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
Doing business in Georgia has become easier than in America
According to the Doing Business 2019 report published by the World Bank, Georgia ranked 6th among 190 countries in terms of simplicity of doing business. This was an improvement over two ranks compared to last year.
Problems that foreigners frequently face in Georgia
The importance of Georgia as a tourism hub is growing year after year.
Tbilisi TV Broadcasting Tower – Better than the Eiffel Tower?
It is planned to renovate the Tbilisi TV Broadcasting Tower, one of the landmarks in the capital.
Georgian Fusion Menu by The Biltmore Hotel Tbilisi
5,895,914 international visitors have visited Georgia between January and August of 2018. Compared to the previous year the number has increased by 12.2 per cent.
Advertising of gambling and lucrative games may become banned in Georgia
Advertising of gambling and lucrative games may become banned in Georgia. Those who violate the new rule would be fined GEL 10 000.
Lebanese café-lounge Beirut opens in Tbilisi
What is necessary to organize an unforgettable event? – Fun, emotions, lots of surprises, good music and delicious menu.
Georgia second among the fastest growing tourist destinations in Europe
Georgia is among the fastest growing tourist destinations in Europe. The data is published by the UN World Tourism Organization.
Bitmain launches world digital mining summit in Tbilisi, Georgia
Bitmain CEO Jihan Wu and Roger Ver, CEO of Bitcoin.com Head Speaker List featuring Circle, DEX.top and Genesis Mining when Digital Mining Leaders Convene In Tbilisi on September 21-23
GAZELLE FINANCE GEORGIA AND TBC BANK HELP THE WESTERN REGIONAL CENTER OF MODERN MEDICAL TECHNOLOGIES EXPAND ACCESS TO QUALITY HEALTHCARE SERVICES IN KUTAISI, GEORGIA
TBC Bank and Gazelle Finance have teamed-up to support Medical City, a leading healthcare provider in the western region of Georgia to launch the Western Regional Center Of Modern Medical Technologies.
Equivalent to buried treasure – resources that are underused in Georgia
For 2018 the IMF Commission has forecast an annual economic growth for the Georgian economy of about 5,5%.
Does the quality of Georgian wine increase and how the export affects it
If we look at the data collected about modern Georgian wine, we will find out that the Georgian wines produced between 2015-2017 are much better in terms of their quality and Oenologic features rather than the wines produced between 2009-2011.
Japan simplifies the visa requirements for Georgian citizens
Diplomatic and economic relations between Georgia and Japan are now moving to a new phase. Recently Japan has decided to simplify the visa requirements for Georgian citizens.
M&S (Marks and Spencer) and H&M collections to be produced in Georgia
Garments manufacturer MGMTEX will start production of the M&S and H&M trendy collections from this September.
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.
PHOTO OF THE DAY
Exchange Rates
GEL Exchange Rate
Convertor
12.11.2018
13.11.2018
USD
1
USD
2.7146
2.7166
EUR
1
EUR
3.0800
3.0602
GBP
1
GBP
3.5325
3.4900
RUB
100
RUB
4.0430
4.0131
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
2.7166
EUR
1
EUR
3.0602
GBP
1
GBP
3.4900
RUB
100
RUB
4.0131
November 2018
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