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Police need to interfere - David Narmania on how to resolve the mining issue in Svaneti

Tuesday, 18 January 2022 14:25 hits 360 times
David Narmania, Chair of Georgian National Energy and Water Supply Regulatory Commission
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David Narmania, Chair of Georgian National Energy and Water Supply Regulatory Commission

In the interview with "Mtis Ambebi", David Narmania, Chair of Georgian National Energy and Water Supply Regulatory Commission (GNERC), states his opinions about the energy crisis and mining issue in Mestia; why he disagrees with the Minister of Economy; legal basis of providing free electricity to Mestia municipality.

 Mr. Narmania, let us start with why Mestia gets free electricity. 

- The agreement to provide Mestia with tax-free electricity was signed in the 90s. However, I don't think using it now is justified.

- What was the basis for the agreement?

- I am not sure. I know the head of government made the decision. 

According to the executive order from the President of Georgia, Eduard Saakashvili, the Ministry of Energy of Georgia reevaluated the agreement on June 2, 2003, and kept it active. 

- Indeed, there is a signed document of tax-exemption for Mestia, a mountainous region. 

- There are other mountainous regions in Georgia. Was it the only reason? Locals and environmentalists say that Enguri Dam changed the climate, the area was damaged, and free electricity compensates. Electricity generated by the Enguri dam is used in Abkhazia as well. In Svaneti, many say that if Abkhazians can have free electricity, they should also have it. 

- None of those approaches are suitable. The energy generated by the Enguri dam is split 40/60. 40% is used in Abkhazia and 60% in other parts of Georgia. Primary aggregates that produce electricity are placed in Abkhazia. 

- Recently, "Energo Pro Georgia" stated that Upper Svaneti should not be getting free electricity, and there is no legal basis for that. When and how the order of Shevardnadze was revoked?

- As I know, the agreement is still active. However, I agree with "Energo Pro Georgia," and the Regulatory Commission has the same position. "Energo Pro Georgia" subsidizes the electricity in Mestia; of course, it amounts to a massive loss.

- Mikheil Botsvadze, Director General of "Energo-Pro Georgia," stated that they have not collected the tax on electricity consumed in Mestia. Furthermore, they spend GEL 45 000 000 to repair and protect the network. Are those the contract conditions, or is the company operating depending on their goodwill?

- Of course, they do not have an official obligation. However, the company has an operating license in Georgia except for Tbilisi, including such commitments. 

- Is it goodwill or obligation?

- It is goodwill. On the other hand, it is also part of the operation license. 

- If they decide to cut the electricity for the entire region, can you hold them accountable?

- If they decide to cut off the customers who do not pay the tax, we cannot hold them accountable. Their decision will be rightful.

- In September 2020, GNERC and the Government of Georgia were working on a plan to resolve the issue. Is the document ready?

- According to the plan of "Energo Pro Georgia", individual electricity meters should be set in the region. They even started the process but could not continue due to certain obstructions. 

- According to "Energo Pro Georgia", electricity consumption in 2021 equaled 101 568 155 kWh, 10M more than the previous year. In 2019 the region of Mestia consumed the same amount of electricity as 19 other regions of Georgia. However, residents of Mestia think the numbers are artificially inflated to force them to pay taxes. 

- Numbers are not inflated. The data is taken from electricity meters. The consumption is increased, but it is not entirely connected to either locals or commercial objects. Mining is the primary source of consumption. 

- Can GNERC double-check the validity of those numbers?

- JSC Georgian State Electro system can check numbers, and as I know, they confirm the data. 

- According to the data, the problem has increased for the last ten years. What did GNERC do to combat the issue?

- GNERC can set tariffs, monitor, if license requirements are met, etc. We are doing everything we are entitled to by the law. 

- Recently, you have made several public announcements about the possibilities to tackle the issue. If you are not entitled to do that, what was the main aim for those announcements?

 - "Energo Pro Georgia" occasionally addresses GNERC about particular issues. My responsibility is to speak publicly of those issues. This is also a duty we can fulfill. 

- What was the topic of their latest appeal?

- They request to remove Upper Svaneti from the license area and assign the network to the municipality. 

- What do you think of that request?

- We do not think the municipality of Mestia can manage it better than "Energo Pro Georgia".

- Locals also say that maybe the process leads to the new company entering the area instead of "Energo Pro Georgia".

- Who would benefit from it? If a new company cannot collect taxes, it does not seem profitable. 

- Are you assuming that the municipality cannot take care of the old network?

- They cannot. Even if they put enough effort into it, I don't think they can repair and protect the network. 

- Is the issue only financial?

- Financial and administrative as well.

- Locals took an oath by the icon to reduce consumption. The company states that it did not help, and they are not responsible for the situation in Mestia. The region does not have electricity during the tourist season. Can you see the way out of the situation?

- Tourism development should not be hindered. That, as well as providing locals with electricity, is the top priority. Due to the increased consumption, we may think of different measures, such as sealing miners off and starting a legal case. I think this is the way out. 

- Can you be sure of that? You stated the same several days ago, but the Minister of Economy disagreed. Although you are not a part of the government, GNERC is still considered a state organization. Is there a consensual position in government?

- We agree on some details and disagree on others. I still think that if miners overload the network, they should be removed. 

- Would it be possible without the interference of police?

- No, we cannot be managed without police. 

- In December 2020, a mining farm was confiscated from hotel "Banguriani". According to "Energo Pro Georgia," it consumed enough energy for 4-5 villages. In January the same year, 600 and 2000 miners were removed in Idliani and Khaishi. Despite the scale of the issue, it still cannot be resolved. Should we think that particular interests scare officials to push further?

- I don't think so. The operations you mentioned show the issue can be fixed. We should check the most congested areas first.

- During the recent energy crisis, police did nothing, despite "Energo Pro Georgia" addressing the electricity looting. 

As I know, they have started the investigation. Unfortunately, I do not have detailed information on actual events and results. However, I confirm "Energo Pro Georgia" addressed the Ministry of Internal Affairs of Georgia and sent us a copy of the letter. 

- Do you think the situation can be improved in the nearest future?

- I am confident that the reaction will be adequate. 

 

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