Gov’t to Subsidize Increased Electricity Tariff for Million Citizens
By Natalia Kochiashvili
Tuesday, January 18, 2022
The subsidy for utilities has become more targeted and from now on, the subsidy will be given to the people who need it the most. The increase in electricity tariffs will be subsidized for a million people. Prime Minister Irakli Gharibashvili informed about it at the beginning of the government session. According to him, the decision will take effect in January and will be valid throughout the year.
“We will subsidize a significant part of the population, about a million people, with the increase in electricity tariffs. This applies to target groups, those with social scores below 150 thousand points.” PM said, adding that this program has been in place since the day the pandemic started, it lasted for 2 years, it ended in January and now it has been extended for the socially vulnerable people - population most in need.
On January 1, 2021, the GNERC (Energy and Water Supply Regulatory Commission) approved an increased electricity tariff in Georgia, but the government subsidized the tariffs of some household and commercial customers and covered the increased costs from the budget. As the PM announced at yesterday’s government session, this time the state will subsidize the increased tariff only for those with social scores below 150 thousand points within the first 200 kilowatts.
Before that, when the increase in the networks of "Telmiko" and "Energo-Pro" was set at 3.5 tetri for each category, then PM Giorgi Gakharia launched the subsugy project which would finance the difference between the new and old tariffs and the increase wouldn’t be transferred to the population. All household customers who consumed up to 300 kilowatts of electricity per month were funded 3.5 tetris from the budget. This was a maximum of GEL10.5 per month per subscriber. 456 thousand subscribers connected to "Telasi" network received an average subsidy of GEL4.16 per month on the electricity tariff, while 809 thousand subscribers of "Energo-Pro" received an average subsidy of GEL3.70 per month. According to the GNERC, GEL54.2 million was spent on this subsidy in January-October.
The Government of Georgia also announced after the session about creating a new type of Special Financial Zones which will be located on 110 hectares in Tbilisi and Gonio. These zones are supposed to bring the status of a regional financial center of Georgia. Legislative changes are needed first, and the government will be consulted on the model of these financial centers by Rothschild Investment Holding, with which the government signed a contract in December. These centers will focus on fintechs, asset management companies, trading companies and so on.
“Special financial zones will offer international companies legal regimes based on common law principles, as well as regulatory and fiscal regimes based on international experience. Most importantly, more than half of the employees of companies operating in these zones must be Georgian citizens. Ultimately, we assume that this will contribute to the development of the capital market,” Gharibashvili said.
In addition, Gharibashvili signed a resolution amending the Government of Georgia ¹188 of October 22, 2009 “On Defining the List of Regulatory Bodies of Other Countries or Interstate Pharmaceutical Products.” He announced that it will be possible to import high quality and low cost GMP standard medicines from the Turkish market in accordance with the GMP standard - the law to require this standard for importers is currently being drafted. Minister of Healthcare Azarashvili says that the market is fully open and as a result of this decision, prices are supposed to be reduced for 200 medicines.
“Several months ago, on the instructions of the PM, the Competition Agency studied the pharmaceutical market, to go through all the nuances that could be found to reduce the prices of medicines. The first step, which was considered urgent after doing this research, is to open the Turkish market. There are about 200 medicines, studied by different approaches, which in Turkey, for example, cost 5 GEL and with us 10 times more. In some medicines the margins go up to 1000%.” Azarashvili.
Recall that the Competition Agency published the report 1.5 years after instruction and made 13 recommendations to the state, including the need to define the rules for indicating generic medicines in medical prescriptions, as well as the introduction of GMP standards and an electronic prescription system. The document deals with the structure of the pharmaceutical companies themselves and their organizational arrangement. The Competition Agency calls on the state to impose restrictive norms on the market holding structure.
The PM also instructed the Minister of Health to cooperate with the relevant parliamentary committees and set up a working group to work on amendments to the legislation.
