Georgian construction company Prime Concrete starts building a new Pace Terminal Project in Poti

Published in Economics
Sunday, 20 October 2019 16:27

Georgian construction company Prime Concrete starts building a new Pace Terminal Project in Poti co-financed by the U.S. Overseas Private Investment Corporation (OPIC).

October 10, 2019. Poti. The Georgian construction company Prime Concrete has been commissioned to build a new Pace Terminal Project in Poti with a total value of construction work of US$ 20 million. The project is co-financed by the U.S. Overseas Private Investment Corporation (OPIC). An official ceremony to mark the beginning of construction was held in Poti on October 1, 2019 and was attended by the Deputy Prime Minister of Georgia Maia Tskitishvili, the Minister of Economy of Georgia Natia Turnava, the Managing Director of OPIC Kenneth Angel, the Pace Terminal’s Director David Nadirashvili and the Founder of Prime Concrete Alexander Sokolowsky. Other high-ranking members of the Georgian government and parliament as well as diplomats and foreign guests were also present.

For a Georgian company to build such an important terminal is a unique opportunity. Prime Concrete managed to successfully qualify for the tender in a highly competitive process with dozens of international contractors. Its competitive advantages lay in its distinctive means and capabilities, its experience and know-how, and its truly local presence. Prime Concrete also partnered with the Dutch companies Royal HaskoningDHV, which developed the most efficient design for berth and pier construction, and Vanthek, a leading international piling contractor.

Prime Concrete is a well-established Georgian construction company that has successfully implemented numerous large-scale projects, acquiring exceptional competence and invaluable expertise in the fields of port, water, road and other civil and industrial infrastructure projects. Its portfolio includes maritime projects such as the rehabilitation of berth no. 7 and the construction of an inland container terminal in Poti; public works such as wastewater treatment plants in Anaklia, Ureki, Zugdidi and Gardabani; extending Tbilisi’s 2nd metro line (to University Station); and building and rehabilitating several municipal roads in western Georgia (Samegrelo).

Prime Concrete CEO Alexander Sokolowsky underlined the importance of the Georgian company winning the tender: “We are extremely glad to engage in the construction of this strategic facility. It is an exceptional occasion when a Georgian company under an EPC contract takes full responsibility for the construction of such a complex and large-scale project. We use local capabilities, bring our decades-long experience and expertise, hire local workers, and use local construction materials, which is beneficial for local communities and the entire country. We will make sure with our partners from Pace Group, Royal HaskoningDHV and Vanthek, that the new terminal is built in a high-quality, safe and environmentally friendly manner, increasing Georgia’s transit capabilities to new high levels.”

The new terminal will occupy 25 hectares of the New Port Zone in Poti’s former shipyard. The total length of the berthing facilities will be 650 meters, with a water depth of 12 m. This will be the first modern facility in Georgia to handle deep-water vessels by 2020. The total cargo turnover of the terminal will be 5 million tons. The total project cost is US$ 93 million, of which US$ 50 million will be allocated by OPIC and the remaining US$ 43 million by Pace Group as an equity contribution. This is OPIC’s single biggest engagement in Georgia. The terminal will increase the country’s strategic importance as a hub between East and West and as an integral part of the Belt and Road Initiative. OPIC’s decision to finance the project is also a form of recognition from the U.S. and other international stakeholders of the terminal’s significance for Georgia and the wider region.

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  • HAS THE GEORGIAN GOVERNMENT REVEALED ITS TRUE INTENTIONS REGARDING ANAKLIA PORT?

    Government Actions and Words Appear to Show Its Support for Poti at the Expense of Anaklia and Raise Questions About Whether it has been Misleading Georgian Public as well as International Communities

    TBILISI, GEORGIA, 27 October, 2020 – Recent actions and comments by the Georgian Government appear to have exposed its true intentions to promote Poti and to turn its back on Anaklia as the location of a future world-class seaport.  In the process, the Government has damaged its reputation in the global investment community by misleading investors and diplomats who were led to believe that the Government is still committed to a project at Anaklia.  By every measure, it appears the Government has no interest in such a project at Anaklia.

