Caucasus Business Week #122

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November 16, 2015 #122

November 16, 2015, Issue 122

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David Mirtskhulava: Georgia Has to Pay no Political Price to GazProm Pg. 6

GEORGIA – ATTRACTIVE TOURISM DESTINATION FOR ALL FOUR SEASONS State Budget Bill Calls for Funding Tourism Sector Promo Campaigns by 23 mln GEL The National Tourism Administration’s budget will increase to 23 million GEL as part of the tourism sector promotion state program. The increased budget will mainly finance marketing campaigns, the tourism administration head Giorgi Chogovadze said.

Under the parliamentary regulations, the 2016 state budget bill must be approved at the end of December 2015. Before, certain entries and allocations may be revised, including in the tourism administration. Anyway, the current bill calls for growing the administration budget by 5

ANTIDUMPING LAW: SUPPORTERS AND OBJECTORS The Government of Georgia is developing an antidumping law and the parliament is expected to adopt the bill by the end of the autumn session.

The full version of the bill was not published yet, but objectors have already expressed complaints.

Members of the New Political Center of Girchebi (Pinecones) are criticizing the bill. Zurab Japaridze, one of the leaders of the new political center, says the government plans to restrict comparatively cheaper imported products and this decision will damage the population.

“The adoption and then real enactment of the antidumping law will increase prices. No other results are expected. We will have only specific

million GEL. The last three years have recorded a growth in the tourism administration budget.

In 2014 the national tourism administration’s budget was 12 million GEL, in 2015 – 18 million GEL and the 2016 budget is planned at 23 million GEL. Pg. 7

David Tsiklauri: What is Georgia’s Potential for Energy Independence Pg. 4

FLY FROM TBILISI TO SEOUL, NYC, LA, TORONTO VIA CHINA

Pg. 8

STATE-OWNED PARTNERSHIP FUND UNDER NEW MANAGEMENT

result in the form of increased prices and, naturally, this process will hit socially vulnerable part of our society. Why? There are very simple reasons. What does the antidumping law imply?

Some countries may practice incorrect policy of subsidizing certain sorts of exports products.

Consequently, these products may be imported to Georgia at low tariffs.

And the Georgian government plans to restrict imports of cheaper products to the country. This signifies Georgian residents will not be able to buy cheap products, as only expensive products will remain in the market.

Pg. 5

GLOBAL ENTREPRENEURSHIP WEEK

David Saganelidze’s Current Projects and Future Aspirations.

JSC Partnership Fund (PF) is a state owned investment fund, established in 2011. Partnership Fund’s main objective is to promote investment in Georgia by providing co-financing (equity, mezzanine, etc.) in projects at their initial stage of development.

David Saganelidze, the former leader of Georgia’s Parliamentary majority, was appointed

by Prime Minister Irakli Garibashvili as the Head of the Partnership Fund in the end of Septmeber.

Saganelidze was elected as the Member of

Parliament in October 2012 after the winning election of the Georgian Dream coalition. Before joining political forces with Ivanishvili Saganelidze was one of the leaders of the New Right.

Partnership Fund assets exceed 5 billion GEL. Partnership Fund’s portfolio is comprised of Georgia’s strategically important assets: Georgian Railway - 100% of shares; Georgian Oil and Gas Corporation (GOGC) - 100% of shares; Georgian State Electrosystem - 100% of shares; Electricity System Commercial Operator - 100% of shares; JSC Telasi - 24.5% of shares.

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DIGITAL BROADCASTING REFORM SUCCESSFULLY ACCOMPLISHED

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NEWSROOM

2 MAIN EVENTS

Tbilisi Railway By-pass Project Expecting Green Light From The Govn’t

EU OFFICIAL: “99% CERTAINTY” GEORGIA WILL GET VISA LIBERATION IN 2016 EU rules, and in terms of the number of projects being implemented within the country. We know how it is important for Georgian society to receive the visa-free regime, and that it is of more symbolic significance, rather than of political importance.“

In which form construction of Tbilisi Railway By-pass Project will be continued should become clear within a week.

According to Mamuka Bakhtadze, general director of “Georgian Railway”, 3 versions are worked out that are already submitted to Tbilisi Municipality. Respectively, the decision is expected from Tbilisi City Hall.

“We hold consolations with Tbilisi Municipality, the project is already submitted and we expect response from them. “Georgian Railway” has already submitted several variations. We are waiting for the City Hall’s decision. However, I should also note, that Tbilisi Municipality works on the general project of the city and this project must be joined on time to that plan. So, we expect the final decision in the nearest future,” Mamuka Bakhtadze told the press.

$150m Project to Make Internet Available Nationwide Georgia is embracing a $150 million USD project that will make internet available for all Georgian regions and villages. The project, financed

by Georgia’s former Prime Minister Bidzina Ivanishvili, has been launched by the Ministry of Economy of Georgia.

The first stage of the project will create a reliable internet connection for 500 villages in 10 different Georgian regions. These areas are: Adjara, Guria, Imereti, Racha-Lechkhumi, SamegreloZemo Svaneti in west Georgia and Kvemo Kartli, Mtskheta Mtianeti, Kakheti and Shida Kartli.

When fully implemented, internet will be available in 2,000 Georgian villages, meaning 91 percent of the population will have internet access.

Georgia Showcases Its Investment Climate to Greek Investors Georgia has introduced its business and investment environment to members of the Greek business society. The large group of Greek business leaders, representatives from business associations and the Greece Chamber of Commerce director attended the event, which highlighted Georgia’s investment potential. The event was held in Greece yesterday. Georgia’s First Deputy Foreign Affairs Minister Mikheil Janelidze talked about the reforms Georgia had implemented recently. Janelidze also provided detailed information about Georgia’s investment climate.

By the End of the Year Georgia’s Economy to Grow by 2.8-3% According to Deputy Finance Minister George Kakauridze, it is planned to make adjustment in the budget based on the financial results for 10 months of 2015.

“For example, the economy grew by 2.7% instead of the projected 2%. By the end of the year this figure will probably be 2.8% -3%. On this basis, plan on tax revenues will increase by 120 million and will amount to GEL 7.5 million, “- he says. In his words, the financing of the program of universal health care will increase by GEL 96 million, the Infrastructure Ministry’s funding will reduce by 76 million while Agriculture Ministry’s financing – by GEL 5 million.

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“We know how much Georgia – a high achiever in the dialogue between the Eastern Partnership and newly associated countries – is objectively resentful over Moldova’s having the visa-free regime, while it was not granted for Georgia.”

G

eorgia will have the opportunity to participate in the visa-free regime with the EU beginning in 2016, according to Andrejs Mamikins, the European Parliament’s rapporteur for Georgia.

Speaking to Trend news agency, Mamikins said that a very positive report on Georgia is expected from the European Commission.

He further said the report would be presented this year.

“And it can be said with almost 99 percent certainty that the visafree regime will be introduced next year”.

Mamikins further said it was to some extent unfair to not grant Georgia a visa-free regime with the EU, while providing Moldova with this privilege, because these two countries are comparable in terms of their territories, populations, current territorial problems, geographical locations and geopolitical importance.

Mamikins added that the reason for Moldova’s receiving the visa-free regime before Georgia lies in the fairly strong influence by the Romanian lobby, and the fact that almost one million Moldovans have Romanian citizenship, along with citizenship in Moldova and, consequently, they were already allowed to travel freely throughout the EU. Mamikins noted that Georgia, among the three countries newly associated with the EU, is regarded as a leading country, both in terms of the number of laws harmonized in line with

He noted that Georgia’s preparations for introducing a visa-free regime with the EU are worth praising, and the country will almost certainly receive the regime once the report is presented.

Regarding the visafree regime for other associated countries, Mamikins believes that this will not happen in 2016.

He also said there will be no visa-free regime with Ukraine, and there is little chance of a visafree regime between the EU and Turkey.

FEDERICA MOGHERINI HOPES FOR “GOOD NEWS” FOR GEORGIA

E

uropean Union (EU) top official Federica Mogherini, who recently visited Tbilisi, hopes Georgia will soon receive “good news” about its visa liberalization ambitions.

Mogherini, the EU High Representative for Foreign Affairs and Security Policy and Vice President of the European Commission, spoke at a press briefing after meeting with Georgian Prime Minister Irakli Garibashvili during her first-ever South Caucasian visit in Tbilisi.

She assessed Georgia’s progress in implementing its Visa Liberalization Action Plan (VLAP) and said:”

The steps taken are actually positive. We can’t predict the results but we absolutely see the progress that has been reached through your hard work and high political will.

The EU official also praised the dynamic development of Georgia-EU bilateral relations and Georgia’s implementation of its Association Agreement (AA).

BUSINESS WEEK caucasus

The Editorial Board Follows Press Freedom Principles Publisher: LLC Caucasian Business Week - CBW Address: Aleksidze Street 12 Director: Levan Beglarishvili Mobile phone: +995 591 013936 WWW.CBW.GE Email: caucasianbusiness@gmail.com

Mogherini noted during her meeting with PM Garibashvili the pair discussed Georgia’s domestic political situation too. She stressed the importance of peace and stability as the country prepared for elections next year.

“I am confident that Georgia can hold demo-

cratic elections,” she said.

