‘kNOw Gazprom’: Discussing Georgia’s New Gazprom Contract
On the 2nd of March, Georgian Students For Liberty organized a panel-discussion titled “kNOw Gazprom” as a part of the Defend Your Wallet campaign. Together with the audience, the speakers discussed the current news on Georgian gas deals and their local economic effects.
Georgia’s new contract with Gazprom is currently one of the most important issues in the Georgian political and economic landscape. Recently, there has been a secret meeting of Georgia’s Minister of Energy, the Deputy Prime Minister Kakha Kaladze and the head of the Russian company Gazprom, Alexei Miller. The news of this meeting came out in the Russian media. No one knows what has been decided for Georgian society in this meeting: Georgia’s government aims to hide the details of the contract, because the non-governmental sector has been striving to avoid this contract between Georgia and Gazprom for the past two years. The new contract will go into effect in 2018, and then Georgia will have to face its results. At the ‘kNOw Gazprom’ event, we discussed what the new contract might bring and why the Georgian government actually approved this concession towards Russia.
Two speakers participated in the panel discussion: Vato Lezhava (Rector of the Free University of Tbilisi and Agricultural University of Georgia and chief adviser to the prime minister of Georgia in 2009–2012) and Zviad Khorguashvili (Economic analyst).
Vato Lezhava took the audience through the history of Gazprom and its relations to Georgia. Since the nineties, relations between Gazprom and Georgia have been broken and restored on and off, depending on the politics, because the Russian Government owns more than 50% of Gazprom shares. The fact that Georgia has a monopoly on a pipeline to Armenia, has always been one of the main levers to strengthen Georgia’s role and priorities in the Caucasus region. Under the conditions of the old contract, Russia paid Georgia a transit fee of 10% of the gas for transferring the gas to Armenia through Georgia’s pipeline.
On the 18th of January, Minister Kaladze published a few details about the commercial contract with Gazprom. With the exact numbers (which were provided by the deputy prime-minister), Zviad Khorguashvili could explain the audience why the new contract is unprofitable for Georgia and what details it includes:
The length of the pipeline is 234 kilometers and it can transit 2 000 000 000m3 of gas. From that amount, Georgia was getting 180 000m3 gas from Gazprom. Now Georgia has lost this 10% transit fee, because according to to the new contract this gas has to be bought.
Furthermore, Georgia actually doesn’t even need the Russian gas, because Gazprom isn’t Georgia’s only source for gas: most of Georgia’s gas is actually provided by Azerbaijan and Socar Gas Georgia, which has already shown readiness to send more gas to Georgia. This means that there’s no need to buy additional gas from Gazprom, but the government still insists on doing so.
It is highly suspicious that the Georgian government accepted this new contract. Gazprom doesn’t set prices, it can always decide to increase the price later. Also, no one knows what the value of the Lari compared to the Dollar will be next year. Those are risks which the Georgian government has taken, which benefit the occupant country, Russia.
The Georgian society has to accept the fact that from 2018 on, they will have to pay for gas which they used to be getting for free. They will receive less money for gas transfers, and on top of that they will probably have to pay more taxes than they expect.
Katie Shoshiashvili is a student of Social Sciences at the Free University of Tbilisi, Georgia, and a Local Coordinator for European Students For Liberty.
This piece solely expresses the opinion of the author and not necessarily the organization as a whole. European Students For Liberty is committed to facilitating a broad dialogue for liberty, representing a variety of opinions. If you’re a student interested in presenting your perspective on this blog, please contact firstname.lastname@example.org for more information. Header image source: Flickr.