Poti vs Anaklia – Georgia’s two deep-water ports projects

Poti vs Anaklia – Georgia’s two deep-water ports projects

access_time2019-05-31 09:55:48

Minister of Economy Natia Turnava abolished  the decision to issue a permit for the construction of a deep-water port in Poti, but as APM-Terminals, which owns the port, says,  it has not yet received official notification about this.

 The scandal broke out on May 28, when IPM said in the media that the company had received permission to build a deep-water port in Poti, the decision was opposed by  Anaklia Development Consortium.  The Consortium management said that a permit to build a port in Poti actually means the failure of the Anaklia project, since the country doesn’t need two deep-water ports at a distance of a couple of tens of kilometers.

In response, the minister said that the permit was issued in violation of the procedures, and without notifying the leadership of the Agency for Construction Supervision - as a result, the head of the agency was dismissed, and the permit was withdrawn.

The chronology of the confrontation of two potential ports is as follows:

On January 3, 2019, APM Terminals and Poti New Terminals Consortium presented to the Ministry of Economy the concept of the Poti port expansion which  provides for its deepening to 14.5 meters and the construction of a 700-meter pier. 25 hectares of land have already been allocated for the  project.

The project also envisages  the construction of the bulk cargo terminals.

On January 8-9, some  media reported  that TBC-Bank CEO Mamuka Khazaradze was accused of money laundering, and the central bank demanded removal of the founders of the commercial financial institution from the leadership. In the end, Mamuka Khazaradze loses all his managerial positions but  remains the bank’s major shareholder.

This incident is considered as a threat to the Anaklia port project carried out by  Anaklia Development Consortium, which is a subsidiary of TBC Bank.

In the midst of these events, the third project appears - on February 4, 2019, the Pace Group and Overseas Private Investment Corporation (OPIC) signed an agreement to build a new terminal in Poti - the project also envisages the deepening of the port to a level allowing to receive vessels with a capacity of 50,000 tons.

 OPIC allocates $ 50 million for the construction of the terminal; construction is planned to be completed by the end of 2020.

In May 2019, the Georgian government officials  met with representatives of major international financial institutions to discuss the  issues related to the financing of the Anaklia project.

The sides failed to reach an agreement, because of the 8 points presented by investors, one turned out to be unacceptable for the government. Namely, if the port is unprofitable and is unable to attract a sufficient amount of cargo, the Georgian government will assume the compensation of losses and repay a loan to the banks in the amount of $ 400 million.

The Minister of Economy was confident in the commercial viability of the project but still  the government  could not take on such an obligation.

APM Terminals is integrated into the world's largest container shipping company Maersk, which operates in 74 ports in 58 countries.

The company bought  the port of Poti in 201 0.

The Anaklia Development Consortium won a tender for construction of  Anaklia deep-water port with a capacity of 100 million tons in 2016.

The founders of the consortium are Mamuka Khazaradze and the American businessman Kurt Conti.


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