Georgian Govt Terminates Contract with Anaklia Development Consortium

The Government of Georgia has decided to terminate its contract with the Anaklia Development Consortium, Minister of Regional Development and Infrastructure, Maia Tskitishvili told reporters after the government’s session on January 9, noting that new tender documents will be prepared for Anaklia deep sea port construction.

Minister Tskitishvili also explained that although the government gave additional time to the Anaklia Development Consortium to fulfill its obligations, the latter failed to replenish its capital with USD 120 million and to attract a USD 400 million loan from international banks.

She also noted that since the Consortium failed to provide pre-construction and construction financial guarantees, as well as to find “a real” investor, the government supposes that further postponement will bring no positive effect to the project.

The Infrastructure Minister also said that the Consortium was forgiven for USD 10 million penalty; however, it will have to pay new penalties to the budget and return the lands transferred to it.

Since 2017, the government had been providing unprecedented support to the project, postponing [fulfillment of obligations], forgiving penalties, and exempting it from bank guarantees; nevertheless, it yielded no results and the Consortium failed to fulfill its obligations,” the Minister said.

Tskitishvili noted that the government would not like to have an arbitration dispute with the Consortium, adding that it is the Consortium’s right and if it makes this decision, the government will get involved in the dispute as a party.

Speaking about the importance of the Anaklia deep sea port in terms of the country’s economic development and security, Tskitishvili said that the government is beginning to look for “more serious and financially stronger” partner to implement the project.

We would like to attract an American or Western partner. We cannot accept an investor who may be incompatible with our strategic interests, because the port has both economic and security dimensions,” Tskitishvili told reporters.

She also touched upon the investigation against Mamuka Khazaradze and Badri Japaridze, main partners of the Anaklia Development Consortium, citing “insufficient guarantees” provided by the Consortium to the banks rather than the investigation process as the reason behind the investors’ refusal to finance the project.

Therefore, any speculations about ongoing investigation against Khazaradze and Japaridze and its linking to the problem faced by the Anaklia Development Consortium since summer 2017, are absolutely placeless,” she said.

The Anaklia Development Consortium commented on the government’s decision later today. Levan Akhvlediani, Consortium’s Director General said they will take Georgian government to international court over the termination of the contract.

“We have done a tremendous work … for this project to succeed… USD 75 mln was invested [in the project], certain construction works are carried out [already], we attracted funding from banks and investors, we sealed an agreement with port-operator, selected general contractor… the [Georgian] government not only did not invite these stakeholders for talks, it did not even wish to engage in constructive talks [with them]. That is why we cannot accept accusation that we did not meet our obligations,” Akhvlediani stated.

Anaklia deep sea port project, a major seaport project on Georgia’s Black Sea coast located few kilometers away from Russian occupied Abkhazia region, has strong backing from the U.S.

In June 2019, U.S. Secretary of State Mike Pompeo said following the meeting with Mamuka Bakhtadze, then Prime Minister of Georgia, that “[Anaklia deep sea port] project and others will enhance Georgia’s relationship with free economies and prevent Georgia from falling prey to Russian or Chinese economic influence. those pretended friends do not have Georgia’s best interests at heart.”

For more background follow our tag on Anaklia Port.

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