Abkhazia’s energy – from crisis to collapse

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The water level in the reservoir of the Inguri hydroelectric power station was 422 meters on December 24, and according to the estimates of the staff, the operation of electric generators might be stopped within a week due to the critically low water level.

At present, Inguri HPP supplies only 15% of electricity to Abkhazia, and Russia supplies the remaining 85% since December 18. Despite the fact that Sukhumi still has a debt of 162 million rubles (about 2,220 thousand dollars), it is forced to request electricity from Russia for the third year in a row.

The energy sector of Abkhazia has been in crisis since 2015-2016. After they began to mine cryptocurrency massively, energy consumption increased sharply, and since 2017 they have to ask Russia for electricity,” says Jemal Gamakharia, the Chairman of the Supreme Council of the Autonomous Republic of Abkhazia.

Aslan Bzhania, the de facto President of Abkhazia, have noted that one of the crucial reasons for the energy crisis in Abkhazia is that population, as well as commercial enterprises, does not pay electricity bills regularly, despite the world’s lowest electricity tariff.

1 billion 800 million rubles is the debt of consumers for electricity over the past 24 years, while the tariff for the population is 40 kopecks ($0,0054). They don’t pay these 40 kopecks! There are some villages where the population pays 15-20% for consumed electricity, there are villages that do not pay at all,” Bzhania said at the press conference on September 21.

According to the Abkhazian company Chernomorenergo, the problem is aggravated by the following three factors: a shortage of generating capacities, a shortage of line capacity and a shortage of transformer capacities.

The shortage of generating capacities

Sukhumi hydroelectric power station, restored in 2019, is the only power plant fully controlled by the Abkhazian de-facto authorities. Russian investor Vladimir Apukhtin has spent $12 million to restore the Sukhum HPP. The plant has a capacity of 19.6 megawatts and an annual output of 120 million kWh, which is approximately five percent of the energy consumed in Abkhazia. There is one more 120 mW HPP Vardnilш 1 in the Gal district of Abkhazia but it is managed by the Ministry of Economics and Sustainable Development of Georgia. Accordingly, the share of the state in the capital of Enguri LTD is 100%.

The rest – more than 2 billion kilowatt-hours is supplied to the rebel republic either directly from the Enguri hydroelectric power plant, or purchased in Russia.

The peculiarity of the Enguri hydroelectric power station is that the Jvari’s reservoir that feeds power generators is located in the Zugdidi region, controlled by the Georgian authorities, and the power plants that generate electricity are in the Gali region of Abkhazia. After the end of the war in September 1993, under agreement between the two sides, 40% of the energy from the Inguri HPP was supplied to Abkhazia, and 60% to Georgia.

There is no legal agreement or signed document on the separate operation of the Inguri HPP. There is a verbal gentlemen’s agreement, which is still gentlemanly observed to this day. According to this agreement, 40% of the generated electricity goes to Abkhazia, and 60% to Georgia,” says Jemal Gamakharia.

It is notable that despite the agreement, Abkhazia consumed more than 40% during certain years.

In 2016, consumption was 43%, in 2017 – 47%, in 2019 – 50%, in 2020 – 70%, and this year energy consumption has grown even more, but, probably, this ratio – 40 to 60 will be observed in the final calculation,” says Jemal Gamakharia.

In the event that the generation of electricity at the Inguri hydroelectric power station falls or the station stops, electricity supply to Abkhazia is carried out from Russia. And such supplies hit the budget of Abkhazia, because Sukhumi pays nothing to Georgia for electricity, but de facto authorities have to pay for the Russian power supplies, and the price of Russian energy ranges from ₽2,7 ($0,037) to ₽3.6 ($0.049)

They sell at a price of 2.70 to 3.60 rubles per kilowatt-hour. At the same time, in Abkhazia itself, private consumers pay ₽0.4 kopecks ($0,0054), and legal ones pay ₽0.85 ($0.012) per kilowatt.

According to Radio “Echo Kavkaza”, Inter RAO supplied in 2016 Abkhazia with electricity for 221 million rubles (108 million kW/h), in 2017 – for 50 million (for 195.8 million kW/h). There were no arrears in 2018. Yet, in 2019, the flow of Russian electricity amounted to 69.4 million kW/h, and part of the funds (for 45 million kilowatt-hours) was paid by the government of Georgia. In 2020, Abkhazia received 69.4 million kW/h.

Abkhazia covers all the debt on electricity to Russia from the funds that are allocated to it every year, starting in 2013, by Russia itself within the framework of the “Investment program to promote the socio-economic development of Abkhazia.” For 2020-2022, the program provides for the allocation of funds in the amount of 4.5 billion rubles (612 million dollars).

During the repair of the Inguri HPP tunnel, from December 2020 to the May 2021, Abkhazia received 1 billion kilowatt-hours from Russia. It was assumed that debts to Russia for electricity would amount to 3 to 5 billion rubles, and to pay them off, all the money received under the “investment program” in 2-3 years would have to be paid in full. However, as stated by the Minister of Economy Kristina Ozgan, the bill for the electricity was not presented.

