Caucasian Business Week #44 by Caucasian Business Week

DISTRIBUTED FREE OF CHARGE

BUSINESS WEEK March 3, 2014 #44

caucasian business week www.facebook.com/CBW.ge Partner News Agency

March 3, 2014, Issue 44

caucasian1

BE INFORMED, DO BUSINESS

GEORGIA CO-INVESTMENT FUND’S PROJECTS REMAIN IN VIRTUAL MODE

Obama, Biden Meet with Georgian PM Pg. 2

espite the fact that the fund’s management announced that 10 projects worth 1.1 billion USD had been approved, none of them have been launched yet.

Giorgi Kvirikashvili: Baku-Tbilisi-Kars railway is strategic project

Pg. 5

MAJOR PART OF GEORGIA-BASED FOREIGN COMPANIES COME FROM IRAN

Pg. 4

ommersant “ reports that Iranian companies prevail among foreign companies under international sanctions operating in Georgia. Pg. 7

DISTINGUISHED PRODUCTS OF MARNEULI FOOD FACTORY AT THE GULFOOD 2014

argebeli Holding is taking part in the Gulfood 2014 international exhibition. Products of Marneuli Food Factory and JSC Healthy Water are being presented at the exhibition. Pg. 8

TBC BANK COMPLETED JANUARY WITH 8,5 MILLION GEL PROFIT, 22,5% OF THE RETAIL CREDITS COMES ON TBC

ECOLOGIST ON KHUDONI HPP: “SERIOUS GUARANTEE FOR ENERGY SAFETY”

n a recent interview with the Georgian news agency “Medianews”, ecologist Mariam Kimeridze defends the construction of the controversial Khudoni hydro power plant. Pg. 10

AZERBAIJAN EBRD EXTENDS SENIOR LOAN FOR SHAH DENIZ PROJECT

he European Bank for Reconstruction and Development (EBRD) is extending a senior loan worth $200 million for Russia’s Lukoil Overseas Shah Deniz Ltd. Pg. 11

CIS UKRAINE NEEDS $35BN IN AID TO ‘STAY AFLOAT’ – FINANCE MINISTER

second-wave of revolution, a missing President, and a treasury that is nearly empty, Ukraine is on the brink of bank-

ruptcy.

Pg. 12

WORLD NEWS IMF SAYS TAXING SUPER RICH CAN BOOST ECONOMIC GROWTH

Pg. 3

LOOK WEST, YOUNG MAN: GEORGIA’S 31-YEAR-OLD PRIME MINISTER TURNS TO EUROPE, NOT RUSSIA

hen Irakli Garibashvili was a child, his native Georgia was just beginning to recover from decades as an impoverished Soviet satellite. Garibashvili’s house had no electricity or gas, and he studied by candlelight. The newly independent country -- beset by chronic corruption, rampant civil instability, and lingering economic malaise -- wasn’t doing much better. Garibashvili is now Georgia’s prime minister and, at 31, the youngest elected head of government in the world. His government’s primary focus, Garibashvili told Foreign Policy in an interview, is developing closer economic and political ties with the European Union while laying the groundwork for eventually joining the North Atlantic Treaty Organization. His country was once firmly oriented east, towards its rulers in Moscow. Garibashvili hopes it will soon be just as firmly oriented west.

SOCAR TRYING TO MONOPOLIZE GAS FILLING STATIONS LEVAN KALANDADZE: “WE PAY MORE FOR SOCAR’S 0.45 GEL GAS” Economic experts Emzar Jgerenaia, Levan Kalandadze, Giorgi Abashishvili and Irakli Lekvinadze have talked about Russia’s new energy doctrine, about its accents and the current challenges before Georgia, the sides not interested in development of Georgia’s hydro energy resources. The existing economic, energy and ecology threats were also discussed. Moreover, the economic experts have also talked about the problems in the natural gas supply and distribution field, the issue of monopolies – whether the information on gas quality, pressure,

calorific capacity are controlled and whether the change in indictors for natural gas grows the current 0.45 GEL tariff for natural gas. IRAKLI LEKVINADZE, an economic expert: “Gas supply is carried out by Azerbaijani company SOCAR. Today the information on qualitative indicators of supplied gas is inaccessible. The company also imports gas and owns gas distribution networks in some regions. These factors make the company a monopolist on the market and it dictates its own desirable terms to the gas distribution networks too. Pg. 7

Levan Kalandadze: What is behind protests against HPPs construction? Pg. 10

Temur Chkonia: Everyone has Forgotten about Domestic Businessmen Pg. 6

Businessman Lasha Papashvili Thinks that the Construction Industry has been Destroyed in Georgia Pg. 6

Paata Trapaidze: In the 21st Century Infrastructure Projects should be Carried out Quickly Pg. 6

WILL APPEARANCE OF M-SQUARE LOWER PRICES ON REAL ESTATE MARKET? ”M -Square” is among expensive construction companies

Pg. 5

Pg. 6

NEW GENERAL MANAGER OF ROMPETROL GEORGIA

MAIN EVENTS caucasian business week

March 3, 2014 #44

U.S. PLEDGES ‘ADDITIONAL ASSISTANCE’ FOR GEORGIA’S EURO-ATLANTIC ASPIRATIONS

OBAMA, BIDEN MEET WITH GEORGIAN PM

.S. President Barack Obama joined Vice President Joe Biden’s meeting with Georgian PM Irakli Garibashvili at the White House on February 24. The White House said in a readout of the meeting that President Obama and Vice President Biden both congratulated for Georgia’s “success in completing the country’s first peaceful, democratic transition of power, and urged the Prime Minister to continue working with all of Georgia’s leaders and with civil society to advance the rule of law and to consolidate Georgia’s significant democratic achievements.” “The President and Prime Minister further discussed opportunities for strengthening U.S.Georgia strategic cooperation, including on increasing trade and investment ties between our two economies.” “The President and Vice President also reaffirmed the United States’ strong support for Georgia’s sovereignty and territorial integrity within its internationally recognized borders. They also assured the Prime Minister that the Georgian people had the United States’ unwavering support as they pursue their Euro-Atlantic aspirations and pledged continued U.S. assistance to help the new Georgian government as it pursues political, economic, and defense reforms,” the White House said. It said that the President and the Vice President thanked Georgia for being “a valued friend and reliable partner in supporting our most challenging regional and global priorities.” “In doing so, the President expressed the United States’ deep appreciation for Georgia’s significant contributions to the NATO mission in Afghanistan and honored the sacrifices made by Georgian soldiers and their families,” the White House said. President Obama joined the meeting for about 20 minutes, according to a senior administration official. PM Garibashvili said after the meeting “Georgia is moving actually to a new stage of relations with the United States.” “Our government has received full support from the U.S. President and the Vice President. They have reiterated U.S. support to Georgia,” Garibashvili said. “It was a very positive and fruitful meeting. I want to stress that the United States is the most important, strategic partner for Georgia and we will maximally contribute deepening and strengthening of these relationships,” the Georgian PM said and also added that the U.S. reiterated readiness to “deepen trade and economic” ties with Georgia. Meeting with the U.S. President was not announced beforehand; Georgian Foreign Minister Maia Panjikidze said that the meeting was pre-

planned but not made public in advance upon request from the White House. “Of course we knew it in advance, but it was a request from the White House not to pre-announce details of scheduled meetings,” she said. Panjikidze, who was present at the meeting, said President Obama reaffirmed that “Georgia has full support, the Georgian government has full support” of the United States. She told Imedi TV that the U.S. President reiterated support to Georgia’s territorial integrity and its European and Euro-Atlantic integration and noted “importance of Georgia’s constructive steps” towards Russia. Georgian State Minister for European and EuroAtlantic Integration Alexi Petriashvili, Deputy Foreign Minister Davit Zalkaliani and Georgian ambassador in the U.S., Archil Gegeshidze, were among the Georgian officials present at the meeting in the Roosevelt Room of White House. U.S. ambassador to Georgia, Richard Norland, and U.S. Assistant Secretary of State for European and Eurasian Affairs, Victoria Nuland, were also present. The Georgian PM’s office said in a readout of the meeting with the U.S. Vice President, that “the U.S.-Georgian strategic partnership, Georgia’s European and Euro-Atlantic perspective, as well as reforms carried out by the Georgian authorities were the main topics of the meeting.” “The Georgian PM stressed on installation of barbed wire fences [by the Russian troops] across the occupation line of Tskhinvali region and Abkhazia and thanked the United States for its unambiguous position on this issue.” “PM Garibashvili noted that the [Georgian] authorities appreciate highly U.S. condemnation of building dividing lines by the occupying Russian troops and expressed hope that the U.S. support in this respect will continue in the future as well,” the Georgian PM’s office said. “The Prime Minister noted that process of Georgia’s NATO integration is dynamic like never before.” “During the meeting with Vice President Joe Biden, the Prime Minister noted that Georgia will sign the Association Agreement with the European Union before autumn, 2014 and the Georgian government welcomes readiness of the United States to support Georgia in implementing commitments under the agreement.” “Prime Minister Garibashvili has urged the Vice President to continue supporting further improvement of the U.S-Georgian relations because it is of vital importance for Georgia taking in the view upcoming [local] elections, signature of the Association Agreement with the EU and NATO summit [in Wales in September],” PM’s office said. Also on February 24, the Georgian PM met separately with Republican Senators Roy Blunt and Jeff Sessions, as well as Democratic Senators Dick Durbin and Carl Levin.

.S. Secretary of State John Kerry said after meeting with Georgian PM Irakli Garibashvili on February 26 that bilateral “strategic partnership is stronger than ever” and announced about the plan to provide “additional assistance” to help Georgia with its European and Euro-Atlantic aspirations. “Today I am announcing additional assistance by the United States to help support Georgia’s European and Euro-Atlantic vision, specifically to help Georgia achieve visa-free travel with the EU and to mitigate the hardships caused by borderisation along the occupied territories,” the U.S. Secretary of State said; details of the “additional assistance” were not immediately available. The Secretary of State was speaking at the fourth plenary session of the U.S.-Georgia Strategic Partnership Commission right after the bilateral meeting with the Georgian PM. In his opening remarks the Secretary of State stressed on importance of “strict adherence to rule of law”, strong political opposition and providing “a level playing field” for local elections in June. U.S.-Georgia Strategic Partnership Commission is a mechanism established through strategic partnership charter signed by the two countries in January, 2009 to address priority areas identified in the charter: democracy; defense and security; trade and economy; people-to-people and cultural exchanges. Kerry said that he had “a very good bilateral meeting” with the Georgian PM during which they discussed issues ranging from “economic and external challenges” to Georgia, as well as Georgia’s efforts to sign the Association Agreement with the EU and the situation in Ukraine. He said that the U.S. encourages Georgia to sign the Association Agreement with the EU. Georgia intends to sign the agreement, which also includes deep and comprehensive free trade component, before autumn. “We do not make that urging for the signing that Association [Agreement] some sort of zero-sum game between the east and west, between us or any other party. We simply want people to be able to exercise their freedom of choice and be able to maximize their economic opportunities and that does not mean that it can’t also involve engagement with others,” Kerry said. He said that the U.S. and Georgia have “very strong and important relationship focused on many issues” and stressed significance of democracy and rule of law. The Secretary of State hailed Georgia’s 2013 presidential election saying that “transparency and the openness of the process was significant.”

“You have a chance to build on these achievements by demonstrating now a level playing field during upcoming local elections,” Kerry said, adding that democracy benefits from strong political opposition. “So we urge all sides to work constructively to advance the dialogue and debate within Georgia and that’s just going to make your nation stronger.” Commending Georgia’s “progress in economic reform”, he also urged the Georgian government “to quickly implement its plans” to contribute to trade and investments including with the United States. “Strict adherence to rule of law and a steadfast commitment to the process will encourage the confidence of investors and it will serve as a catalyst for integration with Europe and enhance Georgia’s international reputation,” he said. “We urge all Georgians to unite in looking forward and to leave the past in the past,” Kerry added. The Secretary of State said that the U.S. “remains committed to strengthening” trade and investments with Georgia and expressed support to Georgia’s efforts “to become a regional trade hub, which will require continued infrastructure improvements and sustained regional cooperation.” He reiterated U.S. support to NATO Bucharest summit decision that Georgia will become a member of the Alliance. “The United States will work to make sure that Georgia’s progress is acknowledged by all members at this year’s NATO summit,” Kerry said. He also said that the U.S. support’s Georgian government’s “reconciliation efforts” in respect of breakaway Abkhazia and South Ossetia, as well as Tbilisi’s efforts to achieve “a peaceful and just resolution of conflicts.” “We continue to object to Russia’s occupation, militarization and borderisation of Georgian territory and we call on Russia to fulfill its obligations under the 2008 ceasefire agreement including withdrawal of its forces and free access for humanitarian assistance,” the Secretary of State said. He said he’s looking forward to visiting Georgia possibly sometime in spring. PM Garibashvili, who met President Obama and Vice President Biden on February 24, said in his opening remarks at the strategic partnership commission session that Georgia has “always stood adamantly next to the United States in every single situation.” “Your support provides a powerful stimulus to our resolve to persist in the often uphill but honorable task of strengthening democracy, especially in our challenging region and especially when more than 20% of Georgia territory remains under Russian occupation,” Garibashvili said.

