An Easy Place to WELCOME to GEORGIA Am Very Pleased to Have This Opportunity to Welcome Distinguished Readers of This Publication

INDEPENDENCE DAY SPECIAL

THE FINANCIAL EXPRESS READ TO LEAD A SPACE MARKETING FEATURE THURSDAY, MAY 26, 2011

VERA KOBALIA| MINISTER OF ECONOMY AND SUSTAINABLE DEVELOPMENT An easy place to WELCOME TO GEORGIA am very pleased to have this opportunity to welcome distinguished readers of this publication. I consider this opportunity as a pleasure and a great privilege as it allows me to address a country that plays a big role in the global economy. do business IToday, I would like to share with you some key ideas regarding Strategically located East European nation presents opportunities in energy,realty and tourism the business opportunities that Georgia has to offer in different areas. But before that, I would like to give you a brief history of friendly reform process and competitive Georgian statehood. tax structure,Georgia presents ample op- We have only a short history of modern statehood. With the portunities across sectors like energy, downfall of the Russian empire in early 20th century, Georgia power generation & transmission,real enjoyed only three years of independence and democratic estate,tourism and agriculture. governance in 1918-1921. Then Soviet communist occupation and Though there are evidences of domination followed for 70 years. Only in 1991 have we restarted contact between India and Georgia dur- our efforts to build an independent and democratic country. The ing the time of the Old Silk Route, first 12 years of transition were very difficult with a lot of challenges present day trade relations were estab- ahead. However, real, deep-going changes started only in 2004 lished only after Georgia announced its after the Rose Revolution of independence in 1991. Georgia lies in a November 2003. And there was region of vast untapped oil and gas po- much to change. From the very tential. It plays an important part in outset the government had two transportation of oil and gas in the major challenges: Caspian Sea- Black Sea region. There is To defeat and eradicate an oil pipeline from Baku in Azerbaijan corruption to Ceyhan in Turkey via Tbilisi (Baku- And to create a functioning Tbilisi-Ceyhan or BTC pipeline) and a market economy, enabling parallel gas pipeline called South Cau- business, creating jobs and casus Pipeline. There are thus huge op- raising the standards of life for portunities for Indian energy all its citizens. companies in Georgia. In July 2008, Jin- Only in a few years the dal Petroleum—a Navin Jindal group government has managed to company—acquired four oil and gas Ex- overcome these challenges and ploration Blocks in Georgia. today, Georgian police is a role Subsequently,Jindal Petroleum also ac- model in the region. Public quired a Producing-cum-Exploration administration is fully reformed, Block with a 75% participating interest. red tape and bureaucracy are being eliminated constantly, services ■ ANINDYA SENGUPTA complete revamp of the income tax and sectors,Georgia’s GDP growth remained Jindal Petroleum is planning to acquire to citizens and businesses are provided with one-stop shop customs duty structure and a much-pro- in the range of 9 to 12% between 2005 and more exploration blocks and is also con- principle and many of them are already delivered online. ustavi,a Soviet-era steel town- claimed programme to minimise corrup- 2007.In 2006 and 2008,the World Bank sidering venturing into refining and mar- The key philosophy behind our economic policies was ship some 30 kilometres from tion have helped Georgian economy to named Georgia as the top reformer in the keting of various petroleum products. liberalisation and deregulation of economy. Our government did its the Georgian capital Tbilisi is post an impressive turnaround.Now world.Georgia has been ranked as the With a total planned investment of more best to make sure that Georgia transformed into one of the most an unlikely place to find a pres- Georgia is one of the fastest growing 12th easiest country to do business world- than $200 million,Jindal Petroleum is the business-friendly countries worldwide. We have removed and ence of India Inc.But it is here economies in East Europe.Spurred by wide,by the World Bank “Doing Business largest Indian investor in Georgia. simplified as much regulation as possible, in an attempt to make that one of the major foreign in- gains in the industrial and service 2011”survey.Apart from an investor- Turn to page 3 doing business in Georgia quick, cheap and therefore responsible. vestmentsR by an Indian company in Eastern Eu- Our efforts have been well illustrated in a number of international rope has taken shape—GEO Steel,with a 49% rankings. Georgia was ranked 12th among 183 countries in the investment from JSW,has built a modern steel World Bank’s “2011 Ease of Doing Business” report and 7th among factory at Rustavi.The factory,built at