Commercial News Update for Georgia

 

December 2007

 

Compiled by: Kartlos Gviniashvili, BISNIS Representative, U.S. Embassy, Tbilisi

 

TURKS TO MAKE INVESTMENTS IN HPSs CONSTRUCTION IN AJARA

03.12.2007

 

Energy Ministry informs that the government and company AjaraEnergy-2007 will sign by the end of the year the memorandum, envisaging constructing 7 small and middle HPPs of 119 MW capacity in total.

 

As Sarke was told in AjaraEnergy-2007, the construction will be funded by Turkish investors with $180 million.

 

Design works are planned to start from May 1, 2008, and should be finished within a year. The next stage scopes to launch construction itself. HPPs will be entered into operation stage by stage within 3-5 years, the company notes.

 

In total, the company plans to construct 16 small and middle HPPs. The issue of other 9 HPPs construction, being studied currently, expected to be decided next year.

AjaraEnergy-2007 was set up by Turkish businessmen in Georgia this year.

 

Source: Sarke Information Agency

 

TBC-BANK TO ATTRACT $500M CREDIT RESOURCES NEXT YEAR

03.12.2007

 

TBC-Bank expects to attract credits totaled to $500 million for the next year, Mamuka Khazaradze, head of supervisory board of the bank, declared. He forecasted that expected rise in cost of world credit, which may be provoked by bad financial results of City Bank and Merrill Lynch, will not hamper credit inflow in Georgia.

 

TBC Bank has attracted about $300 million in credits from foreign financial institutions this year. Namely, Deutsche Bank allotted $54 million, JP Morgan – $47 million, Merrill Lynch – $40 million, Credit Suisse – $35 million, the Netherlands Financial Company for Development (FMO) – $20 million.

 

TBC Bank expects to attract more $50-60 million until the end of year. The bank does not specify funding sources. However, as it became known to Sarke that $12 million accounts for European Bank of Reconstruction and Development (EBRD), which will allot the credit for mortgage funding.

 

As for TBC Group (TBC Bank and its subsidiary companies – Georgian Reconstruction and Development Company (GRDC), TBC Leasing, Georgian Pension and Insurance Holding (GPIH) and others), the funds, attracted by it, exceeded $500 million in total, Khazaradze said.

 

According to the National Bank of Georgia, TBC-Bank total assets made up 1.8 billion lari on November 1, liabilities – 1.5 billion lari. In terms of the mentioned figures, the bank ranks the 2nd in Georgian banking sector.

 

Source: Sarke Information Agency

 

8TH INTERNATIONAL EXHIBITION OF AGRICULTURE, FOOD AND DRINK, PACKAGING AND PROCESSING TECHNOLOGIES LAUNCHED IN TBILISI

05.12.2007

Eighth international exhibition of agriculture, foodstuffs and drinks, packaging and processing technologies launched today in Tbilisi exhibition center Expo Georgia. The 3-day exhibition is supported by Georgian Agricultural Ministry and Tbilisi City Hall.

80 companies from Armenia, Austria, Azerbaijan, Georgia, Germany, Italy, Russia, Turkey, Ukraine and the US present their production on 50 showcases.

According to Eka Okropiridze, product engineer of Dohler Georgia, the daughter company of German Dohler has been operating on the Georgian market for 3 years. The company supplies complimentary inputs for non-alcohol and low-alcohol drink and natural juices producing companies – Coca-Cola Bottlers Georgia, Kazbegi and others.

Russian company Kant has been operating on the Georgian market for 4 years, importing foodstuffs from various countries, including Russia. Megi Kutaladze, manager of the company, said that Sweet Country, the daughter company in Georgia, should be launched in near future, which will produce sweet pastry.

Source: Sarke Information Agency

 

TBILISI HOSTS POLISH INDUSTRIAL EXHIBITION

05.12.2007

Exhibition of Poland’s industry was launched for the first time in Tbilisi exhibition center Expo Georgia today. The 3-day event is promoted by Polish Economic and Agriculture Development Ministry, Georgian Economic Development Ministry and Georgian Embassy in Poland.

More than 30 Polish companies, as well as their Georgian subsidiaries, took part in the exhibition. The participant companies represent food industry, tourism, construction, light industry, etc.

Organizers of exhibition expect that the event will promote and deepen economic cooperation and trade between two countries. As Polish ambassador to Georgia noted, at this stage Georgian production is represented on Polish market only through wine.

According to Georgian Statistics Department, trade turnover with Poland has made up $49.7 million during January-October, which is 0.98% of total foreign-trade turnover of Georgia. At that, Polish import accounts for $47 million (1.15% of total import), while Georgian export – $2.7 million (0.27% of total).

