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Conti International Reported To Be Leaving Anaklia Development Consortium

Conti International reported to be leaving Anaklia Development Consortium

Conti International Reported To Be Leaving Anaklia Development ConsortiumSource: Anaklia Development Corporation

Anaklia, Georgia (PortSEurope) August 17, 2019 – Local sources are reporting that Conti International, one of the partners of Anaklia deep sea port project, has decided to leave the Anaklia Development Consortium.

The reasons remain unclear as Levan Akhvlediani, director general of the Consortium, told reporters on August 15 that Conti International has not made the decision on leaving the Consortium “today or yesterday” and that “talks about it were underway for a certain period of time.”

Accentnews.ge reported on August 15 quoting an unidentified source that lack of agreement between the government and the international financial institutions prompted Conti International to leave the project.

IPN News reported that Elisabeth Rood, US Chargé d´Affaires in Georgia to have said: “The United States continues to believe that the Anaklia Port Project is a very important project for Georgia’s economic development and for the fulfilment of its potential as a trade and transportation hub. We continue to believe that this project should be completed with American investment because this can be a very strong strategic partnership between the United States and Georgia in the economic sphere”.

There are concerns that Russia or China could be trying to take over the project. Read here.

The Georgian government is likely to demand that a replacement foreign investor be found.

Ten days ago, Anaklia Development Consortium announced that Mamuka Khazaradze and Badri Japaridze, the current Chairman and Vice-Chairman of the Anaklia Development Consortium’s Supervisory Board, would resign from the board. Both announced a few days ago their intention to resign.

Mamuka Khazaradze and his deputy, Badri Japaridze announced about their plans to quit Anaklia Development Consortium’s Supervisory Board on July 26, after Tbilisi City Court ruled that the founder and former Board Chair of the TBC Bank, Mamuka Khazaradze and his Deputy Badri Japaridze had to post a GEL 700,000 bail each after being charged in a money laundering lawsuit.

The Anaklia deeps sea port project has been beset by other problems recently. In April this year, Anaklia Deep Sea Port, the Georgia Black Sea construction project, was put in doubt after last week’s announcement of Georgian government support for a rival project in the nearby port of Poti, and the almost immediate denial by the Economy Minister, claiming that the document for the construction of a deep sea port in Poti has been cancelled.

There are also indications that the consortium cannot raise the required funds.

Georgian Prime Minister Mamuka Bakhtadze has said that his government welcomes any activities which support the completion of the Anaklia Port Project. The statement was made amidst increasing doubts regarding the financing of the project.

The Georgian Ministry of Infrastructure has said that it is unlikely that the Anaklia Development Consortium will attract the needed funds to launch the construction of the Anaklia Deep Sea Port in January 2020.

The ministry says that the consortium’s statement that the delay in coming up funds will not influence the construction schedule is wrong. The latest schedule presented by the consortium says that the construction of the port will be completed in 2022 instead of 2020, the ministry said.

The ministry states that “despite unprecedented support from the government” the consortium was unable to raise a $400 million loan from international financial institutions for the port construction and the consortium must contribute $120 million of its own capital. 

The fact that the time period to attract funds for the construction of the first phase of the port has been postponed several times is confirmation of the government’s support for the project”, the ministry added. The ministry has stated that the port will be built regardless of the financial difficulties of the consortium. The port will be built anyway, with a private or a state investment,” the ministry says.

The ministry stated that the government has taken on the obligation of providing an additional $100 million for the project before signing the investment agreement and was directly involved in the negotiations between foreign banks and the consortium. This was a sign of big support,” the ministry says.

The ministry has urged the consortium to start the construction process in a timely manner and not spend time “on populist statements on the importance of the project.”

 TBC Bank founder Mamuka Khazaradze, who represents TBC holding in the Anaklia Consortium, has accused the government of hampering the construction of the port. He was Khazaradze charged with money laundering earlier this week and is now put on bail.

Anaklia Development Consortium won the state tender to construct the Anaklia Deep Sea Port and signed a deal with the government in 2016, but has faced problems in attracting funds for the $2.5 billion (€2.23 billion) project. ADC consists of TBC Holding from Georgia, Conti International (USA), SSA Marine (USA), British Wondernet Express working in Central Asia, and G-Star Ltd. from Bulgaria (the company has Georgian owners and seems to operate as an offshore investment vehicle).

Bakhtadze said that the state has paid tens of millions of GEL for land for the consortium. and assumed responsibility for developing additional infrastructure that requires several hundred million in investments, be it a railroad, a highway, or any other. He claimed that the government had succeeded in securing for the Anaklia Project a place on every interested IFI’s priority list.

The consortium has been had problems raising finance and in July this year, the project, was again put in doubt after an announcement of Georgian government support for a rival project in the nearby port of Poti, and the almost immediate denial by the Economy Minister, claiming that the document for the construction of a deep sea port in Poti has been cancelled.

More PortSEurope news on issues surrounding Anaklia port had be accessed here.

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