Mogherini added Georgians and Italians perfectly understood what emotions in politics meant but she stressed there were frames that needed to be respected, including media pluralism, rule of law and independence of the court.

Editor: Nino Gojiashvili. Mobile phone: 595 050404 Reporters: Nutsa Galumashvili; Lazare Gvimradze; Shiva Parizad.

Designer illustrator: Giorgi Magradze. Technical Assistant: Giorgi Kheladze

Source: www.commersant.ge, www.bpi.ge, www.gbc.ge, www.agenda.ge, www.civil.ge

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INTERVIEW caucasus business week

November 16, 2015 #122

WHAT IS GEORGIA’S POTENTIAL FOR ENERGY INDEPENDENCE Interview with TBC Bank’s Deputy CEO David Tsiklauri

mercial banks finance various projects that are important for the country and that support the development of various fields of economy. The same applies to the energy sector: banks have contributed significantly to the development of the energy sectors.

The growth of energy generation in 20042012 was the result of the rehabilitation of existing facilities and the reduction of losses. The banks were actively involved in this process and financed the rehabilitation projects. As a result, the system has become healthier and energy generation has increased.

At this stage of sector development, it is necessary to build additional capacity to meet the increasing demand. The construction of new plants without banks’ participation is hardly possible: new projects are mainly implemented through bank loans and private capital is only 30-50% of total financing for hydro plants.

- How much has TBC bank invested in the energy sector?

E

nergy independence is a central issue for the Georgian economy. In order to achieve energy independence, Georgia’s rich hydro potential must be fully utilized. For this purpose, over the past several years a special focus has been placed on the construction of new capacity and on attracting foreign investors to the sector. The stability of our economy depends heavily on this.

In recent years, in addition to foreign investors, local banks have also expressed their interest in energy and, in particular, in financing hydro energy projects. Among them, TBC Bank is notable for its USD 150 million investment in the field over the past five years and the bank has even more ambitious plans in the energy sector.

In addition, commercial banks not only finance the construction of new energy generation points but also greatly contribute to attracting foreign investment in the sector.

- How will the cooperation between the banking and energy sectors develop and what positive results will this cooperation bring to the economy?

- We spoke about these and other issues with TBC Bank’s Corporate Banking Business Director, David Tsiklauri: - At what pace are the new capacities being built in Georgia and is it realistic that Georgia achieves energy independence over the next several years?

- As you are aware, achieving energy independence is one of the country’s top economic objectives. Considering Georgia’s natural resources, one of the ways to achieve energy independence, using our rich, renewable energy sources. In the first place, this implies using our hydro resources - currently only 40% of its potential is being used.

The utilization of this resources and the construction of new capacity will be a great stimulus for the economy, as it will result in the creation of new jobs, economic growth, and development.

In recent years, the demand for energy has

been constantly increasing. The pace of the construction of new capacity has not matched the increased demand, unfortunately.

For this reason, the country has been importing more energy more than it exports since 2012.

Imported energy, as you may be aware, is more expensive than the energy produced by local hydro power plants.

In the future, as the economy grows, we will need additional capacity - more and more energy.

It is absolutely necessary to obtain enough energy capacity for the economy to develop and for the country to have sufficient energy resources.

In general, when the energy consumption increases, there are three major sources that can be used to fill the deficit: import, which at this point is the most expensive resource; fossil energy, which is not a cheap resource either, and energy produced by hydro power plants, which is the most affordable option of the three sources.

As I have already mentioned, at this stage only 40% of the country’s hydro potential is utilized, which implies that there are significantly more resources that can be used.

- What are the development dynamics in the energy sector? How attractive is it for banks to invest in this sector?

- The energy sector in Georgia is a growing and stable business. It also has a very high growth potential.

Over the past five years, energy consumption in Georgia has increased by 27% whereas energy production has increased by 23%. This indicates that consumption is growing faster than production. Based on this, we can assume that the pace of the construction of new capacity, and the overall pace of sector development, will become faster. The trend of foreign investment inflow to the sector will also continue. Hence, the banks will have even more interest to finance the sector.

As for energy companies, in order to implement several medium or large projects in the energy sector, private capital and debt capital are necessary. This explains the active cooperation between energy companies and banks.

Today, energy is one of the top priority sectors for TBC Bank’s Corporate Banking Service.

Loans to energy companies comprise 12% of the Bank’s corporate l loan portfolio. We have even more ambitious plans for the future.

- How important is bank’s participation in the implementation of a new project?

- To start with, I would like to note that com-

known as “green energy”, i.e. renewable energy, they have an impact on the environment.

For this reason, each detail should be considered during the project evaluation: we should be sure that each standard is met and construction will have minimum impact on the microclimate where the project will be implemented.

- The Minister of Energy and other government officials frequently emphasize the banks’ role in the implementation and development of energy projects. In addition to providing financing, what other services do you provide in the energy sector?

- In addition to providing financial resource to energy companies, we carry out nonfinancial initiatives that support the development of the sector. In particular, TBC Bank regularly organizes various international forums and conferences.

These initiatives have two goals: first to attract investors to the sector and, second, to provide interested investors with information on investment opportunities in the sector.

“Today, energy is one of the top priority sectors for TBC Bank’s Corporate Banking Service. Loans to energy companies comprise 12% of the Bank’s corporate l loan portfolio” - We have financed about 10 energy projects over the past five years. This is a USD 150 million investment. During this period, the energy sector obtained an addition 60 MW of capacity as a result of TBC Bank’s financing.

We participated in financing the rehabilitation of existing facilities, as well as the construction of new hydro power plants.

I would like to emphasize our efforts in financing the construction of the biggest hydro power plant since the independence of the country – 108 MW Darialhesi. The bank even received an award for this project in 2015 from the influential financial magazine EMEA FINANCE. The project will be finished in the second half of 2016.

- What do the banks pay the most attention to when making a decision about financing a particular project? To what extent are the environmental standards met during the implementation of energy projects?

- In order for the bank to finance an energy project, it has to be technically and financially complete. We have set standards and we can provide information about them to anyone interested. It is very important that the environmental impact of a particular project is well researched and argumented.

Even though hydro energy projects are

We cooperate with foreign, as well as Georgian, investors and we also have the capacity, and the will, to provide a stimulus to the further development of the sector. Recently, TBC Bank’s subsidiary prepared and published the results of its research on the energy sector. The report gives a detailed description of investment opportunities in the field. The aim of this report is to raise interest in the field among foreign investors, provide them with information and help them discover proper investment opportunities.

- Should the Georgian economy expect banks’ continued active participation in the utilization of the country’s hydro potential and in the creation of new capacity?

- TBC Bank has very ambitious plans with regard to energy projects: we plan to increase our energy portfolio in 2016. At the moment, we are also in a very active phase:

We are working on approximately 5 projects, which will bring an addition 100 MW capacity to the country.

A portion of these projects is still in the preliminary evaluation stage, while others are at the stage of investment risk assessment. We are already financing one of them, the construction of a plant with 4 MW capacity, and we hope to finance the majority of these projects by the end of the year.

ECONO-MIX

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ANTIDUMPING LAW:

SUPPORTERS AND OBJECTORS Part of Business Sector Considers Antidumping Law Salvation Mechanism Besides political forces, the business sector’s opinion has also split. One part asserts the antidumping law will damage Georgian citizens by restricting admittance of cheap products and services to the market.

Another part shares the Economy Minister’s position and assures the antidumping law will bring profits to the country.

T

he Government of Georgia is developing an antidumping law and the parliament is expected to adopt the bill by the end of the autumn session. The full version of the bill was not published yet, but objectors have already expressed complaints.

Members of the New Political Center of Girchebi (Pinecones) are criticizing the bill. ZURAB JAPARIDZE, one of the leaders of the new political center, says the government plans to restrict comparatively cheaper imported products and this decision will damage the population.

“The adoption and then real enactment of the antidumping law will increase prices. No other results are expected. We will have only specific result in the form of increased prices and, naturally, this process will hit socially vulnerable part of our society. Why? There are very simple reasons. What does the antidumping law imply?

Some countries may practice incorrect policy of subsidizing certain sorts of exports products.

Consequently, these products may be imported to Georgia at low tariffs.

And the Georgian government plans to restrict imports of cheaper products to the country. This signifies Georgian residents will not be able to buy cheap products, as only expensive products will remain in the market.

Only several business companies will make profits of this decision, who may have employed 200 to 400 persons and a major part of our population will bear losses”, Zurab Japaridze said.

The Free Democrats political party also objects to adopting the bill. An adoption of price regulatory mechanisms represents interference in the free market, Vasil Revishvili, a member of the party’s economic team, noted.

“No regulations that regulate prices through instructions can be correct’, VASIL REVISHVILI added.

An antidumping law contains foreign trade restricting norms that set barriers to foreign companies so as they could not sell their products in Georgia below the prime cost.

UNDER THE WTO STANDARDS, THERE ARE TWO EXPLANATIONS FOR THE DUMPING POLICY: 1.

Importer companies sell imported products in foreign countries at below the prime cost compared to the country of origin.

2.

Importer companies sell products in foreign countries at below the normal prices compared to the country of origin.

Economy Minister DIMITRI QUMSISHVILI says foreign companies may set deliberately lower prices with the aim to gain dominating positions on the Georgian market and in this case domestic companies will bear losses.

