Georgian PM: Increase of Gas Price Political Decision

Georgian Prime Minister Zurab Nogaideli said in Moscow on November 25 that Russia?s decision to increase gas prices for Georgia, from the current USD 63 to USD 110 per 1000 cubic meters starting next year, is a “purely political decision.”

Nogaideli visited Moscow on November 24-25 and held talks with the chief executives of the Russian energy giant Gazprom, which is the only supplier of gas to Georgia. He dismissed the Russian side?s claims that Georgia currently receives gas from Russia at “a subsidized price” as “incorrect.” He was speaking at a news conference organized by the RIA Novosti news agency.

“We currently receive gas at the market price, a market price for our region ? the South Caucasus. Of course gas prices, for example, for Germany and the South Caucasus will always be different, because gas for our region is delivered from Central Asia. From Kazakhstan to Georgia via Russia there are two pipelines ? the length of one pipeline is 800 kilometers and the length of the other is 1500 kilometers. This is the length from Central Asia to Georgia. Also, there is no transit country between Georgia and Russia. Meanwhile gas for Germany – [a country] which is often brought-up as an example and where gas price is USD 200 [per 1000 cubic meters] – is delivered from Siberia and must first pass through several transit countries before it is delivered to Germany,? Nogaideli said, adding that Tbilisi considers this change of gas price for Georgia ?a political decision.?

But he said that Georgia?s economy is prepared for this increase of gas prices. ?The [financial] losses caused [by this increase in gas prices] will be only 0.6%-0.7% of Georgia?s GDP. But these losses will be compensated by economic growth, which will be a double-digit figure next year,? Nogaideli said.

He said that talks about gas prices are expected to be over within the next 7-10 days. ?These talks involve gas prices as well as the amount of gas which will be delivered to Georgia – I think it will be about 2 billion cubic meters [next year], or maybe slightly less,? he added.

Nogaideli said that Tbilisi will closely observe Russia?s gas price policy in respect to other countries of the region as well. ?The gas price for other countries will increase as well; but for Georgia it increases more then for other countries. So I think that this was a purely political decision,? the Georgian Prime Minister stated.

Nogaideli also said that despite controversy over the price of gas, he ?tried to put forth some positive issues.?  The Prime Minister put forth an offer to Gazprom regarding a joint Russian-Georgian venture which would be owned equally by both sides and which would deal with gas transit through Georgia as well as with investments in ?Georgia?s gas transportation capabilities.?

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