German bank KfW Bankengruppe is lending €85.2m for the project. The EU Neighbourhood Investment Facility will provide a €10m grant while Armenia and Georgia will invest €1.5m and €6.6m respectively.
The money will be used to build the new electricity transmission line and a high-voltage direct current station between the two nations.
A new back-to-back station will be built in Ayrum, Armenia, close to the Georgian border.
EIB vice-president Wilhelm Molterer, responsible for the bank’s lending in Armenia, said: "Secure and reliable supplies of energy are of crucial importance for further improving the living standards of the people of Armenia and Georgia.
"The project will also foster regional trade, increase the potential for the use of hydro energy generation and facilitate FDI by ensuring the reliable electricity deliveries needed by foreign investors."
KfW director for Eastern Europe, Caucasus and Central Asia Eva Witt said: "The connection of the Armenian and Georgian power grids aims at closing a missing link in the regional power network and will contribute to improving energy security in particular in Armenia."
Image: Contract signing ceremony. Photo: Courtesy of European Investment Bank.