GEORGIAN, RUSSIAN DIPLOMATS TO MEET NEXT WEEK

oscow said it does not expect that arranging talks between Georgian and Russian leaders will be discussed “in practical terms” when diplomats from the two countries meet in Prague next week. Meeting between Georgian PM’s special representatives for relations with Russia, Zurab Abashidze, and Russian Deputy Foreign Minister, Grigory Karasin, is scheduled for March 4-5. This format of dialogue between the two countries, which have no diplomatic relations since the August 2008 war, was launched in December, 2012 to address issues related mainly to trade, economy and people-to-people contacts. “We do not expect that in Prague modalities of high-level meeting will be discussed in practical terms. It [possible top-level meeting] has to be comprehensively prepared. The both sides are interested in this. In accordance to usual in-

terstate practice, an extensive preparatory work should precede a meeting between leaders in order to elaborate common ideas about agreements, which could be the result of [such top-level meeting],” Russian Foreign Ministry’s spokesman, Alexander Lukashevich, said in a statement on February 26. Lukashevich said that this format of “informal dialogue” between Abashidze and Karasin has brought some results, among them return of the Georgian products back on the Russian market. “Georgia’s participation in the 2014 Sochi Olympic Games had a positive effect on atmosphere of bilateral relations,” Lukashevich said. He said that during the upcoming meeting, which will be the sixth one, Abashidze and Karasin will continue discussing issues “on which long-term progress is possible”, and will exchange views about ongoing and possible bilateral projects in the fields of transportation and trade.

The Newspaper is Distributed at Tbilisi to Athens Flights of Aegean Airlines

BUSINESS WEEK

caucasian The Editorial Board Follows Press Freedom Principles Publisher: LLC Caucasian Business Week - CBW Director: Levan Beglarishvili DISTRIBUTED FREE OF CHARGE Editor-in-chief: Evgeni Mikeladze Mobile phone: 591 013936; 577965577 Commercial Department: Irakli Lekvinadze Email: caucasianbusiness@gmail.com

The weekly is distributed to top companies, banks, embassies, state sector, Tbilisi and Batumi hotels, Tbilisi, Batumi and Kutaisi Airports, as well as in the town of Marneuli. The newspaper will also penetrate Azerbaijan in the near future

PUBLICITY March 3, 2014 #44

caucasian business week

INTERVIEW

LOOK WEST, YOUNG MAN: GEORGIA’S 31-YEAR-OLD PRIME MINISTER TURNS TO EUROPE, NOT RUSSIA

really want to transform my country into a real, modern, democratic, European state,” he told FP, choosing his words carefully. “That’s my dream.” Making that dream come true will require deftly finessing Tbilisi’s relationship with Russia. With pro-Western leaders in nearby Ukraine struggling to find their way out from under Russia’s thumb, Georgia’s successes and struggles offer both a roadmap and a cautionary tale for Kiev. The revolutionaries who now control Kiev, fresh off from ousting Ukrainian President Victor Yanukovych, seem certain to elect new leaders who are strongly committed to closer ties with both the EU and the United States. Top European Union officials have already traveled to Kiev todiscuss the terms of a large package of financial aid, and the Ukrainian government has said it will soon ask the United States for a loan. Russia reacted with fury to the moves, and Garibashvili is well aware of the risks of pushing Moscow too hard. Georgia’s last president, Mikheil Saakashvili, took power in 2004 after the socalled “Rose Revolution” ousted the leader who had governed Georgia since it gained its independence in 1991. Immediately after the fall of the

Soviet Union, Saakashvili began work to improve ties with the EU. and the United States, angering Russia. In 2008, Georgian troops fought a series of low-level skirmishes with separatist forces in the breakaway region of South Ossetia. Russia intervened on behalf of the rebels and pushed the Georgian forces out. Tbilisi and Moscow severed their diplomatic ties, and South Ossetia and Abkhazia have been under de facto Russian control ever since. Saakashvili spent his final years in office futilely trying to persuade the West to help reclaim the lost provinces. Garibashvili, who took over as prime minister last November, has a very different strategy. In his interview with FP, Garibashvili said that he hopes his country’s increasing integration into Europe will gradually persuade the citizens of South Ossetia and Abkhazia that it would be in their own interest to rejoin Georgia. Tbilisi is slated to sign a so-called “association agreement” with the E.U. in August, bringing Georgia closer to full membership, and Garibashvili predicted that within the next five years Georgian citizens will be able to travel through the E.U. without visas and that the country’s economy will be rap-

FINANCE MINISTER: GEORGIAN PRODUCTS ARE NOT COMPETITIVE EVEN IN GEORGIA An interview with Finance Minister Nodar Khaduri

- What is currently the main issue of Georgia’s economy? - The main problem of the Georgian economy is the lack of competitiveness. Today Georgian products are non-competitive not only abroad , but also in Georgia. The reason for this is the low availability of finance - in particular, we are talking about credit resources. Human resources are also non-competitive. Unfortunately, over the past 20 years our specialists in various industries have lost their jobs, and for a time - qualifications. There are many shortcomings in education, there was no specific vision - where we are going

March 3, 2014 #44

caucasian business week

and what state are building. Now we have identified ways to solve these problems. - How should an interest rate on bank loans reduce? - The banks have no liquidity problems, but still there are complexities with long-term money. Banks are motivated by short-term money, lending short-term projects and refrain from investing in long-term ones. In this regard, the government has made the first step – has taken 44 million GEL from banks in debt ( in the future we’ll take another 200 million ), which are placed on deposits in banks at 1% per year for a long time , eventually they will be able to lend more longterm projects at lower interest . Little Georgia’s economy has no effect on the world market, but the world market, including financial, affect Georgia very much, unless artificial barriers are created. They may be political risks, inflation, closed economy, and so on. But our main goal is the European integration , and it means that we must become a part of the European economy and financial market . This will mean a lower interest on loans. But everything depends on the expectations inside the country and beyond. Now expectations are being formed. Private investment fund is a very good mechanism for investments and incentives for investment by others. Savings are also to be encouraged. Deposits are placed in the Georgian banks, but most people

GIORGI KVIRIKASHVILI: BAKU-TBILISIKARS RAILWAY IS STRATEGIC PROJECT

idly expanding because of growing trade with Europe. Residents of the breakaway regions, he believes, will want those perks for themselves. “They will see the difference in living standards,” Garibashvili said. “They will see how they live in Abkhazia and Ossetia, and they will see how Georgians live.” That entire strategy depends on how effectively Garibashvili will be able to realize his vision of Georgia as a regional business and economic hub. Georgia has long been known for its wine exports, but Garibashvili said his country is investing in new high-voltage lines capable of carrying hydroelectric power to Turkey. Garibashvili, speaking like the businessman he was before he becoming a politician, also boasts that his country offers political stability, a cheap labor force, and a pro-business regulatory structure. In the interview, he said he expected his country’s economy to grow by at least 5 percent in 2014. Garibashvili is well aware that a new flare-up with Russia would derail those plans, and he has worked hard to improve the strained relationship between the two countries by appointing a personal envoy to the government of Russian President Vladimir Putin and opening direct dialogue with Moscow. Russian rhetoric about Georgia is noticeably softer than in the past, but it’s clear that Putin isn’t yet ready to let bygones be bygones. Garibashvili said that Russian forces have begun building 30 miles of barbed wire fencing along the border with South Ossetia. The work stopped in December, weeks before the start of the Sochi Olympics. On Tuesday, just after the closing ceremony, the work resumed. “That’s crazy, right?” he asked in the interview. Garibashvili is the first leader of a post-Soviet country who didn’t grow up living under Soviet occupation, but he won’t be the last. Some of Ukraine’s next leaders will probably be roughly the same age and will probably have grown up with roughly the same sets of experiences. Georgia is closer to Iran and Iraq than it is to Paris and London. If Garibashvili succeeds, his country will be part of the EU. all the same. That accomplishment won’t be lost on the young leaders gradually taking power across the former Eastern bloc. “We want to be an example,” Garibashvili said in the interview. “We want to show the way.” Foreign Policy

he Baku-Tbilisi-Kars railway is of strategic importance to Azerbaijan, Georgia and Turkey, Georgian Deputy Prime Minister and Minister of Economy and Sustainable Development Giorgi Kvirikashvili told journalists in Baku. “The railway will contribute to the strengthening of the neighborhood, friendship and trade relations among the countries,” he said, AzerTag state news agency reported. Kvirikashvili noted that the problem regarding the purchase of territories along the route in the implementation of the Baku-Tbilisi-Kars project has already been solved, there are no obstacles for the project. “The project will be launched in time. Test train will be launched at the end of 2014, in 2015 the project will be completed,” he added. The BTK railway is a regional rail link project that connects Azerbaijan, Georgia, and Turkey. Azerbaijan has allocated a $775 million loan to the construction of the Georgian section of the railway. The project is being financed by the State Oil Fund of Azerbaijan. The project was implemented after Azerbaijan’s President issued a decree on the ‘Implementation of measures within the Baku-Tbilisi-Kars project’, dated February 21, 2007. The total length of the BTK is 826 kilometers (about 513 miles). After commissioning the railway, mutual trade between Azerbaijan, Georgia, and Turkey will increase significantly, the total volume exceeding $10 billion per year. Head of Azeryolservis JSC (road transport infrastructure) of the Ministry of Transport Javid Gurbanov recently said the construction of the Baku-Tbilisi-Kars railway will come to an end in mid-2015.

have no savings as incomes are very low – there is not enough investment , the economy is not growing, people do not work , respectively, they do not have savings. This vicious circle is necessary to break. We do the real steps to stimulate savings, for example by creating pension funds. - According to the program of the government, until 2020 the unemployment rate is expected to decline from the current 15 % to 12%. The government argues that the real figure is higher. Why it was not mentioned in the document? - Today Georgian laws do not stipulate the term “unemployed. According to international practice, a citizen who does not have work, and who is looking for it is considered the unemployed. From this point of view we’ll get 15 %. But if you ask the population, the number of people who consider themselves unemployed is much higher. In addition, we have a very high rate of self-employment. We must do everything in order to reduce the level of informal employment. Currently 70 new enterprises are built in the agricultural sector, 15,000 new jobs are created. Though, of course, this is very small, considering that the working-age population in Georgia reaches 2 million people. The population should feel the economic growth and it should not be limited to statistical data. The aim of our program is inclusive economic growth . - It was reported that in January 2014 economy grew by 8%. Is it true? This is a figure presented by the Ministry of Finance, which is based on declarations of taxpayers. In particular, the turnover of enterprises paying VAT increased by 16% in comparison with January 2013. According to our calculations, in January economic growth was 8%. In addition, turnover of agriculture increased by 83%, turnover of the construction business grew 43%. - In 2013, the government failed to reach the

projected level of economic development, and the budget did not get 600 million GEL . What was the reason? - In 2013, despite the slowdown, the main costs were made - more than in 2012. Correct management allowed us to free up some funds. In addition, we have suspended the implementation of several infrastructure projects due to the high risk of corruption transactions. Many companies that won tenders, went bankrupt soon after the regime change. Accordingly, the projects had to be suspended that led to a decline in economic growth. This has caused budget problems as well, but we’ll try to avoid the problems associated with the transition period in 2014. - Why was there a devaluation of the national currency? Does it provide the replenishment of the budget? - Devaluations occurred worldwide, somewhere more, somewhere less, and it is associated with the recovery of the U.S. economy and the increasing demand for the dollar. The exchange rate of the Turkish lira fell by 20 %. In addition, Georgia’s economy is dollarized and 70-75 % of transactions are carried out in dollars. As soon as the economy revived, immediately the demand for dollars has increased. There are also subjective factors such as negative expectations about what will be hyperinflation that the country is collapsing, etc. Now many say that the government is interested in reducing the rate of GEL, but in fact, the government has debts in foreign currency, respectively, it is not interested in the devaluation, as costs will rise. With regard to budget revenues, it is not serious - small inflation cannot possibly make any major adjustments in replenishment. Currently, the GEL rate has reached a new equilibrium point, and major fluctuations are not expected.

