The European Union has added Russian energy company Inter RAO to its latest sanctions package, raising questions over the future of Georgia's power sector. The move could have implications for electricity supplies in Tbilisi because of the company's indirect ownership of key energy assets.
The European Union approved its 21st sanctions package against Russia on 23 July, adding Inter RAO to the list of sanctioned entities.
The Council of the European Union describes Inter RAO as one of Russia's largest energy companies and says it is controlled by the Russian government.
Inter RAO indirectly owns Telasi, which supplies electricity to Tbilisi, as well as Telmiko and the Khramhesi 1 and 2 hydropower plants.
Although Telasi and Telmiko have not been named in the sanctions package, EU sanctions rules can extend to companies owned or controlled, directly or indirectly, by a sanctioned entity. Inter RAO holds a majority stake in Telasi.
Under EU sanctions rules, banks and companies based in the bloc may face restrictions on carrying out financial transactions or providing services to companies linked to a sanctioned entity.
Because Telasi and Telmiko are owned by Inter RAO, their banking access and financial operations could come under pressure, even though neither company has been sanctioned by name.
The National Bank of Georgia has sought to reassure the public, confirming that local banks will continue servicing Telasi in the national currency. It said Telasi is not included on any sanctions list and stressed that maintaining electricity supplies is essential for the country.
However, the development has prompted questions over whether additional restrictions could follow.
Opposition figures have criticised the government, arguing that it had several years to reduce Inter RAO's stake in Tbilisi's electricity sector following Russia's full-scale invasion of Ukraine.
They say the government failed to act despite the likelihood that a Russian state-owned company such as Inter RAO would eventually face EU sanctions.
Levan Gogichaishvili, a member of the opposition party Gakharia for Georgia, has called on the government to reduce Inter RAO's ownership stake to a level that could allow the restrictions affecting the Georgian companies to be lifted.
For now, Telasi continues to operate as normal and local banks continue to provide services to its customers.
However, the situation highlights Georgia's continued reliance on a Russian-owned energy company now subject to EU sanctions, and how decisions taken in Brussels could have practical consequences for the country's energy sector.
Whether the government decides to reduce Inter RAO's ownership stake, and how quickly it acts, is likely to determine how the situation develops in the coming weeks.
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