Page 26 - Caucasus Outlook 2023

3.1.3 Industry
Georgia’s manufacturing sector remains highly concentrated and
severely underdeveloped. In 3Q22 manufacturing accounted for just
9.5% of total business turnover, a modest 111.9% increase compared to
the same period in 2021. The total production value in the
manufacturing sector for the third quarter of 2022 stood at GEL4.29bn
($1.63bn).

3.1.4 Energy & power

Hydropower accounts for more than 80% of Georgia's generating
capacity and 75-90% of power generation, based on average
hydrologic conditions.

Russia is Georgia's number one import partner in terms of oil and
refined oil products. Meanwhile, in 2021 about half of gasoline and
diesel imports were sourced from the EU. While in 2021 15% of
Georgia’s petrol came from Russia, in the first half of 2022 this figure hit
39%. Likewise, 24% of diesel was Russia-sourced in 2021, and this
year it increased to 34%. Georgia’s energy dependence on Russia
brings obvious risks as Moscow is known to wield energy as a political
weapon.

Georgia received $64.78mn from exporting electricity between
January-July, recording a 337% y/y increase, the State Electricity
System reported. The figures show that 93% of the exports were for
Turkey, with 631mn kWh of electricity exported to the country.

In 2022 Georgia received a €40mn EBRD loan and a €13mn grant from
the EU that will be used to reduce energy consumption, mostly in
schools, contributing to overall energy security and protection of the
environment.

Germany's national development bank KfW also provided additional
financing to Georgia’s energy sector. “Lower utility bills, a cleaner
environment and greater energy security benefits us all,” said Catarina
Bjorlin Hansen, EBRD Regional Director for the Caucasus. “Together
with the European Union and KfW, we are directing our efforts to make
schools in Georgia greener and to provide comfortable learning
environments for students.”

Chevron's Tengizchevroil (TCO), operator of the giant Tengiz oilfield in
Kazakhstan, began shipping oil via Georgia's Batumi port on the Black
Sea in 2022. The development came after a sharp fall in exports from
the Caspian Pipeline Consortium (CPC) pipeline that runs to the
Caspian Sea, as Russia halted certain mooring point operations over
claimed storm damage.

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