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Sunday, 24 June 2018


Economic Intelligence Palpated Georgian Railway

18.06.2009  |  13:55

3087.jpegThe visit of the Russian Railways (RZD) President Vladimir Yakunin to Georgia has not taken place. A reaction to the information «Mantoux test» was not slow to arrive: the opposition accused the authorities of a desire to sell everything to Russia. But no one else is asking!

At the end of last week the Armenian information agency "Arka" mentioned the possible trip of Vladimir Yakunin to Georgia, informing on the forthcoming visit of the RZD head to Erevan. The scoop was carried on by other mass media, both in Russia and in Georgia. But Irakly Ezugbaya, head of the Georgian Railway, disclaimed it almost immediately.


In spite of that, mass media started discussing the visit and its purposes.

According to the Regnum agency, Yakunin was going to consult Georgians on some customs issues and agree upon a possibility to introduce transit rates of the South Caucasian Railway CJSC (JKZD). But the main target was to discuss the purchase or outsourcing of the Georgian Railway by RZD.

The 100% owner of the GZD LLC is the state represented by the Enterprise Management Agency. The Georgian Ministry of Economic Development has wanted to sell the railway for a long time, possibly to foreign companies capable of significant investments. Money is required to repair bridges, restore stations etc. Experts advise that GZD should be converted into a joint-stock company leaving the control stock in the hands of the state.

Somehow or other Georgia will have to find a wealthy owner for its railway. Before the South Ossetian war they said that five companies applied for participation in the Georgian Railway LLC privatization tender: Center Invest Capital Рartner (Russia), Stratton Holdings Lls (USA), Capital Investment Group AG (Switzerland), East Capital (USA) and Silk Road Group SA (Kazakhstan). But now no peep from any volunteers to purchase the railway assets can be heard.

For a start, the Georgian Government offered for sale a subsidiary of GZD, Railway Telecom. It serves over 10000 telephony and Internet subscribers throughout Georgia and provides for communication with the neighbouring countries. The tender covers the sale of a land strip along the railway lines where telecommunication cables are laid. «The initial price of Railway Telecom can be about 20 mln. dollars», said at the beginning of June the Minister of Economic Development of Georgia Lasha Zhvania cited by Reuters. Meanwhile in March he denied that Telecom was for sale. It was supposed just to outsource it provisionally to a private company for a year for six mln. lari (about four mln. dollars), specified the «Business Georgia» portal. The privatization plans are likely to have been modified due to a critical shortage of budgetary funds.

According to the official data, among those who are interested in the Telecom purchase there is another Russian company, Rostelecom. Apart from it, the subsidiary of GZD is claimed by the Georgian Caucasus Online and the Kazakh United Telecom Company (OTK). However, in practice the latter can also turn out to be Russian as the Kazakh Banku Turan Alem just credited the anonymous OTK purchaser but did not buy it as it was stated by mass media, says the CNews portal.

In spite of the fact that the tender for purchase of GZD itself has not even been announced yet, the news on the possible arrival of Vladimir Yakunin who is said to be a friend of the Russian Premier Vladimir Putin agitated the Georgian opposition. During a Tbilisi manifestation the leader of the New Right Wing opposition party David Gamkrelidze emoted the crowd by a speech on Mikhail Saakashvili not selling the railway only because actions of protest are still going on. «What other crime must the first person of the country commit? The territories have been divided, the strategic units have been sold to Russia. It is Mikhail Saakashvili's merit that the country has lost its investments», revealed Gamkrelidze.

«However difficult is the condition of the country budget, its railway cannot be sold», said a Doctor of Economy David Narmania in his interview to the Kommersant radio. «It is unacceptable as the transit corridor will be in danger. Georgia and Armenia are parts of the same system. Our partners do not approve such a deal. It will become one more step to the deterioration of our security system», - echoes an ex member of the supervisory board of the Georgian Railway Ghia Khukhashvili.

However negative is the reaction of the Georgian opposition, it testifies that the emergence of the Russian investor is expected, it does not seem improbable at all. All the more so as the fact of the backroom negotiations of Saakashvili's government with the management of the Russian monopoly was confirmed by a representative of JKZD Vage Vartanyan in his interview to the Kommersant radio. He specified that the parties have not come to any agreement yet.

But RZD has almost encircled Georgia already. Not long ago the Russian company purchased the control stock of the ferry crossing operator Black Sea Ferry Investment. Its ferry transports goods from the Caucasus port to the Georgia port of Poti.

RZD has almost come to an agreement on the outsourcing of the Abkhazian railway with the President of the republic Sergey Bagapsh.


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