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Government of Georgia (GOG) has set forth legislative initiative, in order to facilitate sustainable development of Georgia’s rich renewable energy potential. This legislative tool regulates procedures and rules of Expression of Interest (EOI) for construction, ownership and operation of power plants in Georgia.

Ministry of Energy of Georgia sets the list of potential power plants and publishes the list on official web-page. The EOI can be announced only for projects which are included in the list. (Link:  List of potential power plants in Georgia)

Decision regarding announcement of expression of interest for particular project, which is included in the list, is taken by Government of Georgia.  After such decision is in place, Ministry of Energy publishes the information about new announcement of EOI. Such decision can be provoked by officially demonstrated interest by investor.

After every decision of Government of Georgia to announce expression of interest for particular project, Ministry of Energy will elaborate individual terms and conditions of EOI for every project. Thereafter, Ministry will issue corresponding order and actually announce the EOI and publish the terms and conditions.

Terms and Conditions of the EOI include minimum requirements which should be met by winning party after winning the EOI. These are as follows:
1. Name  of  power  plant  to  be  constructed,  approximate  place  of  allocation, estimated scheme and main technical parameters;
2. Terms for the construction technical and economic feasibility study, commencement of the construction under construction permit and commissioning of the power plant;
3. Power plant construction estimated investment cost;
4. The period   and   amount   of   the   pre-construction   security   presented   for participation in the Expression of Interest;
5. Qualification requirements and criteria for determining the best application, with maximum edge indicated;
6. Contact information for submission of the applications, contact phone;
7. Draft of the Memorandum for conclusion with the Winner of the Expression of
Interest;
8. All other information, that Ministry may consider appropriate.

The Interested Party together with the application submitted has to provide to the Ministry the preconstruction bank guarantee in favor of the Government according to the total installed capacity of the power plant in amount of 5 000 (five thousand) USD or its equivalent in the Euro per MW. Moreover, Preconstruction Guarantee must be issued by the member country of the “Organization for the Economic Co-operation and Development” (OECD) and/or Bank licensed in Georgia. The amount of the Preconstruction Guarantee shall not exceed 15% of the share capital of the issuing Bank.

The Ministry of Energy publishes the above-mentioned requirements on the official web-page of the Ministry (www.energy.gov.ge).

Ministry of Energy will accept and review applications, which will be in full compliance with conditions approved by expression of interests. Those participants, which satisfy qualification requirements, will be sent a notification letter by Ministry. 

The only criterion of winning in expression of interest is the lowest proposed electricity price to be sold to “Electricity System Commercial Operator” (“ESCO”). 

In order to participate in EOI interested parties should satisfy following qualification requirements: 
1. In expression of interests can participate legal entity or consortium of legal entities;
2. Necessary condition for the construction, ownership and operation of the power plant by the Winner of the Expression of Interest is to sell full annual power generation of the power plant during 15 years from the date of commencement of operation of the power plant, during following months of each year: January, February, March, April, September, October,  November  and  December  to  the  “Electricity  System  Commercial  Operator” (ESCO) according to the Guaranteed Power Purchase Agreement executed in advance.

The memorandum is signed with the winner of Expression of Interest announced by the resolution of Government of Georgia. Parties of the memorandum are Government of Georgia, ESCO and winner of Expression of Interest. 

The   Memorandum is composed of two phases: Preconstruction Phase and Construction Phase.

During   the Preconstruction Phase, the Winner of the Expression of Interest shell fulfill following obligations:

1. Complete the project construction technical and economic feasibility study;
2. Complete the project Environmental Impact Assessment Report.

During the Construction Phase the Winner of the Expression of Interest shell fulfill following obligations:

1. Obtain the right to use the land within the area of project;
2. Obtain the necessary permits for the project implementation;
3. Commencement  of  the  power  plant(s)  construction;  
4. Conduct  all  the  construction works under the Law of Georgia, construction, environmental and safety standards; 
5. Complete construction works;
6. Commencement of operation.

At the same time, in the beginning of the construction phase investor must present construction guaranty, which will be 100 000 USD (or equivalent in Euro) per one megawatt of installed capacity for the projects with installed capacity of 100 megawatts or less, and 50 000 USD (or equivalent in Euro) for project(s) with installed capacity of more 100 megawatts. Construction guaranty must be issued by the bank which is licensed in any countries of Economic Cooperation and Development organization (OECD) or in Georgia. Construction guaranty term is defined by the Memorandum of Understanding. Delay of the construction works commencement date, which is in full compliance with terms and conditions of the Memorandum and is based on construction permit, will result in imposition of fines for a violator in amount of 1.5% of the total amount of Construction Guarantee for each overdue day.

In case investor has developed power plant(s) that is not included in the list of potential plants, Government of Georgia is authorized to sign memorandum of understanding through direct negotiations for such project. At the same time, investor is obliged to negotiate with the Ministry of Energy regarding such project(s), in order to avoid overlapping areas of existing and potential power plants.

Visit the Web: www.hydropower.ge
Pre-feasibility Studies and Interactive Map of Potential HPP in Georgia
Overview of electricity sector and export opportunities
List of Potential HPP's
On-going Investment Projects

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