Georgian government grants ADC more time to meet terms of agreement regarding Anaklia Port
By Tsotne Pataraia
Thursday, October 17
The Ministry of Regional Development and Infrastructure of Georgia releases a statement regarding the Anaklia Deep Sea Port project, according to which Georgian government grants the “Anaklia Development Consortium” (ADC) some additional time to meet its obligations in full accordance with the agreement:
“Although the consortium has failed to fulfill partial capital commitments and has not presented agreements with banks, which grants the Georgian government the right to terminate the agreement immediately, Georgian government considers the importance of the Anaklia Port construction project and refuses to exercise the right to terminate the contract at this stage," reads the statement.
On October 15, the deadline for fulfillment of the consortium's interim obligations for the Anaklia Development Consortium on port construction has expired. The investor had to submit a binding document confirming that the capital was filled has expired. Besides, it had to produce a preliminary, non-binding document on obtaining bank financing from banks.
It was set out in one of the last changes to the investment agreement. Following today's announcement, the deadline is to expire by the end of 2019:
“The Government of Georgia is allowing the Consortium to fully utilize the resources at its disposal and until the end of 2019, to raise its capital and reach a written agreement from international banks to complete the port construction project,” states the ministry.
The deadline for fulfillment of all obligations under the investment agreement signed between the Government of Georgia and ADC has been postponed several times by the Government of Georgia to ADC since 2017. The fundraising deadline for the construction of the first phase of Anaklia Port has been delayed several times since August 15, 2017.
By the end of this year, the following commitments will be fulfilled in the financing of Anaklia Consortium: an agreement with potential investors to raise a $ 120 million consortium equity; an agreement with the international banks on a $ 400 million loan allocation and sign an agreement; submitting a $ 20 million bank guarantee to ensure compliance; contract with the first phase terminal operator and first phase construction contractor.
We hope that the continued support of the Georgian government to the project will be fruitful and that the consortium will be able to fulfill its contractual obligations properly, ”read the statement.
The Minister of Regional Development and Infrastructure Maia Tskitishvili also made some comments on this issue. She thinks that this should be the final opportunity for ADC:
“This should be the last chance. I think there is a consensus in society that we will not be postponed indefinitely. We have decided to give the ADC time by the end of the year to meet these obligations under its investment treaty promptly and by the end of the year to meet its obligations in terms of equity as well as raising $ 400 million with banks… as you know that we have been postponing our commitments since August 2017 and this is our sixth postponement,” Maia Tskitishvili said at a briefing.
Levan Akhvlediani, GM of the “Anaklia Development Consortium” responded to the statement of the Ministry of Regional Development and Infrastructure. He welcomes the government's decision:
"The government's decision not to terminate the contract is certainly for the better," said he.
Akhvlediani thinks that the problems in the process of the project should be resolved by joint efforts:
“We have clearly stated our position and the status of the company and the project in general. We believe that there are specific obstacles in the process of the project being overcome and resolved by joint efforts,” Levan Akhvlediani stated.
“Anaklia Development Consortium” (ADC) is an international consortium that combines international and local companies with specialized experiences in their respective fields working with the Government of Georgia to execute and fulfill Anaklia Deep Sea Port project. ADC is a consortium of TBC Holding from Georgia, SSA Marine from the United States, Wondernet Express from UK and G-Star LTD from Bulgaria.
The relationship between the government and the consortium has been quite controversial while implementing the project. Critics of the government say that the authorities are doing everything in their power to prevent a port project from completing, which is explained by Russian influence over the high officials within the government.