I will clarify what is presumed behind this bill. The time of adopting this bill is not a subject of discussion.

I assure you that the antidumping law fully meets the international legislation and in practice all member counties of the World Trade Organization (WTO) have adopted similar legislations.

There is nothing against the convention.

Consequently, this is an elementary mechanism to protect our enterprisers if someone dishonestly treats your market”, Qumsishvili said.

Vice Premier GIORGI KVIRIKASHVILI also approves the bill because of risks that some companies may deliberately set dumping prices to lead domestic companies to bankruptcy with the aim to become monopolists in the Georgian market.

As a rule, antidumping laws serves to promote the domestic production. An adoption of the antidumping law will set new regulations to the business sector and specific companies will be granted protectionist preferences.

BDO managing partner ZURAB LALAZASHVILI says the adoption of the antidumping law will destroy the Georgian economy.

“In general, we should realize the results of the antidumping law and additional regulations very well. As a rule, similar legislation may be expedient and acceptable in distinct segments for a certain period in case of confirmed monopolies. In all other cases, these decisions will bring high prices and lower competition. I do not touch quality-related issues if this or that category of pour consumers find the quality of this or that product acceptable. In general, regulation of prices will bring destructive results to the Georgian economy. We should realize regulated prices grow prices and narrow competition and generate consumer discontent. I do not believe this law will save any industry. Initially, this law may promote certain industries, but in several years these regulations will damage both consumers and the sector”, Zura Lalazashvili said.

Meanwhile, LEVAN SILAGAVA, a head of the association of grain growers, positively appraises the antidumping law. He asserts this law will rescue the domestic flour production.

“We manifestly back the antidumping law enactment. First, when joining the WTO, Georgia assumed the obligation of adopting an antidumping law. High-ranking officials made these statements in due time. Adoption and enactment of this law will bring much benefit to the domestic production. Our field is in heavy condition. We can-

not provide intense exports of flour, because our neighboring countries have closed their markets through either legislation or specific mechanisms and we cannot export flour to foreign markets.

For instance, it is entirely impossible to export flour to Azerbaijan. Armenia admits flour imports in restricted volumes. Turkey protects the market by legislation, I mean high-rate imports taxes that change on seasonal basis. The same situation is reported in European countries. The EU association membership agreement was not fully enacted and if we try to export our flour to the European market, the price policy there makes us to pay 132 EUR per ton and this is quite high-rate tax. In practice, we cannot enter the European market. Nevertheless, the association agreement contains protection mechanisms too.

Georgia has signed a free trade agreement with Turkey, but tax-free regime does not include flour exports. Tax-free regime enables to export only 2000 tons of Georgian flour to Turkey, while the more volumes are taxed by 12%. Two thousand tons make up Georgia’s daily consumption volume and it is clear this is a small quota, but we can submit an example when Urekhi company tried to employ this quota in Turkey, but faced huge problems and failed to export even 2000 tons”, Levan Silagava said and added the WTO agreement and the EU association agreement contain direct indications that if importers pose a threat to some domestic companies through dumping prices, the country is authorized to apply law, including antidumping laws.

They frequently refer to excessive regulations, but if Europe has adopted this law and it is not excessive in Europe, why are the antidumping regulations considered excessive in Georgia?

When Russian flour is imported to Georgia, it is cheaper compared to the domestic flour and we assert this is a shadow dumping, because flour production is 30% cheaper in Russia compared to the Georgian production. Over the past 3 years, three major mill complexes were suspended in Georgia. If this tendency continues, Georgian mill complexes will have to import flour from abroad.

If we do not adopt the antidumping legislation, the Georgian market will be saturated by foreign flour, because the market players will have to stop production. Over 400 citizens have lost job places after suspension of 3 mill complexes. Moreover, the neighboring grain production field will be also damaged. The more job places disappear in Georgia, the more job places will be created in Russia.

The same tendency is discerned in other sectors too, including the egg production faces the same problem”, Levan Silagava said.

POWER SECTOR

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DAVID MIRTSKHULAVA: GEORGIA HAS TO PAY NO POLITICAL PRICE TO GAZPROM Georgia’s ex energy Minister David Mirtskhulava talks about the ongoing negotiations with GazProm, the agreement to be signed in December and energy security issues.

- What is your opinion on the current negotiations with GazProm and considerations as if the country may lose independence?

- Similar considerations are exaggerated, because Energy Minister Kakha Kaladze has cast light on the subject of negotiations, namely, on plans for growing Russian gas transit volume. This issue was also confirmed by the Energy Minister of Armenia.

Naturally, Georgia is a transit country and Georgia transits Russian gas to Armenia at full capacity. We take 10% of the transited gas.

- What would you say about the political price of this deal, because experts assert GazProm is a political instrument for Russia? How was this issue treated when you was leading the Georgian Energy Ministry?

- Before 2003 Georgia signed the agreement that determined Georgia’s independence from GazpRom’s natural gas. The agreement called on constructing the Baku-Tbilisi-Erzurum gas pipeline, the South Caucasus gas pipeline, that transports Azerbaijani natural gas from the Shah-Deniz field to Turkey and the part of the gas remains in Georgia. Georgia, as a transit country, receives 5% of the transited volume and 0.5 billion cubic meters of gas at the special tariff. The consolidated volume reaches 700 million cubic meters that is added 200 million cubic meter Russian natural gas from the transit to Armenia and Georgia’s total natural gas inflows from transit deals makes up 900 million cubic meters. For several years this volume was sufficient to satisfy the needs of the

We Have Showed Devotion to Transit Corridor in the Heaviest Situations GIORGI MARGVELASHVILI The President of Georgia “Georgia was and remains a gateway between Europe and Asia and we are ready to deepen our relations and cooperation in this direction. We have discussed the current situation in the region and the importance of stability. We confirmed mutual respect between our countries and to the territorial integrity of Georgia and Azerbaijan. We have reaffirmed our devotion to the principles of inviolability of borders, peaceful resolution of the conflicts and respecting sovereignty and territorial integrity of each other”.

Georgian population and the Georgian power sector. Today, our country needs to draw more natural gas volume to fully satisfy the domestic demand and to supply cheap social gas to the Georgian power sector.

Hence, the 2002 agreement has determined Georgia’s energy security and natural gas supply depends on such reliable supplier as our friendly country of Azerbaijan and SOCAR. As to the arisen questions, SOCAR supplies natural gas to commercial consumer too. Natural gas consumption is growing in Georgia and therefore, the country needs to draw alternative suppliers.

- Azerbaijan has entered into agreement with GazProm. The Azerbaijani President noted a couple of days ago Azerbaijan has no plans to get integrated into the European community. Ilham Aliyev has also warned Europe to abstain from interfering into the internal affairs of Azerbaijan. Should we expect the same tendencies in Georgia?

- According to my information, the Azerbaijani President’s statement refers to the second stage of the Shah Deniz project to prove there are sufficient volumes and Azerbaijan will be able to supply natural gas to Europe by 2018. But the current situation suggests there are certain difficulties regarding additional volumes of natural gas in Azerbaijan.

Therefore, commercial companies, not the state sector, consider availability of concluding contracts with GazProm. I mean some enterprises, gas filling stations. Naturally, commercial consumers should find the Russian natural gas prices affordable.

Today gas filling stations have to purchase gas at the starting price of 290. If GazProm offers lower tariffs, the Russian company may cooperate with this small segment as part of commercial contracts without no threats to Georgia’s energy independence.

- Changing tariffs make European countries seek alternative energy carriers…

- Naturally, the west is trying to get rid of the dependence on GazProm because they consider the Russian natural gas to bear the political component too.

I absolutely share their position. If you examine the tariff structure, there is serious difference. Poland has spent huge financial resources to construct liquefied gas terminals to partly ensure energy dependence. Georgia resolved the same issue through the 2002 agreement, when the country joined major projects of the Azerbaijani gas suppliers. If we analyze this situation and the portion of Russian natural gas in our country, we will see

We Own Huge Gas Reservoirs to Satisfy Needs of Our Neighbors and Europe

Nothing will Hinder Our Cooperation With Azerbaijan, Even Negotiations With GazProm

ILHAM ALIYEV The President of Azerbaijan

KAKHA KALADZE The Energy Minister of Georgia

“We could not consider the South Stream project today without construction of the BakuSupsa-Ceyhan and Erzurum gas pipelines. Today this projects are of huge economic and political importance for Georgia, Azerbaijan and Europe.

Azerbaijan owns huge gas reservoirs and this signifies our country is able to satisfy the needs of not only Azerbaijan, but also the needs of our neighbors and Europe”.

“There is no connection of President Aliyev’s visit with GazProm. It is our prerogative to hold negotiations with GazProm. We appreciate the relations we had, have and will have for many years. This mutual cooperation will continue in the future. I have affirmed several times that Azerbaijan is our strategic partner country.

We receive a huge volume of natural gas from Azerbaijan and nothing is able to hinder this cooperation”.

Georgia depends on the Azerbaijani supplier by 90%. Georgian residents and the Georgian power sector fully receives this social gas to satisfy the household needs and the Russian gas cannot ever compete with Azerbaijani preferential gas.

- This issue caused confusion, because the first information on the current negotiations was published on the GazProm website.

