World Bank Approves $35 Million Investment for Black Sea Submarine Cable Project Preparatory Activities

22-05-2024 10:29:01 Economics

The World Bank’s Board of Executive Directors today approved a $35million loan for the first phase of the Enhancing Energy Security through Power Interconnectionand Renewable Energy (ESPIRE) Program for Georgia.

According to the World Bank, the ESPIRE Program consists of three phases with a potential financing envelope of up to $500 million that seeks to improve Georgia’s institutional capacity for the development of submarine cable projects, strengthen Georgia’s domestic power transmission system, and establish a direct electricity interconnection between the South Caucasus and Southeast Europe. Additionally, the parallel digital interconnection would reduce internet connection costs, improve bandwidth, and generally enhance international digital connectivity across the Black Sea.

The ESPIRE Program is designed to support the next steps in the preparation of a potential Black Sea Submarine Cable (BSSC) Project, which aims to establish parallel electricity andfiber-optic submarine cable interconnections across the Black Sea, with landing points in Georgia and Romania.

“The ESPIRE Program can play a pivotal role in realizing one of the most strategic and ambitious energy and digital connectivity initiatives in the region,” said Rolande Pryce, World Bank Regional Director for the South Caucasus. “The Black Sea Submarine Cable Project, has potential to become a transformational interconnection between the South Caucasus and Southeast Europe, helping the countries from both sides of the Black Sea to improve energy security, decarbonize energy supply, and develop renewable energy, as well as increase direct digital connectivity.”

"The first phase of the ESPIRE Program is especially critical, as it aims to help identify a suitable corridor for the BSSC Project, and support further preparatory activities such as surveys of the Black Sea seabed, including geophysical and geotechnical investigations. To enhance the implementation readiness of the BSSC Project, the first phase also includes capacity building and technical assistance for the establishment of adequate institutional mechanisms for intergovernmental coordination and joint decision-making with other countries participating in the BSSC project. If Georgia and other participating countries decide to proceed with the implementation of the BSSC Project, Phase 2 of the ESPIRE Program would finance, in parallel with Phase 1, the strengthening of the on-land transmission grid in Georgia and potentially other countries, which would be crucial to enabling electricity exchanges through the submarine cable system. Phase 3 would then support the financing of the submarine cable itself, in collaboration with other financiers. The fiber-optic cable component in the same seabed corridor is expected to attract significant private-sector investment." the World Bank said.

"The Black Sea Submarine Cable is a flagship project initiated by Georgia, which will provide adirect connection of the South Caucasus countries to the European energy system.The first phase of financing, which was approved today by the World Bank, is fundamental in terms of further development of the project," said Levan Davitashvili, First Vice Prime Minister, Minister of Economy and Sustainable Development of Georgia.

"Implementation of the BSSC project implies the boost of large-scale infrastructure in the country, the creation of jobsand increased investments in Georgia’s economy. With the Black Sea Submarine Cable project, Georgia will become a very important partner country of the European Union, and this will contribute to the strengthening of the energy security of the European Union, Georgia and the entire South Caucasus region, the development of the renewable energy sector and the increase of transit opportunities between the regions".

"The World Bank-supported first phase of the ESPIRE Program will contibute to the important initiative that aims to improve Georgia's energy security, and to support the preparatry works forthe Black Sea Submarine Cable (BSSC) Project", said Lasha Khutsishvili, Minister of Finance of Georgia. "We believe that the project will strengthen Georgia's role as a reliabletransit country and exporter of renewable energy from the South Caucasus to the European Union, contributing to the diversification of energy sources and the development of regional transport corridors. The project is viewed as a significant step towards closer integration between the South Caucasus region and the EU, fostering economic growth, development, and connectivity across the region".

The ESPIRE MPA Program is part of the World Bank Group’s Global Challenge Programs on“Energy Transition, Efficiency and Access” and “Accelerating Digitalization.” The Program is also consistent with the forthcoming World Bank Georgia Country Partnership Framework 2025-2029, focusing on enhancing inclusive growth and competitiveness, and improving connectivity and integration.

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