Vakhtang Ambokadze, the former General Director of the Georgian state-owned company JSC Electricity Market Operator (ESCO), is involved in importing and transiting electricity from Russia through a company co-owned by the Russian JSC Inter RAO.

Hence, several circumstances signal the alleged corruption:

• A day after resigning from his post as ESCO's Director General, Vakhtang Ambokadze became the Director of the Inter RAO Georgia LLC, whose only client in the 2019-2020 period was the ESCO;
• The amendments made to the decree of the Georgian National Energy and Water Supply Regulatory Commission in 2020 increased the profits of Vakhtang Ambokadze's company;
• It is dubious, why an intermediary company was necessary to supply the ESCO with electricity imported from Russia with an added markup.

An alleged case of conflict of interest

The ESCO General Director Vakhtang Ambokadze applied for the registration of Inter RAO Georgia LLC to the National Public Registry Agency on May 2, 2019. The Inter RAO Georgia LLC was registered in the business register on May 21 and Vakhtang Ambokadze was appointed as the Director. Vakhtang Ambokadze left the position of the General Director of the ESCO, a day before the registration of the new company, on May 20.

On May 22, the ESCO registered the Inter RAO Georgia LLC as a participant in wholesale trade as an exporter, importer, and wholesale supplier of electricity.

The case of the appointment of Vakhtang Ambokadze as the Director of the Inter RAO Georgia LLC was also noted in the 2019 study of Transparency International Georgia, as the "revolving door" case. The term “revolving door” refers to the movement of individuals between public office and private sector positions, and it may involve conflicts of interest and corruption risks.

Inter RAO Georgia LLC – a joint business of Russian and Georgian citizens

Since the day of registration, 50.01% i.e., most of the shares of the Inter RAO Georgia LLC is owned by the Silk Road Holdings B.V., registered in the Netherlands, and is a subsidiary of the Russian Inter RAO. In particular, its largest shareholders are OJSC Rosneftegaz (26.37%) and CJSC Inter RAO Capital (28.89%), whose beneficial owner is the Russian government.

From the date of registration until July 8, 2020, 49.99% of the Inter RAO Georgia LLC was owned by the company EWG Holding LLC, registered in Luxembourg, whose beneficial owner is Eduard Surlevich, a citizen of Belgium born in Russia. From July 2020, the owner of the referred 49.99% share became its subsidiary company EWG Georgia LLC. Along with the transfer of the shares to the subsidiary company, Rati Ghvamberia acted as a proxy of EWG Holding LLC, and Rati Ghvamberia's sister - Khatia Ghvamberia became the Director of EWG Georgia LLC. Moreover, Rati Ghvamberia is a person linked with the former Minister of Economy of Georgia and current businessman Ivane Chkhartishvili. Rati Ghvamberia holds director positions in several companies owned by Chkhartishvili’s family.

On June 13, 2022, Vakhtang Ambokadze's another company Black Sea Energy Trading LCC bought 100% of the EWG Georgia LLC’s shares for 100,000 USD. Along with the owner, EWG Georgia LLC changed its name to Lux Energy Holding LLC.

From June 28, the Inter RAO Georgia LLC also changed its name to Lux Energy Trading LLC. As a result of the above-mentioned changes: 49.99% of the Lux Energy Trading LLC (formerly Inter RAO Georgia LLC) is owned by Lux Energy Holding LLC - Vakhtang Ambokadze being the beneficial owner, and 50.01% is still owned by the Russian side.

The governing body of the Lux Energy Trading LLC (formerly Inter RAO Georgia) is a Supervisory Council, which consists of 5 members, as follows: Vakhtang Ambokadze, Aleksandre Abashidze, Alexandra Panina (Russian citizen), Anna Kashuba (Russian citizen) and Anatoliy Markov (Russian citizen). Russian citizens represent Inter RAO.

The Chairman of the Board of Directors of the Russian company Inter RAO - Igor Sechin, members of the board - Dmitry Shugaev, Anatoly Gavrilenko and manager Boris Kovalchuk are under Western sanctions due to the Russian aggression on Ukraine. Boris Kovalchuk is the son of Russian oligarch Yury Kovalchuk who is a member of Vladimir Putin's inner circle.

The income of the Inter RAO Georgia LLC and the alleged case of adjusting the normative act in favor to it

As the Inter RAO Georgia LLC’s 2019-2021 financial statements illustrate, the amendments made to the Georgian National Energy and Water Supply Regulatory Commission (GNERC) decree led this company to profit.

