Georgia’s Energy Minister has responded to the notification of a legal dispute with Georgia initiated by Russia’s Inter RAO energy giant over their owed compensation due to the depreciation of the lari, and hoped the issue will not get to the International Court of Arbitration.
Attempt to avoid legal dispute with Inter RAO
By Gvantsa Gabekhadze
Thursday, April 27
Kaladze’s statement came after Gardabani Holdings B.V. and Silk Road Holdings B.V., Dutch affiliates of the Russian Inter RAO, notified Georgia of an investment dispute over compensation due to the depreciation of the Georgian currency lari, Russian media reported.
The companies sent letters to the Georgian President and ministers of foreign affairs, justice, and energy, saying that the country has violated its liabilities under an international deal signed with the Netherlands on stimulation of investment and mutual protection of interests.
In particular, Silk Road bought 75.11% in Georgian power grid company Telasi in 1998, and Gardabani bought 100% in hydropower plants Krami-1 and Khrami-2 in 2011.
The contracts say that Telasi and Khrami-1’s tariffs were to increase, if the lari depreciates against the U.S. dollar and Khrami-2’s will rise if the lari depreciates against the Japanese yen.
“But in 2014, the Georgian regulator created a methodology for calculation of tariffs that did not encompass these obligations.
“In 2013–2016, the lari lost 31% against the U.S. dollar and 13% against the Japanese yen, but the regulator rejected requests of Telasi, Khrami-1 and Krami-2 to raise the tariffs,” Russia’s Vedomosti reported.
Kaladze confirmed that several days ago, Georgia received a letter about the issue.
“We will do our best to get well prepared and present the relevant documentation. It’s possible we can avoid the dispute at the international court. It’s a very long process,” Kaladze said.