Caucasian Business Week #50 by Caucasian Business Week

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BUSINESS WEEK April 14, 2014 #50

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April 14, 2014, Issue 50

BE INFORMED, DO BUSINESS

GEORGIA AUSTRIAN BUSINESSMEN WANT TO REPLACE “CHIPS” BY GEORGIAN DRIED FRUIT

caucasian1

aspi cannery” talks about a growing interest in the Georgian dried fruit in Europe. Pg. 4

WILL SILKNET BECOME MARKET MONOPOLIST? GLOBAL MEDIA GROUP (GMG) STOPS OPERATION

EUROPEAN BRAND SPAR PLANS TO ENTER THE GEORGIAN MARKET IN THE COMING MONTHS

NABEGHLAVI’S ADVANTAGE IS IN ITS NATURAL UNIQUENESS

Caucasus TV, MagtiSat and SuperTV May Cease Broadcasting Sports Channels

BIDZINA IVANISHVILI SELLS “BANK CARTU”

C CIS

GAZPROM BUYS OUT KYRGYZGAZ FOR $1

AZERBAIJAN CBA’S CURRENCY RESERVES EXCEED $14.7 BILLION

he total amount of the currency reserves of the Central Bank of Azerbaijan (CBA) exceeded $14.7 billion in the first quarter of 2014.

Pg. 4

Taleb Rifai: Now it’s Time for the Whole World to Invest in Georgia Pg. 4

ater plays an essential role in our daily life. It is vital for functioning of human body as well as for meeting sanitary-hygiene needs. Pg. 7

“Transelectrica”: The Name of “Khudoni HPP” should be Changed

CABLE TELEVISION TARIFFS WILL INEVITABLY GROW

ilknet company has purchased Global Media Group (GMG). The sides have already reached agreement and only technical details should be resolved. The deal value is not divulged, CBW

reports. At the same time, GMG general producer Bidzina Baratashvili proves the deal has been genuinely concluded. The company management will not change, he told CBW. “I confirm the information and GMG has become

a Silknet part. We suppose new projects will be launched in May and the existing channels will be renewed. The name of GMG will be replaced by other name and this issue is being currently negotiated. The management will not change. Nothing will change, only Silk will replace GMG”, Bidzina Baratashvili noted. As to the deal details, Baratashvili abstains to divulge them and explains GMG’s former owners should talk about this. Pg. 5

“WISSOL” QUITS FUNDING FC “TORPEDO KUTAISI “

issol “ quits funding the FC “Torpedo Kutaisi” but exactly when it will happen and what is the fate of existing sport facilities - the main stadium, a base and courts, is still unknown. We are waiting for information from “Wissol” on this issue. Also we have not received a response from the club’s director Giorgi Papiashvili. It became known about the fact that “Wissol” refuses funding FC “Torpedo Kutaisi” in December last year. Pg. 2

Pg. 11

WORLD NEWS US TO BECOME OIL INDEPENDENT BY 2037 – EIA

PROCREDIT BANK PRACTICES DISCRIMINATIVE REGULATIONS FOR CURRENCY EXCHANGE

Anar Ismayilov: Trade finance is a key element of our strategy in Georgia and Azerbaijan alike

Pg. 5

PASHA Bank Financed Trade Finance Conference

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Archil tsabutashvili: Customers in All Regions will Have 24-hour Water Supply in about 10 to 15 Years Archil Khabadze: Projects Stopped under the Previous Government have been Renewed Pg. 6

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MAIN EVENTS caucasian business week

GOVERNMENT RETURNS PROPERTY TO BUSINESSMAN VANO CHKHARTISHVILI AT 1 GEL UNDER N616 RESOLUTION OF APRIL 4, 2014

“WISSOL” QUITS FUNDING FC “TORPEDO KUTAISI “

hen “Torpedo” representatives met the acting Mayor of Kutaisi Shota Murghulia and asked to save “Torpedo”. According to Murghulia, the 2014 budget project had already been approved and “ Torpedo” had not been taken into account. However, he expressed readiness to support the club. Today the club representatives say that “Wissol” is still funding “Torpedo” club . “Commersant “ reports that the company has approved the club’s budget until the end of May. What fate awaits “Torpedo” after this period, we couldn’t receive information neither from Kutaisi Mayor nor from “Wissol Group”. “Wissol Group” received the FC “Torpedo” base from the state for a symbolic price of 1 GEL in 2010. Investment commitments were scheduled for 7 years, however, the company claimed that in the

April 14, 2014 #50

end, “Wissol” had invested in “Torpedo” more than planned, more particularly, 25 million. Kutaisi “Torpedo” President and “ Wissol Group” founder Levan Pkhakadze told “Commersant” last summer that in the case of the correct management, this area would be profitable for the company. “We are not just talking about material dividends because the possession of the football club is quite significant image and reputation especially in countries where football enjoys high popularity. Georgiacannot be an exception and has a very long history, I think that the time will come in Georgia very soon when club patronage and possession will be a great prestige and advancement guarantee, “ - said Pkhakadze. “Commersant” is trying to find more details on the issue. commersant.ge

SOSO GALUMASHVILI INVITED TO JURY OF KYIV INTERNATIONAL ADVERTISING FESTIVAL

espite the political unrest in Ukraine, organizers of Kyiv International Advertising Festival 2014 have taken a decision that Kyiv host the festival after Odessa and Lvov. The Jury will name winner works in three nominations: design, PR and digital image. The Jury in the PR nomination was staffed by support of Ukrainian Association of Public Relations (UAPR). Under the decision, Soso Galumashvili, Georgian PR and marketing communications specialist and senior adviser for GEPRA Company, has been named as the KIAF Jury member. KIAF’s 15th Festival will be held in experimental format. The works will be appraised by the jury of 11 members. The jury will select finalists and the owner of grand prix will be selected by a majority of the jury member votes. The winners award ceremony will be held on May 30.

nder the government resolution, the 35 000 square meter nonagricultural land plot and buildings on it that are located on Eka Bezhanisvhili Street in Sighnaghi, the Kakheti Region, is owned by Somgo Company. The Commersant has explored the company is owned by businessman Vano Chkhartishvili. The property was returned to the businessman at 1 GEL. A 90% stake in Somgo company is owned by two enterprises that are registered in offshore zones – Sonata Alliance (Seychelles Islands) and Gosia Financings (Panama). The Commersant.ge has contacted Vano Chkhartishvili in London, the UK, for taking an interview on the issue. Chkhartishvili said he had bought the 3.5 hectare nonagricultural land plot in Sighnaghi by auction from the state in 2007 at 1 million USD, but later the previous government appropriated this property. Somgo Company says the new Authorities found the property in ownership of the Economy Ministry. At the beginning of 2014 Vano Chkhartishvili applied to the Economy Ministry and requested for return of his land plot. The Economy Ministry satisfied Chkhartishvili’s request and, under the agreement, Vano Chkhartishvili will invest 2 million GEL in the Sigh-

naghi development project in exchange for the property return. Under the obligations before the Economy Ministry, a wines and alcoholic beverages enterprise will be constructed on 3.5 hectare land plot, a demonstrative vineyard will be arranged on one hectare land plot. The businessman will also construct a 50-suite hotel and 200-stea restaurant. The obligatory investment amount makes up 2 million GEL. The agreement will be concluded in several days, the company management noted. This is the second case the new government returns the property appropriated by the authorities of Saakashvili to the owners. At the beginning of 2014 the Economy Ministry returned the building of Albatross company that is located at 44 Chavchavadze Avenue to businessman David Begiashvili.

GEORGIA RANKED 66TH OUT OF 132 COUNTRIES IN THE SOCIAL PROGRESS RANKING

hese are the findings of the research conducted by the American nonprofit organization Social Progress Imperative. According to the experts of the organization, the level of the country’s social development does not always depend on the economic situation and GDP per capita , as the countries with the same level of GDP may be quite different in the degree of social progress. Based on the research methodology developed at Harvard Business School , evaluation occurs mainly on three factors - access to basic benefits, living conditions, and the ability to realize the potential of development.

The study authors say that while making the rating the actual performance is taken into account rather than the macroeconomic situation, GDP growth or social spending budget. New Zealand leads the ranking, which takes the 25th place in terms of GDP per capita. Political rights, an access to modern communications and schooling predetermined New Zealanders’ victory in the ranking. Among leaders are Switzerland, Iceland, Netherlands, Norway. Burundi, Central African Republic and Chad are on the bottom of the ranking list. Georgia is ranked 66th, Russia - 80th, Ukraine – 62nd.

AUSTRIAN BUSINESSMEN WANT TO REPLACE “CHIPS” BY GEORGIAN DRIED FRUIT

aspi cannery” talks about a growing interest in the Georgian dried fruit in Europe. According to the factory’s Director, the Austrians expressed a desire to import dried fruits made of Georgian eco-friendly fruit and took samples of dried apples to Europe. He says that there is demand for wild pears that are prepared in August and samples will be sent at this time. According to Kaspi canning factory, the Austrians want to import Georgian packaged dried fruit to the European market as a natural product which may replace “chips “ but they do not have the official information about this. Along with various canned goods, Kaspi canning factory produces apple, wild pear , plum and rose hip dried fruit

which cost is about 3.5 - 8 GEL. The plant is supplied with environmentally friendly fruit, mostly from Racha and Tianeti regions.

