Russian Company Seals Controversial Takeover of Tbilisi Electricity Distribution
On July 31 AES Corporation officially announced that it sells its assets in Georgia to the Russian Unified Energy Systems (UES). The US company’s Georgian assets include three power plants and an electric distribution company Telasi in capital city of Tbilisi.
As a result of the deal the Russian power giant, which already owns 50% of the power lines in Georgia, acquires 75% of AES Telasi, power plants Khrami-1, Khrami-2 and two power blocks of AES Mtkvari. Thus the Russian state-owned UES becomes the monopolist in the Georgian energy system causing concern of the local political circles.
“This is a commercial decision of a commercial company,” the AES Silk Road manager John Huffaker said in Tbilisi on July 31 after the meeting wit the Georgian President. He added the RAO Nordic, a sub!
sidiary company of the UES was the only company to have expre!
ssed willingness to purchase the AES assets in Georgia.
The deal was signed between AES subsidiary AES Silk Road Company and the UES subsidiary company RAO Nordic a month ago, while the Georgia authorities say they were officially notified concerning the deal on July 31. However Ignacio Iribarren, ex- general manager of the AES Telasi, claims the AES informed the Georgian government regarding the possible sale of AES’s assets in Georgia last November.
The US embassy in Georgia on July 31 expressed regret concerning the AES Corporation’s decision to sell its assets in Georgia, saying the decision “reflects the difficult investment climate in Georgia.”
“The US is sorry that AES Corporation of Arlington, Virginia has decided to sell its assets in Georgia. But we understand the commercial reasons for the decision. The US remains committed to supporting reforming in Georgia’s energy sector,” the press rel!
ease reads.
Georgian opposition politicians have already voiced concerns regarding the entry of the UES in Georgia, demanding from the government to obstruct the entry of the Russian company, as the US company violated agreement with Georgia, while signing deal with the UES.
Irakli Chubinishvili, chairman of the special parliamentary commission investigating the reasons of energy crisis in Georgia, calls the Government of Georgia to file a lawsuit against the US company AES in the London Court of International Arbitration.
He claims the deal between the AES and Russian Unified Energy Systems is illegal, as according to the 1999 agreement between the AES and Georgiathe US company had no right to sell its assets before 2004. In addition, AES had to notify the owner of the remaining 25% of Telasi shares – Tbilisi municipality – on its intention to sell the controlling stakes.
“Paragraph 17 of the framework agreement entitles the!
company to carry out talks with any company over sale of its!
own shares through the coordination with the Georgian side. Under the contract, the company has the right to sell its assets on expiration of 5-year term of activity in the country,” Chairman of the Energy Regulation Commission Elizbar Eristavi says.
At the Parliamentary session opposition MPs warned that the entry of the UES, which is the Russian state-owned company would lead to monopolization of the Georgian energy system by Russia.
“The Ministry of Fuel and Energy of Georgia remains without functions, since the Russian side will take over the entire energy system of Georgia,” Irakli Chubinishvili said at the special session of the Parliament on August 1.
Parliamentary Chairperson Nino Burjanadze also voiced concern saying “monopolization of the Georgian energy system by the Russian state-owned company is absolutely inadmissible.” “I am not against Russian capital, but the country’s energy independence is of !
vital importance,” she added.
By Tea Gularidze, Civil Georgia
