FROM RECOVERY TO RECOVERY

SOPHIKO SICHINAVA

Any country holding a safe place in the world market has a key that is equal to economy of the whole country. For instance, North Africa has gold and diamonds, Norway has oil, Turkmenistan has gas, Japan has technologies and Georgia has ports.

Ports are our keys that we can present before the whole world. Transport is a permanently growing share of our GDP. Transport is Georgia with its independence and safety, workplaces and settled social issues. On the other hand, investment capacity of the branch is very high holding the second place after the space. At the same time, it is not only natural wealth, but also a politicised sphere. It resembles fossil lying on the bottom that needs to be extracted and processed. First of all, this requires technical conditions, good management, safe political and optimal tax situation in the country, international integration and partner relations with foreign countries that transport cargoes, have experience and capital.
Our editorial office regularly highlights the subject of Georgian ports in all above-mentioned directions. Our foreign readers help us in this. They ask us to publish the latest materials on this subject. Besides, there are also two reasons that made us pay attention to this issue. Tender of Poti port and creation of free economic zones have become very actual issues nowadays. However, many people have no idea of the landowner country – Landesport, about what problems the port will have to settle, what state can do for this and what is the way out of the situation, what will be the possible loss of our property in case if correct measures are not taken in due time.
Yet what is going on in Poti port? What does the last decade have in store for Georgia (exclusive data for Georgian and foreign readers as well as for demagogues and populists)? Last year was especially productive for Poti port. The total freight turnover was 4,048 million tons. In 1992, 1,103 million tons were processed, in 1995-1,777 million tons and in 2001 – 3,44 million tons. In 2002 the main share of gas structure consisted of transit – 2,1 million tons (51,9%). For the last year Poti port has also had the best results in financial indicators. In 2002 its incomes totalled 40 million.
After the opening of a new ferry line – Trabson – Poti and Rise, autotruck transportations have developed more intensively. In January processing of large diameter pipes for Baku-Jeikhan pipeline has been launched. It is a quite large-scale programme that will help to increase the freight turnover of Poti port.
Great investments are made in modernisation of port. Jemal Ianishvili says, the port more and more resembles a construction site. The first oil pipage terminal with 2 million tons capacity of mineral oil per year was launched into exploitation in October last year. The total cost of the project is 32 million dollars. It is the most expensive project of the port.
Last year the seaport fleet was supplemented by two units: dredging vessel “Niko Nikoladze” and tugboat “George Vitaev”. The both vesselswere built by order of Dutch Port. The list of port successes is not confined to this. Many significant projects are planned for 2003.
Approximately 5 million tons of cargos were processed in Poti port during the USSR period. It was, mainly, black coal and marganese. After the disintegration of the Soviet Union delivery of traditional cargos was postponed. Yet the situation changed for the better in 1997. There is restructuring of Poti port in the given stage. This significant event is performed in accordance with the President’s order and it provides for long-term lease of different port terminals by means of tenders. At the same time, the port still remains state property.
Tender commission has already been formed by the President’s order. The commission has determined which terminals will be let for lease in the first place. Tender results will become known by the end of May. The port leadership is sure that restructuring will produce good results. Nowadays, only one operating company works in the port.
Jemal Inashvili:
– “Operating company must process minimum 6 thousand tons a year. If the company processes less, it will have to cover the difference. Besides, there is monetary guarantee. If the company does not meet the terms, it will face financial problems, its contract will cease, money will be withdrawn and all relations with the company will be broken. Apart from rent, there is also tonnage tax per each processed ton. Its payment is effected in accordance with regression principle: the more cargos the company processes, the less it will have to pay.
Communications – the port cares for roads, railway, repair and arrangement of hydrotechnical equipment. Besides, it supervises activities of operating company. There is another tax that comes directly from the port administration: tax on ships. The biggest problem is cargo and its processing so more people are involved in this process. After the arrival of operator, these problems will pass to the company. Operating company is obliged to provide 75% employment. The rest 25% are required in the port so they can be employed there.
If there are not any further problems, the port will be able to process much more cargos. Yet there are many risk factors: political situation and so on. We do not take this into account. The company can insure political risks if it wishes”.
Nowadays, in the whole world incomes are left in ports for further development because it costs the state mush cheaper than the scheme in accordance with which money first comes to budget and then once in 5-10 years it is spent for financing the port. Such variant is hardly imaginable in Georgian reality. Works performed in Poti port have been financed by the port itself.
Jemal Inaishvili:
– “Compared with our country, foreign countries view port not as source of income and budget, but rather as a factor promoting the development of economy in any particular region and economy of country. Port implies export and import. Port pays all taxes of the country except VAT though the latter will be added to the taxes as soon as operating company pays the rent”.
Apart from other taxes, the port also has to pay property tax. In fact, this tax is “against” investments because property tax on large investments will be certainly high. Why does not anybody raise this question? There will not be any investments unless this question is solved.
We have attracted 30 millions’ investments. Oil terminal has been built. The port has received property that will in fact bring 25% of profit from nothing.
– But you said you had to pay property tax?
The tax should be paid by investor. This, certainly, weakens interests, but it is a positive factor for us because we have received a source of additional income without investing anything. This income will help us to realise our project.
Jemal Inaishvili:
Freight turnover of each wharf depends on economy. 60-70% of our cargos are transit. For instance, Israel has three ports. The three ports process 30 million tons of dry cargo. Added to this is oil and mineral oil. The population of Israel is 5 million people. Besides, it is not a transit country. The population of Georgia is 5 million people as well. There are two ports here that process 4 million tons of dry cargo. Georgia is a transit country. However, budget of Israel is 50 billions whereas budget of Georgia is 500 million GEL.
Rustavi metallurgical factory does not function any more. It is lost for us as a customer and enterprise with export potential. Azot functions very poorly. Gruzcement functions only in the internal market. Zestaphoni factory of non-ferrous metals is also “suffocating”.
– The most important factor for the successful functioning of Georgian ports is political and economic stability in the country and in regions as a whole. Unfortunately, export and import potential is not used completely in our country. The same can be said about countries of region and Central Asia the cargos of which pass through Georgian ports. The economic development of these coutnries will contribute to the growth of Georgian ports. The same can be said about all other ports of the former Soviet Union.