Civil Georgia, Georgia
April 26 2005

PM: Privatization of Trunk Gas Pipeline Ruled Out

In an interview with Russian news agency Interfax on April 25
Georgian Prime Minister Zurab Nogaideli said, that the Georgian
authorities made `a pragmatic’ decision to rehabilitate the gas
pipeline system of the country instead of its privatization.

`This is a final decision,’ Nogaideli stated.

`We are following our own interests and in this particular case, our
economic interests. Previously, we had particular problems with
attraction of funds for rehabilitation, but very soon we will receive
USD 40 million from the U.S. program [referring to the Millennium
Challenge Account],’ the Georgian PM said.

Russian energy giant Gazprom was interested in purchasing trunk
pipeline. Georgian leadership’s statements made in February over
possible privatization of gas pipeline system to the Russian
state-controlled Gazprom triggered concerns of not only Georgian
opposition, but also of the United States.

Zurab Nogaideli said that Georgia needs these pipelines’
rehabilitation in order to ensure Russian gas supply to both Georgia
and Armenia via Georgia. `Hence, we will profit by transiting gas
through the pipeline,’ Nogaideli said, adding that Georgia will
receive 10% of transited gas as a transit fee.

`We will not create any problems to Russian gas transit to Armenia,’
he said.

The Georgian Prime Minister stressed that Georgia is also interested
in alternative ways of gas supplies. `Frankly speaking, if the gas
from [U.S.-backed] Shah-Deniz [Azerbaijan] is cheaper than the
Russian gas, we will buy gas from them, or vice versa. This is a
clear and pragmatic approach,’ Nogaideli added.