Annual Reports

2010 – Annual Report

Black Sea Energy Transmission System Network (500/400kV) Project Black Sea Transmission Network Project aimed at rehabilitation/construction of 500kV overhead line Gardabani-Akhaltsikhe-Zestaponi (about 270km), as well as construction of 400kV line from Akhaltsikhe to Turkish border (~35km) and of 500/400/220kV substation with HVDC back to back plant in Akhaltsikhe, commenced in 2009. The Project will be implemented with the financial support of European Bank for Reconstruction and Development (EBRD), European Investment Bank (EIB) and KfW, Frankfurt am Main (KfW). The total estimated value of the Project is 300 million EUR and overall monitoring and control over the Project activities will be implemented by Energotrans Ltd., fully owned subsidiary of GSE and a special purpose vehicle. The Project will:  increase stability and reliability of Georgian power system;  ensure uninterrupted power supply throughout the territory of the country;  improve power supply to the South of Georgia;  provide a strong precondition for economic development;  enable export of surplus energy;  ensure reliability of power export, import and transit operations. Name of the Project: Black Sea Energy Transmission System Program Project Activities: • Construction of 400kV OHLMeskheti from Akhaltsikhe to the Turkish Border • Construction to be completed on existing 500kV OHLVardzia from SS Gardabani-500 to Akhaltsikhe • Construction to be completed on existing 500kV OHLZekari from SS Zestaponi-500 to Akhaltsikhe • Construction of new 500/400kV substation Akhaltsikhe Project Implementation in Progress: Agreement between GSE and KfW Project Agreement for Consulting Services to the Project Executing Agency in the Framework of Black Sea Energy Transmission System Program – signed on February 25, 2009 Consultant Fichtner GmbH & Co KG Date of Contract for Consulting Services: May 12, 2009 Estimated completion date 2013 Table 21 The table below shows the project activities carried out under the contracts: Package A (500/400kV OHLRehabilitation/Construction) Contractor KEC (India) Date of Contract July 5, 2010 Effective Date of Contract: August 12, 2010 Total Value of Contract EUR 55,632,462 Project Completion Date (Estimate) July, 2012 Progress in Reporting Period: The Contractor started carried out the project works. (Main parts of the design, e.g. for500 kV towers, conductors, OPGW, conductors, insulators are already approved or commented) The Contractor submitted a detailed schedule of work implementation. Works on 34km section of line (1-140 towers) is completed (obligation of Energotrans); Rehabilitation works on 500 kV line (T1-T39) completed on December 31, 2010. progress of works is in line with the time schedule from the contractor, except for the Phase 1B (400 kV OHL Akhaltshike - Turkish Border), where the works didn’t start due to the delayed delivery of the project from Turkish side. However, presently no overall delay is expected Package B (works at substations, including construction of a new substation) Contractor SIEMENS (Austria) Date of Contract July 22, 2010 Effective Date of Contract: September 13, 2010 Total Value of Contract EUR 35,770,606.08 Project Completion Date (Estimate) March, 2013 Progress in Reporting Period: The Contractor started carried out the project works; Time schedule is delivered which doesn’t coincide works with Package B. Needs revision. On December 15, 2010 meeting was held and corrected schedule is under preparation. Package C (arrangement of back-to-back station) Contractor SIEMENS (Germany) Date of Contract August 23, 2010 Effective Date of Contract: September 1, 2010 Total Value of Contract EUR 133,864,025 Project Completion Date (Estimate) May, 2013 Progress in Reporting Period: The Contractor started carried out the project works; The Contractor submitted a detailed schedule of work. Time schedule is delivered which doesn’t coincide works with Package C. Needs revision On December 15, 2010 meeting was held and corrected schedule is under preparation. Works for water supply at the substation completed (obligation of Energotrans); Works for power supply at the substation completed (obligation of Energotrans); Contractor delivered soil survey report. Table 22

