The Company

“I’m home, I’m tired. 
There’s no electricity in my house. 
There’s no electricity in the whole town. 
I don’t believe in Telasi… I want electricity…”
—Georgian rock song
Two candles burn in an otherwise unlit room.

In 1981, Roger Sant and Dennis Bakke, both former members of the U.S. Department of Energy, founded AES, “The Global Power Company.” Their dream was to change the world by bringing competition to the previously staid sector of electricity, and to organize the AES Corporation around a de-centralized system of management. This unusual business philosophy was a great success, and by the early 1990s, AES was investing worldwide, especially in regions where other energy companies did not. By the late 1990s, it boasted more than 100 power plants in 16 different countries and was one of the world’s fastest growing energy companies.

In 1998, Merrill Lynch won a mandate to advise the Georgian government on the privatization of Telasi, the electricity distribution company in Georgia’s capital city, Tbilisi. AES successfully bid for the job, resulting in the creation of AES-Telasi. As featured in POWER TRIP, Mike Scholey became the company’s general director and hired Piers Lewis, who was working with the Georgian government to devise new metering, accounting and billing systems for the distribution of electricity.

A bill from AES-Telasi.

“This bill is from AES-Telasi. This bill is the most scary thing in Georgia nowadays.”
—Leeka Basilaia, Georgian journalist

The AES-Telasi Balance Sheet

During its time in Georgia (from January 1999 to September 2003), AES-Telasi struggled to improve of the country’s energy infrastructure. Here’s a glimpse at the challenging statistics:

Average monthly wage in Tbilisi: $15

Average monthly residential electricity bill from AES-Telasi: $24

Average monthly bill prior to AES-Telasi: $0

Amount of money AES-Telasi spent improving power lines and meters in Tbilisi: $90 million

Estimated daily loss at AES-Telasi: $120,000

Total loss at AES during its time in Georgia: Over $200 million

Facing Challenges

Upon its creation, AES-Telasi immediately faced a variety of challenges. It had to rebuild Telasi, which was poorly organized and broke, in a country whose residents were unaccustomed to paying for electricity. Since Georgia gained independence in 1991, a lack of funding made energy importation difficult. The Georgian electricity sector relied on power imported from Russia in the winter, and its energy infrastructure was severely lacking.

POWER TRIP details AES-Telasi’s mounting frustrations: Tbilisi residents blamed the company for not supplying power, but there was not enough power available because the country’s corrupt elite often stole electricity without paying for it. Continued struggles with Russia were also an issue. Georgia’s president at the time, Eduard Shevardnadze, remained at odds with the Russian government, especially over Russian access to the region’s oil. Georgia’s location made it an effective gateway to the oil- and gas-rich states to the west. Some Georgians believe that Russia allowed energy debts to accumulate on purpose, then demanded a handover of strategic assets as repayment, thus creating a Russian monopoly of the region’s natural gas supply—a position that would allow it political leverage over Georgia.

When President Shevardnadze threatened to expel Russian troops from Georgian soil, the Russians shut down the natural gas supply. Because gas-powered thermal generation plants provide Georgia with most of its electricity during the winter, AES-Telasi had no energy to distribute. AES was forced to shut down and the country was plunged into darkness.

AES Leaves Georgia

Although AES never participated in energy trading, the Enron scandals in 2002 led to plummeting stock in the energy sector. Financially weakened, AES could no longer support its Georgian operators, so it put AES-Telasi up for sale in 2003. There was only one interested buyer: the Russians. Telasi is now owned by United Energy Systems (UES), a Russian state-owned company . UES pledges to provide Georgians with “24-hour electricity,” but continues to battle many of the same problems that AES did, including corruption, poor technology and financial hardships.


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