Page 62 - GEORptMay21

Georgia’s electricity consumption down 5.5% in 2020
number of local miners are active in Mestia district.
The losses of the distribution company Energo Pro Georgia grows every year against a background of rising electricity consumption in Svaneti. According to estimates, the company suffers a loss of Georgian lari (GEL) 13-14mn (more than $4mn) per year.
Electricity generation and consumption in Georgia dropped by 5.8% and 5.5%, respectively, in 2020, in line with lower economic activity. According to the Georgian electricity market operator "Esco", total generation last year amounted to 11.16 TWh, equivalent to 5.8% less than in 2019, when total output was 11.86 TWh.
Production decreased particularly at the county's hydropower plants, which account for the largest part of total generation.
The amount of electricity generated by Georgia's thermal power plants edged down by less than 1% to 2.82TWh. In the case of the hydropower plants, the reduction was measured at nearly 7.7% for a total of 8.25 TWh, accounting for nearly 70% of the electricity generation.
The electricity generated by the Kartli wind farm increased from 84.7mn kWh to 90.8mn kWh year on year, amounting to 0.8% of total generation. Electricity consumption decreased by 5.5% to 12.41 TWh, down from 13.15 TWh in 2019.
9.2 Major corporate news 9.2.1 Transport corporate news
Fitch affirms rating of Georgian Railway with negative outlook
Fitch Ratings has affirmed JSC Georgian Railway's (GR) Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at BB- with negative outlooks.
Among the factors that could, individually or collectively, lead to a negative rating action/downgrade for GR, were, according to Fitch, a downgrade of Georgia's sovereign rating; dilution of linkage with the sovereign, resulting in the ratings being further notched down from the sovereign's, and a downward reassessment of the company's Standalone Credit Profile (SCP), resulting from a deterioration of the financial profile with net debt/EBITDA sustainably above 9x as per the rating case.
Georgian Railway issued, in May 2012, $500mn worth of 10-year bonds denominated in US dollars and carrying a 7.75% coupon. The bonds mature in November 2022.
According to Fitch, key assumptions for the ratings case were operating revenue growth on average at 3.9% in 2020-2024 and operating expenditures growth on average at 4.9% in 2020-2024.
According to Fitch, GR receives mostly non-cash and indirect state support. “Historically, support of GR's long-term development has been via state policy incentives and asset allocations. GR enjoys greater pricing power than its Fitch-rated regional peers. GR's tariffs are fully deregulated, allowing tariffs in both freight and passenger segments to be adjusted to market conditions. Freight tariffs are set in US dollars, resulting in natural hedge for a company that operates in a country with a dollarised economic environment,” Fitch said. The ratings agency considered a potential default of GR on external obligations as potentially harmful to Georgia, as it could lead to reputational risk for the state.
“Both GR and the state tap international capital markets for debt funding, as well as loans and financial aid from IFIs. This leads us to assume that a default
62 GEORGIA Country Report May 2021 www.intellinews.com