Georgia and Inter RAO In Talks on Power Plant

Georgia said Monday that it was in talks with Russian electricity trader Inter RAO over joint control of the vital Enguri hydroelectric power plant, which straddles Georgia's de facto border with breakaway Abkhazia.

"We are in talks to create a council with equal representation, which will manage the operation of the Enguri plant," Georgian Energy Minister Alezander Khetaguri told reporters.

He said a memorandum on the start of negotiations was signed in Tbilisi at the end of December, despite a war between the two countries over breakaway South Ossetia in August.

The Enguri plant generates 4.2 billion kilowatt-hours of electricity per year, accounting for 45 percent of Georgian electricity generation. Under a deal between Tbilisi and Abkhazia, which threw off Georgian rule in the early 1990s, the breakaway region gets 1.2 billion kilowatt-hours.

The plant's five generators lie on the Abkhaz side of the de facto border, but the Enguri dam is on the Georgian side.

Russia recognized the independence of Abkhazia after the August war with Georgia over South Ossetia. Russia will deploy about 3,700 soldiers in each region, Foreign Minister Sergei Lavrov said on Oct. 23.

Khetaguri said there was no prospect of transferring any shares in Enguri to Russia.

"All 100 percent of shares of Enguri were, are and will be in the hands of Georgia," he said.

Khetaguri said that if a final agreement is signed, Russia would pay Georgia for electricity consumed in Abkhazia. He said Russia was ready to buy additional electricity from the Enguri plant for its southern regions.

"Inter RAO will also be responsible for purchasing surplus electricity, especially in the summertime, which will provide Georgia with an additional 25 million lari ($15 million) in revenue," Khetaguri said.

Some, however, are less sanguine about the motives behind the deal.

"If the Georgian government says we're at war with Russia, why are we giving them control of power production? That's unacceptable," Gia Khukhashvili, head of the Association for Georgian Economic Security, said by telephone. "In my opinion, Georgia was cornered into the Enguri deal after the war."

Inter RAO, which is chaired by Prime Minister Vladimir Putin's powerful deputy Igor Sechin, who curates Russian energy policy, is also one of the biggest investors in Georgia, with an electricity distribution firm for the capital Tbilisi, a 300-megawatt capacity thermal electric plant and two hydroelectric stations each with 120 megawatt capacity.

Inter RAO announced last month that it would export electricity to Turkey via Georgian territory.

(Reuters, Bloomberg)