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PUBLICITY April 14, 2014 #50

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INTERVIEW April 14, 2014 #50

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“TRANSELECTRICA”: THE NAME OF “KHUDONI HPP” SHOULD BE CHANGED An interview with the technical Director of “ Transelectrica “ David Mirtskhulava

- When will be ready the final report on the impact of the HudoniHPP project on the environment? - Document is actually ready, and soon everyone will be able to read it . - There is a lot of debate about the income tax that will be paid to the budget of Georgia both during construction and during operation of the hydropower plant. What is the situation in this regard? - First I would like to mention one thing - back in 1985 , when work on hydroelectric project was underway in the Soviet Union, local residents demanded to change the name of the then name from Khudoni HPP on Khaishi HPP on , and I

believe that this is the correct formulation of the question . As for taxes, the situation is as follows - for 6 years of construction 27 million USD have been paid to the budget in the form of income tax, in the first 20 years after the start of operation 137 million in the form of property tax –and in the form of income tax 410 million in the first 20 years. Additional production of two other hydropower plants located n the vicinity was 475 million kWh per year, and the market value of this energy will be 1.3 billion over 20 years. - Are you ready to fulfill 111 requirements of Ministry of the Environment Protection concerning the safety of Khudoni HPP ? - Anyway, all their recommendations were taken into account. We did not agree with some, but none of the recommendations was left without attention. Some of those with which we disagree will be considered partially. In any case, there will be a clear and reasoned position on each of these issues. - Whether other investors show an interest in this project ? - I have not heard anything about the other investors. In Georgia, many are genuinely mistaken and think that investors are fighting for the right to invest money here . In fact, everything is the opposite - Georgia should fight for investors , creating for them a good business climate and attract international capital . - Is the question of reducing the scale of the hydropower plant is considered as required by the locals? - This issue is not discussed. The current param-

eters of the project are the best. If anyone thinks that reducing the height of the dam the village will not be flooded, it is a mistake . Based on the actual technical parameters, the reduction of the dam even 2 times will not give the possibility to avoid flooding. - Will the law on expropriation be enacted, if an agreement with the locals is not reached? - We hope that we will manage to come to a consensus - Svaneti , Georgia needs this project. I hope that the state will not have to apply to provided by law mechanism. - What will be the compensation for the locals who will be relocated? - It will be worthy compensation, although for obvious reasons I cannot disclose the amount . I have repeatedly said that the investor does not consider this project as short-term , on the contrary , we believe it is long-term and it should improve people’s lives. - In your estimate, can we consider the protest of the population artificially controlled, and who can stand behind it? - I think that some protests are exactly manageable, though certainly not all . Some individuals are trying to earn dividends on this very sensitive subject amid escalating protests. They , for some reason , supported Khudoni HPP project for two years , and now are agitating against . - Recently, there is a lot of talk about the cultural heritage. But in other countries such as Italy, Japan, Norway, Switzerland large industrial facilities are built in 50-60 kilometers from major cities - aren’t they worried about their cultural heritage? As it is known, after the completion of construction of the power plant you intend to create a fund for the development of Svaneti. What will it bring to the resident of this region? We believe that the fund should have founders the natives of this land. They will determine for what money should be allocated – infrastructure, training of young people, or even for something else. They will solve this themselves.

TALEB RIFAI - NOW IT’S TIME FOR THE WHOLE WORLD TO INVEST IN GEORGIA

ow is the time for the whole world to invest in Georgia . SecretaryGeneral of the World Tourism Organization (UNWTO) Taleb Rifai said in his speech in the 8th World Congress on Snow and Mountain Tourism in Andorra. ”I came from a very beautiful country, which is called Georgia. I had meetings at the highest level and I want to tell you that this is the fastest growing country in the field of tourism. It has great potential and now is the time for the whole world to make an investment in Georgia. To prove my attention and a great respect for this country I will hold the first official meeting with Director General of “Gudauri Ski Resort “ within this Congress, “ - he said. The Congress is attended by up to 500 ski resorts representatives. Taleb Rifai paid an official visit to Georgia on April 5-7 . He had high-level meetings with the Prime Minister, Economy and Sustainable Development Minister, Foreign Minister and other government officials. Secretary-General of the World Tourism Organization officially opened the conference devoted to Protected Areas Development Project [PADP].

CUSTOMERS IN ALL REGIONS WILL HAVE 24-HOUR WATER SUPPLY IN ABOUT 10 TO 15 YEARS Interview with Archil Tsabutashvili, a director general for the United Water Supply Company

-The mission of the Georgian United Water Supply Company is to ensure 24-hour water supply to the population. When do you expect to fulfill this mission and what are your plans in this direction? - We suppose it will take about 10 to 15 years to ensure 24-hour water supply to the population in regions. The water supply networks have been either disordered or outdated in a number of regions and many years and many millions are required to restore this infrastructure. Our company has elaborated a concrete plan to rehabilitate the infrastructure stage by stage in many cities and districts. - The water supply network is genuinely outdated and the company losses are grown, while the quality falls. What is the formula to determine priorities for replacing the infrastructure? Do you make accent on only removal of breakdowns?

Answer: Our company removes breakdowns in everyday regime. As to our priorities, we make focus on the population that lacks for drinking water. Therefore, our company carries out full or partly rehabilitation of outdated networks or pumping stations in cities of all regions within our coverage zones. We also prioritize to organize ultramodern water quality laboratories. All these measures ensure required quality of drinking water. The Asian Development Bank (ADB) has approved the third tranche as part of the water supply improvement project. The tranche accounts for 98 million USD. We plan to purchase ultramodern water quality laboratories thanks to this tranche. Today we have quality laboratories in almost all regions and we plan to increase their quantity in the future too. - What are the projects the company is working on now. What time is required to implement these projects? Will the company carry out the project under the schedule and what is the value of these projects? - At this stage the company is implementing several projects. The projects financed by ADB and the European Investment Bank are the most important ones. ADB-financed projects are being implemented in Mestia, Anaklia, Kutaisi and Poti. The projects call for construction and rehabilitation of water supply systems and they are valued at 102 million GEL. Part of them will be completed in 2014, while some of them will be completed in 2016. Despite the projects are large-scale, their implementation will end within the schedule. As to EIB-financed ongoing projects, the bank

has allocated a 40 million EUR loan for 31 cities in Georgia for the water supply systems rehabilitation. Projects have been completed in 21 cities, while the works will end by the end of 2014 in the remaining 10 cities. The projects are being implemented by the municipal development fund of Georgia. The loan is supported by a 4 million EUR grant of the neighborhood investments facility (NIF) that will be spent to improve the company operation. The ongoing projects have considerably improved the water supply systems in Georgia in various regions. Consequently, the population receives high-quality drinking water. We have improved the supply schedule in many cities, as well as achieved 24-hour water supply in many places. -Would you provide some information on the planned projects? How much finances the donors have allocated and what is the ratio of donors in these funds and what is the ratio of the state budget? - Besides the ongoing projects, the company also plans to implement new large-scale projects. Namely, we plan to implement new projects in Ureki and the second phase of the project in Kutaisi. These projects will be financed as part of the ADB-provided third long-term tranche of 98 million USD. The Ureki project calls for constructing water supply and sewage systems, while the Kutaisi project is to rehabilitate the water supply system. In 2014 we will also implement the projects financed under the first and second tranches of ADB: the sewage system cleaning works in

Anaklia and the construction of a sewage system cleaning asset in Mestia. ADB-financed projects are of crucial importance to provide high-quality services to Georgian customers in regions. This year we will launch construction and rehabilitation of water supply systems in 28 cities as part of the ADB second loan of 40 million EUR. The loan is enhanced by an 8 million EUR grant of NIF and the sum will be spent on implementing infrastructural projects in 28 cities. The second loan is to considerably improve the company services. The donors-provided funds are replenished by the state budget funds and ithe state ratio is about 18%. - Water standard issues represent real problems in regions. How do you plan to resolve the problem? - The problem mainly arises amid the weather conditions deterioration in the places from where we take water, when the river water tiered up and so on. In similar situations the company has to cease water supply to prevent the population from receiving low-quality water. As soon as the water meets the standards, the company restores the water supply. We provide the drinking water control by technology chemical and microbiology devices. Analysis contains many components and stands close to the Healthcare Organization standards. The company also has 8 central regional laboratories to supervise service center laboratories, where drinking water quality control is carried out on everyday basis.

BANK April 14, 2014 #50

caucasian business week

ANAR ISMAYILOV: TRADE FINANCE IS A KEY ELEMENT OF OUR STRATEGY IN GEORGIA AND AZERBAIJAN ALIKE CBW Interview with Anar Ismayilov, a Chief Executive Officer for PASHA Bank in Georgia

Trade Finance Conference in Tbilisi - PASHA Bank has recently increased the charter capital. What is the ground for this decision? - There are external and internal factors that contributed to that decision. Firstly, we feel very confident about the positive outlook for the Georgian economy. Sectors of particular interest, trade, agriculture and renewable energy all are expected to generate strong growth in coming years. With the increased capital base we will be able to contribute to that growth in a more meaningful way. Secondly, as we gain more experience in the local market, the sizes of deals that we are comfortable to take a part in, as a sole provider of financing as well as a part of a syndicate, keeps growing. Capital increase was necessary to support our growing confidence and willingness to take larger exposures - What benefits are the bank’s existing and potential clients should now expect in partnership with PASHA Bank? What are the directions the bank will finance more? - We offer a full range of corporate banking services to large and medium size clients. A particular emphasis is placed on financing cross border trade. We are open to consider financing of most business sectors although some will be prioritized for the immediate future. Of those trade, agriculture and renewable energy are particularly

interesting. Thorough analysis of client’s business underpins our lending operations. As much as the circumstances permit we complement the asset based lending model with cash flow based approach. As we opened for business in Georgia just about a year ago our client base is still relatively small. This enables us to devote extra time and effort to serving each of our customers. This is the aspect of our business that is not going to change as the Bank grows. Client satisfaction will remain our focal point going forward - PASHA Bank has got the same business model as its founder bank in Azerbaijan. Despite this, unlike Azerbaijan, the Georgian bank sector is small. Are there any plans to make some changes in the bank’s approaches? - A large part of the credit for the success of parent bank in Azerbaijan is attributable to its well designed business model, values and philosophy that drive a high level of loyalty of the customers and business society. From the very beginning, when encouraged by the bank’s shareholders, these had been intended as to be sustainable in the long run and be viable irrespective of the external environment, including market size. So, we do not plan any major changes to the proven business model, although some adaptations, as

we gain further experience, might be justified to allow for Georgian market specifics and customer preferences. - PASHA Bank has sponsored Georgia-Switzerland business forum in Zurich. What was the bank’s interest in this case? - We consider such forums an excellent opportunity to promote the country’s image internationally as one open to investors as well as an invaluable platform to establish successful business contacts in countries such as Switzerland. We are also keen to communicate our interest in taking part in financing trade between Georgia and Europe. A significant number of corporates whether already engaged in trade relations or still researching the alternatives were present. So were a number of Swiss entities studying investment climate in Georgia. This is exactly the audience that can most benefit from the financial products and services we offer - PASHA Bank has also financed the Trade Finance Conference in Tbilisi. What are your visions and appraisals about the concept of Trade Finance in Georgia and Azerbaijan? - Trade finance is a key element of our strategy in Georgia and Azerbaijan alike. There is a growing demand for increasingly sophisticated products and services in both markets. The conference we sponsored was aimed at the corporates active in international trade interested in most recent developments in the field of trade finance. We plan on further supporting promotional events such as this to help increase marketplace’s awareness of benefits associated with trade finance products and services. - What are PASHA Bank’s plans on the Georgian market and does the bank plan to make noncore business in Georgia? - As we have discussed, our Bank focuses on funding the growing regional trade, offering businesses active at re-

gional and international level full range of corporate and investment banking services. In the short to medium term we have no plans of entering the retail end of the market, preferring to focus on the immediate goal of strengthening our position as a full-service corporate bank. With the growth of the financial assets investment will be made in the supporting infrastructure. Beginning from 2015 the Bank will require more offices in Tbilisi and other cities.

