Kazakh company to return KazTransGas - Tbilisi management next year under certain conditions

Kazakhstan, Astana, Dec. 6 / Trend D. Mukhtarov /

KazTransGas will return to KazTransGas - Tbilisi management, if they are given all the benefits that were previously promised by the Georgian side during the purchase of the asset, a representative of KazMunaiGas National Company close to the negotiations said during an interview with Trend on condition of anonymity.

KazTransGas-Tbilisi is the property of the Kazakh Company, despite the fact that it is being temporarily managed by a representative of the Georgian government. "After we are given all the benefits previously promised by the Georgian side during the purchase of the asset, Kazakh personnel will certainly return to station management, " the source said.

According to the source, the return of Kazakh management may take place next year, following completion of a "detailed conversation" between both sides.

"The question is not "whose gas to purchase: Azerbaijani or Russian". The origin of gas makes no difference to the consumer; the price, which should be affordable for the population of Tbilisi, is what is important" the source said.

According to the source, the pricing policy of the former Georgian government led to the distribution station's return to its original status when it was bought by KazTransGas.

"It went back to its original status. People again began to pluck the counters, as public services became unaffordable. After the Kazakh Company came to management, due to considerable investments in the modernization of the station, it became possible to significantly reduce the losses, and now the situation is the same as in the beginning, "the source said.

Reportedly, KazTransGas JSC has invested more than $ 100 million in the KazTransGas-Tbilisi since entrance onto Georgian market in May 2006, while directing funds mostly to the modernization and repair of gas distribution systems in Tbilisi, the purchase and installation of gas meters that in turn, reduced the leakage of natural gas from 60 percent to 20 percent.

The interlocutor reminded that in connection with the election, and other political situations, the gas price and benefits for KazTransGaz were frozen.

"This meant that the Kazakh Company began to lose effectiveness. The debts, which accumulated during the activity of the temporary executive of the former Georgian government, were not the fault of Kazakh management. Therefore, the Kazakh side cannot be blamed in anything, it is necessary either to continue cooperation, or return the money invested by the Kazakh company", the interlocutor stated.

The source expressed hope that the new Georgian Prime Minister is a man who knows the business and will be able to make the right decision in regards to which direction to go.

"They (the Georgian side) now say: come back, we have a new Prime Minister, he understands the business, and has an understanding of how to move forward. Let's have a discussion," the source said.

As was previously reported, in May 2006 the Kazakh firm KazTransGas became the owner of the assets of the Tbilisi gas distribution company JSC Tbilgazi after winning an investment bid.

The investor paid $12.5 million for the company.

KazTransGas owns the gas distribution network in the capital of Georgia, the total length of which is 2000 kilometers. Since entering the Georgian market, the company has served more than 210,000 customers, and 3000 communal facilities, as well as about 400 large industrial enterprises.

On May 16, 2009 the Energy Ministry of Georgia stated that the Kazakh company KazTransGas-Georgia which has a full stake in the Tbilisi gas distribution system, had accumulated debts totaling $48 million, after which a decision to appoint a special manager was made.

As previously reported, the Georgian government is ready to discuss the issue of the withdrawal of the temporary manager from KazTransGas-Tbilisi and the return of Kazakh management, said Energy Minister Kakha Kaladze to reporters after the meeting with Kazakh governmental delegation led by Deputy Prime Minister Erbol Orynbayev in November of 2012.

Since 2009, the Georgian National Regulatory Commission for Energy and Water Supply has appointed a special manager to KazTransGas-Tbilisi. The reason for the change of management was due to the company's 80 million lari debt, including 68 million lari to the Georgian Oil and Gas Corporation for natural gas supply.

"The main theme of the meeting was the question of KTG which is very problematic for Kazakhstan. We promised that we will discuss this topic. I believe all issues can be resolved in dialogue," Kaladze said.

"In general, I welcome the return of the Kazakhs to Georgia. There were some strange situations in the past. As I recall, they were going to make a very big investment. But there were some problems after it all began in 2005. We are ready to resume negotiations to resolve all questions, including those on Tbilgazi," he added.

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