1. Donor Conference Ministry of Energy of Georgia

2. Current situation Technical problems –Power sector of Georgia – not build to operate independently Economic problems Collection rate –Not metered –High Indebt ness –Not rehabilitated properly for 10 years Financial aid needed for transition period and basic rehabilitation

3. Objectives Self-Sustainability – profitability –Independently operational –Without additional subsidies from donors and / or government –Attractive for private investment Energy Security –Utilization of transit opportunities –Multiple sources for import –Differentiated markets for export Otherwise politically and economically dependent No prospect for economic development Social tension

4. Policy Collection rate –Main problem –40% collection rate –Investment in metering –Legislation against theft of electricity –Public awareness campaign Rehabilitation and construction of new grid and high voltage lines –Turkey, Azerbaijan, Russia, Armenia Rehabilitation of Existing Hydropower Plants –40-45 % of installed capacity –Spend less on imports

5. 500KW Energy System of Georgia Ministry of Energy

6. Enguri HPP 1300MW – 700MW Vardnili HPP 210MW – 60MW Hydro Power Plants of Georgia Khrami I HPP 112MW – 60MW Khrami II HPP 110MW – 0MW Jinvali HPP 130MW – 90MW Shaori HPP 38MW – 18MW Dzevrula HPP 80MW – 54MW Vartsikhe Cascade HPP 184MW – 132MW Ministry of Energy Gumati I,II HPP 66MW – 39MW Rioni HPP 48MW – 45MW Lajanuri HPP 111MW – 30MW Planned: Hudon HPP 600MW

7. Current achievements Without additional investments Decreasing of electricity looses in high voltage grid –17% in Winter of 2003 – 9.6% in Winter of 2004 Relatively improved supply of electricity – up by 16% Installation of meters at borders with neighbor countries State budget investment - 2,5 mln USD per month –Enguri HPP rehabilitation project co-financing –Wholesale & commercial metering –Urgent maintenance Rehabilitation of the 1 st unit of Vardnili HPP (70 MW) Detailed business plan for 2004-2005 Improved legislation for financial rehabilitation

8. Projects Metering –Improved collections –Decreased consumption –Rustavi example Rehabilitation of HPP –40 - 50% of installed capacity –“Quick Hit” program Rehabilitation of Gardabani TPP –Electricity for base load –Problem – Funds for natural gas supply Rehabilitation of the network –Increased system stability Winter Heat Program –Improved supply and help vulnerable