Georgian Minister Downplays Experts’ Fears over Gas Pipeline Privatization

Georgian State Minister for Economic Reforms Kakha Bendukidze said on December 28 that Georgia should decide whether to sell its gas pipeline system based on its own interests and not on recommendations from the foreign experts.

“We should listen less to foreign experts; we should assess and decide whether to sell gas pipelines or not,” Kakha Bendukidze said after the government’s session on December 28.

Experts fear that privatization of gas pipeline system to the Russian state-run company will be a final blow to the country’s energy independence, which already largely depends on Russia.

Georgian Energy Minister Nika Gilauri said on December 28, that Georgia will sell gas pipelines to the Russian energy giant Gazprom only in case Tbilisi has a guarantee of receiving cheap gas from Gazprom for next 25 years and a guarantee that the gas pipeline will be returned back in the Georgian ownership in case of violation of contract.

Georgia has a binding commitment not to sell its gas pipeline network at least before 2010.

According to the Millennium Challenge Compact signed between Georgia and the United States, through the Millennium Challenge Corporation on September 12, the Georgian government undertook a commitment not to sell its major gas pipeline system until the expiration of the agreement’s term – 2010.

The Georgian government also has no right to sell or transfer controlling shares in the Georgian Gas International Corporation, a state-run company which operates the gas pipeline system in the country.

The U.S. allocated USD 49.5 million, through Millennium Challenge Account (MCA) assistance program, towards rehabilitating the gas pipeline system.

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