№768May 30 – June 5, 2011

PARTNERSHIP FUND IS FORMED IN GEORGIA

GUAM WORKING GROUP ON CONCEPTION OF TRANSPORT CORRIDOR DEVELOPMENT

CHAMBER OF CONTROL OF GEORGIA POINTS TO UNEVEN DISTRIBUTION OF STATE BUDGET OF 2010

MOST OF ALL GEORGIA EXPORTS ITS PRODUCE TO AZERBAIJAN

GEORGIA AND TURKEY SIMPLIFY RULES OF BORDER CROSSING

RAILWAY X-RAY SCANNER IS INSTALLED IN POTI

ENTREPRENEURS TO GET OPPORTUNITY FOR DELAY IN PAYING TAXES

2% OF UNREGISTERED COMMODITY NOT TO BE FINED BY TAXATION SERVICE

DELAY IN PRESENTING INCOMER DECLARATION NOT TO BE FINNED

GEORGIA INVITES ARMENIAN BUSINESS PEOPLE TO COOPERATE IN SAMTSKHE-JAVAKHETI

REHABILITATION OF SAIRME RESORT INFRASTRUCTURE GOES ON

RUSSIAN HOLDING NOVAPORT TO BECOME MANAGING COMPANY OR EVEN CO-OWNER OF SOKHUMI AIRPORT

FROM JUNE 1 ADDITIONAL REGULATIONS ON PROTECTING CLIENTS START OPERATION

PROCREDIT BANK SIMPLIFIES AGRO-CREDIT RECEIVING

BANK OF GEORGIA SUGGESTS COMPANIES NEW TERMS OF BUSINESS-CREDITS

BANK OF GEORGIA GETS AMERICAN EXPRESS AWARD

GEORGIA STARTS EXPORT OF ELECTRICITY TO EUROPE FOR FIRST TIME

NORWEGIAN COMPANY CLEAN ENERGY INVEST TO BUILD HPP IN GEORGIA

SATELLITES DISCOVERED OIL NEAR GEORGIAN BLACK SEA COAST

EU CONSIDERS INCONSEQUENT STRATEGY OF AGRICULTURE DEVELOPMENT OF GEORGIA

BILBERRY GROWING STARTS IN WEST GEORGIA

DIRECT AIR COMMUNICATION BETWEEN ANAKARA AND BATUMI

REGULAR FLIGHTS START BETWEEN TBILISI AND ALMATY

GPS TABLES APPEAR AT BUS STOPS IN TBILISI

FROM JUNE 4 TELEPHONE NETWORK OF GEORGIA MOVES TO NEW SYSTEM OF NUMBERING

IRANIAN INVESTORS ARE INTERESTED IN FORMER STUDENTS CITY LOCATED IN VAKE DISTRICT OF TBILISI

QATAR COMPANY MAWASHI TO INVEST INTO GEORGIA

UKRAINIAN BEER OF “SARMAT” AND “SARMAT ZHIGULEVSKOE” BRANDS APPEARS AT GEORGIAN MARKET

BIG CAR SELLING CENTRE – “CAUCASIAN AUTOCENTER” OPENS IN RUSTAVI

GEORGIAN INSURANCE COMPANIES IN 2010 RECEIVED AWARDS FOR THE SUM OVER GEL 300 MILLION

NEXT YEAR UP TO 150 NEW CLINICS AND HOSPITALS TO OPEN IN GEORGIA

GEORGIA TOUGHENS LEGISLATION ON GAMBLING BUSINESS

GEORGIA INTRODUCES NEW REGULATIONS FOR USE OF FORESTS

AZERBAIJAN, GEORGIA, ROMANIA AND HUNGARY EXPRESS FULL SUPPORT TO GAS PROJECT AGRI

GOVERNMENT

PARTNERSHIP FUND IS FORMED IN GEORGIA

In the words of Prime Minister Nika Gilauri, the Partnership Fund will encourage the private sector and will finance bug investment projects. “In compliance with the recently adopted law “On Partnership Fund”, the government should found a council, the members of which will be Ministers of economic profile”, mentioned the Premier.

“Main function of the fund is to implement big energy and not only energy projects, which the private sector cannot fulfill independently, but which are very important for stabilization in the country, economic advance and growth of export’, mentioned Mr. Gilauri.

In his words, the talk is on construction of very big hydro-power type. ‘We want the fund to start work in the near future and within the nearest years to see involvement of the private sector into economy. Our aim is considerable growth of economic activity in the country through this fund, also promotion to export”, said Mr. Gilauri.

COOPERATION

GUAM WORKING GROUP ON CONCEPTION OF TRANSPORT CORRIDOR DEVELOPMENT

GUAM working group on transport recommended to adopt the agreed variant of the “Conception on GUAM transport corridor development” at the level of heads responsible to transport development in state organizations, is said in the May 31 GUAM press-release.

The health session of the working group, which was also participated by the representatives of International Road and Transport Union (IRU) in the Eurasian region and GUAM secretariat was held on 30-31 May in Kiev and chaired by the Azerbaijan side.

