Electricity & Gas Sector Reform
	Oil & Gas Sector Reform
	Energy Efficiency Program
	Georgian Winter Heating Assistance Program

 » Electricity & Gas Sector Reform

Background

PA Government Services Inc. (PA) has been retained by the US Agency for International Development (USAID) to undertake a two-year energy sector reform program in Georgia to promote a series of reforms focused on both the electricity and natural gas sectors. The activities continue to build upon earlier work completed by PA under the sponsorship of USAID.

Program Objectives

Overall, the activities supported by this program are intended to:

• Improve the operation of the energy system by increasing private sector involvement and management;

• Enhance energy supply availability and increase the efficiency of its use, to help ameliorate the present supply crisis and the social suffering it entails;

• Prove the investment environment for the energy sector and concomitantly, for the Georgian economy overall;

• Increase public awareness of, and support for, energy sector reform initiatives, including privatization.

Activities

A number of separate activities are being undertaken by PA as part of this program. These include:

1. Legal and Regulatory Reform: PA is supporting the drafting of new laws and amendments to existing laws to improve the legal framework for the market reform of the energy sector. In the area of regulatory reform, PA is providing technical assistance to the Georgian National Energy Regulatory Commission in the areas of: tariff-setting; licensing; quality of service; licensee performance monitoring; rules/procedure development; and public outreach.

2. Improved Transmission, Dispatch and Wholesale Market Operations: PA is working to improve the operation of the wholesale electricity market in an effort to enhance the financial performance of the energy system. This includes assistance to legally and operationally consolidate the transmission and dispatch enterprises, to provide staff training, and to work towards significant reform of the wholesale electricity market (moving increasingly to a bilateral contracting/balancing market model).

3. Privatization of the Energy Sector: PA is assisting with those steps necessary to bring about further privatization of the energy sector. This involves a variety of activities, such as sector restructuring analyses, pre-privatization improvement strategies and other technical support to enhance the environment for strategic investor privatization. Another major program component is to support the successful adoption and mobilization of unique multi-year private management contracts for the electricity transmission and dispatch enterprises and the Georgian Wholesale Electricity Market.

4. Distribution Utility Commercialization; This activity promotes the privatization and improved commercial operation (financial performance) of the electricity and natural gas distribution sectors. Through this activity, PA is undertaking a number of electricity metering, billing and collection activities in several areas of Georgia such as Rustavi , Adjara and Dusheti. For the natural gas sector, the commercialization and privatization efforts are focusing on Tbilgazi, the natural gas utility serving the capital of Tbilisi , with the goal being to implement a series of improvements at the enterprise – managerial, organizational and operational – that will improve Tbilgazi's financial performance and increase the likelihood of its successful privatization.

5. Promotion of Energy Efficiency: Training of local Georgian specialists on energy efficiency – to help create an energy services industry in Georgia – is a main focal point of this subtask. PA is also helping to establish energy related NGOs (branches of the international Association of Energy Engineers) in Tbilisi , Adjara and Kutaisi . Additionally, PA is implementing a number of demonstration projects nationwide, including several focused on renewable energy technologies (e.g., microhydro, solar thermal, biogas).

6. Public Outreach: PA has launched an activity to promote public awareness of energy issues. As part of this effort, an energy-related NGO network has been established to advance public awareness of energy related issues in Georgia and the region at large. Also, a public awareness campaign is being developed to support energy efficiency including educational outreach, brochures and public service announcements.

7. Regional Energy Issues: PA is providing technical and other advisory support to a working group consisting of representatives from Azerbaijan , Armenia and Georgia on ways to improve the coordination and efficiency in the operation of the region’s energy systems.

8. Specialized Support: This activity area provides support to USAID on issues or other technical assistance needs that may arise during the program’s period of performance. Often, this type of technical support involves assisting with efforts needed to mobilize financing from other international financing institutions (i.e., helping the Government of Georgia and state enterprises to meet the requirements of the international financing institutions for financing). One support activity underway involves assisting the management of the Enguri station to improve their financial and operational management to meet the requirements for release of a rehabilitation loan being provided by the European Bank for Reconstruction and Development (EBRD).

Main Program Counterparts

In conducting this effort, work is underway with a number of counterpart agencies and organizations including:

• The Ministry of Fuel and Energy

• The Ministry of State Property Management

• The Municipality of Tbilisi

• The Georgian Wholesale Electricity Market

• The Georgian National Energy Regulatory Commission

• JSC Electrogadatsema

• Dispatcherizatsia Ltd.

• Parliament

PA is also working closely with the International Finance Corporation, which is serving as the investment advisor for the Government of Georgia. Additional support is being provided to the EBRD as noted above. Close coordination efforts are also underway with the World Bank.

 » Oil & Gas Sector Reform

Background  

PA Government Services Inc. (PA) has been retained by the US Agency for International Development (USAID) to undertake a thirty-nine month energy sector reform program in Georgia to promote a series of reforms focused on the upstream oil and gas sector.

