Georgian Railway the Last State Giant, Business for Sale!
FROM THE REDACTION
Privatization in Georgia has taken place through several stages since 1998 to date. At the first stage, still during the period of Soviet Union ‘keeping’ property of certain joint enterprises and cooperatives took place.
It was the same as the part of state property of Georgian railway, or instrumental factory on Treseteli ave., that now belongs to Beso Jugeli, or Tofadze’s brewery was assigned to several persons, directors and they owned it with the right of long term lease and management.
The next, second stage 1992-1993 due to these persons lobbing Shevardnadze’s government adopted a law – selling a property (transferring ownership) to a group of people/ collective through privatization (no one know the reason even now, in the reality the property was sold to directorate – people who has kept the property by the end of communist era; for instance Chkhonia kept lemonade factory). It was a direct privatization method and any strategic object did not participate in it. Buying property was permitted both by money and so called Turkmenistan assets – /Georgia paid USD 350 per 1000 KMB gas.
The third stage of privatization was Voucher privatization, shares of ownership distributed to all citizens. It was quite fair as it was equally distributed and everyone had a chanse to participate in priovatisation. Mainly small and medium buniness sectors, serivce and commerce were sold here too. The fourht stage started from 1997 with selling big industries like Zestafoni, transferring ownership rights of hydro-electric power stations, Azoti chemical plant, Madneuli etc. the fifth stage started in 2004 and ends in 2008 – tenders, auctions with the participation of foreign capital, although it somehow participated even before.
The end of five stage epopee is a serious accord – Georgian Railway! Georgian and foreign specialists have been discussing the issue of forming large state industries as Joint Stock Companies. They have come to an agreement that these shares should quote on stock exchange in Georgia as well as in Eastern Europe – Poland, Prague stock exchanges, that the process should be transferable and not corrupted, fair and useful for the country. Governments passed by Georgian Railway, it still remained to be Ltd and corrupted agreements’ body. Today the non-transferable sale collapse of Railway became evident. Once the representatives of the World Bank and our other international partners spoke about it quietly, today they state that George Arveladze made a serious mistake when he sold the Georgian Railway to Parkfield Investment Ltd for 89 years and following serious international resonance returned it back. Maybe he wanted to re-sell it to a rich Georgian, but when the case was given away and spread, it just didn’t work. Still, we, economists would like to know more about the system, not the person. It doesn’t really matter who is to blame. The system is something that rally matters, that is not well organized.
The issue of selling Georgian railway is still active today. Will Russia consider Railway enough to leave Georgia? If it is content with it, I am absolutely ready to assist the deal! But Russia is not content with it. It wants right of managing all pipelines here, the way that leads to the last goal- reaching the world’s energetic hegemony. It is going to be another ‘petting’ followed by showing claws in order to annex Georgia by means of obvious or invisible sources. Russia will be ready for managing elite loyalty, but never ready for an independent Georgia. Someone may find it quite rhetorical or even pathetic, point to neighboring Armenia that gives its Railway to Russia according to Russian information agencies for USD 570 million for 30 years, forever; but no one needs that railway except for Armenia itself. Russia promises to open it one day on Azerbaijan and Iran roads, although for the coming 39 years it is impossible. Therefore, Armenia has nothing to lose.
Its not so important in Georgia that Russia is the owner of the Railway directly through companies registered in England and Switzerland. What really matters is, that the form is still non-transferable. we believe that we should invite international investment companies like Merrill lynch and prepare Railway for selling: change it into a JSC, change management, pack it and then prepare it for IPO. I can’t see the necessity of selling it in two or ten month. The process itself should be excellent. Railway for Georgia is a non-fiscal value; it’s a part of international integration.
As for Russia, Kazakhstan oil is the main part of 23-25 million tones of annual load transported by railway. Besides, Azerbaijan State Oil Company SOKAR purchased Khulevi Oil terminal (Poti) it will need reservoir of 350 thousand tones to load its terminal. As Russia buys railway, resistance between Batumi Kazakh direction and Azerbaijan side will take place.
Experts believe, Russian business structures will purchase railway. It is going to be a political step. That’s what opinions are. Let’s wait and see what the West and the US position are.