Georgian Fuel Market Expects Changes
24 October, 2013
Georgian Fuel Market Expects Changes
Georgian fuel market, believed to be monopolized, is expecting changes after a new liberalized contract on railway cargo transit has been concluded between Georgia and Azerbaijan recently. Some sector pundits think the contract is not sufficient to liberate Georgian fuel market from the monopolies, unless proper competition law is adopted and entrepreneurs get equal access to financial resources.
Early in October, Georgian Energy Minister Kakhi Kaladze reported to media that more Turkmen oil and oil products will be imported to
Georgian market, since a new and more liberal transit agreement was reached with Azerbaijan, Georgia’s trusted partner country in the South Caucasus transit corridor connecting Asia with Europe. Carriers and cargo shipping businesses have been pointing to existing latent monopoly on Azeri side that befuddled transportation of oil and oil products from other Caspian oil producing countries on Azerbaijan-Georgian railway passage for many years. This led to monopolization of Georgian fuel market with around 75% of Azeri dominance and unreasonably high prices, Demur Giorkhelidze, an economic analyst, pointed out in his interview to Georgian Journal. Most of economic analysts suspected that previous administration of Georgia had a share in profits from the lucrative oil products trade.
Therefore, one of the major pre-election covenants of Georgian Dream, the ruling party that won parliamentary elections to former ruling National Movement last fall, was to fight monopoly and cut fuel prices down by at least GEL 0.20. As a matter of fact, prices really dropped by the promised figure since September of 2012 to September of 2013 from average GEL 2.15-2.40 and GEL 2.15-2.40 to GEL2-2.20 and GEL2 -2.20 on petrol and diesel respectively. Oil importers explain it by the price slump on international market. The administration believes this is a result of releasing business from the governmental pressure [practiced during the ex-power] and predicts further drop in prices as a result of new transit agreement with Azerbaijan that unfolds prospects to import more oil product from other countries, in particular, from Turkmenistan that made around 2-3% of total import of oil products in Georgia against 33% and 26% made by Romania and Azerbaijan respectively. The latter is the official market leader in diesel import however consumer believes almost 80% of petroleum is also of Azeri origin.
Vano Mtvralashvili, Chairman of The Union  of Oil-Product Importers, does not expect a breakthrough on Georgian fuel market in near future as he believes the market is saturated: five leading oil importer and distributor companies making up of 95% of Georgian market [such as Azeri state-based Socar, Wissol which imports Italian oil products, Rompetrol Georgia that supplies Romanian oil products, Lukoil mainly importing Bulgarian and Russian product, and Gulf importing European product] are scarcely expected to shift focus to Turkmen product as far as they all have long-term contracts and obligations with their partners whereas the petty players cannot change the picture. New players may have had their say but limited access to financial resources ties the hands of the entrepreneurs, who are willing to compete with already well-positioned market leaders.
“One or two petrol stations cannot change the situation; if a new player enters the market, it will need to create a network covering entire country to compete with operating leading network companies that would that have ensured consumers thanks to their service and product quality. These two points and not the price are decisive actually. There are few petrol stations selling product by 5-10 Tetri cheaper but sales are much bigger at brand companies,” Mtvralashvili told GJ. Giorkhelidze believes new players can emerge only if free market rules are observed.
“Trust deals still go ahead. Personally I know people who want to enter this market but banks that have shares in the business with the operating monopolists, withhold credits to the new players; they will never admit them in. Only removing transit problems will not change the picture; the authorities should introduce proper competition law on local market and ensure equal credit access to all,” he said. Nevertheless, consumers hope for better. “If Turkmen diesel oil will have an unfettered access here, it will cut prices down significantly, I look forward to it”, Kote, a taxi driver, said on behalf of most of his colleagues, interviewed by GJ.

Print
Other Stories
The World Digital Mining Summit to be held in Georgia
The summit is scheduled to take place between 21st-23rd September in the Hualing Hotel, Tbilisi, Georgia.
Galt and Taggart - Tourism Boom Continues in Georgia
Tourism has become one of the key drivers for the Georgian economy. Galt and Taggart has recently published research about the Georgian tourism sector in the first half of 2018.
"The worst dream for Putin is that Russians want to live in Georgia"
This year, visitors to the Adjara region would notice that there is a boom in construction in and around Batumi.
Underground gas storage facility to be built in Georgia
KfW, a German government-owned development bank signed a EUR 150 million promotional loan with the state-owned Georgian Oil and Gas Corporation (GOGC) for the construction of the first underground gas storage facility in Georgia.
New gambling rules for Georgia
Georgian lawmakers are preparing a new draft law relating to online-casinos and gambling that will seek to curb gambling addiction in Georgia.
How expensive is it to visit Georgia?
The Georgian Lari (GEL) is the official currency of Georgia and is the only legal means of payment in the entire territory of Georgia.