Program Objectives  

Overall, the activities supported by this program are intended to:

• Strengthen the independence, sovereignty, and prosperity of Georgia and encourage political and economic reform.

• Mitigate regional conflicts by building economic linkages between Georgia and the other nations of the Caucasus region.

• Bolster the energy security and energy independence of Georgia by ensuring the free flow of oil and gas to the world market place.

Primary Goal

The primary goal of this program is to assist the Government of Georgia (GOG) in creating the laws, rules, regulations, institutions and institutional capacity to promote, enhance and facilitate:

• Full and optimal development of Georgia’s domestic oil and gas supply sector, both on and offshore, consistent with international standards, including standards pertaining to environment, safety and health;

• Georgia’s role as a critical transport corridor for East to West transportation of energy resources.

Activities  

PA is involved in a number of separate activities under this program. These include:

1. The Law on Oil and Gas: PA was instrumental in the drafting of this law and in advising the Ministry of Fuel and Energy, Ministry of Environment and Natural Resource Protection, and the Parliament on the need for, the benefits from, and the correctness of, a modern western-styled legal framework for the upstream oil and gas sector. This law was adopted by Parliament in April 1999.

2. Legal Reform: PA is supporting the drafting of new laws and amendments to existing laws to improve the legal framework for the reform of the oil and gas sector. For example, PA’s experts provided technical assistance to the GOG in the drafting and passage of the Law on Obligations to Compensate for Harm Caused by Hazardous Substances.  This “no-fault” liability law incorporates western legal concepts to provide for compensation for injury to or loss of persons, and damage to or destruction of property, the environment, and historical and cultural sites caused by the release of hazardous substances. Also, through the efforts on The Law on Expropriation of Property for Public Necessity, PA introduced the legal concept of eminent domain to Georgia .  Although provided for in the Georgian Constitution this legal principle had not been fully developed in Georgia .  Further elaboration of this concept was necessary to facilitate the acquisition of rights-of-way for the construction of pipelines and other works of public necessity.

3. State Agency for Regulation of Oil and Gas Resources (State Agency): The Law on Oil and Gas created the State Agency to administer the law and to exercise sovereign State authority in the granting and enforcement of agreements with investors. PA is supporting the State Agency by providing advice, expertise, and other technical assistance on issues of law, customs, and general western business practices pertaining to the international petroleum industry. PA is also supporting the State Agency in the tendering of licenses for exploration and development of the remaining oil/gas tracts in Georgia .

4. Regulatory Rules and Regulations: Full implementation of the Law on Oil and Gas requires the adoption of detailed rules and regulations by the State Agency.  PA has provided legal and operational expertise to the State Agency in the drafting of these rules and regulations.

5. Support During Contract Negotiations: A major US independent oil and gas exploration and production company has entered into a Production Sharing Agreement (PSA) to explore the Georgian portion (near shore) of the Black Sea . Previous attempts to secure a contract over this same area were unsuccessful partially due to a lack of understanding of modern petroleum industry contracting practices on the part of the Georgian negotiating team. With PA’s assistance, the State Agency, Saknovtobi (the Georgian National Oil Company) and the US company were able to reach a satisfactory agreement. PA continues to assist the State Agency in negotiations with investors wishing to amend existing PSA contracts so as to take advantage of the benefits offered by the Law on Oil and Gas.

6. Main Export Pipeline (MEP) and Shah-Deniz Pipeline Support: These two international transit pipelines are extremely important for energy producers and consumers worldwide in the effort to move Caspian oil and gas resources to international markets. PA supported the Georgian International Oil Company (GIOC) in its efforts to implement the pipeline agreements Georgia has entered into with Azerbaijan and Turkey .  PA conducted a review of Georgian laws and counseled the GOG regarding possible conflicts between Georgia ’s obligations under the contracts and its laws.  Further, PA supported GIOC in the preparation of baseline environmental impact information for the proposed pipeline corridor.

7. Commercialization of Oil and Gas Enterprises: PA is working with several state-owned enterprises in the oil and gas sector to improve their financial performance through restructuring, operational improvements and staff training. PA is also examining options for private sector involvement in these enterprises.

8. Specialized Support: This activity area provides support to USAID on issues or other technical assistance needs that may arise during the program’s period of performance. Often, this type of technical support involves assisting units of the GOG and oil and gas investors to understand each other’s concerns and to achieve the common goal of developing Georgia ’s petroleum resources.

Main Program Counterparts  

In conducting this effort, work is underway with a number of counterpart agencies and organizations including:

• The State Agency for Regulation of Oil and Gas Resources in Georgia (SAROGR)

• The Ministry of Fuel and Energy

• The Ministry of Environment and Natural Resource Protection

• Georgian National Oil Company (JSC Saknavtobi)

• Georgian International Oil Corporation (GIOC)

• Georgian Gas International Corporation (GIC)

• Parliament

 » Energy Efficiency Program

Energy Efficiency Map of Georgia

Click here to download the program

Background 

PA government Services Inc. (PA) has been retained by the US Agency for International Development to implement energy efficiency program to promote energy efficiency industri creation.

