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Georgia's Tourism Sector - Tourism Market Watch | February 2017

7 Mar, 2017

The number of international arrivals was up 2.1% y/y to 0.37mn in February 2017. Out of the top five source markets, there was growth from Armenia (+7.7% y/y), Russia (+31.4% y/y), and Ukraine (+10.6% y/y), while arrivals were down from Azerbaijan (-6.6% y/y) and Turkey (-21.0% y/y).

The number of international arrivals was up 10.5% y/y to 0.76mn visitors in 2M17. The number of visitors increased from all major countries except for Turkey (-11.6% y/y) in 2M17, while the number of visitors from Azerbaijan was flat (+0.1% y/y). Russia and Ukraine posted double-digit growth rates, while Armenia (+18.2% y/y) was the single largest contributor to overall growth.

While the top four source markets accounted for 86.1% of international arrivals in 2M17, secondary source markets also posted robust performances. The number of Iranian visitors is up almost 5.4x to over 15,000, while the number of Israeli visitors during the same period is up 65.0% y/y to over 3,000 visitors. Arrivals from the EU were up 21.9% y/y in 2M17 with Germany (+35.4% y/y), Poland (+30.2% y/y), and UK (+26.2% y/y) driving the growth.

The tourist category continues to drive arrival growth in February 2017. The number of overnight visitors (‘tourist’ category) was up 16.4% y/y and accounted for 38.0% of total international arrivals. Same-day arrivals were down 9.1% y/y, while the number of transit visitors was up 7.6% y/y in February 2017. 

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Georgia's Energy Sector - Electricity Market Watch | January 2017

2 Mar, 2017

Domestic consumption increased 7.2% y/y in January 2017, with Telasi (+10.5% y/y) and eligible consumers (+17.9% y/y) driving the growth. DSO consumption increased 5.8% y/y: consumption was up 2.7% y/y by Energo-Pro, 7.7% y/y by Kakheti Energy Distribution, and 10.5% y/y by Telasi, which has posted 20%+ annual growth rates for the past five months. Consumption of the Abkhazian region was up 6.9% y/y and accounted for 94.8% of the electricity generated by Enguri and Vardnili. Consumption by eligible consumers was up significantly (+17.9% y/y), albeit from a low base in January 2016 (-24.7% y/y). The largest eligible consumer, Georgian Manganese (78.5% of direct consumption), posted 24.9% y/y growth, also from last year’s low base (-28.3% y/y), and contributed quite significantly to energy demand growth in January 2017 (1.7 percentage points). Electricity exports were negligible, while electricity transit from Azerbaijan to Turkey amounted to 9.7gWh in January 2017.

Domestic consumption needs in January 2017 were met in roughly equal parts by hydro generation (49.7%), on the one hand, and thermal (34.0%) and imported (15.8%) electricity, on the other. The newly built wind power plant accounted for 0.6% of total electricity supply. Total electricity supply from domestic sources was down 1.3% y/y. Hydro generation decreased 10.4% y/y, mainly due to low generation of regulated power plants (-29.3% y/y), excluding Enguri and Vardnili, whose combined production was up 5.6% y/y. The drop in hydro generation was compensated by thermal power (+13.8% y/y) and imports. The amount of imported electricity almost doubled (+92.3% y/y), but from a very low base in January 2016 (-43.9% y/y), and increased only 7.8% compared to January 2015. Most of the imported electricity came from Azerbaijan (96.3%), with the rest (3.7%) imported from Russia, via the Salkhino line, in the beginning of January 2017 to supply the Abkhazian region in island mode. Guaranteed capacity fee was down 21.9% y/y to USc 0.66/kWh. Guaranteed capacity was provided by each of the five guaranteed capacity sources for most of the month. Mtkvari Energy and Gardabani CCGT operated at full power for the entire month, while Blocks 3 and 4 and GPower were mainly providing reserve for the system.

Georgia Renewable Power Company (GRPC) has significant plans in renewable energy project development. GoG has declared intent to sign an MoU for the feasibility study of wind power plants (WPPs) in Tbilisi, Martkopi, and Tkibuli. The company is also planning to develop four additional WPPs. Excluding GRPC’s wind project pipeline, there is approximately 822MW of wind projects under development MoUs.

The fourth phase of rehabilitation on Eguri HPP, which mainly includes works on the 15km tunnel through the Enguri dam to the power house, is scheduled for 2018 and will require approximately EUR 33mn. Enguri HPP halted operations for several days starting February 19th, allowing experts to walk through the tunnel. Enguri HPP, together with Vardnili HPP, satisfies approximately 35% of total annual electricity demand (22% excluding the Abkhazian region). 