On the results of discussion the session participants decided to recommend taking into consideration IRU information in regard to the project “Model “Motorway Initiative” and to continue discussion with the aim of search for the ways to its implementation. IRU initiative “Model Motorway’ is directed ay use of best modern technologies at border crossings and UN Conventions, which mitigate foreign trade and motor transport functioning, and foresees development of road infrastructure at separate strategically important sections of ancient Silk Road. The present initiative concentrates attention on promotion to trade and eradication of administrative barriers in the border crossing points, which face 40% of losses in time during transportation. It demands support and joint efforts of international establishments, to be fulfilled within state-private partnership as next practical step of IRU on importance of Eurasian transport communications.

At the session, the participants, in particular, exchanged information on observation of the protocol of the 6th session of the working group, discussed the project “Conception of GUAM transport corridor development” considering proposals of the Ukrainian side.

On the session results the protocol was signed. The participants agreed to hold a regular session of the working group in second half of 2011. The date and place will be agreed on diplomatic channels.

FINANCE

CHAMBER OF CONTROL OF GEORGIA POINTS TO UNEVEN DISTRIBUTION OF STATE BUDGET OF 2010

They say in Chamber of Control that on the results of studying the “Report on 2010 state budget fulfillment” it was disclosed that maximum expenditures from the budget were fixed in the second half of the year, and only last December they made up GEL 584 million.

The report says that new obligations shouldered by the government in the end of the year, appearance of unplanned reserves and expenditures, which were not planned in the beginning of the year led to growth of money supply in the country. Chamber of Control proves that such actions of the government are negatively reflected on the growth of inflation and budget deficit and point to the need of adopting the new solutions in the state budget management.

ECONOMY

MOST OF ALL GEORGIA EXPORTS ITS PRODUCE TO AZERBAIJAN

By the data of the Georgian National Statistic Service Geostat the volumes of export to Azerbaijan in January – April 2011 made up $96 million, i.e. $31 million more than the indicator of last year analogous period. Nevertheless, Azerbaijan occupies the third place two months in succession (from March 2011) in the list of biggest trade partners of Georgia. Import of Azerbaijanian produce to Georgia in January-April made up $178 million, i.e. $52 million exceeds the indicator of January-April 2010.

Second place is occupied by Ukraine, which is after Azerbaijan in export of Georgian produce ($40 million), but is ahead on import of its produce to Georgia ($245 million). A total volume of foreign trade turnover of Georgia with Ukraine, com pared with the analogous indicator of last year, increased by $105 million and reached $285 million.

The first among the biggest trade partners of Georgia is occupied by Turkey with the volume of foreign trade of $404 million. It is $107 million exceeds the indicator of 2010 analogous period. Export of Georgian produce to Turkey reduced by $2 million ($74 million, and import increased by $109 million ($330 million).

Foreign trade of Georgia in January-April 2011 made up $2,571 million, i.e. 37% more than the indicator of last year analogous period. Export increased by 40% ($656 million), import – 37% ($1,915 million).

CUSTOMS

GEORGIA AND TURKEY SIMPLIFY RULES OF BORDER CROSSING

On May 31 President of Georgia Mikheil Saakashivli says at an official opening of renewed customs checkpoint Sarpi that the citizens of Georgia and Turkey can cross the Georgian-Turkish border with intrastate identification cards without the need of presenting foreign passport.

“I want to congratulate because the citizens of Georgia and Turkey can cross the border without foreign passports, as I promised a year ago. The drivers won’t have to leave the cars, they will cross the border after presenting identification cards, as it is done in Switzerland and many other countries. All this is an example of what the relations should be like between two civilized European states”, says Mr. Saakashvili.

RAILWAY X-RAY SCANNER IS INSTALLED IN POTI

The railway X-ray scanner, produce of the Chinese company NUCTECH, is installed in Poti at the railway junction. It will enable the customs officers to check all the coming freights without opening the containers. The system was installed by $30 million grant, allocated by the Chinese government.

In the words of Kakha Baindurashivli, Minister of Finances of Georgia, such modern form of control is one more step towards protecting of economic borders of the country. He says, “the system will provide secure and quick movement of freights on the territory of Georgia”. X-ray scanner will work 24 hours a day.

TAXES

ENTREPRENEURS TO GET OPPORTUNITY FOR DELAY IN PAYING TAXES

In compliance with the changes into the Tax Code soon the entrepreneurs will be given a chance to delay tax payment, but for this they have to pay certain sum. According to the draft law, tax agreement can be formed from next taxation period and with the aim of delay in payment of taxes. In this case, delay can be conducted up to 3 years with payment of annual 4%.

If the term of delay exceeds 3 years, annual rate of interest is determined by the Prime Minister on concrete agreement, but it should be lower than 4%.

However, head of incomes service also can now refuse the tax agreement. By the acting norm, a taxpayer appeals to the incomes service with the application to conclude a tax agreement, and the incomes service, in its turn, sends it, supplied with accompanying documents to Minister of Finance for presenting it to discussion of the government.

2% OF UNREGISTERED COMMODITY NOT TO BE FINED BY TAXATION SERVICE

It is planned to introduce new amendments into Tax Code. According to them amnesty will be declared on definite volume of produce and an entrepreneur won’t be fined taxation bodies. Thus, in the words of Gia Khuroshvili, government parliamentary secretary, if unregistered commodity doesn’t exceed 2% of the registered volume, then Taxation Service will pardon the present violation by an entrepreneur.

