The NGO “AYFB”: extremely favorable conditions for “Energo Pro Georgia” provided by Nogaideli,the former Prime Minister, made it possible for the company to occupy 70% of the market

On June 9, 2015, the NGO “Association of Young Financiers and Businessmen - AYFB”  held a briefing. PaataBairakhtari, an analyst of the organization,accused  high ranking officials of the former government of interference in business.

“State interference in economy and business was very familiar during the former government. Instead of providing sufficient environment and legal basis for business development, high ranking officials, responsible for the process, directly participated in making business decisions.” 

The analyst stated, that “Association of Young Financiers and Businessmen” is a particular example related to the start of the company “EPG” , in which, the former Prime Minister, Zuram Nogaideli was directly and openly involved as the interested party.

„The point is, that the Government has artificially created favorable conditions for EPG , by means of number of  illegal decisions, making it possible for the company to occupy 70 % of the market.The Young Financiers believe, that such subjective and more likely corruptive decision of the ex-Prime Minister, made life much more expansive for the population and accordingly it is necessary that investigative agencies got interested in the issue.

In June, 2006, the Government selected Czech company through privatization tender, (the  fairness  of the selection process, is another issue for consideration ), which was ready to pay 312 million USD to the state budget for 2 distributive companies and 6 hydro power plants.  

However, after several months, on February 5, Ex-Prime Minister Nogaideli has publicly stated, that selling energy facilities  for 312 million USD would cause electricity tariff increase in price. Shortly, tender terms have been reviewed and it was decided that EPG would pay 132 million USD instead of 312 million USD.   

The tariff increase was implemented promptly and widely. A few days before the transfer of asserts, EPG was entitled with an opportunity to sell electricity by increased tariff. “Energy Games” by Nogaideliis proved by GNERC resolution , submitted several month prior to conclusion of the deal, which established growth of the tariff for electricity and introduction of the IBT. (which has facilitated EPG case in the future).

This resolution establishes  in accordance with the frequency and levels of consumptions, the distribution, transmission and dispatch tariffs of not only heat generation but also hydro-power generation as well.

Therefore, in February 2007, the high, medium and low voltage power transmission lines, restored partially by state funds and the regional distribution system, equipped with common counters (apart from Kakheti and Tbilisi) , with established IBT (reflecting expenses incurred by the state, rather than by “Energo Pro Georgia”), was transmitted to “Energo Pro Georgia” under the agreement.

Accordingly, “Energo Pro Georgia” uses tariff, that is not calculated on the basis of its expenditures, and besides,  the agreement has granted the right to demand from the government  to make GNERC submit  decision on the tariff index and establishment of the period  for individual metering in the regions.

As  Nogaidelihad announced, everyone should have been happy about changes, sine very soon, it would bring even more sustainable energy sector , 132 million USD would be transferred to the state budget, while the rest of the money was going to be invested in the rehabilitation projects carried out by the Czech company.

However, in the end, the society faced situation when price of the property purchased by “Energo Pro Georgia” was reduced by 200 million USD and electricity tariffs were increased. 

The Prime Minister, to say the least, lied, as it is not a property cost that affects the tariff , but investment amount is reflected on the tariff. 

Eventually. “Energo Pro Georgia” has became the country’s largest distribution company with  more then 875 000 consumers.

“The Young Financiers believe, that the Prime Minister of the “United National Movement” Government, ZurabNogaideli should be interrogated by relevant investigative agencies.” – stated Bairakhtari visiting “Reportiori” press-club and   added that EPG is monopolistic company in respect of the number of consumers, sales and service capacity , as well as electricity generation and distribution throughout Georgia. It owns 15 medium hydro power plants, total installed capacity of which exceeds 469,25 MW. It should also be noted, that the company’s service area covers more than 90 % of the country’s territory.