On September 21, 2021, the Asian Development Bank (ADB) approved a USD 100 million Policy Based Loan (PBL) to the Republic of Georgia. The PBL can be used for general government budget support, but the loan is based on key policy updates that target the electricity transmission network in the country. I was honored to provide support to the program by conducting the economic and financial analyses for the loan and policy reforms.
The loan is intended to improve the operational structure, corporate governance, and financial management of the country’s electricity transmission company Georgia State Electrosystem (GSE), and its subsidiary, EnergoTrans. According to ADB Director General for Central and West Asia Yevgeniy Zhukov, "This is a flagship program for Georgia, focusing on improving the financial and corporate governance of two major energy sector state-owned enterprises (SOEs). 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."
Georgia has made significant progress in reforming the electricity sector from state monopoly to liberalized market structure. However key structural, financial and governance barriers remain, especially as they relate to GSE and Energotrans. The program addresses these barriers through three primary objectives: (i) it creates structural changes that will improve operational and network efficiency, (ii) it corporatizes GSE using a modern governance model, and (iii) it brings financial sustainability for GSE. These reforms will be vital to a healthy energy sector, which will play a key role in Georgia’s COVID-19 economic recovery.
Richard Swanson, Ph.D.
Asset valuation and project finance expert, specializing in financial and economic analysis of civil infrastructure assets.