the site of 183 countries in terms of dealing with construction permits. a Russian crane manufacturing facility, According to Transparency International, Georgia is one of the least converts metal scrap into rolled steel.In the true corrupt countries in Eastern Europe and according to Forbes Tax spirit of free market globalisation,Indian capi- Misery and Reform Index, the 4th best performer worldwide. tal has reached to such corners of the world But business friendly environment is not all that Georgia has to even before New Delhi could open a full-fledged offer. I believe our country has another important and very strong embassy there. competitive advantage. Situated at a strategic location between Any company considering Georgia as an investment destination Mediterranean and Caspian Sea,scenic Geor- should have in mind that on entering Georgia, it will automatically gia is an economic powerhouse today.Though a find an eco-system in place, since Georgia as a hub connects small country herself,Georgia enjoys a geo- several important economic regions of Europe and Central Asia. In strategic position and the opportunity to access addition, it has favourable trade regimes and free trade agreements neighbouring markets.During Soviet times with a number of countries. We have made sure that not only trade Georgia had the highest standard of living of all regimes but importantly physical infrastructure is also there to 15 Republics.But then it suffered a precipitous allow businesses to fully employ the benefits of location and fall post-1991.After the Rose Revolution of No- business environment. Turn to page 3 vember 2003,Georgia has carried out a number of drastic reforms to transform its economy.A

ZURAB KATCHKATCHISHVILI | AMBASSADOR EXTRAORDINARY AND PLENIPOTENTIARY OF GEORGIA LET US JOIN FORCES than one can think and it is essential that we, joining our forces, make these similarities a powerful tool for ever- increasing our friendly relationship. Georgia is a small state in the Cau- casus, but its geographical location makes it an important player in the region, especially as a transit country for oil, gas and other commodities shipped from Azerbaijan, Central Asia states to the West. But this is not the only asset of Georgia: modern and liberal legisla- tion and a corruption-free environment make it today one of the most business-friendly countries: According to World Bank & IFC 'Do- ing Business' Index, our country has moved from 112th place in 2005 to 11th place in 2010. Georgia’s Tax System can be sum- marised as 'Fewer Taxes, Lower Rates.' The number of taxes, since 2004, has decreased from 21 to only 6 today.Personal income tax is a flat 20% while corporate income tax rates are a flat 15%.With well-diversified in- t is my immense pleasure to ad- famous Silk Route, bridging between vestment sectors in energy, dress you today,one year after East and West. healthcare, agriculture, telecommu- Embassy of Georgia has been es- As for present cooperation, it is con- nications, real estate & construction tablished in New Delhi. But this tinuously developing, but we definite- and infrastructure development, Idoes not mean relations between our ly cannot be satisfied with the existing Georgia is not simply another market- two countries count only one year.As situation. More can be done and this is place, it is a genuine opportunity. far back as in the 12th century,Shota exactly one of the major tasks of our World-famous for its legendary hos- Rustaveli, the most famous Georgian Embassy: to better present Georgia to pitality,Georgia is welcoming poet, in his immortal poem, 'The the business community of India, sup- businessmen, investors and, of Knight in Panther Skin', had an Indi- port and facilitate contacts between course, tourists from India and an Prince as one of the main charac- peoples of India and Georgia and in- expresses hope that relations between ters. But we can travel even further in crease cultural exchanges. Georgia our two countries will reach the high time, as Georgia was part of the and India have much more in common level it ought to have. INDEPENDENCE DAY SPECIAL

PROPERTIES ON THE BLOCK The Ministry of Economy and Sustainable Development of Georgia (MoESD) is pleased to announce the privatisation of six state-owned properties located in the very centre of Tbilisi city.Given the scarcity of real estate assets in the centre of Tbilisi, KETI BOCHORISHVILI, Director, Georgian National this privatisation provides unique investment opportunities in the Georgian real estate sector Investment Agency Watch out for privatisation opportunities