Source: Sarke Information Agency

 

REALTY REGISTRATION IS SIMPLIFIED FOR LEGAL ENTITIES

06.12.2007

National Agency of Public Register of the Georgian Justice Ministry today announced simplification in real estate registration process for legal entities. Namely, if earlier legal entities had to present extract from the Enterprise Register of Finance Ministry’s Income Service in order to implement real estate registration, now the Agency will get information from Enterprise Register’s electronic database.

Enterprise Register’s database was created with the support of “Business Climate Reform” project of USAID. The Agency notes that this is the first precedent of e-government in Georgia.

Source: Sarke Information Agency

 

NEW CONTAINER TRANSPORTATION ROUT ILYICHEVSK-POTI LAUNCHED

06.12.2007

Georgian Single Transport Administration informs that container transportations have been started on Ilyichevsk-Poti rout. Ukrainian container ship Libra (bale cubic capacity – 303 TEU) has already made the first trip to Poti recently.

Container vessel will perform the rout presumably once a week, the Administration says.

The Poti port noted that ferry rout to Ilyichevsk started in 1996 and presently Ukrainian railway ferryboats Geroi Shipki, Geroi Plevni and Greifswald trip to Poti port once a week.

However, railway freight increased turnover in Georgia resulted in necessity to start additional container line, the Poti port explained.

According to Poti port, port freight turnover made up 6.7 million t in 2006, which is by 9.1% more than the figures of 2005. Revenues amounted to 45.4 million lari, growing by 8.8%, while profit made up 9 million lari, or by 25% more.

Source: Sarke Information Agency

 

JSC TBILISI ELECTRIC CARRIAGE REPAIR PLANT TO CONSTRUCT NEW PLANT

12.12.2007

JSC Tbilisi Electric Carriage Repair Plant intends to construct new, modern plant, Mirian Dekanoidze, director general, told Sarke.

Dekanoidze explained the mentioned decision with inability of current plant to meet increased demand for the JSC production, which comes not only from LLC Georgian Railway, but from countries of former Soviet Union as well. Dekanoidze said that the capacity of the plant is 150-200 freight carriages monthly.

According to Dekanoidze, plant constructions will need $30-40 million investments and 1.5-2-year period. The plant will employ about 3,000 people.

At this stage, ongoing works scope investors’ attraction and territory selection for construction. All details, regarding the plant building, will be defined in the first half of 2008, Dekanoidze added.

At the same time, current plant of JSC Tbilisi Electric Carriage Repair Plant is being upgraded. The plant intends to start freight and passenger carriages building from the next year.

Source: Sarke Information Agency

 

TBILISI TO HOST PABSEC SUMMIT

10.12.2007

The Parliamentary Assembly of the Organization of the Black Sea Economic Cooperation (PABSEC) will hold the 30th Plenary Session of its General Assembly on December 10-12 in Tbilisi.

Nino Burjanadze, the acting Georgian president, is expected to make a speech in her capacity as president of the BSEC Parliamentary Assembly.

Ukrainian Foreign Minister Arseniy Yatsenyuk will attend the session, along with other officials.

Source: Online Magazine‚CIVIL.GE

 

FORUM OF GUAM MEMBER STATES

07.12.2007

 

On December 7 of the current year at “Sheraton Metekhi Palace” was held a meeting of “Trade and Transportation Supporting Project” managing committee of GUAM member states, in which the representatives of  Georgian, Ukrainian, Azeri and Moldavian Customs and Frontier Departments  were participating,  also members of Guam’s  secretariat.

 

The above mentioned project aims at simplification of customs-frontier procedures and improvement of trade and economic relations of these countries.

 

Georgian delegation included the Deputy Head of the Revenue Service of the Ministry of Finance, Irakli Siradze, also other representatives of the Revenues Service, Frontier Police and The Ministry of Foreign Affairs.

 

The delegations of Ukraine, Azerbaijan and Moldova have been presided by the Deputy Heads of the Customs Departments.  Among the participants there were the representatives of the frontier services.

 

At the meeting the Deputy Head of the Revenue Service of the Ministry of Finance, Mr. Irakli Siradze did special presentation regarding the implemented reforms in the Revenue Service.

 

At the meeting Georgian delegation stressed the necessity of normalization such issues, as: setting  an electronic version of preliminary notification of cargo transportation across the GUAM states, Collaboration between customs administration on assessment of the risks and customs control; exchange the information about customs procedures, movement of cargo and transport means, provision of information in case of changes in customs regulations, elaboration of multilateral project on “administrative cooperation and customs issues” and etc.

 

After the meeting, the members of delegation visited Kakheti region, where they would observe the rehabilitation process of the customs exit-point “Lagodekhi”, being build with financial support of the US government and also the renewed City of Sighnaghi.

