The FINANCIAL — The Russian-Georgian conflict started on August 7 has been very bad news for international and local investors in Georgia. Though the companies claim not to have been facing unmanageable difficulties so far and moreover, are doing their best to help the population.
“The Russia-Georgia conflict will not affect the RAK investment plan. The latest Russia-Georgia conflict will not hamper the Ras Al Khaimah Government’s investment plan in Georgia,” a senior official said.
The Ras Al Khaimah Government has recently invested in a port in Georgia, where its real estate development arm Rakeen is developing a free zone. Rakeen is also developing some mixed-use projects near the capital Tbilisi.
“This situation is merely temporary. I do not think this will continue for long,” Wahid Atta Allah, member of the Board of Directors at Rakeen, Ras Al Khaimah’s property development arm, told Gulf News yesterday.
“We have some lands earmarked for development near the Georgian capital of Tbilisi which are safe and unharmed,” he said, adding, “We are committed to our investment.”
“The safety of our employees takes priority over any other matter,” says Irene Krohn from the TeliaSonera headquarters in Stockholm.
One of the largest telecom-operators in Georgia, Geocell, with a staff of 300, belongs to the Swedish-Finnish telecommunications service provider TeliaSonera. However, no Finnish or Swedish employees currently live in the country.
“At present our office in Tbilisi has only minimum staff,” Krohn reports.
The company has evacuated most of its employees, advising them to stay at home. Whether or not somebody has been wounded since the outbreak of violence, Krohn does not know.
“Our network in the area is naturally under huge strain, but it is working,” added Krohn.
Krohn notes further that it is too early to discuss how the war will affect TeliaSonera or the operators it owns in the Caucasus and in the surrounding areas.
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Apart from TeliaSonera, Finnish companies have only minor activities in Georgia. Nokia has a sales office with a couple of employees in Tbilisi.
“There is nothing to worry about, everyone is all right,” a representative of Nokia reported.
Trade between Finland and Georgia is relatively modest.
“The value of Finnish exports to Georgia amounts to only a couple of million EUR,” reports analyst Seija Spiridovitsh from the Finnish export promotion organization Finpro.
“Notwithstanding the current tough situation in Georgia, Wissol filling stations are continuing to work as usual all over the country. As for the price changes, the recent developments in the international market have improved our abilities of import and Wissol will do its best to make retail prices in Georgia adequate to the international market price reduction tendencies. As for the present, we’ve dropped prices by 5 tetries,” Vasil Khorava, Wissoll Georgia’s General Director, told The FINANCIAL.
“Since August 15 prices for all types of fuel have been reduced by 5 tetries. The current developments in the country badly affect all kinds of businesses and it’s not dependent on the inadequate growth or reduced demand on a particular product. Personnel safety is another issue of concern as we have 58 filling stations in Georgia,” claimed Levan Gogichadze, Lukoil Georgia.
The company has reported that all these enterprises in Georgia are operating as normal.
“We have shipped the next tanker with oil products from the Kulevi-based terminal belonging to SOCAR,” the company reports.
Nevertheless, SOCAR has decided to carry out an evacuation of the family members of its personnel in Georgia-based enterprises.
“Georgian authorities said that a village close to two oil pipelines has been bombed but the pipeline itself was not damaged,” said a spokesperson for the operation’s largest shareholder BP PLC (BP).
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The spokesperson said both the Baku-Supsa and Baku-Tbilisi-Ceyhan oil pipelines – of which BP is the largest shareholder – cross an area close to the village, in the Gardabani district of Eastern Georgia.
The BP-operated, natural gas South Caucasus Pipeline, which carries Azerbaijani natural gas, goes through the same area, according to BP’s website.
“As for the bombing, the village of Akhali Samgori is located close to the Baku-Supsa pipeline. However no damage to our facilities has been incurred at all,” the BP spokesperson in Georgia said.
The 150,000 barrel a day Baku-Supsa pipeline transports Azerbaijani oil to the Georgian Black Sea port of Supsa. While SCP and the 850,000 b/d BTC follow the same route from Azerbaijan’s Caspian to Turkey’s Mediterranean coast through Georgia.
Russia denies attacking the pipelines.
TBC Bank and Bank of Georgia, the two leading Georgian banks, established international funds to support the victims of the conflict in South Ossetia.
“Businesses should be on the people’s side, who have suffered enormous losses due to the conflict and that’s where TBC Bank is. We call all international organizations and companies to make their contributions to the fund established by TBC Bank,” declared Mamuka Khazaradze, the Founder and Supervisory Board Chairman of TBC Bank
TBC Bank made its first contributing to the bank – GEL 5 million.
