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Investment Planning and Regulatory Measures in Georgia

Investment Planning and Regulatory Measures in Georgia. Kyiv, 30 October. Major Projects in Electricity. Major Projects in Natural Gas. Gas Storage 190 m cm cushion capacity 210 mcm working capacity South Caucasus pipeline expansion 691 long SCP pipeline

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Investment Planning and Regulatory Measures in Georgia

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  1. Investment Planning and Regulatory Measures in Georgia Kyiv, 30 October

  2. Major Projects in Electricity

  3. Major Projects in Natural Gas • Gas Storage • 190 mcm cushion capacity • 210 mcm working capacity • South Caucasus pipeline expansion • 691 long SCP pipeline • Gas volume exported through pipeline will triple and reach 22bcm/year 2022 • AGRI Project • LNG terminal at Georgian black sea coast • Compressor station at Geo-AzBorder • Technical capacity is limited due to the Lack of pressure (22-24 bar) • Increase pressure up to 37 bar • Rehabilitation of 800/700 mm pipeline at Georgian territory

  4. Approval of development plans • TYNDP prepared by TSO and Approved by the Ministry • Regulator only expresses remarks and recommendations • After approval, TYNDP is legally binding act • Ministry monitors/controls implementation of TYNDP • Based on TYNDP, Three year investment plans are prepared by TSO/Transmission Companies and submitted to the Regulator • GNERC monitors the implementation of the investments • No gas development plan approval procedures in legislation

  5. Approval of Investment plans • Regulatory period lasts 3 years • IP includes only investment projects, which will be commissioned before the end of the regulatory period • GNERC shall approve and consequently reflect in RAB only reasonable and justified investments • Rate of return on RAB is defined based on WACC (16.4%) method and is fixed during the regulatory period • RAB shall not include: • Investments that were carried out or will be carried out through full or partial financing from the third party - Companies should account for such assets separately; • Investments which are not considered as justified and reasonable • Assets that are not used in regulated activity • Construction in progress (unfinished construction)

  6. Higher Risk Assessment - Status Quo

  7. Gaps • Law on energy is not compliant with the 3rd energy package • Investment plans and TYNDP are approved by different entities • CBA is not approved by the Regulator • No well defined minimal requirements for TYNDP • Lack of investment evaluation and higher risk assessment/mitigation of the major projects • Poor connection between TYNDP and FYNDP (DSO) • And Georgia hasn’t transposed yet Regulation (EU) 346/2013

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