    Government Puts Its Support Behind Poti at the Expense of Anaklia

    As reported in the media on 18 October, Georgian Prime Minister Giorgi Gakharia said at a political event sponsored by Georgian Dream, "We have to agree and be honest with each other that there are many problems in Poti, but nevertheless, I want to tell you that the next 4 years will be the years of Poti reconstruction, specifically the years of Poti reconstruction. Because that is what necessary not only for Poti but the entire country.[1]

    Separately, Davit Ebralidze, Chief Executive Officer of Poti Free Industrial Zone (FIZ) said in an interview with Georgia Today “Initially when thinking about location of new FIZ, the most significant location was chosen strategically, not only in Georgia but in the Black Sea and Caucasus Region. Poti FIZ is located in the centre of the Silk Road and international transport and logistics corridors. Its location is one of the distinctive advantages over other free industrial zones in the country…  The Poti Free Industrial Zone is one of the most strategic and successful companies within Smart Capital Group.”[2]  

    Taken together, these comments suggest that the Government are now committing themselves to Poti as the future home of the long-anticipated deepwater seaport, contradicting prior statements from the Government.

    The 23 October announcement by APM Terminals Poti (APMT) and Poti New Terminals Corporation (PNTC) that they have signed an agreement for the joint development of a new bulk cargo facility on the northern side of the Poti Sea Port reinforces the belief that the Government has been telling two conflicting stories: One that it is still committed to Anaklia; the second that it is focused solely in Poti.  PNTC’s website suggests their intent is to see “a new deep-water harbor (greenfield) for dry bulk and container handling north to the existing Poti Port.”[3]  In other words, an alternative to Anaklia.

    The interests of Georgian Dream Supporters Intersect with those of Poti FIZ

    Based on public records, there appears to be close financial interests between Poti FIZ and high-level people connected to Georgian Dream:

     

    • Poti Free Industrial Zone is managed by Euro-Asian Management Group, which is jointly owned by a subsidiary of the Chinese company CEFC and Eurasian Invest LLC. 
    • Both David Ebralidze and Ivane Chkhartishvili are on the Supervisory Board of Eurasian Invest, which itself is owned by two companies registered in the British Virgin Islands, where laws make it difficult to track who owns them.
    • Davit Ebralidze was previously Head of Administration for Georgian Co-Investment Fund, a fund set up by Georgian Dream leader and former Prime Minister Bidzina Ivanishvili to manage some of his personal investments.
    • Chkhartishvili is also co-chairman of Euro-Asian Management Group and owns Smart Capital Group which, as noted above, is involved with Poti FIZ.[4]  Chkhartishvili “has been connected to several corruption cases” according to Democracy and Freedom Watch[5]
    • George Bachiashvili, who served on the board of directors of Eurasian Invest and appears to be the sole director of one of the BVI companies behind Eurasian Invest. He previously served as CEO of Georgian Co-Investment Fund and has long been connected to Bidzina Ivanishvili as a financial advisor.

     

    Government Admits That Anaklia is Unlikely

    As further evidence that the Government has no interest in seeing a port developed at Anaklia, it included language in its proposed 2021 budget that would be certain to scare away any potential investors.  On pages 517-518 of the proposed budget is the following passage regarding the intended new tender for an Anaklia Port Project:  “Potential risks – as it currently stands, due to the potential arbitration dispute, an investor of high reputation and experience may not be selected. Also, other unforeseen circumstances.”[6]

    Government Abandons Anaklia Site and Creates Health and Environmental Risks

    The Government has also abandoned the site of the proposed Anaklia project after it unlawfully seized the land from ADC in February 2020.  While ADC had invested considerable resources to begin site preparation work, including clearing 110-hectare area where soil was removed and cleared of waste, the Government’s failure to maintain the site has led to significant and chronic circulation of dust and particulate emissions, causing damage to the environment as well as threatening nearby residents with potentially serious respiratory health problems. 

    ADC had advised the Government of the need and means to mitigate these risks.  However, the Government has ignored this, causing problems for the people of the region and signaling its lack of any further interest in the site.

    Statement from Anaklia Development Consortium

    “The current Government has misled the people of Georgia and the international community about its intentions for Anaklia port. Since unlawfully terminating the investment agreement with ADC in January 2020, Government ministers have said multiple times that the Government will issue a new tender for a port project at Anaklia. Based on its actions, however, it seems the  Government has chosen to promote Poti and the related Free Industrial Zone, at the expense of the Anaklia Port. 

    “Most troubling is the Government’s duplicity, which will only serve to discourage foreign investors who feel they cannot trust the Government, and Georgian citizens who fear that the scourge of corruption will once again tarnish Georgia’s reputation and undermine their trust in the Government.  One has to question whether the Government is acting in the best interests of the people of Georgia.  Regardless of its motives, however, it certainly appears the Government is not being honest about its intentions with Anaklia.”

