TFGG01: GEORGIA SUPPLY LINE INTERUPTION BRINGS

UNCLAS YEREVAN 000671 SENSITIVE SIPDIS E.O. 12958: N/A TAGS: ECON ENRG ETRD ELTN PREL AMGT GG AM SUBJECT: TFGG01: GEORGIA SUPPLY LINE INTERUPTION BRINGS CRITICAL GASOLINE SHORTAGE; WHEAT IS NEXT Sensitive but Unclassified -- Protect Accordingly ¶1. (SBU) The disruptions to Georgia's rail and road network created by the Georgia-Russia crisis have begun to create economic problems for Armenia. Armenia ordinarily receives 90 percent of its import freight via Georgia. A critical gasoline shortage has become the first serious symptom for Armenian consumers, while diesel and natural gas remain more plentiful for now. Meanwhile, Armenia has about a 10-day supply of wheat on hand, while a 7,000 ton shipment awaits transport at Batumi, according to the cabinet chief of staff. ¶2. (SBU) Virtually all gas stations in Armenia have partially or fully closed for lack of gasoline to sell. A few companies continue to sell gasoline to their corporate clients who have pre-negotiated coupons or vouchers for gasoline, and even these clients are being restricted in the quantities they can purchase. Mission employees have become aware over the past three to four days of the increasing scarcity of gasoline on the market; many of our employees are now driving on fumes, and we are beginning to grapple with emergency conservation and back-up transportation plans for our own staff and community. ¶3. (SBU) Two companies -- Mika and Flash -- dominate the gasoline import market in Armenia. We contacted both companies and were told that neither one was selling gasoline to ordinary customers -- only to corporate clients -- and neither company was taking on new corporate clients in the current shortage climate. Mika and Flash are wholesalers to the remainder of Armenia's gas stations, and those other stations ran out of supply even earlier than did the Mika and Flash-branded stations. Both companies declined to provide details of their remaining gasoline stocks in country, but the Mika representative noted that the situation is dire. The executive director of the Union of Businessmen and Manufacturers of Armenia (UMBA) also commented to post that the issue was already of grave concern to businesses, and saw no quick solution in sight. UMBA has a number of leading freight and trucking companies among its membership and on its board, so is relatively well-informed about transportation and supply chain matters. ¶4. (SBU) The Transportation Ministry's press spokeswoman told the media that large quantities of fuel bound for Armenia are bottlenecked at the Georgian port of Batumi. One convoy of fuel Qrived via Iran. The spokeswoman gave no details of the Iranian convoy, but press report that the convoy brought 10 containers of flour, 19 containers of gasoline, and four of diesel. ¶5. (SBU) David Sargsian, the PM's chief of staff, told us that the much-ballyhooed truck convoy that reached Armenia from Batumi contained only 500 tons of gasoline, which repesents just one day's worth of normal consumption. Armenia has also received roughly 300-400 tons per day from Iran, but this has been intermittent. Nine railcars of gasoline are among the Armenia-bound shipments backed up in Batumi awaiting shipment, awaiting repair of the railroad line. Sargsian told us that, despite local media reports, Georgian officials have not obstructed cargo trans-shipment to Armenia. ¶6. (U) Armenian media quoted Georgian officials as stating that even once the railroad line is repaired and operational, the route remains cut by the presence of Russian troops. PENNINGTON