The ADC stated gov’t reneged on support for port project

The ADC stated gov’t reneged on support for port project

The FINANCIAL -- The Anaklia Development Consortium is the company originally selected by the government of Georgia to develop the Anaklia Port project. The company has released a statement yesterday, September 9. The statement claims the government ran a campaign to undermine the project by dissuading potential project investors, lenders, contractors and suppliers from joining the project in order to kill it.

The ADC Supervisory Board states that “All infrastructure projects of such scale require government support; namely the encouragement of lenders and investors, the assistance in permitting, regulatory approvals and a favorable tax regime, and providing any ancillary support; in this instance, the provision of land and the construction of road and rail infrastructure. For a government to actually oppose an infrastructure project that it had itself approved is highly unusual in the global economy.

Georgian government strangled ADC’s ability to develop the Anaklia Port project and destroyed a project the government itself originally sponsored. The ADC Supervisory Board said that the damage to Georgia caused by the government goes well beyond the potential loss of the Anaklia Port and the associated Special Economic Zone. The government manufactured all sorts of excuses for not wanting to see various investors, lenders and partners involved in the project, but the government really only had one purpose: to choke the project to death by scaring away everybody who might have an interest in supporting it. Also, is it beyond coincidence that government ministers – including two prime ministers - who voiced support for the project or otherwise expressed concern about the growing controversy with the project tendered Da their resignations shortly after such comments were made?", reads the statement. The conduct of the government is scaring away investors at a time when Georgia cannot afford to lose any more foreign investment. Amount of foreign direct investment in Georgia has fallen from nearly $2 billion in 2017 to just over $1.3 billion in 2019, and in the first quarter of 2020, stood at only $171.8 million - a catastrophic decrease even before the Covid crisis began to take effect", reads the statement, as reported by agenda.ge

To note, Bob Meyer, one of the main investors, and Anaklia Development Consortium filed an independent arbitration lawsuit against Georgian on July 29. The plaintiffs tag the decision of the Georgian government about termination of the contract as illegal and demand restitution of their rights. According to their statement, the demand exceeds 1 billion USD and comprises losses of Consortium and Meyer, Georgian Public Broadcasting wrote.

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. TBC’s Mamuka Khazaradze then claimed the investigation, among others, aimed at stalling the construction of the Port. The Conti International, one of the main partners of the venture, quit ADC in August 2019. This move, reportedly, stemmed from a lack of agreement between the government and international financial institutions. In January this year, the Government terminated the contract with the Consortium, according to civil.ge

"Even though the Government had originally awarded ADC the sole right to develop the Project following a competitive and transparent selection process, and even though it was understood that Government support was necessary for the success of the Project in order to enable ADC to attract international investors and financing, in fact the Government changed course and undertook an overt and covert campaign to ensure the Project could never succeed", was written in a statement of ADC. 

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. Turnava also, 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.

FDI in Georgia amounted USD 237.8 million in Q2 2020

Author: The FINANCIAL

Advertisement

Events