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.”
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.”
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.” 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. Chkhartishvili “has been connected to several corruption cases” according to Democracy and Freedom Watch
- 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.”
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.
Further details of the Anaklia Port project and ADC can be found at http://anakliadevelopment.com
 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:
Anaklia Development Consortium Statement Regarding Government’s Own Admission That Any New Port Tender will Likely FailThursday, 08 October 2020 16:44
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:
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 - 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.’”
Some examples of the Government’s efforts to strangle ADC and the Anaklia Port Project include:
- 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.
- 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.
- 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.
- 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.)
- 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.
- 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.
- 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.
- SSA Marine advised ADC that it was suspending its activities related to the Anaklia Port project.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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
SSA Marine, one of the largest American companies, will become the operator of Anaklia Port Terminal and one of its investors, a relevant agreement was signed today at the Administration of the Government of Georgia.
The signing ceremony was attended by Georgian Prime Minister Giorgi Kvirikashvili.
Along with the Conti Group, SSA Marine is the second American giant to invest heavily in the development of the Anaklia Port.
SSA Marine, one of the largest global operators, runs over 250 strategic terminals in five continents and serves 27.2 million containers (TEU) annually. SSA Marine introduces modern innovative technology standards in design, operating, and project development.
Before the signing ceremony, Georgian Prime Minister Giorgi Kvirikashvili held a meeting with SSA Marine's Vice President Robert Watters and the founders of the Anaklia Development Consortium. The parties discussed Anaklia Port-related issues, Georgia-US economic partnership, and Georgia's attractive investment environment.
The Prime Minister emphasized the US Vice President's visit and the importance of America's support for Georgia.
"Very important is the visit of the Vice President of the United States, and Georgia is grateful for the vitally important support of the US. We all heard the strongest messages of the US support for Georgia, which is another reassurance, another guarantee for the success of US-Georgia economic cooperation. We are really committed to bringing more economic substance to our bilateral strategic cooperation, and this is not another but one of the most important evidence of this excellent cooperation," the Prime Minister stated during the meeting.
Robert Watters thanked the Head of Georgian Government for his support since the very outset.
The Anaklia Deep Sea Port Project launched in 2016. The Anaklia Development Consortium developed the Anaklia Port's master plan and preliminary design, also conducting over 50 terrain, water and environment, and engineering analyses for different directions of construction. Work is already underway on a strategy for the development of the city of Anaklia and the special economic zone.
Construction work on the Anaklia Port is expected to launch in the second half of 2017.
In the nearest future, the Government of Georgia will reveal which company is going to construct the Anaklia PortThursday, 19 November 2015 12:30
In the nearest future, the Government of Georgia will reveal which company is going to construct the Anaklia Port. Our journalist addressed Mr. Teimuraz Karchava, the leader of “Anaklia Port and Eco Park” consortium, with several questions.
Mr. Teimuraz Karchava, Leader of “Anaklia Port and Eco Park” Consortium
Question: What do you think your advantages are in Anaklia Port bidding process in comparison with your competitor?
Answer: With a full consideration of strategic and political aspects of the Anaklia New Deep Water Black Sea Port, our consortium has selected and developed a very balanced scheme for the financing, construction and operation of the Anaklia Port project.
The design and concept of the port, which is not threatening Anaklia population with expatriation and which has been under preparation and elaboration for 15 years, was jointly developed by a Chinese Company “CCCC Second Harbor Consultants” and a Georgian Company “Mshenproekti”.
According to the concept of our consortium, the port should occupy just 0.8 km of the coastline, while from what we know, according to the design of the other consortium, the port is located on a 3 km line across the coastline and threatens to expatriate up to 200 families. The design concept of our competitor only allows 30 million tons of cargo turnover annually, while ours exceeds 100 million tons, fully complying with the bidding requirements.
Our consortium undertakes the responsibility to conduct the feasibility studies as soon as the investment agreement is signed between our consortium and the Government of Georgia.
Our consortium undertakes the responsibility to start the construction of the first phase of Anaklia Port on July 1st, 2016.
Besides, a big part of the land, that falls into the port territory (roughly 2100 hectares), belongs to “Anaklia Eco Park & Port” Ltd, and 100% of its shares belong to me, Teimuraz Karchava. The above-mentioned land was unlawfully confiscated from me by the former government on June 4th, 2012. It is currently under an ongoing litigation and is subject to a legitimate return.
The above-mentioned circumstances give our consortium the clear advantage with respect to the investment agreement signature.
Question: Please briefly tell us about the financing sources of the Anaklia port project.
Answer: Our company’s partner is the biggest Chinese state-owned energy company “Powerchina”, which is going to invest 15% of equity. The remaining 85% of equity, which is currently owned by my company, “Anaklia Eco Park & Port” Ltd, will be shared among the partners of our consortium that include Georgian, Chinese, American, Turkish, Swiss and other companies. Besides, our consortium will also attract a 70% loan of total project value from Chinese banks and financial institutions, with the full support of “Powerchina”.
It is also crucial that “Anaklia Eco Park and Port” Ltd, “Powerchina” and our other partners do not require any state financial guarantees from Georgian Government within the scope of this project.
The Chinese companies will be involved in the construction of Anaklia port and they will co-finance the project.
TBC Bank and Georgian Railway signed a memorandum with the Corporation of China Railway Construction Corporation today.
The Silk Road Fund is interested in the Port of Anaklia .
A Georgian Government will reveal the winner of the tender in the end of September.