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Georgia

( Last update: March 2006 )

Electricity Market
Sector structure
Upstream Georgia has significant domestic electricity generation resources, notwithstanding lack of fossil fuel. Hydroelectric and fossil-fuel power accounts respectively for 80% and 20% of total annual generation. Persistent deficit of installed capacity over demand (about 150MW in 2005).

Russian electricity monopoly Unified Energy Systems (UES) controls much of the Georgian electricity industry. In July 2003, UES purchased several electric generating facilities.

Spanish Ibedrola manages the Wholesale Power Market of Georgia on the basis of a 5-year management-contract started January 2002. Direct negotiations accounts for 30-35% of transactions, wholesale market for the remaining 70-65%.
Networks Irish company ESBI International manages the consolidated transmission and dispatch company Georgian State Electrosystem (GSE) since March 2003 on the basis of 5-year agreement.

Four Transmission system operators: United Energy Distribution Company of Georgia, Energy Company of Adjara, Kakheti Energy Distribution (all in course of privatisation) and Telasi Distribution Area (75% owned by UES and 25% by state).
Downstream Despite a diverse fuel supply base, electricity supply within the republic of Georgia experiences several outages, due to malfunctioning of energy assets and payment disputes.

Regulated tariffs for electricity supply on full-cost recovery basis.
Gas Market
Sector structure
Upstream No significant domestic production.

Long-term supply agreement in place with Russian state-owned gas monopoly Gazprom.
Networks 44 natural gas distribution companies: 7 are private, 12 partly state-owned and 25 state-owned.
Downstream Tbilgazi (Tbilisi distribution company, in course of acquisition by KazTransGaz) is the largest consumer in Georgia currently under management contract executed by Georgian group New Management.
Current issues Improvement of energy security and solution of power deficit problems, through increase of generation and transmission capacity. In this respect, feasibility study for a second 500kV line between the Zestaphoni and Garbadani stations funded by US Trade and Development Agency in March 2006.

Modernization of T&D, metering and dispatch systems in order to reduce losses, improve technical quality and increase collection rate.

Completion of SCP pipeline by BP planned in October 2006. Pipeline will allow gas supply to Georgia and Turkey from Shah Deniz field (Azerbaijan) as well as transit toward Europe.

Privatization of energy asset. With respect to electricity, privatisation of distribution companies United Energy Distribution Company, Ajaria Energy Company and Kakheti Energy Company, and for six hydroelectric power stations (totalling 361MW capacity) planned to be completed in August 2006.

Promotion of competition.
National Legislation Law on Regulatory Authorities

Law on Electricity and Natural Gas

Law on Licensing
Sources IERN staff on publicly available information