It remains a mystery how the several billion debt was written off remains a mystery – there is no information about this anywhere. However, sources in the Kremlin say that the debt was written off thanks to the personal agreements of one of the political groups that entered the government of Aslan Bzhania.

Currently, Abkhazia receives 60% of the required energy from Russia, since the water level in the reservoir of the Inguri hydroelectric power station has dropped to a critical level and a complete shutdown of the power plant is expected.

Nevertheless, how much electricity is there in Abkhazia itself? According to the company “Chernomorenergo”, every year the consumption growth is about 5%. Since 2020, as the press service of Chernomorenergo notes that the consumption has grown by 24%.

According to the Georgian side, the growth in energy consumption in Abkhazia averages 20% per year.

In 2019, Abkhazia consumed 2 billion 63 million kilowatt hours. This is 4,400 million more than in 2018. In 2020 – 2 billion 500 million. And in 2021, according to preliminary data – by 19-20% more. In 2021, until May, Russia was selling electricity to Abkhazia. About 1 billion have been sold. From May to October, the Inguri hydroelectric power station generated 2.9 billion kilowatt hours. From here 1 billion 200 million or 41% went to Abkhazia,” says Jemal Gamakharia.

However, both the Georgian and Abkhaz sides agree that consumption in Abkhazia will grow and exceed the limit that it receives from the use of the Inguri hydroelectric power station, the estimated capacity of which is 4 billion 430 million kilowatt hours, while the total consumption of electricity by Abkhazia from December 2020 to October 2021 amounted to 2.2 billion kWh.

Where to get energy?

The way out of the situation looks quite simple – to buy electricity or build additional hydroelectric power plants. However, Abkhazia has no funds for this. According to research by the British company Renewablesfirst, which builds hydroelectric power plants, the construction of a hydroelectric power station can vary in a wide range from $ 4,000 for each kilowatt of power to 9000. The larger the power plant, the lower the price per kilowatt of operating power is.

According to the ESFC Investment Group (headquartered in Spain), the construction of small hydropower plants costs 4-5 thousand dollars per 1 kW of installed capacity.

Covering the shortage of 1 billion kilowatt / hour is possible by building new power plants. The total power of new or recovered HPPs is calculated according to the formula 1 billion kWh divided by the number of hours in a year (=8760). Thus, the aggregate capacity of all new stations should be at least 114.115 megawatts. The construction of such a power plant will cost, according to ESFC Investment Group, $45 million dollars, or 3.285 billion, or 2 years of financing under the Investment Program.

And Abkhazia does not have that kind of money.

Deterioration of networks

In addition to the construction of power plants in Abkhazia, there is also a big problem of wrapping electrical wires and transformers. The Chernomrenergo company published more than 100 announcements on transformer accidents, cable breaks or outages due to equipment overheating on its Facebook page, in 2021.

Replacing the infrastructure of the electricity distribution system, according to the deputy of the de facto parliament of Abkhazia, Garry Kokai, will amount to at least 4.7 billion rubles ($ 54 million).

According to the Georgian side, a much larger amount will be required to restore the entire energy infrastructure of Abkhazia – the construction of hydroelectric power plants and the repair of equipment.

According to Abkhaz’s data, according to their calculations, about 20 billion rubles are needed to restore the electric grid infrastructure/ Abkhazia does not have such amounts,” says Jemal Gamakharia.

The non-payments’ problem

As de facto President Aslan Bzhania believes, the low collection rate for energy is due to the lack of metering.

First of all, people don’t pay because there are no electricity consumption meters. Absolutely everyone must be equipped with the devices,” Bzhania said at the September press conference.

Remote shutdown meters have already been installed in Abkhazia. In particular, according to Said Blabba, deputy chief engineer of Chernomorenergo, 500 such meters were installed in 2019. However, residents of Abkhazia are skeptical about this initiative.

Such meters are installed near all houses on Avidzba street (former Bzyb highway), And almost all of them are broken – the tenants just took and transferred the supply directly. Most often this happens because the meters cannot withstand voltage surges. And the drops occur because the power lines are simply outdated. Mainly, the voltage in the network is barely more than 110 volts, but sometimes it jumps sharply above 220 volts, then not only the meters burn out, some home appliances – televisions, computers fail,” says Sukhumi resident Anna D.

“I live in a nine-storey building. The building is not fully populated, there are 6 more families at the entrance, and of all I am the only one paying for the light. Why am I doing this if I cannot pay at all? Probably, I just do not want to lose my moral principles, because Chernomorenergo will not get rich from my 1,000 rubles,” says Tamara L., a resident of the new district of Sukhumi.

