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On 25 July 2014, Minister of Energy of Georgia, Kakha Kaladze, talked about petrol and electricity prices. According to his statement, neither the members of the Georgian Dream coalition nor Mr Ivanishvili have ever said anything about the reduction of the petrol price by one lari. He also pointed out that halving the price of electricity was never a pre-election promise of the Georgian Dream. The Minister stated: “Since 1 October 2012, it is clear that we no longer have unjustifiably high petrol prices. I agree that the prices on Platts[1]

have increased, however, for the past few days there has once again been a reduction. We depend upon the world petrol market and since the prices on Platts have fallen lately, I’m sure that very soon we shall also have a reduction in petrol prices.”

FactCheck

took interest in Kakha Kaladze’s statement and verified its accuracy.

FactCheck also wrote about electricity and petrol

prices earlier in the year. The issue of utility bills has a separate chapter in the pre-election programme of the Georgian Dream coalition. According to the programme: “The utility payments (including the electricity price) in Georgia have been growing since 2004. With its rates, Georgia left behind not only the members of the Commonwealth of Independent States but many European countries as well. A particularly sharp increase in the prices was observed from 2007 to 2010.The electricity tariff in this period increased by almost 70%.” The programme also stated that the differential tariffs instituted by the United National Movement were socially unjust.

According to its pre-election programme, the position of the Georgian Dream coalition was that the utility tariffs should be based upon objective calculations of the service value. In this way, electricity would be available to all citizens of Georgia. The programme also promised that after winning the elections the Georgian Dream would newly calculate the utility tariffs and substantially reduce them.

During his press conference on 16 September 2012, former leader of the Georgian Dream coalition, Bidzina Ivanishvili, talked about the utility tariffs. The former Prime Minister said that it was possible to instantly slash the electricity bills by half (including the electricity tariff) since the existence of a lot of hydroelectric stations in Georgia allowed this. In terms of the pre-election campaign, leader of the coalition member party‘s National Forum, Gubaz Sanikidze, stated that the electricity price would be reduced from 17 to 8 tetri

from the end of October.

Bidzina Ivanishvili also talked about the electricity tariff reduction on 24 October 2012 during his meeting with the Parliamentary Minority. According to his statement, the electricity and natural gas tariffs were artificially increased as a result of the involvement of government controlled companies and it would be possible to substantially cut the tariffs by ending this involvement. However, Mr Ivanishvili did not specify the companies to which he was referring in his statement.

During his press conference on 22 November 2012, Mr Ivanishvili denied the credibility of his pre-election promises. He said that it was impossible to halve the electricity price and that his pre-election promise was exaggerated.

After the round table on the electricity tariffs, Minister of Energy of Georgia, Kakha Kaladze, stated that it was possible to reduce the electricity prices, however, it was unimaginable to halve them.

On 24 December 2012, in his interview with The Weekly Palette, Mr Ivanishvili once again talked about the electricity tariff reduction. According to his statement, from the beginning of January the electricity price would be reduced by 20%-25%. He also said that the government was working on the petrol price reductions as well and in the nearest future, after the eradication of monopolies, the petrol tariff would be reduced as well; however, this time he did not specify the numbers. After the Georgian Dream came to power the electricity tariff was reduced by 3.54 tetri. The tariff for those of Telasi customers who consumed energy of up to 100 KW equalled 13.48 tetri whereas now it equals 9.94 tetri (26.26% reduction). For customers consuming energy between 100 KW and 300 KW, the tariff amounted to 12.46 tetri (22.12% reduction). Subscribers of Energo Pro Georgia had to pay 12.98 tetri when consuming up to 100 KW whereas now they pay 9.44 tetri (27.27% reduction). From 100 KW to 300 KW, the tariff used to be 16.52 tetri and was reduced to 12.98 tetri (21.42%

cut).

FactCheck also verified the accuracy of Mr Kaladze’s statement about petrol prices. He stated that neither Mr Ivanishvili nor other members of the Georgian Dream coalition had ever talked about a petrol tariff reduction by one lari. This part of the statement is also not very accurate. During his press briefing on 10 February 2012, the leader of the coalition member party, Free Democrats, Levan Izoria, talked about the artificial increase in the petrol price. He accused the United National Movement government and its closest associates of artificially raising the petrol price by 50 tetri (not one lari). The data published on the official Gulf website, which includes an archive of fuel prices for 2012-2013, demonstrates a drop in fuel prices in December of 2012 followed by an increase in the period between February and March of 2013. Starting from 18 March 2013 the petrol prices saw a decrease of five-to-ten tetri while in April 2013 the prices of all sorts of petroleum dropped by three-to-five tetri. On 20 September 2013, the prices went up by seven-to-ten tetri relative to the previously lowered prices while on 28 September the price of Premium petrol shrank by two tetri and Regular and Euro Regular by six tetri. On 19 December 2013, the prices of Premium and Euro Regular increased by 9 tetri, Regular and Euro Diesel by 8 tetri and Diesel by 10 tetri.