Swiss-Georgian Trade and Investment Opportunities roundtable in Zurich

PASHA BANK FINANCED TRADE FINANCE CONFERENCE

ASHA Bank in Georgia, a full-service corporate bank, has sponsored aTrade Finance Conference held at Radisson Blu Iveria hotel, organized in cooperation withthe International Chamber of Commerce (ICC) Georgia . Speaker panel included Mr. Pavel Andrle, an internationally acclaimed Trade Financeexpert, Mr. Anar Ismayilov, CEO of PASHA Bank Geor-

gia and Mr. Aleksi AleksishviliFirst Vice Chairman of ICC Georgia. Representatives of several dozen leading Georgian corporateswere in attendance. Audience included key dicision makers as well as the specialists with hands on involvement in trade finance operations . An introductory session, led by Mr. Andrle, focused onvarious trade finance instruments currently offered by the Georgian banking sector

followed by a presentationon of International best practices and trade finance regulatory framework. PASHA Bank CEO, Mr. Anar Ismayilov commented that such conferences offer an extremely useful interactive venue for providing the companies engaged in international trade with the latest updates on developments in the trade finance field. Building a diversified trade finance portfolio is one of the cornerstones of

PASHA Bank’s corporate strategy for Georgia. We intend to continue supporting the initiatives aimed at raising the awareness of the Georgian corporate sector of the full range of trade finance products and services on offer at PASHA Bank – he added. Mr. Aleksishvili provided the audience with an overview of the investment climate in Georgia.

BUSINESS & ECONOMY April 14, 2014 #50

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ARCHIL KHABADZE: PROJECTS IRANIAN BUSINESS GROUPS WANT STOPPED UNDER THE PREVIOUS TO BUILD HOTELS IN GEORGIA ranian business groups are interested in terest in the construction of hotels on the Black GOVERNMENT HAVE BEEN RENEWED building hotels in Georgia . One of the Sea coast as well as in Tbilisi. According to Vano An interview with Head of government of Adjara Autonomous Republic Archil Khabadze

- What infrastructure projects are planned for this year in Adjara ? - We have already started projects in municipalities, we build internal roads and put in order irrigation system. In several villages kindergartens are being built, schools are being rehabilitated. In Kobuleti the construction of the House of Culture is underway while in the mountainous Adjara a resort area is being arranged. It’s scheduled to begin construction of a highway Batumi - Akhaltsikhe, construction of the road to the Turkish border bypassing the large settlements has already begun. The budget for 2014 also includes many social projects and programs of assistance to agriculture. In addition, the process of housing for eco-migrants will be activated - 232 apartments will be built for them until 2017. - Are there some projects that were started by the previous government and suspended today? - There is much talk about some stalled projects because of which a number of unemployed is growing and economy is falling. All this talk is not true. On the contrary - projects that were halted under the previous government due to tax penalties and officials’ attempt to deprive the property from the rightful owners have been resumed. Many of them have been resumed and came to an end - for example “Kempinski “ and “Hilton “ hotels, high-class hotel “DIVANI”, which will soon be opened. Negotiations on the completion of the “Alphabet Tower “ in Batumi are underway, but so far we cannot find investors, as debts of several million have accumulated around this project.

Therefore, it is very difficult to find the investor. - What do you plan in terms of business development in the region? - We really changed the business climate in the region, are in talks with potential investors, we have a lot of interesting projects proposed by us and investors. There is a special group, which is engaged in these issues, it also prepares investment packages in terms of coordination with the government that will provide investors with comprehensive information on all matters that may interest them - for example, with respect to the legal framework for business, current and completed projects, concrete proposals, the statistical data and the business climate in the region, etc. - Whether new hotels, entertainment venues, and other objects that can boost tourism are being built? - Our main goal is to complete what has already been started. In parallel, we are working on new proposals. There are some specific examples of how we are trying to revive the projects that were started under the previous government but were suspended - “Gardens of Babylon” hotel which is being built by Azerbaijani investors , a 5-star hotel “Holiday Inn .” In parallel, we are working on new investment projects. Several branded hotels are being built in Batumi, and our task is to do everything to facilitate their completion. - Do you plan any projects in terms of tourism development, and what innovations can we expect this year? - Adjara Tourism Department conducts market research, and permanent and hard work is carried out in this direction. Various studies on market demand are conducted, new routes are planned, and infrastructure is updated. In addition, 4 more tourist information centers will be added to the six existing. We also regularly conduct training of staff in order to increase the quality of service, courses for owners of guest-houses and wine cellars. Only in 2014 we brought in Batumi hundreds of foreign tour operators and journalists, for whom special info-tours were arranged. Moreover, in several countries we conducted advertising campaign, and we already have the results. So, this year we expect a large number of tourists.

founders of Georgia - Iran Chamber of Commerce states radio “Commersant” that the Iranians have expressed their in-

Mtvralashvili, they want to build a hotel on the territory of the Tbilisi sea, though the particular project and business plans don’t exist.

ISRAELI INVESTORS TO RESUME A 21 - STOREY HOTEL PROJECT IN KUTAISI

utaisi City Hall hopes that the current talks regarding the construction of high- class hotels “Sheraton “ and “Radisson “ in the city will be productive. Head of Urban Planning Department of Kutaisi City Hall Andro Marjanishvili says that wellknown brands have not yet made a decision, but the architect does not exclude the possibility that the agreement will be reached. “All investors will invest large sums of money in the case of the acceptable environment for them. Kutaisi really needs high-end hotels. As you know, the city has an airport but doesn’t have hotels suitable for travelers,”- Marjanishvili notes. In his words, the city government is actively working in this direction. Commersant.ge got in touch with “Sheraton” office in Tbilisi, where they have no information

about the negotiations with the Kutaisi City Hall. At the same time, “Commersant” has leant that the construction of a 5 - star hotel, which was suspended, is again on the agenda. It’s about the construction of a high-class 21 - storey hotel in front of the new construction of Kutaisi Parliament instead of a four-storey building. The minority members named the initiative on Parliament’s return to Tbilisi a reason for the termination of the project. Georgian representation of the Israeli company claims that the only reason for the suspension is a disagreement between the parties. The Jewish party partner Nata Kvantaliani says the project is still in force and is expected to be carried out, although Kvantaliani refrains from disclosing additional details at this stage. According to her, in the case of development of tourism infrastructure, the entry of upscale hotel brand is quite realistic.

EUROPEAN BRAND SPAR PLANS TO ENTER THE GEORGIAN MARKET IN THE COMING MONTHS

he European brand SPAR will sign an agreement with “Foodmart” regarding the entry into the Georgian market this month. As it turns out, SPAR’s entry into Georgia will not hamper the litigation. ”Foodmart” representative Otar Shamugia explains to commersant.ge that representatives of the Dutch supermarket chain will visit Tbilisi in April. When it comes to concrete action plan, as Shamugia notes, this plan will be developed in May and appropriate actions will be launched. As for the SPAR, a Dutch Spar is an international retail chain and franchise with approximately 12 500 stores in 35 countries worldwide whose headquarters is located in Amsterdam.

The brand owns several sub- brands : InterSpar hypermarkets , which compete with “Carrefour “, “Tesco”, a medium-sized supermarkets EuroSpar and SuperSpar, Spar Express which are the smallest shops and are located in small cities. As it is known, “Foodmart” founder and the owner of 12 % shares Eugeny Pichkhaia sues “Foodmart” due to illegal transaction. By decision of Tbilisi City Court, “Foodmart” was banned from mortgage and selling its real estate. This decision will remain in force until a business dispute with “Populi ‘’ founder is completed. Note: “Commersant” exclusively learnt that the owner of “Populi “ “Foodmart” company would bring in Georgia a well-known European brand in March.

WILL SILKNET BECOME MARKET MONOPOLIST? GLOBAL MEDIA GROUP (GMG) STOPS OPERATION Caucasus TV, MagtiSat and SuperTV May Cease Broadcasting Sports Channels

CABLE TELEVISION TARIFFS WILL INEVITABLY GROW

cannot divulge any financial and technical details, because I was not owner of the company. I am an ordinary worker. I am a general producers of the company and technical details are not agreed with us. Therefore, you can contact Levan Kubaneishvili and Mamuka Gamkrelidze on the issue. They were owners of GMG company”, Baratashvili told CBW. Mamuka Gamkrelidze asserts GMG has not been sold, but he confirms he has no relation with GMG any more, as he holds no stake in the company. According to the Public Registry, today New Media Group holds a 15% stake in GMG, while the remaining 85% stake is owned by his daughter Tamar Gamkrelidze. Mamuka Gamkrelidze founded GMG by a 100 GEL authorized capital in July 2010, while in August Media Consulting Group (MCG) owned by Giorgi Koghuashvili took over a 15% stake. Levan Kubaneishvili became a director for MCG. In December the authorized capital was replenished

by 550 000 GEL. In February 2011 MCG handed over its stake to New Media Group founded by Kubaneishvili. In June Mamuka Gamkrelidze was appointed as Georgian Ambassador to China, while Levan Kubaneishvili was appointed as a GMG director. For the last time the company management changed at the end of 2011, when Mamuka Gamkrelidze handed over his stake to his daughter in line with the law on broadcasting, under which all broadcasters are obliged to fill out a declaration and publish the information on the company owners. Silknet that operates as SilkTv on the television market explains negotiations are underway with GMG channels. Silknet and GMG are both authorized bodies and, under the procedures, the companies are obliged to apply to the Georgian National Communications Commission (GNCC) for respective permission, because in similar cases operators and authorized bodies have to take permission from GNCC.