Remote meters are disabled in different ways: someone just pays an electrician, someone intimidates them to connect directly. Several times the electricians came to turn off the electricity, but they were greeted with Kalashnikovs and were ordered not to appear ever again on the street. So the operator sees non-payment, but it is impossible to disconnect the subscriber,” says a resident of Sukhumi, Daur N.

Nevertheless, according to de facto Prime Minister Alexander Ankvab, thanks to the new metering system, the average collection rate increased over the year from 38 to 54 percent.

According to Chernomorenergo, Abkhazia will need to purchase meters for 90 thousand households, which will amount to more than 270 million rubles. It was planned to allocate 100 million rubles for meters in 2021, but 70 million had to be spent on emergency repairs and the purchase of new equipment for burnt-out elements of the power supply system. However, 30 million was spent on the purchase and installation of meters. In 2022, it is planned to spend another 100 million rubles from the Russian investment program for these purposes.

However, as Jemal Gamakharia notes, since the price of electricity remains low, even a 100 percent charge on electricity will not solve the problem of energy supplies or renewal of the power grids.

With such a low price and collection rate, they are left with some pretty pennies. These are the problems of an objective nature. In order to restore the power grid infrastructure, according to their calculations, about 20 billion rubles are needed, and Abkhazia does not have such amounts. And here we come to political reasons and background,” says Jemal Gamakharia.

Russian investment or takeover

Georgia, which sees in this the continuation of Russian aggression, as well as part of the opposition and part of the de facto government of Abkhazia, opposes the Russian proposals in the field of energy.

The disagreements between the de facto president and the government came to light in August 2021: Aslan Bzhania instructed the cabinet of ministers to prepare draft agreements with the Russian company Clean Energy on the rehabilitation of three differential hydroelectric power plants in the Gali region on the Eristskali River. However, Deputy Minister of Economy Timur Mikvabia reported to the President that these agreements were never presented.

According to preliminary estimates, the cost of restoration is significantly higher than construction elsewhere. Subsequently, we also have considered the issue of building small hydroelectric power plants on other rivers. Naturally, given that all our rivers are mountainous, turbulent, the flow brings a lot of rock, it turns out that there are problems with the choice of the river. At the moment, the Ministry of Economy does not have a draft contract with a potential investor,” Mikvabia said at a government meeting.

Bzhania, for his part, expressed extreme dissatisfaction: “If the offer of the “Clean Energy” company does not suit you, if you think that you can find an investor on more favorable terms! Please find it with more favorable terms. If not, go down this path. If you don’t, I’m not going to work with you. And I will not. Is everything clear? “

However, in October of this year, the draft agreements were never presented. Moreover, it turned out that these alternating power plants are on the balance sheet of LLC Inguri HPP.

These hydroelectric power plants are on our balance sheet and we want to rebuild them. This issue is still under discussion,” – said the director of the Inguri HPP Levan Mebonia to Echo Kavkaza, noting that preliminary agreements on financing are underway with the European Bank for Reconstruction and Development.

Despite the position of LLC Inguri HPP, Aslan Bzhania said that the Russian side is preparing investments in the amount of 10 billion rubles for the restoration of the differential HPPs on Eristskali.

We, together with our Russian friends, have prepared an energy roadmap. It provides for issues related to the establishment of an economically justified tariff in the country, there will be several of these tariffs, they will be introduced in stages,” Bzhania said at a September press conference.

The situation was further aggravated by the speech of Aslan Bzhania on November 22, when he justified the need for Abkhazia to fulfill its obligations under military and economic treaties.

We must share a part of our sovereignty, I don’t see any tragedy in this,” Bzhania said.

For a month, the opponents of the incumbent president made statements about the inadmissibility of ceding sovereignty. As a result, it came to a rally on December 21, at which the opposition demanded the president’s resignation. On December 21, for the first time in the history of Abkhazia, riot policemen took to the street with shields and clubs. Meeting resistance, the protesters dispersed, but in their statement they indicated that they were demanding “to freeze all energy, property and foreign policy initiatives of the president.”

Former Georgian Minister for Civil Integration Paata Zakareishvili believes that the interests of the Abkhaz opposition coincided for a time with the interests of Georgia – to suspend the privatization of energy networks, however, this coincidence will soon disappear.

In fact, the opposition in Abkhazia is also not opposed to Russia investing money. But the nuance is that the current opposition figures want to sell energy facilities to Russia themselves, and not wait for Bzhania to do it,” says Paata Zakareishvili.

According to Jemal Gamakhariya, Georgia will not tolerate Russia privatizing the differential power plants and it is possible that Enguri HPP would be stopped at all.

We are fulfilling our part of the gentlemen’s agreement – we provide 40% of the electricity to Abkhazia. We consider the inhabitants of Abkhazia our citizens living on our territory, and we will try to provide our citizens with electricity, but if foreign citizens, a foreign state try to seize this energy system, then, of course, we will have to violate this agreement,” Jemal Gamakharia said.

Beslan Kmuzov, for newcaucasus.com

Photo: Anna Chikhladze