Investors say Georgia's strategic Anaklia port project is at risk
By Gvantsa Gabekhadze
Friday, May 31
Anaklia Consortium, a tender-winning private investor which is tasked to build the 2, 5 billion USD Anaklia deep-sea port in western Georgia, stated on Thursday that the project which is seen to create a new maritime corridor between China and Europe is at risk as the Georgian government allowed the construction of another deep-sea port in Poti, a coastal town in western Georgia, which would have created obstacles in attracting funds from possible investors for the Anaklia port.
The former member of the Georgian TBC Bank board and the founder of the Anaklia Consortium Mamuka Khazaradze said that the Anaklia port investors learned on Wednesday about the permit issued for the subsidiary company of APM terminal to construct the deep-sea port in Poti.
Khazaradze wrote that the permit on Poti port was issued on May 2, before the meeting of the Georgian government members with the Consortium and international banks' representatives on May 21, where the demands of the European Bank for Reconstruction and Development (EBRD), Overseas Private Investment Corporation (OPIC), Asian Development Bank (ADB) and the Asian Infrastructure Investment Bank (AIIB) were discussed regarding the Anaklia port, as the banks may allocate 400 million USD loan for the construction of the Anaklia port.
"The information regarding the new port was shocking for the Consortium, its partners and investors, as the government said nothing about the permit during the meeting with us on May 21," Khazaradze said, adding that the implementation of the Anaklia project would be under a severe risk if government failed to take a relevant step.
Georgian Minister of Economy Natia Turnava responded that neither she nor any other top officials in the country had information regarding the permit for the new deep-sea port in Poti.
She said that the "preliminary document on the use of land" and not the construction permit was issued by the Technical and Building Supervisory agency head of the Ministry of Economy, without consulting with her leadership.
"We have decided to annul the document and the head of the agency, who signed the document, will leave her post," Turnava said.
She urged the Anaklia Consortium to be "focused on the project, which is highly supported by the state," and not waste time on other issues.
The United National Movement and the European Georgia opposition stated that the situation indicated at the "unprofessionalism and inadequateness" of the government.
"It seems that a kindergarten has a low-qualified headmistress [referring to Turnava]," a member of the European Georgia Sergi Kapanadze said.
The United National Movement members have summoned Turnava to Parliament to answer the questions on the "mess."
Analyst in economic issues Gia Khukhashvili says that the government has failed to evaluate risks regarding the ports.
He said that building the Anaklia port, drastically reduces the role of the Poti port, which the town entirely depends on for a living.
"However, taking the current situation into account, I fear that neither the Anaklia nor the Poti port will be built. Of course, such a development will affect the state interests," he said.
It was announced on May 21 that seven of eight demands of EBRD, OPIC, AIIB, and ADB, to allocate funds for the Anaklia port project, were met. The only condition which remains unresolved concerns the securing of financial risks.
The Georgian Dream government says that the state will not cover such risks.
The Anaklia Consortium leadership states that the demand regarding the securing of goods turnover might be settled with the involvement of one of the funds of the European Union.
The demands of the banks concern the development phases of the project and other issues.
Per the current agreement, the first phase of the project must be completed in three years after the construction begins. The first phase is due to be completed by November 20, 2020. The banks demanded a feasibility study of each stage and said that the port development should not be linked to any specific date and should start only after the feasibility study is completed.
Another demand is about the "golden share." The banks propose to significantly reduce the state impact mechanism as well as the golden share. Issues regarding the continuation of the terms, compensation, and political force majeure were also raised.
One of the demands is related to the road and railway that will be connected to the port.
The banks require that the works, resettlement, and all the process to be developed following the investors' rules, which was not envisaged in advance.
Demand is also on loan agreements. Following the current deal, the state has the right to approve the conditions of credit agreements, while the banks offer the state only to approve the amount and terms of the loan agreement.
After two years of discussions, the Georgian government selected the Anaklia Development Consortium in 2016 ahead of six other local and international companies to develop the mixed-cargo port on a build, operate and transfer basis.
The Anaklia Development Consortium will invest $2.5 billion in the Anaklia Deep Sea Port project. The Consortium will have to attract the funds from international monetary institutions.
The Consortium was jointly established by local company TBC Holding and US firm Conti International.
The Anaklia Port's mission is to create a new, faster maritime corridor between China and Europe, helping restore the historic Silk Road. Experts say that the port will strengthen NATO's interest in the Black Sea.
