The News in Brief
Wednesday, October 7
Competition slightly increased in Georgia’s fuel market in 2013-2014
Transparency International Georgia published its first study on the Georgian fuel market in 2012, covering major trends and problems in this sector until 2012, and offering recommendations to resolve them. Reporting period of the present study spans over 2010-2015. The second study has led to the following key findings:
Market Characteristics
Motor fuel consumed in Georgia is entirely imported, and in 2014 was the largest imported good in Georgia. 903.2 thousand tons of motor fuel worth 1.415 billion GEL were imported to Georgia in 2014;
By 2012, a clear oligopolistic structure of fuel market was formed in Georgia. Five companies dominated the market in imports of fuel as well as wholesale and retail trade. Statistical indicators measuring competition confirm the same.
Statistical data illustrates that competition on this market in 2013-2014 has grown slightly, while the market structure is still far from preferred. In 2013 the market share of large enterprises reduced by 2% compared to the previous year, constituting 93%;
In 2013-2014, the Herfindahl-Hirschman Index1 has reduced by approximately 1000 points compared to 2012. This is also a progress but still insufficient. Interestingly, the tendency of reduced level of concentration on the fuel market in 2013 has not continued in 2014, resulting in the reduced number of fuel importing companies and the growth of the Herfindahl-Hirschman Index. Although small-scale, these changes still pose a risk that oligopoly on this market is sustained in the future.
Market Regulation
Until 2014, the state enjoyed rather limited capacity in terms of observing competition. Situation in this respect has changed considerably on 14 April 2014, when the Competition Agency with increased powers was set up pursuant to the new Law of Georgia "on Competition". Given the high public interests, on 12 November 2014 the Competition Agency launched an inquiry in the fuel market, aimed at establishing the abuse of dominant position by firms on the market. In July 2015 the Agency completed studying the market and fined eight companies for breaching competition legislation by 55 million GEL in total;
As for the fuel quality control, legislation of Georgia sets standards that the oil products and natural gas sold on the Georgian market must meet. Nevertheless, there is no quality norms control mechanism for these products in the country. Further, no adequate sanctions exist for violating the quality norms;
In 2010-2015, total of 489 samples (petrol and diesel) were examined, 38% (187 samples) of which failed to meet quality norms set by legislation.
Prices
Prices of five key players in Georgian fuel market have been characterized with parallelism during the last three years;
Fuel prices of five key players in Georgian market during the last three years more or less have followed the trend of global prices of oil. However, in some cases the changes in global prices were not adequately reflected on Georgian market for a long time. This trend is especially visible during reduction of prices;
Public Opinion Survey
26% of respondents purchase fuel from different companies, 20% prefer Wissol's fuel, 17% purchase fuel in Gulf's gas stations, 16% - in Rompetrol, and 14% - in Socar. Lukoil is less popular among five large companies - only 10% of respondents buy fuel in gas stations of this company;
In choosing the fuel, 50% of respondents give priority to the fuel quality, while the choice of 41% depends on the fuel price. (Transparency.ge)
Georgian Gov’t opens special residence for Muslim community in Batumi
Muslims living in Georgia’s southwestern Adjara region are happy to have a new residence for their Mufti that also serves as a learning environment for students.
The residence officially opened in the coastal city of Batumi today.
The State Agency for Religious Issues procured a four-floor building, which had previously been used as a hotel, and transferred it to the Muslim community to use.
The Mufti – a Muslim legal expert who is empowered to give rulings on religious matters – will live and work in part of the residence while a portion of the property will be established as a madrassa (the Arabic word for educational institution), which will be used by Muslim pupils.
Western Georgia’s Muslim Mufti Beglar Kamashidze thanked Georgia’s Prime Minister Irakli Garibashvili and the State Agency for Religious Issues for gifting the Muslim community the facility, calling it "aan historic incident”.
Over the years we wanted to have such a residence which would conform to the needs of the Muslim community. Today our expectations are fulfilled and God gave us a building where parish and superiors can continue to work,” Kamashidze said.
