Kazakhstan Prefers Batumi to Poti to Construct Grains Terminal

Business Materials 26 September 2008 18:41 (UTC +04:00)

Kazakhstan, Astana, 26 September / corr. TrrendCapital K.Konirova / "Construction of the grain terminal in Georgian port Poti is stopped because of disagreement between sides in financial issue," a source at the Food Contract Corporation JSC told Trend correspondent in Astana. It was commenting on the recent statement of Kazakhstan Minister of Agriculture Akilbek Kurishbayev.

"We refused from construction of the terminal in Poti because of financial reasons," the source said. 

During the governmental hour in Majilis the Kazakhstan minister stated to response to an MP/s question, said: "We refused from Poti. We wrote a letter to the government, in order not to spent money there and to stop the project hereon. Now this question is undoubtedly connected with international problems, in particular with the situation in Georgia". 

During the negotiations, held before the well-known August events in Georgia, the sides did not succeed to make an agreement about conditions of financial investments, as the representative of Food Contract Corporation said. 

In summer the agreement with the Georgian ministry of agriculture was signed, according to which the JSC had to build the grain terminal and elevator with 24 000 tons capacity in Georgian port Poti.

Собеседник напомнил, что летом было подписано соглашение с минсельхозом Грузии, согласно которому АО должно было в этом году построить в  грузинском порту Поти зерновой терминал и элеватор емкостью 24 тыс. тонн.

"Market Shares of Kazakhstan and Georgian sides in the project had to 50/50, as it was done with Azerbaijani partners in Baku port. We granted $9mln - half of the facility's cost. The same investment had to be put by the Georgian side, which offered land and equipment for this amount", the source clarified.  

Kazakhstan attracted international independent auditing company, which estimated the property, suggested by the Georgian side. As a result, the land was estimated at $4mln and the facility was found outdated. 

"We agreed to accept the land, but we suggested to invest the rest $5mln by money. However, the Georgian side did not posses such funds, insisting on its own conditions. They did not suit us and we had to reject construction of the grain terminal at the parity base," the source underlined.

The Food Contract Corporation decided to review another variant - construction of the grain terminal in another Black Sea port of Georgia -Batumi, but with its own 100% participation.

"Construction of the grain terminal at the Black Sea was the alternative route for delivery of our grain to world markets. We experienced problems with delivery of our goods through other Black Sea ports - Odessa or Novorossiysk due to high harvests in Russia and Ukraine. That is why we were interested in this project," he said.

Now Kazakhstan supplies his grain through the Caucasian corridor by two routes. One lies through the Caspian Sea to Baku port, onwards Georgia by land way. The second one runs by railway through Russia: from Aksaraysk to Samur and onwards through Azerbaijan to Georgia. The Food Contract Corporation has already launched negotiations with Georgian side for parceling in Batumi.

"However, after the well-known events in August we, like other participants in this market, stopped all negotiations on this project till complete regulation of the situation in this region. We do not reject the project of construction of the grain terminal in Batumi port, but we will wait for stability to come", the representative of JSC resumed. 

The Food Contract Corporation has 10 regional representative offices in Kazakhstan and foreign countries, including in the UK, Russia, China, Iran and Azerbaijan. The JSC has five subsidiaries, specialized in different regions of Kazakhstan, the grain terminal in Aktau port at the Caspian Sea with a trans-shipment capacity of about 500,000 tons a year.

The correspondent can be contacted at [email protected]