“In regard to unregistered produce the entrepreneurs have arguments that they had not enough time to register or the produce has just been brought in. In some cases, it’s necessary to think whether this argument is true, or an entrepreneurs wants to avoid taxes. That’s why we introduce regulation, according to which we won’t use sanction of the volume of unregistered produce doesn’t exceed 2% of the registered commodity of the same definition. If in case of checking it is disclosed that an entrepreneurs has bought raw material and he has registered 98% of it, then 2% will be pardoned for him”, mentions Mr. Khuroshvili. In his words this can be considered technical mistake.

DELAY IN PRESENTING INCOMER DECLARATION NOT TO BE FINNED

His is foreseen in the amendments to Tax Code, adopted by the parliamentary committees in the first hearing. According to the draft law, the amount of some fines will be also reduced, which were foreseen fro some activities. For example, a person who rents a flat and is obliged to present income declaration till the end of the year, after the amendments are introduced he can exceed the term and he won’t be fined. In case of having unregistered goods, the fine will be twice lower and in case of announced price discount on produce, the amount of tax will also be lowered.

Up to 40 such amendments are planned to be introduced into Tax Code, which will make it more liberal and convention for natural and legal entities.

REGIONS

GEORGIA INVITES ARMENIAN BUSINESS PEOPLE TO COOPERATE IN SAMTSKHE-JAVAKHETI

This was stated by Ambassador Extraordinary and Plenipotentiary of Georgia to Armenia Tengiz Sharmanashvili on May 30. “A month ago Tbilisi hosted a business forum devoted to discussing ways to develop Javakheti. Over 40 business people expressed wish to take part in the project”, he said, adding that all the proposals of the Armenian business people will be considered.

According to him, the program’s focus is on developing local tourism industry through construction of winter resorts. “I hope that very soon a large construction will kick off in Javakheti and Armenian business people and investors will take part in the project realization”, the Ambassador said.

He also said that the government of Georgia is determined to resolve the problems of the Armenian population. “We understand that the biggest problem is lack of jobs and infrastructute development can provide jobs”, stressed Mr. Sharmanashvili.

As an example of successful cooperation he cited construction of a brewery in the region’s capital Akhalkalaki by Armenian and American business people of Armenian origin, which has created 400 jobs.

As Mr. Sharmanashvili said, Georgian business persons also want to invest in Javakheti. “But to attract both Armenian and Georgian investors it is necessary to create favorable conditions for doing business in the region”, stressed the head of the Georgian embassy in Yerevan. In this regard, it is not excluded that in the near future Javakheti can become a free economic zone. “This cannot be ruled out, and I think that Javakheti free economic zone will stimulate the region’s development”, concluded the diplomat.

According to the ambassador, the overall situation in the majority of Georgian provinces, especially in mountainous regions is poorer than in sea resorts, which is all over the country.

REHABILITATION OF SAIRME RESORT INFRASTRUCTURE GOES ON

The project is being implemented by municipal development fund of the Ministry of Infrastructure and Regional Development with financial support of the WB and the government of Georgia. It is planned to rehabilitate a motorway by the resort session in Sairme, also three passenger and two motorway bridges. Concrete fortifying walls are being built on both banks of the river Tsabolara. Street lighting of the European design are being installed, and special lamps will be put on bridges and in public gardens. Special touristic signs will be put of German produce in the public gardens, and on the roads – road signs. Paths and recreation zones will ne arranged in the public gardens as well.

Rehabilitation of sewerage and water supply systems is also ongoing. New filter station is being built and 500 meter reservoir. Such station was not in Sairme before and the local population and tourists had to use unfiltered water.

The German specialist designated thermal baths and their upgrading has already started. 25% of thermal medicinal baths resources will be mastered this year already. In 2012 50% of such baths will start functioning, and in 2013 the thermal baths will start work at full capacity.

RUSSIAN HOLDING NOVAPORT TO BECOME MANAGING COMPANY OR EVEN CO-OWNER OF SOKHUMI AIRPORT

Russian and Abkhazian officials intensively discuss the issues of granting the Sokhumi airport the status of a reserve airport during 2014 Olympiad is Sochi. By some information, the issue of mobilizing investments into Sokhumi airport was discussed by the representatives of de-facto Ministry of Economy of Abkhazia and Ministry of Transport of Russia on May 30 in Moscow. Main claimant to the Sokhumi airport management is the Russian holding Novaport of Roman Trotsenko, who will probably get a share in the Sokhumi airport complex as well. Now share in the Sokhumi airport complex as well. Now the only Russian airport company, which has projects abroad is Basel Aero (the owner Oleg Deripaska), a owner of the Kharkov airport.

The amount of this share has not been specified yet, because a final decision has not been adopted yet and will demand on the volume of investments. The Russian specialists consider the Sokhumi airport demands serious reconstruction, and the resources for conducting the construction works will be mobilized through the credits of the Russian state banks.