2011 – Annual Report

ENERGOTRANS LTD

Black Sea Transmission Network Project

2011 Annual Report

Introduction
Energotrans Ltd (“Energotrans”) was established on September 12, 2002 by the Georgian State Electrosystem Ltd, which holds 100 per cent of company shares.
Energotrans aims at transmission (evacuation, transit) of electricity to Republic of Turkey through high voltage transmission lines, rehabilitation of the grid and development of appropriate infrastructure for ensuring reliable operation of transmission network. The major objective of the company is to gain profit by carrying out the entrepreneurial and commercial activities envisaged by obtained licenses and applicable laws.
Energotrans owns an incomplete 500 kV transmission line Tbilsresi-South Georgia-Zestaponi crossing the nine administrative districts of Georgia, which construction was suspended in 1991-1992. The 190 km long 500 kV transmission line “Vardzia” will connect the existing Gardabani-500 substation with 500/400/220 kV substation being constructed in Akhaltsikhe District, while the 67 km long 500 kV line “Zekari” will link the newly built Akhaltsikhe and the existing Zestaponi-500 substations. In addition, Akhaltsikhe substation will be interconnected with Borchka substation in Turkey via the new 400 kV transmission line, which 31 km long section runs within Georgia.
The lines will be equipped with fibre-optic cable conveying information from power facilities to the Central Dispatch Centre. Also, the transmission line will be provided with relay protection, automation and communication equipment for redundancy of the optical communication network.
In turn the foregoing arrangements will provide:
• Sustainable operation of the national power network
• Significant strengthening of high voltage transmission grid
• Improved reliability of the power supply to the South Georgian region
• Avoidance of interruptions in power supply of capital and eastern regions of Georgia along with the consecutive losses due to possible emergency shutdowns of the existing 500 kV Tbilsresi-Zestaponi transmission system
• Opportunity for exporting the surplus electricity available in the energy balance of Georgia
• Availability of the sufficient infrastructure for undertaking electricity import, export and transit
• Significant reduction of electricity losses.
It should also be noted that within the framework of the Black Sea Energy Development Program and according to Resolution No. 07 of the Georgian State Electrosystem Ltd, Founding Partner of Energotrans, dated March 12, 2012, the Energotrans during April-May, 2010 completed rehabilitation and construction works along the first 30 km long section of 500 kV transmission line Vardzia (from Tower No.1 to Tower No.140 inclusive).

1 List of Investment Agreements for Black Sea Energy Transmission Network Project
The following agreements have been executed:
1. EUR 80 million Loan Agreement between Georgia and European Bank for Reconstruction and Development (EBRD) dated March 17, 2010; Project Agreement on Black Sea Transmission Network Project between EBRD, Georgian State Electrosystem and Energotrans.
2. EUR 80 million Financing Agreement between Georgia and European Investment Bank (EIB); Project Agreement on High Voltage Transmission Lines Project between EBRD, Georgian State Electrosystem and Energotrans Ltd dated March 26, 2010.
3. EUR 100 million Loan and Financing Agreement between Georgia, Energotrans Ltd and German Reconstruction Credit Institute (KfW); Separate Agreement between KfW, Georgian State Electrosystem and Energotrans on Black Sea Transmission Network Project dated April 13, 2010.
Subsequently, for implementing the foregoing financial instruments, three sub-loan agreements were executed on July 16, 2010 between the Ministry of Finance of Georgia, Georgian State Electrosystem Ltd and Energotrans.
4. EUR 3 million Financing Agreement of November 25, 2011 between Energotrans and KfW about funding environmental mitigation measures and payment of due compensation amounts within the framework of Black Sea Transmission Network Project.
2 Information about Progress of Black Sea Transmission Network Project
Three tenders were announced and conducted for implementing the Black Sea Transmission Network Project including the following contractual packages: 1) Package A – Construction of High Voltage Transmission Lines; 2) Package B – Construction/Rehabilitation of Substations; and 3) Package C – Construction of High Voltage Direct Current (HVDC) Back-to-Back Station.
2.1 Package A
In June, 2010 the Contract for Package A Works with adjusted Contract Price of EUR 53,632,462.00 was awarded to the Indian company KEC International Limited (“KEC”). Further, on July 05, 2010 Energotrans and KEC executed Contract No. ET-OHL-01 for construction of high voltage transmission lines included into the Black Sea Transmission Network Project.
Effective Date of this Contract is August 12, 2010, and Completion Date falls in July, 2012.
As specified in the Contract, on August 13, 2010 Advance Payment amounting to 20% of the Contract Price, i.e. EUR 11,126,492.4 was transferred to KEC’s account.
As for December 31, 2010, rehabilitation of 500 kV line has been completed from Tower No. 1 to Tower No. 39 (10 km), and this section has been interconnected with 500 kV line Mukhrani to serve as a back-up of Kartli-i transmission line linking Gardabani and Ksani substations. In January 2011, respective Acceptance Certificate was issued for completed works with participation of consultant company (Fichtner).