BUSINESS & ECONOMY March 3, 2014 #44

caucasian business week

NEW GENERAL MANAGER OF ROMPETROL GEORGIA

GEORGIAN PRIME MINISTER MEETS WITH AMERICAN BUSINESSMEN

rime Minsiter Irakli Garibashvili invited American businessmen in Georgia. On the meeting held in Washington it was mentioned that high-level political partnership between Georgia and United States will definitely be reflected on the economic relations of two countries. Respectively, more attention will be paid to the investments and trade relations, - Prime Minister’s press service releases this information. On the meeting Irakli Garibashvili talked to American businessmen about economic situation in Georgia and existing business environment in the country. Prime Minister explained that in addition to favorable political

environment he offers businessmen the nest public services in the region, simple tax system and rapidly developing infrastructure, protection of property and copyright and intellectual property, free access to the court system, effective financial system, transparent legal environment and macroeconomic stability. Besides, Prime Minister of Georgia talked about the legal and institutional reforms, which are carried out for free and transparent competition on the market. “Georgia has an ambition to become a regional hub in trade and business and regional base for multinational enterprises”, - Irakli Garibashvili stated on the meeting with American businessmen.

r. Serik Salikov has been appointed as the new General Manager of Rompetrol Georgia. According to the management of company, new General Manager, Mr. Serik Salikov has been working in Rompetrol Georgia since June 2013. Prior to the appointment on the new position he held the position of First Deputy General Manager. Before moving to Georgia, Mr. Serik Salikov has worked for more than 20 years in CIS Countries in various oil and gas and other industrial companies, where he held managing positions. In addition, Mr. Serik Salikov has profound experience in construction industry where occupied managerial position for years.

“It is the ninth year of steady and successful development of Rompetrol on the Georgian market. We shall continue to hold on to this course – development and expansion of the network, improvement of services and supply customers with high quality European fuel” – says Mr. Serik Salikov. Starting from 2005 Mr. Serik Salikov is the fifth General Manager of Rompetrol Georgia. With the education history, economy and finance, Mr. Serik Salikov possesses diplomas of the University of Karagandy of the latter faculties. He also possesses diploma of Moscow Finance Academy with specialization in Financial Management. Prior to the change Rompetrol was managed by Mr. Nurken Murzagaliyev.

GEORGIAN MUSHROOMS ENTER THE RUSSIAN MARKET

CO-INVESTMENT FUND’S PROJECTS REMAIN IN VIRTUAL MODE

espite the fact that the fund’s management announced that 10 projects worth 1.1 billion USD had been approved, none of them have been launched yet. In 2013, the government announced its intention to attract investments worth $ 2 billion. It is now obvious that the plan was not feasible. The reasons for the failure were explained by objective delays in the formation of the Co-investment Fund , which was supposed to work with investors offering them real projects , etc. In addition, a political factor was given as an argument – elections, change of power, cohabitation, standby from the business , etc. But the election is over, the transition period is over, the fund has was created, according to Ivanishvili , 6 billion USD are mobilized, 10 projects totaling 1.1 billion USD are approved. After that, everyone had the expectation that in the near future at least a part of these projects would be launched , and finally, promised jobs would be created. However, “Business Resonance “ was told at the Fund that the approval of the project does not mean its implementation. The project will be handed over to investors, they would consider it, and if they deem it profitable , then a decision on funding will be made. It turned out that at this stage the projects have no investors. We know about 10 virtual projects the same thing we knew a few months ago - they relate to energy, real estate tourism and agriculture. Yet we know that the milk processing plant is planned to be built for 50 million USD, hydroelectric power plants with a capacity of 400 MW as well as several hotels. And no other specific details. As for the Partnership Fund, it selects the projects in accordance with the economic potential and influence on economic development. At this stage, the fund has implemented several projects - two hotels in the regions, pig farm , moreover, the construction of thermal power plant

of 230 MW and worth 200 million is being carried out jointly with the Turkish “Chalik Group”. The construction of Anaklia port on the Black Sea and valued at $ 500 million is also planned – at this stage an investor is being searched. The Fund is also in talks about the construction of another hydroelectric power with the capacity of 210 MW and valued at 628 million USD. Thus, at this stage the Fund is engaged only in two major projects - besides one of them yet has no investor, and it’s unclear when the second will begin. “The fact is that with respect to these two funds we have only virtual information. A fact that the Fund will facilitate investments – these are only words. Time to time we hear that the fund’s capital is growing, but it is not expressed in specific projects,” - said the expert Giorgi Abashishvili. According to the expert Irakli Lekvinadze, there are certain expectations in respect of funds that they can bring serious capital to the country. The Co-investment Fund should attract large investments in energy, real estate, agriculture , and infrastructure. But so far we have almost no information about the projects. Specifically, it is known only that the Ukrainian company “ Terra Food” plans to build a milk processing plant in western Georgia. But there is virtually no information even on this project. I also know that many local companies have offered their projects for consideration by the fund, but there is no result, “- said the expert . At the same time , against the backdrop of failure of an investment plan for 2013 , Director of the National Investment Agency Giorgi Pertaia said that in 2014 a rapid growth of investment was expected. “The growth will begin in 2014. If the country is stable, then the second half of the year will be very successful. Besides, there is nothing surprising in the fact that amid two elections , the investment climate has worsened,”- Pertaia notes. However, while promises remain promises, and none of them have yet developed into a real business.

fter mineral water and spirits, Georgian mushrooms will be sold in the Russian market. Director of the largest mushroom manufacturer in Georgia “White Hat’’ says that the first batch of mushrooms will be sent to Russia in a month. According to Vano Ioseliani, they are cooperating with several Russian companies and at the moment they are going through the registration process. Ioseliani notes that “White Hat’’ will export mushrooms to Dubai in the near future. Kuwait

is also interested in the import of Georgian mushrooms. However, Ioseliani adds that logistical procedures create a problem as freight rates are quite high in Georgia. “White Hat’’ plans to increase the production volume by 30%. Ioseliani states that they produce 400 tons of mushrooms for the local market monthly, while in summer along with a decrease in the demand, they plan to export the remained raw materials. In his words, trout and mushrooms produced by “White Hat” hold 50% of the market while the price ranges within 5 – 7 GEL.

NEW TURKISH COMPANY TO INVEST IN GEORGIA’S TEXTILE INDUSTRY

ccording to the Secretary General of the International Investors Association of Georgia Osman Chalikshan, a Turkish company intends to build a textile factory

in Samtredia. He notes, the company representatives will arrive in Georgia in a few days and in the case of a positive decision , they are going to invest one million GEL in the construction of the enterprise. The company intends to sew “Puma” clothing in Georgia, and employ up to 600 people at the factory. There is an old textile factory in Samtredia and

if investors decide to start a business only the retooling of the factory will be required, “- said Osamn Chalikshan. Currently, a Turkish company “Gunkar “ is building another textile factory in the city of Kutaisi.

MOBIPAY ANNOUNCED BANKRUPT

ompany Mobi Pay, which was the international network for mobile payment, was declared bankrupt. The company, which does not operate since September 13, 2012. They addressed to the bankruptcy case to the court on December 4, 2013 Revenue Service is a creditor of LTD Mobi Pay, at the end of the reporting period the enterprise can’t fulfill tax obligation. They can’t meet upcoming requirements. As the court verdict states, LTC Mobi Pay has no funds on the account and in the box office. Also the enterprise does not have a mechanical vehicle and real estate. Respectively, the debtor can’t sat-

isfy upcoming requirements of the creditors. Respectively, the company was declared bankrupt. Registration of LTD Mobi Pay in the Business Registry will also be cancelled.

INTERVIEW caucasian business week

TEMUR CHKONIA: EVERYONE HAS FORGOTTEN ABOUT DOMESTIC BUSINESSMEN An interview with the founder of “ Coca-Cola Bottlers Georgia” Temur Chkonia

- What could be the results of the meeting of the Prime Minister of Georgia and the U.S. President? How positive is a fact that the President met with the Prime Minister , and what can we expect? - As far as we know , a meeting of Irakli Garibashvili and Barack Obama was unplanned, and the President suddenly came to a meeting of the Prime Minister of Georgia with U.S. Vice President. It was a show of support , but also showed his desire to get acquainted with the new head of Georgian government. Probably this is due to the deteriorating situation in Ukraine. - As for economic relations between the two countries - how do you assess the possibility of the appearance of major U.S. companies in Georgia? How big is the potential for deepening economic relations between the two countries? - On the one hand trade depends on the laws, customs duties , etc. On the other hand there should be products that can be exported . Law can be simplified, but the main thing is to have products that can be exported to the United States. What do we have? Suppose we have a quality wine, but in a big competition it is unlikely to take a big place in the market , although it will find its niche . And

what else? Nothing at all! We need to explore the American market, the demand for certain goods and start all over again. This is a long-term project, although there is nothing impossible. - Can we expect an increase in U.S. investment in Georgia? - Of course. Theoretically we can expect serious investments, as well as enterprises should be established to produce competitive products that will be sold in different countries. But we must not forget that there are also local businessmen who can do it faster than foreigners. We are so focused on attracting foreign investors that completely forgot about local, as if in Georgia there is no business, while investment has no nationality. - President of the International Chamber of Commerce in Georgia announced that the country still had the political tension that prevented investors. How would you assess the current business climate? Does it feel like the political tension? - One must distinguish two different things - first - a struggle for power, the second – the support of business. Both sides have the support of the business. It has always been and will be in all countries - there is power and there is opposition. This should not interfere with the conduct of business and affect the investment. In order business to feel safe an independent court must be created which itself will settle everything. - After the change of government there was talk that the government does not show a clear vision of economic processes, and business is in standby mode. Has this process completed? - I did not understand what “standby” means. What are we waiting for? Are we waiting for good weather that the rain will never come? It is about the proper business planning, development, risks, etc. It always has been, is and will be. We should not expect greenhouse conditions.

WILL APPEARANCE OF M-SQUARE LOWER PRICES ON REAL ESTATE MARKET?

”M -Square” is among expensive construction companies

ccording to Director General of “Bank of Georgia” Irakli Gilauri, the introduction of restrictions on the ownership of non-core assets demanded by some experts will have a negative impact on the population , because they will have to pay more for the same product . Gilauri gives an example of the real estate company owned by “Bank of Georgia” and states that if “M- square’’ didn’t work in the real estate business, apartments would have been much more expensive. How competitive are prices offered by “M-

square “ and what do its rivals think about Gilauri ‘s statement ? The construction business is monopolized, “Bank of Georgia” rarely issues mortgage loans to customers of other construction companies – “Archi Group” Director General Ilya Tsulaia states. He notes that the bank refrains from lending “Archi Group” clients , because it owns “M- square” and issues loans to its clients. Tsulaia claims that they are negotiating with other banks to get loans. According to him, in order to maintain competitiveness in the market, the company provides its clients domestic installments for 5-10 years. ”It is difficult to issue long-term loans for developers, we offer a 10% domestic installment to our customers, but we have to maintain competitiveness , “ - says Tsulaia. He says that the entry of “M -square” company did not reduce prices, on the contrary , some companies even increased prices . However, as “Commersant” found out “M –square” is among the most expensive construction companies . Real estate agency “Erdo Group “ founder Guram Palavadishvili believes that neither “M- square” nor any other company determine prices on the market and statements regarding the ownership of non- core assets , and a fact that “M- square” appearance has had an impact on prices is wrong , because prices are determined by demand.