- The GazProm website published the information, because Georgian Energy Minister Kakha Kaladze met with the GazProm head in Brussels for the first time, but transit issues are negotiated by the Georgian and Russian parties every year. The Minister has also noted about 27 changes have entered the agreement. This is a routine that permanently continues, because Georgia is a transit country and Armenia receives Russian natural gas through Georgia.

We Should Not Invest Our Own Funds in Power Sector DAVID SAGANELIDZE The Partnership Fund’s Director “We should not put our money in the power sector. We have undeveloped fields and regions.

We assert these fields and regions should be developed to save the agriculture sector, fishing sector, as well as other directions and if we waste 70% of our resources in the power system, where investors have sharp competition, no one will enter our country. Investors arrive in our country and I tell them Georgia is a wonderful country with many interesting fields, but they inquire our energy projects and show readiness to invest even billions of USD in this sector”.

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TOURISM

7 GEORGIA – ATTRACTIVE TOURISM DESTINATION FOR ALL FOUR SEASONS caucasus business week

State Budget Bill Calls for Funding Tourism Sector Promo Campaigns by 23 million GEL

T

he National Tourism Administration’s budget will increase to 23 million GEL as part of the tourism sector promotion state program. The increased budget will mainly finance marketing campaigns, the tourism administration head Giorgi Chogovadze said.

Under the parliamentary regulations, the 2016 state budget bill must be approved at the end of December 2015. Before, certain entries and allocations may be revised, including in the tourism administration. Anyway, the current bill calls for growing the administration budget by 5 million GEL. The last three years have recorded a growth in the tourism administration budget. In 2014 the national tourism administration’s budget was 12 million GEL, in 2015 – 18 million GEL and the 2016 budget is planned at 23 million GEL. A bulk of the allocations of about 20 million GEL will finance marketing activities, small tourism infrastructure development projects, trainings and developing various tourism products.

“According to our estimations, 10 million GEL suffice to finance summer and autumn campaigns.

Summer period traditionally remains the most intense period and in summer the country hosts a major part of tourists and international visitors. It is important that Georgia grow into an attractive and interesting tourism destination for all four seasons.

Besides summer months, the same financial support is required to winter marketing campaigns too”, Giorgi Chogovadze noted.

As to penetrating new markets, Giorgi Chogovadze noted the administration will intensify efforts in EU countries, but more aggressive campaigns will be carried out in the Persian Gulf, because the last months have recorded a growing tendency from this direction. Digital visa system has fueled a growth in tourist inflows from Iran.

“The Analysis has showed the Persian Gulf is located in the vicinity of Georgia, only 2 hours of flights. On the other hand, three airlines connect this Region with Georgia”.

To make a breakthrough in this direction, we have set visa-free regime to those persons, who reside and work in the Persian Gulf countries, besides local residents. As a result, the inflow of visitors from the Persian Gulf is increasing at high paces. Moreover, the airlines have adjusted their activities to this initiative and increased the frequency of flights. We have expanded our activity to the direction of India too”, Giorgi Chogovadze noted.

We plan to carry out more aggressive campaign in Eastern countries and the private sector representatives also welcome this initiative.

TORNIKE GURULI, a marketing specialist and currently owner of Gallery Travel Tbilisi and Gallery Hostel Tbilisi, says the tourist inflow from western countries is not intense, because European residents have wider option and Georgia cannot compete with European markets.

Therefore, our accent should be shifted to the eastern countries, Guruli asserts.

Georgia is a very popular country in such countries as Saudi Arabia and other Arab countries. Therefore, it is important that the

state allocations finance the drawing of tourists from these countries too.

The visa liberalization issues are also very important for Iranian citizens, who seek to visit Georgia”, Tornike Guruli said.

Gudauri Heliksir owner VATO ASATASHVILI also welcomes a growth in the national tourism administration’s budget. Over the past years the increased allocations have not proportionally increased tourist inflows to Georgia.

Not only the tourism administration, but mainly the government is guilty of inefficient results, because it is upon the government to determine the climate, but it does not know where to go, Asatashvili said.

Vato Asatashvili urges the Government’s economic team to develop new resorts in the country.

“The very new and recently developed resorts bring money. Advertising expenditures represent one-off costs that bring efficient results.

Moreover, the service sector development, generating revenues and advertising this generated service sector is of crucial importance. But we do everything in opposite. The government has decided that AD campaign represents a simple way and they spend money in a simple way and no one does business there, where it must be done in reality”, Vato Asatashvili noted.

Giorgi Chogovadze:

The Year of 2015 was Successful for Tourism Sector

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espite negative effects of the Region’s political and economic difficulties on our economy and tourist inflows, the national tourism administration changed the strategy at the beginning of 2015.

A focus was made on international activities, including international marketing campaigns and tight cooperating with foreign media. In 2015 we invited more than 400 reporters from various countries of the world. As a result of this job, Georgia will host three influential international conferences in 2016 to 2017, including two ones will be held in 2016. As to an upturn in visitors’ inflow, the last 10 months have recorded a 7% growth in foreign visitors’ inflows and these indicators enable to conclude that the year of 2015 was very successful for international visitors and in terms of revenues”.

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EVENTS caucasus business week

November 16, 2015 #122

DIGITAL BROADCASTING REFORM SUCCESSFULLY ACCOMPLISHED

The Digital Broadcasting Agency of the Ministry of Economy and Sustainable Development of Georgia summed the digital broadcasting reform at the special conference held at the Courtyard Marriot Hotel.

The presentation was attended by the Georgian authorities, representatives of the European Union, EBRD, USAID, the Consulate of China, non-governmental organizations, representatives of commercial structures and local and foreign experts.

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he opening speech at the conference was delivered by the Minister of Economy and Sustainable Development, Dimitri Kumsishvili. The process of transition from analogue to digital broadcasting, performed work and the outcome of all those efforts were touched in their speeches by the Vice PM and Foreign Minister Giorgi Kvirikashvili, the chairperson of the National Communications Regulatory Commission, Vakhtang Abashidze, the chairperson of the Digital Broadcasting Agency, Nino Kubinidze, the Director of European Bank for Reconstruction and Development for Caucasus, Bruno Balvanera and the head of the telecommunications direction of the Institute for Development of the Freedom of Information, Ucha Seturi.

DIMITRI KUMSISHVILI: “Today we can say that Georgia is the leader country, which has succeeded in transition to digital broadcasting in the shortest period of time.

The success of the reform was the outcome off the coordinated and purposeful cooperation of Georgia’s executive and legislative authorities with the National Communications Regulatory Commission, Georgian TV-Radio Center, Public Broadcaster,

Georgian Technical University, international and local experts and consultants and this was a very fruitful work indeed“.

Giorgi Kvirikashvili congratulated on the successful accomplishment of the reform to the audience and stated that Georgia was the only country in the region that had managed to conclude all the activities necessary for creating new technological platform in the shortest terms.

“I’d like to thank every single person involved in the process of the reform, but special thanks to Mrs. Nino Kubinidze for performing very serious management functions for effective implementation of this project. I’d like to express my gratitude to our citizens for accepting this reform with understanding”, - Giorgi KVIRIKASHVILI said.

Vakhtang Abashidze was the next to offer congratulation speech. He emphasized that the main achievement of the reform was the encouragement of Georgian-made broadcasting content and the freedom of expression.

“The reform has enabled us to adopt amendments that helped the broadcasters move from the regime of licensing to the regime of simple authorization. This is

FLY FROM TBILISI TO SEOUL, NYC, LA, TORONTO VIA CHINA

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mid intensified China-Georgia relations, China Southern Airlines announced its intentions to operate several new international flights from Tbilisi Airport.

The new destinations from Tbilisi will include cities like Seoul, New York, Los Angeles, and Toronto. All these will become accessible for Georgian travelers through connecting flights in Chinese cities of Urumqi and Guangzhou.

China Southern Airlines presented the future plans for expanding its business activity in Georgia at yesterday’s conference held at new Hualing Hotels and Preference at Tbilisi Sea City.

The Company’s deputy marketing director Zhang Jun thanked the Georgian government for the active cooperation with China Southern Airlines, which is the country’s one of three biggest airlines.

“Reviving Georgia’s role in the historic Silk Road is one of our goals. So far we do not have a lot of tourists from Georgia. But if we have more customers from Georgia using our Airline’s transit services, we will lower the fairs for them,” Mr. Jun said.

“Chinese people love Georgia very much,

but the wide audience doesn’t know much about the country yet.

Enactment of the new direct flights between Georgia and China will bring the two nations closer to each other”.

China Southern Airlines operates direct flights from Tbilisi to Urumqi and Guanzhou. As the director of Georgian Civil Aviation Agency Guram Jalagonia notes, China Southern Airlines has been working in the country for four years now.

“The Company is oriented at increasing tourist activity in Georgia; we can only salute this undertaking by China Southern Airlines. Chinese government is planning to sign the free-trade agreement with Georgia, which is extremely important for Georgia’s economic development,” Jalagonia told CBW. Tbilisi – Urumqi flights operate regularly since 2011 at the from Shota Rustaveli International Airport.

the top level liberal regime for broadcasters and only few countries can boast to have such liberal approach on legislative level around the world”, - VAKHTANG ABASHIDZE said.

EBRD Director for Caucasus, BRUNO BALVANERA also hailed the transition as the process that had greatly contributed to the EBRD activities.

