What do new Georgian authorities want from SOCAR?

Georgian Ministry of Economy does not rule out possibility of revision of contracts with Russian Inter RAO EC and SOCAR, Minister Georgii Kvirikashvili said in his interview to Mzera TV channel yesterday.

He said the contracts concluded with the investors should be transparent. He added that the effective agreements with the above-mentioned companies will be revised. Kvirikashvili believes that the investor cannot derive profit during five years.

"The investors should not violate rights of the consumers," said Georgian Minister of Economy, Kvirikashvili believes that revision of contracts with the investors will not affect the investment environment.

"We are not going to evict any of the investors. We would like to make fair demands. The fact that a Georgian citizen and a citizen of a developed country pay the same rate is absolutely unfair," Minister added.

While commenting on the new government's coming to power in Georgia, Rovnag Abdullayev, SOCAR President, said that "regardless of the place of its operation outside of Azerbaijan SOCAR always adheres to all the items of the concluded contracts. Abdullayev said that SOCAR considers Georgia a strategic market. "Our investments come from the strategic interests of Azerbaijan, which are supported by the political and economic ties between the two countries," SOCAR President said.

Abdullayev also said that SOCAR signs all international contracts in line with the British legislation. Any possible disputes will be solved by the international arbitrage. "Our countries have also signed the intergovernmental agreement on protection of investments," added SOCAR President.

Why does "new Georgian government" make such public statements? Doesn't it know what SOCAR and Azerbaijan mean for Georgia's economy? They are well aware of all these facts. They also know importance of Azerbaijani energy projects for the West, cost of all the projects and that delay of these projects will affect Georgia's political like. However, Mikhail Saakashvili's coming to power has also delayed construction of the Baku-Tbilisi-Ceyhan oil pipeline and BTC Co company had to bear extra expenses for social and environmental projects.

Right now Ivanishvili's government wants people to feel their work, reduce prices for gas, power and fuel as soon as possible. It is possible to do that, but they will need "tax holidays" in other projects. Otherwise, $700 million invested by SOCAR into construction of a carbamide plant in Georgia will be delayed till improvement of business climate.

* SOCAR started operating at the Georgian market since 2007. Till January 1, 2012 SOCAR's investments totaled $510 million. At present almost 70% of Georgian gas market and one third of fuel market are dependent on Azerbaijan. SOCAR Energy Georgia is the biggest tax payer in Georgia for three years running.-0-