over two decades as part of Financial Cooperation. At the same time, KfW on behalf of the German Federal Government has made a significant contribution to facilitating private investments in hydroelectric power and rendering it commercially viable by providing low-interest credit lines. KfW also supports Georgia in reforming its energy sector and in the energy-efficient rehabilitation of public buildings.

Further information on KfW Development Bank can be found at: www.kfw-entwicklungsbank.de/International-financing.