Recently, in Baku, President of Azerenergy JSC Baba Rzayev and head of the board of the JCS Georgian State Electrosystem David Tvalabeishvili signed a Memorandum of Understanding on promising energy systems. Translated from the official and diplomatic language, it is about the development of communications that will connect the energy systems of the two countries, in particular, the construction of a duplex power line with a capacity of 330 kW, which will facilitate the flow of electricity in the winter and summer periods.
The agreement reached has a wide context: the cooperation of Georgia and Azerbaijan in the energy sector, including the use of Georgia’s transit resources for the export of the Azerbaijani energy resources to the world markets, has been developing for about 20 years. Georgia is provided by the Azerbaijani natural gas for almost 100%. Moreover, Baku, according to the agreement with Tbilisi reached 12 years ago, supplies natural gas at a reduced price. In addition, Georgia has the opportunity to receive a significant amount of the natural gas transported through its territory free of charge (for transit) or at a reduced price compared to the world prices.
Against this background, many were surprised by the statement by the leadership of the Independent Commission for Regulation of Tariffs in the Energy Sector (ICRTES) about the increase of the natural gas price by the end of the year. In January, Tbilisi residents and the residents of the areas supplied by SOCAR - the state-owned Azerbaijani company - with natural gas will receive receipts with an increased amount of the required payment. ICRTES does not specify how much the retail price of natural gas will increase, but according to the leaked information, it can amount to 50 tetri ($ 0.18) per cubic meter. That is 3-4 tetri higher than now.
What has caused the price increase? The opposition blames the government’s “negligent economic policy” of Mamuka Bakhtadze, and some hint that the price increase was a result of the cooling of the Georgian-Azerbaijani relations. However, an expert on energy issues, George Khukhashvili, in an interview with Vestnik Kavkaza categorically denied this version:
"Many people very incompetently confuse the retail tariff of natural gas for the population with the price of gas supplies from Azerbaijan to Georgia. Azerbaijan did not raise the price of supply, and the consumer tariff, in this case, is related not with the rise in prices for imports, but with the devaluation of the lari."
According to the expert, the method of calculating the tariff is of great importance, in particular, the issue of profitability: "SOCAR-Georgia, which supplies gas to consumers, has made the major investments in infrastructure development over the past five years. Along with the devaluation of the lari, this could not but affect the tariff.”
According to Khukhashvili, there is no indication that Baku has decided to withdraw from the strategic agreement reached under President Saakashvili about regular deliveries of natural gas at a preferential price. The expert stated:
"The increase of the natural gas prices for the population is connected with the internal Georgian economic problems, and not with the character and quality of the Georgian-Azerbaijani relations, especially in the energy sphere."