March 3, 2014 #44

“CAUCASUS ROAD PROJECT”: IN THE 21ST CENTURY INFRASTRUCTURE PROJECTS SHOULD BE CARRIED OUT QUICKLY An interview with Director of “Caucasus Road Project” Paata Trapaidze - Businessman Fady Asly says that there is still a tense political situation in the country, which prevents the inflow of investments. Do you agree with this opinion? - Agree. Also, a meeting of eight business associations has been recently held where a joint statement was made about what , in their view , steps should the government do to improve the business climate. In particular , they talked about the decriminalization of offenses in the sphere of business, the transformation of the financial police , change of tax legislation . We must be sure that when the investigating authorities claim that a businessman broke the law , it means that he really broke it . Today’s tax code is subject to interpretations that always create the risk of making wrong decisions - in particular, the state always has the opportunity to look at the law from the angle that suits it more. In addition, we should be able to obtain a uniform interpretation of the tax legislation, guaranteed response about how to read a particular item. In general, I can confirm that the pressure on business decreased in comparison with the period of the previous government , but at the same time many checks end up with the wrong decision . For example, take the business of the former head of one of the regions Caesar Chocheli . I do not know him personally , but if even half of what they say about him is true, then it is wrong . Businessmen should not be divided along political lines. Businessman is businessman anyway. - Was your company checked under the new government? - Yes, and was checked without any problems. I have no complaints to the authorities about me or my company. I agree with Fady Asly that ministers should ask themselves every morning - if I were a foreign investor , why would I come to Georgia to invest ? What makes Georgia better than China, India ? Over the past year they’ve made a lot of mistakes that did not improve the business climate. Although, the pressure on business has been stopped. - Government’s strategy - 2020 includes the decriminalization and other factors, but you insist that these decisions are needed in the near future? - Of course, every day counts. We live in the 21st

century, everything is changing around at an unprecedented pace. Today investments are made in the areas where they work fast and timely react. We are seriously lagging behind the development, so we need to act as quickly as possible, to create an adequate environment to attract investment. And we should do it as fast as possible. - What’s happening in your business? Are infrastructure projects carried out today? - I believe that projects should implement faster. It has no direct relationship to economic growth. Ministry of Infrastructure does not determine the pace of economic growth , it is only a part of the process, and let no one think that if the infrastructure projects are quickly implemented , it will mean economic growth. But the projects must be implemented quickly , and the ministry should speed up the implementation of the tender conditions . For example, a tender for construction of the Tbilisi- Rustavi highway was held, the winner was revealed, but the work still has not begun. We cannot work so slowly in the 21st century, and everyone should understand that. - Infrastructure Minister David Narmania says that local companies do not have enough experience, and therefore, the ministry is trying to attract foreigners. How far do you agree with that? - Strongly disagree. Despite the fact that I have a good relationship with the minister, in this matter I cannot agree with him. We have so much experience that we can implement any project. This is demagoguery, and nothing more. In Georgia, there are several such companies that can implement any project. I say this with full responsibility.

BUSINESSMAN LASHA PAPASHVILI THINKS THAT THE CONSTRUCTION INDUSTRY HAS BEEN DESTROYED IN GEORGIA In his words, working in the construction business has been more difficult than the bank

apashvili recently left the position of Chairman of the Supervisory Board at Bank Republic, SocGen Group, in order to devote more time to his real estate business. In his words, working in the construction business has been more difficult than the bank, as “nothing has been done in the Georgian construction business during the post-soviet era. The industry is ruined. It does not exist, either in terms of specialists or other things.” The average cost of upcoming projects amounts to around USD 88 million. In May 2014 we will open an apartment hotel in Batumi worth USD 10 million. USD 6 million is the budget of the hotel in Tusheti, which we will be opening during the peak season this year. The total cost of the Hilton hotel is USD 60 million. We are also building another business centre at Leonidze 2, worth USD 12 million,”- he said.

BUSINESS & ECONOMY March 3, 2014 #44

caucasian business week

SOCAR TRYING TO MONOPOLIZE GAS FILLING STATIONS

MAJOR PART OF GEORGIA-BASED FOREIGN COMPANIES COME FROM IRAN In total 3 272 companies under international sanctions are operating in the market

C I

think it is important to provide active monitoring of the issue and develop certain standards too. Giorgi Abashishvili, an economic expert: “Besides SOCAR is monopolist in Georgia in terms of gas supply, last period the company has broadened its plans. SOCAR seems to have decided to fully monopolize the gas fill-

ing stations all over the country. To this end the company has launched a new campaign ands increased gas tariff to 330 GEL to all companies that are not owned by SOCAR, while the Azerbaijani company supplies natural gas to its own filling stations at a dumping price of 270 GEL. This is an attempt to lead all filling stations to bankruptcy and appropriate them finally”.

LEVAN KALANDADZE: WE PAY MORE FOR SOCAR’S 0.45 GEL GAS

he issue with monopolies remains one of the painful and unsafe tendencies in Georgia. SOCAR is a manifest sample to this. In practice, this company is a monopolist on the Georgian market in terms of gas imports and distribution. SOCAR is an exclusive gas importer to Georgia and in practice, the company controls gas distributor companies in Georgia, excluding Tbilisi gas distributor company. The problem contains may sides and layers. Today our country does not control the gas quality, gas pressure and calorific capacity standards. The issue is uncontrolled and the consumers have to hope for the only the SOCAR goodwill and honesty of SOCAR”, Levan Kalandadze says. - Mr. Levan, do you mean the company cheats the consumers though artificial reduction of gas pressure and calorific capacity? - It is natural that our society poses questions and expresses doubts over the gas quality. How much do we pay for the 0.45 GEL gas? The issue

becomes especially relevant in winter months, when the gas pressure falls in gas stoves and other household gas devices, when gas combustion process is very low-quality, when the time for boiling one kettle of water become longer. The gas company considerably grows revenues through dishonest activities that are expressed in artificial reduction of gas pressure and gas calorific capacity and these doubts legitimately exist in the society and the circle of experts. Thanks to artificial reduction of gas pressure and gas calorific capacity in the network, the society has to pay more for gas consumption and consume more gas, the gas meter turns longer and, finally, all of us pay more money to the SOCAR’s pocket. In reality, we pay much more money for a cubic meter of gas than 0.45 GEL. All these problems drive from the fact the State Oil Company of Azerbaijan (SPOCAR) is a market monopolist in Georgia, in practice. On the other hand, the state, in general, has got very indifferent and unserious approach to monopolies and the related threats”.

ommersant “ reports that Iranian companies prevail among foreign companies under international sanctions operating in Georgia. According to the National Statistics data, in total 3 272 Iranian companies are operating in the market. Recall that the sanctions imposed by the National Bank of Georgia in respect of some Iranian companies are still in force and the country continues to cooperate with the UN and international organizations on this issue. However, according to the companies operating in Georgia, the EU member countries are not included in the top ten and mostly neighboring and Asian countries are interested in the Georgian market. In particular:

IRAN .............................. 3 271 TURKEY ........................ 2 781 EGYPT ........................... 1 530 INDIA ............................. 1 323 RUSSIA ........................... 1 201 AZERBAIJAN ............... 693 U.S. ................................. 635 ISRAEL .......................... 617 ARMENIA ..................... 505 UKRAINE ...................... 464 Recall that last year the Iranian - Georgian Chamber of Commerce and Industry was established. One of the founders of the Chamber and Chairman of the Union of Oil Products Importers Vano Mtvralashvili explains that energy sector , construction sector and food products are in the Iranian investors’ interest and Georgia - Iran’s annual trade turnover amounts to 120-150 million USD. Total number of companies registered in Georgia, according to partner countries, reaches 16 915 as of February 1, 2014. Companies from 115 countries are represented in the Georgian market. According to data provided by Sakstat, the share of German companies is the biggest among the

EU countries. The top ten of the companies from the EU member states is as follows:

GERMANY .................... 408 ITALY ............................. 194 CYPRUS ........................ 152 FRANCE ........................ 147 GREECE ........................ 141 UN. ROYAL ................... 125 LITHUANIA................... 101 NETHERLANDS .......... 98 SPAIN .............................. 94 AUSTRIA ....................... 94 Note: The country’s government expects the activation of trade and economic relations with the European Union after the signing of the Association Agreement. According to the economic expert Emzar Jgerenaia, the only reason why European companies are passive in the Georgian market is the business environment existing in Georgia and the Georgian vague legislation, the banking system and the monopolistic situation in the market is unacceptable for the EU member states. While the National Bank is protecting the ownership of non- core assets by banks and there are monopolies in certain areas of business, such a market would not be acceptable to the EU countries, no matter how much we say that Georgia’s investment environment is attractive, “ - says Jgerenaia. The expert explains a fact of such an activity of Iranian companies by the Iran’s current law. He says that Georgia’s laws are relatively liberal than Iranian and the investment environment is acceptable for the Iranian businessmen in the light of the international sanctions imposed on them. In addition, the expert assesses the activity of Turkish companies and explains that it was caused by Turkey’s aggressive policy in the investment field that envisages the implementation of investments from Georgia in the neighboring countries, including Afghanistan.

THE HEALTH BENEFITS OF BEER

eer is one of the most commonly consumed alcoholic drinks. After wine, beer is considered as the healthiest alcoholic beverage of all. We all know the health benefits of red wine, especially for the heart. However, beer is another healthy alcohol after red wine. If you are a hard core beer lover, here are few surprising health benefits of beer, the chilled drink that you can enjoy only if you drink moderately. Beer contains B complex vitamins namely B2, B12 and B6. These vitamins promote the growth of haemoglobin in the body. Chilled beer has calcium, iron, zinc, potassium, silicon, sodium, magnesium etc that are healthy for the body and bones. It is believed that having beer can make you fat. However, beer is low in carbohydrates. So, if you are on low carb diet, you can have a pint of beer without worrying much. According to Harvard University, studies have shown that drinking a pint or two of beer regularly has leads to a decline in the chances of cardiovascular diseases. This is because beer increases the HDL (good cholesterol) levels. Higher HDL levels improve the flow of blood into the heart. This prevents the chances of heart blockage. Beer also has folate (water soluble vitamin B) that lowers the risk of coronary diseases to a great extent. Beer is a drink to strengthen the bones of your body. Beer has calcium, iron and silicon that strengthens bones and improves their growth. Do not drink more than a pint or else chances of fracture can increase. Studies in Tuff University suggests that beer strengthen bones but gulping down more than two drinks can be harmful for the bones. Beer is good for kidneys. This is one of the surprising health benefits of an alcoholic drink. You might have heard people asking you to avoid alcohol as it damages the kidneys. But beer is a beverage that prevents you from getting kidney stones. Beer has about 90% water that avoids dehydration and flushes out toxins from the kidneys. This stops you from developing stones in your kidneys. Beer also lowers blood pressure. A Harvard University study has shown that moderate consumption of beer lowers blood pressure. This prevents you from developing heart blockage. These are few health benefits of beer. Moderate consumption of this alcoholic drink is healthy for the body but an excess of anything is always bad. ENJOY!

BUSINESS caucasian business week

March 3, 2014 #44

GEORGIAN BUSINESS SUPPORTS SPORTS

Gia Gogoladze: Business involvement in sports is very important, especially in a country such as Georgia

reparations for the European Youth Olympic Festival Tbilisi of 2015 reached their final stage. Georgian sportsmen are being supported by Georgian business as cemented by a cooperation memorandum concluded between JSC Healthy Water (Tskali Margebeli) and the Georgian Athletics Federation. As a result of the agreement, JSC Healthy Water (Tskali Margebeli) renowned on the market for its mineral waters, Nabeghlavi and Bakhmaro, will be a Platinum sponsor of Georgian Athletes. Difficult tournaments lie ahead, first the 2014 European Athletics Team Championship and then the European Youth Olympic Festival. Both parties expressed a hope that cooperation would prove productive and that Georgian sportsmen would present themselves in the best light. “Our company, since its establishment, has been actively supporting Georgian sports and healthy lifestyle in general. Our mission is to engage the youth in these types of activities as much as possible and support traditional but less popular sports for Georgians,” said Gia Gogoladze, Director of JSC Healthy Water. “For 17 years our company has been trying to promote various sports events through various activities and we’ve been sponsors of many competitions and festivals. Company employees are respectively more engaged in the sports activities,” added Gogoladze. Q: Mr. Gogoladze, what are your feelings and expectations regarding JSC Healthy Water beinga Platinum Sponsor of the European Youth Olympic

Festival Tbilisi 2015 and the 2014 European Athletics Team Championships 3rd League? A: As you know, Europe’s youth festival is one of the biggest sports events and this year’s festival is special as it will be held in Tbilisi. This is a big challenge for our country as well as for the city and the population in general due to its sports, economic, political and social importance. Tbilisi gradually is becoming a regional center of sports activities in the Caucasus, and various sports are developing and modern infrastructure, meeting international standards, is being constructed. In such conditions our vision is that Georgian business must support such initiatives. Making investments and assistance are essential for sports and education systems. JSC Healthy Water (Tskali Margebeli) is going to support both of them. In addition to sports, the other cultural and international factors are to be considered, since similar activities have always helped the country to integrate with the international community. From a cultural perspective, young Georgian sportsmen will have an opportunity to get acquainted with their peers from various countries and make friends. Q: Is participation in an international forum of this type a great responsibility for the country as well? A: I noted from the beginning that the mission of our company and its brands is to facilitate popularization of a healthy lifestyle in the country and similar activities help us to realize this mission. This is a great honor and responsibility for the company and for all of its employees. On our side, I will say that our support is not limited to sponsorships of the youth festival and it will continue in the future. Q: Apart from financial assistance what is the mission of your involvement in the process? A: The involvement of business in sports is very important, especially in a country like Georgia. Financial assistance is just one part of our agreement, but during the whole preparation period Tskali Margebeli with its channels and capacity will try to promote the festival and increase youth awareness about this competition. On the other hand, we will make organizers feel our support and ensure them that we are reliable partners.

