Borjomi might become Russian controlled

The opposition is very actively discussing the issue of strategic assets in Georgia being purchased by Russian companies. Some of these companies are private but most of them are state owned.

The Democratic Movement for United Georgia (leader Nino Burjanadze) held a press conference last week at which its representative Davit Chezhia stated that the announced auction of the license to produce Borjomi mineral water for the next 25 years might be designed to hand this facility to the Russians, meaning one more important strategic asset will become Russian-owned. Chezhia thinks that any Russian state-supported but privately registered company could offer a huge amount of money which other competitors, including Georgian companies, could not match.

The Ministry of Economic Development of Georgia has announced that the auction will be held on March 20 and that the license has an initial starting price of USD 8 million. However the Georgian Glass and Mineral Water Company (GG&MW) has made a ‘statement for clarification’ which says that GG&MW is the owner of the Borjomi mineral water business and is not planning to either sell or share it. GG&MW has held the extraction and production license being auctioned since 1997.

The GG&MW statement makes clear that anyone participating in the tender auction should be aware that GG&MW has spent dozens of millions of USD to build up the facility over the last 12 years. Regardless of the result of the auction the company does not intend to sell the assets it owns and neither will its shareholders think of selling their shares. Therefore whoever wins the right to extract the water will hardly be able to bottle it independently, as GG&MW still owns the bottling facility and all other relevant infrastructure.