Tweet
Georgia Today
Aug 28 2014
Armenian Gas Deal Draws Georgian Budget Concerns
By Zaza Jgharkava
28.08.2014
A Georgian is investing $600 million in the Armenian economy, it has
been revealed, as the media of Georgia's neighbors Armenia and
Azerbaijan responded to Prime Minister Irakli Gharibashvili's visit to
Yerevan. Later, this information was confirmed by the Georgian media
as well. The goals of the agreement between the Armenian government
and the Georgian company Anaklia IEP (Industrial Eco Park) Holding
were announced by the Kakheti Information Center.
The news has been perceived as sensational. Georgia, whose budget
heavily depends on foreign investments, making such a large financial
injection to a neighboring country's economy, instead of its own, has
caused alarm
Teimuraz Karchava, owner of 100% of shares of the holding told
journalists about the project's details at the press club of Ria
Novosti. The story of businessman Karchava is closely connected to
Russia. Like other Georgian businessmen, Karchava accumulated his
capital in Russia but not enough to afford an investment of $600
million into another country's power industry. His interests -
Moscow's VIP club "National", uniting a casino and a restaurant -
would not bring him anywhere near that level of funds.
Karchava comes to light in Georgia in 2008. According to the Public
Registry, Karchava holds Georgia the following companies in: Anaklia
Gas, Churia, Teka, Chateau Manavi, Anaklia Industrial Eko Park & Port,
and Black Sea Port. Before 2008, the Georgian "Onassis" was detained.
As the newspaper kommersant.ru wrote in 2004, Karchava was arrested by
the Moscow police for offering a bribe to the Finance Ministry worker
Denis Mikhailov. After this criminal misadventure he returned to
Georgia and started a new business life.
According to Georgian news agency livepress.ge, Anaklia Port Ltd
received the right to construct a transport knot in the Anaklia resort
zone by the October 20, 2009 order no.732 of President Mikheil
Saakashvili. According to the agreement, construction was to finish in
2013 and a $5-6 billion investment was to be made. The project
included construction of a sea port, railway and vehicle roads,
railway and vehicle transportation infrastructure, energy and
engineering services. However, its implemenatation did not materialize
and the Ministry of Economy demanded $100 million from the businessman
in October 2012 for violating investment terms.
Karchava spoke about the reasons for this sensational investment at
the briefing at the Ria Novosti press club. At first, the construction
of this power station working on gas was planned for England; a $400
million worth of machinery was already purchased from the General
Electric Corporation. But high prices on natural gas in England
thwarted these plans. Armenia was selected; the government of Armenia
guarantees the provision of $1 billion cubic meters of gas per year
for a lower price. In two months, machinery was brought from England
to Armenia via cargo jets. The company Anaklia Energy established in
Armenia will construct the gas power station and exploit it. In the
process of construction and during the first five years of
exploitation, the government of Armenia is exempting Anaklia Energy
from taxes. The generated energy, almost all of it, which is 4 billion
kwt/hr, will be exported. Karchava pointed out that power generated in
Vanadzor will be used for implementing projects of Anaklia IEP
Holding, which was established in Georgia with the participation of
world famous companies: British Eco Power, China Power and Citik Group
(Hong Kong).
According to Karchava, for the construction and functioning of the
Anaklia port, as well as for the implementation of other projects, 400
megawatt energy will be needed. However, today Georgia's power system
does not have the capacity to supply the project with the necessary
amount of electricity. This is why it was decided to build a gas power
station in Vanadzor. It will take 18 months to make it operational and
in Georgia it would take 8 years to build a hydro power plant. "The
Vanadzor gas power station is practically the first investment into
building the Anaklia port," Karchava said.
The ambitious plans of Karchava seem interesting at first glance;
however, such a big investment in the neighboring country raises many
questions, not to say anything about Karchava's British adventure. It
is truly interesting especially at a time when Prime Minister
Gharibashvili announced the construction of a new bridge at the border
of Armenia and Georgia to have been the main achievement of his visit
to Armenia. This $600 million investment was not raised. Armenia
receives gas from Russia and Iran. For gas from Iran, Armenia has an
obligation to use it only to operate the power plant, without the
right to re-export, which should be returned back to Iran as
electricity.
