Saakashvili – Russians can’t replace Georgian electricity

Georgian President Mikheil Saakashvili has denied reports that the Enguri Hydro Power Plant deal, under which Georgia and Russian energy company Inter RAO will exercise joint management of the biggest power plant in Georgia, has been called off.

“We’re not going to hinder Russian companies from coming to Georgia,” Saakashvili said in an interview with Bloomberg news agency in the Black Sea port of Batumi. “The more business interest we get, the less political pressure there will be. I’ve never said that Georgia doesn’t need Russian business,” said the President.

The Georgian Parliamentary opposition stated last week that the deal had been “spoiled,” because the negotiations with the Russians had lasted longer than the period laid down in the memorandum signed by both sides at the beginning of 2009. This memorandum should have served as the basis for the final contract for the HPP’s management.

Both the Parliamentary and non-Parliamentary opposition protested against the Enguri deal, considering it dangerous for Georgia, as it may potentially give Russia control over Georgia’s principal electricity sources. Leader of the opposition Republican Party Levan Berdzenishvili supposed that the deal might be a part of a “conspiracy” between Georgian and Russian authorities. “I can’t understand why the Government signs a deal with Russia, the country which Georgia has declared is occupying its territory. This deal makes me doubt that the August [Russian-Georgian] war had only military and political consequences. The agreement on Enguri looks like the losing side paying a contribution to the winner,” stated Berdzenishvili, speaking to The Messenger soon after the existence of the deal became known.

The non-Parliamentary opposition and several NGOs also strongly protested against the fact that the preparatory memorandum signed by Georgia and Inter RAO has not been published and its contents are known to only a very restricted circle from the ruling party and a few MPs from the Parliamentary opposition. However Georgian Prime Minister Nika Gilauri, speaking in Tbilisi on March 11, stated that “In any country it is recommended that, before the actual signing of a contract, details of the negotiations are not revealed. The fact that the existence of the memorandum has already become known to several people, including the opposition, is one of the reasons for the problems in the negotiation process with the Russian side.”

Despites the protests and warning from the opposition, the Georgian President insists that the agreement on Enguri HPP will bring nothing but benefits for Georgia. “Georgia will gain extra revenue. I think the Enguri deal will be perfect,” said Saakashvili in Batumi, where he also noted that now “We’re working with the Russians to get the best deal.” “The Russians are trying to replace Georgian wine with Italian or Spanish,” Saakashvili said, referring to the Russian ban on wine imports which is part of the 2006 economic embargo. “But there’s no way they can replace Georgian electricity. We both have an interest in Georgia exporting power.”

Russian state-owned company Inter RAO owns 75% of the Telasi power distributor in Tbilisi, as well as two thermal power generating plants, the 9th and 10th Energy Blocks. The company also has the management rights to two Georgian HPPs – Khrami I and Khrami II. If it also gains control of Enguri almost all of Georgia’s electricity system will be run by a Kremlin-backed company.

The Enguri HPP is the biggest hydro power plant in the whole Caucasus region. It is located on Georgian-controlled territory near the administrative border with Georgian breakaway region Abkhazia. It was built back in 1977 and is able to produce 4.5 billion KW hours of electricity annually.

Tbilisi and Sokhumi have an agreement under which 40% of the electricity generated by Enguri is consumed by separatist Abkhazia and southern Russia and the remainder is transferred to territory controlled by the central Georgian Government. Technicians of both Abkhazian and Georgian ethnicity work at the plant.