On another note, representatives of the Georgian Muslim Department delivered humanitarian aid to about 700 extremely vulnerable people who lived in the slums – commonly known as the cardboard city – in Khelvachauri village in the Adjara region. (Agenda.ge)
Transparency International Georgia published its first study on the Georgian fuel market in 2012, covering major trends and problems in this sector until 2012, and offering recommendations to resolve them. Reporting period of the present study spans over 2010-2015. The second study has led to the following key findings:
Market Characteristics
Motor fuel consumed in Georgia is entirely imported, and in 2014 was the largest imported good in Georgia. 903.2 thousand tons of motor fuel worth 1.415 billion GEL were imported to Georgia in 2014;
By 2012, a clear oligopolistic structure of fuel market was formed in Georgia. Five companies dominated the market in imports of fuel as well as wholesale and retail trade. Statistical indicators measuring competition confirm the same.
Statistical data illustrates that competition on this market in 2013-2014 has grown slightly, while the market structure is still far from preferred. In 2013 the market share of large enterprises reduced by 2% compared to the previous year, constituting 93%;
In 2013-2014, the Herfindahl-Hirschman Index1 has reduced by approximately 1000 points compared to 2012. This is also a progress but still insufficient. Interestingly, the tendency of reduced level of concentration on the fuel market in 2013 has not continued in 2014, resulting in the reduced number of fuel importing companies and the growth of the Herfindahl-Hirschman Index. Although small-scale, these changes still pose a risk that oligopoly on this market is sustained in the future.
Market Regulation
Until 2014, the state enjoyed rather limited capacity in terms of observing competition. Situation in this respect has changed considerably on 14 April 2014, when the Competition Agency with increased powers was set up pursuant to the new Law of Georgia "on Competition". Given the high public interests, on 12 November 2014 the Competition Agency launched an inquiry in the fuel market, aimed at establishing the abuse of dominant position by firms on the market. In July 2015 the Agency completed studying the market and fined eight companies for breaching competition legislation by 55 million GEL in total;
As for the fuel quality control, legislation of Georgia sets standards that the oil products and natural gas sold on the Georgian market must meet. Nevertheless, there is no quality norms control mechanism for these products in the country. Further, no adequate sanctions exist for violating the quality norms;
In 2010-2015, total of 489 samples (petrol and diesel) were examined, 38% (187 samples) of which failed to meet quality norms set by legislation.
Prices
Prices of five key players in Georgian fuel market have been characterized with parallelism during the last three years;
Fuel prices of five key players in Georgian market during the last three years more or less have followed the trend of global prices of oil. However, in some cases the changes in global prices were not adequately reflected on Georgian market for a long time. This trend is especially visible during reduction of prices;
Public Opinion Survey
26% of respondents purchase fuel from different companies, 20% prefer Wissol's fuel, 17% purchase fuel in Gulf's gas stations, 16% - in Rompetrol, and 14% - in Socar. Lukoil is less popular among five large companies - only 10% of respondents buy fuel in gas stations of this company;
In choosing the fuel, 50% of respondents give priority to the fuel quality, while the choice of 41% depends on the fuel price. (Transparency.ge)
Georgian Gov’t opens special residence for Muslim community in Batumi
Muslims living in Georgia’s southwestern Adjara region are happy to have a new residence for their Mufti that also serves as a learning environment for students.
The residence officially opened in the coastal city of Batumi today.
The State Agency for Religious Issues procured a four-floor building, which had previously been used as a hotel, and transferred it to the Muslim community to use.
The Mufti – a Muslim legal expert who is empowered to give rulings on religious matters – will live and work in part of the residence while a portion of the property will be established as a madrassa (the Arabic word for educational institution), which will be used by Muslim pupils.
Western Georgia’s Muslim Mufti Beglar Kamashidze thanked Georgia’s Prime Minister Irakli Garibashvili and the State Agency for Religious Issues for gifting the Muslim community the facility, calling it "aan historic incident”.
Over the years we wanted to have such a residence which would conform to the needs of the Muslim community. Today our expectations are fulfilled and God gave us a building where parish and superiors can continue to work,” Kamashidze said.
On another note, representatives of the Georgian Muslim Department delivered humanitarian aid to about 700 extremely vulnerable people who lived in the slums – commonly known as the cardboard city – in Khelvachauri village in the Adjara region. (Agenda.ge)