Op-ed: who’s gonna pay the 2020 electric bill in Abkhazia?
“Energy should become a locomotive for the economy of Abkhazia,” said Sergey Bagapsh when he was president of Abkhazia, back in 2005-2011.
Since then, Presidents Ankvab and Raul Khajimba have succeeded as presidents, several governments have been replaced – but the “locomotive”, as it stood, covered with rust on the siding, continues to stand, not having moved an inch.
In the fall of 2019, during the presidential campaign, an attempt was made by one of the presidential candidates Almas Japua – also incidentally the chairman of the parliamentary commission to investigate activities in the energy sector – to move the energy sector forward.
However, it all ended with Japua accusing the leaders of Abkhazia and the leadership of Chernomorenergo (both past and present) of inefficiency and, in fact, involvement in corruption. Those in response said that “he himself is a fool”, and no conversation took place.
However, in this ‘clarification of relationships’, the residents of Abkhazia had more of an opportunity to learn a little more about the Abkhaz energy industry than they had before.
Things used to be different: the average person listened to a lecture from the authorities on a given energy topic with pre-set points and topics that were presented as axioms that did not require proof.
The main idea here was that the energy industry in Abkhazia was unprofitable, a lot of money had to be invested in it (which, actually and ironically, has been done in recent years), but even then it will never become profitable.
A separate aspect of the “axiom” was information about the Ingur Hydroelectric Power Station.
The Ingur Hydroelectric Power Station [ed. In Georgian, Inguri] was launched in 1978. Its height is 271.5 meters and it has a length of 800 meters, it is one of the largest arched concrete dams in the world. It is located directly in the zone of the Georgian-Abkhaz conflict and is managed from both sides of the conflict: the reservoir and part of the diversion tunnel are on the Georgian side, and the other part of the tunnel, the building of the hydroelectric station and four overflow hydroelectric power stations are located on the Abkhaz one.
This is the only joint Georgian-Abkhazian project. The parties together manage the hydroelectric power station and share the electricity that it produces, which makes cooperation and regular contacts necessary.
Until now, the authorities of Abkhazia have argued that, with the exception of the dam which is located on the Georgian side, the entire hydroelectric power station belongs to Abkhazia. At the same time, Abkhazia does not pay for generation, although it consumes 40 percent of the generated energy.
Now all this is being called into question:
- the official affiliation of the station with Abkhazia (there is not a single paper that would testify to this);
- and the actual amount of energy consumed;
- and the official diagnosis of the incurable loss of the energy sector.
Meanwhile, heavyweights in the area are getting ready for a fight.
In the fall of 2020, the Ingur Hydroelectric Power Station is about to embark on a long-term repair – with all the energy supply problems arising from this process ready to rear their heads.
It is still unknown who will supply Abkhazia with electricity during the downtime of the Ingur Hydroelectric Power Station, and most importantly, who will pay for these energy bills.
Everyone understands that the tariff for electricity purchased from outside will be noticeably different than the current one – 40 kopecks [about 6 cents] for individuals and 80 kopecks [about 12 cents] for legal entities.
Everyone understands that the tariff will increase significantly.
The previous stop of this hydroelectric power station cost the budget of Abkhazia almost half a billion rubles [about $8 million] for only three weeks.
Then, locals had to pay for Russian energy at Russian tariffs, which are ten times higher than Abkhaz ones.
Yes, this money was not pulled directly from the Abkhaz treasury, it was deducted from the financial assistance that Russia annually provides to Abkhazia. Nevertheless, in fact it was money intended for the republic.
The new shutdown of the Ingur hydroelectric station will cost the budget about 3.5 billion rubles [about $55 million].
This amount is one and a half times more than the entire Russian subsidy of Abkhazia for 2020.
How the budget will cover this gap is yet unknown.. But there is no need to suppose – and so it is clear that it will not be possible to survive the consequences of this shutdown of the hydropower plant without complicating the political situation in Abkhazia.
Meanwhile, the station, which is already in its tenth, will be repaired with money from the European Bank for Reconstruction and Development, and this “political” loan will be enough only to patch up “holes”, that is, to partially repair the derivational tunnel.
The overhaul of the Ingur Hydroelectric Power Station is hindered by one circumstance – the lack of a clear legal design of the station, which would not cause any claims from either side – neither from the Georgians nor the Abkhaz.
Georgia, of course, has all the necessary packages of documents issued by its Ministry of Justice on the Ingur Hydroelectric Power Station and it regularly declares that the station belongs to it.
However, despite this ‘official situation’, they understand that the legal status of the station, when the dam is on the Georgian side and the switch is located in Abkhazia, is very controversial.
Under this controversial status, not a single commercial bank will give serious money either for partial repairs, or even more for its complete modernization.
Yes, there is still a “gentlemen’s agreement” between Tbilisi and Sukhumi on the division of energy generated by the “60 by 40” formula, and it continues to work with various reservations. But under it, no commercial bank will give a loan to the station.
A political one would certainly not have been given if there had not been a global catastrophe threat for the region in the event of a major accident at the Ingur Hydroelectric Power Station.
Neither Tbilisi nor Sukhum is going to change the order of things over the years, that is, to design the Ingur Hydroelectric Power Station as a joint Georgian-Abkhaz enterprise.
Georgia will not go for it for political reasons, because it would mean an indirect recognition of Abkhaz sovereignty.
Abkhazia is not happy with the economic aspect.
Registration of the Georgian-Abkhaz enterprise automatically entails responsibility for the maintenance of the hydroelectric power station.
Abkhazia does not pay for the generation, but is it still to bear the costs of the station itself?
But the biggest motive to resist both conflicting parties exists exclusively at the level of the elites.
Of course, they don’t acknowledge it aloud even on their deathbed, but the clear legal design of the Ingur Hydroelectric Power Station will put an end to all kinds of shadow schemes, which a priori cannot but be present, in an enterprise of such sensitivity and complexity.
Indeed, in a conflict one can do more than suffer losses – one can also make money.