Trade with the EU and the Commonwealth of Independent States (CIS) has grown significantly
Trade with the EU and the CIS has grown by 26% and 33.5 % respectively, says GeoStat, the Georgian National Statistics Office.
The unemployment rate decreases in Georgia
The unemployment rate decreased in Georgia by 1,9% and amounted to 12.1% in the 2nd quarter of 2018 compared with the previous quarter,
Memorandum of Understanding to be signed between Georgia and Malaysia
According to the Georgian Ambassador to Malaysia Nikoloz Apkhazava, Georgia plans to sign a Memorandum of Understanding (MoU) with Malaysia.
“Blauenstein Georgia” due to expand in Georgia
“Blauenstein Georgia” is planning to open more shops in Georgia. It is an agriculture company that sells meat products, meat and convenience food.
The amount of Direct Foreign Investment rises in Georgia
According to the information of the National Statistics Office of Georgia, the amount of direct foreign investment in Georgia has risen
It’s going to get  harder for foreigners to get residence permit in Georgia
It’s going to get harder for foreigners to get permit of residence in Georgia.
Mziuri Park in Tbilisi to be renovated soon
It was the dream of prominent Georgian writer Nodar Dumbadze that when the original Mziuri park was constructed and opened in 1892 that it should be a park for children,
Winemakers to produce Kvanchkara in its place of origin - Racha
Khvanchakara is a semi-sweet Georgian red wine which originates from Racha, in the western part of Georgia. Kvanchkara is made of two types of grape Mujuretuli and Aleksandrouli.
The level of Georgian wine and Chacha exported has increased
The National Wine Agency of Georgia has recently published statistical information about the level of Georgian wine and Chacha exported between January and July, 2018.
New fire engines to be Manufactured in Georgia
The Acting Head of the Emergency Management Agency Shalva Khutsishvili said that the old Zili fire engines (which were made in the USSR) will be phased out and replaced with new ones, manufactured in Georgia.
Georgia witnesses a record number of tourists
The Georgian National Tourism Administration publishes statistical information about international visits to Georgia.
Canadian businessman plans to build a hotel in Bakhmaro
Canadian businessman Vadim Malishev plans to build a hotel in Bakhmaro resort, Guria, in the western part of Georgia.
Coffee Factory will open in Tbilisi in October
The first coffee factory (which will be located on the Kakheti highway) in Tbilisi will open in October.
Places in Georgia where real estate is the most expensive
The real estate market in Georgia is growing annually. In Tbilisi as well as other regions of Georgia new developments are increasingly taking place.
How much does a vacation cost in Tbilisi?
It is the middle of summer and those who have not yet taken a vacation are looking for an appropriate place for sure!
The price for extreme sports in Georgia
Georgia offers a variety of options to extreme sport lovers.
The number of Georgians who own property abroad increases
The number of foreign properties owned by Georgians is increasing.
How much does Taxi cost in Tbilisi?
Stories how Taxi drivers try to deceive passengers and charge them with more money than they should pay are known for everybody all over the world.
What are the highest paid areas in Georgia
According to the data collected by the National Statistics Office of Georgia in the first quarter of 2018 the highest paid jobs in Georgia are found in the financial and insurance fields.
PHOTO OF THE DAY
Exchange Rates
GEL Exchange Rate
Convertor
21.09.2018
22.09.2018
USD
1
USD
2.6193
2.6216
EUR
1
EUR
3.0693
3.0854
GBP
1
GBP
3.4651
3.4584
RUB
100
RUB
3.9538
3.9340
Other Stories
Recently Toyota rolled out Global Campaign under this slogan that reflects the Olympic and Paralympic Spirit of Encouragement,
A couple from Switzerland combines Swiss tradition and technology with Georgian products. Their cheese is made in the Georgian mountains and sold in local stores and hotels.
It has been more than five years since the residents of Lilo village, near Tbilisi, cannot open their windows.
63 000 GEL was received by the Georgian Agro Export Group which is just a small part of the European Neighbourhood Programme for Agricultural and Rural development.
Georgian entrepreneur Guka Tavberidze, who runs his own business in the UK and does it quite well, has been invited by BBC
The grand opening of 7-star The Biltmore Hotel Tbilisi took place in Georgia’s capital on July 31.
DUSHETI, Georgia – The Georgian government and the World Bank will allocate USD 5.6 million (12 million GEL) to fund
A new Georgian clothing brand named Person has emerged in Georgian market.
Georgia is in the midst of an economic maelstrom, Euronews reports.
Situation at Georgia’s mineral water market is interesting: over the last year, the volume of export has grown by 56 percent. According to “GeoStat”, over $114 million worth of mineral water was sold
GEL Exchange
USD
1
USD
2.6216
EUR
1
EUR
3.0854
GBP
1
GBP
3.4584
RUB
100
RUB
3.9340