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Investment Planning and Regulatory Measures in Georgia

This presentation explores the investment landscape in Georgia's energy sector, focusing on major electricity and natural gas projects. Topics include regulatory measures, approval processes, investment plans, risk assessment, and compliance challenges. Learn about key initiatives such as the AGRI Project and gas pipeline expansions. Discover the current gaps in regulatory frameworks and strategies for mitigating risks. Gain insights into improving coordination between stakeholders and enhancing compliance with EU regulations.

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Investment Planning and Regulatory Measures in Georgia

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  1. Investment Planning and Regulatory Measures in Georgia Kyiv, 30 October

  2. Major Projects in Electricity

  3. Major Projects in Natural Gas • Gas Storage • 190 mcm cushion capacity • 210 mcm working capacity • South Caucasus pipeline expansion • 691 long SCP pipeline • Gas volume exported through pipeline will triple and reach 22bcm/year 2022 • AGRI Project • LNG terminal at Georgian black sea coast • Compressor station at Geo-AzBorder • Technical capacity is limited due to the Lack of pressure (22-24 bar) • Increase pressure up to 37 bar • Rehabilitation of 800/700 mm pipeline at Georgian territory

  4. Approval of development plans • TYNDP prepared by TSO and Approved by the Ministry • Regulator only expresses remarks and recommendations • After approval, TYNDP is legally binding act • Ministry monitors/controls implementation of TYNDP • Based on TYNDP, Three year investment plans are prepared by TSO/Transmission Companies and submitted to the Regulator • GNERC monitors the implementation of the investments • No gas development plan approval procedures in legislation

  5. Approval of Investment plans • Regulatory period lasts 3 years • IP includes only investment projects, which will be commissioned before the end of the regulatory period • GNERC shall approve and consequently reflect in RAB only reasonable and justified investments • Rate of return on RAB is defined based on WACC (16.4%) method and is fixed during the regulatory period • RAB shall not include: • Investments that were carried out or will be carried out through full or partial financing from the third party - Companies should account for such assets separately; • Investments which are not considered as justified and reasonable • Assets that are not used in regulated activity • Construction in progress (unfinished construction)

  6. Higher Risk Assessment - Status Quo

  7. Gaps • Law on energy is not compliant with the 3rd energy package • Investment plans and TYNDP are approved by different entities • CBA is not approved by the Regulator • No well defined minimal requirements for TYNDP • Lack of investment evaluation and higher risk assessment/mitigation of the major projects • Poor connection between TYNDP and FYNDP (DSO) • And Georgia hasn’t transposed yet Regulation (EU) 346/2013

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