ENKA ‘Finally’ Terminates Namakhvani HPP Contract

ENKA Renewables LLC has terminated its contract with the Georgian Government to build and operate the Namakhvani Hydropower Plant in western Georgia, financial statements of the constructor’s parent company said.

The document, published in Georgian media today, confirmed that ENKA Renewables had as of December 31, 2021 written off capitalized property, plant and equipment of the HPP worth USD 40.4 million.

It was not immediately clear if the Georgian Government had bought the disposed assets. The contract had included a provision stipulating that the investor was allowed to request the Government to purchase, however.

The authorities and the investor have been in talks since the parent company of ENKA Renewables LLC, Istanbul-based ENKA Insaat announced on September 20, 2021 it had notified the Government for terminating the contract due to breaches of terms and force majeure.

Lack of Clarity Over Talks

The details about the negotiations have been scarcely available to the public.

Then-Economy Minister Natia Turnava was cited in the media as saying on January 18 that the Government was trying to find a settlement with the investor so that the case did not go to arbitration.

Turnava, who quit the post in early February, stressed that the Government’s aim was to ensure that the company’s withdrawal would not harm either the Namakhvani project or the country.

But noteworthy, even if the case went to arbitration, the contract between the Government and the investor obliged both parties to ensure confidentiality about the dispute, including keeping the information secret about its existence.

Meanwhile, Turnava’s successor Levan Davitashvili made ambiguous remarks about the talks with the company. On February 21, he refrained from confirming that the contract had been indeed terminated, saying the investor had “certain proposals.”

“We should wait for properly conducted legal process, about which the public, especially concerned persons, will be provided with complete information.”

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The Namakhvani HPP Project in western Georgia encompasses two separate HPPs on the Rioni River, the longest river flowing solely within the Georgian boundaries: the Lower Namakhvani HPP (333 MW) and the Upper Namakhvani HPP (100 MW).

Locals opposing the planned power-plants over multiple concerns, including environmental, gave a fierce resistance to the project. Their months-long tent protest gradually grew into a major nationwide movement, which held massive rallies, including in Tbilisi, the capital in May 2021.

Besides environmental risks, activists and CSOs opposing the project had cited “cabal” and “anti-state” provisions of the contract.

The government, on its part, stressed the need to enhance the energy security and to employ up to 1,600 Georgians with the “foreign direct investment in the amount of USD 800 million.”

Follow our Namakhvani tag for earlier developments about the controversial project.

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