DISTINGUISHED PRODUCTS OF MARNEULI FOOD FACTORY AT THE GULFOOD 2014

argebeli Holding is taking part in the Gulfood 2014 international exhibition. Products of Marneuli Food Factory and JSC Healthy Water (Tskali Margbeli) are being presented at the exhibition. Gulfood is the largest annual exhibition in the food industry, held in the UAE for 5 days. A total of 20,000 brands of more than 4,500 companies from over the world are exhibited there. The number of visitors reaches 80,000 and the exhibition opened on February 23 and will end on February 27. “Our companies are present at the exhibition for the first time with their stands, where visitors can get acquainted with Marneuli and Tskali Margebeli products and taste those.” said Irina Gaprin-

dashvili, Director of Marneuli Food Factory. “The Exhibition turned out to be successful for both companies. Meetings have been organized with the large trade networks and international distribution companies.” Marneuli Food Factory is a part of Margebeli Holding established in 2007 and represents one of the largest enterprises in Georgia. The factory, equipped with European quality machinery, produces over 50 natural and tasty jarred products made from Georgian raw materials. The factory receives raw materials from Marneuli Agro, one of the holding members, and local small farmers. Each part of all products contained in jars is harvested in Georgia. According to the company, the sign M has become a synonym for high quality and healthy food.

BANKING & STATISTIC March 3, 2014 #44

caucasian business week

GEORGIAN PARLIAMENT AMENDED THE LAW ON AGRICULTURAL LANDS

hanges include the possibility, in some cases, to limit the effect of the law on the moratorium on sale of agricultural land until 31 December 2014, which was passed by

TRADE SECTOR CREDITING PORTFOLIO SHRINKS IN JANUARY

y February 1, 2014 share of trade sector in lending of the legal entities equals to 45,1% (01/01/14 -45,2, 01/02/13 -47,5%). National Bank informs that in January loans issued for the trade sphere reduced by 23,2 million (0,9%) to 2,4 billion GEL (01/01/14 -2,442 billion, 01/02/13 -2,238 billion GEL). Growth was 6% in previous month. Share of trade lending (47,5%) has reduced since the same period of last year, although its weight in the total credit portfolio remains the highest. By February 1 lending of industry equals to 935 million GEL, share - 17,4% (01/02/14 -17,4%, 942,3 million GEL). In January 0,8% reduction

(7,4 million) was mentioned. In comparison with the same period of last year the share has reduced by 3,5% (01/02/14 -20,9%, 982,4 million GEL). Share of construction lending in the loan portfolio of the legal entities maintained at 8,1% (01/02/14 -8,1%). Amount equals to 433,3 million GEL (01/01/14 - 435,5 million). In January it reduced by 2,3 million (0,5%). In the same period of last year share equaled to 8,9%, amount - to 420,5 million GEL. Therefore, 70,7% of the total amount of legal entities lending come only on 3 sectors - industry, construction and trade (01/01/14 -70,7%, 01/02/13 -77,3%). In total, corporate loans portfolio equals to 5,4 billion GEL (01/02/13-4,7 billion GEL).

Parliament. This right is given to the government of Georgia if a subject who wants to purchase the land has relevant arguments showing that the sale of land

is in the interests of the country’s economy. According to the head of the Parliamentary Committee on Agriculture Gigla Agulashvili, a change in the law will help improve the economy of Georgia : “The changes will promote the development of agriculture, the introduction of new technologies, mastering of new crops, and ultimately , economic recovery ,” – the MP says.

EXTERNAL TRADE OF GEORGIA IN JANUARY 2014

TBC BANK COMPLETED JANUARY WITH 8,5 MILLION GEL PROFIT, 22,5% OF THE RETAIL CREDITS COMES ON TBC

SC TBC Bank completed January with 8,5 million GEL profit. In the same period of last year the bank’s profit equaled to 1,8 million GEL (2013 - 55,4 million, 2012 - 30,07 million, 2011 - 121,1 million; 2010 - 43,05 million GEL). BY February 1, 2014 credit portfolio of the bank is 2246 billion GEL (01/02/13 - 2,246 billion GEL), deposits - 2,578 billion GEL (01/02/132,318 billion GEL), overall obligations - 3,4 billion GEL (01/02/13 - 3,021 billion GEL). Annual growth of the loans is 14,9%, of the deposits - 11,2%. Actives have increased by 11,7%, to 3,997 billion GEL. Market share equals to 23% (01/02/13 -25,2%). Bank operates for 21 years. Major stakeholders are TBС HOLDING, EBRD, IFC, DEG, FMO.

Stock capital of the bank is 600,7 million GEL (01/02/13 -592 million GEL). By February 1, 2014 share of TBC Bank on the retail credit market is 22,5% (01/01/14 -23%, 01/02/13 -24%). Individuals loan portfolio of TBC increased by 19 million in January, since the same period of last year - by 213 million GEL (24%). By February 1 amount of the portfolio is 1,073 billion GEL (01/01/14 -1,068 billion, 01/02/13 -859,7 million GEL). Overall loan portfolio of the bank equals to 2,580 billion GEL (01/01/14 - 2,786 billion, 01/02/13 -2,317 billion GEL). Credit investments of the commercial banks exceeds to 10 billion GEL, among them individuals credit portfolio is 4.77 billion GEL (01/01/14 -4,7 billion, 01/02/13 -3,6 billion GEL).

BTA BANK COMPLETES JANUARY WITH 628 191 GEL LOSSES

SC BTA Bank completed January 2014 with 628 191 GEL loss. In January of last year bank’s loss equaled to 648 511 GEL. By February 1 deposits (without banks’ deposits) equaled to 41 million GEL (01/02/13 -36,6 million), credit portfolio - 58,1 million GEL (01/02/13-81,2 million GEL), overall obligations - 106,7 million GEL (01/02/13 - 97,8 million GEL).

Bank’s actives ARE 128,2 million GEL, market share - 0,7% (01/02/13 -124 million GEL, 0,9%). BTA Bank operates on Georgian market since 2001. 49% of the bank’s stocks belong to JSC BTA BANK, 51% - to Silk Road Financial Group. Large Beneficiaries are fund Samruk Kazina (39,9%) and George Ramishvili (31,6%). Stock capital of the bank is 30,5 million GEL (01/02/13-26 million GEL).

PROCESSING SYSTEMS OF TBC BANK AND LIBERTY BANK CONNECTED WITH EACH OTHER

irectors of the banks Vakhtang Burskhrikidze and George Arveladze signed cooperation agreement on Thursday. By direct connection of the processing systems of the banks, both banks gave opportunity to the consumers will use wider network of ATM and POS terminals and lower fees.

In the framework of the cooperation, TBC Bank’s customer will use 340 ATMs of Liberty bank, with existing fees. From March 1, 2014 consumers of Liberty Bank will have the same opportunity in TBC network. In addition to Liberty, Basis Bank, Bank Constanta and Halyk Bank are also connected to the processing center of TBC.

BANK OF GEORGIA COMPLETES JANUARY IN 15.324 MILLION GEL PROFITS

SC Bank of Georgia completed January with 15,324 million GEL profit. In the same period of 2013 the bank’s profit equaled to 9,172 million GEL. By February 1, 2014 bank’s actives equal

to 6,082 billion GEL (01/02/13 -5,1 billion GEL), market share - 35% (01/02/13 -36,1%, 01/02/12 -35,4%, 4,5 billion GEL). Bank of Georgia is a market leader according to almost all indicators.

n January 2014 external merchandise trade (excluding non-organized trade) in Georgia amounted to USD 761 million (preliminary data), 15 percent higher yearon-year. The exports equaled USD 224 million (14 percent higher), while the imports stood at USD 538 million (15 percent higher). The negative trade balance was USD 314 million in January 2014 and its share in external trade turnover constituted 41 percent. The charts below reflect basic trends of the external trade of Georgia for 2010-2014: In January 2014 the external trade of Georgia with the EU countries amounted to USD 173 million, down by 4 percent compared to the corresponding indicator of the previous year. Exports amounted to USD 46 million (15 percent higher), while imports amounted to USD 127 million (9 percent lower). The share of these countries in the external trade of Georgia amounted to 23 percent, 20 percent in exports and 24 percent in imports (in January 2013 27, 20 and 30 percent correspondingly). 26 percent of the trade deficit came to the EU countries (37 percent in January 2013). In January 2014 the external trade of Georgia with the CIS countries totaled USD 263 million (higher by 20 percent compared to January 2013). Exports stood at USD 113 million (29 percent higher), while imports equaled USD 150 million

(14 percent higher). The share of the CIS countries in the external trade of Georgia constituted 35 percent, 51 percent in exports and 28 percent in imports (In January 2013 33, 45 and 28 percent, respectively). In January 2014, compared to the corresponding period of the previous year, CIS countries accounted for 12 percent of the overall trade deficit (16 percent in January 2013). In January 2014 the share of top ten trading partners in the total external trade turnover of Georgia amounted to 68 percent. The top trading partners were Turkey (USD 114 million), Azerbaijan (USD 86 million) and China (USD 58 million). Major commodity positions by exports and imports In January 2014 motor cars reclaimed the first place in the list of top export items, equaling USD 43 million, or 19 percent of total exports. Exports of ferroalloys totaled USD 32 million, and its share in the total exports amounted to 14 percent. Nitrogenous mineral fertilizers occupied the third place. Exports of this commodity group stood at USD 19 million and 9 percent of the total exports. The top import commodity in January 2014 was motor cars, imports of which amounted to USD 48 million and 9 percent of the total exports. Petroleum gases and other gaseous hydrocarbon commodity group followed in the list with USD 47 million, or 9 percent of imports. Petroleum and petroleum products came third with USD 43 million (8 percent of imports).

HPP caucasian business week

March 3, 2014 #44

FARUQ SADIQ: FUTURE GENERATIONS WILL ENJOY THE BENEFITS OF KHUDONI CONSTRUCTION

WHAT IS BEHIND PROTESTS AGAINST HPPS CONSTRUCTION?

rather interesting document got published recently – Russia’s new energy doctrine. Naturally, similar government documents and concepts are always overly belletristic with political-economics and contain an abundance of, as our western partners would sometimes say, completely pointless and rationally defunct bla-bla-bla. As such, these doctrines and concepts and strategies almost never catch the spotlight of wider layers of society. And so naturally for our society – or at least for the bigger part of it – the Russian energy doctrine, the political document representing Russia’s energy concepts and strategies, is practically alien. However, the new doctrine does contain one particularly interesting “detail”, which I think the Georgian society and more importantly the government leadership should be keenly aware of. The new doctrine emphasizes that the growth of energy capabilities from developed markets is strictly limited. It’s expected that energy resource demand will seriously increase in the coming years, from developed countries in particular. In light of all this, all efforts must be made in order to maximize the energy dependence of developing countries. Or in other words, maximize their dependence on energy carriers belonging to Russia. This will enable Russia to turn energetics into a more effective pressuring or blackmailing tool – political, economic or otherwise - aimed at other countries. Events currently underway in Ukraine are a clear indication of where a country can go when high energy dependence is in effect. It’s unfortunate that our society isn’t fully realizing the gravity on the whole issue of our country’s energetic safety and energy dependence levels on Russia. This becomes clear from the fact that the country’s most important and valuable treasure, the potential for effective utilization of hydro energy resources, is still dividing opinions. The matters of building high-capacity hydro power plants, which will have specific regulative and peak efficiency-oriented functions in addition to the basic ones and will significantly decrease energy deficiency during winter and alleviate the need for energy import, are still being fiercely debated. While these HPPs will ensure the decrease of Georgia’s energy dependence on other countries, Russia especially. It also must be taken into account that fully utilizing the country’s hydro energy potential and increasing hydro energy power levels will grant us significant prospects at alternating from thermal energy and replacing energy generated by thermal plants with energy generated by hydro power plants. Why? For a very simple reason – no one is against the construction of thermal plants and the general development of this entire sector, naturally, since they have a very base and important function. But we must always remember that Georgia has none of the raw materials needed

