DISTRIBUTION: CORE: All USAID: Dana Kenney; Nick Okreshidze MINISTRY: Aleko Khetaguri (Deputy Minister); Simon Shapakidze (Assistant of the Minister) Advisory Assistance to the Ministry of Energy of , Public Outreach Strategic Plan Implementation

Consumer’s Survey SPECIAL REPORT

Activity Date: June 1,2, 2005 B. Tsirekidze Contact By: CORE - “Advisory Assistant to the Ministry of Energy” a USAID Project, Method: Consumer’s Survey conducted in cooperation with Liberty Institute CORE - “Advisory Assistant to the Ministry of Energy” a USAID Project, Organization/Company P. Ballonoff - Chief of Party Name: B. Tsirekidze – Communication and Public Participation Expert Address: 10 Lermontov Str. 0105 , Georgia Tel/Fax: + 995 32 439020/+995 32 439022 E-Mail: [email protected] Cooperation with/Participant/Speaker: Name: Liberty Institute Address: Tel/Fax: E-Mail:

REPORT: In the framework of the project "Advisory Assistance to the Ministry of Energy of Georgia" a previously unscheduled consumer survey was conducted at the request of the Minister. A survey of consumer attitudes and expectations regarding electricity supply and field related issues was not planned by CORE for 2005, because other USAID partners (Liberty Institute and PA Consulting) were planning to prepare research on consumer attitudes and expectations about the energy issues.

The current survey was prepared by the Liberty Institute contractor – BCG Research Group. For the survey only the funds of Liberty Institute were used.

The CORE team participated in the development of questions, related to energy supply, consumer expectations and image of the Ministry of Energy, as well as did the Energy Minister.

We believe that the survey was a good example of cooperation between different USAID partners to reach common goals and avoid duplication and overlapping in the funds.

1 The main goals of the survey:

The survey was dedicated to research the expectations, demands and attitudes of energy consumers in those regions of Georgia which are covered by the Liberty Energy Project:

Field activities of the survey were conducted during March, 2005. A total of 1200 respondents were interviewed during the survey. The method of multistage random sampling of face to face interviews was used in 7 big cities of Georgia: Tbilisi - 200 respondents Gori – 160 respondents – 170 respondents – 170 respondents – 170 respondents – 150 respondents – 180 respondents

The statistical error of the survey is 2-3% with reliability of 95%.

The survey, as dedicated to electricity issues, covered the following topics: - Electricity supply (i). How was the electricity supplied to you in summer months? (ii) How was the electricity supplied to you in winter months? (iii). How many hours a day did you get electricity in December 2004, January 2005 and February, 2005? (iv). Was the electricity supply schedule adhered or not? - Comparison of current and last winters (i). What do you think, was this winter much better compared to the last winter in terms of electricity supply, a little bit better, the same, worse, or much worse? (ii). How would you assess electricity supply for current winter was it much better, slightly better, the same , worse or much worse compared to the previous years?

- Expectations of consumers related to electricity supply during the winter 2005, future winters, final recovery of the sector: (i). What kind of electricity supply did you expect to have this winter? (ii). What do you think how will you be supplied with the electricity next year? (iii). How long, do you think, will it take to provide uninterrupted, 24 hour power supply in your city?

- Commercial lines: (i). Is there any commercial electricity supply line in your city? (ii). Is your house re-metered? (iii). How much is your family monthly payment for the electricity supplied through commercial line?

- Payment of electricity price: (i). How do you pay electricity fee? (ii). Will you pay fully electricity payment if it is counted according to your meter reading? (iii). Why you do not pay electricity price? (iv) How do you want to pay the price of electricity? (v) From several provisions concerning the electricity tariffs which of them is acceptable for you? (vi). If you were provided by 24 hour electricity supply how much would be the maximum monthly payment 2 that your family could afford? (v). From several provisions concerning the stealing the electricity which of them is acceptable for you? (vi). What would you do if no-one makes you responsible for non-payment of the price of consumed electricity and electricity supply is not terminated? (vii). What would you do if tariff is reduced?

- Assessment of the companies and organizations operating in the energy sector: (i) How do you assess the activity of the listed organizations? (ii). how do you assess the reforms implemented in energy sector of Georgia: (Creation of the Ministry of Energy; Privatization process of the energy companies; Transfer of energy facilities into private ownership; What do you think should be the direction of the energy sector); (iii). According to you, how the energy sector should be developed in Georgia: (Remain under the State management; introduce Russian capital investment; introduce mixed capital investment; managed by the Georgian private sector? Nothing will help the sector anyway); (iv). In your opinion, what are the main problems, existing in the sector? (v). Asses the existing level of corruption in the companies operating in energy sector; (vi). Do you agree that: The crisis will be overcome through the Ministry of Energy’s efforts; The Ministry of Energy will not be able to overcome the crisis; Overcoming the crisis is not the Ministry of Energy’s function; The Ministry of Energy will not be able to overcome the crisis alone, it requires a joint effort; The public must play an important role in overcoming the crises; Personally I am satisfied with the performance of the Ministry of Energy; Personally I am not satisfied with the performance of the Ministry of Energy (v). Can you give a list of actions carried out by the Ministry of Energy during the last year? (vi). Will the listed persons be able to implement their work successfully? Salome Zurabishvili, Irakli Okruashvili; Kakha Bendukidze; Alexander Lomaia; Vano Merabishvili; Nika Gilauri Aleksi Aleksishvili

- Corruption: (i). Which level of the energy sector has the highest corruption?; (ii). Did the corruption level in the energy sector increase, decrease or remained unchanged; (iii). Will the corruption level in the energy sector increase, decrease or remain unchanged in future? (iv). Who must lead the fight against corruption, in your opinion?

