The Japanese government has agreed to provide a loan of US$345M to refurbish two hydro power plants in Georgia.

The 30-year loan will be disbursed to Georgia over the next two or three years, with interest charged at 2.6% annually, and there will be a ten-year grace period before repayment begins.

Georgia, bordering Turkey and Armenia at the eastern end of the Black Sea, suffers from energy shortages because it lacks reliable generating capacity — even in the capital Tbilisi homes receive electricity for only six hours per day. Old and outdated hydro facilities provide more than half the country’s power. The loaned funds will be spent on repairs and on replacement of outdated machinery at the 112.5MW Ladzhanuri station, some 160km northwest of Tblisi, and the 10MW Khrami 2 plant, 100km west of the capital. They will also cover rebuilding of a substation in Kutasi, western Georgia.

International requests for proposals for equipment supply are expected to be announced shortly.