    Why Poti Cannot be an Adequate Alternative to Anaklia

    The Government’s initial decision to develop Anaklia was taken in 2013 after the Government hired a consortium of international consultants to compare and contrast the options in Georgia for a deep sea port. Anaklia was chosen because it held a number of advantages over every other location in Georgia, including the geo-technical conditions of the site, its financial feasibility and most importantly, the significant economic, social and geopolitical impact the project would have both on the Abkhazia region and the wider country.

    The consultants’ report clearly outlined that the existing ports in Georgia (including Poti) are limited in their capacities and hinterland connections, and any expansion would have only short-term impact for the national maritime sector. The consultants advised the Government of Georgia to consider the development of the greenfield and large-scale deep sea port at Anaklia to ensure long term advantages for the country and phased capacity developments to serve Georgia’s needs in long-term perspective.

    The existing port in Poti has numerous disadvantages and is not suitable for expansion, and the proposed new site at Poti is equally flawed, as explained by ADC.[7]

    Further details of the Anaklia Port project and ADC can be found at http://anakliadevelopment.com



    [1] http://newsreport.ge/შემდგომი-4-წელი-იქნება-კონ/?fbclid=IwAR1AtLz_0LUPH6-rpI6mL3jDqulgERnq9WyNFyosCQYlUZalo0uIqyrsHQ0

    [2] http://georgiatoday.ge/news/22687/Poti-FIZ-CEO-on-the-Benefits-of-World-Free-Zone-Organization-Membership

    [3] https://pntc.ge

    [4] http://smartcapital.ge

    [6] The full set of documents submitted by the Government to the Parliament of Georgia together with the draft Law on 2021 State Budget are available at:

    http://parliament.ge/ge/ajax/downloadFile/142460/07-2.525_ბიუჯეტი_2021

    [7] http://anakliadevelopment.com/news/port-of-poti-is-an-inadequate-substitute-for-anaklia-deep-sea-port/

  • DETAILS RELEASED OF GEORGIAN GOVERNMENT’S CAMPAIGN TO STRANGLE ANAKLIA PORT PROJECT

    Ruling Georgian Dream Party Reversed its Support for Vital Project,

    Wiping Out Economic Benefits for Georgia

    TBILISI, GEORGIA, 9 September, 2020 – The Anaklia Development Consortium (ADC), the company originally selected by the Government of Georgia to develop the strategic Anaklia Port Project, today shared additional details of the Government’s campaign, directed by the ruling Georgian Dream party, to undermine the project by dissuading potential project investors, lenders, contractors and suppliers from joining the project in order to kill it.

    The following statement is issued on behalf of the ADC Supervisory Board:

    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. 

    “The Georgian Government’s campaign to strangle ADC’s ability to develop the Anaklia Port Project represents a self-inflicted wound for itself and considerable injury to Georgia’s economy and its role in the region.

    “Taken together, the Georgian Government's specific actions are part of a deliberate and well-orchestrated campaign to destroy a project which the Government itself originally sponsored and endorsed, but subsequently chose to destroy as a result of what appear to be the political and economic self-interests of the Georgian Dream Party and its principals.

    “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 were tendering their resignations shortly after such comments were made?  

    “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 conduct of the Government is scaring away investors at a time when Georgia cannot afford to lose any more foreign investment.  According to the National Statistics Office of Georgia, the amount of foreign direct investment in Georgia has fallen from nearly US$  2 billion in 2017 to just over US$ 1.3 billion in 2019, and in the first quarter of 2020, stood at only US$ 171.8 million[1] - a catastrophic decrease even before the Covid crisis began to take effect.  As Retired U.S. Lt. Gen. Ben Hodges of the Center for European Policy Analysis said, ‘the government only has itself to blame.’[2]

    Some examples of the Government’s efforts to strangle ADC and the Anaklia Port Project include:

    November, 2017

    • Georgian Dream party leader Bidzina Ivanishvili requested to meet with ADC to discuss the Anaklia Port Project and asserted that the expansion of Poti Port could achieve the same objectives of the Anaklia Port at a far lower cost. 

    June 2018

    • During a June 12 meeting of the Georgian Dream party, attended by more than 100 party officials, Party Leader Bidzina Ivanishvili personally blamed Prime Minister Giorgi Kvirikashvili for his actions in support of the Anaklia project and for having close ties to ADC investor Mamuka Khazaradze.  Mr. Kvirikashvili resigned the day after that meeting.

