Georgian Industrial Group buys Tbilisi KazTransGas Subsidiary

According to reports by Forbes.kz, the Georgian Industrial Group is about to buy a KazTransGas (KTG) JSC subsidiary in Tbilisi. KTG JSC is the national oil and gas operator in Kazakhstan, which is owned by the government. 

The price of $40 million is below the total debt KTG-Tbilisi accumulated in 2009, when the mother company had decided to look for a buyer. KTG JSC has been operating KTG-Tbilisi since 2005, but the business has never flourished, remaining in the red since 2009, when debt exceeded $48 million. The subsidiary is in dire need of turning around the business by changing the operating plan and cutting costs. Negotiations started in 2009, but the right opportunity hasn’t been found since.  

KTG-Tbilisi is a main provider of gas in Georgia, and provides services from gas pipeline installations to private home gas supplies. Consumers range from big corporations to small households covering all different needs of the Georgian gas market. 

The takeover by the Georgian Industrial Group will incorporate KTG-Tbilisi into the largest holding company in Georgia, reaching yearly revenues of over $160 million. The holding company focuses on various industries, especially the energy sector.

Furthermore, the holding company was criticized by various sides for monopolizing the Georgian media landscape holding considerable amounts of First Stereo, Rustavi 2 and Mze. Although in 2011 the shares of First Stereo were sold, the Georgian public remains wary of the holding group. The new takeover of KTG-Tbilisi allows a further concentration of the gas supply in Georgia.

By Benjamin Music