After the final deal between Silknet and GMG, Caucasus Online (CaucasusTV), an immediate competitor of Silknet, will not use GMG services. It is clear the consumer interests will be damaged, because the exclusive rights for broadcasting various competitions and championships was owned by GMG. CaucasusTV may lose clients and bear losses. GMG does not plan to prolong the contract agreement with Caucasus Online. Therefore, we will notify our consumers in legal terms that starting May 17 Caucasus Online service package will not include GMG channels and these channels will be replaced by HTB channels. We find it important to search and offer interesting channels to our subscribers and this process continues on permanent basis. At this stage, Silknet does not plan to purchase new channels from Silknet”, Caucasus Online told CBW. As to MagtiSat and SuperTV, it remains unknown whether these companies will cooperate with SilkTV. Anyway, it is clear SilkTV will sell

its own services at the price that will not lead the company to losing subscribers and will enable the company to receive serious profits form the deal. It is worth noting GMG launched broadcasting television channels in January 2011. At this stage, the company broadcasts six Georgian-language television channels through cable televisions. The company broadcasts: • GMG Football • GMG Sport 1 • GMG Hollywood • GMG Sport 2 • GMG Movie Gourmet • GMG Women’s Club GMG owns exclusive and nonexclusive rights for broadcasting the following sports tournaments: European League, German Bundesliga, Champions League, Dutch Eredivisie, National Championship of Argentina, the national championship of Brazil and so on. The company has purchased rights for broadcasting over 500 feature films and soap operas.

BUSINESS April 14, 2014 #50

caucasian business week

BEER HEALTH BENEFITS

he main active ingredient of beer is alcohol, and therefore, the health effects of alcohol apply to beer. Moderate consumption of alcohol, including beer, is associated with a decreased risk of cardiac disease, stroke and cognitive decline. A 2005 Japanese study found that low alcohol beer may possess strong anti-cancer properties, Iranian.com reports. Brewer’s yeast is known to be a rich source of nutrients; therefore, as expected, beer can contain significant amounts of nutrients, including magnesium, selenium, potassium, phosphorus, biotin, chromium and B vitamins. In fact, beer is sometimes referred to as “liquid bread”. Some sources maintain that filtered beer loses much of its nutrition. Isohumulones are chemical compounds that contribute to the bitter taste of beer and are in the

class of compounds known as iso-alpha acids. A series of studies using animal models have shown that beer may prevent carcinogenesis and osteoporosis; beer provides plasma with significant protection from oxidative stress; and isohumulones, the bitter substances derived from hops, may prevent and improve obesity and type-2 diabetes, improve lipid metabolism, and suppress atherosclerosis. Further studies are needed to clarify the components in addition to isohumulones that are responsible for these beneficial effects of beer. In May 2013, scientists from the University of Wisconsin found that a pint of the black stuff every day could prevent blood clots and heart attacks. In a study carried out on dogs with narrowed arteries, the scientists found that those who were given Guinness had reduced clotting activity in their blood compared with those who were given lager.

NABEGHLAVI’S ADVANTAGE IS IN ITS NATURAL UNIQUENESS

ater plays an essential role in our daily life. It is vital for functioning of human body as well as for meeting sanitary-hygiene needs. And still ,what are benefits of water, how much water is to be consumed by humans during a day and what can be consequences of not taking water…. According to experts, 70% of human body is comprised of water. Water easily warms up or cools down; therefore, it equips the body with the best thermal regime. Water is the best solvent. It helps to regulate body temperature, stabilize metabolism, provide nutrients to cells, excrete salts and harmful substances from organism and etc. Ms. Dali Dolidze, Head of Nabeghlavi’s Lab states that human body needs minimum 1.5 L water during 24 hours and maximum 2-3 L (unless individual has sickness when water consumption is to be limited). Hydrocarbonate sodium table water “Nabeghlavi”, enriched with natural CO2 , has a subtle taste and unique curative properties. It is prominent for prevention and treatment of chronic stomach and liver diseases, contributes to elimination of harmful substances from human body and enriching it with all the necessary minerals. „Excessive loss of water entails undesirable results for human body. E.g 10% loss causes hallucinations while in case of 12% loss the health condition cannot be recovered without medical assistance. When over 12% of water is lost, blood gets thick and its movement in vessels becomes complicated, which may lead to lethal outcome” – state representatives of the Company Lab. The Company representative stresses importance of natural spring water and its advantage compared to tap water: “Natural mountain water is a pure and cold water coming out from soil, therefore microorganisms are less proliferated in it. Tap water can be received after filtration and processing of mountain river and sea water.

However, water is necessary whether it is coming from spring or tap.” Experts also suggest to consume mineral water and address its variety, which is due to composition. „Mineral water is natural as well and one of its major values is determined by component minerals. For example, Nabeghlavi’s advantage is in its natural uniqueness. It is distinguished by its physical-chemical characteristics from the other mineral waters. Mineral water derived from subsoil through wells does not require preliminary processing and purification. It required filtration and carbonation only. Unlike the other waters, it contains some ions due to which Nabeghlavi mineral water is considered as a light mineral water. Nabeghlavi is also beneficial for diabetics. It regulates function of pancreas gland and contributes to digestion process and etc.” Spring water Bakhmaro comes to the surface at the health resort of the same name, situated at the height of 2000m above sea level. It is channeled to the bottling plant by elaborate pipeline. The spring water is properly filtered, keeping its original chemical composition. Bakhmaro is very soft water, rich with oxygen and has a perfect pH 7.5 Approved and duly certified for use in baby food by G. NATADZE SCIENTIFIC-RESEARCH INSTITUTE OF SANITARY, HYGIENE AND MEDICAL ECOLOGY. - Ms. Dolidze mineral waters are sold in glass and PET bottles in retail chain. Do they lose their natural features? - Nabeghlavi is being bottled in glass and PET containers and sealed. For the purpose of preservation, the water is carbonated with CO2, which is known in chemistry as a dry ice. Therefore, all chemical reactions are stopped and the mineral water does not lose its features. Fresh waters of the western Georgia are soft not hard. Mountain waters, especially Nabeghlavi, go through mineral layers and get mineralized and pleasant to drink. This also may be one of the reasons of its uniqueness.

HPP caucasian business week

April 14, 2014 #50

RUSSIA WILL INSTALL THE WIRE IN ENERGY SECTOR

he price of Russian gas for Ukraine increased up to $385.5 per thousand cubic meters from April 1. Russia punished Kiev one more time for its European aspirations and raised price for blue energy resource by 43.5% or $ 117. However, in the light of Crimean events, new government in Kiev was getting ready for the worse scenario with Russia. Ukrainian Government still does not exclude the possibility that Russia may increase the price for natural gas even more in the future. In such situation, the Ukrainian experts think that the country has to reject Russian gas, since Ukraine is in fact in a war situation with Russia. According to them this is the same as if the British bought tanks from Hitler during the Second World War. The EU itself tries to end its energy dependence on Russia. The EU leaders not so long ago, at the summit held in Brussels, made a joint statement that the EU had to reduce its dependence on the Russian oil and gas. The Ukrainian events made the necessity to take urgent actions and diversify

energy resources clear one more time for the EU. Herman Van Rompuy, the President of the European Council, declared that the EU leaders would hold a two-day summit in June, where the measures would be designed for energy protection of Europe for the case if Russia reduced natural gas supply. Currently Russia provides one third of the EU’s energy demand. Statements of the European leaders were followed by statement of Barak Obama, the US President, that America would be able to provide the Europe with gas if the EU member states signed the Trade Agreement. However, Obama added that the Europe should not rely completely on the US and use available opportunities and seek for new resources. At present 20% of Georgia’s territories is occupied by Russia. The process of wire installation in Georgian villages gets activated from time to time and there seems no end to creeping annexation. Recently the Russian helicopter entered the Georgian air space, nothing to say about Russia’s position towards Georgia’s desire to get integrat-

ed in the European and Euro-Atlantic structures and what it may undertake to impede our aspirations. After all of these, in our opinion, it will not be consoling to hear that Georgia imports 70% of its energy from Russia. In addition, Russia is among the three largest trade partners of the country. The Ukrainian events proved that Russia will not avoid using none of the available levers including the energy one. In such conditions we have to do our best to reduce energy dependence on this country. Nowadays Georgia utilizes only 18% of its hydro resources and there are great unused opportunities and potential in this area. For example, construction of Khudoni HPP directly means reduction of energy dependence on Russia, meeting the local demand for energy resource and the possibility to export the power. If Georgia achieves optimum utilization of its hydro potential it will have the chance to become the player of the global energy market. In the event of Khudoni operation, the biggest asset of the country will be energy independence followed by better mechanisms for protection of the country’s sovereignty and integrity. Utilization of the country’s hydro-energy potential and growth of hydro-energy capacity also allow to significantly substitute thermal energy and electricity generated at thermal power stations. Georgia does not possess raw materials required for operation of thermal power stations and our country imports those. Respectively, when we construct thermal power stations and grow the share of electricity generated by thermal power stations in the energy system, we directly increase energy dependence of Georgia on the other countries, while by developing hydro energy and hydro power station industry we on the contrary are reducing degree of Georgia’s dependence on the other states. Heading in this direction will be one more important step made towards Georgia’s

energy independence. The fact that Khudoni construction means reduction of energy dependence on Russia needs to be explained by competent people to the population. Georgian citizens should have detailed information on all those benefits, which accompany construction of each HPP or infrastructural project. Population should know what is the cost of energy reliance on the hostile country and it should not be permitted to sacrifice the perspective for building strong, developed and energy independent country for personal interests. According to the new energy doctrine of Russia, developing countries should be dependent on Russia’s energy at maximum extent. The hysterical campaign against Khudoni HPP project that is taking place in Georgia has the purposeful character indeed. Certain forces in Georgia are being manipulated and their activity is related with the interests of the hostile countries. The cornerstone of the new Russian energy doctrine, published at the end of the last year, is distinguished by one aspect: Russia’s aim in the coming years is to make developing countries even more dependent on the Russian economy and energy. This implies that the threat increases for Georgia in terms of implementing the energy independence policy and all attempts in the country aimed at increasing energy independence directly contradict the new Russian energy doctrine. Implementation of large infrastructural projects on the Georgian territory is not in Russia’s interests, there is very simple logic: when we build a hydro power station in the country, we are increasing degree of our energy independence, since the resources used by HPP in the form of water is a Georgian wealth. Therefore, the bigger and more HPPs we construct, the less energy and gas we’ll import from Russia and Azerbaijan during winter months respectively. Since thermal power stations require gas their development increases degree of energy dependence. There is a certain category of people, who unilaterally and purposefully are fighting against construction of hydro power stations and say nothing about construction of thermal PPs. The impression is being formed that anti-HPP campaigns represent a continuation of new energy doctrine of the Russian Policy.