to sustain thermal plants and resorts to importing them. As a result, when we’re developing the industry of thermal plants in the country and causing an increase of the energy share generated by them in the overall system, we’re also directly increasing our energy dependence levels on other countries. And that’s when by developing hydro energy and the hydro powers plant industry we’d do the exact opposite, lessening Georgia’s energy dependence on others. The antagonistic attitude to the hydro energy issue and certain anti-globalist vibes in a minor part of society can only be explained by three reasons: - Ignorance on the importance of energy independence and general lack of information regarding the dangers of energy dependence; - Lack of knowledge on the benefits and advantages gained by utilizing the potential of hydro energy; - Personal motivation and intended lobbying of outside forces and third party interests. The third factor is the most dangerous from the above listed. When there is a group in society, albeit a small one, which is intentionally fighting against the growth of hydro energy development and resource utilization specifically, and at the same time says nothing regarding thermal plant constructions, is really only protesting strategically important hydro energy plants and stations. They don’t think of the environment or anything affecting it, nor do they think of ecology or problems with the local populations, and turn to suspicious silence once the matters touch thermal plants. They turn to suspicious silence once Georgia’s energy dependence levels to the Azerbaijani company “Socar” start rising at an alarming rate. Dependence to a company which is practically a lone and exclusive supplier of natural gas to the country. Seems strange, doesn’t it? This silence and biased outlook obviously begets a number of questions and concerns. To be frank, I can only call what transpired during the delegation’s visit from the European Bank for Reconstruction and Development’s (EBRD) in the hotel “Radisson BluIveria” as something intentional and determined. This was when a small group of anti-globalists practically ran up to the EBRD delegation and obstructed their meeting with government officials right in the hotel lobby. Naturally this led to apparent doubts regarding this process and the so-called protest serving certain outside force interests and goals, since the “protesters” were specifically requesting the EBRD to not invest in Georgia’s hydro energetics and hydro energy projects. And the decrease in Georgia’s hydro energy potential, halting of hydro energy projects in the country and increasing the dependence level of the energy system on other countries is precisely in the interests of Russia’s new energy doctrine. Levan Kalandadze

aruq Sadiq, Director General of Rustavi Steel thinks that natural resources owned by any country have to be adequately used for its economic development and contribute to improving the life of its citizens. “All countries passed the stage of using its natural resources. The civilized world will always face the choice - whether to use natural resources or protect the uncreated nature. Civilized economy cannot be imagined without development of heavy industry and the choice is to be made on the basis of priorities. Power generated by HPPs is the cheapest in the world. Investments made in such a big construction as Khudoni HPP will remain in the country. Future generations will enjoy the benefit brought by Khudoni HPP. This project is not just the one planned for several years. In my opinion, priorities and perspectives are clear and attractive. Cheap electricity will be generated and be exported, the industry will get developed, which would create jobs and allow the country to compete with neighboring Azerbaijan having cheap natural gas. However, billions are required for tourism development and enabling the country to live on this. Here we are coming across with the same problem. Tourism development also requires electricity, which does not seem a deficit now but for future development it might be insufficient. Natural gas and coal are required for operating

the Thermal Power Stations. The gas is to be imported from Azerbaijan. Respectively this will entail additional costs for the country and be less effective. Power generated from gas will be more expensive. Competition with Azerbaijan will be ridiculous to say the least. The God gave Georgia natural resources required for construction of HPPs and the electricity generated by hydropower stations is not just cheap, it is almost free. HPP has less costs and the power exported will be effective and profitable for the country. As regards the nuclear power station, after the Japanese tragedy many countries refused to implement such projects. In addition, costs are very high and uranium needs to be imported from the other countries. This will be not just ineffective but also risky at certain extent. Also too much water will be needed for cooling turbines down and technical-engineering support will be difficult. Therefore, low-cost and completely self-sustainable and productive will be the HPP” – said Faruq Sadiq.

EUROPEAN COMMISSIONER FOR ENERGY VISITS GEORGIA

he European Commissioner for Energy, GüntherOettinger, came with a visit to Georgia and conducted a meeting with Prime Minister IrakliGaribashvili. The meeting was also attended by KakhaKaladze, Georgia’s Minister of Energy. The primary topics discussed on the meet were Georgia’s perspectives at joining the European energy union. The European Union team were

fully supportive to the idea of Georgia’s enlistment in the energy union, and certain details for the preparation period were discussed. Further negotiations are expected to carry on for 6-8 months with the agreement to be signed no later than October of this year. The talks also touched on Eurointegration matters in general, and certain forward steps in this area were acknowledged. The participants of the meet then conversed on various specific energy projects, as well.

ECOLOGIST ON KHUDONI HPP: “SERIOUS GUARANTEE FOR ENERGY SAFETY”

n a recent interview with the Georgian news agency “Medianews”, ecologist Mariam Kimeridze defends the construction of the controversial Khudoni hydro power plant. “What we’ll get with building the Khudoni HPP is apparent in the environmental assessment document. Personally, I consider the HPP to be a serious guarantee for energy safety.” Kimeridze elaborated on Georgia’s current energy independence state and deemed it necessary to “diversify the country’s energy sources and utilize owned resources the best we can,” stating that serving transit functions alone won’t ensure energy safety. “Energy safety means utilizing the strategic resources that we have. And that’s water, and if we utilize it and gain the ability to transport and diversify it, our energy safety will increase significantly.” Regarding the much-debated Khudoni HPP itself, the ecologist said that any infrastructural project, be it strategic or not, will always negatively affect the environment, and that all strictly ecological factors can easily be restored, given the government and/

or investors deem it necessary. “The Khudoni HPP will not have irreversible effects on the climate. I repeat, in case of felling trees, it’s possible to restore them. As for the climate, how can the power plant negatively affect the western part of Georgia, where we have high levels of humidity?” “Those who say that the Khudoni HPP will affect the climate are incompetent.” She further noted that any activity in the environment defense field should be aimed at a country’s development, and provided the Seychelles as an example of islands with astounding nature but high levels of poverty. Kimeridze concluded by stating that she fully supports the Khudoni HPP, as long as appropriate compensative matters are taken care of regarding the local population, who face imminent relocation. “From my standpoint, this power plant will be a serious guarantee for energy safety. Economy will increase as well, among other things. And if it’s not built, we won’t be able to use the strategically relevant energy resource that we have, and will be dependent on imports alone.”

AZERBAIJAN March 3, 2014 #44

caucasian business week

AZERBAIJAN, INDIA INTEND TO EXPAND CO-OP IN ENERGY

zerbaijan and India are planning to set up a joint working group in the field of energy (hydrocarbons). The decision to establish the group was made at the third meeting of an intergovernmental commission in India on trade-economic and scientific-technical cooperation between the two countries. Azerbaijan’s delegation was led by country’s Ecology and Natural Resources Minister Huseyngulu Bagirov. Addressing the event, India’s Commerce and Industry Minister Sudarsana Natchiappan, called for acceleration of the working group formation. During the meeting, the two sides agreed to expand cooperation in the field of alternative and renewable energy, oil and gas industry, chemical industry and pipeline projects. India is represented in Azerbaijan’s oil and gas sector by ONGC Videsh Company. The American “Hess” company has agreed to sell its stake in the major oil and gas projects in Azerbaijan to the Videsh. The corporation announced that it

completed the sale of its stake in the “Azeri-Chirag-Guneshli” and Baku-Tbilisi-Ceyhan projects in March, 2013. Under the deal, “Hess” sold 2.72 percent of the stake in the ACG project and 2.36 percent in the BTC pipeline project for $1 billion. Production at Azeri-Chirag-Guneshli oil field, located about 100 kilometers east of Baku in the Caspian Sea, was launched in 1997. Participants of the project to develop Azeri-Chirag-Guneshli are British Petroleum (operator - 35.83 percent), Chevron (11.27 percent), Inpex (10.96 percent), AzACG (11.6 percent), Statoil (8.56 percent), Exxon (8 percent), TPAO (6.75 percent), Itocu (4.3 percent) and ONGC Videsh (2.72 percent). The trade turnover between Azerbaijan and India amounted to $1.1 billion by the end of 2013, which was 41.4 percent less than 2012. Some $49.6 million of the total trade turnover between two sides fall to Azerbaijan’s imports, while in 2013, India imported goods from Azerbaijan amounting $1.09 billion.

AZERBAIJAN REMAINS GEORGIA’S LARGEST EXPORT MARKET

eorgia exported to Azerbaijan the goods worth $37, 086 million in January 2014, which $9 million less than in the same period in 2013, the Georgian National Statistics Office reported. Thus, despite the decline in exports, Azerbaijan remains the largest export market of Georgia. Azerbaijan exported to Georgia the goods and services worth $48, 582 million. Azerbaijan is the second largest foreign trade partner of Georgia. The trade turnover between the two countries amounted to $85, 668 million in January or 11.3 percent of the total volume of

Georgia’s foreign trade turnover. Turkey is in the first place among Georgia’s foreign trade partners with $114, 357 million, and China is the third with $58, 142 million. The trade turnover between Azerbaijan and Georgia amounted to $1.35 billion or 12.5 percent of total foreign trade turnover of Georgia in 2013. Azerbaijan mainly exports to Georgia petroleum, petroleum oils and gases, gypsum, anhydrite, plaster and other products, while the motor cars, live bovine animals, bars and rods of iron, cement are the most imported goods from Georgia to Azerbaijan.

AZERBAIJAN, MONTENEGRO TO HOLD BUSINESS FORUM IN MARCH

he Azerbaijani-Montenegrin Business Forum will be held in Montenegro on March 5. The Azerbaijani Fund Export and Investment Promotion (AZPROMO) confirmed the news adding that:” The event, co-organized by AZPROMO and the Ministry of Economy and Industry of Azerbaijan, will be held during the visit of the Azerbaijani delegation to Montenegro on March 4-7.” The trade turnover between the two countries amounted to $11,850 in 2013. Azerbaijan exported $11,460 worth of goods to Montenegro, and imported $ 390, according to the Azerbaijan State Customs Committee. Although the amount of export-import between the two countries stand at a low level, Montenegro is considered one of the most promising markets for Azerbaijani productions. Montenegro opened Honorary Consulate in Azerbaijan on December 4 last year, which also contributes to the development of friendly relations.

Earlier in January, the Civil Service Commission under the Azerbaijan President and the Montenegro Human Resources Management Authority signed an action plan on cooperation for 20142015. About 1,500 tourists from Azerbaijan visited Montenegro last year. Also Azerbaijan is investing in the construction of a tourist complex in Montenegro on the shores of the Bay of Kotor. The total investment will amount to 500 million euros. Azerbaijan State Oil Company, which won the tender, established “Azmont Investments” for this project. The complex will include a network of resort “One & Only”, known for its orientation towards affluent customers. Moreover, in accordance with the Memorandum of Understanding on the future supply of Azerbaijani gas to Albania, Croatia and Montenegro, there are plans to construct a gas pipeline corridor passing through the Trans-Adriatic gas corridor that will allow the delivery of gas from Azerbaijan to Montenegro.

BP SAYS SOME $2 BN TO BE INVESTED IN ACG PROJECT

he consortium of the Azeri-ChiragGuneshli (ACG) offshore fields block development in Azerbaijan will invest about two billion dollars in the project in 2014, Reuters reported BP’s president for the Azerbaijan-Georgia-Turkey region, Gordon Birrell as saying. BP is an operator in ACG development project. “We will spend approximately two billion dollars at the ACG in 2014, which is slightly less than last year,” Birrell said. This year’s money would be spent on drilling 19 wells in the ACG, according to Birrell. A PSA contract on the Azeri-Chirag-Guneshli offshore field development project was signed in September 1994. The agreement is valid for 30 years. Shares in the contract for development of the Azeri-Chirag-Guneshli block of fields is distributed as follows: BP (operator in Azeri-Chirag-Guneshli) - 35.78 percent, Chevron - 11.27 percent, Inpex - 10.96 percent, AzACG - 11.65 percent, Statoil - 8.56 percent, Exxon -

eight percent, TPAO - 6.75 percent, Itochu - 4.3 percent and ONGC - 2.72 percent. In 2013 the consortium spent about 772 million dollars in operating expenditure and 2,833 million dollars in capital expenditure on ACG activities, according to BP report as of 2013. ACG produced on average 655,370 barrels per day or over 239 million barrels during 2013 from the Chirag, Central Azeri, West Azeri, East Azeri and Deepwater Gunashli platforms compared to 664,400 barrels per day in 2012. Birrell said output would fall slightly at the ACG oilfields this year because of planned maintenance work at the Central Azeri and West Azeri platforms, halting operations for a couple of weeks. He did not say when the work would start. “Because we are shutting down this year, I expect it (output) to be slightly less in 2014,” Birrell said. “It’s included in the plan that is shared with the SOCAR (State Oil Company of Azerbaijan Republic) and the government. This is no surprise,” he added.