ne of the priorities of the Georgian FORMER MINISTRY OF JUSTICE FORMER MINISTRY OF FINANCE FORMER TBILISI PUBLISHING CLINIC HOSPITAL OF IVANE Ogovernment is conduct- ing the privatisation process Building space: 8,516 sq.m Building space: 7,994 sq.m HOUSE JAVAKHISHVILI TILISI STATE effectively,and in this regard Land area: 3,302 sq.m Land area: 7,613 sq.m Building space: 21.770 sq.m UNIVERSITY (TSU) some concrete steps have been Floors: 3 Floors: 2 Land area: 9.447 sq.m taken,such as introducing a Built: 1920 State ownership: 100 % Floors: 5 Building space: 9,200 sq.m “One Stop Shop”approach for State ownership: 100 % Location: Centre of Tbilisi City, Abashidze St. State ownership: 100 % Land area: 16,021 sq.m the maximum transparency of Location: Centre of Tbilisi City, Rustaveli Starting privatisation price: $4.5 million Location: Centre of Tbilisi City, Kostava St. Floors: 2 the process and comfort of in- Avenue Estimated development cost: $12 million Starting privatisation price: $12.2 million State ownership: 100 % vestors,the involvement of the Starting privatisation price: $10.2 million Estimated development cost: $ 4.4 million Location: Centre of Tbilisi City, Agmashenebeli commercial banks in privatisa- Estimated development cost: $3.5 million The property is located at very centre of Street tion activities,online availabil- Tbilisi City and in the most prestigious res- Given the property’s outstanding site and Starting privatisation price: $5.6 million ity of privatisation documenta- Taking into consideration the property’s ex- idential district of the downtown. proximity to Tbilisi's business and Estimated development cost: $ 24 million tion and easy access to tremely convenient location, it is ideal for The property has been valued as a two entertainment destinations, it has been val- information. developing for various business activities, year residential development strategy with ued as a A or B classes office and shopping Considering the property’s outstanding lo- For a country with a transi- including but not limited to, a hotel, high- $12 million estimated development cost centre. cation, it is unique for developing a residen- tional economy,the privatisa- class office space and a shopping centre. and average selling price of $1,200 per Based on the appraisal assumptions (con- tial business project but not limited to it. tion of large enterprises has a The property has been valued as a hotel sq.m., which is quite below the prices in the sidering 22% vacancy rate and $4.4 mn esti- The property has been valued as a two positive influence on the devel- development strategy with an initial $3.5 market in the prestigious residential mated development cost), cumulative cash year residential development project with opment of the state economic million estimated development cost and av- districts e.g. like flows to the equity own- an initial $24 million estimated development system.the government aims erage occupancy rate of 85% throughout Abashidze Street. In the er is projected to turn cost and average selling price of $900 per sq. to hand over its remaining un- 2011-12. Provided these assumptions, cumu- aftermath of the valua- positive within five m. The after-tax two year equity IRR is profitable assets to private en- lative cash flows to the equity owner is pro- tion, the after-tax two years from the start of expected to exceed 36%. The country is expe- terprises,thereby making jected to turn positive within five years from year equity IRR may be the project. riencing a chronic housing shortage, often them more efficient.One of the the start of the project. expected to reach 40%. The valuation is based on 23% average with three generations living together in good examples of successful The valuation is based on 23% average dis- Given the excellent location of the prop- discount rate and average capitalisation one household and has the lowest total resi- privatization is the Radisson count rate and average EV/EBITDA of 5.5x erty and the assumed price of $1,200 per rate of 11.5% by 2022, so that the after-tax 11 dential stock per capita and the highest aver- Blu Iveria Hotel.The hotel by 2022, thus the after-tax 11-year equity IRR sq.m (below the market prices), starting year equity IRR may be expected to reach age residents per household of any capital in building was bought by may be expected to reach 23%. privatisation price—$4.5 million, provides 23%. Eastern Europe. investors and a world-famous Given the reserved assumption, the start- significant upside potential to the prospec- Starting privatisation price—$12.2 mn, is Given the scarcity on the housing market brand entered Georgia,creating privatisation price---$ 10.2 million, is con- tive investors. considerably lagging behind its peers' valu- and the assumed selling price of $900 per ing additional jobs.For 2011,it siderably lagging behind its peers’ valuation ation in the market and thus provides sq.m (below market prices), the starting pri- is expected that the state budget in the market and thus provides significant significant (in the range of 40%-50%) vatisation price---$5.6 million, seems quite will earn 150 million GEL (in the range of 25%-30%) upside potential upside potential to prospective investors. attractive with a potential of increasing the