The Messenger
Monday, February 28, 2005, #037 (0811)

Gilauri outlines energy plans

Energy crisis dominates emergency government session
By Keti Sikharulidze


Enguri hydroelectric power station will be
disconnected for three months from April 1
for rehabilitation
Minister Nika Gilauri

Stating that the 'times of false promises has ended," and that he will
not lie to the citizens of the country regarding problems that exist in
Georgia, President Mikheil Saakashvili chaired an emergency government
session on Friday primarily devoted to the country's energy crisis.

"We did not start the crisis in the energy sectors, but we must finish
it. I need a real program of how to solve this problem at last,"
said the president, adding that the population should know when the
government will resolve the electricity problems allowing the whole
country to escape from darkness.

"The main mission of my government is to solve problems in months
and if they cannot be solved in months then at least in the nearest
future. If Tbilisi, Batumi and one or two other cities in Georgia are
supplied with electricity but other parts of Georgia not, this does not
mean that the problems have been partially solved," said Saakashvili.

Minister of Energy Nika Gilauri said that the government inherited an
energy system on the edge of collapse from the previous government
especially, and described chronologically those problems that the
system faced last year.

Primary among the energy sector's problems are those affecting the
country's hydroelectric power stations. Three of the twelve major
units are out of action, and energy experts warn that a further six
could be lost soon as a result of breakdowns.

"Last year we tried to lift Georgia out of this energy mire, but
I agree that we have not yet done enough to solve the electricity
problems in Georgia serious problems in the regions still remain,"
said Gilauri.

Gilauri stated that the ministry has worked out a two-year project to
develop the energy sector, which will solve the country's electricity
problems. The main priorities for the next two years, he said, would
be technical arrangement, financial stability, and metering 70 percent
of the regions this year, which would solve problems between supplier
and distributional company.

He also talked about "enforcing new rules" which would single out
the responsibilities of each person, and also would single out who
is responsible to supply each resident with electricity.

Gilauri also named two other main priorities for the following
two years: first, guaranteeing the security of energy supplies both
technically and economically; and second, improving the profitability
of the energy sector so that it no longer has to rely on donors' help.

"The main problem in energy security was basic power supply. To
solve this problem GEL 30 million will be allotted from the budget to
build two new 120-megawatt gas turbines ... which will be finished
in two years time," said Gilauri, adding that the building of the
new turbines would help to cover the 300-megawatt deficit currently
faced by Georgia.

The minister added that even with the new turbines, import of
electricity from either Russia or Armenia will still be necessary.

According to Gilauri, GEL 44 million will also be allotted from the
budget to rehabilitate the Tbilsresi power units and hydroelectric
power plants, which together will provide an additional 700 megawatt. A
monthly plan of what work needs to be done when has been worked out,
he said.

"One serious problem for Georgia is Enguri hydroelectric power station,
where repair works have not been held for years," he said.

Enguri will stop operating for around ninety days from April 1, to
allow the ministry to fully rehabilitate it. This will necessitate
energy curtailments across the whole of Georgia, the minister said,
"though it [Enguri] will be equipped with modern equipment and will
provide a guaranteed 260 megawatt to the energy sector" once the
repair work has been completed.

The European Union plays great part in allowing this rehabilitation
work to be carried out. The EU is to loan Euro 5 million for the
rehabilitation of Enguri. "The European Union and the Bank of Europe
are satisfied by the work being carried out in Engurhesi and are
ready to support us financially," said Gilauri.

The Ministry of Energy also plans to start rehabilitation of the
Tbilsresi 10th power unit. Gilauri said they have already started
negotiations with RAO UES regarding a two-year rehabilitation project
to begin in summer or autumn this year..

Speaking on the profitability of the energy sector, Gilauri stated
that problems in energy supply will continue as long as owners of power
stations are not assured that each kilowatt produced is not profitable;
and equally, until distribution companies are not convinced that each
distributed kilowatt is profitable.

for him and till the manager of the distributional company would not
get profit from each sold kilowatt hours.

"It is a problems that needs to be solved in the nearest future;
and one way to solve it is through privatization and an increased
number of paying customers," Gilauri stated.

At the session Gilauri also discussed the long-term plans for 2007-2008
years, one of which is to invest in Khudor hydroelectric power plant
and another to build a new 500 kilovolt transmission line which would
connect the east and west parts of Georgia.

Gilauri explained that today the country is dependent only on one
500-kilovolt line and even the smallest accident causes serious
disruptions in the energy sector, so the ministry is looking for
investors to fund a new high voltage line, the building of which
would take eighteen months.

"If this project is realized we would be able to import energy only
for reserve, which means that the energy that Georgia uses would be
produced in Georgia. The new supply and metering would make for a
guaranteed supply of electricity in the country," said Gilauri.

Prime Minister Zurab Noghaideli stressed that the profits from the
privatizations would be spent on most of the above-mentioned projects.

"Through the privatization of Chiatura manganese factory, Vartsikhe
hydroelectric power station and the Georgian Ocean Shipping company
we must rehabilitate the Georgian energy sector, which will help
boost the economy," he said.

According to Noghaidelim GEL 200 million will be spent on
rehabilitating programs from privatization this year and GEL 65
million next year. "Our main goal for the whole country is to meet
next year's winter without an energy crisis and we must do our best
to achieve this."

Gilauri also talked about the diversification of gas supply, noting
that the country is fully depended on the Russian gas company Gazprom,
though he added that the rehabilitation of the Azerbaijan-Georgia
gas pipeline would improve the situation.

"It will give us the possibility to import gas not only from Russia,
but also from Azerbaijan and Iran. And we can also get additional gas
from Shah-Deniz project as well. This means that our country will get
10% of the gas transported from Russia and Armenia, as well as 5%
of Shah-Denis gas. Furthermore we will buy gas form Shah-Deniz by
guarantee, which is nearly one billion cubic meters, which will help
to supply Georgia with gas and electricity," said Gilauri.

Summing up, the president demanded that all residents of the country
should know that those hydroelectric power units and others are not
enough to provide 24-hour electricity.

"We need new supplies and new lines. It is impossible that the whole
country get electricity from one line, which can be easily broken. One
of the fastest ways to solve this problem is the rehabilitation
of hydroelectric power stations and gas turbines," concluded the
president.