Tbilisi Says Russia's Plan to Double Gas Price Politically Motivated
/ 2 Nov.'06 / 14:52
Civil Georgia

Georgia has said that Russian energy giant Gazprom’s intention to more than double the gas price to USD 230 per 1000 cubic meters is a political decision aimed at mounting more pressure on Tbilisi.

On November 2, Russian news agencies were extensively reporting  Gazprom’s plans to increase the gas price for Georgia from the current USD 110 starting from 2007.

But Georgian Deputy Energy Minister Alexander Khetaguri told Civil Georgia on November 2 that no official notification has been received from the Russian side about the new price proposal.

The gas distribution company in Tbilisi, owned by the Kazakh state-run KazTransGaz, said on November 2 that negotiations about the gas price are underway with Gazprom and a final agreement is expected to be signed by mid-December. The only agreement that KazTransGaz-Tbilisi has made with Gazprom so far is that starting from 2007 it will import 450 million cubic meters of gas – the amount needed to supply consumers in Tbilisi for one year.

Georgia will reportedly need a total of up to 2 billion cubic meters of gas in 2007.

Georgian Foreign Minister Gela Bezhuashvili, who is currently in Moscow, said on November 2 that USD 230 per 1000 cubic meters is a political price and such a move by the Russian gas monopoly “was anticipated.”

“We should see how this price was calculated and why the price for Georgia is the same as the one for European countries. We should find out why Georgia, which is located closer [to Russia], should pay as much as Eastern European countries. So, this is an issue of technical negotiations. Such a result was absolutely anticipated,” Bezhuashvili told Georgian reporters in Moscow.

“The price, of course, should be based on market economy principles. But, in this case I think that a lion’s share of the price comes from politics instead of economics,” Gela Bezhuashvili told reporters.

Gazprom increased gas prices for Georgia from USD 60 to the current USD 110 starting from January, 2006. At that time, officials in Tbilisi were accusing Russia of imposing a “politically-motivated” price.

“It will reduce economic growth maybe by some 2%. But I do not think this two-fold increase of gas prices will be a devastating blow for our economy,” Roman Gotsiridze, the President of the National Bank of Georgia, said on November 2.

USD 230 per 1000 cubic meters will be the highest price among CIS countries. According to the Russian business daily Kommersant, Gazprom sells gas to Ukraine for USD 130 and to Moldova for USD 170.

During his visit to Moscow, Georgian Foreign Minister Bezhuashvili met with his Russian counterpart Sergey Lavrov and the Secretary of the Russian National Security Council, Igor Ivanov, on November 1.

“I did not expect any tangible results from this meeting. But the most important thing is that a dialogue is underway,” Bezhuashvili said on November 2.

He also said that the dialogue will be continued at the highest level when President Saakashvili and his Russian counterpart Vladimir Putin meet in the Belarusian capital Minsk on the sideline of the CIS summit.

“Naturally, we should spare no efforts to ensure that the contact, which will obviously take place in Minsk between the two Presidents, is as fruitful as possible, so that the two presidents can tell each other everything they want,” Bezhuashvili said.

He also said that during the Moscow talks the Georgian side made it clear that Tbilisi insists on “a two-way movement” in the process of negotiations.

“The Russian side understood our position. We also listened to them. Therefore, we will continue working,” Bezhuashvili said.

Russian business daily Kommersant wrote on November 2 that Gazprom’s decision to more than double the gas price conformed that Moscow has no plans to compromise in the current standoff with Georgia.

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