Participation in the Sokhumi airport reconstruction project was offered to all the biggest Russian airport companies. However, practically all of them refused because they consider it too risky to invest into the airport of non-recognized republic. “The political aspect attracts Roman Trotsenko. For him it is an image project, strengthening of relations in necessary circles”, say the source close to him.

In the experts words, billion roubles will be required for full – scale reconstruction, in result of which the Sokhumi airport will satisfy the status of a reserve airport within the Sochi Olympiad. These are expenses for purchase of light-signal equipment and terminals reconstruction. By the Abkhazian legislation a private company cannot own take off-landing strip and land within the airport (the same rubles act in Russia), but a legal entity (among them with the participation of foreign capital) can own the terminal. Elena Guryanova, head of public relations department in Transstroy (reconstructed the airport in Gelenjik, says the project will cost Novaport more than 3.5 billion rubles.

Chairman of additional board of the journal “Aviatransport Review” Alexei Komarov says that from the geographical viewpoint Sokhumi is really optimal as a reserve airport for the Sochi Olympiad of 2014: it is the nearest to Sochi. “But this, probably, is the only plus”, says the expert. There are far more minuses in this issue. Thus, the Russian investors will have to invest not only into the aerostation, but also intro high – speed motorway connecting Sochi and Sokhumi. Mr. Komarov also mentions the problems may appear with the visa regime for foreign citizens, arriving to Russia for the Olympiad through Sokhumi. “The border between Russia and Abkhazia is semi – transparent, but still it exists”, the expert says. In his words,

the airports in Anapa, Gelenjik and Krasnodar, though are far from Sochi but have all the required infrastructure.

Majority of foreign sportsmen and fans won’t wish to cross the Russian border on the river Psou, as in this case it is a gross violation of the Georgian legislation and in case they’ll want to visit Georgia after that, they will risk to be imprisoned or fiend with much honey.

BANKS

FROM JUNE 1 ADDITIONAL REGULATIONS ON PROTECTING CLIENTS START OPERATION

Giorgi Kadagidze, National Bank president, says that a new rule is in effect from June 1, which will maximum regulate the relations of commercial banks with clients. Thus, commercial banks were obliged to deliver clients full information on banking services. The rule concerns all the contracts to be concluded from 1 June, when the credit sum exceeds GEL 300 and is less than GEL 50,000, also all the deposit contracts, the first payment on which is less than GEL 50,000.

Mr. Kadagidze says the banks are obliged to point in the contract all the financial expenses, connected with credits or deposits, real rate of interest, information on currency risks, terms of contract change, etc.

“Very often the credit product, in addition to expenses on application, is connected with other expenses a swell, which exceed the final cost. Sometimes a client is not delivered this information. From now on the banks have to deliver the client the information about all this, which will enable a consumer to compare the products and to choose those acceptable for him/her”, mentions Mr. Kadagidze.

He also points that in case of the items is violated by banks or a client is not satisfied with his/her claims to the bank orally, in writing or by e-mail. The bank is obliged to answer the client within the fixed terms. But if the consumer is not satisfied with the response, he/she can appeal to the NB department of clients’ rights protection. Of after relevant study, violation is disclosed on the part of a commercial bank, the later will be punished.

PROCREDIT BANK SIMPLIFIES AGRO-CREDIT RECEIVING

ProCredit Bank suggests simplified procedure fro receiving the credits to clients, engaged in agro sphere, especially, for businessmen, engaged in cattle-breeding and nuts production. These clients can use simplified procedures and get credits quickly, is said in the ProCredit Bank press- release.

“As agricultural sector is a very important sector of the economy in Georgia, ProCredit Bank, as a development-oriented bank, has always focused on financing agro businesses. Georgia has a good potential in developing its agricultural sector, due to favorable climatic and soil conditions. The bank is contributing to the development of the sector, as the development of agriculture will lead to the growth of local production and creation of

employment opportunities for the rural population”, is said in the ProCredit Bank's message extended on June, 2.

It is mentioned also, to further facilitate the growth of agro businesses, ProCredit Bank continues to provide loans both for working capital and fixed assets and offers seasonal and flexible repayment schedules, which are of key importance to the agricultural businesses.

“ProCredit Bank is one of the leading banks in Georgia, the “house bank” for small and medium-sized enterprises, offering a full range of banking services to legal entities and private individuals. The bank was established in 1999 and has 58 branches throughout the country”, is said in the message.

BANK OF GEORGIA SUGGESTS COMPANIES NEW TERMS OF BUSINESS-CREDITS

On May 30 Giorgi Chiladze, Deputy CEO of the bank, said at the press-conference that “the company, which though August 31 in the amount of up to $500,000, won’t have to pay 3-month interest payment, which will enable entrepreneurs to direct spared sum to expand their business.

In Mr. Chiladze’s words, all legal entities can use the credit, who want to get main financial resources, to buy real estate and to conduct repair works.

“The client, who already owns business, can finance his/her consumer goals, current expenses. The sum of business-credit is determined from $1,000 to $500,000. Credit can be used also in lari and euro”, mentioned Mr. Chiladze.

