Economy Minister: Anaklia Project ‘Strategic’, ADC out of the Game

4 mins read — On May 14, Georgian Minister of Economy and Sustainable Development Natia Turnava said the Anaklia Deep-Sea Port Project is of “strategic importance” for Georgia, however, after the Georgian government has terminated its contract with the Anaklia Development Consortium (ADC) in early 2020, the latter will not be given another chance to finish the project.

Turnava’s remarks come two days after the ADC released a statement stressing they are “the right partner” for the government to achieve the shared vision of the Anaklia Port project, and that they are “ready to restart work promptly.”

Minister Turnava said after the cabinet meeting earlier today that “for many years” the ADC “had a very good chance” and government support “to start and finish this project.” “Unfortunately, we do not have a reason to trust the Consortium for the eighth time now,” Turnava said, adding “this issue has been closed.”

Georgian Govt Terminates Contract with Anaklia Development Consortium

Government Gives ‘Last Chance’ to Anaklia Development Consortium

Turnava then noted that as many global companies are now switching from the “traditional industrial hubs,” Georgia has an opportunity to be “a number one choice for them” for its “attractive” geopolitical location and an entrance to the Black Sea.

The Economy Minister further stated that the Anaklia Deep-Sea Port Project has gained “even more commercial attractiveness” in the post-coronavirus period, and the government will hold a tender and restore coordination with financial institutions “at the earliest opportunity”.

According to ADC, “while the project is currently stalled by a dispute with the Government,” they have “temporarily paused with filing an arbitration claim” against the government.

In the meantime, ADC has voiced its willingness to avoid the arbitration “so that the dispute does not further delay this strategic infrastructure project,” and work cooperatively with the Government “to attract additional investors and continue with the work that has already commenced.”

ADC also noted that “Anaklia is the only suitable location if Georgia is to realize its full potential as a transport hub and a transit corridor,” and “to abandon these strategic opportunities would be a severe setback” for the country.

Founded in 2014, ADC was a joint venture of Conti International and TBC Holding (then led by Mamuka Khazaradze) which won the state contract to build and operate the deep sea port in 2016.

First storm clouds started gathering over the harbor in January 2019 when the Prosecutor’s Office announced that TBC Bank, the leading Georgian banking company, was facing a criminal investigation over money-laundering allegations.

In August 2019, trying to shield the ADC from reputational damage, TBC’s Mamuka Khazaradze and Badri Japaridze (now leaders of the newly founded “Lelo for Georgia“ party) quit the ADC’s Supervisory Board.

In mid-August Conti International announced its decision to quit the Consortium. This move, reportedly, stemmed from lack of agreement between the government and international financial institutions.

The Ministry of Infrastructure expressed concerns over the fate of this grand financial undertaking, which, according to the body, remained underdeveloped and under-capitalized in the hands of ADC. The Consortium representatives, in contrast, have spoken out against government’s meddling, accusing the cabinet of sabotaging the project.

On January 9, 2020 the Government of Georgia has decided to terminate its contract with the ADC. Minister of Infrastructure Maia Tskitishvili said that despite delays and even though the government pardoned ADC some outstanding tax payments, the Consortium failed to meet its contractual responsibilities. ADC said they would seek international arbitration.

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