EBRD Loan Revoke Gives Rise to Speculations
24 November, 2011
EBRD Loan Revoke Gives Rise to Speculations

The decision of state owned Georgian Railway LLC to continue the Tbilisi Railway Bypass Project without the EUR 100 million credit of the European Bank for Reconstruction and Development gave rise to the speculations that not the GR but the EBRD declined funding of outrageous violation of property rights in the resettlement process.   

Early in November GR announced it no longer needs the EBRD credit to fin

ance the EUR 300 million worth Tbilisi Railway Bypass Project of the construction of a new bypass to re-route rail traffic beyond Tbilisi centre to improve the efficiency and safety of rail operations as well as to solve environmental issues and release about 83 hectare of land in Georgian capital for urban renewal projects.

The project had three following funding channels: EUR 100 million of EBRD credit, internal GR resources as well as a part of sums that GR yielded through the Eurobond emission [about EUR 80 million] in July of 2010, and EUR 8.5 million through technical assistance and grants earmarked by the EU Neighbourhood Investment Fund.

GR assures that this year’s profit allows to decline the preferential EBRD credit that makes up one-third of Tbilisi bypass project financing.

“The EBRD credit was offered under very preferential terms but this year was very successful to GR that enables us to find internal sources to fund Tbilisi bypass project without the EBRD credit,” Irma Stepnadze, a Spokesperson of GR explained to Georgian Journal.

According to GR official papers, profit and total comprehensive income nearly doubled this year based on six months data compared to 2010. Six month period of 2011 makes GEL 93. 562 million while similar figure of 2010 stands at GEL 30. 558 million. However Ditrikh Muller, a market analyst with the Georgian Investment Group, doubts the GR financing is scarcely sufficient to reimburse EUR 100 million of the EBRD given under most preferential crediting terms and GR very likely would not have declined such a lucrative deal at its own discretion. He presumes that under official reasons of the EBRD credit cancelation stands the EBRD’s strong position cutting funding to GR that did not comply with the EBRD requirements.

Zakaria Kutsnashvili, Head of non-governmental Law for People, also believes not GR but the EBRD cancelled the credit deal for outrageous violation of landowners’ rights in the resettlement process.

Kutsnashvili protects interests of about 100 landowners out of more than 860 proprietors whose rights were infringed by the resettlement plan. GR have been offering trice lower than market price to landowners and implemented illegal expropriation of lands through ministration of government, police and court.

To find truth part of the offended proprietors appealed to the EBRD. The EBRD sent an independent audit to check whether land acquisition, compensation and resettlement activities carried out by GR comply with EBRD requirements that was an obligatory condition for the EBRD funding. These standards first of all include disbursement of fairly calculated compensations to the affected landowners.

“This audit has led to a number of recommendations and questions to GR,” the EBRD source informed Georgian Journal in this past July after the audit was completed, but the EBRD did not disclose details of questions and recommendations under the pretext that the audit is an internal tool.

Nina Phkhakadze, Head of Legal department at GR, assured in this past September that “the EBRD independent audit did not discover any serious infringement and that the compensations were disbursed in full compliance with the Georgian law as well as the EBRD’s environmental, social policy and resettlement requirements.” Therefore GR could appeal to the EBRD for the loan transfer any time.

However the EBRD accentuated that it did not disburse any part of the loan as “per the loan agreement such disbursements are conditional to satisfactory resolution of land acquisition issues, amongst other conditions.”

GR swears the EBRD continues partnership on supporting other priority projects with the railways. However neither the EBRD nor the GR disclose details of other priority projects at the moment.

Neither GR nor the EBRD connect the credit cancellation with the audit findings, however Georgian experts read between lines.

According to Kutsnashvili, GR went ahead with its offensive policy in spite of the recommendations made by EBRD’s audit [GR did not provide GJ with the audit finding papers as of yet] that led to cancellation of the deal. The Court declined the land expropriation claim on the one hand, on the other hand it approved the claim on lands evaluation although assigned the re-evaluation expertise to the similar company that was accused in underestimation of the questioned lands.

Kutsnashvili worries that the EBRD aquittance is a scandal and a great loss to afflicted proprietors who lost serious support in their plea for justice.

“It is a scandal that the biggest European bank that works with 45 Euro Council member-states refuses to cooperate with Georgia for it does not know how to treat people. The reason the EBRD declined financing to GR is quite clear,” he said.

“That will be a huge impact to Georgia’s credit rating and investment climate,” Muller said. “That means that Georgia will not be able to get as cheap international financing as we enjoyed before.”