EXPERTS’ ADVICE TO THE GOVERNMENT REGARDING THE KHUDONI HPP

uring a briefing in the “Pirveli Pressclub”, a group of experts consisting of Levan Kalandadze, Giorgi Abashishvili, Irakli Lekvinadze and Levan Alapishvili discussed strategically important investment projects in the country and their possible causes for stagnation. According to the experts, the implementation of the largest investment projects to this date – and those would be the Khudoni HPP and Adjaristskhali – are being artificially stagnated. The projects have lost traction for the past month and it’s a dangerous tendency the roots of which could be traced back to the government’s poorly coordination and inefficiency. The experts noted that topically relevant Ministries alone are not enough to successfully carry out investment projects of this scale – every Ministry must contribute and coordinate their efforts, the lack of which stands as a huge unresolved problem today. “This somewhat passive approach from governmental structures begets doubt and a very real threat to other large and strategically relevant investment projects. Coming from this, we’re afraid that the nearest future may see similar problems

threaten, for example, the Neskra HPP project implementation. A similar precedent took place in the Ghurta village recently, concerning the construction of a cascade of HPPs on the Adjaristskhali river, which is being carried out by the international company TATA and has an investment cost of $700 Million USD,” stated Levan Kalandadze. Practically all formal and legal procedures relevant to the Khudoni HPP project have been completed. The Environmental Impact Assessment document is finalized as well, and the only things left for completing the process and acquiring a construction permit are the land measurement procedures, which have been temporarily halted. By today, the land measurement procedures conducted for the Khudoni HPP project have covered 1415 hectares, with just 155 hectares short to its completion. The lack of sufficient technical procedures from the government structures is stagnating the rest of the work, putting the $1.2 Billion strategically crucial investment project under risk. Giorgi Abashishvili considers it important to take energy investments and projects seriously and stated that the “largest share of direct foreign investments in Georgia (12%), which, in turn, means the most interest from investors, is aimed at the energy field and hydro energy in particular. This becomes clear from EBRD, IFC, The World Bank and other international financial-investment companies making statements and expressing readiness for the investment opportunities in Georgia’s energy business.”

EBRD TO FINANCE LARGE DAM CONSTRUCTION IN TURKEY

BRD has expressed interest in financing a large hydro power station construction in Turkey. The “ALPASLAN-II” dam and power station, which is planned to be built on Turkey’s Murat River by 2017. The 280MW HPP has been in works since August 2012. 34 kilometers North from the town of Mus, the HPP is to stand 116 meters erect with a 50 kilometer transmission line. The reservoir will encompass an area of 55 km2. There are 22 villages and up to 7100 residents in the area of project effect, which is estimated to cost 1.69 Million Turkish Liras. The project is being carried out by Enerjisa, a

Turkish registered company owned by Omer Sabanci A.S. and DD turkey Holdings, both registered in Luxemburg and holding 50% of Enerjisa’s share each. Sabanci is one of Turkey’s largest industrial and financial conglomerates, while DD Turkey is owned by E. ON SE, which is one of the biggest players on Europe’s energy market. The investor received the permit to start construction in 2012 and a certain portion of the workload has already been done – tunnels and water funneling systems are already in place. In frames of the project, the company is planning on building 54 kilometers of new roads. The dam itself will being construction in the second half of 2014, which has also already been approved by EBRD.

BANKING NEWS April 14, 2014 #50

caucasian business week

FUTURE STATUS OF GEORGIAN DEVELOPMENT BANK STILL UNCLEAR BIDZINA IVANISHVILI SELLS “BANK CARTU”

ommersant.ge has exclusively learned that a former Prime Minister Bidzina Ivanishvili has decided to sell “ Bank Cartu “. According to our source, negotiations are underway on this issue with foreign financial groups. To verify the information commersant.ge got in touch with Director General of “Bank Cartu” . According to Nodar Javakhishvili, he has no information about the sale of the bank but at the same time adds that he does not rule out such a possibility. “ I do not know anything about the bank’s sale but everything is possible,” - Javakhishvili told commersant.ge. “Bank Cartu “ was mentioned in yesterday’s statement made by the Co-investment Fund concerning “Panorama Tbilisi” and Bidzina Ivanishvili’s participation in this project In particular, according to the Fund , Mr. Ivanishvili has repeatedly stated that he never did

business in Georgia and the only commercial organization him owned is JSC “ Bank CARTU” , which he founded in Georgia at the time in order to attract investments. According to the Co-investment Fund , unfortunately, due to the current political situation in Georgia, the bank has not been able to achieve goals. “This is the bank that was purchased by “Absolute “Bank in 2001 to cover its liabilities and to maintain the stability of the banking system. The formation of the Co-investment Fund with declared capital of 6 billion USD and which approved 11 projects worth 1.3 billion USD has lost actuality in terms of JSC “ Bank Cartu” involvement in investments,” - the statement reads and also states that the formation of the Co-investment Fund and Bidzina Ivanishvili’s participation as one of the main investors is caused by an increase of investments in the country and not by personal commercial interest.

INSURANCE OF CREDIT RISKS STARTED IN GEORGIA

PI Holding and TBC bank introduced joint innovation product on the market. First time in Georgia, this product will ensure credit installments. It means that if the borrower looses job during loan coverage period, insurance company will pay the installments. Insurance company covers the loan in the case if the borrower is not able to continue working due to accident.

Police cost is 1,5%-3,5% of the monthly payment. The sides explain that the insurance aims to maximally protect the borrower from all the risks, which may prevent them from the timely payment of the installments. Besides, insurance of the credit installments are valid on all credit products (mortgage, consumer, quick consumer, auto loans, TBC CARD/PRIME CARD, installment card) and its purchase is possible in any branch and service centers of TBC.

IN 2014, A SUBSIDIARY OF “ BANK OF GEORGIA “ TO PLACE BONDS ON THE LONDON STOCK EXCHANGE

resident of the National Bank of Georgia [NBG] Giorgi Kadagidze stated in an interview with “Reuters “ that this year two largest commercial banks in the country planned to expand their presence on the London Stock Exchange [LSE]. In particular, we are talking about “ TBC Bank “

new financial institution , the creation of which is planned by the government, will unite several investment funds - Economy Minister Giorgi Kvirikashvili states. According to him, it’s status is not known at this stage - whether it will remain a fund or will be renamed to the bank. “The Partnership Fund and other funds, which are now scattered in various ministries, will be merged into a new structure. On the basis of their pooling, one large and more efficiently run financial institution will be created. Now we are discussing whether it will be considered a fund or a state bank. There are two options - the Development Fund or the Georgian Development Bank,”

– says the Minister . Regarding the mandate, in his words, it would be so as not to conflict with the commercial banks operating in the country. “This institute is to finance long-term strategic projects that need long-term capital. In particular, the projects that are not usually funded by commercial banks. As for the names of candidates for senior management position in this structure, a few names that were mentioned in the media are really considered, but the decision in this regard has not yet been made. Today the Partnership Fund has a very competent management, but the decision on who will head the new institute will be made by consensus,- the Minister notes.

INVEST BANK COMPLETED Q1 WITH 1,3 MILLION GEL LOSS

SC Invest Bank completed Q1 2014 with 1,3 million GEL loss. Deposit amount is 25,7 million GEL, non0banking deposit portfolio increased on the expense of fixed-term deposits. At the end of February the portfolio did not exceed to 10,3 million GEL. Credit portfolio has doubled and equaled to 16,8 million GEL (01/03/14 -8,8 million GEL). Actives have already increased and By April 1 equal to 43,9 million GEL (01/03/14 -24,6 million GEL). Toll April 1, during 5 months temporary admin-

istration of National Bank managed the ban. After its leave information about the change of majoritarian stockholder was released. Alexander Kurtanidze became owner of 70% share, which replaced Alexidze and Gabrielashvili. About the plans of the new stockholder, among them injected amount in the capital will be known on the stockholder meeting. The meeting should also confirm supervision board of the bank. Entrance of the supervisor in Invest Bank was caused by failure to meet supervision capital requirement (≤12%).

ACCORDING TO Q1 RESULTS, VTB BANK HAS ISSUED AGRO CREDIT OF 8,2 MILLION GEL

ccording to Q1 2014 results, VTB Bank has issued agro credit of 8,2 million GEL. The bank stated that loans are issued mainly in the II and III com-

ponent. II component is for medium-sized and large farmers, III component - for funding of enterprises.

During 2013 loan of 37 million have been issued. In total, in the framework of the project, amount of the loans issued by bank equaled to 45,2 million GEL. During 2014 VTB assumes to issued agro loans of 45-50 million GEL. Total portfolio of preferential agro credit exceeds to 288 million GEL.

and “Bank of Georgia “, which already sell their shares on the stock exchange. In this case, it is not a bank but its subsidiary company, which intends to place its bonds on the stock exchange . “Bank of Georgia” shares have been traded on the LSE since 2006.

BANK REPUBLIC ENDS JANUARY TO FEBRUARY PERIOD IN 6.9 MILLION GEL PROFITS

ank Republic completed JanuaryFebruary with 6,9 million GEL profit (01/03/13 -4,8 million GEL). By March 1 deposit portfolio equals to 533,2 million GEL (01/03/13416,2 million GEL), credit - 581,1 million GEL (01/03/13-574 million GEL). Bank’s actives equals to 952 689 000 GEL, market share - 5,6%

(01/03/13 - 791 million/5,6%). Bank Republic operates form 1991. 93,6% of the bank’s stocks belong to French banking group SOCIETE GENERALE, which purchased control package (60%) in Summer 2006. 6,4% belongs to European bank for Reconstruction and Development (EBRD). Overall stock capital is 153,8 million GEL (01/03/13 -125,5 million GEL).

RESERVE ASSETS TOTALED 2.599 USD BY APRIL 1

y April 1, 2014 international Reserve Actives equaled to $2,599 billion (01/04/13 - $2,941 billion). Reserves in March reduced by 27 million (in February growth was mentioned, in January, December and November - reduction). According to statistic of National Bank of Georgia (NBG), in the annual expression growth is

negative and equals to -11,7% (01/03/14 _-11,3%, 01/02/14 _-12%, 01/01/14 _ -1,7%). NBG has not made interventions in March, in February purchased $60 million on the currency auctions. By April 1 reserves of the national currency equals to $2,376 billion. In addition to foreign currency actives, reserve actives also include special drawing rights (SDR) and data about the reserve position in IMF.