Below is described project progress for December 31, 2011:
500 kV Transmission Line “Zekari” between Akhaltsikhe and Zestaponi
Construction works are under way along the entire line, within Akhaltsikhe, Borjomi-Kharagauli National Park, and Bagrati and Zestaponi Districts.
The following works have been completed along transmission line Zekari:
Number of erected towers 68 (from 70)
Number of installed foundations 788 (from 812)
Length of stringed conductor 34.8 km (from 67 km)

Progress rates:
 Scheduled 96,9 %
 Actual 86,7 %

500 kV Transmission Line Vardzia between Akhaltsikhe and Gardabani
Construction works are in progress along two sections of this line, in Aspindza and Tsalka Districts.
Number of erected towers 192 (from 388)
Number of installed foundations 888 (from 906)
Length of stringed conductor 54.3 km (from 190 km)

Progress rates:
 Scheduled 54.3 %
 Actual 49.6 %

Review of tower and foundation designs for transmission link “Meskheti” between Akhaltsikhe substation and Turkish border has been completed. Foundation fabrication works are in progress. Four foundations have been installed. Actual progress achieved is 6.2% that is in line with schedule.
Total progress rates for Package A:
 Scheduled 66.4%
 Actual 62.7%.

In April 2011, Environmental Impact Assessment Report was approved, and on June 27, 2011 Construction Permit was issued for the modified alignment crossing Borjomi-Kharagauli National Park.
The detailed progress of construction works along Vardzia and Zekari transmission lines is provided in Annex No. 1.
The first Amendment to the Contract was executed on March 2, 2011 based on which the Contract Price has been adjusted to EUR 55,909,688.92.

2.2 Package B
In July, 2010 the Contract for Package B Works including the alternative proposal (construction of additional 220 kV substation) with adjusted Contract Price of EUR 36,770,606.08 was awarded to SIEMENS Austria. Subsequently, on July 22, 2010 Energotrans and SIEMENS AG Osterreich executed Contract No. ET-SS-02 for construction of 500/400/220 kV substations included into the Black Sea Transmission Network Project.
Effective Date of this Contract is September 13, 2010, and Completion Date falls in March, 2013.
As specified in the Contract, on September 07, 2010 Advance Payment amounting to 20% of Contract Price, i.e. EUR 17,154,121.21 was transferred to SIEMENS Austria’s account.
Currently the Project Works are in progress, and the technical specifications and design documents undergo review and approval process.
On May 3, 2011 construction of Akhaltsikhe 500/400/220 kV substation and back-to-back station officially opened. Project inauguration ceremony was attended by Ms. Mariam Valishvili - Deputy Minister of Energy and Natural Resources of Georgia, Ms. Eva Witt - First Vice-President, East Europe, Caucasus and Central Asia, KfW Development Bank, Paul-Henri Forestier - EBRD Regional Director for the Caucasus, Moldova and Belarus, representatives of the other donor institutions and construction companies (SIEMENS-Austria, SIEMENS-Germany and KEC International), and Mr. Sulkhan Zumburidze - Chairperson of the Management Board of the Georgian State Electrosystem. At the opening ceremony, the attended officials buried the time capsule with information about the Project.
As for December 31, 2011 the foundation works in Akhaltsikhe and Zestaponi has been completed. Erection of the metal structures and installation of the earthling grid and primary equipment are in progress.
Completion of the first stage works (at Akhaltsikhe 500 kV and 400 kV substations, and Zestaponi 500 kV substation) is scheduled in April 2012.
Akhaltsikhe Substation

Foundations at 500 kV side
Total 404 items
Completed 404 items

Erection of metal structures:
Total 535 tones
Completed 535 tones.

