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Davit Narmania: Do we want an energy dependency on Russia? - probably not

Davit Jalagonia
11.10.21 10:30
DaviT Narmania, Chairman of Georgian National Energy and Water Supply Regulatory Commission (GNERC) declares that GNERC will review the consumer tariff this year. As Narmania explains, tariff review is conditioned due to the separation of electricity distribution and supply activities. Now, company Telmiko supplies Tbilisi with electricity instead of Telasi, while EPI Georgia supplies the regions instead of Energo-Pro Georgia. The GNERC Chairman assures that a substantial increase in the tariff is not expected, as the current tariff already reflects all the key factors, as electricity tariff has already increased since 1 January, this year. This is not the only topic covered during an interview with Davit Narmania. 

Let's start our interview with tariff policy. New Tariffs for households in the Gas sector have already been approved. How long will the government be able to maintain the price of gas for our population?

The oil and gas corporation decided to help the household sector and this is quite a heavy pressure for the corporation, because it uses its own profitt to maintain tariffs and pays almost 200 million Gel per year for it. That's why we have a lower price of gas for the population. One cubic meter costs 56 tetri for households in regions and we have almost the same price in Tbilisi. Without subsidies coming from the corporation the gas price would be much higher for us. Let’s see how long the government can help the population.

The Oil and Gas Corporation writes in its ten-year development plan for the Georgian gas transmission network that the policy of subsidies of gas tariffs might cause an obstacle for the infrastructure projects in the future. In terms of economic development, Is it reasonable to take this risk from the government?

If you ask me as an economist and the head of the regulatory commision as well, my answer is that we need to focus more on the economic components than the social support components step by step. The economic projects planned by the Oil and Gas Corporation should not be delayed. I understand that there is still a pandemic, which is accompanied by social difficulties, but I think that it will not last for years, and as soon as the social environment is improved, the oil and gas corporation should be allowed to implement its economic projects and this is up to the government. As far as I know, this policy remains unchanged during the pandemic.

Do you expect any changes in terms of electricity tariffs due to the division of energy supply companies' functions? Are there any circumstances that might allow energy companies to ask you for a tariff review?

We have approved all the rules, including the tariff calculation rule and the tariff methodology according to the conjuncture of this new market. Whatever we have, we do not expect any substantial growth.

According to the methodology, the companies will apply to us 6 months ahead to set the tariffs. After this period expires, traditionally, the tariffs will be set at the end of the period or in December.

We have such a picture - on the one hand, our country is a member of the European Energy Community, we are implementing reforms, we have already passed a law and we even will already have a smart electricity metering, but this meter must measure the electricity consumption, which is gradually becoming difficult to produce in this country. I mean the construction of new hydropower plants. Considering that we are a member of the European energy family, do you think that the challenges faced by investors in the energy sector of Georgia are quite serious?

The current situation regarding the planning and construction of new facilities is unfavorable, especially based on the already known decision made by the investor of Namakhvani HPP ENKA. I hope that this is not the final decision and at least some consensus will be found with this, or with another investor.

It would be better to complete the ongoing facilitation process with the involvement of the European Energy Community and bring the members of this process closer together. There was additional research that needed to be completed and it would probably be better if the investor made a decision later, because these types of decisions are a signal to other investors as well.

Today, not only the construction of Namakhvani HPP has been delayed, but also the construction of other large and medium HPPs, including those projects that have practically no significant negative impact on the environment.

Such a very radical protest against hydropower plants, is not appropriate for our economy and security as well. Energy dependence is growing on many countries, including Russia, which has occupied 20% of our country's territory. Do we want an energy dependency on Russia? - probably not.

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