On May 4, 2018, Government of Georgia (GoG) adopted the Law of Georgia on Public-Private Partnership (PPP), which defines a PPP as an agreement between a public sector institution or municipality and a private developer, in which the private developer assumes substantial financial, technical, and operational risk to design, finance, build, and operate the project. The law admits the selection of a private partner through direct negotiations only in the energy sector.
A PPP agreement must meet the following criteria:
- Long-Term — The minimum term for the PPP agreement shall be defined by the legal act of GoG, but may not be for less than a five-year period;
- Value — Until July 1, 2020, the project value shall be no less than 5 million Georgian Lari (GEL); after July 1, 2020, the minimum project value shall be defined by the legal act of GoG;
- Public Service or Infrastructure — The project must involve the provision of a public service or the construction, maintenance, and/or operation of public infrastructure by the private partner;
- Risk Sharing — Sharing risks between the public and private partners;
- Private Financing — Full or partial private financing of the project.
GoG Resolution No. 426 on “Approval of the Rules of Developing and Implementing Public-Private Partnership Projects,” enacted on August 17, 2018, sets detailed instructions for the identification, initiation, preparation, implementation, and post-implementation stages of a PPP project. Additionally, the PPP law and corresponding bylaws in GoG Resolution No. 426 are applicable to energy projects.
Furthermore, power generation projects that do not meet the PPP criteria, but are initiated by private developers, are subject to GoG Resolution No. 515 on “Rules and Conditions for Submit to the Ministry of Economy and Sustainable Development and Reviewing the Proposals on Conducting Construction Feasibility Studies, Construction, Ownership, and Operation of those Power Plants that Are not Public-Private Partnership Projects,” enacted on October 31, 2018.
This Renewable Energy Investor Guidebook explains all the necessary steps for the successful implementation of a renewable energy project in Georgia — from project initiation through project decommissioning — and outlines all existing legislation, permits’ (i.e., environmental, construction, and operation), deadlines, fees, and procedures involved.