On 22 February 2015, on air on the Rustavi 2 TV channel, a member of the United National Movement, Zurab Japaridze, stated: "Not a single new investor has entered Georgia’s energy sector in the last two years."

FactCheck

took interest in Zurab Japaridze’s statement and verified its accuracy.

Neither the National Statistics Office of Georgia nor the Ministry of Energy and Natural Resources of Georgia keep annual statistics concerning new investors which have entered Georgia’s energy sector and the amount of foreign capital invested therein.

The Ministry of Energy of Natural Resources of Georgia sent FactCheck

a list of those companies which signed memoranda with the Ministry on carrying out new investment projects in the period of 2013-2014 (the signing dates are indicated in the parentheses).

1. Hydrolea LTD (11.09.2013)
2. Austrian-Georgian Development LTD (12.09.2013)
3. Georgian Hydro Power LLC (22.10.2013)
4. Royal Haskoning DHV (Pty) LTD (30.10.2013)
5. Ahlatci Enerji Sanayi ve Ticaret A.S. (11.10.2014)
6. Calik Enerji Sanayi ve Ticaret A.S. (11.10.2014)
7. JSC Svaneti Hydro (31.10.2014)
8. Bugato Energy LLC (07.02.2014)
9. JSC Supsa Energy (12.03.2014)
10. JSC Georgian Energy Development Fund (08.04.2014, 22.09.2014, 17.07.2014)
11. Trialeti 2013 LTD (16.05.2014)
12. Mardihouse LTD (19.05.2014)
13. Energo Windpower LLC (23.05.2014)
14. Georgian International Energy Corporation LTD (16.06.2014)
15. Eg LTD (16.06.2014)
16. Pshavi Hydro LTD (19.06.2014)
17. JSC Iori Energy (19.08.2014)
18. GGP LTD (22.09.2014)

The list includes both foreign, daughter and local companies. Head of the Investment Project Department at the Ministry of Energy and Natural Resources of Georgia, Liza Tavdumadze, stated in her interview with FactCheck: "

These are the companies which launched new investment projects in the years 2013-2014 and attracted new investments."

FactCheck

decided to obtain more information regarding these companies and the investments they made.

For instance, the founder of Hydrolea is a Bulgarian company, Crosscountry Capital EAD. In 2014, Hydrolea completed the construction work for the Akhmeta HPP in the Akhmeta district. The construction work started in July 2013. The capacity of the Akhmeta HPP is 9.4 million mWh and the estimated investment cost of the project equals USD 9.8 million. The Bulgarian company made that investment with the assistance of local banks and international financial institutions. The Hydrolea company will construct three new HPPs on the Rivers Kasleti and Darchi-Osmeleti in the Mestia municipality. These construction work projects are scheduled to start in 2015. FactCheck

contacted the director of Hydrolea, Dali Mikuchadze, who stated that Hydrolea was registered in July 2012 with the plan to construct the Akhmeta HPP also elaborated in 2012.

Calik Enerji is a Turkish company which, according to its signed memorandum, has taken the obligation to construct cascade HPPs (Alpana and Sadmeli HPPs) on the River Rioni in the Racha-Lechkhumi and Kvemo Svaneti region. The estimated investment cost to construct the cascade HPPs is USD 485 million. The construction work is scheduled to start in 2017 and be completed in 2021. The Turkish company also carries out construction work for the Gardabani Cycle Power Plant (CPP) which started in 2014.  However, the memorandum on the construction of the CPP was signed much earlier, in August 2012. At a meeting at Calik Enerji’s Tbilisi office, FactCheck

was told that the company entered Georgia to carry out the aforementioned CPP investment project.

The Turkish company, Ahlatci Enerji,

will construct an HPP on the River Dolra in the Samegrelo and Zemo Svaneti region. The estimated investment cost of the project is USD 41 million. The respective construction work is scheduled to start in 2015 and be finished in 2019.

In regard to new investors which have come to Georgia in the exact period of 2013-2014, one prominent example is the largest Indian transnational company-conglomerate, Tata Group, which entered Georgia in 2013. Its daughter company, Tata Power International, together with the Clean Energy company and the IFC InfraVentures Fund, signed an agreement in 2013 to construct cascade HPPs in the Ajara region. The estimated investment cost of the project is USD 700 million.

According to the information obtained from the Ministry of Energy and Natural Resources of Georgia, the Korean company, K Water, started to invest in the construction of new HPPs on the territory of Georgia in 2014. The company, together with a partnership fund, will construct an HPP on the River Nenskra in Svaneti which will be able to generate 280 mWh power annually. The estimated investment cost of the project is USD 1 billion.

Of note is that according to the National Statistics Office of Georgia, the amount of total foreign direct investments in the energy sector equalled USD 99 million in 2014 which is 60% less than in 2013. Additionally, the amount of investments in the field of energy in 2014 is significantly lower as compared to 2011 or 2012.

Graph 1:

 Foreign Direct Investments in Energy (USD million)

It needs to be mentioned that the volume of real production in the energy production and energy distribution sectors decreased by 2.8% (GEL 1.5 million) in 2014. Since 2004, this was the first time when these sectors registered a decrease. Even in 2008 and in 2009, when Georgia was invaded by Russia and hit by the world economic crisis, the real growth in the energy production and energy distribution sectors was 5.4% and 5.6%, respectively.

Conclusion

Several foreign companies started to carry out new investment projects in Georgia in 2013 and 2014. In the same period, new investors, including Tata Power International and the Korean, K Water, entered Georgia’s energy sector.

It must be noted that the biggest chunk of foreign direct investments in 2011-2013 was made in the energy sector. However, there was a 60% decline in the volume of investments in the field of energy in 2014 as compared to 2013. In addition, the volume of Georgia’s energy production and energy distribution sectors also dropped by 2.8%. The last time these sectors experienced a decline was in 2004.

Even though investments and production in the energy sector decreased in 2014, the assessment of the MP in regard to new investors is incorrect. Therefore, FactCheck concludes that Zurab Japaridze’s statement is MOSTLY FALSE.