WILL “TAHAL” BREAK ORGANISED CORRUPTION CHAIN

BY. Eka Gabadadze

“Tbilgas” privatisation process is nearing its end. The Israeli company “Tahal” turned out to be the only real potential investor among a great number of other ones who have taken part in the privatisation process.

Finally, negotiations were held between the Georgian and Jewish party on the high level – the president of Georgia tried to finish privatisation process of “Tbilgas” in the shortest terms. We hope that the problem will be settled before autumn and winter season and Tbilisi inhabitants who are under constant psychological terror of “Itera” (i.e. Russian party) will become free of stresses (at least, of the threats to stop gas supply). The President’s position, probably, guarantees that “Tbilgas” will soon have an investor and this issue will be settled once and for all. Everything is supposed to become clear in some days. However, according to the backstage information, serious forces struggle against the privatisation of “Tbilgas”. By the “serious forces” we imply corrupted officials that both a chairman of the Control House and other law enforcement structures refrain from naming (such reserve gives rise to doubts).
Despite the fact that staff of “Tbilgas” was renewed (mainly, leadership and Observers’ Council), and a contractor firm USAID, PA Consulting developed several offers, recommendations for the improvement of this position, the situation has not improved. As we see, corrupted officials find it difficult to depart with the circulating “substantial capital” in “Tbilgas”.
Political battles of “Tbilgas”
What is going on in “Tbilgas”? Officials refrain from answering this rhetoric question. I remember that Gia Gozilashvili, one of general directors of “Tbilgas” and now one of officials of “Grusgas” said: Gas is of interest, but money is of greater interest!” Perhaps, this very interest prompted the Georgian political establishment to lay hands on “Tbilgas”.
An interest of Russian political orbit sputniks in the process of “Tbilgas” privatisation creates a real danger. They try to make “Tbilgas” subordinate to “Tbilgas” and thus increase the areal of corruption. As far as we know, Tbilisi consumes 90% of gas in the country while all other regions consume 10% all in all. As “Grusgas” has only a 10% areal, it wishes to become a monopolist and expects assistance from “Itera” and parties. “Socialists” and “Agordzineba” will, certainly, play a great role in this business. The Russian party has a particular chance, as “Itera” still remains to be the only supplier. The Russian party has real chances for securing a grip on economic and political levers.
“The international Energy Power Company “Itera” has created a subsidiary enterprise that would work on the implementation of investment projects in different countries. Tamaz Pataridze, head of the Georgian representation “Itera” intends to make “Itera” interested in the implementation of investment projects in Georgia. “It is a pity that we are busy with discussing issues of “Tbilgas” indebtedness and do not think about new investments. As soon as the problem is solved, we will start thinking about the development of new projects”, – said Tamaz Pataridze. (T. Pataridze used to be a vice-minister of industry). He thinks that the industry of Georgia is dead whereas there are real perspectives of its development. I wonder what Pataridze implies by the perspectives of development and solution of problems. Presumably, as soon as the Georgian party repays debts to “Itera” (God knows how), money will be spent on new projects. We could explain Patridze’s statements as follows: Population lost substantial funds due to the installation of electric meters in Tbilisi”. As some say, Russia helped to make Georgian meters. They will be installed (population will pay for it, too) so that it will become impossible to steal gas. At the same time, the similar business could be made under the aegis of the rehabilitation of amortised gasmains, which will also become another burden for population.
In this situation, there appears “Tahal” that is interested in privatising “Tbilgas”. Its rival, i.e. Russia, does its best to present “Tahal” as monster saying that this company’s arrival would cause increase of prices. We should hereby note that the Russian party has repeatedly increased tariff on gas. As for the increase of tariff, this issue is settled by a majority of votes in the Parliament. “Tahal” demands liberalisation of taxes in exchange for the increase of tariff. It will not be, certainly, given liberalisation and it will have to increase tariffs. The Parliament will not support this variant so “Tahal” will have to leave Georgia. Yet, it is still dubious as negotiations with this company have entered a decisive phase and on the basis of some information sources, the Georgian party tries to bargain with “Tahal”, which postpones the process of provatisation.
“Tahal” will again leave us in care of “Itera”, or might there be better perspectives?
It is difficult to answer the question on this stage because nowadays “Itera” and “Grusgas” formedby it are monopolists of gas supply to Georgia. This factor as well as frequent non-execution of contract terms by “Tbilgas” makes it possible for a supplier to manipulate. Prices that are observable in the wholesale market are established on the monopolisation of gas supply.
According to specialists’ conclusion, the wholesale price of Georgia is approximately 10% more than in Armenia and Azerbaijan. There are also great costs for the transportation of gas from the borders of Georgia till Tbilisi. According to the international practice, transportation to such distance should cost no more than 3 dollars while “Tbilgas” pays 7 dollars. Moreover, “Itera” pays money for the transit of gas through Armenia to a gas transporting company 10% of the whole volume equalling 5,5-6 dollars. The price includes not only transportation costs, but also transit taxes. Yet, given the transportation costs, the Georgian law envisages for a higher tax for “Tbilgas” than transportation costs for “Itera” and transport tax altogether.
Since 2005, a 55 dollars’ worth supply of Azerbaijan gas” to Tbilisi is planned (1,5% acceleration of prices is expectable in the future). At the same time, the calorific capacity of Azerbaijan gas is 10% more than 1,5% escalation of prices). Thus, the equivalent cost of Azerbaijani gas will amount to 50 dollars by the end of 2005. If rationalisation of transportation costs is considered, we can conclude that the cost of Azerbaijani gas in the local market will be 10-15 dollars less than the cost of Russian gas, which will, eventually, have a positive effect on the formation of final cost of gas supply.
Thus, everything depends on the skills of “Tahal” and the good will of the Georgian party. Could not we solve the problem of “Tbilgas” that became a reason of mass psychosis? As people say there is always a way out. Moreover, the way out has already been found.
“Itera” does not wish to give up its positions. The company’s recent steps are a clear example of it. The claim to fully cover old and new debts and oppression of the Georgian party testify to the fact that “Itera” tries to lay hands on “Tbilgas” in exchange for these means.