He also informs that in addition to special proposal on business-credit Bank of Georgia suggests small and medium – sized business owners a new credit product – revolver overdraft, which foresees light, only considering turnover existing in the bank, determination of a single limit for the company. Revolver overdraft can be used by private entrepreneurs and legal entities. The overdraft term is up to 2 months, and the sum is from GEL 5,000 up to GEL 40,000.

BANK OF GEORGIA GETS AMERICAN EXPRESS AWARD

Bank of Georgia, within marketing award of American Express Global Network Services, won in the nomination “Best Program of Loyalty and Inclusion” for the program Membership Rewards. Bank of Georgia was also mentioned in the nomination “Best Issue of New Card” for Blue Card American Express.

Nominees of American Express are named annually among 129 banking institutions of 131 countries.

POWER ENGINEERING

GEORGIA STARTS EXPORT OF ELECTRICITY TO EUROPE FOR FIRST TIME

The first European country, which started to receive Georgian electricity is Serbia. Export of electricity is conducted through the territory of Turkey. Several European countries are also wish to buy electricity. Electricity, already sold to East Europe, makes up 38 MWt. They say in the government about increase of this amount soon.

“Georgia plays an important role in development of European energy policy, and it has been already fixed now – Georgia is electricity exporter to EU”, said Prime Minister of Georgia NIka Gilauri. In his words, it will attach additional function to Georgia, as the country has real potential to become a part of system of energy supply to Europe. Mr. Gilauri considers Georgia thus can move to absolutely another stage in relations with Europe, which is of great importance for Georgia not only in economic, but also in political sense.

“This will attach Georgia additional function because the country possesses potential to be energy partner of Europe. EU Energy Commissar Otinger named Georgia one of the energy resources of Europe, as it’s of great importance for EU now from where it can get clean electricity and where it can reserve hydro-energy. In this plane, EU discusses four countries: Spain – for West Europe, Switzerland – for Central, Norway – for South Europe and Georgia – For East”, mentioned Mr. Gilauri.

NORWEGIAN COMPANY CLEAN ENERGY INVEST TO BUILD HPP IN GEORGIA

By the information of the Ministry of Economy and Sustainable Development of Georgia, the agreement between the company and the government will be concluded on June 9. But before that the project details were specified in Oslo, where the Georgian-Norwegian business-forum was held. In particular, it was announced that to build hydro-power plant on the river Acharistkali, Clean Energy Invest will invest $314.3 million.

According to the memorandum, signed with clean Energy Invest, Executive chairman of the Board of the company Bard Mikkelsen plans to visit Georgia, namely, Adjara in June to sign several agreements.

In the words of clean Energy Invest representatives, Georgia, like Norway, is a reformer country with the greatest prospects and is very attractive from the viewpoint of making investments into it.

The Oslo forum was attended by up to 60 Norwegian companies. Magnhild Meltveit Kleppa, Minster of Transport and Communications of Norway announced at the forum that Georgia-Norway relations kept deepening and mentioned that the Norwegian companies already expressed interest in energy sector of Georgia. In his words, this cooperation is important for both countries.

GBW note: It is mentioned on Clean Energy Invest site that its founders are “some most respected persons in Scandinavian electric energy sector”. The company plans to invest the capital to develop the projects of hydroelectric energy in the countries with vital energy structure and unused energy potential. At the initial stage of the activities the company will focus on Georgia.

OIL

SATELLITES DISCOVERED OIL NEAR GEORGIAN BLACK SEA COAST

According to the Engineering Technology Center SKANEKS (Russia), which was spread on June 2, within the frames of monitoring of oil pollution of the Black Sea was discovered a natural source of oil in the southeastern part of the Sea city Poti. It is reported that the source has been identified on the basis of images made by different satellites of Institute of Oceanology after P.P. Shirshov together with SKANEKS specialists.

The analysis of radar-tracking images (RTI) has allowed establishing connection of natural displays of the oil observed on a surface of the sea, with processes of formation and migration of petrohydrocarbons in a sedimentary complex of a southeast part of the Black sea. On the basis of the analysis of the stains which have been found on 16 different RTIs, received during 1993-2011 in web cartographical appendix GeoMixer position of a source has been defined at the bottom of the sea. The source is located at coordinates 41º58'59''N and 41º07'30''E at a depth of 1,050 meters and works with the periodicity of 0.3-5 hours. The first significant observation of the griffin from space with Space Radar was held in December 1993.

According to specialists, the unloading of petroleum reservoir in the southeastern part of the Black Sea only from this source can provide a supply of an average of 1 to 8 tons per day or from 400 to 3,000 tons per year. The highest possible amount of natural oil discharges from the bowels of this place according to the Space Radar could reach 7 thousand tons of oil a year.

Detailed bathymetric data showed that at this point at the bottom there is a positive form of relief of Pechora, which obviously is a source of oil discharges. This is confirmed by data from independent geophysical studies IFM-GEOMAR (Kiel, Germany) together with Russian specialists. Besides, the radar in the area revealed a number of small spots, confined to secondary structures, suggesting the presence of a number of other natural sources of oil. They are also of interest and require further research.

Using several radar pictures can significantly help finding natural sources of oil in the sea. For analysis and research of natural oil, which has been found while using radar images, in particular, GIS approach has been used. With the use of GIS natural sources of oil have been

found in the Caspian Sea, on the northeast shelf of Sakhalin Island and in Lake Baikal, the report said.