    October 2018

    • In February 2019 ADC learned that during an October 2018 meeting with senior U.S. State Department officials in Tbilisi, Mr. Giorgi Gakharia  (then Minister of Interior) advised the U.S. officials that the Anaklia Port project was not in Georgia’s interests.

    January 2019

    • SSA Marine, which was selected as the Anaklia Port operator and was a potential investor, alerted ADC of its concerns about what seemed to be the Government’s support of an expansion of the Poti Port.  (Following detailed studies sponsored by the Government back in 2013-14, it had been determined that Poti Port could never meet Georgia’s needs for a Deepwater Port, which is why the government itself selected Anaklia for development at that time.  The Government’s subsequent expressions of support for expansion at Poti was a clear signal to the lending and investment community that the Government was no longer supportive of Anaklia.)

    February 2019

    • A sovereign European development bank advised ADC that it had decided against supporting the project because of the negative actions of the Georgian Government, and the possible shift of support to the Poti Port.

    February 2019

    • Another sovereign European development bank advised ADC that it was withdrawing its support because one of its counterparts had just done so (above) due to the state’s apparent shift of support from Anaklia to Poti.

    March 2019

    • It has been reported that Infrastructure Minister Maya Tskitishvili, in ministerial hearings before Parliament, undermined SSA Marine as a potential investor and as the port operator, claiming the company lacked experience and financial capacity.  These assertions were not true. In the process of her speech, the minister also breached legal obligations of confidentiality that were associated with the investment agreement.

    April 2019

    • SSA Marine advised ADC that it was suspending its activities related to the Anaklia Port project.

    April 2019

    • Mr. Giorgi Kobulia, Minister of Economy and Sustainable Development, told “Forbes Week” that the negative public discussions and media reports of the Anaklia project were having a negative impact on the business climate within Georgia.  He subsequently resigned within days of the interview.

    May 2019

    • A major U.S. private equity firm which was in advanced negotiations with ADC to join the project revealed to ADC that Government officials warned the firm to stay away from the project.

    June 2019

    • Prime Minister Mamuka Bakhtadze, in a trade visit to the U.S., met separately with SSA Marine, the leadership of the U.S. private equity firm that were interested in investing in the project, and with U.S. Secretary of State Mike Pompeo in Washington, D.C.  Secretary Pompeo expressed support for the Anaklia project with the prime minister standing next to him, saying it would “strengthen Georgia’s ties with free economies and not allow Georgia to be under the economic influence of Russia or China.”  Upon his return to Georgia, Mr. Bakhtadze resigned, and this again put the project in unchartered waters.

    September 2019

    • At a meeting in Tbilisi, a large Hong Kong-based private equity group with significant Central Asian transportation synergies that was considering joining the project was told bluntly by Infrastructure Minister Tskitishvili that the Government did not desire their participation in the project.  At this same meeting Ms. Tskitishvili reaffirmed the Government’s seeming opposition to SSA Marine’s involvement in the project.

    September 2019

    • Giorgi Volski, Vice Speaker of Parliament, falsely claimed that the Hong Kong private equity group mentioned above is a “Russian” company,  with the intention either of disparaging it or sowing further confusion about the government's position in respect of the project.

    September 2019

    • In a meeting between Prime Minister Gakharia and an Anaklia Supervisory Board member, Mr. Gakharia stated that “things had to get quiet” before he could reassure the major potential U.S. investor of the state’s support for the Anaklia Project, which the board member understood to be a condition that ADC and Mr. Khazaradze stop criticizing the government publicly on its opposition to the Anaklia Project, and the government would stop criticizing ADC.  
    • Also, the Supervisory Board was promised a letter of support to a U.S. investor from the highest levels of the Government, but this never materialized, even though ADC did comply with the Government’s request.

    September 2019

    • A delegation from the U.S. (in Tbilisi to participate in the 5th annual Tbilisi International Conference sponsored by the McCain Institute) met with new Prime Minister Giorgi Gakharia, and subsequently with Mamuka Khazaradze.  Representatives of the delegation told Mr. Khazaradze that Prime Minister Gakharia told them the Anaklia project was not commercially viable when this was patently not the case.

    October 2019:

    • Fadi Asly, chairman of the International Chamber of Commerce in Georgia, is quoted in the media saying, “No one will invest in Anaklia project as long as Bidzina Ivanishvili wants to destroy it.”

    Taken together, these are only a selection of the instances where the Government of Georgia actively undermined the project in an effort to prevent ADC from developing the project.  ADC intends to present evidence during the upcoming arbitration proceedings to demonstrate the degree to which the Government took such steps.

