According to general estimations, energy resources are the form of capital that primarily determines both the political and economic independence of a country. Everybody agrees that the efficient employment of energy resources is a necessary factor for gaining maximum benefits.
What is the power potential and current condition of South Caucasian countries such as Armenia and Georgia? What are the statistics we have?
According to World Energy Council indicators (2018), Georgia ranks 69th of 125 countries in terms of the development level of power system. It is interesting that all neighboring countries surpass Georgia in this rating. Azerbaijan ranks 27th, Armenia – 43th, Russia – 59th and Turkey – 44th.
Deficiency of oil and gas resources
The negative balance of electricity generation and consumption and the growing import of electricity makes the Georgian power system vulnerable.
According to electricity market operators, in 2018 imports hit record figures, and the ratio in consumption constituted 19%. The Ministry of the Economy asserts that the current situation will essentially change by 2030. The Deputy Economic Minister Natia Turnava declared that by 2030, domestic production of electricity will fully satisfy domestic market demand, and Georgia will export about 3.5 billion kw/h electricity a year.
“5 billion USD for the construction of major hydro power plants, and 117 projects at various stage of implementation genuinely enable us to attain this goal”, Turnava noted.
Like Georgia, Armenia also suffers from a deficiency of oil and gas and hydro resources. Consequently, Armenia mainly depends on imports, like Georgia. Armenia imports 83% of its natural gas from Russia. Russia fully supplies fuel to the nuclear power plant in Armenia. Armenia also receives natural gas from Iran, too. It is interesting that Armenia returns 3 kw/h electricity for each cubic meter of Iranian natural gas. Considering that Armenian steam power plants generates 4.5 kw/h electricity for 1 cubic meters of Iranian natural gas, Armenia receives significant benefits from this deal. Despite the lack of energy resources, Armenia manages to grow electricity generation from year to year. Electricity exports also grow. For example, according to the statistics office of Armenia, in 2017, Armenia generated 7.753 billion kw/h electricity and increased the exports by 15% (1.405 billion kw/h).
It is interesting that Armenian electricity is mainly used by Georgia, Iran and Iraq. 40% of electricity in Armenia is generated by the Metsamor nuclear power plant. The country hopes that domestic generation will fully satisfy domestic market demand by 2030 and Metsamor Nuclear Power Plant will play a decisive role in this aspiration, as well as renewable energy systems (wind and solar power).
Natural gas and electricity consumer tariffs in Armenia and Georgia
The Armenian internet site Iragir.am, based on the domestic statistics service, writes that the supply and generation of energy resources is more diversified in Armenia than in Georgia, but there are higher tariffs in Armenia regardless.
According to the statistics service, Georgian citizens pay a 30% lower tariffs for natural gas compared to Armenia. The biggest difference is recorded in the case of electricity. Citizens of Armenia have to pay 50% higher tariff. Compared to Armenia and Georgia, consumers pay a 7-8 tetri lower tariff for electricity supply in Azerbaijan, Russia and Ukraine. In turn, the tariff is 2.5 times higher in Latvia.
In Armenia a four-member family has to pay 100 GEL (20,000 Dram) a month for 200kw electricity, 50 cubic meter of gas and 20 cubic meter of water, while Georgian citizens pay only 60-70 Gel for the same services (12 500 Dram).
By Zurab Khachapuridze