Foundations at 400 kV side
Total 382 items
Completed 382 items

Foundations at 220 kV side (included into Phase 2):
Total 207 items
Completed 60 %

Zestaponi Substation

Foundations at 500 kV side
Total 182 items
Completed 177 items

Metal Structures
Total 261.8 tones
Completed 252.6 tones

Total progress rates for Package B:
 Schedulled 54,7 %
 Actual 48,2 %

The first Amendment to Contract was executed on October 18, 2011 based on which the Contract Price was adjusted to EUR 36,856,558.04.
1.3 Package C
In July, 2010 the Contract for Package C Works with adjusted Contract Price of EUR 133,864,025.00 was awarded to SIEMENS AG Germany. Subsequently, on August 23, 2010 Energotrans and SIEMENS AG Osterreich executed Contract No. ET-B2B-03 for construction of 500/400 kV back-to-back station included into the Black Sea Transmission Network Project.

Effective Date of this Contract is September 1, 2010, and Completion Date falls in May, 2013.
Technical specifications and design documents undergo review and approval process.
Construction of the access road (2,8 km) to construction site, as well as earthworks in the substation area has been completed. Construction of back-to-back station, control room and air compressor building along with the supply of power equipment is in progress.
Total progress rates for Package C:
 Scheduled 55.34 %
 Actual 54.9 %

It should be noted that, during 2011, the works under each contractual package were subjected to regular monitoring. Weekly meetings held on site, as well as in Tbilisi, and monthly meeting conducted in Germany were devoted to detail review of the Project progress along with discussion of raised problems and identification of appropriate response measures.
Representatives of Energotrans attended the factory acceptance test of major equipment, and the technical personnel received training in Georgia and Austria.
Energotrans together with the representatives of Georgian State Electrosystem participate in negotiations with foreign investors, who plan to develop hydro power projects in Georgia in accordance with the Memorandums of Understanding executed with the Government of Georgia. Commencement of construction works are scheduled in the nearest future, and after commissioning part of these facilities’ outputs will be transmitted to Turkey.

3 Social and Environmental Assessment
Environmental and social impacts of the Black Sea Regional Transmission Project were studied in accordance with the Laws of Georgia on Environmental Protection (1996-2007) and Environmental Permit (1996-2007), and as prescribed in the agreements executed with the international financial institutions (EBRD , EIB , KfW). The resulting Project’s environmental impact assessment report complies with the requirements of the Georgian legislation and environmental policies of these IFIs, as well as with the European Union’s applicable directives (Directive 97/11/EC, European Council 1985, 1997).
For the purpose of conducting the statutory studies, Energotrans contracted the Black & Veatch Special Projects Corp, which is a leading reputable engineering/construction/consulting company (Contract No. C18507).
The scope of studies comprised investigation of the natural and the social environment along several alternative alignments with identification of particularly sensitive sections, and determining of the appropriate avoidance, compensation and mitigation measures taking into account environmental aspects applicable to the Project construction and operation phases. Subsequently, the final construction corridor was specified, which is optimal as from engineering/operational, so environmental perspectives.

The company’s Social Assessment Teams regularly visited communities located along the Project route, as well as held meetings with NGOs and other stakeholders to brief them about Project goals and assignments.
As prescribed by the Georgian laws, at the first stage the draft document was prepared and made available for review and comments to all stakeholders. After review and processing of the received comments, the final draft was submitted to the Ministry of Environment Protection and Natural Resources, which approved it on May 25, 2010.
For the section crossing Borjomi-Kharagauli National Park modified by KEC, Energotrans prepared Addendum to ESIA and organized its public review in Tbilisi and Borjomi respectively on February 8 and 25, 2011. After due consideration of received comments, the final adjusted Addendum was submitted to the Ministry of Economy and Sustainable Development and the Ministry of Environment Protection for review and approval. The Ecological Expertise Conclusion received on April 29, 2011, and the final ESIA were submitted to the Project donors for approval that was granted in June 2011.
Flora and fauna conservation, restoration and monitoring plans were prepared in August 2011 according to ESIA approval conditions. In September 2011 the contracted qualified specialist completed the first stage monitoring works along transmission line’s construction corridor and in adjacent areas. The next monitoring round has been scheduled in 2012 spring. The site-specific action plan encompassing mitigation of construction impacts and restoration of affected areas/habitats will be prepared in January 2012 along with the specific compensation measures. Energotrans strives to minimize impacts over environment and communities during construction of transmission lines and substations. The officers of Energotrans regularly meet with local population and review with them all construction related problems. It is important that considerable portion of village of Zikilia residents have been employed in construction of Akhaltsikhe substation occupying unqualified labour, maid and canteen positions. The access road to village of Zikilia was gravelled. From the appropriate sums included into the Project budget, Energotrans has paying compensation amounts for acquired land and removed trees in accordance with the applicable Georgian laws.

