Georgia Intent to Revise BTK Project
27 December, 2012
Georgia Intent to Revise BTK Project
Tbilisi questions upcoming Baku-Tbilisi-Karsi (BTK) railway project’s economic benefits to Georgia and is intent to revise the project. New Prime Minister Bidzina Ivanishvili presumes that after BTK railway becomes operational, the active trunk railway of Georgia, connecting Caspian Sea with the Black Sea as well as Georgian ports, may lose cargo.
To find out whether or not the BTK possible benefits may offset the expected losses of Georgia and revise the contract terms in line
to Georgian interest, Ivanishvili plans to discuss the issue during his visit in Azerbaijan scheduled in coming days in Baku until New Year. Ivanishvili does not question implementation of the BTK as such, but the project terms.
“The project should be completed” he said during his briefing with Georgian media on December 24, 2012, “But terms should be revised.”
Georgian economic analysts agree with the Premier as they find decisions of previous government taking around UDSD 770 million of preferential loan from Azerbaijan to construct Georgian section of the BTK project, that cuts much bigger ice with Azerbaijan and Turkey, premature and to be corrected.
Ditrikh Muller, a co-founder of Georgian Investment Group, believes BTK undermines geopolitical importance of Georgian east-west corridor incorporating Georgian main railway line and Black Sea ports in Poti and Batumi – this entire infrastructure package is one of the core chains of TRACECA transit corridor connecting Asia with Europe through the shortest route. And Georgian ex-government had better attract loans for enhancing productive capacity of this corridor first of all the railway [with more than 2 thousand kilometer in length] running from Baku to Poti and Batumi ports rather than take a huge loan to construct its alternative route with twice less productive capacity and unclear tariff policy, and that on the top of all was strongly disapproved by western partners of Georgia the US and the EU for the BTK aimed at isolation of Armenia from regional projects.
Washington went as far as prohibited American financial institutions to participate in the BTK but the interest of Azerbaijan and Turkey, both having closed borders with Armenia due to past political conflicts, was so high in building direct overland connection detouring Armenia that they launched the project based on their own resources.
The thing is that the BTK route provides an alternative route bypassing the already existing historical railway route running from Kars to Baku through Armenian city Giumri and Tbilisi that was cut out after Turkey closed its borders to Armenia to support Azerbaijan in its territorial conflict with Armenia over Nagorno-Karabakh region. Yerevan stressed on this route’s activation when talks on BTK started as it required less investments and might facilitate to the economic integration of the countries in the region. However Azerbaijan preferred to pay political price and lay down a completely new rail bypassing Armenia that baffles the latter’s prospects to restore the existing Giumri-Kars route in a long run.
According to Muller, Turkey’s interest was even higher. It is an open secret that the north-east part of Turkey near Kars is quite underdeveloped from infrastructure and economic point of view. This region may avail a lot of the railway construction connecting with the Bosporus Strait, one of the most developed parts of the country. Besides, this on-rail route is believed to discharge the Turkish ports of Bosporus off permanent bottlenecks once the planned rail tunnel under the Bosporus Strait in Istanbul is complete.
Georgia is the only BTK participant that faces losses: its major railway loses monopolist position of the vertically integrated rail carrier in the Europe-Caucasus-Asia transport corridor and Georgia took USD 770 million to finance its rival venture. While Georgian Railway (GR) revenues account for 2.1% of Georgian GDP and the lion’s share on GR cargo transportation comes on Azerbaijan and Caspian countries.
GR productive capacity handling with 20 million tons at the moment is expected to be enhanced to 30 million tons per year by 2017 after its infrastructure will be rehabilitated and the railcar fleet enhanced. Meantime the estimated productive capacity of BTK is forecasted to reach 15 million tons of cargo and three million passengers’ transportation by 2030. But on its initial phase the BTK is supposed to transport a million passenger and 6.7 million tons of cargo. And this initial phase may last for 10 years.