AZERBAIJAN ATTRACTS FOREIGN INVESTMENTS IN HIGH-TECH PARK

igh-Tech Park of Azerbaijan’s ICT Ministry is seeking opportunities to attract major foreign investments in the “Technopark”. Head of High-Tech Park, Seymur Aghayev said in an interview with “The Business Year” that the project is one of the most promising one for the development of Technopark in the next few years. The project includes preparing ground for a limited list of space renting companies to invest in Azerbaijan. In addition, a flexible master plan that will satisfy the needs of large tenants is under considerations. The park, which is under construction, will cover 50 hectares area in the Pirallahi district of Baku. Works are currently underway to build the park, construct the necessary infrastructure, study pertinent international experiences, and address other organizational issues. The park will play an important role in the sustainable development of economy of the country. “Our main goal is to create a regional technology park and become one of the best players in this field. Finding competitive innovative solutions and further commercialization of the innovations are the main components of the project. Azerbaijan’s economics and leading position in the region as a key player allows it to facilitate commercialization of its inventions,” Aghayev said. The Business Incubation Center of the park has already accepted 20 projects. Once the project reaches the desired stage of development, the next step will be shifting them to the High-Tech Park, which will provide tax and customs privileges to its residents.

“The main aim is to ensure investment in projects. Along with the master development plan, we are creating an infrastructure package for potential investors. During 2014, we are intending to develop an attractive business package for our future investors,” he said. There are no restrictions in reception of the participants in the High-Tech Park. Promising ideas will get adequate support for the further development, regardless of whether they come from the citizens of Azerbaijan or foreign countries, Aghayev noted. The new facility will be an area with the necessary infrastructure, logistics and governing entities for conducting research in ICT, telecommunications and space use, energy efficiency, and the development of new and high technologies. Residents and companies operating in the park will be exempt from the 18 percent VAT on imported infrastructural and technological goods and services. The park participants will also be exempt from tax and customs duty for seven years.

EBRD EXTENDS SENIOR LOAN FOR SHAH DENIZ PROJECT

he European Bank for Reconstruction and Development (EBRD) is extending a senior loan worth $200 million for Russia’s Lukoil Overseas Shah Deniz Ltd. The aim is to finance the development of giant Shah Deniz gas condensate field located in Azerbaijan’s sector of the Caspian Sea, EBRD said on February 27. “Stage 1 of the Shah Deniz field is crucial for the energy security of Azerbaijan, Georgia and Turkey. Our new financing will help prepare the ground for further reservoir expansion to feed the gas through the Southern Corridor - a proposed energy route from the Caspian which could potentially deliver gas all the way to the European Union. This project is also an example of the good cooperation with Lukoil in our common efforts to develop operational best practices for hydrocarbon production,” EBRD Managing Director for Energy and National Resources Riccardo Puliti said. The EBRD has played a crucial role in the initial development of Shah Deniz Stage 1, providing Lukoil with loans worth $180 million, and Azerbaijan’s state energy company SOCAR with $170 million. The EBRD also ensured the application of high international standards - technical, environmental and health and safety. “Shah Deniz is one of the company’s key projects in this region, and Lukoil is paying substantial attention to ensuring that high standards are implemented in the field. We are satisfied with our long-term cooperation with the EBRD and appreciate their support for our efforts in these matters,” Vice President of Lukoil, President of Lukoil Overseas, Andrey Kuzyayev said. The current loan will pay for part of a technological upgrade of existing operations, which could

see output from the field increase by up to 2 billion cubic meters (bcm) per year. This increase will see peak production from the gas field reach 8.9 bcm per year. For comparison, Azerbaijan itself consumes 13 bcm of gas per annum. The total cost of expenditures on the first stage of the Shah Deniz field development project is estimated at $2.128 billion. Lukoil’s share in the projects will amount to $212.8 million. Lukoil Overseas Shah Deniz Ltd is a 100-percent daughter company of Lukoil Overseas, a holding company that manages Lukoil’s participation in exploration and production projects outside Russia. Lukoil holds a ten-percent interest in the Shah Deniz development project. The Shah Deniz field was discovered in 1999. It is one of the world’s largest gas-condensate fields. The reserves are estimated at 1.2 trillion cubic meters of gas. The Shah Deniz Stage 1 was launched in 2006. It has the capacity to produce about 9 billion cubic meters of gas per year and approximately 50,000 barrels a day of condensate. Shah Deniz is operated by the London-based BP. The partners include SOCAR, Statoil, Total, Lukoil, NICO and TPAO. BP and Shah Deniz partners have invested $6 billion in Shah Deniz Stage 1 up to date. The EBRD invests in the enterprise, financial and infrastructure sectors to promote sustainable growth in Azerbaijan. Since the start of its operations in the country, the EBRD has invested around $ 2 billion in about 137 projects, with over 90 percent of these projects investing in the development of the private sector. Around 73 transactions with a total value of approximately $540 million have been signed with financial institutions in Azerbaijan.

12 UKRAINE SEEKS INVESTMENTS FROM MAJOR OIL COMPANIES

he world’s largest oil companies from Royal Dutch Shell to Exxon Mobil are likely to reassess deals to drill in Ukraine amid a political crisis in the country, Bloomberg reported. Shell and Chevron signed agreements last year to drill unexplored shale formations in Ukraine. Before the crisis erupted last year, Exxon was also close to signing a pact to explore the Black Sea. However, Chris Weafer, senior partner at Macro Advisory in Moscow, said that Ukraine is “a no-go area for any investment from any foreign investor right now,” adding that investors need political stability and economic predictability.

GREECE’S DEPA EXTENDS DEAL WITH RUSSIA’S GAZPROM BY 10 YEARS

reece’s natural gas distributor DEPA has clinched a new gas supply deal with Russian gas giant Gazprom, Reuters reported. The new agreement extends a current deal between the two companies by 10 years to 2026, the Greek energy ministry said. The two sides have been negotiating for months, with DEPA seeking a cut of between 15 and 20 percent in the gas supply price. The new deal provides for a more flexible take-or-pay agreement. DEPA will get between 2.5 and 3 billion cubic meters of natural gas each year. The new gas price is linked to the one for oil and is below $400 per 1,000 cubic meters, according to multiple sources.

RUSSIA’S GAS PRODUCER NOVATEK SAYS 2013 PROFIT ROSE 58%

ovatek, Russia’s leading independent natural gas producer, said 2013 profit rose 58 percent, citing gains from its Yamal LNG project and an asset swap with stateowned Rosneft, Bloomberg reported. Net income increased to 110 billion rubles ($3.1 billion) from 69.5 billion rubles a year earlier, the Siberia-based company said in a statement. In 2013 the company swapped stakes in Sibneftgas for SeverEnergia with Rosneft. Novatek also received big gains from China National Petroleum Corp., which paid $1.1 billion for a 20 percent in the Yamal LNG venture in January and February 2014. Worldwide, Russia accounts for 5 percent of total LNG supply and 30 percent of pipeline deliveries.

BANKS TO WATCH OUT FOR POSSIBLE TRANSACTIONS OF EX-UKRAINE PRESIDENT

he US Treasury has warned banks to watch out for the possibility that former Ukraine President Viktor Yanukovich might try to move stolen state assets, the Wall Street Journal said. Treasury’s Financial Crimes Enforcement Network said banks need to apply “enhanced scrutiny” to transactions by Yanukovich or former senior officials in his government. The measure would protect against “misappropriated or diverted state assets, the proceeds of bribery or other illegal payments, or other public corruption proceeds.”

RUSSIA MAY SET LIMIT FOR KAZAKHSTAN VODKA REPORTS

ussian deputies and Rosalkogol, a government agency that oversees the sale of alcohol, plans to limit imports of vodka from Kazakhstan, Vedomosti reported Wednesday. If approved, the measure would allow individuals to bring only 5 liters of alcohol from Kazakhstan. Officials explain that excise taxes are different in the two states. In Russia, the current excise tax for 1 liter of pure alcohol is 400 rubles ($11), while in Kazakhstan it is 192 rubles.

CIS March 3, 2014 #44

caucasian business week

‘TREASURY EMPTY’, UKRAINE’S ECONOMY IN FREE FALL

kraine’s new Prime Minister, opposition leader Arseny Yatsenyuk, has promised the government would do its best to avoid a default, a difficult task as the country’s treasury is empty and the economy is in disarray. Yatsenyuk says he expects an EU/IMF economic stabilization package soon, but didn’t give any specifics on timing. Strengthening ties with the European Union and the International Monetary Fund will remain a priority as Ukraine rebuilds, Yatsenyuk said on Thursday in Kiev, Itar-Itass reported. Yatsenyuk said negotiations with Russia would continue, and he considers the neighboring country “a partner”. The IMF failed to come through with a loan of $10-15 billion last August, and it remains to be seen what offer they will come up with for the new government. But in December Ukraine signed a $15 billion loan deal with Russia. The first $3 billion was paid to Ukraine in December, but the second installment of $2 billion, is postponed until Moscow deems Ukraine has formed a legitimate government. Yatsenyuk believes the economic trouble ahead will likely make him the most unpopular PM in Ukraine’s history.

CENTRAL BANK WOES Ukraine has a massive debt, both domestically and abroad. Propping up its overvalued currency with interventions has drained much of the country’s foreign exchange reserves, which are now close to $15 billion. As a percentage of GDP, Ukraine’s public debt stands at 40.5 percent. In summer 2014, a debt payment of $60 billion, or about one third of the economy is due, according to Central Bank data. The EU was disillusioned with the Yanukovich government when he didn’t sign the European Trade Association Agreement in November. On the brink of collapse, a move towards the EU could spell the end of Ukraine’s economy, which the S&P ratings agency already has said is likely to default. Fitch ratings agency says the risk of a sovereign debt default is high and has also downgraded credit to junk status. Russia and Ukraine have several financial and trade ties, which could be in jeopardy if Ukraine makes a move West. The Ukrainian Central Bank decided to halt currency interventions in February, and as a result the hryvnia will continue to slide. In 2014, the currency lost 20 percent against the dollar, more than any other emerging currency. In 2013, foreign-exchange reserves tanked 28 percent, according to Bloomberg data.

As a country with deep financial problems, thenPresident Yanukovich tried to play Russia and the West against each other in order to get the best deal, but ended up losing support from both sides. The UK, US, and Europe have all promised aid to Ukraine, but no official offers have come forward.

UKRAINE NEEDS $35BN IN AID TO ‘STAY AFLOAT’ – FINANCE MINISTER

second-wave of revolution, a missing President, and a treasury that is nearly empty, Ukraine is on the brink of bankruptcy. Kiev’s finance minister said it needs $35 billion in aid by the end of 2015. Acting Finance Minister Yuriy Kolobov said the situation is “difficult but controllable” and proposed calling an international conference of donors with the EU, the US and other countries to seek financial assistance. One of the main goals will be forging a path for Ukraine to sign an EU Association Agreement, which, when President Yanukovich failed to sign in November set off protests in the country. An arrest warrant has been issued for Yanukovich for his role in last week’s bloody clashes in which 82 people died. “The new government’s task is to stop the country’s decline, to stabilize the currency, ensure timely wages and pension payments, to win back investor trust, and to create new jobs,” Kolobov said. The European Union has said it would provide financial assistance to Ukraine to help it avoid default or bankruptcy. On Sunday, the UK Chancellor said the US and EU should be ready to help Ukraine rebuild “with a check book” in hand. Opposition leader Arseny Yatsenyuk, a member of the Batkivshchina (Fatherland) Party, and a favorite of the West is likely to be appointed prime minister, and has warned that Ukraine’s economy is on the edge of collapse. “We have to ask for financial help from the Inter-

national Monetary Fund,” said Yatsenyuk, commenting that Ukraine has never seen a financial catastrophe on this scale in its history. Speaking after Sunday’s Group of 20 finance and central bankers meeting, IMF Managing Director Christine Lagarde said the organization is “ready to engage” with Ukraine, providing both humanitarian and financial support. An IMF bailout was unattractive to the politicians in power, who instead, led by then-President Viktor Yanukovich, signed a $15 billion aid package with Moscow in December. The Washingtonbased institution said a bailout was possible if Ukraine ended gas subsidies (which would send gas bills soaring), froze salaries as part of an austerity program, devalued the over-valued and dollar-pegged hryvnia, and other budget cuts. IMF bailouts have crippled much of southern Europe, as most governments, in exchange for loans, have had to introduce extreme austerity measures, which have left countries like Greece worse off than before the debt crisis. ‘STATE HAS BEEN ROBBED’ Ukraine’s depreciating currency reserves and massive deficit have brought it close to economic collapse. In the last year, reserves have tanked 28 percent down to $17.8 billion at the end of January, according to Bloomberg. “The state treasury has been robbed. The country has been brought to the brink of bankruptcy,” Yatsenyuk said during a parliamentary session on Monday. Ukraine’s foreign debt is $140 billion, nearly 80

percent of the country’s gross domestic product. Ukraine’s government reserves are so depleted they may no longer be able to keep national energy company Naftogaz afloat, and the government may be forced to privatize it. Such a proposal was drafted last April, but controversially has still has not been voted on in the Ukrainian parliament. The at-risk economy has prompted the big three rating agencies to downgrade their outlook on Ukraine, lower than the junk level of Greece or Cyprus. Most recently, ratings agency S&P downgraded Ukraine’s credit rating from CCC+ to CCC and warned it was “likely to default.” The government of Ukraine has stopped all government payments except for salaries to state employees at the request of acting Deputy Prime Minister Aleksandr Vikul. Parliament Speaker Aleksandr Turchinov, acting president of Ukraine, said earlier that the economy was in a “pre-default situation” and “spinning out of control.” MEDVEDEV UNEASY ON AID Since street violence and political uncertainty have escalated, Moscow has reneged on its aid promise, as they want to wait until Kiev has a legitimate authority to follow through on agreements. “Frankly, the legitimacy of many governmental bodies is in doubt there,” Russian Prime Minister Medvedev said on Monday. “Treating masked men armed with Kalashnikov rifles, who are now circling Kiev, as a government – we would find it difficult working with such a government,” the PM said. Medvedev added that Russia is willing to fulfill all its obligations under agreements signed with Ukraine, but is concerned that its interests may be under threat. A sign of this unease is the recall of the Russian ambassador to Ukraine back to Moscow for consultations. Newly-freed former Prime Minister Yulia Tymoshenko, who was released from prison on Saturday, said she would return to the country’s broken political scene when speaking to crowds in central Kiev. Early elections will be held on May 25, 2014.