PROCREDIT BANK PRACTICES DISCRIMINATIVE REGULATIONS FOR CURRENCY EXCHANGE

roCredit Bank practices discriminative regulations for currency exchange, one of the damaged clients, who had to pay a 3% commission fee for currency exchange, told the Caucasian Business Week (CBW). The bank did not inform me in advance and this was surprise, the respondent noted. The bank representatives explained that the commission fee was not requested from only the bank clients. Similar regulations are not practiced in any other Georgia based commercial bank and ProCredit Bank regulations discriminate the clients, the CBW respondent said. CBW contacted ProCredit Bank to cast light on

the issue: -According to our information, the bank charges a 3% commission fee for currency exchange. However, the bank clients are not charged the interest rate. What is the ground to differentiate the clients? - “A commercial bank is authorized to independently determine tariffs and conditions for concrete bank services, as well as to set standard and individual commission fees for both bank clients and other individuals. It is important and it should be noted that ProCredit Bank provides valuable and comprehensive information on all concrete bank services and tariffs to all persons having our bank services”, a ProCredit Bank representative answered.

10 VOLVO SUSPENDS RUSSIA ARMORED INFANTRY VEHICLE PLAN OVER UKRAINE

CIS RUSSIA CAN’T SUPPORT UKRAINIAN ECONOMY FOREVER - PUTIN

olvo has halted a joint project with Russia to build an armored infantry fighting vehicle, citing concerns about the situation in Ukraine, AFP reported. Renault Trucks Defense, which is owned by the Swedish truck manufacturer and Russia’s state-owned Uralvagonzavod, signed an agreement to develop a combat vehicle in February 2013. The project has now been reconsidered due to concerns the Swedish government would veto the deal in line with western sanctions against Russia.

UKRAINE DID NOT PAY FOR GAS IN MARCH GAZPROM

ussia’s Gazprom said on Tuesday that Ukraine had failed to pay for its March gas supplies on time. Kiev’s total debt of $2.2 billion had not been reduced by the deadline of midnight on Monday, Reuters reported. Russian gas transit via Ukraine to Europe remained stable on Tuesday. Ukraine’s energy company, Naftogaz, declined immediate comment, Gazprom said. EU officials were due to meet Ukraine’s energy minister in Brussels later on Tuesday.

RUSSIA BANS UKRAINIAN DAIRY IMPORTS FROM 6 COMPANIES

ussia’s consumer protection agency said on Monday it had suspended imports from six Ukrainian dairy producers, Reuters reported. Rospotrebnadzor said laboratory tests had showed that the products violated dairy regulations. “To ensure consumer rights Rospotrebnadzor has suspended imports into the Russian Federation of [six] Ukrainian dairy producers,” the agency said.

TURKMENISTAN UPS POWER GENERATION

he electricity production growth rate amounted to 116.2 percent in Turkmenistan in the first quarter of 2014 compared to the same period of 2013, the Turkmen State Statistics Committee reported. Turkmenistan generated 18.8 billion kilowatt hours of electricity in January-November 2013. Turkmenistan plans to bring electricity production to 27.4 billion kilowatt hours by 2020 and to 35.5 billion kilowatt hours by 2030. Power generation is one of the leading sectors of the national economy. The Turkmen power stations run on natural gas, supplied from the nearest fields. In case of need, black oil and diesel fuel produced at the local refineries are used as reserve fuel. The work is underway to expand the export of electricity to Afghanistan, Iran and Turkey. The opportunities to supply Tajikistan, Kazakhstan, Pakistan and the Caucasian countries are being examined. Currently, 10 power stations, 32 turbines, of which 14 - steam, 15 - gas and three - water are operating as part of Turkmenistan’s energy system.

KYRGYZSTAN, TAJIKISTAN EYE TIES

he current state and perspectives of the bilateral cooperation have been discussed during the phone conversation between Kyrgyz and Tajik Prime Ministers Dzhoomart Otorbayev and Kohir Rasulzoda, Kabar agency reported on April 10 with the reference to the government’s report. The sides discussed perspectives for commercial and economic relations within the framework of Kyrgyz-Tajik Intergovernmental Commission for complex consideration of bilateral issues, as well as the issues of cooperation at the ministerial level. The issues of coordination and interaction between the government delegations on border issues and the schedules of upcoming working meetings were also discussed.

April 14, 2014 #50

caucasian business week

ussia can’t continue to prop up Ukraine’s faltering economy, and this responsibility should fall on the US and EU, which have recognized the authorities in Kiev but not yet given one dollar to support the economy, President Putin has said. “The situation is - to put it kindly, strange. It’s known our partners in Europe have recognized the legitimacy of the government in Kiev, yet have done nothing to support Ukraine – not even one dollar or one euro,” Putin said at a meeting with government officials at his residence outside of Moscow. “The Russian Federation doesn’t recognize the legitimacy of the authorities in Kiev, but it keeps providing economic support and subsidizing the economy of Ukraine with hundreds of millions and billions of dollars. This situation can’t last indefinitely,” Putin said. In December, Russia provided Ukraine with a $3 billion loan, which was a part of a bigger $15 bil-

lion aid package agreed the same month. Russia also offered a 33 percent gas price discount that would have saved more than $7.5 billion. The head of the International Monetary Fund Christine Lagarde said that Russia’s loan tranche last year was vital for the collapsing Ukraine economy. In the meantime, the West hasn’t yet effectively provided any money to Ukraine. The International Monetary Fund has agreed to provide Ukraine a bailout package of up to $18 billion, but the details are still being worked out. The US has also promised $1 billion in loan guarantees to help the collapsing Ukraine economy. Gassing over gas At the same meeting, Russia’s Ministry of Energy Alexander Novak said that Ukraine’s debt to state monopoly Gazprom stands at $2.238 billion. Ukraine has not paid for Russian gas since the beginning of 2013, and with all discounts withdrawn it is now charged $485 per 1,000 cubic meters of gas.

This is a price Ukraine says it will not pay, claiming it is much higher than most of the rest of Europe pays for Russian gas. President Putin also asked Gazprom to refrain from asking advance payments from Ukraine, until further consultations are held. “This certainly complies with the contract, but given the difficult situation in Ukraine and the incompleteness of our negotiations with the EU, I would ask the Government to hold off on such measures [advance payments - RT] that appear in the contract until additional consultations, if, of course, our partners agree to such consultations.” “If they don’t agree, we’ll act according to the existing contract,” Putin added. Ukraine’s reserves of natural gas have dwindled to 6.5 billion cubic meters which is not enough for the coming winter, Gazprom’s Deputy Chairman Vitaly Markelov said at the meeting. Kiev will need 11.5 billion cubic meters to keep the lights on, Markelov added. Ukraine’s overall debt to Russia, including the bill for gas, now stands at $16.6 billion Prime Minister Dmitry Medvedev said. “Three billion dollars is Ukraine’s debt, the accumulated gas debt stands at $2.2 billion, and what we consider Russia’sprofit shortfall, at $11.4 billion, in total, $16.6 billion.” Moscow turned off gas transit through Ukraine to Europe in the winter of 2006 and 2009 after Kiev failed to pay its Gazprom bill, leaving parts of Europe without energy during the winter months. Moscow has accused Ukraine of siphoning off supplies intended for Europe during these periods, an accusation Kiev refutes.

GAZPROM BUYS OUT KYRGYZGAZ FOR $1

ussia’s Gazprom has bought 100 percent of Kyrgyzgaz for a symbolic $1, as it also undertook to cover the company’s $40 billion debt. The deal makes Russia’s gas monopoly the sole gas supplier to Kyrgyzstan. “It’s a historic day. Today we signed an agreement to acquire 100 percent of Kyrgyzgaz and this company is joining the big Gazprom family,” Gazprom CEO Aleksey Miller said Thursday. Kyrgyzgaz will be renamed Gazprom Kyrgyzstan, and Gazprom plans to invest at least 20 billion rubles over the next five years. “A goal of the new company is to provide reliable and stable gas supplies to all Kyrgyzstan custom-

ers at lower prices,” Miller said. “To achieve that goal it’ll be necessary to renovate, modernize and reconstruct the existing transportation wires and trunk pipelines.” As gas production in Kyrgyzstan is low and gas supply stands at just 25 percent, Gazprom aims to explore for new fields in the country. “Economic stability is the most important thing. When people have gas and heat, they are confident in their future,” the Gazprom head said. Gazprom has an exclusive 25-year deal to export gas from Kyrgyzstan, which will also protect the Russian company’s investment from nationalization, and allow for the easy transfer of foreign payments connected with the investment.

Gazprom will also have the right to set gas tariffs for Kyrgyzstan supplies to third countries and determine the price of storing gas in underground storage facilities.

WORLD BANK WARNS IMF TERMS WILL EAT INTO CONSUMPTION, INVESTMENT IN UKRAINE

oan terms set by the International Monetary Fund (IMF), will cut consumption in Ukraine this year by 8 percent, as well as erode capital investment, the World Bank (WB) has warned. The increased cost of household gas and district heating “will affect purchasing power and limit the government’s ability to boost capital spending this year. Thus, in 2014, we expect to see a decline in both consumption and fixed investment,” says the WB statement. “After several years of robust growth, a drop in consumption may be significant this year (over 8%) while decline in fixed investments will not

be that substantial due to a low statistical base,” it added. The World Bank also said the GDP will shrink 3 percent, with inflation jumping to 15 percent in 2014. Greece got its first international bailout four years ago, and the people have seen their disposable incomes fall by a third, and unemployment soaring to 28 percent – the highest in 33 years. The country’s GDP has shrunk by a quarter over the period. In March the IMF agreed to grant Ukraine between $14 billion and $18 billion over the next two years, to help the country avoid a default. The IMF funds usually come with stringent terms,

asking for various cuts and economic reforms. In the case of Ukraine, the fund’s requirements include a 50 percent increase in the price of gas for households, as well as a quick pension reform and lower government spending. On a positive note, quick structural reforms will boost economic growth in Ukraine to 3 percent in 2015, the WB said. Also, support by foreign lenders usually improves investor confidence and lowers the cost of international borrowing. The first $3 billion tranche may be transferred this spring. Overall support from the broader international community will come to $27 billion over the period.

