Investors List 8 Demands for Anaklia Deep Sea Port Development

On March 21, the Georgian Minister of Regional Development and Infrastructure Maia Tskitshvili announced that the international financial institutions involved in the construction of Anaklia Deep Sea Port have outlined eight demands that must be fulfilled before they will invest in the project.

The Anaklia Deep Sea Port is one of the most important infrastructure development projects in Georgia. Hailed as the ‘project of the century’, the port will enable Georgia to become a transport hub for trade between Asia and Europe.

Speaking at a plenary session in Parliament, Tskitshvili listed the demands made by The European Bank for Reconstruction and Development (EBRD), Overseas Private Investment Corporation (OPIC), Asian Development Bank (ADB) and the Asian Infrastructure Investment Bank (AIIB).

The current agreement states that the project’s first phase must be completed within 3 years after construction begins. Currently, the first phase is due to finish by November 20, 2020. However, “regrettably there are no finances for this project,” said Tskitishvili. “I presume this deadline will not be met.”

Investors are now demanding a feasibility study be conducted at each phase of the project. Rather than tying the project to specific deadlines, the investors would like to decide after each feasibility study whether or not the project should progress to the next phase.

In addition, investors made demands regarding the port’s road and railway connections, saying they would like all works and processes to be conducted according to their rules, which was not initially planned.

Loan agreements were also listed among the demands. “At this stage, we have a deal that if the contract is terminated due to the government’s of investor’s failure, the port will be returned to state ownership and the process of searching for a new investor will begin,” said Tskitishvili. “The liabilities that the previous investor had with the banks will be passed on to the new investor,” she continued. “Now the banks demand that the state guarantees the loans.”

The investors’ also made demands regarding shares and the so-called ‘golden share.’ Currently, the government has one share in Anaklia Development Consortium, the consortium responsible for developing the port. However, the government’s ‘golden’ share allows them to require a consensus on various vital issues. Investors propose to reduce this power significantly.

The demands restrict the states’ involvement in the project: “the changes are harmful to the state’s interests in comparison with the existing agreement,” said Tskitishvili.

The other demands regarded compensation and the continuation of terms.

Anaklia Development Consortium (ADC) released a statement in response to Tskitishvili’s speech and the investors’ demands. ADC insists that Tskitishvili made ‘false, biased and distorted statements which harm the project and its construction process as well as international investors who are willing to take part in the port’s construction and who took risks to invest just 4 kilometers from a conflict zone, near Abkhazia.’

The Consortium also stressed that such statements are damaging to the investment environment of the project and the country as a whole.

The Consortium said it also believes the demands to be an attempt to discredit the US company SSA Marine, the largest shareholder in the project. “Such statements may have a negative impact on Georgian-American relations,” reads the statement.

The Anakalia Development Consortium has stated that it is ready for business dialogue and construction. The negotiations with investors are continuing.

By Amy Jones

Image source: Anaklia Development