- Willingness to receive the information: (i). Information would you like to get any kind of information regarding the energy sector developments? (ii). What kind of information would you like to receive regarding the energy sector? (iii). How would you like to get the information?

- What kind of activities should be conducted by consumers in order to participate in recovery of energy sector?

3 SUMMARY OF KEY FINDINGS:

Electricity supply to customers in summer and winter times is different. In winter fewer consumers have 24 hour electricity supply and the schedules are kept much less accurately compared to summer. The majority of the respondents receive electricity only according to the schedule or in a chaotic way even in summer.

The best electricity in the country is provided in Tbilisi. and Rustavi; Gori and Akhaltsikhe are supplied with electricity much better than other cities. The worst situation regarding electricity supply was identified in Poti, Zugdidi and Kutaisi. In regional cities electricity supply varies according to months. December and January are slightly better months than February in terms of power supply.

Mostly the schedules were violated in the regional cities. The best situation in this regard was in Akhaltsikhe and Gori (in December).

Consumers from Tbilisi think that this winter was much better in comparison with 2001 and 2002 years. Assessment of the electricity supply of this winter period varies according to cities. According to Gori, Poti and Zugdidi consumers this winter was worse than the previous ones. Different opinion was fixed by the customers from Rustavi and Akhaltsikhe, they say that the situation with electricity supply was better this year than in the previous winters.

In general only a minority of consumers think that electricity supply improved in comparison with the previous winters.

Consumer expectations were really high in regard to expected recent conditions of electricity supply; only 10% of consumers were pessimistic. Two thirds of consumers expected that electricity supply would have improved. Optimistic expectations prevailed in Rustavi, where majority of the consumers pointed out that they expected to have a 24-hour electricity supply.

Expectations for the future are also optimistic. Nearly half of the respondents expect the energy supply will be improved for the next winter.

For the majority of consumers it was difficult to forecast the period of full recovery (24 hours electricity supply). A significant part of Kutaisi and Poti consumers think that energy sector will be recovered in ten years. In Rustavi and Zugdidi more customers predict recovery in 3 years.

Almost all respondents from Poti, Kutaisi and Zugdidi and a significant part (32%) of the respondents in Akhaltsikhe confirmed the existence of “commercial lines” in their cities. Payments for “commercial lines” are distributed as follows: Kutaisi – 5, 10, 20 Gel; Poti – 5, 10 GEL; Akhaltsikhe – 10 GEL per month.

4 Majority of consumers wish to be re-metered and pay the price electricity according to the meter reading. Consumers expect that in parallel with re- metering electricity supply will be improved. Important motivation for being re- metered is also the desire to control the electricity bill – to have the opportunity of paying for consumed electricity.

Almost all electricity consumers think that electricity tariff is high in Georgia.

5-10 GEL per month is the most acceptable payment in case of 24 hours electricity supply for the significant part of the responders (34%).

Majority of consumers think that stealing electricity is robbery and should be punished by law or monetary penalties, although they also take into account economic conditions. Half of the respondents declare that in a country where the Government cannot provide normal living conditions for the citizens, stealing electricity cannot be considered as crime.

The majority of consumers note that they would not cover electricity price fully in case they know that they would not be punished for that.

Consumers negatively assess the activities of all energy companies, the Ministry of Energy as well as privatization of energy units. More than two third of consumers consider that energy units should be left under the government management. Only a majority of Rustavi citizens consider privatization of energy units as a positive challenge.

The main reasons of problems in energy system are recognized by consumers as follows: corruption (70% of the respondents); Deranged hydro power plants (39%); Bad technical condition of the system (37%); High electricity tariff (34%).

Ministry of Energy, GNERC and GWEM are evaluated by the customers as the organizations where the level of corruption is higher than in any other organizations and entities of the sector, though they are also recognized as being highly corrupted. 83% of the respondents are not satisfied by the activity of the Ministry of Energy; although many of them think that the Ministry will be able to recover the sector. Consumers also understand that everybody including the whole society should participate in overcoming the energy crisis.

A majority of the respondents are not able to point out any positive or negative challenge conducted by the Ministry of Energy. According to a small part of the respondents (8%) re-metering of consumers can be considered as a positive challenge, conducted by the Ministry. The most negative development according to 19% of consumers is the worsening of electricity supply of regions compared to the previous year.

Consumers are very pessimistic with regard to successful management of the sector by Nick Gilauri. Irakli Okruashvili is recognized as the most successful minister.

More than one third of consumers think that the corruption level is not decreased in comparison with the previous years. Only 31% of consumers consider that 5 corruption is reduced. 28% of respondents are pessimistic in this regard pointing out that the level of corruption increased. Regarding the future expectation about changing the level of corruption - 36% think that it will not be changed, 42% of consumers consider that corruption level will be decreased in future and only one fifth of the consumers (21%) have pessimistic attitude stating that corruption will be increased. In contrast with the consumers from Rustavi and Akhaltsikhe, citizens of Kutaisi and Tbilisi are the most pessimistic about reduction of corruption level in future.

Majority of consumers thinks that the President and the Government are the bodies which should lead the fight against corruption.

Half of consumers are interested to have the information about the energy system. The majority of consumers are interested to receive the information on the plans of energy sector recovery mostly by TV and radio.

Significant part of consumers (74%) considers that paying bills is the most important measure that can be undertaken by consumers for facilitating the recovery of the system.

Two appendixes are attached to special report:

Appendix I: Questions

Appendix II: Statistical Report

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