FAST MOVE: BURGER KING TO ENTER CRIMEA AFTER MCDONALD’S QUIT

urger King says it will open restaurants in Crimea, following McDonald’s decision to suspended activities and close its three restaurants on the peninsula. “We plan to enter the Crimean market, but I find difficult to answer when it will occur,” ITARTASS quotes Dmitry Medovy, the CEO of Burger King Russia. The company has not decided how many restaurants to establish in the territory. Currently Burger King has no restaurants in Crimea.

The fast food chain was established in 1954 in the US, and globally in 2012 it was ranked fifth in terms of total sales ($8.6 billion). In terms of number of restaurants, and burgers served it’s the world’s second largest behind McDonald’s. Burger King has more than 12,600 restaurants in 86 countries, including around 200 in Russia. The idea to enter the Crimean market apparently came after its main competitor McDonalds decided on April 3 to temporarily suspend activity in the Crimean peninsula due to “manufacturing reasons.”

A few days ago McDonald’s Ukrainian arm suggested its Crimean employees could transfer to other branches outside the peninsula. The company has also deleted its Crimean company information from its website.

AZERBAIJAN April 14, 2014 #50

caucasian business week

AZERBAIJAN TO ADOPT 300 STANDARDS IN 2014

zerbaijan’s State Committee for Standardization, Metrology, and Patent plans to adopt 300 standards based on international standards. The news was announced by State Committee Chairman Ramiz Hasanov at a meeting of the Caspian European Club (CEIBC) held in Baku on April 9. Addressing the event, Hasanov said the State Committee is carrying out its standardization work through the created technical committees. The State Committee is also attracting the relevant services of government agencies to work out the standards more effectively. “It would be easy to have all the world standards translated into Azerbaijani and deployed in Azerbaijan. We are conducting a stage-by-stage introduction and taking the market requirements into account,” he noted. Hasanov also said a twin project covering 24 months is currently underway. The project is aimed at improving the legislations in the field of standardization. “The option of creating an electronic file of standards is currently under consideration,” the Committee Chairman stressed. Speaking about the development of the industrial sector, Hasanov said a technical committee,

based on Sumgayit Technologies Park, was created in March. The standards that will be introduced in the near future have been defined thanks to this work. Apart from that, a technical committee engaged in petro-chemistry was created jointly with Azerbaijan’s state energy company SOCAR. A new service has also been created in the field of metrology. Thanks to this service, the most modern laboratory of the South Caucasus was created jointly with the Agency for Nuclear Energy in Azerbaijan last year. The national standard base is also planned to be modernized this year, Hasanov added. Speaking about the accreditation, Hasanov pointed out that a new law on accreditation has already been prepared and submitted to Azerbaijan’s parliament for consideration. The draft bill has passed through two readings and is expected to be adopted within two months. Hasanov also said the State Committee is conducting an active work concerning industrial property - the patents. The work in this direction is carried out under the corresponding structures of the UN. He also noted that certification in Azerbaijan is carried out in accordance with international standards. The State Committee has accredited 30 companies in this sphere so far. Following the meeting, Hasanov was presented with the CEIBC honorary membership certificate. CEIBC was established in June 2002 in association with the Caspian Energy International Media Group and under the support of the largest oil and gas companies operating in the Caspian-Black Sea region. Azerbaijani President Ilham Aliyev is the chairman of CEIBC. CEIBC is operating in 50 countries worldwide, carrying out an active work in maintaining dialogue between government agencies and the private sector.

IMF SAYS AZERBAIJAN’S INFLATION TO BE AT 3.5 PCT

he International Monetary Fund (IMF) forecasts Azerbaijan’s inflation to be at the level of 3.5 percent in 2014 and 4 percent in 2015. This was noted in IMF’s World Economic Outlook report on the prospects for development of world economy, published on April 9. In 2013, the inflation rate in Azerbaijan stood at 2.4 percent. The inflation in Azerbaijan is expected to be at the level of 4.25 percent in 2016, and 4.95 percent in 2017, 2018 and 2019, IMF noted. The current account surplus of the balance of payments’ transactions will decrease from 14.49 billion manat in 2013 (GDP ratio - 19.7 percent) and will amount to $11.914 (15 percent) in the country, according to IMF forecasts. The current account surplus of the balance of payments will

decrease to $8.7 billion (9.93 percent) in 2015, $5.32 billion (5.53 percent) in 2016, $ 5.71 billion (5.5 percent) in 2017, $5.58 billion (4.98 percent) in 2018, $5.66 billion (4.63 percent) in 2019, IMF said. The European Bank for Reconstruction and Development (EBRD) predicts Azerbaijan’s inflation at a level of 3.8 percent in 2014, which is one of the lowest indicators among the countries of the Commonwealth of Independent States (CIS). IMF also forecasts Azerbaijan’s GDP to grow by 5 percent in 2014 and by 4.6 percent in 2015. The real GDP growth in Azerbaijan amounted to 5.8 percent in 2013. The country’s GDP in 2013 increased up to 57 billion manats. Azerbaijan has cooperated with the IMF since September 18, 1992. IMF loans were allocated to Azerbaijan within six programs, but cooperation with the IMF has been at the level of consultation since 2005, as the Azerbaijani government has refused to receive loans from the fund. The IMF office opened in Baku in 1992. Although its staff has been reduced since 2009, it has remained an important partner for the Azerbaijani government. It is noteworthy that cooperation between Azerbaijan and the IMF played an important role during the global economic and financial crisis.

AZERBAIJAN UPS POWER GENERATION

ver 6.2 billion kilowatt hours of electricity was generated by power plants of Azerenergy JSC (production and distribution of electricity in Azerbaijan) in January-March 2014. The company reported that nearly six billion kilowatt hours of electricity was generated by power plants of Azerenergy JSC in the first quarter of 2013.

The JSC’s power plants generated over two billion kilowatt hours of electricity in March 2014 compared to nearly two billion kilowatt hours in March 2013. In total, Azerenergy JSC produced over 21.5 billion kilowatt hours of electricity in 2013 compared to 21.3 billion kilowatt hours in 2012. The capacity of power plants owned by Azerenergy JSC exceeds 6,500 megawatt.

CBA’S CURRENCY RESERVES EXCEED $14.7 BILLION

he total amount of the currency reserves of the Central Bank of Azerbaijan (CBA) exceeded $14.7 billion in the first quarter of 2014. This figure was equal to $12.33 billion in the first quarter of 2013. Annual calculation of the CBA currency reserves raised by 19.32 percent, or $2.38 billion, the bank said on April 7. The currency reserves of CBA increased by 21 percent and amounted to $14.152 billion in 2013. CBA plans to increase the volume of its reserves to $16 billion by late 2014. CBA Deputy Chairman Avtandil Babayev believes the bank’s goal “is not to increase reserves, but to increase their stability.” Rapid growth of the currency reserves was the main factor for the formation of a strong macro-

economic buffer and reduction of sensitivity of the domestic economy towards external shocks. The increase in reserves led to the maintenance of the continued net investment position of the country at an acceptable level.

AZERBAIJAN, AUSTRIA EYE TRADE TIES

zerbaijan and Austria have mulled the opportunities for developing the bilateral cooperation, Azertag reported on April 4. The discussions were held during the meeting of the Austrian delegation led by Second President of the National Council Karlheinz Kopf with representatives of Azerbaijani companies specializing in the fields of ICT, construction and consulting. Earlier the Austrian delegation was received by Azerbaijani President Ilham Aliyev, Parliamentary Speaker Ogtay Asadov, Foreign Minister Elmar Mammadyarov, Economy and Industry

Minister Shahin Mustafayev and Culture and Tourism Minister Abulfas Garayev. Diplomatic relations between the two countries were established in February, 1992. The legal framework for bilateral cooperation includes 38 documents. There are over 50 Austrian companies operating in different fields of Azerbaijani economy. Trade turnover between Azerbaijan and Austria was about $333.46 million in the first eleven months of 2013, Azerbaijan’s State Customs Committee reported. Azerbaijan’s imports from Austria amounted to $79.58 million, while exports to Austria amounted to $253.88 million during this period.

SOCAR TO PURCHASE, SELL AND IMPORT LIQUEFIED GAS TO TURKEY

OCAR Turkey LNG received a license for the purchase, sale and import of liquefied gas and export of natural gas in Turkey. The news was announced by the Turkish Energy Market Regulatory Authority (EPDK). The license was issued for the period of 30 years, EPDK said. Azerbaijan and Turkey’s relations have always been strong due to a common culture and history and the mutual intelligibility of Turkish and Azerbaijani languages. Turkey was the first country in the world to recognize Azerbaijan’s independence in 1991 and has been a staunch supporter of Azerbaijan in its efforts to consolidate its independence, preserve its territorial integrity, and realize its economic potential that arises from the rich natural resources of the Caspian Sea. The countries share a short 8 kilometer-border, with the Aras River separating Turkey from the

Nakhchivan exclave. Economic projects, implemented between Azerbaijan and Turkey, are bringing these countries together and strengthening their cooperation. These two countries are connected by several important regional projects, including the BakuSupsa, Baku-Tbilisi-Ceyhan oil pipelines, BakuTbilisi-Erzurum gas line, and Trans-Anatolian gas pipeline (TANAP). Azerbaijan and Turkey’s economies and cooperation have reached a high level. SOCAR is one of the world’s most well-established oil companies, active in Turkey since May 30, 2008. SOCAR is involved in a number of major investment projects in Turkey, including the construction of TANAP, Star refinery, and others. SOCAR’s investments in Turkey are its largest direct investments. It is possible that SOCAR’s investments in Turkey’s economy will reach $20 billion as a result of implementing a number of projects.

