Georgian Dream Announces Conditional Write-Off of Energy Firms’ Debts

Georgian Dream Prime Minister Irakli Kobakhidze said the government will write off about one billion lari in accumulated debts of companies involved in renewable energy projects, but only on condition that they meet revised deadlines, warning that the debts will be reinstated if the terms are violated.

“All companies involved in the energy sector that are engaged in the development of renewable energy projects will, under a specific condition, have the penalties accumulated before the state written off, the total amount of which is one billion lari,” Kobakhidze announced at a December 10 briefing in government administration.

“As for the condition: in order to prevent companies from being tempted to continue their operations irresponsibly and from accumulating new debts, and to ensure that they take the government’s initiative to reset the sector seriously, any violation of the updated deadlines will result in their full liability for the payment of newly accumulated penalties and fines. In addition, the debts written off by today’s decision will also be reinstated,” he added.

Kobakhidze explained the conditional write-off serves two purposes: to “remove financial barriers” for companies implementing energy projects and to ensure they remain “fully motivated” to complete the planned projects on schedule.

“The write-off of debts should become the beginning of a new process based on mutual cooperation, while at the same time being grounded in responsibility,” he noted, warning that the government will take a “strict approach” to any new unfulfilled obligations or debts.

During the briefing, Kobakhidze also said Georgian Dream’s “strategic goal” is for the country, in the medium term, to become “fully self-sufficient in electricity supply and an exporter of electricity.”

The announcement prompted criticism from observers. Shota Dighmelashvili, editor-in-chief of Forbes Georgia, wrote on Facebook that many of the companies expected to benefit from the debt write-off are likely involved in cryptocurrency mining, which has sharply increased electricity demand in recent years.

“Until now, the entire population has been paying the price for the dramatically increased demand for electricity caused by mining,” Dighmelashvili wrote, adding that capital effectively flowed “from every household into the pockets of the miners.” He said that debts accumulated due to “crypto market fluctuations or other reasons” are now being canceled, meaning the public “was forced to subsidize the profits of crypto miners” and, in return, “will receive nothing except higher taxes.”

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• 17/12/2022 – Georgia, Azerbaijan, Hungary, Romania Sign Agreement on Black Sea Electricity Cable
  

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