After 19 December 2013, there was both reduction and increase in the prices of different petroleum products. After June 2014, the prices of all types of fuel went up (reduced on 9 July and went up again from 19 July).

Presently, Socar Petroleum prices are as follows: Super is GEL 2.35/litre, Premium – GEL 2.26/litre and Euro Regular – GEL 2.18/litre. The price of Euro Diesel is GEL 2.30/litre and Azerbaijan Diesel – GEL 2.12/litre. RomPetrol has almost similar prices: Euro Regular – GEL 2.14/litre, Premium – GEL 2.24/litre, Super – GEL 2.35/litre and Euro Diesel – GEL 2.17/litre. Gulf’s prices are as follows: Euro Regular – GEL 2.15/litre, Premium – GEL 2.23/litre, Super – GEL 2.32/litre, Euro Diesel – GEL 2.28/litre and Diesel –GEL 2.16/litre.

In our inquiry we can weigh the prices of fuel for September of 2012 against those of 2014 based upon the data published on the website of the Union of Oil Products Importers to Georgia.

As of September 2012, the average retail price of fuel equalled:

  • Super Petroleum – GEL 2.33/litre
  • Premium Petroleum – GEL 2.26-2.28/litre
  • Euro Regular Petroleum – GEL 2.12-2.17/litre
  • Regular Petroleum – GEL 2.12/litre

As of July 2014, the average retail price of fuel equalled:

  • Super Petroleum – GEL 2.30-2.25/litre
  • Premium Petroleum – GEL 2.19-2.29/litre
  • Euro Regular Petroleum – GEL 2.10-2.20/litre
  • Regular Petroleum- GEL 2.10-2.12/litre

It should also be noted that according to the 7 July 2014 statement of the Union of Oil Products Importers to Georgia: “According to Platts, in May and July the world prices on petroleum products increased. Namely, the price of petrol increased by USD 58 and amounted to USD 1,033/tonne; the price of Diesel grew by USD 27 and amounted to USD 911.50/tonne.” According to the same statement, the crisis in Iraq and, partially, the confrontation between Russia and Ukraine resulted in the rise in petrol prices. In July, petrol prices on the world market were reduced. Also according to the 30 July 2014 statement by the Union of Oil Products Importers to Georgia, there is a trend of price reduction on the world petroleum products market. The data published by Platts, which is used by Georgian petroleum importers, also shows the reduction of petroleum products prices on the world market. For example, the international price of petrol is now less than USD 1,000. As of 29 July 2014, the international market price of petrol is USD 982/tonne and USD 907/tonne on Diesel (10ppm). According to the statement, should the trend be maintained, petroleum product prices in Georgia will soon be reduced.

Even though the world market prices of petroleum products have been reduced, the Georgian market saw only a short reduction of prices from 9 to 19 July after which they increased again.

According to the 8 July statement of Zurab Japaridze, the actual reason for the growing prices is the devaluation of the lari

which the government does on purpose to ensure the fulfilment of the revenue pan of the budget. Analyst Beka Kemularia gives another reason for the increased prices on petroleum products in Georgia. According to his statement, Georgian petroleum importing companies are the ones responsible for the increase of the prices.

Conclusion While verifying the accuracy of Kakha Kaladze’s statement FactCheck

found that the part of the statement about the pre-election promises of electricity tariff reduction is not accurate. During our analysis, we found that both Mr Ivanishvili and another member of the Georgian Dream coalition, Gubaz Sanikidze, talked about halving the electricity tariffs during their pre-election campaign.

Kaladze was also not entirely accurate when he said that neither Bidzina Ivanishvili nor any other member of the coalition had talked about the reduction of petrol prices by one lari. On 10 February 2012, the current Deputy Minister of Internal Affairs, Levan Izoria, accused the United National Movement government and its closest associates of artificially raising the petrol price by 50 tetri. It should be noted that petrol prices were not reduced by 50 tetri

after the Georgian Dream came to power and none of the members of the coalition questioned the credibility of this promise prior to the elections. Only after the elections were over did they admit that such a sharp reduction of prices was unrealistic.

Mr Kaladze’s statement about the trend of a reduction in petrol price since 1 October 2012 is also not true as the Georgian market saw both increased and reduced prices since the end of 2012. It should also be noted that in spite of the reduction of petroleum prices on Platts in July, prices on the Georgian market have not been reduced as of yet.

We conclude that Kakha Kaladze’s statement: “Mr Ivanishvili never said anything about reducing the petrol price by one lari. Please provide the source of such information. None of the members of the coalition have ever said that the petrol price would be reduced by one lari or that the electricity price would be halved,” is FALSE.


[1]

Platts is an independent news agency which is part of the media holding McGraw-Hill companies. It operates in the fields of energy and marketing services and provides consumers with production news and current prices of petroleum, electricity, natural gas and other energy resources.