Dr Bhamy V Shenoy, widely known in Mysore for his consumer activism, happens to be a globally recognized energy expert. I persuaded him to jot down some salient points from his experiences in Georgia, if only because 1) project consultants here could discern certain similarities in the scenario sketched out by Dr Shenoy; 2) there might be some lessons to be learnt by project managers elsewhere; and 3) because of the relevance Dr. Shenoy’s expertise might have in task-forcing Mysore’s master plan, particularly his advocacy for a corporate initiative in the energy sector, by way of gas-fired power plant.

Here, then, are excerpts from Dr. Shenoy’s note on ‘the challenges/frustrations of working for donor agencies’:

In 1997 I got an opportunity to work as a consultant to bring about legal, regulatory and institutional reform in the oil and gas sector of Georgia and Central Asian Republics of Kazakhstan, Uzbekistan and Turkmenistan, for six years. I accepted the job with the hope that I could make a difference in these countries because of my international oil sector experience at Conoco and my work with Mysore Grahakar Parishat in combating corruption and inefficiency in public domain.

Georgia represents one of the worst of former Soviet Union countries where employees and the management of the companies had unfettered freedom to exploit the resources at their disposal for their benefit, at the expense of other stakeholders. Managers did not concern themselves with maxing the rate of returns on the assets under their control, even when there was much scope for it. Emphasis was often, not on improvement of operations, but on what assistance they could get from foreign donors. Georgian International Gas Company, by installing modern meters at the gas intake from Russia, could save considerable amount of money. EUTACIS offered to install the meters at a cost of about $2 million. However, if the company were to do it themselves, to meet the urgent need of measuring the exact amount of gas received, they could have done it for less than $50,000.

There was a project connected with conducting environmental impact assessment of Baku-Ceyhan-Tbilisi pipeline, costing more than $3 billion to transport oil from Caspian to the World Market. The World Bank offered a loan of $10 million so that Georgia could hire mostly foreign consultants. But then the Bank could not process the loan in time to conduct these studies. On my recommendation the USAID gave a grant of $50,000, to hire local Georgian experts to do preliminary EIA, which was of great help to Georgian government in the EIA approval procedure. Though the World Bank loaning process could not be completed on time to be of help, the Bank, nonetheless, went through the process to sanction $10 million, adding to Georgia’s debt burden without producing tangible results.

Managers of the gas distribution company Tbilgazi shed crocodile tears for the poor, while lining their own pockets. They were telling me of the hardship of their poorer customers, who could not afford to pay their bills, while gas connection was being given mostly to well-to-do consumers. In reality, managers collected money from consumers, but did not hand it over to the company. The number of residences connected to the network of Tbilgazi went up from 39,000 to 163000. The amount of gas billed remained more or less at the same level.

My research suggested that by adopting, what I called, an oil-value-chain management model the Georgian government could generate about $250 million revenue from the country’s oil and gas sector, a fivefold increase over what it actually collects. The American Chamber of Commerce in Georgia helped set up a Petroleum Advisory Group (PAG) to address the issue. USAID’s economic restructuring team and United States ambassador Richard Miles expressed their support. I was the lead expert on PAG. Its recommendations were accepted by President Sheverdnadze in setting up a high level steering committee to reduce smuggling and improve tax collection.

I had the mistaken impression that USAID wanted to publicize any good example of successful anticorruption efforts. I sent the stories encapsulated above. USAID’s Washington bureau, however, seemed worried that I was giving them ‘sensitive’ information, without getting mission clearance from USAID Georgia - even though most of my information was already public knowledge. USAID Georgia remained interested in my work, intervening on my behalf when I lost my country clearance and was told to avoid Georgia. I had also got the rare commendation letter from the US ambassador for my initiative and contribution. However, my company acted as if I could not expose my anticorruption efforts without embarrassing key clients. I was asked not to meet or conduct phone or email briefings without prior clearance, and to keep a minder on hand whenever I met with someone. After a few weeks, I was asked to leave the company.

My current connection with the country is limited to my assisting a young Georgian friend (just 28 years), who has now become the General Director of their National Oil Company, as head of its advisory board on an honorary basis.