Energo-Pro Georgia, the largest electricity distribution company in the country, was rated “BB.” Fitch Ratings has assigned JSC Energo-Pro Georgia (EPG) an Expected Long-Term Foreign Currency Issuer Default Rating (IDR) of ‘BB(EXP)’ with Stable Outlook. The rating is based on expected cash flows and market situation for the next three years. GNERC’s regulatory methodology, whereby tariffs are revised every three years, and the upward revision of the WACC from 13.54% to 16.4% as of January 2018, positively affect the ratings.
Total installed capacity of Georgia increased 10.0% over the last two years to 4,104.9 MW. 2016-2017 additions have included 12 hydro (352.7 MW) and one wind (20.7MW) power plants. Three large HPPs – Dariali (108MW), Khelvachauri (47.5MW), and Shuakhevi (178.7MW) – account for 89.5% of the aforementioned capacity increase. According to the 2017 forecast, these three HPPs will produce 0.5 TWh of electricity in 2017 and satisfy 4.2% of annual consumption (11.9TWh).
Total installed capacity of Georgia will increase by 13.8% by 2020, if projects at construction stages are completed on schedule. 35HPPs with 337.2MW of installed capacity are at the construction stage to be commissioned by end-2020. Their timely completion will result in 1,586.0 GWh of additional hydro generation annually. In addition to the HPPs at the construction stage, the pipeline includes over a hundred projects at the feasibility stage, as well as a second GOGC-owned CCGT project (230MW) in Gardabani, to be completed by 2020, and designed to satisfy electricity demand during winter deficits.
Domestic consumption increased 16.3% y/y in September 2017 and 9.0% y/y in 9M17. Consumption by eligible consumers, up 91.1% y/y, was one of the key drivers, as usage by Georgian Manganese increased 149.7% y/y and contributed 7.6 percentage points to overall growth in September 2017. Consumption of distribution companies, up 13.0% y/y, was an even larger contributor (10.1 ppts). Consumption by Energo-Pro Georgia subscribers, including former Kakheti Energy Distribution subscribers, increased 13.2% y/y, while Telasi consumption was up 12.5% y/y. The Abkhazian region’s electricity usage was down 8.2% y/y and accounted for 11.0% of domestic consumption.
Electricity import increased 5.5 times to 132.9GWh and accounted for 13.9% of total electricity supplied to the grid in September 2017. Notably, the level of import was only 0.7% above the plan. The main source of import (60.6%) was Azerbaijan, with the rest coming from Russia. Domestic generation increased 2.8% y/y, with HPP generation up 10.4% y/y (74.1% of total). Thermal generation decreased 32.4% y/y (11.2% of total) from the low base in 2016 (-40.6% y/y), while the new wind power plant accounted for 0.7% of total electricity supply.