through the privatisation of to prospective investors. IRR to as high as 57%. government property. There has never been a better time to invest in Georgia. Former Physical Education Institute Former Ministry of Economy and Thanks to an aggressive reform agenda implemented Building space: 41,568 sq.m Development by the government over the last Land area: 3,302 sq.m Building space: 8,882 sq.m seven years;our country has Floors: 3 Land area: 4,344 sq.m dramatically improved its busi- State ownership: 100 % Floors: 11 ness and investment climate as Location: Centre of Tbilisi City, Chavchavadze Ave State ownership: 100 % well as its rankings in interna- Starting privatisation price: $15 million Location: Centre of Tbilisi City, Chanturia St. tional business surveys.For ex- Estimated development cost: $ 30 million Starting privatisation price: $ 6.1 million ample,Georgia was ranked Estimated development cost: $ 1.9 million 12th among 183 countries in the Given the relatively high initial development World Bank’s “2011 Ease of Do- cost ($700 per sq.m), the property is estimated The property has been valued as a two-year resi- ing Business”report. to generate revenue of average $41.2 million dential development strategy with $1.9 million Besides the privatisation throughout 2011-2022 with an average estimated development cost and average selling process,the Georgian govern- occupancy rate of 75%. Provided these price of $1,200 per sq. m. In the aftermath of the ment has identified a few prior- assumptions, cumulative cash flows to the eq- valuation, the after-tax two-year equity IRR may ity fields for investments such uity owner is projected to turn positive within be expected to exceed 25%. as Tourism—mainly develop- four years from the start of the project. The country is experiencing a chronic hous- ment of tourism Since there is a high initial development ing shortage, often with three generations infrastructure—energy,agri- cost, i.e. project's relatively high start-up risk, living together in one household and it has the culture,infrastructure,and ap- the valuation has been based on 30% average lowest total residential stock per capita and the parel business development. discount rate and average EV/EBITDA of 5.5 highest average residents per household of any The GNIA is committed to by 2022. Consequently the after-tax 11 year eq- capital city in Eastern Europe. As a result, Tbil- the assumed $1,200 per sq.m (in line with prices assisting you with all your in- uity IRR may be expected to reach 30%. isi has among the least living space per person of in the market), starting privatisation price--$ 6.1 vestment and business develop- Given the scarcity in the hotels market and vatisation price—$15 million, seems fairly at- any capital city in Europe. million, seems quite attractive with a ment needs.Our team of invest- quite reserved assumptions, the starting pri- tractive with a compellingly high IRR. Given the scarcity in the housing market and compelling high IRR. ment specialists offers investors a wide range of services,including market research and analysis,advice on market entry,local partner search and introduction to business leaders and authorities. For list of state-owned sites, please regularly visit:www. Bollywood stumbles on breath-taking privatization.ge

ith snow-covered An agreement was signed between Narendra Bajaj, a producer with Sid- GNIA:Partner No.1 mountains, sun- the Ministry and the Bollywood pro- dhi Vinayak Creations, gave his first The Georgian National drenched beaches, ducers during the Minister’s visit to impressions, describing the country’s Investment Agency (GNIA) empty deserts, India in November 2010. The locations as unique, and praising the was established in 2002 gleaming lakes and agreement was followed up in Mum- available infrastructure, “I think under the Ministry of Wdeep forests, Georgia has huge poten- bai, on February 22, 2011 when Vera everything (here) works for the film Economic Development as a tial as a destination for foreign Kobalia and Kakha Baindurashvili, industry,” he noted excitedly. part of the liberalisation investors in the arts. The country’s Minister of Finance, held a meeting The five member-delegation, which drive. GNIA plays an varied locations and stunning with Indian businesses to discuss op- Narendra Bajaj aside included Varun essential role in economic landscapes, all within a day’s distance portunities for future cooperation. Bajaj, co-producer; Chirag Bajaj, exec- liberalisation and is the only from each other,provide a great During their stay in Georgia, the Bol- utive producer; Roop Naik from Zip government agency opportunity for filmmakers looking lywood delegation also met Nikoloz Pap Zoom Productions, and other responsible for investment for spectacular backdrops at low costs. Rurua, Minister of Culture, whose high-profile industry insiders, started and recently also for export Georgia is slowly stepping into the