Promises Still Power Georgia’s Electricity System

After years of inadequate or non-existent maintenance following the breakup of the Soviet Union, the problems of Georgia's electricity system are legion – and legendary. But with expectations of a cash windfall from the current privatization campaign, the government is promising that the situation might – after 13 years – finally change.

A December 23 statement by Prime Minister Zurab Zhvania set the tone. In it, Zhvania pledged that $70 million out of an expected $200 million from state property sales would go to "securing electricity supplies" by autumn 2005. Energy Minister Nika Gilauri later went one step further and even named a concrete date: October 1, 2005.

But whether that amount will be enough to turn the lights on is open to debate. Dana Kenney, senior energy advisor at the US Agency for International Development's Office of Energy and Environment in Tbilisi, stated that the figures touted by the government will fall far short of solving Georgia's energy woes. Pervasive corruption and problems with bill collection also plague the energy sector. Though breaking the system up into separate generation, transmission and distribution units helped curtail some of the corruption, Kenney said, those problems still linger on. "Money has to flow through the system," she commented.

How the government plans to keep that money flowing, however, is unknown. For now, in addition to the privatization revenue, emphasis is being placed on outside assistance. At a June 2004 donors' conference in Brussels, Georgia submitted requests for $82 million in assistance for the energy sector, an amount second only to "budget support," the online news service Civil Georgia reported. The government also expects to use funds from the US-run Millennium Challenge Program for refurbishing small hydropower stations and monies from the German bank KWF to revamp the regions' electricity supplies, Gilauri told a January 6 press conference, the Prime News Agency reported. The exact amount of these funds has not been disclosed.

A comprehensive government plan to revamp the energy system has also been announced, but not made public. The Energy Ministry did not respond to EurasiaNet requests for information on the plan in time for this article.

Meanwhile, despite the government's promises, public exasperation with Georgia's energy crisis shows no sign of abating. In December 2004, some 600 protestors in Kutaisi, Georgia's second largest city, took to the streets with placards bearing a simple message: "Give us light." They were joined by 200 demonstrators in the nearby town of Zestafoni.

At the time, local officials appeared divided on how to respond to the crisis. While Giga Shushania, deputy governor for Imereti province, home to Kutaisi, took aim at power distributors for leaving the city "blacked out for the past few months" and without adequate drinking water, Deputy Governor Gia Tevdoradze took issue with protestors, asking "You haven't had electricity for 13 years [so] why do you remember it?" the daily 24 Hours reported.

Georgia produces mainly hydropower, which provides enough energy for the spring, summer and autumn when water levels are high. When water levels fall in the winter, imports – from Russia, Armenia, Turkey and Azerbaijan – cover the gap. Energy Efficiency Center Georgia, a renewable energy consultancy sponsored by the European Union, estimates that Georgia's domestic oil, gas and coal supplies can cover only 20 percent of annual demand.

These days, the degree of the problem is not always felt in Tbilisi, where the situation has drastically improved over the past few years. But the capital still feels the pain of aging transmission lines and equipment. Periodic blackouts hit the capital in October, November and December; largely the result of faulty transmission lines, in addition to the general disrepair of the entire sector.

But while Tbilisi may go several days without reliable electricity, several weeks or even months is more the norm in the regions, home to approximately 68 percent of Georgia's population of 4.7 million.

Bill payment is one frequent explanation cited by both the government and energy sector experts for the electricity system's woes. According to statistics from the Energy Efficiency Center, roughly 60 percent of Tbilisi residents pay their electricity and gas bills. In the regions, though, that number drops to around 30 percent.

"There is a difference between [electricity company] management in Tbilisi and the rest of the country," said George Abulashvili, director of Energy Efficiency Center Georgia, "The customers in Tbilisi are paying for the energy."

But in the western province of Guria, home to Imzari Chartishvili, paying or not paying electricity bills makes little difference. While electricity company officials have announced that they will provide electricity for a few hours per day only to account holders who have paid their monthly bills (roughly nine lari, or about $5), recently, even those residents who had paid their bills have still been left sitting in the dark for days on end, villagers in Lesa say. What power there is comes for a few hours at night only.

Ongoing corruption at each stage of the electricity system – generation, transmission and distribution – plays a large role in hampering bill payment, commented USAID's Dana Kenney. "People don't want to pay because they don't know where the money is going," she said.

So far, under Saakashvili's relatively free-form anti-corruption campaign, few details have been provided on how the government plans to tackle that problem.

Meanwhile, outside interest in Georgia's energy industry continues apace. In December, plans were announced by Canargo Energy Corporation, a Channel Islands-based oil and gas production company, for a $57 million oil drilling project in the Samgori and Ninotsminda fields. Georgia's Vartsikhe Hydro Power Plant was recently sold together with Chiaturmanganumi, a manganese mining enterprise, to the Russian company EvrAz Holding and the Austrian-Georgian company DCM-Ferro for $132 million. Talks have also reportedly started about selling the country's gas distribution stations, a heating plant and a backline pipeline, to Russian energy giant Gazprom, according to Rustavi-2 television – deals that would require amendments to existing legislation.

But whether or not this show of investor interest will make a difference for ordinary Georgians remains unknown. So far, the lack of workable solutions has only slowed Georgia's economic recovery still further, observers say. The country's per capita income and economic growth rates lag far behind those of neighbors Armenia and Azerbaijan.

"Energy is everything for our people . . .They can't do anything without energy," said Manana Dadiani, head of the EEC's Renewable Energy Department. "Giving them energy gives them the possibility to do something."