“We believe that communication is a very important sphere, which can bring serious benefit to the country. The digital switchover has freed up frequency resources, improved quality and created a more liberal legislation. Georgia has taken a step forward to the EU and European standards”.

Chairperson of the Digital Broadcasting Agency, Nino Kubinidze summed up the work performed by the agency through the process of the reform and spoke about its outcome and benefit.

“The government ensured maximum protection of the rights of the country and its population and optimal, rational spending of budgetary funds in terms of efficient use of radio frequency resources and also by purchasing high category network devices and certified set-top boxes in the lowest price”, - Nino Kubinidze said.

The representative of the non-governmental organization IDFI, UCHA SETURI also reviewed the process of the reform. He spoke about the improved model of the media regulation and evaluated the process of the reform positively.

“Today we have government’s minimum

interference in the coverage of commercial broadcasting and this happens only on regulation level and this is one of the factors that has been highly praised even beyond the borders of Georgia. I should particularly mention the part of the regional media – the licenses given for free was the precondition of the success of this process.

It should be stressed that this model has been evaluated as the successful Georgian project by our partners”.

At the conference, the companies and persons, who had provided special support and assistance to the process of reform, were awarded with certificates of gratitude by Nino Kubinidze and Vakhtang Abashidze.

The event was concluded with the presentation of the documentary film “Digital Broadcasting Reform in Georgia” shot by the Digital Broadcasting Agency.

Nowadays, all the work, including legislative regulations, construction of state and private networks, social subsiding and information campaigns that are necessary for the new technological platform, has been concluded.

The technological change carried out under international obligations has fundamentally transformed the terrestrial television industry. The full range of multifunctional services and the opportunities for effective use of frequency resource is the choice of the contemporary world and our country has become a part of this world. This reform has moved live TV broadcasting in Georgia on an absolutely new stage of development.

November 16, 2015 #122

PARTNERSHIP FUND

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caucasus business week

STATE-OWNED PARTNERSHIP FUND UNDER NEW MANAGEMENT David Saganelidze’s Current Projects and Future Aspirations

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SC Partnership Fund (PF) is a state owned investment fund, established in 2011. Partnership Fund’s main objective is to promote investment in Georgia by providing co-financing (equity, mezzanine, etc.) in projects at their initial stage of development.

David Saganelidze, the former leader of Georgia’s Parliamentary majority, was appointed by Prime Minister Irakli Garibashvili as the Head of the Partnership Fund in the end of Septmeber.

Saganelidze was elected as the Member of Parliament in October 2012 after the winning election of the Georgian Dream coalition. Before joining political forces with Ivanishvili Saganelidze was one of the leaders of the New Right.

Partnership Fund assets exceed 5 billion GEL. Partnership Fund’s portfolio is comprised of Georgia’s strategically important assets: Georgian Railway - 100% of shares; Georgian Oil and Gas Corporation (GOGC) - 100% of shares; Georgian State Electrosystem - 100% of shares; Electricity System Commercial Operator - 100% of shares; JSC Telasi - 24.5% of shares.

Partnership Fund to Create a New Financial Institution in Georgia

The Fund Carrying out Two Major Projects in the Country The Partnership Fund (PF), is teaming up with local company Gino Invest to implement two major projects in Georgia.

One project envisioned building an Eco Green City near Tbilisi Sea territory while the other was about building several spa-hotels in different regions of Georgia.

The Tbilisi Sea development project included

building kindergartens, schools, sport and recreation centres, medical and rehabilitation centres and a trade district. It also outlined the creation of residential villas, cottages and apartments.

The whole area will be classed as an Eco Green City where 90 percent of the energy used by all facilities will be generated from solar, wind, hydro power and bio gas.

EBRD Regional Director Cooperates With the Partnership Fund A delegation of the European Bank for Reconstruction and Development (EBRD) led by Bruno Balvanera, Director for the Caucasus, Moldova and Belarus held a business meeting with the senior officials of the Partnership Fund.

Bruno Balvanera said that he is happy about the cooperation with the Partnership Fund and

is proud to be involved in the implementation of Nenskra HPP project. The participants of the meeting discussed several projects, where the Partnership Fund is considering involving EBRD. David Saganelidze, CEO of the Partnership Fund and Bruno Balvanera exchanged their views on cooperation opportunities.

Partnership Fund Conducts a Feasibility Study For Racha’s Tourism Opportunities With BDO The Partnership Fund and BDO, a consultant company commissioned to conduct a feasibility study for Racha’s tourism opportunities held a working meeting. The study includes preparing a development concept for the Racha region as well as specifically for Utsera, Shovi, Shaori and etc.

As a result of the study the development concept will be prepared envisioning developing several

modern resorts in Racha, West Georgia.

BDO Georgia is a member of BDO network, a worldwide network of public accounting firms, called BDO Member Firms. With more than 1,328 offices in 151 countries, BDO is the fifth largest network in the world.

The feasibility study will be completed by the end of 2015.

Draft bill on reorganization of Partnership Fund should be submitted to the Parliament late this year.

According to David Saganelidze, executive director of the Fund, Advisory Council, compromised of three members works jointly with the German Development Bank (KFW) on the draft bill, in order to create a big financial institution on the basis of the Partnership Fund. The Advisory Council includes Mirian Gogiashvili, former Finance Minister, Tamar Beruchashvili, former Minister of Foreign Affairs and Merab Kakulia, former Vice President of National Bank.

David Saganelidze hopes, that the reorganized fund in the form of the Development Finance Institution will start to operate by Spring 2016.

It is already known, that the new organization should not have the right to accepts deposits and to process banking operations. As for the crediting, the organization will give priority to those initiatives that are not funded by the commercial banks (start-ups, or high-risk projects).

Saganelidze believes that Georgia needs a state financial institution, which will carry on the survey process, defining the initiatives that have development potential if financial support is provided.

Initiatives in certain rural regions of the coun-

try will also be prioritized.

Saganelidze notes, that the state must “cut the way” and define the directions in which the commercial banks will start the cooperation later.”

What the name of the new financial intuition will be or the form of the fund allocation is not known yet. Works are carried out in this direction and several versions are being discussed currently. What is known is that the new state financial institution will try to raise the funds from the international donors as will.

Saganelidze notes, that he cant see any reasons as to why Georgia would not need a developed finance institution, when 248 development banks operate on the basis of such in the leading countries of the world.

“We do not have it and we do not need it.

That’s what they keep telling me.

I have been battling for three years, but cannot break the topic through,” frustrated Saganelidze says. Executive director of Partnership Fund emphasizes that the new financial institution should not cover the banking sector. “On the contrary, we should establish new spheres, where the banking sector should be extended,” he says.

As for the second project, plans were already in place to build the first spa-hotels in Bakuriani village and Mtskheta and Kakheti regions.

HEALTHCARE 10 ANTIMICROBIAL THERAPY TO BE IMPLEMENTED IN GEORGIA’S PRIMARY HEALTHCARE caucasus business week

November 16, 2015 #122

Georgian Doctors Will Take Instructions From Sanford’s Guide to Antimicrobial Therapy

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eorgian practitioners were given instructions from Sanford University Guide to Antimicrobial therapy.

National Center for Disease Control and Public Health of Georgia (NCDC), hosted a conference on introduction of rational application of Antimicrobial Therapy in the country.

The Georgian version of 45th edition of the Sanford guide to Antimicrobial therapy was presented on the event. The guide is an internationally acclaimed publication and is daily used by every American practitioner.

Starting now Georgian therapists as well, will take instructions from this book, which holds many years of medical experience.

The presentation by Dr.Elizabeth Bouvet and Dr.Malvina Javakhadze addressed the European perspective on then use of antimicrobial therapy, as well as the instruction for implementation of the Sanford guide for Georgian practitioners.

The event was organized by the Ministry of Health, National Center for Disease Control and Public Health in collaboration with GAHSC. Representatives of the Ministry of Health, NCDC, Global Alliance and Georgia’s regional hospital practitioners attended the event.

Jean-Elie Malkin: Antimicrobial Resistance Rationalizes The Use of Antibiotics

President of the international consulting company, Global Alliance Jean-Elie Malkin discussed the overall healthcare condition in Georgia and outlined Antimicrobial resistance as the way to rationalize the use of antibiotics.

“As the president of the Global Alliance, I would like to say we are supporting authorities of Georgia and the Ministry of Health and the Minister himself on the ongoing process of improving the whole health care system.

This initiative taken by the Ministry and NCDC of translating the Sanford Guide on the use of antibiotics is fully in line with what we are doing. Why? Because we are aiming to improve the whole health care system, to improve quality of services, to improve efficiency of services, and – what is the most significant – to improve the cost effectiveness of these services,” Malkin said.

By better rationalizing the use of Antibiotics – which I am sure this guide will allow all the practitioners to do – it will also allow doctors in the field of infectious diseases, to be more effective, to provide better quality of services and to save money. Saving money is important because the misuse of antibiotics increases the overall cost of health, so not only it will be beneficiary for patients and doctors but also for the whole country.

ZAZA SOPROMADZE deputy Minister of Healthcare considers Antimicrobial resistance a global issue: “We are trying to share the European experience to our practitioners, and give them adequate recommendations and instructions. We have translated Sanford University’s guide to Antimicrobial Therapy. National coordination council of Antimicrobial resistance has been created in Georgia. A national strategy has been prepared, which, first of all, implies rational pharmaceutical therapy. This is very important because such infections are difficult to treat and are related to certain costs”.