AGRICULTURE

EU CONSIDERS INCONSEQUENT STRATEGY OF AGRICULTURE DEVELOPMENT OF GEORGIA

It is said in the report for 2010 on fulfillment of the plan of activities by Georgia, which was elaborated within the European policy of neighborhood that last year the volume of agricultural produce kept reducing in Georgia. EU names the factors causing this to be lack of consistent sectoral policy, limited accessibility of bank credits, outdated technique, etc.

“The government has not adopted any important measure to make crediting more available for farmers”, is mentioned in the report. According to the document, limited financing impedes the Ministry of Agriculture in conducting such traditional arrangements in support of this sector as financing of the program of mechanization, and subsides for grapes harvest.

BILBERRY GROWING STARTS IN WEST GEORGIA

By the information of Bakur Kvezereli, Minister of Agriculture of Georgia, the project is being implemented by the Ministry of Agriculture of Georgia jointly with the American company Fallcreck. In Samegrelo region (West Georgia) demonstrative plantations will be made seedlings brought from the USA will be planted. The project, being implemented on the principle of co-financing, costs GEL 3 million.

It should be mentioned about great demand on bilberry in Europe, where only several countries are seriously engaged in bilberry-growing. For example, a typical farm in the USA occupies 300-400 hectares of land and up to 50 persons work there, who gather bilberry by lands or machines. At each plantation there are from 1 million up to 20 million bilberry bushes. The USA produces more than 200 million pounds of bilberry per year. American farmers annually earn $14.3 million from export of bilberry, mostly, to Canada and Japan.

TRANSPORT

DIRECT AIR COMMUNICATION BETWEEN ANAKARA AND BATUMI

President of Georgia Mikheil Saakashvili and Prime Minister of Turkey Recep Taiyp Erdogan on May 31 visited in Batumi opening of a new air flight. In Mr. Saakashvili’s words this air route confirms the fact of economic and transport communication development. “We already have air routes from Istanbul and now geography of flights keeps growing”, mentioned the President.

From June 8 the flights between Ankara and Batumi will become regular and will be conducted twice a week – on Mondays and Saturdays. The ticket price starts from €82. The Batumi airport will serve Turkish regions bordering Georgia as well.

REGULAR FLIGHTS START BETWEEN TBILISI AND ALMATY

Kazakh National Airline Company Air Astana started on June 2 regular air flights Almaty-Tbilisi. Direct air flights are conducted by airliner “Embraer 190” three times a week – on Mondays, Thursdays and Saturdays. Duration is 3 hours 40 minutes. Those who wish can go from Almaty to Deli, Peking, Bishkek, Kuala and other cities of the Asian region.

Air Astana was registered in 2001 and on May 15, 2002 conducted its first flight Almaty-Astana. Now its air stock consists on 24 planes. The route network involves more than 50 internal and international flights.

GPS TABLES APPEAR AT BUS STOPS IN TBILISI

At the public transport stops in Tbilisi installation of new electronic tables started on which the time of arrival and route of buses are indicated. By the information of Municipality representatives, at the first stage 20 GPS tables will be installed. By the end of August at 450 stops most overcrowded with passengers, the citizens can know exact time of arrival of buses they wish.

COMMUNICATION

FROM JUNE 4 TELEPHONE NETWORK OF GEORGIA MOVES TO NEW SYSTEM OF NUMBERING

From June 4 subscribers’ numbers of fixed local telephone networks of Georgia change. Telephone system in Tbilisi becomes seven-figured and in the regions it is now six-figured. By the information of Georgian National Communication Commission, to the acting numbers the figure 2 is added. The other figures remain the same. For example, a subscriber’s number in Tbilisi 99-99-99 will be 299-99-99, Batumi number 7-99-99 becomes 27-99-99. The length of number remains unchanged only in Rustavi, where figure 1 of the six-figured fixed local telephone networks will be changed with 2, other figures remain unchanged. For example, number 15-99-99 will be 25-99-99.

From June 20 in Georgia the numbers of cellular communication networks change, and from June 27 – numbers of fixed telephone networks working on cellular principle.

From November 25, 2010 the decree of the Georgian government was in effect “On proving the provision of national system of numbering of electronic communication networks”. According to the document the process of transfer to a new system of numbering will finish till the end of 2011 in compliance with the plan of the government.

REAL ESTATE

IRANIAN INVESTORS ARE INTERESTED IN FORMER STUDENTS CITY LOCATED IN VAKE DISTRICT OF TBILISI

By the statement of head of Fast Plus company (big importer of road bitumen and exporter of sheep to Iran in particular) Nazi Alasania, the Iranian holding Farasat plans to build on the territory of the former students’ city in Vake district of Tbilisi a 24-storey multifunctional complex: habitation, restaurants, hotels and trade centers. The project total cost makes up $50-55 million. Construction is supposed to start in this July and to finish for two years.

