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Wednesday,
August 22,
2007, #160 (1427)
The fund was set up specifically for this purchase, said Sarah Kendall, the UK-registered company's spokeswoman, speaking with the online magazine Civil Georgia on August 20. She wouldn't say who was behind the company. "Formalizing the process needs to be completed first, and then when all the formalities are done we will be revealing the investors," Kendall said. Minister of Economic Development Giorgi Arveladze was the first to announce the concession, saying on August 16 the management handover would be for an 89-year term. That was revised to 99 years in a statement from the office of Prime Minister Zurab Noghaideli. Like Arveladze, the press release emphasized that the railway would still be state property, and Parkfield Investment would be obliged to invest USD 1 billion into the railroad within the first ten years of its contract. Kendall said the new management would probably spend far more than that; the rail network could need as much as USD 3 billion in investments over the next 15 years, she predicted. Arveladze, announcing the deal, mentioned it would be the first investment in the railroad industry for Parkfield-though neglected to add it would be the first investment anywhere for the company. The new managers will in turn delegate management responsibilities to a second company, the minister said, adding that the government would have no part in the process. A ministry spokeswoman, reached the day of Arveladze's announcement, said she knew nothing about the deal. It was conducted between ministers and their deputies, she explained. No one at the Economic Development Ministry offered more information about the company which will oversee the country's rail system until 2106. The Messenger traced Parkfield Investment's backing to two private companies, Guernsey Corporate Secretaries Limited and Keystone Investments Limited, based in the Bahamas and in Cyprus, respectively. The trail stopped there. With little information and plenty of questions, observers are left scratching their heads. "I think everyone will agree this is a very weird story from top to bottom. I'd rather wait for the real investors to unmask their faces, and possibly answer a bunch of questions surrounding the deal, before I draw conclusions," economist Gia Khukhashvili told the Messenger. Khukhashvili says he'd like to know what the tariff policies will be, and what sort of control the state will hang on to. Arveladze said that under the lease agreement consumer prices can't change until 2009. For five years after that, pricing policy needs to be hashed out in tandem with the Economic Development Ministry. The prime minister's statement, however, clarified that no state consent would be needed to raise prices if they're upped to cover increased costs or to keep in line with inflation. A potential sell or lease of the state rail company had been a controversial topic since the beginning of July, when the government made it eligible for privatization by striking it off the list of strategic state assets. Opposition politician Salome Zourabichvili of Georgia's Way warns the country stands to lose big from the lease. "By leasing the railway, Georgia, as a transitional country, looses all economic leverages and serious income," Zourabichvili said on August 20. The former foreign minister said she was surprised at the choice of company, claiming it was "founded in February of last year, and its capital consists of only GBP 6 million." The Parkfield Investment in question incorporated in January, 2007, with no publicly filed reports on its assets. Zourabichvili's apparent confusion of two similarly-named companies is indicative of the uncertainty surrounding the private company. Khukhashvili, the
economist, was more optimistic. With increasing international railroad
competition, Georgia's state-run rail company wouldn't have been able
to go up against Russia's network, he said. Farming out management,
Khukhashvili predicted, would help in building up Georgia as a transit
corridor, a key priority for the current government. |
Mystery investors
get Georgian Railway for 99 years
