Giorgi Bakhtadze – Georgian Oil and Gas Corporation continues playing its role in strengthening of energy security of Georgia in 2020

07 February, 2020
Giorgi Bakhtadze, General Director of the state-owned energy company – Georgian Oil and Gas Corporation (GOGC), summarized the results of the last year and discussed the plans for 2020 in the interview with "InterPressNew".

- Opening ceremony of the new Gardabani TPP constructed with the investments of GOGC was held recently and the Prime Minister expressed gratitude to GOGC for the project implementation. What is your evaluation of this project? Can it be named as the most successful project of GOGC?

- Gardabani-2 TPP is a very important and strategic project for our country and of course, for GOGC. The new TPP which adds 230 MW to the unified electric power system, reduces the electricity imported to the country by almost twice, by 50%. At the same time, it makes the country's electric power system considerably stable. GOGC implemented the project with its own funds, with the investment of USD 180 mln. and finalized it within the shortest, agreed time. The new TPP is equipped with innovative, so-called Black Start function, which allows for supply of power to the electric power system and restoration from zero within the shortest time in case of occurrence of emergency in the country’s energy system. Of course, Gardabani-2 TPP is the most successful project of the last year for GOGC.

- To what extent did the plans set for GOGC in the early 2019 coincide with the results achieved by the end of the year?
- We indeed achieved the goals and results set in the early 2019 according to the business plan of GOGC, both in terms of financial results and implemented projects. We expect that the net profit of the company will be higher than planned. This success was predetermined by a very purposeful and result-oriented work of our team and also, operation of GOGC in the commercial sector.

- Apart from Gardabani TPP, what other significant projects were implemented by GOGC in 2019?
- Construction of a new gas distribution station in Rustavi should be mentioned among the projects implemented by our team. We have already finalized its construction and it will be connected to the network in the next few days; Soon, 65 thousand residents and the largest industrial facilities of Rustavi will receive natural gas through a new gas distribution station of modern standards – reliability and quality of gas supply will be increased. By the way, until now Rustavi was supplied with gas through the gas distribution network built in 1959. GOGC invested 9 million GEL in this project.

Also, a new, 33 km Adigeni-Goderdzi gas pipeline is very important, which was also built with funds of GOGC – investment of 11.5 million GEL. Goderdzi resort zone received natural gas for the first time this year which not only provides new opportunities for the resort development but also significantly improves the social and economic condition of the local population. In 2019, GOGC carried out rehabilitation works of 97 km of gas pipeline in total throughout Georgia.

- Last year, Fitch Ratings improved the credit rating of GOGC, however, in their statement it was mentioned that the future projects of GOGC, such as the underground gas storage, contain certain financial risks for GOGC. First of all, what preconditioned this improvement and how does GOGC plan to avoid the expected risks?

- The main factor that predetermined improvement of GOGC’s rating was improvement of the country’s rating. Of course, the rating agency also considered financial sustainability of GOGC and diversification of power generation. As for the risks associated with the gas storage project, they arise out of the complex nature of the project and its cost. However, it should be mentioned that GOGC has already raised a long-term loan in the amount of EUR 150 mln. at a low interest rate from the German Development Bank (KfW). It is also planned to conclude a loan agreement with the European Investment Bank (IEB) in 2020, which will fully provide the financial resources required for the project implementation. It should also be mentioned that the Contractor is selected under KfW rules and this Bank manages this process together with other participants.

As for the pipeline construction, this is a very important and strategic project which will considerably increase the energy security and energy independence of our country; We are proud that this project will be implemented by GOGC. The final phase of the tender is underway and we hope that we will identify the winner company in the first half of the year.

- Do you plan to issue Eurobonds in the amount of EUR 300 mln. in 2020? How do you plan to implement this project and how will GOGC benefit from it?

- Refinancing and attraction of approx. EUR 300 mln. from the market are planned in spring. Refinancing is intended for repayment of the old indebtedness in the amount of USD 250 mln. and the remaining attracted amount will be used for construction of a new generation facility – Gardabani-3 TPP.

- Trans-Anatolian Pipeline (TANAP) was officially opened at the end of November and this event was attended by the Georgian Prime Minister – Giorgi Gakharia. According to the Prime Minister, this is the most significant project which will attach more importance to the transit function of Georgia. How do you, as the Director of the company owning the trunk pipelines of Georgia, evaluate the strategic importance of the project for our country?

- South Caucasus (Baku-Tbilisi-Erzurum) Pipeline located on the territory of Georgia, together with TANAP, will ensure supply of gas from Caspian fields to the markets of Turkey and Europe.

As you know, before 2018, before TANAP was put into operation, Georgia could receive maximum of 300 mcm of gas from Shah Deniz field. After putting of TANAP into operation, the volumes of gas transited through the Southern Gas Corridor, including via the territory of Georgia will be gradually increased: by 2024-2026 and in the following period, the volume will be increased up to 22 bcm, which will allow Georgia to receive up to 1,1 bcm of gas annually at a preferential price.

Until that time, Georgia represented a country of a regional significance only (it transited gas from Azerbaijan to Turkey and Russian gas to Armenia). After putting of TANAP into operation, international significance is attached to it. Gas transited through the territory of our country will play an important role in diversification of international, including EU’s energy markets and increasing security of supply.

- What are the plans of GOGC for 2020? What will be your priority activities this year?
- GOGC has been intensely engaged in power generation as a result of diversification of activities for several years already. Our company has already become a very serious player at the market and according to our business plan, we will be actively participating in this process in 2020 too.
By this moment, GOGC has already finalized feasibility study of Gardabani-3 TPP. It is known that its installed capacity will be approx. 272 MW. In the second half of the year we plan to start the construction works of the project and the TPP will be put into operation at the end of 2022. GOGC as the largest state-owned energy company will continue playing its significant role in strengthening of energy security and energy independence of the country in 2020 too. Guaranteed gas supply of the country’s social sector as well as development of oil and gas transport infrastructure remain as priorities of GOGC.
Certainly, our forces will be particularly focused on two large, future projects that we have discussed above – construction of Gardabani-3 TPP and the gas storage. At the same time, we will continue active implementation of gas pipeline rehabilitation projects.