GBW note: Holding Farasat is 100 % private company and uses exclusive support of the banking system of Iran and all the structures of power. Thanks to this unique position, the company implements large-scale projects worldwide. Farasat unites about 80 Iranian companies, engaged in construction, industry, transport, oil, gas, energy, etc. collective annual turnover of a group of companies makes up billions of USD and they are the strongest Iranian companies in these fields.

FOREIGN BUSINESS

QATAR COMPANY MAWASHI TO INVEST INTO GEORGIA

From May 30 through June 3 Georgia was visited by big Qatar company for meat and livestock trading Mawashi.

Within the visit on June 2 Deputy Foreign Minster of Georgia David Jalaghania met the representatives of Mawashi company headed by Sheikh Nayef Bin Eid Al Thani, chairman of board of directors. At the meeting they discussed potentials of investing into agricultural sector of Georgia by the company.

UKRAINIAN BEER OF “SARMAT” AND “SARMAT ZHIGULEVSKOE” BRANDS APPEARS AT GEORGIAN MARKET

Beer is imported by T&D (Trade & Development) company, from 2011 became exclusive representative eon the territory of Georgia of the brands “Sarmat” and “Sarmat Zhigulevskoe” of the Ukrainian factory Miller Brendz Ukraine (till March 2011 – JSC Sarmat).

In the words of T&D representatives, beer “Sarmat” in Ukraine is most popular and at the present stage it masters Tbilisi trade network and soon this beer will be sold all over Georgia.

“We think this product will compete at market with the produce of Georgian and foreign production”, they say in the company.

They explain this beer was delivered to Georgia earlier as well with some regularity and now it will be of regular character. It is planned to hold large-scale advertisement campaign.

According to Georgian Business Consulting information, 100-110 million liters of beer are being sold annually at the Georgian market, 60% of which come on Natakhtari, 8-10% – on Kazbegi, 10-12% – on Castel, and the rest – on imported produce. Very small segment (1-2%) of market is occupied by different local brands of beer.

GBW note: Miller Brendz Ukraine is a brewery, production capacities of which are located in Donezk. From July 2008 is a subsidiary of the group SABmiller, which owns more than 100 breweries in 75 world countries, producing over 210 million hectoliters of beer per year. SABMiller bought 99.84% of shares of JSC Sarmat. Among the brands sold by the company in Ukraine, there are local, (“Sarmat”) and international brands: “Miller Genuine Draft”, “Zolotaya Bochka”, “Velkopopovicky Kozel”, “Amsterdam Mariner”. Miler Brandz Ukraina now is a member of four leaders of national beer market of Ukraine – with specially strong positions in Eastern regions of the country.

COMPANIES

BIG CAR SELLING CENTRE – “CAUCASIAN AUTOCENTER” OPENS IN RUSTAVI

Iberia Business Group invested GEL 4 million into building of the autofair. By the company management information, the autofair with flexible terms of registration and low prices will be without competition, and the first two weeks will serve clients free of charge.

The territory occupies 46,000 sq meters. It has four zones and one terminal and can serve in total 2,000 cars.

In the words of Tariel Khechikashvili, president of Iberia Business Group, the fair suggests clients several services, banking, customs and there is a refreshment room, motel, repair workshop.

Iberia Business Group is formed in 1999 and is a distributor of such concerns as “Audi”, “Volkswagen”, “Skoda”, “Mitsubishi”, “Peugeot”, “Renault” end “KIA”.

The ceremony of centre opening was participated by Prime Minster of Georgia Nika Gilauri, who stressed that by car export Georgia is on the first place in the region and opening of the new centre will promote export growth far more.

“Opening of one more auto fair is very important for us, as Georgia is on the first place in export of cars in the region. 5-6 years ago main export product was scrap metal and more than 50% came on it, today the first place in export is occupied by cars. We are leaders in the given business and its success will enable to form additional working places. Development of this business is caused by simplified procedures both in cars registration and customs procedures. Such quick are in no other country in the region. In “Caucasus Autocenter” within an hour one can take credits, buy and form a car and because of such simplified procedures, many countries arrive to us and buy cars”, mentioned the Premier.

INSURANCE MARKET

GEORGIAN INSURANCE COMPANIES IN 2010 RECEIVED AWARDS FOR THE SUM OVER GEL 300 MILLION

According to the National Bank of Georgia, Georgia's insurance companies in 2010 received GEL 361.46 million insurance awards, which almost corresponds to the index of 2009 (GEL 360.44 million). Georgian insurers in 2010 transferred GEL 53.86 million in reinsurance.

As to the market structure, life insurance had – GEL 10 million, travel insurance – GEL 2.21 million, accident insurance – GEL 3.02 million, health insurance – GEL 245.8 million, motor vehicle insurance – GEL 27.13 million, compulsory third party liability insurance – GEL 3.52 million, railway transport insurance – GEL 0.65 million, aircraft insurance – GEL 6 million, marine insurance – GEL 0.38 million, cargo insurance – GEL 3.1 million, property insurance – GEL 35.15 million, financial risk insurance – GEL 1,25 million, liability insurance – GEL 7,26 million. The volume of insurance payments in 2010 amounted to GEL 188.76 million.

According to the results of 2010, the company Aldagi, according to attracted awards ceded the first position and occupies the second position. Market leader was Imedi L. It is noteworthy that the most important place in the awards of those companies is the medical insurance and the means from it.

