Khudoni HPP Construction Works will Start in December 2015

Interview with TransElectrica director David Mirtskhulava

-MR. David, a year ago the Khudoni HPP construction project was under active considerations and discussions, but today this interest has declined and the issue seems to have lost the relevance. What is a real situation in this respect?

-No, it is not true. The project has not lost its significance, because it is one of the major and main projects for the Georgian power system. As to the current situation, the government has asked for making amendments to the memorandum. The issue refers to a growth in volumes on the domestic level.

I cannot divulge the details, as negotiations are being continued. Our representatives financiers and lawyers will arrive from London and they will assist us in holding these negotiations. I believe by the end of this November the memorandum will be amended and signed and the government will grant us an at least one-year term for inauguration of construction works. We should start construction works in autumn 2015. Before, we should take all required procedural licenses.

-TransElectrica was expected to take a construction license on March 1, but the process failed. What has hampered this process?

-Deadlines are not important in this case. The main thing is that the project must be implemented valuably. This is a state demand and request. One of the main reasons for the failure was the fact we had registered 1400 hectares of land plots for measurement, but for certain reasons we failed to measure the remaining 9% of the required land plots. We have decided to avoid further tensions. Moreover, we have hired the worldwide famous Canadian company that works on important social issues for this region so as everything meet international standards. Thus, I believe it is acceptable to postpone deadlines because of the memorandum amendments and everyday works on Khudoni HPP to implement the project at a high level.

-We remember local residents have showed very irreconcilable position. What is the current situation in this respect?

-We are trying to outline common interests and reach a mutually beneficial solution with the local population. This is not my field, but naturally, I have got information on this issue. The state is also interested  in solving the problem in line with the world’s best standards. To this end we should find due way out, compensations and offers.

-According to unofficial information, the local population will receive unprecedented compensations.

-The project is an unprecedented one in itself. This is the biggest project in the Georgian power system history. Everything will meet international standards. Even the resettlement issue implies providing best living conditions to the current and future generations. Similar projects will maximally improve the living conditions. The company plans to supervise this process in long-term perspective so as to prevent Soviet era precedents. We will implement monitoring, and not only we, but commercial banks of various countries that will be involved in the project implementation.

-I would also ask you about a new, but unpublicized state policy over the power system, under which energy generated by HPPs, first of all, will be purchased by the state.  Do you think such a policy will ensure Georgia’s energy independence?

-According to my information, the government plans to purchase four basic stations that are of crucial importance for the power system. A conference was held on the issue and very interesting projects were introduced, including by Deputy Energy Minister Ilia Eloshvili and Deputy Environment Protection Minister Maya Bitadze. In practice, new perspectives were outlined in this direction in the country.

-Do you think similar policy will be interesting for investors?

-The government provides huge efforts to create comfortable conditions to the investors. Naturally, the sales tariffs will be negotiated. At the same time, investors should find returns from the projects reasonable. Low tariffs are inadmissible, because this will frighten the investors. The tariff should not be too high either. Hence, we should take a compromise decision. As to the government approach, they are interested in drawing and promoting investors, especially as part of this major project.

-When do you expect Khudoni HPP initial construction works  to start?

-I expect the preparatory works to start in December 2015. At the end of the 2015 autumn we will start preparing construction camps. This is a big interest of the government and the company. We have mobilized financial resources and there are no problems in this respect. Engineers and technical staff are also ready for the project implementation. Hence, the company is trying to apply best international practice for successful implementation of the project. This will be a unique and special project for Georgia.