Russian gas continues to flow to Armenia via Georgia and this raises
the main question, why would the Anaklia IEP Holding need gas
purchased from a second party, i.e. the Armenian government? As
Karchava says, the Armenian government is promising advantageous tax
terms to his holding. It appears that the Gharibashvili government
cannot ensure such terms. Doubts are also raised about why Karchava
prefers Armenian gas to its Azerbaijani alternative.
http://www.georgiatoday.ge/article_details.php?id=12604
Aug 28 2014
Armenian Gas Deal Draws Georgian Budget Concerns
By Zaza Jgharkava
28.08.2014
A Georgian is investing $600 million in the Armenian economy, it has
been revealed, as the media of Georgia's neighbors Armenia and
Azerbaijan responded to Prime Minister Irakli Gharibashvili's visit to
Yerevan. Later, this information was confirmed by the Georgian media
as well. The goals of the agreement between the Armenian government
and the Georgian company Anaklia IEP (Industrial Eco Park) Holding
were announced by the Kakheti Information Center.
The news has been perceived as sensational. Georgia, whose budget
heavily depends on foreign investments, making such a large financial
injection to a neighboring country's economy, instead of its own, has
caused alarm
Teimuraz Karchava, owner of 100% of shares of the holding told
journalists about the project's details at the press club of Ria
Novosti. The story of businessman Karchava is closely connected to
Russia. Like other Georgian businessmen, Karchava accumulated his
capital in Russia but not enough to afford an investment of $600
million into another country's power industry. His interests -
Moscow's VIP club "National", uniting a casino and a restaurant -
would not bring him anywhere near that level of funds.
Karchava comes to light in Georgia in 2008. According to the Public
Registry, Karchava holds Georgia the following companies in: Anaklia
Gas, Churia, Teka, Chateau Manavi, Anaklia Industrial Eko Park & Port,
and Black Sea Port. Before 2008, the Georgian "Onassis" was detained.
As the newspaper kommersant.ru wrote in 2004, Karchava was arrested by
the Moscow police for offering a bribe to the Finance Ministry worker
Denis Mikhailov. After this criminal misadventure he returned to
Georgia and started a new business life.
According to Georgian news agency livepress.ge, Anaklia Port Ltd
received the right to construct a transport knot in the Anaklia resort
zone by the October 20, 2009 order no.732 of President Mikheil
Saakashvili. According to the agreement, construction was to finish in
2013 and a $5-6 billion investment was to be made. The project
included construction of a sea port, railway and vehicle roads,
railway and vehicle transportation infrastructure, energy and
engineering services. However, its implemenatation did not materialize
and the Ministry of Economy demanded $100 million from the businessman
in October 2012 for violating investment terms.
Karchava spoke about the reasons for this sensational investment at
the briefing at the Ria Novosti press club. At first, the construction
of this power station working on gas was planned for England; a $400
million worth of machinery was already purchased from the General
Electric Corporation. But high prices on natural gas in England
thwarted these plans. Armenia was selected; the government of Armenia
guarantees the provision of $1 billion cubic meters of gas per year
for a lower price. In two months, machinery was brought from England
to Armenia via cargo jets. The company Anaklia Energy established in
Armenia will construct the gas power station and exploit it. In the
process of construction and during the first five years of
exploitation, the government of Armenia is exempting Anaklia Energy
from taxes. The generated energy, almost all of it, which is 4 billion
kwt/hr, will be exported. Karchava pointed out that power generated in
Vanadzor will be used for implementing projects of Anaklia IEP
Holding, which was established in Georgia with the participation of
world famous companies: British Eco Power, China Power and Citik Group
(Hong Kong).
According to Karchava, for the construction and functioning of the
Anaklia port, as well as for the implementation of other projects, 400
megawatt energy will be needed. However, today Georgia's power system
does not have the capacity to supply the project with the necessary
amount of electricity. This is why it was decided to build a gas power
station in Vanadzor. It will take 18 months to make it operational and
in Georgia it would take 8 years to build a hydro power plant. "The
Vanadzor gas power station is practically the first investment into
building the Anaklia port," Karchava said.
The ambitious plans of Karchava seem interesting at first glance;
however, such a big investment in the neighboring country raises many
questions, not to say anything about Karchava's British adventure. It
is truly interesting especially at a time when Prime Minister
Gharibashvili announced the construction of a new bridge at the border
of Armenia and Georgia to have been the main achievement of his visit
to Armenia. This $600 million investment was not raised. Armenia
receives gas from Russia and Iran. For gas from Iran, Armenia has an
obligation to use it only to operate the power plant, without the
right to re-export, which should be returned back to Iran as
electricity.
Russian gas continues to flow to Armenia via Georgia and this raises
the main question, why would the Anaklia IEP Holding need gas
purchased from a second party, i.e. the Armenian government? As
Karchava says, the Armenian government is promising advantageous tax
terms to his holding. It appears that the Gharibashvili government
cannot ensure such terms. Doubts are also raised about why Karchava
prefers Armenian gas to its Azerbaijani alternative.
http://www.georgiatoday.ge/article_details.php?id=12604