1. Main Issues of the Energy Sector of Georgia Nika Gilauri

2. Main problems Low collection rate Legacy debt Bad discipline Uninformed population Shortage of supply – not build to operate independently

3. Low Collection Rate (possible improvements) Large Industrial Customers –Georgian Railway - HP’s - DONE –Increase of tariff - Fero, Chiaturmanganum, Georgian Railway - JULY

5. Low Collection Rate (Distribution Companies) Abkhazeti - NOT YET Telasi - HAVING NEGOTIATIONS –Purchase agreement UDC –Small Distribution Companies – DONE (19 of JUNE) –Collections at Doorstep – DONE PARTIALLY –Metering – STARTED THE PROCESS

6. Funds Distribution Model STILL BEING CONSIDERED Current situation Abolishing collections at doorstep Collections through banks only Joint account - GWEM, Tax Department, Distribution companies Automatic distribution of funds Motivation to increase collections Same objectives and goals of all players

7. Legacy Debt – DONE Creditors Tax liabilities Long term restructuring Debt of the State –Apkhazeti –Debt of municipal companies Bankruptcy Debt Service agency

8. Bad Discipline Political pressure – DONE (PARTIALLY) Protection of substations - DONE Salary debt – 7.4 mil GEL to GSE Uninformed population – STARTED

9. Shortage of Supply The system not designed to function independently Fact - shortage in Winter Balance out shortage in Winter by excess capacity in Summer (400 mln kvh) – NEGOTIATING Unclear laws and regulation - Subsidies for import -minimum 19.5 million USD

11. Conclusion Remaining problems –Collection rate –Rehabilitation –Shortage of supply Solved problems –Indebt ness –Public awareness campaign –Small Licensees –Discipline in the sector –Corruption on high level – large industrials –Rehabilitation