GEORGIAN GOVERNMENT RESPONSIBLE FOR ENVIRONMENTAL AND HEALTH RISKS AT ANAKLIA PORT SITE

Published in Economics
Thursday, 15 October 2020 17:22

Government Has Neglected Management of Site After Unlawfully Seizing The Property

TBILISI, GEORGIA, 15 October, 2020 – Residents of Anaklia and the surrounding area face health and environmental risks due to the Georgian Government’s neglect of the site intended for the now-suspended Anaklia Deepwater Sea Port, according to the Anaklia Development Consortium (ADC), the company originally selected by the Government of Georgia to develop the strategic Anaklia Port Project.

As part of its project development efforts, ADC prepared a  comprehensive Environmental and Social Impact Assessment (ESIA) in accordance with policies of the International Financial Institutions (EBRD, ADB, AIIB, OPIC), which included rigorous environmental and social protection steps that satisfied not only all Georgian legal requirements, but also best international standards.

In 2018 ADC carried out considerable site preparation work, including a 110-hectare area where soil was removed and cleared of waste, including old structures. ADC received all necessary permits and authorizations from the Government prior to commencing this work.

Even though it was becoming apparent in 2019 that the Government was actively trying to prevent the Anaklia Project from proceeding, ADC  persevered in making every effort to continue project construction while protecting the environment from dust emissions.  In fact, ADC had prepared for Government approval a thorough plan for managing this issue, with the cost to be carried by ADC.

The Government unlawfully seized possession of the site in February 2020 following its wrongful termination of the investment agreement with ADC.  Because of this expropriation, ADC was prohibited from further access to the site and thus was never able to carry out the plan it had designed.  Sole responsibility for managing the property transferred to the Government.

However, left barren, the site is now generating considerable volumes of dust, causing damage to the environment as well as threatening nearby residents with potentially serious respiratory health problems.  Even though the Government understood the steps it should take to manage these environmental and health risks, it took no action, leading to the situation which exists today.

“The Government of Georgia has been acting recklessly and irresponsibly by unlawfully terminating the investment agreement and ignoring the very real health and environmental problems it created when it failed to follow the plans that ADC had proposed for managing  this site or taking any other remediation actions,” according to a statement from ADC.  “The Government is putting peoples’ health at risk and harming the environment by allowing this site to deteriorate.  ADC calls upon the Government to act immediately in the interest of the people of the region. By neglecting to manage this property and failing to assume responsibility for the health and environmental harm it is creating, it would appear the Government has no interest in any future development of a modern port at Anaklia, belying the many promises it has made. The Government is walking away from its responsibilities.”

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

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  • Georgian Prime Minister's Statement

    Today marks the birthday of Zhiuli Shartava, Georgia's national hero and a most prominent political figure and statesman of our time.

    The finest representative of his generation and a true son of his homeland, Shartava, with his exceptional honor, patriotism, and education, fought to the last to ensure unity between Georgians and Abkhazians.

    "With even one person like him, Georgia is destined to survive," these words from a letter to His Holiness Catholicos-Patriarch Ilia II belong to an unspecified Abkhazian who witnessed Zhiuli Shartava's heroic feats.

    Zhiuli Shartava's steadfastness and self-sacrifice for his homeland are an example to be followed by all of us and our future generations.


    Glory to our heroes!

    Irakli Garibashvili

    Prime Minister of Georgia

  • Irakli Garibashvili: Process will soon start for the selection of a new potential investor for the Anaklia Port Project

    Georgian authorities had always demonstrated unprecedented support towards the Anaklia Port Project. It was stated by Irakli Garibashvili, Prime Minister of Georgia at the Executive Government Meeting today.

    As noted by the Prime Minister of Georgia, irrespective of deferring deliverables at multiple occasions, investor failed to meet its commitments and therefore the process will soon start for the selection of a new potential investor.

    "Authorities of Georgia, including the executive and legislative wings, demonstrated full support to the Anaklia Port Project. I wish to remind the society that Parliament of Georgia in its 9th Convocation indicated the Deep Sea Port of Anaklia as a key priority in the Constitution of Georgia. Principal and miscellaneous obligations of the investor were deferred at multiple occasions. Only the principal ones were deferred three times! Also, the Government acquired land from individual property owners in the total value of 58 million GEL and transferred the chain of custody to the investor. We also assumed the obligation to build a motorway and rail road to access the port. The Road Department of Georgia has blueprints ready for it. Besides, Partnership Fund was prepared to allocate a subordinated loan in the volume of 100 million USD to let the investor meet its obligations. Nevertheless, you may well be aware that the investor failed to meet its obligations and could not raise the required equity or borrowing in the volume of 400 million USD. We will be launching a process to select a new potential investor in the nearest future. Respective agency subordinated to the Ministry of Economy of Georgia will be announcing a tender in line with the procedures promulgated in the law. What is equally important, international consultants will be contracted to guide us in the selection process to identify the successful bidder" stated the Prime Minister of Georgia.

