Georgia obliged to pay $80.5 mln to Russian energy company Inter RAO in compensation for lari devaluation

The Arbitration Institute of the Stockholm Chamber of Commerce has obliged the Georgian government to pay 80.5 million USD to Russian energy company Inter RAO as compensation for damage caused by the lari depreciation.

The arbitration dispute began in 2017 when Inter RAO filed a lawsuit against Georgia. 

Inter RAO owns two hydropower plants Khrami-1 and Khrami-2 in Georgia and Silk Road Holdings which owns 75 % of Georgia’s electricity distribution company Telasi.

The Russian energy company states that the measures taken by the Georgian government back in 2014 had an adverse effect on Inter RAO’s investment, demanding ‘compensation for the damage caused by the depreciation of the lari.’

The Georgian Justice Ministry reported that the decision of the case was announced on April 19, 2021 which said that ‘certain compensation should be paid to Inter RAO.’

Inter-RAO demanded compensation in the amount of 200 million USD which was not satisfied based on the arguments and evidence submitted by the Georgian Government and the amount of compensation was set at 80.5 million USD on November 23, 2021,” the ministry says.

The Georgian government has appealed the decision, calling the ruling ‘unfounded.’Photo: Georgian Justice Ministry.

The legal dispute over the issue continues and regardless of its outcome, it is clear that this will not affect the tariffs of the population,” the statement of the ministry reads. 

Georgia’s former energy minister and incumbent Tbilisi Mayor Kakha Kalazde commented on the issue and stated that the agreement with Inter RAO was signed under the previous United National Movement (UNM) government, underlying that he refused to pay 200 million USD back when he held the position of minister. 

The treaty was classified as a secret during the UNM rule in 2007. Therefore, during my ministry, I encountered this agreement,” says Kaladze.

Georgian Economy Minister Natia Turnava said that the decision of the Georgian government not to increase tariffs for consumers despite the Arbitration Court’s ruling ‘was the right decision.’

Then and today we believe that it is absolutely right decision not to increase tariffs for customers, including the tariffs to be paid to Telasi,” said Turnava.

Georgia's interests in the trial dispute were defended by the Ministry of Justice and the law firm White & Case, while the Russian energy company Inter RAO was represented by Freshfields Bruckhaus Deringer and Dentons.