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Gov’t cancels contract with Anaklia Development Consortium

By Natalia Kochiashvili
Friday, January 10
The first item on the agenda for the 10th gov’t meeting was the "Draft Decree of the Government of Georgia on the Termination of the Investment Agreement between the Government of Georgia on the Construction, Operation and Transfer of the Black Sea Port in Anaklia (BOT) on October 3, 2016.”

According to the Ministry of Regional Development and Infrastructure of Georgia, the Anaklia Development Consortium has postponed the construction of the first phase of the port several times since August 2017, “failed to meet deadlines, didn’t make significant progress and failed to deliver a real action plan/vision for fulfilling obligations.” The deadline was December 31, 2019. Prior to its expiration, the government was expecting the consortium to bind contracts with potential investors to raise $ 120 million in equity; sign preliminary agreements with international banks to attract $ 400 million in loans that will be acceptable to the Government of Georgia.

According to the statement, the government's investment in the contract commitments are fully implemented, and the "development of a consortium of five," despite the government's full support, starting from 2017, has been unable to project the most important obligations, failed to achieve any tangible result. Accordingly, the Government of Georgia considered that a further postponement of commitments to the Consortium would not achieve the desired result.

Procedures will start to prepare a new tender for further development of the Anaklia Deep Sea Port, says the Ministry of Infrastructure. The Georgian government is in the process of finding a "more serious," "financially stronger" investor to build the Anaklia deep-sea port - Minister of Regional Development and Infrastructure Maia Tskitishvili told the media after the January 9 gov’t meeting.

"As a result of this investment agreement, we should have had a port in operation by the end of 2020, as you can see, after the expiration of this period, we did not get that result and the prospect of that does not seem to work. So, of course, this is the reason for terminating the contract with this particular investor” – Tskitishvili explained, adding that gov’t would prefer an American or Western investor, since it is not acceptable for the investor to be incompatible with state’s strategic interest, especially given the strategic and security importance of the deep seaport.

Natia Turnava, Georgia's Minister of Economy and Sustainable Development, called the government's decision to terminate the contract with Anaklia Consortium correct: "This decision is, in principle, logical, given that we have been providing unprecedented support to this project since 2017."

According to Turnava, unfortunately, the obligations were not fulfilled, which is the investor's responsibility. According to her, no one will name another project, which has the support of the state and the government, such as the port of Anaklia and it was even written in the Georgian Constitution.

"We need a deep-sea port, Anaklia is our priority and strategic project and we see a need to continue this process, but without this investor, because we do not have the resources to continue this project with this investor. more opportunity, more and more delay in the delay of the project and is not to hurt the interests of the state," said Turnava at the briefing.

The Minister of Economy hopes that the new tender will reveal a credible and effective investor. According to Turnava, much has changed since 2017, both regionally and globally, and these realities will be taken into account:

Mamuka Khazaradze, the co-founder of Anaklia Development Consortium, accuses the Georgian government of deliberately delaying the project.

“I would like to address Bidzina Ivanishvili directly: As of now he did fulfill the Kremlin's task, but Georgian people will not forgive him that he stopped a very important project for our country and future. The project that would define our perspective, jobs, budget, and security… Georgian people will terminate the contract with Ivanishvili and his dream that will be remembered by people as destruction force and black dream,” Khazaradze commented.

“We have no choice but to appeal to the arbitration court”, Levan Akhvlediani, chief executive of Anaklia Consortium, said in a statement on the government's decision to terminate the contract.

According to him, the consortium doesn’t accept the allegations:

"We have worked hard, made great efforts to succeed in this project, some construction work has already been done. We cannot be accused of failing to fulfill our obligations,” he said, adding that the government didn’t play the advanced role to achieve the finale of the agreement and instead of inviting parties to the conversation, refused to enter it itself.

According to him, despite the difficulties, the Anaklia Development Consortium was able to attract investors who demanded only one thing - comfort from the government with respect to their investments in the "Anaklia Developed Consortium".

"The government has taken direct steps to tell investors not to come. Given this situation and given that $ 75 million has already been invested, we have no choice but to appeal to the arbitration court. There are legal processes to go. And after which I will address arbitration court," noted Akhvlediani.

As for the lawsuit, Akhvlediani said the consortium is holding consultations with lawyers, after which the dispute will continue in Geneva court.

“There are two or three governments in the world that oppose the Anaklia project. This is the Georgian government that was talking about one, but actually undermining the project and the other is the Russian government,” Giorgi Kandelaki, a member of European Georgia told media. He said the situation would change after Ivanishvili's removal from power.

Leader of the New Georgia party, Giorgi Vashadze, described the government's decision as politically motivated:

"Anaklia has a crucial role to play in the development of the Georgian economy, but the" Georgian Dream" is not interested in economic development and job creation, they are driven only by personal interests."

"It was clear to the public that the government was not going to continue the Anaklia Port project within the consortium involving international investors," said Levan Bezhashvili, a member of the United National Movement.