State Money Unreasonably Spent on Two Airports?
23 May, 2013
State Money Unreasonably Spent on Two Airports?
Georgian authorities find unreasonable the construction of Kopitnari and Mestia airports with the state investment funds. However, some Georgian experts believe that infrastructure development falls in the state responsibility whatsoever.
The governmental report handed down to Georgian media representatives at Prime Minister Bidzina Ivanishvili’s press-conference on May 14, 2013, included the list of economically non-profitable projects implemented by the former power that be. David the Builder Kutaisi International Airport largely known as Kopitnari airport [located in west Georgia] along with
Mestia Airport [located in Svaneti highland Mestia region] is put on the list. The state spent GEL 53 million and GEL 9.2 million respectively. Giorgi Kvirikashvili, Minister of Economy, and Nodar Khaduri, Minister of Finances, find it unreasonable to spend the money from state coffer on these airports since they could have attracted private investors. According to Khaduri, private business was willing to invest in the said projects but the ex-power did not make any offer.
“There was no offer to private sector. I already have suggestions from private sector to construct airports in other regions of Georgia,” Khaduri is reported by Pirweli news agency on May 16, 2013. Kvirikashvili believes instead of 100% participation the state might make minority investments to give an impetus to business whose stake would have been higher than the state one as an aftermath. This scheme of the state and private sector partnership is approbated in developing countries. “For example Kutaisi airport is interesting [to investors] today and I believe this could be possible at an earlier phase too,” he said. Giorgi Karbelashvili, a former Deputy Minister of Economy and currently minority MP, argues there was no private business willing to invest in Kutaisi and Mestia airports as far as it was obvious that Mestia was and will always be a non-profitable venture but necessary for Mestia inhabitants and state needs; as to Kopitnari it was constructed after Russia bombed Kutaisi airport in the August war of 2008. “And who was supposed to make multi-million investments there then?” Karbelashvili wonders.
As a matter of fact, ex-power put Kopitnari airport for privatization twice offering the infrastructure for symbolic price GEL1 but no investor showed up. Even TAV Georgia operating Tbilisi and Batumi International Airports and believed to be interested in other projects to keep its monopolist position refused the offer. According to Irakli Lekvinadze, an economic analyst, the state is responsible for infrastructure development and there was nothing unreasonable with the construction of Kopitnari airport that is pretty profitable in fact as it offers cheaper flights to Europe and handles with cargo transportation. As to Mestia, it is a failure that was obvious from the very outset of the project for there is no demand for local flight destinations in regions as prices are much higher than for on-land transport and population is poor. The expectation on big tourist turn-out in Mestia did not come true.
“What was wrong with Kopitnari airport as with many other projects implemented by ex-power was that the project had started first and the money assigned to the project was allocated and reflected in the state budget later,” Lekvinadze told Georgian Journal.
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