 

The members of the delegation will be back in Tbilisi, today. The next meeting of the committee will take place in 2008, perhaps in Moldova.

 

Source: Ministry of Finance of Georgia

 

INFORMATION ON THE RESEARCH CARRIED OUT ON EXPEDIENCY OF CONCLUDING THE AGREEMENT ON FREE TRADE BETWEEN GEORGIA AND THE EUROPEAN UNION

13.12.2007

 

Presentation of the research carried out by the international and Georgian experts on the expediency of concluding the agreement on free trade between Georgia and the European Union has been held in Tbilisi Marriot, on December 13.


The major goal of the aforementioned research envisages elaboration of expected outcomes of trade relations due to the conclusion of the agreement on free trade between Georgia and the European Union.


Pursuant to the preliminary results of the research report, conclusion of the agreement between Georgia and the European Union on free trade will facilitate the increase of Foreign Direct Investments, have a positive impact on all fields of local production as well as support the increase of purchasing power and nominal GDP. As for negative effects, conclusion of the aforementioned agreement may have a slight negative impact on fiscal incomes on the first stage.


Political consequences deriving from the conclusion of the agreement are of no less importance. This will be evident positive signal for international commonwealth, indicating that Georgia is on the way to stable and democratic development and for the country’s population that the International commonwealth, including the European Union, support the ongoing reforms in the country. What is most important stabilization of economic and trade relations with regional partners will significantly assist Georgia in resolution of existing conflicts.

Source: Ministry of Economic Development of Georgia

 

KFW WILL OPEN A $16M CREDIT LINE TO BANK REPUBLIC

13.12.2007

German Credit Bank for Reconstruction (KfW) will open a $16 million credit line to bank Republic. According to Republic, the bank will receive the loan by the end of this year or at the beginning of the following year by two equal tranches ($8 million each).

One tranche will be 5-year and will be spent for small and middle size business funding, while another one will be 10-year, and is envisaged for mortgage crediting, the bank informs. The bank didn’t disclose credit interest rates.

As Republic told Sarke, this is the first credit line directly from KfW. However, the German bank sponsored $4 million loan, received by Republic from Commerzbank in 2008.

Republic said it receved two credit lines of $20 million each from International Finance Corporation (IFC) and European Bank on Reconstruction and Development (EBRD). Another credit line of $12 million is expected to be recevied from EBRD by the end of the year or at the beginning of the next year.

According to the National Bank of Georgia (NBG), total assets of bank Republic made up 447.6 million lari by the state of November 1, 2007, while liabilities – 367.7 million lari. In these terms, Republic holds the fifth place in country’s banking sector. The bank has 36 branches and service centers all over the country.

Source: Sarke Information Agency

HEIDELBERG CEMENT GEORGIA TO CONSTRUCT CONCRETE PRODUCING PLANTS IN GEORGIA

 

13.12.2007

Heidelberg Cement Georgia plans to build concrete producing plants in Georgia next year, Meinhard Thrul, the regional director of this Georgian subsidiary of German Heidelberg Cement, told Sarke. At this stage, selection of plant locations is under way in accordance with the market demands, he noted.

To construction of one modern concrete plant costs about $1 million, Thrul said. The produced concrete, being hard-to-transport, will be envisaged for local market.

Heidelberg Cement Georgia, operating since May 2006, owns 3 cement producing plants (2 in Rustavi and 1 in Kaspi). The company has invested more than $100 million in Georgia, Thrul noted.

Presently the company produces 1.5 million t of cement annually, while expects to raise the volume up to 2 million t next year. Part of production is exported in Azerbaijan and Kazakhstan; however, the export volume is not specified.

Heidelberg Cement Georgia employs 1,500 people.

Source: National Bank of Georgia

 

COMMUNICATION COMMISSION INVITES OPERATORS TO EXPRESS INTEREST FOR RADIO FREQUENCY LICENSES

 

18.12.2007

Georgian National Commission on Communications invited operators to express their interest in radio-frequency licenses. Currently free frequencies may be auctioned in case of interest, Sarke was told in the Commission.

The matter concerns following frequency bands for mobile communication: 824.265-827.955 MHz (mobile station) and 869.265-872.995 MHz (base station), 831.645-835.335 MHz (mobile station) and 876.645-880.335 MHz (base station), as well as 1741.6-1744.8 MHz and 1836.6-1839.8 MHz, 1965-1974 MHz and 2155-2164 MHz (TDD – 2015-2020 MHz).

Following frequency bands for local broadband communication networks of wireless access are free as well: 3473.0-3480.0 MHz and 3573.0-3580 MHz, 3497.5-3504.5 MHz and 3597.5-3604.5 MHz.

