Georgia's Gas Supply Sector: Non-Compliance with International Obligations and the Hidden Cost of Gasification
Seventy-nine percent of Georgia’s primary energy supply is import-dependent. Nearly half of the country’s energy mix consists of imported natural gas yet rather than reducing this dependence, the country is choosing to deepen it, raising serious questions of strategic judgment.
Upon acceding as a full Contracting Party to the Energy Community in 2017, Georgia assumed concrete obligations: to open its market, to unbundle network operations from commercial activities, and to introduce a transparent tariff system. Nearly a decade later, the Energy Community Secretariat’s 2025 Implementation Report records that the country’s gas sector compliance with EU regulations does not exceed 20%. The transmission system operator (GGTC) remains uncertified to this day. Functional unbundling of distribution system operators is stalled at 8%. No entry-exit tariff methodology exists. As for market liberalization, the practical results beyond formal procedural steps are negligible: wholesale gas trading is conducted exclusively on the basis of bilateral contracts, while SOCAR-affiliated companies hold dominant positions in an oligopoly formed through the consolidation of a market that once comprised some 90 licensees.
The objectives of the National Energy and Climate Plan (NECP), adopted in 2024, are internally contradictory: climate neutrality by 2050 alongside the full gasification of the country. The Energy Community Secretariat’s Recommendations (4/2023) which explicitly identified this contradiction and named concrete risks of stranded asset accumulation have not been substantively incorporated into the final version of the NECP. As a result, the country is today investing in infrastructure whose economic viability under European climate policy conditions is in serious doubt.
An independent hydraulic analysis conducted on the basis of approximately 50 project documents examined in the course of this study reveals that the state-financed gasification program rests on fundamentally flawed design parameters. In every project analyzed, the heated floor area per household is set at 35 m². Given that the standard rural dwelling in Georgia ranges from 60 to 350 square meters, this figure reflects a serious deficiency in the design calculations. A network dimensioned for a 35 m² dwelling cannot serve a gas boiler in a 100 m² home particularly when three or four houses on the same dead-end spur engage their boilers simultaneously. Compounding this are the use of longitudinally welded pipe a direct violation of applicable construction codes and a 12–24% reduction in calorific value caused by barometric pressure variation in mountainous regions, which is wholly disregarded in the project documentation. The apparent “solution” to this problem artificially increasing network pressure, already a reality in Tbilisi not only fails to resolve the underlying issue but creates a new one: pressure at twice the normative standard generates an explosive hazard.
The financial picture renders these three problems still more stark. The state spends an average of GEL 4,000–6,000 per connected customer, while recovering only GEL 400 in metering installation fees. The GEL 3–4 billion invested in regional gasification since 2013 must, in light of the technical analysis presented in this paper, be considered a stranded investment over the long term. Correcting it through verification, reconstruction, or full rebuilding will cost the country far more than correctly engineered project designs would have cost from the outset.
The paper sets out ten concrete recommendations. These include: a full revision of the NECP incorporating the Energy Community’s observations; acceleration of gas market liberalization; the introduction of a statutory definition of energy poverty; reform of project design standards; the mandatory integration of the altitude factor into both project design and gas consumption metering; an independent technical audit of existing networks; and a systematic assessment of renewable energy, heat pumps, and building thermal insulation as alternatives to gasification.
Gasification functions as a tool for alleviating energy poverty only when the network is technically sound, economically justified, and strategically coherent. As matters currently stand, Georgia’s gas sector fully satisfies none of these three criteria.”