    Press Service of the Government Administration

  • ANAKLIA DEVELOPMENT CONSORTIUM WELCOMES U.S. SECRETARY OF STATE POMPEO TO GEORGIA

    Perfect Opportunity to Reaffirm U.S. Government Support for Anaklia Port Project

    TBILISI, GEORGIA, 13 November 2020 – The Anaklia Development Consortium (ADC) today issued the following statement in advance of the 17-18 November visit to Georgia by U.S. Secretary of State Mike Pompeo:

    “The Anaklia Development Consortium (ADC) and its investors welcome the visit of U.S. Secretary of State Mike Pompeo to Georgia, and expect Secretary Pompeo and Ambassador Degnan will express to the Georgian Government their continued support for a port project at Anaklia.”

    “It was just last year (11 June 2019) that Secretary Pompeo offered a strong endorsement of support for the Anaklia Project following his meeting with then-Prime Minister Mamuka Bakhtadze, when he told the press:

    “I communicated our hope that Georgia completes the (Anaklia) port project. The project and others will enhance Georgia’s relationship with free economies and prevent Georgia from falling prey to Russian or Chinese economic influence. Those pretend friends do not have Georgia’s best interests at heart.”

    The timing and purpose of Secretary Pompeo’s visit invites an examination of the Georgian Government’s purported commitment to seeing through the development of a world-class port at Anaklia. While this commitment was expressed directly to both Secretary Pompeo and Ambassador Degnan, recent developments show that the Georgian Government’s commitment to Anaklia was a hollow one.

    “The Georgian Government’s duplicitous and unlawful actions in relation to the Anaklia project has caused considerable financial losses for its U.S., European and Georgian investors and unfortunately now led to international arbitration proceedings being commenced against Georgia, which create a considerable financial risk for the state and will serve to discourage foreign investment in Georgia at a time when Georgia most needs it.

    “Beyond the Anaklia project, the actions of the current Government over the past year certainly raise questions about its commitment to implementing meaningful judicial and governance reforms, which are important for increasing foreign investment and strengthening the Georgian economy. 

    “We wish Secretary Pompeo all success during his visit to Georgia and his meetings with the Government.”

     

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

  • 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/

  • Anaklia Development Consortium Statement Regarding Government’s Own Admission That Any New Port Tender will Likely Fail

    TBILISI, GEORGIA, 8 October, 2020 – The Anaklia Development Consortium (ADC), the company originally
    selected by the Government of Georgia to develop the strategic Anaklia Port Project, today issued the
    following statement regarding the 2021 State Budget: 

    “In the proposed 2021 State Budget, the Georgian Government admits that a new port tender is unlikely  to succeed. This is because no credible investor is likely to participate in circumstances where arbitration  claims are ongoing about the Government's treatment of ADC and international investor Mr. Bob Meijer.  Hidden on pages 517‐5181 of the proposed budget is the following passage regarding the intended new  tender for an Anaklia Port Project:  “შესაძლო  რისკები  ‐  არსებულ მოცემულობის ფარგლებში,  შესაძლო საარბიტრაჟო დავის გამო, შესაძლებელია ვერ შეირჩეს მაღალირეპუტაციისა და გამოცდილების ინვესტორი. ასევე სხვა გაუთვალისწინებელი გარემოებები”  (“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.”)  This  declaration  acknowledged  that  the  existing  arbitration  is  a  substantial  obstacle for  the  Georgian  Government’s plans and any hoped‐for deep‐water port project at Anaklia.  As the arbitration arises out  of  the government’s own misconduct, it has only itself  to blame for undermining  this vital project for  Georgia’s future growth and development.  1 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_    Anaklia Development Consortium  6 Marjanishvili Street  Tbilisi 0102, Georgia  +995 32 2 95 99 10  This email address is being protected from spambots. You need JavaScript enabled to view it.   http:/anakliadevelopment.com  2 By  its  own admission  the Government  does  not  believe any  legitimate  bidders will emerge for a  port  project at Anaklia, condemning any hope that Georgia will see the jobs and economic growth that would  come with  such  a  strategic  project.  All  the  blame for  this  situation  rests  at  the feet  of  the  Georgian  Government.  Not only will Georgia not see a new port project at Anaklia any time into the future,  the likely outcome is  negative  decisions  by  respected  international  arbitration  tribunals  against  the  Government,  thereby  creating the obligation to pay substantial damages and also creating economic risk for the country given  the damage the government will have caused to Georgia’s standing with international investors.  The investors of the Anaklia Development Consortium remain ready to restart this project, inviting new  investors and partners so that Georgia can realize the riches this project offers.  All that is necessary is for  Georgian Dream and this Government to put aside personal interests and act in the best interest of the  people of Georgia.”  Further details of the Anaklia Port project and ADC can be found at http://anakliadevelopment.com 

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