ministry had played a key role in their journey through Georgia from promotion. Offering a One spotlight of the global movie industry. bringing the producers to the coun- Tbilisi. Their itinerary in the capital Stop Shop approach for Indian filmmakers have been the try.When speaking about the visit, featured the Rustaveli Theatre, investors, GNIA organises first to look into the vast Rurua noted: “The Indian producers Narikala Fortress, the National Muse- business forums, opportunities the country has to offer, are making a promotional video on um, the National Library,Maidan conferences, workshops with a delegation from Bollywood Georgia, which will be shown to lead- Palace, Lisi Lake, Turtle Lake, Shard- and road shows to raise touring Georgia between January 29 ing Indian producers and TV en Street, Sukhishvilebi National Bal- awareness about Georgia as and February 1, eyeing potential film- channels. We want to give Georgians let, and the Jansugh Kakhidze Music an attractive investment ing locations. Vera Kobalia, Georgia’s working in the film industry the op- and Culture Center.Narendra Bajaj destination. GNIA also Minister of Economy and Sustainable portunity to find work through our described Georgia as a “very compact- studies the investment Development, met the Bollywood Bollywood partners and show their ly beautiful” country,adding that climate, FDI, export trends delegation and discussed about po- talent to the world.” “every location is very good by itself— and investor satisfaction. tential future bilateral film-making After visiting areas in both mountains, beaches, lakes, palaces, Nikoloz Rurua, Minister of Culture, meeting Bollywood representatives in January this year projects. Georgia’s lowlands and highlands, modern cities and they’re very,very THURSDAY, MAY 26, 2011 3

An easy place to do business Continued from page 1 eral trade has shown a steady Apart from hydrocarbon re- increase.India’s main sources,Georgia offers a exports to Georgia are great opportunity for Indian currently pharmaceuticals, businesses as the country has polyesters,meat,machinery, zero tariff on majority of textile,stone,tobacco,coffee goods and no quantitative re- etc.There has been tremen- strictions.It is also an energy dous response to the periodic surplus country with a diver- Exhibition-cum-Sale of Indi- sified trade structure.For an consumer goods being or- small and medium Indian en- ganized in Tbilisi by CII with terprises in light engineering support from the Georgia could be an ideal government of India;this has base to enter the East Euro- been contributing to popular- pean markets.India’s invest- ising Indian consumer goods. ments in Georgia in 2007 were India mainly imports ferrous only $62,000;in 2008,the quan- waste,ferrous and non- tum of investments ferrous scraps from Georgia. increased to $27 million Pharmaceuticals are approximately,but that mo- already one of the top exports mentum is yet to be from India and there have CheckCheck inin forfor sustained.Business commu- been a number of exchanges nities in both the countries between the two countries to have,however,realised the expand the ties in the pharma great potential in bilateral sector.Interestingly, trade and investment,lead- Ayurvedic medicines have ing to the establishment of an become quite popular in Indo-Georgian Chamber of Georgia since their entry in Commerce in June 2010 2005.From the Soviet era,In- in Tbilisi. dian students have been go- Georgia has a great tradi- ing to Georgia to study Medi- five-star returns tion of cash crop cultivation cine at the Tbilisi State Hotel occupancy reaches 100% in Tbilisi this month,and the demand for rooms is only rising and food processing.There Medical University.Around are huge opportunities for In- 200 Indian students study dian companies to medicine there currently.In ■ TAMAR KHURTSIA used to be the Hotel Ajara, opened approximately 1.5 million tourists participate in revival of tea recent years more Indian stu- in December 2010 with an invest- will visit Adjara in 2011, up from plantations,citrus and silk dents have been heading to igh-end hotels with over ment of $26 million. The 21-floor 950 thousand in the previous year. industries in Georgia.From Georgia for various one hundred rooms are building features 126 guest rooms, “We plan to increase the num- ancient times,Georgia is also professional courses.Simi- Hfully booked in Tbilisi, ac- and the management is planning ber of tourists by transforming well known for its distinctive larly Indian professionals cording to STR global, a US-based additional developments. Natalie Adjara into a year-round tourist wine making.There have have also made their research firm that specializes in Mchedlishvili, the hotel’s PR offi- destination,” Diasamidze told been some exchanges at the presence felt in Georgia with hotel benchmarking reports and cer told Georgia Today that five Georgia Today, explaining that a government level on dry