According to the Inter RAO Georgia LLC’s 2019 financial statement, the company imported 65.3 million GEL of electricity from Russia in 2019. That year the company had only one buyer - JSC Electricity Market Operator (ESCO). Inter RAO Georgia ended 2019 with a loss of 591,000 GEL. In 2019, the import of electricity from Russia to Georgia doubled, but Inter Rao Georgia LLC sold imported electricity without a markup (due to the legislation in force at that time). This circumstance led to the loss in 2019.

According to the 2020 financial statement, the company's income amounted to 38.2 million GEL in 2020, and its profit - 4.4 million GEL. In 2020, the Inter RAO Georgia still had only one buyer – the ESCO. In 2020, the import of electricity from Russia (excluding the overflowing electricity in occupied Abkhazia) decreased by 37%, due to the pandemic.

On January 28, 2020, the GNERC revoked Article 6 of the N33 decree on Electricity Tariffs, defining the protocol for establishing imported electricity tariffs. In the 2020 financial report of the Inter RAO Georgia, it was stated that reselling companies were not permitted to include a margin in the cost of electricity in 2019, thus the sale price was the same as the cost price. In January 2020, the amendment to the decree of the GNERC allowed the Inter RAO Georgia to set the markup for the imported electricity. In January 2020, the amendments to the GNERC decree, allowed Inter RAO Georgia to establish the markup for imported electricity. In 2020, Inter Rao Georgia supplied electricity to the ESCO with a 17% markup (the difference between the selling price and the price cost of electricity).

According to the 2021 financial statements, in 2021 the company's revenue was 108 million GEL and the profit was 16 million GEL, representing a three-fold increase in revenue and profit compared to 2020.

In 2021, the Inter RAO Georgia started transiting to Turkey and Armenia as well, along with selling imported electricity from Russia to Georgia. The company received 32.1 million GEL in revenue from the electricity sold in Georgia, with 20.8 million GEL paid by the ESCO and 11.3 million GEL paid by other legal entities (direct consumers). Inter RAO Georgia sold 56.3 million GEL of electricity in Turkey and 19.5 million GEL in Armenia, achieving a 26% markup.

In 2022, there was a 46% increase in the import of electricity from Russia to Georgia (excluding electricity overflowing in occupied Abkhazia), while the transit of electricity imported from Russia to Turkey and Armenia experienced a 42% decrease. The 2022 financial statements of the Lux Energy Trading LLC (formerly Inter RAO Georgia LLC) have not yet been published, and therefore, we do not know what income the company received from electricity import and transit. The 2022 financial statements for Lux Energy Trading LLC (formerly Inter RAO Georgia LLC) have not yet been released, thus company’s income generated from electricity import and transit remains unknown.

The ambiguity of utilizing intermediary company in the electricity importation

It is unclear why an intermediary company was necessary for the import of electricity from Russia, as the company adds markup to the cost for the ESCO.

Transparency International Georgia submitted a FOI request to the JSC Electricity Market Operator (ESCO) on January 20, 2023, to determine the rationale behind the need for an intermediary company in the import of electricity from Russia, the selection process of the company, and the duration of the contract. As stated in the ESCO response letter dated January 30, all legal entities registered in accordance with the Georgian legislation are eligible to become importers in the wholesale electricity trade. Therefore, according to the ESCO, it is solely the importer’s decision to establish a business relationship with the relevant legal entity and to import electricity is beyond the ESCO’s competence. The importer establishes a business relationship with a relevant legal entity in the country and imports electricity, this being beyond the ESCO's authority.

They also informed us that as of January 30 of this year, the ESCO did not have a contract with the Lux Energy Trading LLC (formerly Inter RAO Georgia LLC).

It should be noted that on April 8, 2022, the ESCO registered the Black Sea Energy Trading LLC, wholly owned by Vakhtang Ambokadze, to take part in the wholesale trade as an exporter, importer, and wholesale supplier of electricity.

Conceivably, the Black Sea Energy Trading LLC took over the import and transit of electricity from Russia instead of Inter RAO Georgia LLC since Spring 2022. This could be verified once the companies release their annual financial statements.

Georgia imports electricity from Azerbaijan through an intermediary company, wherein former high-level public officials are involved, also raising questions as to why it became a necessity in the first place. In 2020, Studio Monitor released a report on this issue.