Op-ed: Private sector is the only solution to Abkhazia's energy crisis
The energy crisis in Abkhazia cannot be solved in any way. Due to the lack of electricity, the light is turned off for the whole population. The reason for this is illegal cryptocurrency mining, which the authorities have not been able to cope with for more than a year. Inal Khashig, the editor of JAMnews in Abkhazia, believes that the energy crisis in Abkhazia cannot be resolved without changing the form of ownership of the main energy company Chernomorenergo.
Not so long ago, in 2019, when scheduled power outage schedules had not yet become a common occurrence, the whole of Abkhazia consumed two billion kilowatts. That is, we fit almost completely into the back of that 40% of the generation of the Ingur hydroelectric power station, which the republic received according to the Georgian-Abkhazian agreement.
Now it turned out that the indicators for 2020 in one calendar year have increased sharply by a quarter – by 500 million kW. The Abkhaz economy has long been in stagnation, and the only reason for such a sharp growth was mining.
In October last year, that is, by the time Abkhazia had actually exhausted its generation quota, the government’s decision to legalize mining initially looked, if not like a diversion, then at least like an outright gamble.
We were promised 600 million rubles annually of mining income, which would be reinvested in the energy system. But apart from huge losses and bringing the entire energy economy to the handle, the idea of legalizing mining did not bring anything.
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The “overwhelming” effect of such an undertaking was immediately apparent. Although the government disavowed its decision after a couple of months, the genie had already been released from its bottle. The new ban did not change the trend in any way. Electricity consumption has grown at a catastrophic rate for the power system.
Now, the whole republic is de-energized for two hours at night according to the schedule approved by the power engineers. At the same time, Chernomorenergo regrets informing the citizens that they should not wait for the light at the end of the tunnel. For with the end of the holiday season, electricity will have to be cut off for six hours a day.
In general, we have not won mining in any way. In winter, President Aslan Bzhania threatened to fire senior officials if they did not reduce the total energy consumption throughout the country to the indicators of 2019 within the designated two-week period, but things are still going along with the not timid bureaucracy in their places.
To the president’s credit, he is still concerned about the energy crisis. This week, he held another meeting with the participation of the government, heads of power structures, heads of city and district administrations, and, of course, power engineers and once again threatened them with layoffs.
But I feel that his attitude alone is not enough to fight crypto mining. For with rare exceptions, all other fighters are fighters at face value. In fact, they are the beneficiaries of mining themselves.
This applies both to officials looking after the system and to ordinary power engineers. Even if they do not directly mine the crypto they still benefit from it.
Otherwise, it is difficult to explain how a large farm is suddenly discovered somewhere, when for six months now, as ordinary citizens, high authorities have assured that there are no large farms, and if anyone is engaged in mining, then only at home, and it is very difficult to find them.
Moreover, this large farm discovered so unexpectedly,y after its official photo and video has passed, with all its equipment already without victorious fanfare suddenly moved to another place.
It seems that this imitation of the fight against the vicious business will be eternal, of course, until the Abkhazian energy system orders it to live for a long time, or until it frowns on this alarming moment, begins to seriously rebuild itself.
What is the solution?
Regardless of measures, the government is proposing now, including the significant increase in tariffs, without reforming the market monopolist itself – RUE “Chernomorenergo” – the existing crisis will remain insoluble.
The main problem of the Abkhaz energy company is that it is state-owned. No matter what efforts, even the most verified, the company’s management takes, the effect will be close to zero.
It is all the fault of the mental perception of state property that has developed over the years of Abkhaz independence.
According to this experience, a state-owned enterprise is considered ownerless by default. As a rule, the income of such an enterprise, until it naturally, by virtue of the laws of economics goes into the pockets of both the bosses and ordinary workers, the losses are fully hung on the state itself.
This has taken root so much that even if drugs are legalized in Abkhazia and a State Cocaine Production Company is created, it will not be profitable – the bosses are benefiting from it, of course, and the enterprise is on the verge of bankruptcy.
In general, I do not believe in the prospects of the state-owned enterprise Chernomorenergo given the current state of affairs and due to the prevailing mentality. I think that the country’s leadership does not hold any special illusions about this either, but they are afraid to speak openly about it.
Nevertheless, in order for Chernomorenergo to survive and, accordingly, to overcome the energy crisis, it is necessary to change the form of ownership of the enterprise. In my opinion, at the current stage, the best option would be to transform a state-owned company into a public-private partnership.
Only a project based on long-term interaction between the state and business, in which business participates not only in the modernization of the enterprise, but also in its subsequent operation, is able to overcome not only the mining problem that has set the teeth on edge, but also the existing energy crisis.
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