GEORGIA'S PROJECT OF THE CENTURY: THE ANAKLIA DEEP SEA PORT
Anaklia Development Consortium, a venture of Georgia's TBC Holding and U.S.-based Conti Group,won the government tender for building and operating a deep sea port on the Black Sea's Anaklia resort in February. Investor.ge spoke with Kurt Conti, President and CEO of Conti International, and Levan Akhvlediani, the CEO of the Anaklia Development Consortium, about their plans.
Seven Million Tons of Cargo
Conti and TBC Holding are planning to build a port with the capacity to handle 7 million tons of cargo within three years of operation and gradually increase its capacity to at least 40 million tons in thirty years. The port's eventual final capacity should reach 100 million tons.
Anaklia Port will also fill a gap in Georgia's transit infrastructure: currently, ports in Batumi and Poti cannot handle big Panamax and post-Panamax ships. They accept only feeder vessels capable of carrying a maximum of 1,700 containers. The Anaklia Port project aims to solve this problem by providing berthing for cargo ships with a capacity of 10,000 TEU (twenty-foot equivalent units).
Transforming the Country
The project has the potential to change people's lives, noted Conti International CEO Kurt Conti.
"We realized early on that the Anaklia Deep Sea Port is positioned to spur unprecedented regional growth and improve the lives of millions of people," Conti said.
According to him, with free trade agreements between Georgia and Europe already in place and ongoing talks of a free trade agreement between Georgia and China, the Port is set to play a pivotal role in fostering greater relations for strong economic development.
"The Anaklia Deep Sea Port is going to offer new, safe routes from Asia to Europe, and our focus is on meeting the schedule for groundbreaking by the end of this calendar year and completing the first stage of the Port by 2020," he said. "In terms of the long-term perspective, there are a number of upside potentials.Anaklia will serve as a gateway port on the new Silk Road connecting Asia and Europe, and the adjacent Free Industrial Zone will create further throughput for the Port."
Levan Akhvlediani, the CEO of the Anaklia Development Consortium, (ADC) noted that there is a lot of potential that can be achieved - something that can really transform the country. "So there is not only the emotional part, but there is a business part to it, and we feel being part of it is very important," he said.
Mamuka Khazaradze, founder and president of TBC Holding, and PM Giorgi Kvirikashvili
The Chairman of TBC Bank's supervisory board, Mamuka Khazaradze, is personally responsible for attracting Conti International to the project: A 2000 alumnus of Harvard University Business School's Owner/President Management Program, he and Kurt Conti were classmates. When Khazaradze hosted a Harvard reunion in October 2013, he and Conti decided to invest in a joint project.
"When they looked at projects that were available at that time, [Anaklia Deep Sea Port] was one of the most attractive projects. That's how the idea came about," Akhvlediani said.
In the project, Conti will serve as the overall program manager, overseeing development, design, and construction of the port. The company has created preliminary conceptual designs working together with its teaming partner, Moffatt & Nichol.
"Conti has a 100-year tradition of being at the center of some of the most important and complex economic development projects, and the Anaklia Deep Sea Port is certainly one that has the potential to produce immense economic benefits for the region," Conti told Investor.ge in an e-mail interview. "We are excited to be partnering with TBC Holding as well. We believe that their on-the-ground knowledge, combined with our deep sector experience makes us the perfect team to achieve this project."
A Chinese Connection
ADC's contract with the government is a build, operate and transfer model, meaning that the consortium will get the right to use 400 hectares of land allocated for the port for 49 years. In addition, approximately 600 hectares of adjacent land will be handed over to ADC to develop a free industrial zone (FIZ).
The port has the real potential to attract foreign manufacturers to export via Georgia, noted Akhvlediani.
"Georgia signed a free trade agreement with the EU, and products produced in Georgia can be freely exported to the EU. Within the FIZ, as per Georgian law, there are tax breaks for companies operating within the zone. Therefore, that gives double incentives for international companies to come and establish their factories," he said.
ADC plans to focus primarily on assembly and processing at the FIZ. "International companies will have an opportunity to come and establish themselves there, take advantage of tax relief as well as tariff-free export to EU, and access to such a big market. That will create extra throughput for the port as well, and will be very beneficial for the country and the project as well," Akhvlediani added.
In particular, ADC is eyeing the Chinese as potential investors.
Akhvlediani noted that one of the routes for Chinese president Xi Jinping's 2013 One Belt, One Road initiative—a plan to move Chinese goods to Western markets—goes through Georgia.
"We believe Anaklia will be one of the natural gateways for cargo coming from China to Europe," he said.
The size of trading ships is growing, he noted, as are the economies of scale, which will lead to more and more demand for ports that can berth larger vessels. "I think that will be one of the main advantages we will have," he pointed out.
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