Georgia redirects 180 mln euros in funding intended for infrastructure development to counter pandemic

Around 120 million euros allocated by the German Development Bank (KfW) for the construction of a gas storage facility is being used by Georgia to solve problems arising from the COVID-19 epidemic. 

Similarly, in Adjara, 60 million euros allocated for improving the local water supply will be redirected to the fight against the coronavirus.

Georgia received these funds from KfW within the framework of an aid agreement signed following the visit of the German Chancellor to Tbilisi in 2018. The KfW leadership agreed with the decision of the Georgian government to have part of the allocated money used to counter the pandemic.

Economy Minister Natia Turnava claims that the gas storage project is not under threat, noting Georgia has enough resources to start the first stage of construction on time which will take six months, and then find resources to complete the project by 2024. She is convinced that international financial institutions will help Georgia, because this project is so important.

The construction of a gas reservoir is one of the components of the agreement on the relationship between Georgia and the European Union. The current timeline puts it in running order by 2023.

Georgia has practically none of its own natural gas reserves – its reserves make up less than 1 percent of the country’s total consumption.

•Counting Georgia’s losses due to the pandemic

• Counting Georgia’s losses due to the pandemic

Azerbaijan is the main supplier of natural gas to Georgia. The alternative is Russia, from which Georgia buys extra gas in winter. However, Russia has repeatedly used energy issues as political leverage. The storage facility will help Georgia achieve energy independence from Russia by amassing gas reserves in the summer and using them in the winter.

Of the more than 700 gas storage facilities existing in the world today, 3 are located in the South Caucasus: 1 in Armenia and 2 in Azerbaijan.

The project to construct a gas storage facility in Georgia was presented back in October 2014 by the Partnership Fund, and the total cost of the project is estimated at 250,000,000 euros. The project draft places the facility somewhere near Tbilisi. The reservoirs are capable of receiving 400,000,000 cubic meters of gas, which is 10-15% of the total annual gas consumption throughout Georgia.