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Tuesday, 25 October 2016


Tbilisi set to package the country

19.09.2011  |  15:20

Tbilisi set to package the country. 22139.jpegThe government of Georgia is set to sell part of the country's key assets with PM Nica Gilauri, rumored to leave the post soon, claiming that the shares of Georgia's biggest companies will soon be traded on international stock exchanges. It is planned to sell minority packages - 30% max. The parliament adopted a relevant draft law in first reading. No doubt the law will be adopted in next two readings. GeorgiaTimes correspondent has spoken to Jondi Bagaturia, leader of Kartuli Dasi parliamentary faction, opposing the idea.


To start with, let's give a thorough look at the assets proposed for sale. The Georgian Railway, for instance, is undoubtedly one of the largest assets of the country. The length of the railroad is 1, 324 km, it operates well and has a strategic importance for the region helping to bring cargos to the Black Sea ports of Poti and Batumi. The remaining property is not much of interest as we can see from the condition of the railroad tracks and infrastructure.

The railway station in Tkibuli mining town is serviced by local residents, or the remainder of them, stoically overcoming endless troubles with total unemployment as the main problem. Yet, a train to the nearest big town, Kutaisi, arrives on time. Tkibuli is almost a suburb of Kutaisi with 42 km dividing two towns. It takes a train 3 hours and 8 minute to get there. Why? Because the railroad is ruined, leaving no chance to move faster. Yet, people have to use this turtle train, because it's cheap. A trip from the market in Kutaisi home is equal to a flight between Tbilisi and Moscow or Tbilisi and Berlin that more prosperous Georgians can afford.

It is clear that Tkibuli is a railway and a life dead-end. But even if you take a train along a busy main line, looking through the train windows you will see dismantled frames of stations here and there. Stations are packed with burned or broken passenger carriages, and the overhead catenary is in places where railway communication is regular. Over the rest of the railroad it was taken down by pillagers long ago.

In a nutshell, this is one of the assets the Georgian government plans to offer to global investors on London, New-York and Warsaw stock exchanges. But devastation is half of the problem. Another glaring disadvantage is inefficient management. The Georgian Railway is not the only asset planned for sale. There are communication facilities (essentially, for transportation of mineral products) in this list. The way these companies are run is described in one word - non-transparently. Thus, a potential investor planning to buy something in Georgia will not know whether the game is worth the candle. Will it pay off and gain profit?

This is what Georgian economists say: certainly, assets will be bought. Not from considerations of economy, though. Georgia is not an island, it is in the middle of a most unstable region. And communications that go along the country have their value. This high price will be paid by those who will buy the infrastructure with political purposes.

Jondi Bagaturia, leader of Kartuli Dasi parliamentary faction is one of the most flamboyant leaders of Georgian opposition. He is categorically against the plan of the government to sell the assets. At the latest parliamentary session he delivered a protest speech emphasizing that the properties can be bought by Russia. In an interview with GeorgiaTimes he was more reserved giving convincing arguments against selling transport facilities.

"The economic situation in Georgia is extremely negative. In a situation like this, businesses leave, not come. I can give you examples of that. Even small companies feel political pressure. It is clear that transparent businesses won't come to our country. Thus who will buy our assets? Those who want that for political purposes. For instance, our gas and oil pipelines can be attractive to Armenia, Azerbaijan as well as other countries. But what will happen if we sell them? Buyers of our infrastructure will solve their political problems at the cost of our property. It's clear what consequence this can lead to", - Bagaturia says.

Bagaturia was rather mild referring to Russia here. He believes strategic facilities can't be sold to anyone - Russia, or Turkey or any other state.

It seems apprehensions that Russia will penetrate Georgia's economy are exaggerated. The practice shows that Russian companies have no problems operating in Georgia despite all current inter-state issues. Besides, if Russian companies really needed Georgia's strategic facilities, they would have bought them long ago.

Yet, Russia and other neighbors are not the problem. There are domestic reasons, as Jondi Bagaturia explains.


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