HOSPITAL BUSINESS

NEXT YEAR UP TO 150 NEW CLINICS AND HOSPITALS TO OPEN IN GEORGIA

Prime Minster Nika Gilauri announced about it at the governmental session. “You all remember that several months ago we presented to the community the 10 item strategic plan of engagement and modernization. What we are now implementing in the healthcare system is a part of this plan. Within several months you’ll see that more than 60 new clinics and hospitals will open and next year in Georgia we’ll have up to 150 new clinics. Small and middle-sized hospitals will be built both in the regions and big cities. In particular, 15-20 bed clinics will be in the regions, and 70-100 bed clinics in the cities”, stressed the Premier.

GAMBLING BUSINESS

GEORGIA TOUGHENS LEGISLATION ON GAMBLING BUSINESS

Several amendments are planned to be introduced into the law “On lottery, chance and gambling games”. One of the amendments foresees GEL 10,000 fine for violation of the term of paying charges for a permit on upgrading of the slot-machine halls. Charges increase on a permit for upgrading the salon of slot machines. According to the amendments to the law “On charges on permits and licenses”, charges on upgrading slot machine salons in self- governed cities (Tbilisi, Kutaisi, Poti, Batumi) will be GEL 20,000, on other territories – from GEL 50,000 to GEL 100,000 instead of GEL 12,000 per year. A permit for gambling business will be given for a year and not for five years.

Permits, the term of functioning of which expires from January 1, 2012, will be continued only up to this time. And from January 1, 2012 even if the permit is taken recently, it will be cancelled.

ECOLOGY

GEORGIA INTRODUCES NEW REGULATIONS FOR USE OF FORESTS

According to changes introduced into “Code of Forestry of Georgia”, new regulations are introduced on use of forests on the territory of state forestry fund. The present issue was discussed today at the session of the parliamentary committee on environment protection and natural resources held in Dmanisi.

By the new regulation, the procedures are simplified required for personal use of forest. The legal regulations are determined anew in regard to timber transportation and primary processing. Account of lags will be conducted by marking, which will prove their legal origin. Strict control is imposed on resources, obtained in result of timber processing on the territory of state forestry fund.

By the new legislation, availability of wood is simplified for the population. On the forest territory special fenced places are forward, where the population can cut trees pointed by rangers. If up to now, the law enabled one family to cut up to 5 cu meters of fire wood, by new legislation, the present limitations are removed and one family can cut required amount of fire wood. Akaki Bolkvadze, the committee chairman, explains if the trees are cut correctly, it will promote growth of young trees and forest development.

NEWS FROM ABROAD

AZERBAIJAN, GEORGIA, ROMANIA AND HUNGARY EXPRESS FULL SUPPORT TO GAS PROJECT AGRI

The representatives of Azerbaijan, Georgia, Romania and Hungary expressed full support to the project AGRI (Azerbaijan, Georgia, Romania Interconnector) at the ministerial meeting in Bucharest. The project foresees Caspian gas supply in liquefied form through the Black Sea coastline in Georgia to East Europe.

“At the ministerial meeting the representatives of four countries proposed to start feasibility for AGRI project as soon as possible”, mentioned a member of AGRI LNG Co company management staff Vitali Beglyarbekov. In his words, at the ministerial meeting the representatives of the countries listened to presentations of commercial companies from Japan, Norway, Turkey, Korea and France, which expressed wish to prepare AGRO project feasibility.

The tender the project feasibility preparation will be announced in summer 2011. At present AGRI LNG Co board of directors continues work on the company budget and working program, is engaged in collecting the staff.

Azerbaijan, Georgia, Romania and Hungary on February 14 signed the protocol within AGRI project implementation. The document stressed the need to support the project participant companies and to drawn required financing for feasibility preparation. It was also mentioned that intensification of work within AGRI foresees search for the shortest route of Azerbaijan gas delivery to European market, formation of interconnector Romania – Hungary (Arad-Sheged).

Registration of joint venture was held earlier within the project in Hungary. The JV will be engaged in project feasibility preparation and search for the sources of financing. The JV participants are Romanian ROMGAZ Georgian Oil and Gas Corporation, SOCAR of Azerbaijan and MVM. Each of them owns 25% share participation.

The new energy project foresees transit of Azerbaijanian gas on the territory of Georgia through the Black Sea into Romania, from where the energy carrier will come to Hungary and other east-European states. The gas will be liquefied in Kulevi and then transported through the Black Sea to Romanian port Constanta, where a de-liquefying process will take place. Natural has from Azerbaijan will be delivered to the Black Sea coast for condensation in special terminals, then by tankers it will be delivered to the terminal, in the port Constance and further through existing gas infrastructure on the territory of Romania to satisfy requirements of this country and other European states. It is foreseen in the future to build two separate gas pipelines from Constanta to Bulgaria and Hungary for export of Azerbaijanian gas into the EU member countries.

Turkmenistan, participating in the project as a supplier, could have supplied liquefied gas on the Caspian Sea to Azerbaijan for its further transportation to Europe.

AGRI project cost may fluctuate from €1.2 billion to €4.5 billion.