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Vano Mtvralashvili

Georgian Oil Market Tendencies of 2015 at a Glance

55 million GEL Fine by the competition agency, GEL devaluation and global tariffs volatility – these main factors have determined the Georgian oil products market tendencies in 2015.

In his interview with the Caucasus Business Week, Vano Mtvralashvili, the head of the Union of Oil Products Importers, overviews the 2015 market tendencies in Georgia.

We positively appraise the 2015 performance.  The current year has brought many positive and favorable results.

“Namely, the investment inflows were maintained and the infrastructure was renovated. The process of constructing new filling stations with modern infrastructure is being continued and the new stations meet the European standards,”he said.

Moreover, a number of companies keep constructing and developing gas filling stations (SOCAR, Wissol, Gulf)We positively appraise the 2015 performance.  The current year has brought many positive and favorable results.

“This year the companies have developed various services, including, all companies have introduced various discount campaigns for their own loyal clients. This segment of clients occupy considerable ratio in sales indicators,”Vano Mtvralashvili said.

The current year has registered a record volume of imports and consumption of oil products compared to the previous years.

“Despite an essential plunge in global oil prices that cuts state budget payments in the VAT part, the budget payments were maintained at high indicators thanks to a record volume of imports and higher revenues from excise taxes”.

Moreover, the non-branded sector has also started development. Namely, today the number of branded filling stations is about 560 ones, while the number of non-branded filling stations is 460.

The comparison shows the quantity of non-branded filling stations has nearly equaled to the quantity of branded filling stations.

The plunge in global oil prices are of crucial importance, as the retail prices have declined in the domestic market.

As to negative tendencies, Vano Mtvralashvili has outlined two aspects: 1. the GEL exchange rate deprecation in relation to USD that has negatively affected the financial indicators of the companies; the fuel prices have not declined in the proportion that is adequate to the global tendencies;

The fine imposed by the competition agency was disapproved by our companies and the decision was appealed to the court. This factor has partly influenced the investment environment.

As to the failed projects, Vano Mtvralashvili named the Poti oil refinery construction project. Regretfully, the investors has not been selected yet, Vano Mtvralashvili said.

– What should we expect in the next year and what challenges may arise before the Georgian oil products market in 2016?

The GEL exchange rate against USD is a main factor. We hope the GEL rate will strengthen and become stable. We also hope the court will satisfy the appeal of our companies, because we are sure these companies have committed noting illegal.

The competitive capacity on the oil products market has increased and the companies have to be more self-concentrated, to develop infrastructure and to expand the geographic range. The oil products imports will be still high, while fuel prices will remain low amid a plunge in global oil prices. The low fuel prices are expected to make direct influence on the consumption growth.

The fuel qualitative indicators and the control on it will be also improved in 2016. Namely, the country will move to the Euro5 standards. As to diesel fuel, its qualitative characteristics will reach highest indicators. This factor will foster environment protection and establishing competitive environment in the market”, Vano Mtvralashvili said.