Energy sector is one of the strategically important sectors under newly adopted Public-Private Partnership law. The legislation, among others, envisages the possibility of granting long-term guaranteed purchase agreement to the investor. The law on Public-Private partnership was approved by the Parliament of Georgia in May 2018. Later in August 2018, the government of Georgia adopted the rule for PPP projects screening and implementation. These documents define the general framework for PPP projects initiation, partner finding and monitoring.
The project initiation and private partner finding process under PPP framework is generally led by special entities, based on transparent and competitive principles. The energy sector has some exemptions from general rules, e.g: for the projects larger than 100MW, the initiation process must include feasibility study conducted by independent company; all energy sector PPP projects should be agreed with the government despite the size of the project; private companies are allowed to initiate the project; the Government has right to allow closed and direct negotiations with only one partner, skipping the public tendering and evaluation procedure.
The export season of 2018 ended with total export of 588.3GWh (-9.9% y/y). The decrease in 7M exports is explained by: 1) last year’s high base due to unexpected surplus in hydro generation, 2) disruption of export caused by Enguri’s emergency closure in May-2018, 3) low prices on Turkish market, incentivizing companies with TDAs (e.g. Georgian Urban Energy) to sign additional agreements with the GoG and limit export to only May-July period in favor of increased local supply. Although the volume of exported electricity was down, its total value increased by 13.8% y/y to US$ 19.0mn, as Russia’s share (which pays low price vs other markets) in total exports decreased y/y. The electricity trade deficit stood at US$ 11.8mn in 7M18 and was down 40.8% y/y as growth in exports partly absorbed imports.
Domestic electricity consumption increased 10.8% y/y in July 2018 and 8.8% y/y in 7M18. The eligible consumers and distribution licensees drove this growth. The demand was satisfied by hydro generation in July 2018. Hydro Generation increased slightly (+1.5% y/y) and reached 1.3TWh, supported by good hydrological conditions and commissioning of new HPPs. Meanwhile, the maintenance works on some regulated HPPs dragged the supply. Enguri/Vardnili generation (+11.2% y/y) satisfied 65.9% of electricity demand in July 2018. In 7M18 generation of Enguri/Vardnili increased 24.8% y/y and reached its record high generation since 2010 (3.2TWh). Thermal generation and imports accounted for 0.7% of total electricity supply, used only for system’s balancing and stability purposes.