General Director of NCDC AMIRAN GAMKRELIDZE Conference covering Antimicrobial resistance is organized with the support of “Global Alliance”, as you know the company consulates the Ministry of Health and shares recommendations during the process of reforms, their involvement in Antimicrobial theory is highly important. Last 70 years antibiotics have rescued millions of people, but at the same time one of the world’s big challenges is Antimicrobial resistance, which is getting more and more actual nowadays. Choosing antibiotics is hard and new drugs are created slowly. After implementation of C hepatitis, infection control is increased in medical and non-medical institutions.

Elizabeth Bouve: Antimicrobial Resistance is a Worldwide Issue and Georgia Can Solve It With the invitation of Global Alliance, Professor Elizabeth Bouve attended the conference and discussed the ways of improving use of Antibiotics by practitioners. French professor spoke at the conference how to make rational use of antibiotics in the country, what primary health care practitioners need to know, and on the society that has a certain influence on the development of the health sector: “Antimicrobial resistance is a worldwide issue. The main theme of my presentation was this problem. Georgian doctors were given a very important guide, and I would like to recommend all the practitioners, to apply and implement these guidelines and habits outlined in the book. The rational use of antibiotics is an important issue. I support the government and the Ministry of Health in undertaking this initiative for the country.

With such support, appropriate practices and specific actions, I think this problem will be solved. “Global Alliance” is the organization that can consult the Ministry of Health appropriately.

Malvina Javakhadze: Doctors Should Avoid Antibiotics if the Patient Does Not Require Hospitalization According to Prof. Malvina Javakhadze Antimicrobial resistance exists since an antibiotic has been created, but today due to many problems taking antibiotics is not profitable for pharmaceutical companies: “If we continue with such pace, in a few years even a light infection will be incurable and deadly to humans. If we use antibiotics often and unintentionally, future generations will be affected. With regard to primary healthcare – in cases where the patient does not require hospitalization, the choice shouldn’t be made on anti-

microbials. International Week of Antimicrobial resistance is celebrated throughout the world, starting November 16. Prescribing antibiotics has been a major step forward and will prevent lots of problems. “ Antimicrobial resistance is the global challenge of 21st century, which has surpassed state boundaries, expanded to all parts of the world and became a pandemic. The rational therapy is on one hand an important intervention to treat infectious diseases, and on the other, it is a major instrument to tackle antibiotic resistance.

November 16, 2015 #122

COMPANY NEWS

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caucasus business week

LISI DEVELOPMENT OBTAINS TWO AWARDS AT INTERNATIONAL PROPERTY AWARDS CONTEST

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ISI Development company has obtained two awards at the International Property Awards, the Europe’s one of the most prestigious contests in the real estate industry, in the following nominations: Highly Commended Mixed-Use Development in Georgia, and Highly Commended Residential Development in Georgia.

LISI Development has won the awards in this prestigious ceremony for the fourth year. The company has already won 6 awards at this international real estate competition.

The International Property Awards was founded 20 years ago and today it represents one of the ambitious contests in the real estate industry. Worldwide distinguished specialists from all sections of the real estate industry assess the submitted projects. Over 60 experts were invited to

the projects selection process from various countries of the world.

LISI Development is Georgia’s first development company that is implementing a large-scale project on a 350 hectare territory near the LISI Lake. Founded in March 2010 the company has been implementing the LISI Green Town project.

The objective of LISI Development is to develop not only a modern residential complex with refined architecture, but also to establish new, ecologically clean and healthy lifestyle in Georgia.

At this stage, the company has finished the first phase of the residential complex with over 170 apartments, 16 townhouses and 3 villas. The second stage started in May 2015 and will end by 2017.. The second phase calls for developing a 48 000 square meter land plot with 260 residential units (apartments and townhouses).

HENKEL TO INVEST 8 MILLION USD IN HENKEL PLANT CONSTRUCTION IN GARDABANI

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enkel company has launched the plant construction works in Gardabani, the Kvemo Kartli Region. The enterprise will employ 35 persons and investment volume will make up 8 million USD, the Georgian Government’s Office reports.

Georgian Prime Minister Irakli Gharibashvili has attended the project inauguration in Gardabani.

Henkel, the world’s one of the leading com-

panies in the chemical industry, expressed interest in Georgia at the end of 2013.

In the 2013 to 2014 period Henkel explored Georgia’s investment environment, visited stateowned and private land plots and finally decided in summer 2014 to construct a fast-drying cement enterprise in the Gardabani Municipality.

Henkel company employs more than 49 000 persons worldwide. The company’s revenues in 2014 marked 19.2 billion USD.

GLOBAL ENTREPRENEURSHIP WEEK November 18

Venue – International Black Sea University 14:00 -17:00 Organizer - International Black Sea University in partnership with Young Entrepreneurs Association • Startup Stories • Business Incubator Ibsu Idea Lab – startup pitching

November 19

‘’Global Entrepreneurship Week” is the largest international project promoting entrepreneurship and supporting young entrepreneurs.

During November in the framework of the project annualy up to 30 000 activities are organized simultaneously to promote entrepreneurship , by more than 10 000 partner in 149 countries, where more than 8 Ml people are participating.

November 16-21 ”Global Entrepreneurship Week” will be held fourth times in Georgia. Project hosts and local representatives are ”Young Entrepreneurs Association” and ‘’Global Entrepreneurship Network Georgia’’.

PROJECT PARTNERS : • Eurasia Foundation • Geolab • International Black SEa University Startup Nest • IBSU Idea Lab

PROJECT SUPPORTERS : • Ministry of Economy and Sustainable Development • Agency of Innovation and Technology PROJECT MEDIA PARTNERS • Caucasus Business Week • StartUP.ge In the framework of the project, November 16-21 , different kind of activities are planned to promote entrepreneurship and spread the word about startup support programs , initiatives and projects.

(Please register below and select the activities, you want to attent. Based on it, you will receive agenda. Thank you beforehand for your cooperation ) http://bit.ly/1MCOPCl

November 16

Venue - Geolab 17:00-19:30 Organizer - Young entrepreneurs Association, Global Entrepreneurship Network Georgia • Panel discussion - Govemernet support programs for startups • Startup Talks Educating the next generation of entrepreneurs • Startup Talks - startup Culture

November 17

Venue – Geolab 18:00-20:00 Organizer - Young entrepreneurs Association, Global Entrepreneurship Network Georgia • Panel discussion – Funding opportunities for startups • Panel discussion -Incubation and Acceleration programs in Georgia

Venue – Geolab ,18:00 -20:00 Networking event for women entrepreneur November 20 Venue – Eurasia Foundation 16:00 -18:00 Organizer - Eurasia Foundation in partnership with Young Entrepreneurs Association, Global Entrepreneurship Network Georgia • Social Entrepreneurship and Youth – new ways of cooperation

November 21

Venue – Startup Nest 14:00 -18:00 Organizer - Startup Nest in partnership with Young Entrepreneurs Association • Panel Discussion -Marketing for startups • Workshop - crowdfunding as a funding opportunity for startups

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November 16, 2015 #122

WORLD NEWS

November 16, 2015 #122

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COLORADO COULD BECOME THE FIRST STATE WITH UNIVERSAL HEALTH CARE

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plan to make Colorado the first state to opt out of the federal health law and replace it with universal health care, funded by the taxpayer, is going to be on the Colorado ballot in 2016.

Supporters of universal health care gathered 158,831 qualified signatures, which is more signatures than are required to put the measure on the ballot.

Backers of the measure say employers would pay around 7 percent of a worker’s wages into the system. Workers would put around 3 percent into the system. Supporters say the plan would cost around $3 billion a year, but would save $9 billion.

Skeptics of the measure say costs would spiral out of control. It is likely the proposed measure will bediscussed in the upcoming presidential election, since Colorado is a battleground state.

Groups from both sides are likely going to invest a lot in order to advance the measure or defeat it.

If the ballot is passed, an entirely new government entity would be in charge of running the new health care program. Elected officials in 21 districts would be on the board and would be in charge of raising taxes to fund the new health care system.

Colorado is not the first state to attempt something like this. A few years ago, Vermont got support for a single payer health care system, but eventually the state admitted a large program couldn’t be financed due to a lack of money.

Southern Gas Corridor in Focus at Upcoming Energy Summit in Istanbul

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he Southern Gas Corridor will be one of the topics of discussions during the the annual Atlantic Council Energy & Economic Summit, to be held in Istanbul on November 18-20, 2015.

The Summit is aimed at fostering and strengthening transatlantic engagement on energy, economic, and political challenges.

President of Turkey Recep Tayyip Erdoğan, European Commissioner for Climate Action and Energy Miguel Arias Cañete, President of Croatia Kolinda Grabar-Kitarović, Executive Director of the International Energy Agency Fatih Birol, Prime Minister of Albania Edi Rama, US Special Envoy and Coordinator on International Energy Affairs Amos Hochstein are among the keynote speakers at the Summit.

Representatives of SOCAR, Trans Adriatic Pipelien (TAP), Dentos, BP Turkey, as well as the US Ambassador to Azerbaijan will be the participants of the Session dedicated to the Southern Gas Corridor on November 20.