On the other hand, the state owned GR has always been complaining that cannot attract due financial resources to improve GR infrastructure for enhancing GR’s productive capacity. Mullers believe that had Georgian government applied due efforts it might have easily found sufficient sources from international financial institutions like World Bank [and its group members] for enhancing GR’s productive capacity at much softer credit terms than the questioned USD 770 million designed to the BTK and refuted by the west.
“Georgia should evaluate more expensively transit of cargos through its territory, the transit price and the geopolitical benefit that Azerbaijan and Turkey will enjoy by connecting overland route through Georgia. Georgia is at loss, ports are at loss, turnover of cargos decline toward Black Sea and it comes out that we borrowed USD 770 million to construct a railway the benefit of which to us is less,” Soso Archvadze, an economic analyst told Georgian Journal.
However both Muller and Archuadze think that once BTK project is already at its final phase it should be completed by all means but by revised terms. Muller believes BTK may be profitable to Georgia eventually if the tariff policy will be properly streamlined with the GR tariffs.
“More and more cargos are expected to come from the east to west. China that became number two economic power as well as emerging Middle Asian countries like Kazakhstan and Turkmenistan are interested to send more cargos to Europe bigger part of which is transported through quite a long way onward Russia and Baltic ports at the moment. China and Asian countries seek for shorter alternative routes that obviously lay on Georgia if you look at the map, but GR cannot handle with the real cargo demand even with extended turnover capacity. The BTK may take off the extra cargos and neither GR nor Georgian ports will be at loss due to increased demand but this is possible only if equal tariffs will be fixed by GR and BTK. If BTK comes out by lower tariffs it may really affect our part of TRACECA corridor,” Muller elaborated.
As far as nobody is aware of exact contract and tariff terms, Muller finds it more than apt to negotiate the BTK project terms
Print
Other Stories
The World Digital Mining Summit to be held in Georgia
The summit is scheduled to take place between 21st-23rd September in the Hualing Hotel, Tbilisi, Georgia.
Galt and Taggart - Tourism Boom Continues in Georgia
Tourism has become one of the key drivers for the Georgian economy. Galt and Taggart has recently published research about the Georgian tourism sector in the first half of 2018.
"The worst dream for Putin is that Russians want to live in Georgia"
This year, visitors to the Adjara region would notice that there is a boom in construction in and around Batumi.
Underground gas storage facility to be built in Georgia
KfW, a German government-owned development bank signed a EUR 150 million promotional loan with the state-owned Georgian Oil and Gas Corporation (GOGC) for the construction of the first underground gas storage facility in Georgia.
New gambling rules for Georgia
Georgian lawmakers are preparing a new draft law relating to online-casinos and gambling that will seek to curb gambling addiction in Georgia.
How expensive is it to visit Georgia?
The Georgian Lari (GEL) is the official currency of Georgia and is the only legal means of payment in the entire territory of Georgia.
Trade with the EU and the Commonwealth of Independent States (CIS) has grown significantly
Trade with the EU and the CIS has grown by 26% and 33.5 % respectively, says GeoStat, the Georgian National Statistics Office.
The unemployment rate decreases in Georgia
The unemployment rate decreased in Georgia by 1,9% and amounted to 12.1% in the 2nd quarter of 2018 compared with the previous quarter,
Memorandum of Understanding to be signed between Georgia and Malaysia
According to the Georgian Ambassador to Malaysia Nikoloz Apkhazava, Georgia plans to sign a Memorandum of Understanding (MoU) with Malaysia.
“Blauenstein Georgia” due to expand in Georgia
“Blauenstein Georgia” is planning to open more shops in Georgia. It is an agriculture company that sells meat products, meat and convenience food.
The amount of Direct Foreign Investment rises in Georgia
According to the information of the National Statistics Office of Georgia, the amount of direct foreign investment in Georgia has risen
It’s going to get  harder for foreigners to get residence permit in Georgia
It’s going to get harder for foreigners to get permit of residence in Georgia.
