Giving carte blanche to Inter-Rao
20 January, 2011

In quest of money Georgian government decided to divest its 24.53% of shares at Telasi, Tbilisi Electricity Distribution Network. What scares experts is that the state will finally lose control over the strategic object like Telasi and it will remain at full discretion of the Kremlin-owned Inter-Rao, which controls 75% of Telasi at the moment.  
Georgian government plans to divest 24.53% of its shares at Telasi by the end of this year, Aleko Khetaguri, Minister of Energy of Georgia, informed

on December 29, 2010. Shares are to be sold via international stock exchanges. Negotiations with Inter-Rao are close to the end and the government hopes to implement the Initial Public Offering (IPO) of its 24.53% of shares at JSC Telasi by the year’s end.
However,  Khetaguri cannot say at the moment whether or not the entire 24.53% will be sold out. Khetaguri does not rule out to break down this 24.53% in smaller portions so as to attract several petty investors at Telasi. Neither rules he out that Inter Rao itself will acquire part of the questioned state’s share at Telasi but did not elaborate how much.
Presently Inter Rao is a 75% owner of Telasi, out of the remainder 25% Georgian state owns 24.53 and the 0.47% is held by petty shareholders. The state detained 25% of shares in its ownership after privatization of Telasi when American-based AES bought the company for USD 60 million in 1998. Later the state tried to divest its shares at GSE but only 0.47% was sold as there was no special interest for the company considered to be non-profitable at that time.
However after implementing significant investments in infrastructure rehabilitation including completion of the overall individual metering process by almost 90% AES was actually forced to quit the country and hand over the company to  Inter Rao in fall of 2003 [shortly before the Rose Revolution] for USD 26 million. In addition AES paid off USD 60 million of Telasi arrears in effect paying Inter RAO USD 34 million to take Telasi off their hands.
No sooner Inter RAO undertook Telasi assets that it disbursed about a USD 600 million loan to Telasi to finance its further development. Whether or not this debt is paid off by today is not clear, the local office points to Inter Rao head-office in Moscow for an answer. Telasi kept a notorious fame of non-profitable company until 2008. Commensurately its price did not exceed GEL 1 per share and there was no investors’ rush for it, Giorgi Loladze, Director General of Georgia Stock Exchange (GSE), said.
Khetaguri wonders however why on earth the previous government detained 25% during the privatization of Telasi as far as it gives neither privilege nor a voting right to the owner. Therefore he thinks that the state had better enjoy the profit by divesture of the now remained 24.53% rather than keep it forever and never know any benefit.
The pre-Rose-Revolution government can escape responsibility for non –transparent privatization of Telasi and suspicious attempts to oust American-based AES off the country. But the truth is that by the 25% detained at Telasi government kept a right to remain in the supervisory board and keep control over the decision-making process of the company with strategic importance. According to law valid till 2009, an owner of at least 20% in the company had a guaranteed member in the supervisory board.
In the meanwhile the incumbent government aggravated rather than retrieved the mistakes of its predecessor.
In December of 2009 the current government amended the law on entrepreneurs that revoked the right of 20%-stake-holder to have its guaranteed member at supervisory board. And the privileges granted by 24.53% vanished. Looks like Khetaguri had better inquire his colleagues why on earth they amended the law in this way [that affects the entire Georgian investment climate] rather than put out rhetoric questions referring to previous authorities.
“Thanks to old law, Georgian state still has its member at Telasi supervisory board today as far as the board is elected for two years and the office-term of the current board is not expired as yet,” Ditrikh Muller, one of the founders of the Georgian Investment Group [operating at GSE], told Georgian Journal.
On the other hand, he fears that the only interested investor for Telasi shares may be Inter Rao that owns 75% and covets for full control of Telasi. This here amendment gives a carte blanche to Inter Rao that can become the single decision-maker in the company by acquiring just one more share.
Economic analysts say it is crucial for Georgia to detain its 24.53%  completely  as far as if Inter Rao acquires even one more stock above the already owned 75% Georgian state loses its  right to participate in decision-making process of the company. According to Georgian law on entrepreneurs, the owner of more than 75% stocks can draw out any decision without agreeing the issue with other  stakeholders. 
If it acquires 20% and enhances its packages of shares to 95% Inter Rao acquires a right of forceful acquisition of the remainder stocks and can become a 100% owner in the end.
On the other hand acquisition of the even entire share of 24.53% [been in the ownership of Georgian state] can attract any other investors in the not much profitable company like Telasi that went on profit just three years ago. Its profit accounted for about USD 60 million past year – not too big a sum to lure petty investors if taken into account that 75% of it belongs to one investor alone.
“No serious investor will acquire the entire 24.53% [I do not say anything of less amount] if it gives no right to participate in the company’s decision-making process. According to Georgian law, any stakeholder with at least 5% has a voting right and now “thanks to” the new amendment it comes out there is no difference between owning 5% and 20% actually, as privileges are similar. It deteriorates the investment climate of Georgia very seriously as scares petty investors off, while petty investors lay ground to attraction of bigger investors,” Muller said.
He thinks that handing full control of a strategic object like Telasi [that is of social importance] to single investor company owned by the other state is a no-no deal and no commercial profit can justify this step. The more so if this single investor is based in Russia that openly claims that the year of 2011 is the last year to conquer Georgia.

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
19.09.2018
20.09.2018
USD
1
USD
2.6188
2.6179
EUR
1
EUR
3.0593
3.0606
GBP
1
GBP
3.4414
3.4517
RUB
100
RUB
3.8673
3.9087
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
2.6179
EUR
1
EUR
3.0606
GBP
1
GBP
3.4517
RUB
100
RUB
3.9087