WORLD NEWS March 3, 2014 #44

caucasian business week

IMF SAYS TAXING SUPER RICH CAN BOOST ECONOMIC GROWTH

new International Monetary Fund study has found that taxing the super wealthy doesn’t stunt the economic growth of a country, and that redistribution can actually spur gross domestic product. The paper argues inequality is harmful to a country’s growth, and that redistributing wealth using taxes can reduce inequality and boost growth and the length of growth cycles. “There is surprisingly little evidence that increases in tax rates impede medium-to-long-run economic growth,” the IMF paper says. Redistribution is a “win-win situation” and overall has a “pro-growth effect”, and isn’t a job killer, as many other economists argue. Growth inequality is more common in countries that redistribute less, and more equal societies have”faster and more durable growth”. The paper addresses extremes in the formula that sometimes suggest huge redistribution has a negative effect on growth. America’s tax authority, the International Revenue Service, released a report in November 2013 that shows that the US’s richest 1 percent now owns 31 percent of its wealth, while the rest of the population experienced an income rise of only 1 percent. A recent Oxfam study shows that up to 146 million Europeans are at risk of falling into poverty by 2025, and 50 million Americans are currently suffering from severe financial hardship. “We find that higher inequality seems to lead to lower growth. Redistribution, in contrast, has a tiny and statistically insignificant (slightly negative) effect,” the IMF paper states.

However, the report admits that labor supply could be adversely affected by a top heavy tax scheme. “Redistribution that takes from the rich and gives to the poor is likely to reduce the labor supply of both the rich (who are taxed more) and the poor (insofar as they receive means-tested benefits that reduce incentives to work),” the report said. The IMF study, compiled by researchers Jonathan Ostry, Andrew Berg and Charalambos Tsangarides and published by Oliver Blancard, the institution’s chief economist and released on

Wednesday, is meant to serve as a ‘discussion note’ and not an official stance of the Washington-based institution. “Redistribution, Inequality, and Growth” stops short of declaring the paper economic gospel, as the authors admit the data, and discipline of economic theory, is complex and many different variables are at play. ‘Tax the rich’ has become the main mantra of Warren Buffet, America’s second richest man, who hasurged Congress to raise taxes on millionaires to 30-35 percent.

WHATSAPP WORTH MORE THAN $19BN - ZUCKERBERG

YUAN SEES LOWEST VALUE SINCE 2010, PUSHED BY CENTRAL BANK

the recovery is still modest,” Olli Rehn, EU Commissioner for Economic and Financial Affairs, said in Strasbourg, France. “To make the recovery stronger and create more jobs, we need to stay the course of economic reform,” Rehn told reporters. The Eurozone’s best-performing economy, Germany, is set to grow by 1.8 percent, driven by strong exports and a determination to enforce thrift. Germany’s predicted growth is three times Italy’s. Britain, which has stayed out of the Eurozone, was forecast to grow by 2.5 percent – higher than France or Germany. However it’s too early to speak about an economic recovery, as unemployment figures remain slow in improving. The worst-hit countries, Greece and Spain, are predicted

to finish the year with slightly lower rates of unemployment, at 26 percent and 25.7 percent, respectively. But in some other Eurozone countries member states the unemployment rate is set to rise further, in Portugal, to 16.8 percent; in Cyprus, to 19.2 percent; and in France, to 11 percent. Overall, Eurozone unemployment will drop very slightly from 12.1 percent to 12.0 percent this year, the forecasts predict.

achieve. We want to add over $2 trillion more in economic activity and tens of millions of new jobs,” Hockey added. The G20 is setting a goal to increase investment, boost employment and promote competition in the mutual beneficial plan. Another issue discussed during the meeting was cross-border taxation, according to the BBC. The ways of fleeing tax obligations in high-tax nations in favor of countries with lighter tax regimes have been causing a political fury in the US and the UK. Among the most discussed companies were Starbucks, Google, Apple and Amazon. The G20 is aiming to develop a set of common standards for sharing bank account information across borders, making financial operations more transparent. The automatic exchange of data among the member states is to be introduced by the end of 2015. The G20 also said that it “deeply regrets” prog-

hina’s yuan tumbled the most in more two three years after the People’s Bank of China (PBOC) lowered the currency, a move towards a free-floating yuan by 2015. The yuan fell 0.46 percent against the dollar in Shanghai, according to Chinese Foreign Exchange Trade System price data. The central bank reportedly wants an end to the currency’s steady appreciation to ward off speculators before a possible widening of the trading band. “The PBOC is engineering the yuan declines, which might mean the central bank wishes to change the perception of the one-way bet on yuan gains,” according to Kenix Lai, a Hong Kong-based currency analyst at Bank of East Asia Ltd, as quoted by Bloomberg.

BOEING ‘STRUGGLING’ TO FIND BUYERS FOR $1.1BN OF EARLY 787 DREAMLINERS

G20 AIMS FOR $2TN EXTRA ECONOMIC GROWTH

he financial leadership of the G20 countries say they want to generate $2 trillion of extra output over the next five years, providing tens of millions new jobs. It’s the first time the G20 has put a figure on growth plans. The decision by the countries, which account for around 85 percent of the global economy, came following a two-day meeting in Sydney. “We will develop ambitious but realistic policies with the aim to lift our collective GDP by more than 2 percent above the trajectory implied by current policies over the coming five years,” the conclusion of the G20 meeting states. Joe Hockey, the Treasurer of Australia, who hosted the meeting, called the announcement from finance ministers and central bankers “unprecedented.” “We are putting a number to it for the first time - putting a real number to what we are trying to

ross domestic product in the UK rose 0.7 percent in the fourth quarter from the previous three months, as previously estimated, Bloomberg reported, citing the Office for National Statistics. From a year earlier, the economy expanded 2.7 percent, the most in almost six years. There was an annual 8.5 percent increase in business investment. The largest contribution came from net trade, investment and consumer spending.

acebook CEO Mark Zuckerberg said WhatsApp, which his social-media company agreed to buy last week, was “worth more than $19 billion,” Bloomberg reported. The mobilemessaging startup was “a great fit for us,” Zuckerberg said at the Mobile World Congress in Barcelona. “It’s the most engaging app we’ve ever seen exist on mobile by far.” Zuckerberg said he is seeking 3-5 phone companies as partners to connect billions of people to the Internet that don’t yet have access. Pavel Durov, who launched a Facebook spin-off social media in Russia, has also launched a WhatsApp competitor, Telegram, which gained more than 1 million users the day Facebook announced it was buying WhatsApp.

‘WORST MAY BE BEHIND US’: EUROZONE GROWTH OUTLOOK RAISED SLIGHTLY TO 1.2% FOR 2014 he Eurozone’s GDP will grow 1.2 percent in 2014 but will not reach the rates of its main western competitors or China, the European Commission said Tuesday. The US economy is forecast to grow 2.9 percent and China 7.9 percent, the EC said. High debt and unemployment will continue to stall recovery in the 18-member Eurozone after the sovereign debt crisis that hit in 2008, forcing five countries into bailout programs followed by heavy austerity measures, the forecast says. Official unemployment levels will fall 12 percent in the coming year, while sovereign debt will inch up to 95.9 percent of GDP. In total, the Eurozone holds $11 trillion in debt, with a majority of that in Europe’s economic “south” – Greece, Cyprus, Spain, Portugal and Italy. The most indebted country, Greece, has a debt of 176 percent of its gross domestic product. The European Commission has revised its Eurozone growth forecast upward since November, when it predicted 1.1 percent GDP growth for 2014. “The worst of the crisis may now be behind us, but this is not an invitation to be complacent as

UK ECONOMY GREW BY 0.7% IN Q4

ress on granting emerging nations more say in the International Monetary Fund had slowed. Major emerging economies including India, China, Brazil and Russia have voted for giving themselves more power in the International Monetary Fund as their share of the world economy grows. But the changes agreed in 2010 and blocked by the US have still not been implemented. “We deeply regret that the IMF quota and governance reforms agreed to in 2010 have not yet become effective”, said the communiqué. “Our highest priority remains ratifying the 2010 reforms, and we urge the US to do so before our next meeting.” Each country is expected to prepare a detailed economic promotion strategy to present at the G20 November summit in Brisbane, Australia. The possible repercussions if targets are not met will be also discussed.

oeing is having difficulty finding buyers for 11 of its earliest 787 Dreamliners valued at $1.1 billion. Earlier, two airlines canceled order for the models. The partially-completed planes are heavier than new 787s and can’t fly as far, and they have been in storage outside the Seattle-Tacoma airport for nearly four years. The early Dreamliners are known in the industry as the “terrible teens” because of their place in the assembly-line order and the factory woes.

BANK OF ISRAEL LOWERS BENCHMARK INTEREST RATE FOR THE FIRST TIME IN 5 MONTHS

he Bank of Israel has lowered the benchmark interest rate for the first time in five months, Bloomberg reported. The five-member monetary policy panel, led by Governor Karnit Flug, cut borrowing costs by a quarter of a percentage point to 0.75 percent. The bank cited lower-than-expected inflation, consumer pessimism, and “disappointing” US economic data. The yield on the government’s benchmark 2023 bond dropped to a record low 3.35 percent at 9:45am Tuesday on the surprise cut.

PUBLICITY caucasian business week

March 3, 2014 #44

TBILISI GUIDE March 3, 2014 #44

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: 75 21 11, Fax: 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 Av., Tbilisi Tel: 225-20-72/73/74/76 E-mail: turkemb.tbilisi@mfa.gov.tr Address: 8, M. Abashidze str. Batumi, Georgia tel: (8-88-222) 7 47 90 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

caucasian business week Kingdom of Spain Embassy Rustaveli Ave. 24, I floor, Tbilisi Tel: 230-54-64 E-mail: emb.tiflis@maec.es Romania Embassy 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

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 CHARDIN 12 Tbilisi , 12 Chardin St. , Tel: 92 32 38 CHINA TOWN Tbilisi , 44 Leselidze St. (ent. from Chardin St.) Tel: 43 93 08, 43 93 80, Fax: 43 93 08 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 PICASSO Tbilisi , 4 Miminoshvili St. , Tel: 98 90 86 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 LOFT 11. I. Mosashvili str, Tbilisi Tel: (+995 32) 230 30 30 RESTAURANT NERO 21 Abano Street, Tbilisi Tel: (+995 32) 292 10 15

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 THEATRE OF PANTOMIME Tbilisi. 37 Rustaveli Ave. Tel: 99 63 14, (77) 41 41 50 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 GEORGIAN NATIONAL MUSEUM - PICTURE GALLERY Tbilisi. 11 Rustaveli Ave. Tel: 98 48 14 KARVASLA’S EXHIBITION HALL Tbilisi. 8 Sioni St. Tel: 92 32 27, KOPALA Tbilisi. 7 Zubalashvilebi St. Tel: 99 99 02, Fax: 99 99 02 MODERN ART GALLERY Tbilisi. 3 Rustaveli Ave. Tel: 98 21 33, Fax: 98 21 33 M GALLERY Tbilisi. 11 Taktakishvili St. Tel: 25 23 34 ORNAMENT - ENAMEL GALLERY Tbilisi. 7 Erekle II St. Tel: 93 64 12, Fax: 98 90 13

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

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,

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

PUBLICITY caucasian business week

March 3, 2014 #44