Messenger.ge, Georgia
Friday, April 1, 2005, #059 (0833)
New winner in OSCO privatization race
The Georgian government backtracked on its agreement to sell the Ocean
Shipping Company (OSCO) to Armstrong Holdings on Wednesday, announcing the
company is being sold to the British company Aquamarine Shipping Consultants
and its partners.
Speaking at Wednesday’s government session, Prime Minister Zurab Noghaideli
said the terms and conditions demanded by Armstrong Holdings were
unacceptable for the government.
“We cannot go along with such a risk,” Noghaideli said on Wednesday,
explaining that the company had offered to pay 50 percent of the total sum,
and to transfer the other 50 percent only after becoming the legal owner of
OSCO and receiving the titles for the ships.
Back in January the government announced that Armstrong Holdings
Corporation, based in Nevis in the West Indies, had won the privatization
auction with an offer worth USD 161 million for the 100-percent state owned
Ocean Shipping Company.
The government stated that USD 89 million from this sum was to go directly
to the state budget, while the other USD 72 million was to cover OSCO’s
debts to German banks.
The prime minister said on Wednesday that the government had held
negotiations with Aquamarine back in January, adding that the British
company offered USD 93 million for OSCO and will take on its outstanding
debts in a deal totaling USD 165 million.
Representatives from Aquamarine confirmed to The Messenger on Wednesday that
they had already deposited USD 9.3 million in a government bank account.
Company representative Joacim Thomson also confirmed a statement by the
Minister of Economy that through Aquamarine, the company Marine Capital is
partnering with the American firm East Wind and will create a new company
Georgian Tanker to manage OSCO.
According to Thomson, the buyer will pay the remaining USD 83.7 million by
the end of April.
Commenting on the government’s move to annul the previous contract, State
Minister for Economic Development Kakha Bendukidze warned, “Such things will
happen all the time when the conditions do not fit Georgian interests.”
Minister of Economic Development Aleksi Aleksishvili, meanwhile, stressed
that the government had not signed a contract with Armstrong Holdings and
therefore “the Georgian side did not take any responsibilities” to that
company.
Georgian bank takes first commercial loan
Bank Republic announced on Tuesday that it had concluded an agreement on a
five year, USD 4 million credit line with the international commercial bank
Commerzbank International S.A. on March 15.
Chairman of the bank’s Board of Directors Grigol Katsia said the deal “is
unprecedented in the Caucasus region – when a private foreign commercial
bank agrees to lend to a Georgian bank.” So far the Georgian banking sector
has been able to borrow money only from international donors and development
institutions.
The deal was concluded within the framework of a Credit Guarantee Fund
established by the German development bank KfW in Georgia. The Fund allows
Georgian bank to borrow on international capital markets, with the Credit
Fund acting as guarantor of 90 percent of the loan.
“This deal gives local banks the possibility to cooperate with leading
international banks,” Katsia said on Tuesday, adding that the agreement
would help Bank Republic to develop and strengthen positions in
international markets.
Manager of the Credit Guarantee Fund Birte Mörke told journalists that this
agreement would give Bank Republic access to the international capital
market.
“Bank Republic will in turn use this loan to offer loans to small and medium
enterprises in Georgia,” she told The Messenger, while Chairman of the Bank
Republic Supervisory Board Lasha Papashvili added that the agreement could
lead to the creation of jobs in Georgia.
Frankfurt-based Commerzbank is one of the world’s 20 largest banks and is
one of the leaders in Eastern Europe and Central Asia.
The Credit Guarantee Fund has also partnered with Bank of Georgia as well as
with three banks in Armenia. The same type of project is soon to be launched
in Azerbaijan.
World Bank sees “improvements” in government
In Georgia from February 28-March 16, a World Bank mission led by Su Yong
Song, Senior Economist, said it had “noted improvements” under the post
revolution government and has started to prepare for the first Poverty
Reduction Support Credit (PRSC) with Georgia.
The mission met senior government officials and held consultations with
donor organizations and representatives of civil society.
“As a result of intensive discussions with the government and other
stakeholders, significant progress has been made in firming up the PRSC
program, and agreement has been reached on key policy actions,” the World
Bank office in Georgia stated in a press release distributed on Friday.
The Bank says the PRSC will support (1) enhancing public sector
accountability, efficiency and transparency; (2) improving electricity and
gas sector services; (3) improving the environment for private sector
development; and (4) improving social protection and services. The Bank also
noted that there have been extensive discussions about the education sector.
According to the Bank, the mission “noted improvements since the new
government came to office after the Rose Revolution and looks forward to
providing assistance in order to sustain encouraging results attained in
major areas during 2004.”