Government Suspends Underground Gas Storage Project to Spend EUR 120 million on COVID Crisis

Government Suspends Underground Gas Storage Project to Spend EUR 120 million on COVID Crisis The former Prime Minister of Georgia Mamuka Bakhtadze signed an agreement on EUR 150 million loans in 2018, as part of the visit that German Chancellor Angela Merkel paid to Georgia.

As a result of negotiations for several years, the Development Bank of Germany (KfW) agreed to allocate the mentioned financial resource for implementation of the underground gas storage project in Georgia.

According to the document that the Government has sent to the Parliament, amid the COVID-19 outbreak, the Georgian Government and KfW held negotiations and the purpose of this loan has been changed. And EUR 120 million of EUR 150 million will be spent on COVID-19 crisis elimination campaigns. Furthermore, the Government has change the purpose of other loans too, namely, Batumi Communal Water development project with the budget of EUR 60 million. On the whole, the Government has reclassified loans of EUR 180 million and these resources will be directed to the State Treasury. Georgia and KfW signed a new agreement on August 7.

The maturity of the 180-million EUR loan is 3 years, including 2-year grace period. The underground gas storage project is to ensure Georgia’s energy independence and to use the natural gas crossing Shah Deniz pipeline. Total investment value of the project is EUR 220-250 million. Total storage capacity of the facility is 400 million cubic meters, that is 10-15% of Georgia’s annual consumption.