    Further details of the Anaklia Port project and ADC can be found at http://anakliadevelopment.com

     

  • EU4Business project helps set up business clusters for better access to EU market

    Up to 100 Georgian small and medium-sized enterprises (SMEs) are now in a better position to take advantage of the benefits of the free trade agreement between the EU and Georgia.

    The EU-supported project ‘SME Development and DCFTA in Georgia’ has helped to establish three business clusters in the country and to lay the groundwork for two more, reaching out to 100 SMEs specialising in furniture, interior design, film production and post-production, ICT, apparel and honey production.

    As a result of the 4-year project, these SMEs have received access to leading international expertise to help them identify opportunities for capacity and product development, better competitiveness and integration with the European market.

    Cluster member SMEs currently employ more than 1,400 staff members in Georgia.

  • The Project to Foster Peace Citizens, Implemented by HWPL Peace Education

    Kotebe Metropolitan University implements the peace education to train peace-building citizens in Ethiopia

    In December, the professors and students at Kotebe Metropolitan University participated at the ‘Heavenly Culture, World Peace, Restoration of Light (HWPL) Peace Education’ sessions which are also joined by 214 schools in 36 countries. The sessions provided platforms for students and professors to express the significance of peace education and discuss the process of implementing peace education with the visions laid out by HWPL.

    Ethiopia is the melting pot country, enriched with the diverse cultures, peoples, and religions. However, such diversity sparked many conflicts in the past, some of which are still ongoing. These conflicts have stripped the country and people apart emotionally, and the Ethiopian government is actively working to peacefully resolve them for the better future of the country.

    To bring the peaceful reconciliation in the country, the Ministry of Education in Ethiopia and 9 other states had previously signed MOA with HWPL to implement the HWPL Peace Education. The curriculum is designed to empower citizens to properly recognize the value of peace and take the pioneering role of spreading the culture of peace. Implementing Peace Education is also the practical step toward implementing visions laid out by the Article 10-Spreading a culture of peace, out of 10 Articles and 38 Clauses of the ‘Declaration of Peace and Cessation of War (DPCW)’. Citizens are carrying out the popular peace movement to present DPCW to the United Nations to make it into the international law of peace in the form of a legally binding document. This global movement aims to fundamentally cut off vicious cycles of war and support citizens to promote the value of peace as the universal culture for humanity.

    A student who participated at the peace education said, “I learned why peace education is important for resolving conflicts in Ethiopia. It taught me to act as a messenger of peace. It is also important to present 10 Articles and 38 Clauses of the DPCW to the UN to fundamentally eradicate war and conflicts. To this end, we must continue to participate in peace education,” emphasizing the need of peace education in order to peacefully resolve the conflicts in Ethiopia.

    After signing MOA with HWPL, the Ministry of Higher Education in Ethiopia is currently reviewing the ‘HWPL Peace Education’ to incorporate and implement it as formal curriculums in all the universities. Addis Ababa School of Science and Technology (AASTU) also held the peace education sessions right after the Kotebe Metropolitan University.

    After an initiative to pursue HWPL Peace Education was publicly announced in September 2017, HWPL began signing MOA with every Ministry of Education in need of peace education.

    So far, HWPL has signed MOA with the corresponding ministries of 10 countries, as well as MOU with 214 schools in 36 countries, most of which are officially implementing peace education curriculums.

  • EU4Business project holds sectoral meetings on beekeeping, fruit growing and market gardening in Georgia

    Beekeeping, fruit growing and market gardening were the focus of a sectoral meetings organised last week in Georgia in the framework of the EU4Business initiative.

    Representatives of small and medium-sized enterprises (SMEs) and civil society organisations (CSOs) from different regions of Georgia attended the meetings. Ministry representatives included heads of relevant departments, field experts, scientists and representatives of the country’s Agricultural Projects Management Agency.

    The first section of the meeting was dedicated to challenges in the beekeeping sector. During the second part, problems identified in the areas of fruit growing and market gardening were discussed.

    The event was organised within the EU-funded “Georgia on European Way: Creation of Effective Model for DCFTA and SME Strategy Implementation” project. It seeks to strengthen the capacities of Georgian CSOs and business support organisations in supporting the implementation of the Deep and Comprehensive Free Trade Area (DCFTA) with the EU. It also helps implement the SME strategy for Georgia through capacity building, awareness raising and the creation of advisory councils bringing together all stakeholders.

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