Gas cloud

Georgy Kalatozishvili, Tbilisi. Exclusively  for Vestnik Kavkaza

Soon the next session of the Kazakh-Georgian intergovernmental committee on economic cooperation will take place. The Kazakh side intends to raise the question of returning the gas distribution net of Georgia’s capital to its legal owner – the company “KazTransGaz-Tbilisi” which invested about $108 million into its reconstruction since 2006. However, four years ago the Tbilisi court launched state management in the company for debt recovery to the Corporation of Oil and Gas of Georgia (COGG) which imports gas from Azerbaijan.

Since that time the debt increased from $40 million up to $43 million. However, the owners of the company state that some moments are dim: the corporation could wait with payment, and KazTransGaz-Tbilisi would be ready to discharge the debt. Moreover, the administration of the Kazakh company doesn’t understand why their debt to the oil and gas company was shifted to the state, i.e. at the moment KazTransGaz-Tbilisi is dealing with the Ministry of Financials rather than COGG. It is also unclear why the special manager didn’t transfer resources for paying the debt, but accumulated them at an account and transferred them directly to the state budget for paying interests and fees of the general debt.

Kazakh investors were especially puzzled by the statement of the energy minister Kakha Kaladze who invited the board of KazTransGaz-Tbilisi to the negotiations “for settlement of the issue.” But the minister did it through mass media and didn’t send official letters of invitation.

The dispute over KazTransGaz-Tbilisi has a clear intergovernmental aspect. Georgian authorities (the former and the current) wanted to score the debt of the Kazakh company for paying the sovereign debt of Georgia to Kazakhstan. But Astana decisively stated that such a variant is not acceptable. During the last negotiations in November 2012, the minister of financials of Kazakhstan Bolat Zhamishev told his Georgian colleague that Kazakhstan was ready to discuss both debts, but separately.

Vestnik Kavkaz found out the essence of the contradiction which is not mention by both sides of the conflict. Some Georgian politicians say that KazTransGaz-Tbilisi wants to return the company and promises to pay the debt completely, the Georgian government is ready to return the company. However, KazTransGaz-Tbilisi insists on increasing prices for the population, while the new authorities headed by Ivanishvili won’t do it because they promised to reduce gas and electricity prices. They have already partially fulfilled the promise by reducing prices for 10%.

As for “Kaladze’s invitation,” Vestnik Kavkaza found out that the administration of KazTransGaz-Tbilisi plays cunning. “They know perfectly that the Minister of Financials cannot settle the issue. It is up to the court and the Ministry of Financials, while an unofficial invitation means that Kaladze is open for a discussion,” a governmental source told Vestnik Kavkaza.

The main institute with which the Kazakh company will have to deal with is not the Ministry of Financials, but “Independent Committee on Settlement of Energy Prices” (ICSEP). Only it can change gas prices for customers. However, there are no chances that ICSEP would increase the prices.

The governmental sources state that the problem can be settled only at the political level, as an agreement between the authorities of two countries. As the issue is so principle for Astana, we can easily predict worsening of intergovernmental relations and complete freezing of Kazakh investments. Kazakhstan is slowly losing strategic interest to Georgia as a part of the South-Caucasian Corridor and an object for investing political and financial capital.