ISET

Looking down from the famous cross-path of the Georgian Military Highway, you will notice a beautiful little lake that was not there six years ago. The lake is a small reservoir that supplies power to the 8 MW Aragvi HPP. On May 19, the ISET community and guests from professional circles in energy sector heard the story behind this hydro power plant in a seminar entitled “Small Hydro power – what’s special about it and how to implement it?” delivered by Hanness Posch, a civil engineer and entrepreneur working on hydropower projects in Georgia.

Mr. Posch’s engagement with Georgia started soon after Austrian investors rebuilt the Gudauri Ski resort in 1986. Mr. Posch was invited as an engineer to prepare a hydropower project to ensure a stable power supply for the resort. In the meantime, while preparing the project on the Aragvi river, Gudauri investors sold their shares in the resort and Mr. Posch was left as the sole participant in the project without enough resources to implement it. After finding Georgian partners, a company was registered and long search for the necessary funding started. Years later in 2011, the Austro-Georgian company found the money and commenced construction of their first 8 MW Aragvi HPP project.

ISET Hosting a Workshop with Georgian and Lithuanian Energy Regulators

Regulations in the energy sector are there in order to ensure improvements in efficiency and service quality. They are essential because many actors in the energy sector of any country are state companies and/or natural monopolies for which efficiency and quality of service are somewhat foreign concepts.
An EU-funded twinning project "Strengthening capacities of the regulatory cost audit and market monitoring" brings together the regulatory authorities of Georgia and Lithuania in order for them to learn from each other’s experience (and mistakes). As part of this project, on March 15, 2016, ISET hosted a workshop involving energy regulators from both countries. The Lithuanian National Commission for Energy Control and Prices (NCC) was represented by Vygantas Vaitkus. The Georgian National Energy and Water Supply Regulatory Commission (GNERC) was represented by three ISET alumni (class 2011): Giorgi Kelbakiani, Nikoloz Sumbadze and Irakli Galdava, chief specialists with GNERC’s electricity and gas departments.

Georgia has considerable deposits of metal (for instance, manganese, copper and gold) and non-metal resources, however our current regulations do not encourage investment while at the same time failing to generate significant fiscal revenues. Instead of considering the country’s long term needs, these regulations (licensing procedures and royalty fees) have been designed with two objectives in mind:

1) Generate immediate fiscal revenues even before the start of extraction (through exploration and licensing fees);
2) Minimize human intervention in monitoring the sector (by making royalty payments independent of actual extraction volumes and prices). While reducing corruption risks, this approach is too rigid when it comes to risk sharing and incentivizing investment.

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