The Southern Gas Corridor is one of the priority energy projects for the EU. It envisages the transportation of gas from the Caspian Sea region to the European countries through Georgia and Turkey. At the initial stage, the gas to be produced as part of the Stage 2 of development of Azerbaijan’s Shah Deniz field is considered as the main source for the Southern Gas Corridor projects. Other sources can also connect to this project at a later stage.

As part of the Stage 2 of the Shah Deniz development, the gas will be exported to Turkey and European markets by expanding the South Caucasus Pipeline and the construction of TransAnatolian Natural Gas Pipeline and Trans-Adriatic Pipeline.

Turkey Seeks Separate Russia Gas Pipe, Price Talks After Vote

EU urges Russia Not to Impose Food Embargo on Ukraine

Georgian Electricity to Iran and Armenian one to Russia

urkey said its natural gas price talks with Russia should proceed separately from negotiations on a pipeline proposed by President Vladimir Putin last year, signaling a risk of further delays in the deal.

While Russia had expected a package accord after waiting for Turkey to set a new government, the Black Sea nation’s energy minister said Wednesday the two shouldn’t be linked. Turkey is ready to discuss an out-of court price deal with Russian energy company Gazprom PJSC after filing an arbitration claim earlier this month, Ali Riza Alaboyun said in an interview on Wednesday.

“If they say let’s sit down and talk over the previously agreed 10.25 percent discount, there may be a discussion,” Alaboyun said. “But this issue must be handled separately” from the proposed Turkish Stream pipeline, he said.

Last December, Putin offered to make Turkish President Recep Tayyip Erdogan’s country a new linchpin in Europe’s energy supplies by 2020. He proposed to build a Black Sea gas pipeline to supply Turkey and the European Union, which relies on Russian gas for about a third of its needs, amid political tensions with the 28nation bloc. Talks on the deal stalled in July after Erdogan’s party lost its parliamentary majority for the first time in more than a decade, and Turkey failed to form a coalition government.

Erdogan’s party regained a majority in the Nov. 1 election. While Russia’s officials have been saying the deal is possible once Turkey forms a new cabinet after the vote, Putin’s military buildup in Syria contributed to disputes with Turkey last month. The planned capacity of the so-called Turkish Stream pipeline was halved after Russia agreed in September to send more gas to Europe through a Baltic Sea pipe that connects Siberian fields directly with Germany.

he European Union has asked Moscow not to ban Ukrainian goods after 1 January 2016, when the economic part of Kiev’s Association Agreement comes into force. Kremlin says it’s considering customs tariffs, not embargo.

According to EU Trade Commissioner Cecilia Malmstrom, Brussels is doing everything possible to prevent a food embargo against Ukraine.

She said the EU is holding frequent meetings with Russia to mitigate the consequences for Kiev.

Ukrainian industry has estimated the losses from a Russian embargo on its products could be $140-205 million.

Russian Prime Minister Dmitry Medvedev insists the Kremlin plans introduction of customs tariffs, not sanctions against Ukraine. The tariffs will be introduced because Ukraine will no longer be part of the Commonwealth of Independent States (CIS) free trade zone. Moscow is also concerned that without such a barrier, Kiev could illegally supply embargoed European goods to Russia.

“We’re not talking about sanctions, which our partners imposed against Russia. But such a trade environment, of course, would have very serious economic consequences for Ukraine,” said Medvedev.

If the Kremlin decides to introduce customs tariffs on Kiev’s products, the Ukrainian economy will lose $167-239 million.

n the long term Armenia will be able to directly connect with the power system of Russia, Armenian Deputy Minister of Energy Areg Galstyan said today in the parliament, introducing the 10 million Euro draft credit agreement with the European Investment Bank in the framework of the “Caucasus Transmission Network” project (the main donor of the 105-million-Eur project is the German KfW bank, which supports by 85 million Euro).

In the framework of the project, it is planned to construct the first 400 kV transmission line between Armenia and Georgia, which will increase the cable performance for the crossflow between the power systems of both countries almost thrice. Following this, mutually beneficial crossflows will be possible not only between Armenia and Georgia, but also Georgia and Iran.

In 2006, Energy Ministers of Iran, Armenia, Georgia signed a memorandum on cooperation in the sphere of energy, which supposed power crossflows when possible.

This is very beneficial for the Georgian side: the latter will be able to direct to Iran the excess of its cheap hydropower in spring and get the same amount back in winter. Armenia will also be able to buy the cheap Georgian power, the Deputy Minister said.

The construction of the new Electric Transmission Line (ETL) will make it possible for Armenia to directly supply its electricity to Russia, since the Georgian and Russian systems work in a parallelly synchronic regime, and have always worked liked that, irrespective of political conflicts, Galstyan said. Thanks to this, Georgia gets the power it needs in winter months.

Armenia wants to show its Russian colleagues the benefit of the cable performance and construction of another 500 kV ETL from Mozdok to Kavkasioni line.

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PUBLICITY caucasus business week

November 16, 2015 #122

November 16, 2015 #122

Embassy United States of America Embassy 11 Balanchivadze St., Dighomi Dstr., Tbilisi Tel: 27-70-00, 53-23-34 E-mail: tbilisivisa@state.gov; askconsultbilisi@state.gov United Kingdom of Great Britain and Northern Ireland Embassy 51 Krtsanisi Str., Tbilisi, Tel: 227-47-47 E-mail: british.embassy.tbilisi@fco.gov.uk Republic of France Embassy 49, Krtsanisi Str. Tbilisi, Tel: 272 14 90 E-mail: ambafrance@access.sanet.ge Web-site: www.ambafrance-ge.org Federal Republic of Germany Embassy 20 Telavi St. Tbilisi Tel: 44 73 00, Fax: 44 73 64 Italian RepublicEmbassy 3a Chitadze St, Tbilisi, Tel: 299-64-18, 292-14-62, 292-18-54 E-mail: embassy.tbilisi@esteri.it Republic of Estonia Embassy 4 Likhauri St., Tbilisi, Tel: 236-51-40 E-mail: tbilisisaatkond@mfa.ee Republic of Lithuania Embassy 25 Tengiz Abuladze St, Tbilisi Tel: 291-29-33 E-mail: amb.ge@urm.lt Republic of Latvia Embassy 16 Akhmeta Str., Avlabari, 0144 Tbilisi.

E-mail: embassy.georgia@mfa.gov.lv Greece Republic Embassy 37. Tabidze St. Tbilisi Tel: 91 49 70, 91 49 71, 91 49 72 Czech RepublicEmbassy 37 Chavchavadze St. Tbilisi ;Tel: 291-67-40/41/42 E-mail: czechembassy@gol.ge Web-sait: www.mzv.cz Japan Embassy 7 Krtsanisi St. Tbilisi Tel: +995 32 2 75 21 11, Fax: +995 32 2 75 21 20 Kingdom of Sweden Embassy 15 Kipshidze St. Tbilisi Tel: +995 32 2 55 03 20 , Fax: +995 32 2 22 48 90 Kingdom of the Netherlands Embassy 20 Telavi St. Tbilisi Tel: 27 62 00, Fax: 27 62 32 People’s Republic of China Embassy 52 Barnov St. Tbilisi Tel: 225-22-86, 225-21-75, 225-26-70 E-mail: zhangling@access.sanet.ge Republic of Bulgaria Embassy 15 Gorgasali Exit, 0105 Tbilisi, Georgia Tel: +995 32 291 01 94; +995 32 291 01 95 Fax: +99 532 291 02 70 Republic of Hungary Embassy 83 Lvovi Street, Tbilisi Tel: 39 90 08; E-mail: hunembtbs@gmail.com State of Israel Embassy 61 Agmashenebeli Ave. Tbilisi Tel: 95 17 09, 94 27 05 Embassy of Swiss Confederation’s Russian Federation Interests Section Embassy 51 Chavchavadze Av., Tbilisi Tel: 291-26-45, 291-24-06, 225-28-03 E-mail: RussianEmbassy@Caucasus.net Ukraine Embassy 75, Oniashvili St., Tbilisi Tel: 231-11-61, 231-12-02, 231-14-54 E-mail: ukraina_pu@wanex.net; emb_ge@mfa.gov.ua Consular Agency: 71, Melikishvili St., Batumi Tel: (8-88-222) 3-16-00/ 3-14-78 Republic of Turkey Embassy 35 Chavchavadze Ave., Tbilisi Tel: 225-20-72/73/74/76 embassy.tbilisi@mfa.gov.tr Consulate General in Batumi 9 Ninoshvili Street, Batumi Tel: 422 25 58 00 consulate.batumi@mfa.gov.tr Republic of Azerbaijan Embassy Kipshidze II-bl . N1., Tbilisi Tel: 225-26-39, 225-35-26/27/28 E-mail: tbilisi@mission.mfa.gov.az Address: Dumbadze str. 14, Batumi Tel: 222-7-67-00; Fax: 222-7-34-43 Republic of Armenia Embassy 4 Tetelashvili St. Tbilisi Tel: 95-94-43, 95-17-23, 95-44-08 E-mail: armemb@caucasus.net Web: www.armenianembassy.ge Consulate General, Batumi Address: Batumi, Gogebashvili str. 32, Apt. 16 Kingdom of Spain Embassy Rustaveli Ave. 24, I floor, Tbilisi Tel: 230-54-64 E-mail: emb.tiflis@maec.esRomania Embassy