Source: Sarke Information Agency

 

GEORGIA: SECOND EAST-WEST HIGHWAY IMPROVEMENT PROJECT (SEWHIP)

18.12.2007

 

The following project was approved today by the World Bank’s Board of Executive Directors:

 

IDA CREDIT: USD$35 million

TERMS:   Maturity= 40 years; Grace= 10 years

PROJECT DESCRIPTION: The project aims to contribute to the gradual reduction of road transport costs and improve ease of transit along the central part of Georgia's East-West corridor, through upgrading a segment of the East-West Highway from Tbilisi to Rikoti and strengthen the capacity of government agencies to develop and implement a traffic safety program.

 

Source: The World Bank’s Official Web-site

 

FDI VOLUME INCREASED SINCE 2006 BY 58%

24.12.2007

Georgian Statistics Department informs that volume of foreign direct investment (FDI), attracted in January-September, made up $1.05 billion. That figure exceeds by 57.7% the same showing of 2006.

The largest investment volume accounts for Netherlands – about $173.9 million, which is 58 times more than in the same period of 2006.

The top five includes as well Virgin Islands (UK) – $121 million (2.37 times more than in the same period 2006), Denmark – $92.4 million (by 8.4% more), Turkey – $89.6 million (by 1.73% less) and the US – $80.1 million (by 65.8% more).

Next come Kazakhstan with investment volume of $74.5 million (by 74.8% less than in the same period of 2006). Kazakhstan is followed by Czech Republic – $72.9 million (4.89 times more), Russia – $55.95 million (3.19 times more), Cyprus – $51.1 million (by 36.4% more) and the UK – $50.6 million (by 36% less).

As for other countries, Azerbaijan accounts for $27.7 million (by 47.6% less), Ukraine – $24.2 million (23.46 times more), France – $22.2 million (by 33.5% more), Norway – $21.9 million (by 59% less), Italy – $10.8 million (by 71.36% less), Japan – $9.6 million (by 62.16% less).

Source: Sarke Information Agency

 

MCG AND GEORGIAN OIL AND GAS CORPORATION SIGNED NEXT AGREEMENT ON MAIN GAS PIPELINE REHABILITATION

25.12.2007

Agreement was signed today between Millennium Challenge Georgia (MCG) and LLC Georgian Oil and Gas Corporation, according to which 2nd and 3rd phases of main gas pipeline rehabilitation project will start. Funding at $25 million is envisaged for the works that will last 25 months.

Rehabilitation of 17 objects will be implemented in terms of the project, including two sectors of main gas pipeline in Gardabani district, section in Kazbegi district and 1,000-mm gas pipeline on Gldanula River.

According to Zurab Janjgava, director of Georgian Oil and Gas Corporation, rehabilitation works will start next summer. Until that, all the needed procedures for project implementation will be completed – tenders will be held, Corporation will get all the necessary permissions for gas pipeline rehabilitation works, etc.

Budget of MCG project on energy infrastructure rehabilitation makes up $49.5 million. Out of this sum, $44.5 million is envisaged for rehabilitation of the damaged sections of North-South main gas pipeline, while $5 million – for assistance to Georgian Energy Ministry in further improvement and implementation of energy sector strategy.

Six sections of the pipeline were restored in terms of 1st phase of the project. Works, cost more than $15 million, were implemented in 2006-2007.

Source: National Bank of Georgia

 

PREMIUM ATTRACTED BY AIG EUROPE GEORGIA INCREASED BY 49% DURING A YEAR

27.12.2007

According to the Financial Monitoring Service of the National Bank of Georgia, AIG Europe Georgia attracted insurance premium at 1.3 million lari in 9 months, which is by 49% more compared with the same period 2006. The reinsurance accounts for almost the half of the sum – 729,622 lari.

The company holds 1.5% in local market and is placed the 8th among 13 Georgian insurance companies. AIG Europe Georgia represents branch of AIG (American Insurance Group) Europe, registered in Georgia (spring 2005), engaged in operations in Armenia as well.

AIG Europe Georgia carried out 5 categories of insurance in January-September. The civil liability insurance accounts for largest share – 35.1% (451,578 lari), which is by 79% more than in the same period of 2006.

The next ranks property insurance – 433,890 lari (33.7%), which is 2.1 times more than in the same period of 2006; financial risks insurance – 257,701 lari (20%), by 16.5% more; freight insurance – 79,712 lari (6.2%), by 59.4% less; accident and health insurance – 63,033 lari (4.9%), 160 times more.

In 3rd quarter 2007, the company has repaired damage for the first time – 40,837 lari in civil liability sphere.

Source: National Bank of Georgia

 

For more information on Georgia, visit BISNIS online at http://bisnis.doc.gov/bisnis/country/Georgia.cfm  

BISNIS (www.bisnis.doc.gov) is part of the U.S. Commercial Service (www.export.gov).