Georgian and international organizations got actively engaged in the initiative offered by TBC Bank, to contribute humanitarian support to the refugees.Â
According to Maia Rcheulishvili, the founder of Center Point, a developer company, Center Point would provide the refugees with apartments of the under construction project launched in Gori, the cost of which amounts to GEL 5.625 million.Â
“We are trying to provide more and more families with apartments. The original flats were too large, approximately 150 sq/m, supposedly we will divide them,” Rcheulishvili declared to The FINANCIAL.
According to TBC Bank, many of the bank’s partners and Non-Governmental Humanitarian Organizations have got interested in this initiative. In the upcoming days, Levan Vasadze, a Georgian businessman will transfer USD 1 million to the fund. The fund Supervisory Board will control the spending. The members of the Council are the directorates of Rustavi2, Georgian Public Broadcasting (GPB) and the newspaper 24 Hours (24 saati).
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In reply to Khadzarade’s offer to take part in this initiative raised by TBC Bank, Ted Jonas, Managing Partner of DLA Piper’s Tbilisi office, answered “Yes!”.
DLA Piper helps companies around the world to succeed by meeting their legal needs wherever they do business. The company’s office in Tbilisi has been known as the highest quality provider of legal services in Georgia.
In the words of Zaza Kikvadze, Director General of Borjomi, GG&MW (Georgian Glass and Mineral Water), cannot name the exact amount of money which will be transferred to the fund.
“It was an absolutely new suggestion for the companies and so we need some time to research funds. Borjomi will take part in this event. Each company has its own account and we will transfer money directly there. Really this conflict has affected our company, but Borjomi has not stopped its production process. The losses of the mineral water company are not yet known,” Kikvadze noted.
According to Samson Pkhakadze, Chairman of the Wissol Board of Directors, the company will absolutely engage in the humanitarian mission.
“This situation will have had an effect on the country’s economy, but I can declare proudly that it has not affected our company’s funds,” Pkhakadze added.
Sarke Group staff also decided to render assistance to the refugees from the conflict zone.
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Necessary materials were collected by the initiative of Sarke collective, including clothes and household products. Those materials were delivered to the Patriarchate of Georgia for distribution.
“Aid is being collected by Sarke staff. We want to give an example and appeal to the different organizations to follow our example. Our aim at this time is solely to help our compatriots,” Sarke staff declared. Â
According to Otar Kiria, Head of the DS PR Department, they have already helped the refugees by giving GEL 5 thousand and their donations to the fund will grow day by day.
“We donated GEL 5 thousand in the first few days of the conflict. Development Solutions has made inquiries about the location of the refugees in Tbilisi. We found 140 of them in the Gldani district; they were lacking all necessary vital materials. On the first day we brought them food, on the second day we provided them with mattresses and domestic supplies. We have provided our assistance to the refugees located on Dadiani and Kandelaki Streets. The company is continuing to support the Georgian people,” Kiria added.    Â
Bank of Georgia has also announced that it has established a fund to support the victims of the conflict in South Ossetia and has made an initial contribution of GEL 1 million.
The use of the funds will be supervised by a special monitoring group established by Bank of Georgia which will work in close collaboration with the Ministry of Labour, Health and Social Affairs of Georgia and the Mayor’s Office of Tbilisi which are coordinating humanitarian assistance for the victims of the South Ossetia conflict. All contributions to the fund will be highly appreciated.
After the one day holiday Georgian banks resumed work on August 13. Georgia’s financial regulator ordered banks to suspend all lending activities till August 18 but allowed them to continue normal operations with deposits after clients rushed to withdraw cash because of the military conflict with Russia.
“Business since the holiday has been normal for HSBC. Perhaps a little quieter for corporate and smaller businesses but with plenty of retail clients, including new clients opening accounts and depositing their funds. Under the circumstances, the enforced holiday on Tuesday was welcome, even though most of HSBC’s staff were in the office as usual, catching up on things,” said Tony Turner, HSBC Georgia CEO.
“Considering the critical situation in the whole of Georgia and the tense atmosphere, the banking sector is continuing with normal operations, except for those minor restriction applied by FSA in regards to credit operations. All other banking services and products that were available in BR prior to the conflict and its escalation, still are. BR provides its customers with uninterrupted money transfer services through Western Union,” said Gilbert Hie, Bank Republic CEO.
“We call on all members of the Georgian and international business community to support the government and the people of Georgia during this time of need, and to help maintain the strength of the nation, the society and the economy in the face of adversity,” said the American Chamber of Commerce in Georgia (AmCham).
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