The FINANCIAL — SOCAR Energy Georgia has purchased 100% of the shares of Marneuli Gas from Wissol Group. The Public Relations Manager of SOCAR Energy Georgia has said that they haven’t decided yet to change the management of the company.
The representatives of Wissol state that the company decided to sell shares of Marneuli utility as the deal was too good to reject.
“Revenues were practically increasing and loss of natural gas, which is a major problem, was brought from 65% to 15%. The core business of Wissol is development of retail stations in Georgia so we had an attractive offer from SOCAR for the Marneuli utility and sold it out. As a consequence of this deal we significantly increased the investment budget that we have for the development of CNG (Compressed Natural Gas) stations throughout Georgia,” Rusudan Kbilashvili, Public Relations Manager of Wissol, told The FINANCIAL.
“We acquired the company at a government auction, brought new management there with western type ethics and business mentality, streamlined business processes and turned the company into a profitable entity,” states Rusudan Kbilashvili.
Rusudan Kbilashvili says that the company can’t name the price for which the shares were sold to SOCAR. “We can’t open the figure per confidentiality close of our contract, but what we can say is that it was a commercially interesting deal.”
Wissol owns the largest network of service stations. Currently the company has over 100 licenses. 80 Wissol service stations will be in operation by the end of 2009 bringing enhanced convenience to its customers.
SOCAR already owns 30 gas distributor companies. In December of 2008 SOCAR signed a contract with the Ministry of Economic Development of Georgia, according to which the state transferred its ownership of shares in 29 gas distributor companies to SOCAR. SOCAR holds 43% of shares in Kutaisi Gas, 100% in Gurjaan Gas, 91% in Sighnaghi Gas, 100% in Khvareli Gas, 100% in Dedoflistskharo Gas, 96% in Lagodekh Gas, 97% in Sagarejo Gas and so on.
SOCAR Energy Georgia was founded in 2006. The company’s activity includes retail and bulk realization of fuel in Georgia, the importing of petroleum and liquid gas, construction of oil terminals and warehouses. SOCAR’s share on the petroleum market makes 72% and on the diesel market – 61%.
Recent developments at SOCAR
United Press International recently published its analysis over SOCAR’s conflict with KazTransGas owning Tbilisi gas distribution.
“In May 2006, KazTransGas, a subsidiary of Kazakhstan’s state energy company KazMunaiGas, purchased the Georgian capital Tbilisi’s TbilGas gas distribution company for the bargain price of USD 12.5 million, establishing KazTransGas-Tbilisi to oversee operations. In a development that in hindsight might have given the new owners pause, KazTransGas was the only bidder in the tender, which required the winner not only to maintain the company’s profile but reconstruct the ramshackle Soviet-era system and retain all employees.
Despite the increase in efficiency, KazTransGas-Tbilisi’s losses rose, and the company was driven into debt after SOCAR, its gas supplier, sharply raised prices. Now, KazTransGas-Tbilisi’s parent company KMG is considering selling TbilGas if it can recoup its investment. During a March 23 news conference, KMG President Kairgeldy Kabyldin complained, “If SOCAR wants to help Georgia, why is it selling gas to Georgia at a horrendously high price? SOCAR sells gas to Russia and Ukraine at USD 280 per thousand cubic meters, yet offers it to Georgia at USD 400 per tcm. This is ridiculous, completely out of touch with reality.”
The Georgian Government moved quickly to block the Kazakh disinvestment. On March 16, the Georgian National Electricity Regulatory Commission appointed a “special administrator” to temporarily take over management of KazTransGas-Tbilisi and act as a general director until the Georgian Government determines whether KMG is in breach of contract and how the company will discharge its outstanding USD 40 million debt. A week after the Regulatory Commission’s action, Kabyldin said, “We are ready to sell TbilGas if our investment contributions, debt financing as well as the financial support are compensated.”
Written By Levan Lomtadze
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