Print
Other Stories
Business Positive – Successful radio program from Radio Positive
Starting point of radio program Business Positive is to meet interesting people, communicate with them and deliver information that is interesting for the audience.
A factory of electric vehicles to be built in Kutaisi
Prime Minister Mamuka Bakhtadze stated that a factory of electric vehicles will be built in Kutaisi at the presentation of the Aigroup business group.
Qvevri-shaped hotel complex to be built in Telavi
A Qvevri-shaped hotel complex is scheduled to be built in the village of Shalauri in Telavi, Kakheti (east part of Georgia).
Georgian designers presented at Fashion World Tokyo 2019
The products of 11 Georgian designers are showcased at Fashion World Tokyo 2019,
Silknet raises $200 million in Eurobond issue
27 March 2019 - JSC Silknet (“Silknet”), one of Georgia’s leading telecommunications operators, has successfully priced a debut $200 million 5-year 11% senior unsecured bonds issue (the “Notes”).
Pistachio trees will be planted in Georgia
Dozens of hectares of Pistachio are planned to be planted in Georgia this year.
Toyota Safety Sense and Hybrid Technology
Toyota Caucasus, has presented two new models the 5th generation RAV4 and the 12th generation Corolla at Rustavi International Motorpark, several days ago.
Bidzina Ivanishvili “became number one oppressor of businesses in Georgia” - ICC Georgia chairman Fady Asly
Mr. Ivanishvili promised the business community to protect them from harassment and pressure, unfortunately his words died with the sunset of that day
The best brands of Belarus will be exhibited on a large-scale exposition in Tbilisi
"The Belarusians like to come to Georgia to relax near the sea in Batumi as well as to stay in sunny Kakhetia."
Don’t treat business like a hooker! - Georgian businessman Vasil Soprpmadze addresses politicians
Businessman Vasil Sopromadze, founder of the company "Fresco", addresses politicians
RAV4 No Compromise and Corolla Set to Impress – Two New Cars Presented by Toyota
Toyota Caucasus, the company constantly aspiring to greatness, has presented two new models the 5th generation RAV4 and the 12th generation Corolla.
Mamuka Khazaradze quits TBC bank, does not sell the TBC Bank share
I made a decision to leave TBC bank where I spent 27 years of my life
10 Reasons to buy an apartment in the suburbs
There is a tendency for Tbilisi dwellers to move from central parts of the capital to the suburbs.
Georgian citizens are granted the right to work in France
The French Embassy in Georgia made remarks on granting Georgian citizens the right to work in France
The New York Times: Bitcoin declines but Georgia still bet on it
The New York Times has recently published an article about reasons, challenges and causes of generating Bitcoin in the former Soviet country Georgia.
EU to allocate € 13 billion for Eastern Partnership countries, including Georgia
The European Union together with the World Bank plans to allocate investment worth € 13 billion for infrastructure projects in the Eastern Partnership countries.
Anaklia Port and its importance for Georgia
In 2016, Anaklia Development Consortium was authorized to launch the construction of Anaklia Port.
Cryptocurrency mining threatens electrical network in Abkhazia
In the breakaway region of Akbhazia rampant cryptocurrency mining is threatening the shaky electrical network, reports an article of the news portal EuroNet.
Caucasus Wine University to be opened in Gurjaani
In the Kakheti region a new viticulture campus of the Caucasus University is in the process of planning.
Photos describing life of the poorest in Georgia
Fight with poverty should be among top priorities of every government in every country.
Training farmers to rescue the organic hazelnut production in Georgia
Even drizzling rain and unpleasant gusts of wind can’t prevent the farmers from coming and participating in the agricultural training.
Bleak times for organic farmers in Georgia – but there is hope
Organic hazelnut production is a delicate plant in Georgia that has emerged just a couple of years ago. Various pests, among them the Asian stink bug Parosana, trouble hazelnut farmers and menace their livelihood – even before their businesses could really take off.
Hybrid car imports are going through the roof in Georgia
Thanks to their fuel economy, the popularity of hybrid cars is increasing in Georgia, where fuel affordability is low and prices for fuel are unstable.
The New Year offer from MAQRO Construction - Apartments with unbelievable discounts and the parking spaces for FREE!
Location, green yard, spaces for various needs, experience of the construction company and parking space are the main important criteria for potential buyers of apartments.
Interview with the co-founder of Kiwi Vegan Café – the first vegan place in Tbilisi
Behind the Kiwi Vegan Café stands a group of activists who wants to raise Georgian’s awareness for animal rights and welfare.
PHOTO OF THE DAY
GEL Exchange Rate
Convertor
20.04.2019
21.04.2019
USD
1
USD
2.6935
2.6935
EUR
1
EUR
3.0291
3.0291
GBP
1
GBP
3.5021
3.5021
RUB
100
RUB
4.2126
4.2126
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
2.6935
EUR
1
EUR
3.0291
GBP
1
GBP
3.5021
RUB
100
RUB
4.2126
April 2019
Mon Tue Wed Thu Fri Sat Sun
1 2 3 4 5 6 7
8 9 10 11 12 13 14
15 16 17 18 19 20 21
22 23 24 25 26 27 28
29 30