Objective

Overall, the activities supported by this program are intended to:

Create a market demand for energy efficiency (EE) by demonstrating its technical and economic benefits and by training Georgians in EE. This will be accomplished through a) a massive training program, b) construction of EE projects throughout Georgia, and c) structuring some of them as self-financed.

Activities

PA as part of this program is undertaking a number of separate activities. These include:

• Promotion of Energy Efficiency: Training of local Georgian specialists on energy efficiency – to help create an energy services industry in Georgia – is a main focal point of this subtask. 
• PA is also helping to establish energy related NGOs (branches of the international Association of Energy Engineers) in Tbilisi, Adjara and Kutaisi. 
• Additionally, PA is implementing a number of demonstration projects nationwide, including several focused on renewable energy technologies (e.g., micro-hydro, solar thermal, biogas).
• PA is introducing self-financing concept for some of the energy efficiency and renewable energy projects and promote their replication. 

Main Program Counterparts

• Georgian Association of Energy Engineers
• West Georgian Association of Energy Engineers
• Adjarian Energy Engineers

 » Georgian Winter Heating Assistance Program

Background

PA Government Services Inc. (PA) has been retained by the US Agency for International Development (USAID) to manage the fourth year of the Georgia Winter Heating Assistance Program (GWHAP). The seven-month assignment is intended to significantly alleviate the difficulties of payment for winter season electricity supplies for the country’s most vulnerable populace, socially-critical institutions and internally displaced persons (IDPs).  The overall amount of subsidy funding available is expected to reach $10.1 million, including a $1 million contribution to the program from BP. Subsidies will be provided for approximately 200,000 households, 330 socially-critical institutions (e.g., hospitals, orphanages, retirement facilities), and 1,000 IDP collective centers.

Program Objectives

The activities supported by this program are intended to:

• First and foremost, reduce human suffering in Georgia by providing continued access to electricity supply for the country’s most vulnerable persons and institutions during the December 2001 through March 2002 period. 

• Alleviate the near-term impact that the market reform process can have on those persons and institutions that are truly vulnerable.

• Encourage and support the Government of Georgia’s efforts to improve energy supply for the country in both the near and longer terms

Primary Goal

The primary goal of this program is to assist the vulnerable population and key elements of the social infrastructure to pay their winter season electricity bills and ensure that they receive continued access to electricity during the 2001-2002 winter season.

Activities  

PA is involved in a number of activities under this program. These include:

1. Determine GWHAP Beneficiaries: PA, through the use of USAID’s GWHAP vulnerability database, and in consultation with the Ministry of Labor, Health and Social Affairs and the Ministry of Refugees and Accommodation, identifies program beneficiaries including households, social institutions, and IDP collective centers. Monthly subsidy limits are determined by region and by type of beneficiary. 

2. Beneficiary Notification and Public Information: PA designs, publishes and distributes certificates to notify beneficiaries of their participation in the program and the expected subsidy amounts. Program information centers provide a point of contact for the public's questions and inquiries.

3. Monitor Electricity Consumption: For each month of the winter season, PA determines the amount of electricity consumed on average by beneficiary households, institutions and IDP collective centers. 

4. Determine and Pay Subsidies: PA determines the amount of subsidy to be credited to the beneficiary accounts. The actual amount of subsidy for each region is based on the smaller of either the specified subsidy limit or the actual average meter reading for a verification group of randomly  selected households in each region. The amount of subsidy for each institution and IDP center is based on the smaller of the institution’s or collective center’s actual electricity usage or the predefined subsidy limit. Following USAID approval, payment of the subsidy amount is made to an account specified by the Georgian Wholesale Electricity Market (GWEM). The GWEM then credits the accounts of the local electricity distribution companies; the local distribution companies correspondingly credit the beneficiary accounts in accordance with PA’s instructions. 

5. Verification of Credits: PA examines each beneficiary's account at the local distribution company to ensure that the subsidy amounts were properly credited.

6. Verification of Program Requirements: A portion of this year’s subsidy funding is tied to Government of Georgia compliance with several requirements described in the US Government/Government of Georgia Memorandum of Understanding. PA's role is to monitor compliance with these requirements.

Main Program Counterparts

In conducting this effort, work is underway with a number of counterpart agencies and organizations including:

• The Ministry of Labor, Health and Social Welfare

• The Ministry of Fuel and Energy

• The Ministry of Refugees and Accommodation

• Georgian Wholesale Electricity Market

• Georgian National Energy Regulatory Commission

• Local distribution companies

Additionally, to help with implementation of the program, PA has teamed with the non-governmental organization, the Georgian Disabled Women’s International Association.

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