TBILISI GUIDE

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caucasus business week

7 Kushitashvili St., Tbilisi Tel: 38-53-10; 25-00-98/97 E-mail: ambasada@caucasus.net Republic of Poland Embassy 19 Brothers Zubalashvili St., Tbilisi Tel: 292-03-98 Email:tbilisi.amb.sekretariat@msz.gov.pl Web-site: www.tbilisi.polemb.net Republic of Iraq Embassy Kobuleti str. 16, Tbilisi Tel: 291 35 96; 229 07 93 E-mail: iraqiageoemb@yahoo.com Federative Republic of Brazil Embassy Chanturia street 6/2, Tbilisi Tel.: +995-32-293-2419 Fax.: +995-32-293-2416 Islamic Republic of Iran Embassy 80, I.Chavchavadze St. Tbilisi, Tel: 291-36-56, 291-36-58, 291-36-59, 291-36-60; Fax: 291-36-28 E-mail: iranemb@geo.net.ge United Nations Office Address: 9 Eristavi St. Tbilisi Tel: 225-11-26/28, 225-11-29/31 Fax: 225-02-71/72 E-mail: registry.geo@undp.org Web-site: www.undp.org International Monetary Fund Office Address : 4 Freedom Sq., GMT Plaza, Tbilisi Tel: 292-04-32/33/34 E-mail: kdanelia@imf.org Web-site: www.imf.ge Asian Development Bank Georgian Resident Mission Address: 1, G. Tabidze Street

Freedom Square 0114 Tbilisi, Georgia Tel: +995 32 225 06 19 E-mail: adbgrm@adb.org; Web-site: www.adb.org World Bank Office Address : 5a Chavchavadze Av., lane-I, Tbilisi, Georgia ; Tel: 291-30-96, 291-26-89/59 Web-site: www.worldbank.org.ge Regional Office of European Bank for Reconstruction and Development Address: 6 Marjanishvili St. Tbilisi Tel: 244 74 00, 292 05 13, 292 05 14 Web-site: www.ebrd.com Representation of the Council of Europe in Georgia Address : 26 Br. Kakabadze, Tbilisi Tel: 995 32 291 38 70/71/72/73 Fax: 995 32 291 38 74 Web-site: www.coe.ge Embassy of the Slovak Republic Address: Chancery: 85 Irakli Abashidze St. Tbilisi, 0162 Georgia Consular Office: 38 Nino Chkheidze St. Tbilisi, 0102 Georgia Phone: 2 222 4437, 2 296 1913 e-mail: emb.tbilisi@mzv.sk

Hotels in Georgia TBILISI MARRIOTT Tbilisi , 13 Rustaveli Ave. Tel: 77 92 00, www.marriott.com COURTYARD MARRIOTT Tbilisi , 4 Freedom Sq. Tel: 77 91 00 www.marriott.com RADISSON BLU HOTEL, TBILISI Rose Revolution Square 1 0108, Tbilisi Tel: +995 32 402200 radissonblu.com/hotel-tbilisi RADISSON BLU HOTEL, BATUMI Ninoshvili Str. 1, 6000 Bat’umi, Georgia Tel: 8 422255555 http://radissonblu.com/hotel-batumi SHERATON METECHI PALACE Tbilisi , 20 Telavi St. Tel: 77 20 20, www.starwoodhotels.com SHERATON BATUMI 28 Rustaveli Street • Batumi Tel: (995)(422) 229000 www.sheratonbatumi.com HOLIDAY INN TBILISI Business hotel Addr: 1, 26 May Square Tel: +995 32 230 00 99 E-mail: info@hi-tbilisi.com Website: http://www.hi-tbilisi.com BETSY’S HOTEL With Marvellous Tbilisi Views Addr: 32/34 Makashvili St. Tbilisi Tel: +995 32 293 14 04; +995 32 292 39 96 Fax: +995 32 99 93 11 E-mail: info@betsyshotel.com Website: http://www.betsyshotel.com

Restaurants CORNER HOUSE Tbilisi, I. Chavchavadze ave. 10, Tel: 0322 47 00 49; Email: contact@cornerhouse.ge RESTAURANT BARAKONI Restaurant with healthy food.

Georgian-European Cuisine Agmashenebeli Alley 13th Phone: 555 77 33 77 www.barakoni.com CHARDIN 12 Tbilisi , 12 Chardin St. , Tel: 92 32 38 CAFE 78 Best of the East and the West Lado Asatiani 33, SOLOLAKI 032 2305785; 574736290 BREAD HOUSE Tbilisi , 7 Gorgasali St. , Tel: 30 30 30 BUFETTI - ITALIAN RESTAURANT Tbilisi , 31 I. Abashidze St. , Tel: 22 49 61 DZVELI SAKHLI Tbilisi , 3 Right embankment , Tel: 92 34 97, 36 53 65, Fax: 98 27 81 IN THE SHADOW OF METEKHI Tbilisi , 29a Tsamebuli Ave. , Tel: 77 93 83, Fax: 77 93 83 SAKURA - JAPANESE RESTAURANT Tbilisi , 29 I. Abashidze St. , Tel: 29 31 08, Fax: 29 31 08 SIANGAN - CHINESE RESTAURANT Tbilisi , 41 Peking St , Tel: 37 96 88 VERA STEAK HOUSE Tbilisi , 37a Kostava St , Tel: 98 37 67 BELLE DE JOUR 29 I. Abashidze str, Tbilisi; Tel: (+995 32) 230 30 30 VONG 31 I. Abashidze str, Tbilisi Tel: (+995 32) 230 30 30 BRASSERIE L’EXPRESS 14 Chardin str, Tbilisi Tel: (+995 32) 230 30 30 TWO SIDE PARTY CLUB 7 Bambis Rigi, Tbilisi Tel: (+995 32) 230 30 30

Cinemas AKHMETELI Tbilisi. “Akhmeteli” Subway Station Tel: 58 66 69 AMIRANI Tbilisi. 36 Kostava St. Tel: 99 99 55, RUSTAVELI Tbilisi. 5 Rustaveli Ave. Tel: 92 03 57, 92 02 85, SAKARTVELO Tbilisi. 2/9 Guramishvili Ave. Tel: 8 322308080,

SH. RUSTAVELI STATE THEATRE Tbilisi. 17 Rustaveli Ave. Tel: 93 65 83, Fax: 99 63 73 TBILISI STATE MARIONETTE THEATRE Tbilisi. 26 Shavteli St. Tel: 98 65 89, Fax: 98 65 89 Z. PALIASHVILI TBILISI STATE THEATRE OF OPERA AND BALLET Tbilisi. 25 Rustaveli Ave. Tel: 98 32 49, Fax: 98 32 50

Galleries ART GALLERY LINE Tbilisi. 44 Leselidze St. BAIA GALLERY Tbilisi. 10 Chardin St. Tel: 75 45 10 GALLERY Tbilisi. 12 Erekle II St. Tel: 93 12 89

Real Estate International Real Estate Company (IREC) Tbilisi. 9 P. Aslanidi St. Tel: +995 32 238 058 Mob: 599 95 76 71 Email: Info@irec.ge www.irec.ge

GSS Car rental offers a convenient service for those who are interested in renting car in Georgia. Rental fleet mainly consist of Japanese made SUV’s, the company has various models of cars including sedans and minivans which are in good technical condition.

Contact information: Email: info@gsservices.ge.

Address: Shalva Dadiani 10

Akhvledianis Khevi N13, Tbilisi, GE. +995322958377; +995599265432

Theatres A. GRIBOEDOV RUSSIAN STATE DRAMA THEATRE Tbilisi. 2 Rustaveli Ave. Tel: 93 58 11, Fax: 93 31 15 INDEPENDENT THEATRE Tbilisi. 2 Rustaveli Ave. Tel: 98 58 21, Fax: 93 31 15 K. MARJANISHVILI STATE ACADEMIC THEATRE Tbilisi. 8 Marjanishvili St. Tel: 95 35 82, Fax: 95 40 01 M. TUMANISHVILI CINEMA ACTORS THEATRE Tbilisi. 164 Agmashenebeli Ave. Tel: 35 31 52, 34 28 99, Fax: 35 01 94 METEKHI – THEATRE OF GEORGIAN NATIONAL BALLET Tbilisi. 69 Balanchivadze St. Tel: (99) 20 22 10 MUSIC AND DRAMATIC STATE THEATRE Tbilisi. 182 Agmashenebeli Ave. Tel: 34 80 90, Fax: 34 80 90 NABADI - GEORGIAN FOLKLORE THEATRE Tbilisi. 19 Rustaveli Ave. Tel: 98 99 91 S. AKHMETELI STATE DRAMATIC THEATRE Tbilisi. 8 I. Vekua St. Tel: 62 59 73

THE BEST GEORGIAN HONEY OF CHESTNUTS,ACACIA AND LIME FLOWERS FROM THE VERY HART OF ADJARA MATCHAKHELA GORGE IN THE NETWORK OF GOODWILL, NIKORA AND SMART

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PUBLICITY caucasus business week

November 16, 2015 #122