NEW STAGE IN AZERBAIJANIIRANIAN RELATIONS

zerbaijani President’s visit to Iran and the discussion of the strategic issues should be assessed as a new stage of cooperation between the two countries. At the same time, this visit provides a basis for further expansion of cooperation between the countries. From the first day of its activity the new Iranian government began to reconsider relations with Azerbaijan and made a political correction. With this, Tehran demonstrated that it is impossible to achieve anything in the region without Azerbaijan. Either it is needed to be sincere towards Azerbaijan, or to stay away from regional processes. Azerbaijan and Iran are close neighbors, brothers and co-religionists. Sincerity is in the interests of both peoples and at the same time relations between the states serve the peace, stability and security of the region. The change in Iran’s attitude towards Azerbaijan became the cause of rapprochement between the two states. Four documents contributing to strengthening coop-

eration have been signed between the two states during the visit of the Azerbaijani president to Iran. The statements of the Azerbaijani President Ilham Aliyev during the visit further prove that bilateral relations are developing successfully, and historical, cultural and religious roots are creating the basis for this development. One of the important points of the visit was the statement made on the Nagorno-Karabakh conflict. Azerbaijan once again stated that Iran’s support in the settlement of the Armenian-Azerbaijan NagornoKarabakh conflict is important. The Iranian side unequivocally stressed the importance of resolving the conflict in the framework of international norms and principles. And this clearly signals to Armenia the impossibility of concessions in the conflict settlement. The warming observed in Azerbaijani - Iranian relations leaves no doubt that all tasks will be implemented and Azerbaijani-Iranian relations will be raised to a higher level, as our people are linked by deep historical, cultural roots.

MADE IN GEORGIA caucasian business week

April 14, 2014 #50

EXHIBITION, SALES AND TASTING OF GEORGIAN PRODUCTS AT GOODWILL

WORLD NEWS April 14, 2014 #50

caucasian business week

GREECE RETURNS TO BOND MARKET AFTER 4-YEAR HIATUS country’s investment grade below junk status to Caa3. Fitch and Standard and Poor’s rate Greece at B- level. Greece was the first country in the euro zone to require a bailout from the International Monetary Fund, from which it has received over 248 billion euro in loans. The third, and most recent package, was 8.3 billion euros.

fter a four year exile from the euro bond market, Greece is back. Investors bought 3 billion euro ($4.16 billion) in 5-year bonds, offering a glimmer of hope as the euro zone economy continues to crawl out of its debt crisis. “Greece is leaving the bailout and the crisis behind,” Deputy Prime Minister Evangelos Venizelos told reporters in Athens. Orders for the April 2019 bonds with a 4.95 percent yield were oversubscribed nearly 8-fold, according to Venizelos. Venizelos deemed the sale “a huge success” for

Greece’s economy, which has a 320 billion euro debt, or roughly 175 percent of gross national production. When the credit crisis hit in 2012, Greek bonds wiped out nearly 130 billion euro from investors. Europe’s crisis pushed borrowing costs to record highs, but Greek bonds in 2014 (as of April 9) were the best performer of 15 euro area debt markets, according to Bloomberg’s World Bond Index. Plagued by severe austerity cuts to government spending, the reappearance of investor confidence to the region is important. Ratings agency Moody’s has downgraded the

IMF, GET OUT! Angela Merkel, the austerity program’s biggest cheerleader, is due to arrive in Athens on Friday. Domestic politics in Germany have been split by the government’s undeterred support for its weak neighbors. Over 20,000 protestors marched in Athens ahead of Merkel’s visit, chanting, “EU, IMF take the bailout and get out of here!” Troika lenders forced tough austerity cuts on the Greek economy which have arguably made the economic situation worse than it was before the crisis. Deflation remains the highest in the 18-member euro zone, dropping 2.9 percent year on year in February, and prices continue to fall as high unemployment at 28 percent remains a huge threat to recovery. Overall, euro zone inflation is at its lowest levels since November 2009, at 0.5 percent. Just hours before the major milestone, a car bomb was detonated in front of the headquarters of the Bank of Greece, the country’s central bank.

FATAL FINANCE? BANKERS IN NETHERLANDS, LIECHTENSTEIN FOUND DEAD

former executive of the Dutch bank ABN AMRO has committed suicide after killing his wife and daughter, and the head of Liechtenstein’s Bank Frick has been found shot dead in a car park. The suspect in the Frick shooting had a grudge against the bank. Jan Peter Schmittmann, the 57-year old former head of domestic operations at ABN AMRO was found dead on Saturday in the wealthy Amsterdam commuter town of Laren. He was discovered along with the bodies of his 57-year-old wife, and 22-year-old daughter. “The mother and daughter were killed by the father, after this the father killed himself,” Reuters cites a police statement. Police said that Schmittmann left a suicide note, but did not provide any further detail. Family members said that Schmittmann had suffered from serious depression. Schmittmann left the bank in 2008 after national-

ization, At the time ABN AMRO was one of the largest banks in the world, a household name and a symbol of Dutch financial strength. As compensation he was promised a $21.99 million pay off. In the end he got only half, as Finance Minister Wouter Bos considered the sum exorbitant. Since 2010 he was the owner and director of 5 Park Lane, a company that advised private equity investors. This is the second unusual incident related to ABN AMRO in the past five years. In 2009, former chief financial officer Huibert Boumeester was found dead in woodland near London in an apparent suicide a year after he had left the bank. In 2007 Royal Bank of Scotland, acquired ABN AMRO at the height of the economic boom for $100 billion. But the financial crisis forced the Dutch state to nationalize its domestic operations, resurrecting the ABN AMRO name. On Monday, another bank chief executive was found dead in Liechtenstein.

Juergen Frick, the 48-year old head of Liechtenstein-based Bank Frick was found shot dead in a car park. Police believe Juergen Hermann, a former fund manager, shot the banker and then took his own life, according to Swiss media. Police said they believe Hermann, who escaped from the scene may have taken his own life. They said they found his abandoned car with his passport and a confession that included “parting words”. On the suspect’s website, he refers to himself as the “Robin Hood of Liechtenstein” and is reported to have spent years acting against Bank Frick and the Liechtenstein authorities over financial matters. These recent fatalities add to the growing number of suicides and mysterious deaths in the financial world. Three sudden deaths at JP Morgan and 6 in the global financial world happened in just few weeks in February. Financial jobs are notorious for extra-long hours and huge level of stress.

US TO BECOME OIL INDEPENDENT BY 2037 – EIA

S may stop importing oil by 2037 as abundant domestic crude supplies, including North Dakota’s Bakken field and Texas’s Eagle Ford formation, may push production to the level of consumption, according to the US government. The US Energy Department’s branch that collects and analyzes data - the Energy Information Administration (EIA) says that within 23 years the world’s largest economy may become energy independent, while demand for crude is expected to be modest. “This is the first time the Annual Energy Outlook has projected that net imports’ share of liquid fuels consumption could reach zero,” Bloomberg quotes John Krohn a spokesman for the EIA. The most optimistic assessment by the EIA assumes that production will increase to about 13 million barrels a day over the next two decades. The projection is based on more favorable assumptions relating to technological improvements and the productivity of wells. Net oil imports have already fallen to about 5 million barrels a day from a peak of almost 13 million barrels in 2006. The shift is mostly due to advances in techniques such as hydraulic fracturing and horizontal drilling into shale rock. The EIA also calculated a low resource scenario. According to estimates, after the moderate growth of up to 9.1 million barrels a day in 2017

the production of oil may nosedive to 6.6 million barrels a day by 2040. In the worst-case scenario in terms of imports the EIA assessed the net import share of petroleum and other liquids to fall to 25 percent in 2016 and then again rise up to 32 percent in 2040. However, experts say estimating oil production, especially until 2040 is a very tricky business as the assessment factors are too variable. The forecasters must make a number of guesses, including the size of oil reserves lying thousands of feet underground, how quickly tech-

nology advances, and whether a rise in oil prices can make resources once too costly to produce suddenly become economic. “Ten years ago we were importing natural gas, and now we’re looking at exports. The changes have, over the last few years, been dramatic and there’s really no way to predict things more than a couple of years in advance,” Bloomberg quotes Stephen Schork, president of Schork Group Inc., a consulting group in Villanova, Pennsylvania.

TOYOTA RECALLS 6.4MN FAULTY VEHICLES

oyota Motor Corp. is recalling 6.39 million vehicles globally for a variety of problems spanning nearly 30 models, AP reported. No injuries or crashes have been reported related to the recalls announced Wednesday. However, two reports of fires are linked to one of the problems, a defective engine starter that can keep the motor running. The recalls affect a large range of models, including the Corolla, RAV4, Matrix, Yaris, Highlander and Tacoma.

EUROZONE INVESTOR CONFIDENCE INDEX RISES TO 3YR HIGH

he eurozone’s investor confidence index has risen to a three-year high, the Financial Times said. The Sentix Investor Confidence gauge has climbed since hitting a eurozone crisis mark 30 in mid-2012. It rose to 14.1 points in April, up from 13.9 last month. The gauge’s rise was only due to an increase in the assessment of the current environment. The sixmonth outlook expectations dipped for a second month running.

NIGERIA GDP TOTALS $509.9BN FOR 2013, BIGGEST IN AFRICA

ew Nigeria’s gross domestic product (GDP) data has pushed it above South Africa as the continent’s biggest economy, the BBC reported. GDP for 2013 totaled 80.3 trillion naira ($509.9 billion), the Nigerian statistics office said. Some economists point out that Nigeria’s economic output is underperforming because its population (170 million) is three times larger than South Africa’s.

SPANISH INDUSTRIAL OUTPUT IN FEBRUARY EXPANDS TO 2.8%

panish industrial output outpaced expectations in February, feeding hopes that the economic recovery is gathering pace, the Financial Times said. Seasonally-adjusted industrial production expanded 2.8 percent year-onyear, up from 1.1 percent in January. With unemployment up to a record peak of 26.6 percent last year, the figure is seen as a sign that the Spanish economy is staging a tentative recovery.

14 BIG TECH GROUPS LOSE FIFTH OF COMBINED $1.4TN STOCK MARKET VALUE IN MONTH

tock market investors have taken a $275 billion bite out of world’s 14 largest publicly-traded internet companies, each worth more than $20 billion, the Financial Times reported. Five companies in Asia and nine in the US have lost about a fifth of their combined $1.4 trillion stock market value in little more than a month. Some of the best-known tech companies have suffered their biggest hits since the 2008 financial crisis, although analysts say this may be no more than a temporary correction. In the past month, Chinese internet group Tencent has fallen by a fifth, while Yahoo Japan has tumbled 26 per cent. 08:23

CHINA APPROVES NOKIA-MICROSOFT DEAL

hina’s Ministry of Commerce has approved Microsoft’s takeover of Nokia’s handset and services businesses, the Financial Times said. Nokia had expected the transaction to close in April, and now this is still the target. The 5.4-billion-euro deal was first announced last September. The company had also received regulatory approval from the European Commission and the US Department of Justice.

PUBLICITY caucasian business week

April 14, 2014 #50

TBILISI GUIDE April 14, 2014 #50

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

April 14, 2014 #50