4 Financial Standing Regarding Loan Utilization and Co-Finance
The following table shows financial standing of the Project broken down by the sources of finance as for December 31, 2011.
Description 2010 2011
Budget Utilization According to Contracts
Package A – KEC (EUR) 11,493,213 19,342,527
Advance Payment 11 126 492 55,445
Interim Payment 366,720 19,287,082
Final Payment - -
NIF - Grant (KEC) - -
Package B – SIEMENS Austria (EUR) 7,154,121 3,027,484
Advance Payment 7,154,121 217,190
Interim Payment - 2 810 293
Final Payment - -
Package C – SIEMENS Germany (EUR) 40,159,208 13,967,843
Advance Payment 40,159,208 -
Interim Payment - 13,967,843
Final Payment - -
Utilization by Banks (EUR)) 66,023,728 42,289,692
EBRD 12,293,213 19,342,527
EIB 27 159 207 10,000,000
KfW 25,000,000 11,532,033
KfW - NIF (KEC) - -
KfW - NIF (Fichtner) 1, 571,307 1,415,132
Co-Finance (GEL) 394,920 32,278,485
Package A - KEC 394,920 14,237,968
Package B - SIEMENS Austria - 6,456,354
Package C - SIEMENS Germany - 11,584,164

Co-Financing Contribution into Capital (GEL) 5, 000,000 27,000,000
Balance on Co-Finance Account (GEL) 4,414,096 389,359
EIB’s Transfers to Own Account (EUR) 26,959,597 10,000,000
Balance on EIB’s Transfer Account (EIB) 4,645,879 11,539,754

Power Supply of Village of Shenako, Akhmeta District
According to assignment of the Ministry of Energy and Natural Resources of Georgia and JSC Georgian State Electrosystem, in July-August 2011 Energotrans Ltd implemented power supply project of village of Shenako in Mtatusheti area of Akhmeta District. The project included construction of 10 and 0.4 kV distribution network around Shenako area for supplying the local households from the USAID-financed newly built micro hydro plant (with installed capacity of 50 kW matching local electricity demands).

Generation voltage of 0.4 kV is stepped up to 10 kV at 0.4/10 kW (63 kVA) transformer substation, transmitted to other similar transformer substation located about 1500 m apart, where the electricity is stepped down to 0.4 kV, and distributed among customers via various size insulated conductors.

Construction of Jvari-Khorgi Overhead Transmission Line and Jvari Substation
Construction of 200/220 kV Jvari Substation and 200 kV double-chain overhead transmission line Jvari-Khorgi has been envisaged in the 2011-2015 Business Plan of JSC Georgian State Electrosystem. The goal of this project is to:
• provide demanded capacity of 450 MW to Poti Free Industrial Zone;
• evacuate electric power of prospective hydro power plants to be constructed in the upper reaches of Enguri River catchment;
• transit 350 MW capacity from Batumi substation to Turkey;
• improve reliability of 220 kV transmission network.

Sensitive Zone 1. Degraded windbreak

Sensitive Zone 2. Hornbeam and beech forest

Sencitive Zone 2. Hornbeam

Sencitive Zone 3. Beech forest

This Project includes the following works:
• Construction of 500/220 kV Jvari substation (3x167 MW + 167 MW autotransformer and reactor), including connection tap to transmission line “Kavkasioni”;
• Construction of 220 kV transmission line between substations Khorga and Jvari (68 km).
The financing of these Project components with estimated value of EUR 54 million is planned within the framework of the Black Sea Transmission Network Project. Energotrans commenced Environmental and Social Impact Assessment with the use of EBRD funds. Appropriate Scoping Report and Stakeholder Engagement Plan have been completed and submitted to EBRD for review and comments. The feasibility study of this project is under preparation by German company Fichtner GmbH&Co.KG, which first report has already been received and forwarded to EBRD.

2012 – Annual Report

2013 – Annual Report