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Georgia's Tourism Sector - Tourism Market Watch | January 2017

9 Feb, 2017

The number of international arrivals was up 19.8% y/y to 0.39mn in January 2017. Out of the top four source markets, there was strong growth from Russia (+40.3% y/y), Armenia (+31.4% y/y), and Azerbaijan (+7.1% y/y), while the number of visitors from Turkey was flat (-0.8% y/y). 

While the top four source markets accounted for 86.3% of international arrivals in January 2017, secondary source markets also posted robust performances. Ukraine, the 5th largest source market, posted a 28.2% y/y increase in January 2017, while the number of Iranian visitors was up over 7x to 8,000 visitors, albeit from the low base in January 2016, as visa-free regime with Iran was reinstated in February 2016. After growing 8.6% y/y in 2016, arrivals from the EU posted 26.1% y/y growth to over 10,500 visitors in January 2017, with Poland (+24.9% y/y), Germany (+32.0% y/y) and United Kingdom (+22.8% y/y) the top contributors to growth. 

The tourist category continues to drive arrival growth in January 2017, after posting a 19.0% y/y growth rate in 2016. The number of overnight visitors (‘tourist’ category) was up 32.4% y/y and accounted for 39.8% of total international arrivals in January 2017. Same-day arrivals posted modest growth of 5.9% y/y, while the number of transit visitors was up 34.8% y/y in January 2017, after declining 5.7% y/y in 2016.

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Georgia's Energy Sector - Electricity Market Watch | December 2017

8 Feb, 2017

Domestic consumption increased 6.2% y/y in 2016. The main contributor was Telasi (+15.3% annually), which doubled its 2015 annual growth rate (+7.5% y/y). The Abkhazian region, which led the growth in 2015, continued steady growth (+7.0% y/y) in 2016. Energo-Pro subscribers increased their consumption by 3.3% y/y in 2016, slightly lower than the growth in 2015 (+4.3% y/y). Consumption by Kakheti Energy Distribution subscribers increased by only 1.9% in 2016, following much larger increases in previous years (8.4% in 2015 and 8.1% in 2014). Consumption of eligible consumers decreased 1.0% y/y from the low base in 2015 (-21.4% y/y), but the decrease was the result of Rustavi Water Company giving up its eligible consumer status in 2016 (it accounted for 3.4% of direct consumption in 2015). Consumption of Georgian Manganese, the largest direct consumer, was up 4.4% y/y from the 2015 low base (-20.3% y/y).  

The increased level of consumption was satisfied almost entirely by domestic generation sources. Domestic generation increased 6.8% y/y and comprised 96.0% of total electricity supply. HPP generation increased 10.4% y/y, while TPP generation decreased 6.0% y/y in 2016. Growth of hydro generation was mainly driven by regulated HPPs, with generation up 7.8% y/y by Enguri and Vardnili and 11.9% y/y by other regulated HPPs. Generation by deregulated HPPs was up by 16.6% y/y. 91.3% of total electricity supply was consumed by domestic consumers, 4.6% was exported, and 4.1% was consumed by power plants or lost during transmission.

Georgia became a net exporter of electricity in 2016 with 80.1gWh of net export. Electricity import decreased dramatically (-31.5% y/y) to 478.9gWh in 2016 and accounted for only 4.0% of total electricity supply. 77.1% of imported electricity came from Azerbaijan, the rest from Russia. Exports in 2016 were down 15.3% y/y to 559.0gWh. Exports to the main export market, Turkey (52.7% of 2016 export), decreased 29.8% y/y, largely due to the fewer export months for Paravani HPP, per the amended MoU with Georgian Urban Energy. There was a significant increase in export to Armenia (+57.4% y/y), while export to Russia declined 13.0% y/y and accounted for 26.4% of exported electricity.  Total amount of electricity transit from Azerbaijan to Turkey reached 849.6 gWh in 2016.

Wholesale market prices in Georgia decreased 23.3% y/y to USc 4.2/kWh, 35.2% below the Turkish market clearing price in December 2016. Turkish electricity prices increased 12.6% y/y to USc 6.5/kWh from a significantly low base in December 2015 (-24.5% y/y). 22% of total electricity supplied to the grid in December 2016 was traded through the market operator, with the rest traded through bilateral contracts.

HPPs commissioned in late 2016 (164.9MW) are expected to account for 5.7% of total hydro generation in 2017. Generation of deregulated HPPs already posted a significant increase in Dec-16 (+27.5% y/y). An estimated US$ 733mn will be spent on the construction of the Namakhvani HPP cascade in the next 5 years.  Number of Solar and wind projects are increasing.

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