Cargo turnover is growing, but the future of Anaklia port remains unclear

After the end of the pandemic and the start of the war in Ukraine, international cargo turnover increased in Georgia.

Consequently, the load on the country’s transport infrastructure has increased, including railways and roads, seaports, but the country still does not have a deep-water port.

According to the Anaklia Deep Sea Port Development Consortium, despite the current situation, the government is doing nothing to develop the project, which was suspended almost 3 years ago.

Officials say now is a “good time” to announce a new tender, although specific information on when exactly to expect construction of the port to begin is not known at this stage.

Cargo turnover growth

According to the Ministry of Economy of Georgia, 20.4 million tons of cargo were transported in the first six months of 2022, which is 1 million tons more compared to the same data last year.

Over the past six months, the amount of cargo handled in seaports has also increased, reaching 6.3 million tons. Compared to last year, the increase here is also 1 million tons.

The ports handled more containers this year than last year, totaling 220,957 units. Compared to the same data of the previous year, the growth amounted to 17,149 units.

In addition, in the last 6 months compared to last year:

– The volume of cargo handled by the port of Poti increased by 0.3 million tons and amounted to 3.8 million tons;
– The volume of cargo handled by the port of Batumi increased by 0.7 million tons and reached 2.5 million tons;

An increase in cargo turnover means an increase in government revenues, as taxes and fees increase along with it.

For example, according to the State Treasury of Georgia, in January-September 2022, the income from the use of roads amounted to more than 84.8 million lari, which is 74% more compared to the same data of the previous year.

Representatives of the industry also speak about the increase in cargo turnover. According to Mamuka Murjikneli, executive director of the Wondernet Express investment group, the owner of the Batumi mineral fertilizer terminal, cargo turnover has increased significantly.

“The main reason for this, of course, is what is happening in our region. However, the conflict in the region is not the only reason for this. For example, after the commissioning of our terminal, a new direction was added to the logistics corridor of Georgia,” the written response says.

According to him, it is important for Georgia to further develop the existing infrastructure.

“The construction of a deep-water port is vital for us, which will allow us to receive larger vessels and significantly increase the volume of cargo. However, it is not enough just to build a port, in parallel it is necessary to develop the infrastructure approaching the port, and this combination will allow us to increase the function of our country as a logistics hub in the region, and maintain it after the end of the current conflict, in order to maintain logistics routes and cargo turnover that have been transferred to our territory since the beginning of this conflict,” says Murdjikneli.

Port of Anaklia

The Anaklia Development Consortium also talks about the increase in cargo turnover and the favorable conditions created, and states that the Georgian government is doing nothing to use the created opportunities.

“With the exception of the Georgian Dream government, it is now clear to everyone that after the Russian invasion of Ukraine, the development of the deep-sea port of Anaklia will bring economic and strategic benefits to Georgia. Despite public announcements of a new tender for the development of the port, the Georgian government is still not working to make the project a reality,” the consortium said in a statement.

The Anaklia Development Consortium says the government is unwilling to build a port.

“Over the past 34 months, since the government terminated the contract with the consortium, there have been repeated statements that the government is committed to the idea of ​​building a port, but apart from rhetoric, little has been done.

In May 2021, the government announced that it had hired international consulting firm MTBS to update the project’s freight forecast and business model. It’s been 17 months, but the government still hasn’t made the results of the study public, despite the clear public interest and importance of the document.

Also in May 2021, Deputy Minister of Economy [Гурам] Guramishvili said that before the end of the year, the government will be able to announce an expression of interest and select a new investor. It’s been over a year and we’re still waiting.

More recently, the government has said it has received expressions of interest from potential investors and port operators. There are even rumors that the government may decide to finance the development of the port itself. But so far we haven’t seen any action.

During this time, the Georgian government has repeatedly assured the European Union and the United States that it takes Anaklia seriously. [Но] these promises seem to be empty,” the Consortium said.

According to the Consortium, if the first phase of the project had been developed, the port could now handle 900,000 containers and 1.5 million bulk cargo, and these opportunities are now being missed.

The consortium believes that “this is a tragedy”:

– For Georgians who have not received jobs and economic opportunities from the project;
– For the Georgian state, which does not receive tax collections that this project could give;
– For the European economy, which will benefit from a more efficient expansion of trade with Asia;
– Finally, for the democracies of the Black Sea region and the South Caucasus, which will benefit from the minimization of Russian economic hegemony in the region.

“It is time for the government to take Anaklia seriously for the benefit of its citizens and the economy. It’s time to replace empty talk with real actions,” the Consortium emphasized.

“Very good time”

In the budget of Georgia for 2023, 2 million 850 thousand lari was allocated “for the development of the deep-water port of Anaklia”. As of 2021, more than 1 million 288 thousand lari was spent on this program, and in 2020 – more than 703 thousand lari.

Despite attempts to find a new investor, the public does not yet know when a new developer will appear.

Deputy Finance Minister Giorgi Kakauridze said in October that “now is a very good time to announce a new competition for the construction of the port of Anaklia.”

According to him, after the start of the Russian war in Ukraine, the transport load on Georgia has changed significantly and the country’s transit potential has increased.

“The situation that was four years ago and the one that exists today is completely different. One of the components, due to which the previous investor was unable to raise the appropriate funds, was the requirement of a state guarantee in the event of a lack of cargo. The state cannot give such a guarantee.

Today, the situation with cargo has completely changed, they have increased significantly. The role of Georgia in the rail, road and maritime sectors will increase significantly, and therefore now is a very good time to announce a new competition. [на строительство порта Анаклия]”, – said Kakauridze.

According to him, many different investors are currently consulting with the Ministry of Economy and the government about the port of Anaklia, and he is confident that “next year it will be possible to find a new investor who does not require state guarantees to repay debts in the event of a lack of cargo turnover.”

Netgazeti turned to the Ministry of Economy to find out at what stage the tenders are and whether negotiations are underway with investors.

Despite our numerous attempts, the agency did not respond to questions.

Georgia is the only one among the countries of the Black Sea basin that still does not have a deep-water port.

On December 24, 2017, the start of the construction of the port in Anaklia was opened by the then Prime Minister Giorgi Kvirikashvili and the founder of the Consortium, Mamuka Khazaradze.

Then Kvirikashvili said that the port of Anaklia is Georgia’s largest project of the 21st century, a guarantee of Georgia’s transformation into an industrial country.

Kvirikashvili left the post of prime minister in 2018.

On January 9, 2020, the government of Georgia during the premiership of Giorgi Gakharia announced the termination of the contract with the Consortium due to its failure to fulfill its obligations.

Anaklia Development Consortium was founded by Mamuka Khazaradze and included Conti International (USA) and TBC Hodling (Georgia).

The Anaklia Development Consortium (ADC) and its Dutch investor Bob Meyer are arbitrating against Georgia.

Prime Minister Irakli Garibashvili announced that the government will announce a new tender for the construction of the port of Anaklia.

In August 2022, it became known that the Anaklia Deep Sea Port Development Agency under the Ministry of Economy and Sustainable Development will spend 1 million lari through a simplified procurement “for various consulting services for the development of the Anaklia Port.”