Mziuri Park in Tbilisi to be renovated soon
It was the dream of prominent Georgian writer Nodar Dumbadze that when the original Mziuri park was constructed and opened in 1892 that it should be a park for children,
Winemakers to produce Kvanchkara in its place of origin - Racha
Khvanchakara is a semi-sweet Georgian red wine which originates from Racha, in the western part of Georgia. Kvanchkara is made of two types of grape Mujuretuli and Aleksandrouli.
The level of Georgian wine and Chacha exported has increased
The National Wine Agency of Georgia has recently published statistical information about the level of Georgian wine and Chacha exported between January and July, 2018.
New fire engines to be Manufactured in Georgia
The Acting Head of the Emergency Management Agency Shalva Khutsishvili said that the old Zili fire engines (which were made in the USSR) will be phased out and replaced with new ones, manufactured in Georgia.
Georgia witnesses a record number of tourists
The Georgian National Tourism Administration publishes statistical information about international visits to Georgia.
Canadian businessman plans to build a hotel in Bakhmaro
Canadian businessman Vadim Malishev plans to build a hotel in Bakhmaro resort, Guria, in the western part of Georgia.
Coffee Factory will open in Tbilisi in October
The first coffee factory (which will be located on the Kakheti highway) in Tbilisi will open in October.
Places in Georgia where real estate is the most expensive
The real estate market in Georgia is growing annually. In Tbilisi as well as other regions of Georgia new developments are increasingly taking place.
How much does a vacation cost in Tbilisi?
It is the middle of summer and those who have not yet taken a vacation are looking for an appropriate place for sure!
The price for extreme sports in Georgia
Georgia offers a variety of options to extreme sport lovers.
The number of Georgians who own property abroad increases
The number of foreign properties owned by Georgians is increasing.
How much does Taxi cost in Tbilisi?
Stories how Taxi drivers try to deceive passengers and charge them with more money than they should pay are known for everybody all over the world.
What are the highest paid areas in Georgia
According to the data collected by the National Statistics Office of Georgia in the first quarter of 2018 the highest paid jobs in Georgia are found in the financial and insurance fields.
PHOTO OF THE DAY
Exchange Rates
GEL Exchange Rate
Convertor
21.09.2018
22.09.2018
USD
1
USD
2.6193
2.6216
EUR
1
EUR
3.0693
3.0854
GBP
1
GBP
3.4651
3.4584
RUB
100
RUB
3.9538
3.9340
Other Stories
Recently Toyota rolled out Global Campaign under this slogan that reflects the Olympic and Paralympic Spirit of Encouragement,
A couple from Switzerland combines Swiss tradition and technology with Georgian products. Their cheese is made in the Georgian mountains and sold in local stores and hotels.
It has been more than five years since the residents of Lilo village, near Tbilisi, cannot open their windows.
63 000 GEL was received by the Georgian Agro Export Group which is just a small part of the European Neighbourhood Programme for Agricultural and Rural development.
Georgian entrepreneur Guka Tavberidze, who runs his own business in the UK and does it quite well, has been invited by BBC
The grand opening of 7-star The Biltmore Hotel Tbilisi took place in Georgia’s capital on July 31.
DUSHETI, Georgia – The Georgian government and the World Bank will allocate USD 5.6 million (12 million GEL) to fund
A new Georgian clothing brand named Person has emerged in Georgian market.
Georgia is in the midst of an economic maelstrom, Euronews reports.
Situation at Georgia’s mineral water market is interesting: over the last year, the volume of export has grown by 56 percent. According to “GeoStat”, over $114 million worth of mineral water was sold
GEL Exchange
USD
1
USD
2.6216
EUR
1
EUR
3.0854
GBP
1
GBP
3.4584
RUB
100
RUB
3.9340