Energy expert Gia Arabidze told BMG that subsidizing social gas and maintaining low prices is a heavy burden for the Oil and Gas Corporation of Georgia (GOGC).
According to him, this is why the corporation has not implemented major strategic projects in recent years, whereas in the past, the Gardabani 1 and Gardabani 2 thermal power plants were built with the corporation’s own funds.
“Since the consumer tariff and the price of gas supplied to thermal power plants were not increased, the corporation reduced the purchase price included in social gas, and it fell quite low. If I’m not mistaken, it went from $160 down to $90–100. But now there’s a risk that it could fall below production cost. That’s why social gas is supplied at a very low price, which is extremely hard for the corporation to absorb. This is why the corporation hasn’t undertaken serious projects in a long time, while Gardabani 1 and 2 were built from its own funds. Our tariffs—whether for electricity or gas—are social tariffs, not tariffs needed for sector development,” he said.
Since 2013, the Oil and Gas Corporation has been indirectly subsidizing natural gas for households, which annually results in hundreds of millions of GEL in lost revenue. In December 2022, the Georgian government provided GOGC with a GEL 230 million loan to supply the company with operational funds. The loan was needed because the corporation’s financial results had worsened.
According to GOGC’s financial report, the GEL 200 million loan taken in December 2022 was scheduled to be fully repaid by December 2025. BMG has reached out to the company to confirm whether the loan has been repaid; the text will be updated once a response is received.