land the entry of Indian business analysis for the hospitality mar- months after the opening, the de- series of festivals, concerts, inter- farming,agro-industries and houses there.As the kets worldwide. mand is rapidly increasing. national exhibitions and confer- science and technology.As Georgian economy continues The survey,released on May “Since May 17 the Holiday Inn has ences will be used as a tool to stim- Indian rice,sugar,leather to keep up its momentum and 18th, focuses on five luxury,full registered full occupancy and the ulate the visitors’ interest. product and consumer goods prepares for an entry to EU, service international hotels: Tbil- trend is continuing. We are plan- According to Bochorishvili, the started entering the there are bound to be more isi Marriott, Courtyard Marriott, ning to double the development of Georgian market,bilateral opportunities for Indian com- Sheraton Metekhi Palace, Radis- accommoda-tion, Free Tourism trade almost quadrupled panies in Information son Bue Iveria and Holiday Inn. and by the end of Zones will help from $10.58 million in 2005 to Technology and other Managers at these high-end hotels June we will have the $40.2 in 2007.Since then,bilat- service sectors. say they are confident about the 252 rooms,” she said. development of the sector. “FTZs prospects of the hospitality mar- tourists by 2013 over the next couple years, and we There is similar optimism at offer investors unique conditions ket development in the capital as This demand has led the are negotiating for additional the Radisson Blu Iveria. Natalie to start new facilities ” she says. the inflow of foreign tourists, government to launch the Hotel ones” she said adding that “GNIA Luchaninova, Head of Marketing The zones include Anaklia, the businessmen and government Investment Initiative, a project can provide possible investors and PR says that the future of the sandy beach Black Sea resort, delegations is increasing. aimed at developing further with cutting edge market hotel market in Georgia is very “which proves to be rather “On May 18th the rooms of both tourism in Georgia. According to research and professional advice promising. “To date, nearly all the successful as there is a significant Marriots were booked 100%,” con- Kobalia, investors would find this about the market opportunities.” conference halls and meeting interest from foreign firmed Aleksandre Kvaratskhe- latest initiative interesting. A survey conducted by GNIA on rooms are occupied and reserva- businessmen.” lia, Marketing Director of Tbilisi “Developing the hospitality 106 hotels across the country tions are increasing ,” she said. The development of Anaklia is Marriot Hotel. Situated on business means increasing Geor- shows that of the total revenues in one of the projects of Georgian Rustaveli Avenue, the city’s busi- gia’s profile as a tourist the hospitality business, 60-65% is BEYOND TBILISI Government which plans to trans- ness and commercial heart, the destination, and high return on generated by international The GNIA forecasts that by the form the resort as the hub of the six-storey building offers 127 the investment,” Kobalia added. chains, while local hotels hold 35- 2014, there may be 11-12 interna- Black Seaside. Anaklia is still rooms ranging from deluxe rooms The capital offers approximate- 40% of the market. The survey al- tional hotel brands operating in open for investors and the hotels to a vice-presidential suite. ly 2,400 beds in 52 facilities, includ- so reveals that high-quality hotels Georgia. will be soon constructed. Tourism and hotel development ing guesthouses and rooms rented are concentrated in the capital, In the Black Sea coastal Adjara According to Geostat, the has been a top priority for the by private families, according to while mid-range hotels, guest region, for instance, it is expected national statistics office, while Georgian government. Vera the Georgian National houses and family houses are that global brands such as most countries saw declines in Kobalia, Minister of Economy Investment Agency (GNIA), an more common in the regions. Kempinski, Hyatt, Hilton and travellers in 2009, Georgia saw a and Sustainable Development is arm of the Ministry of Economy Georgian hotel investors have Ritz-Carlton will start operation 16% increase over 2008. In 2010, confident the high-end hotels will and Sustainable Development begun to attract global franchis- over the next five years. Adjara’s about 2.03 million international maintain this level. which supports, publicises and ing operators in the last two years. first internationally-branded 5- travellers came to Georgia, up “The data show why Georgia promotes Georgian businesses at In 2009, there were five franchises star hotel opened in June 2010. 36% from 2009. In the first quarter needs to focus on the development home and overseas. operating in Georgia; one more This July ribbons will be cut on of 2011, about 700,000 internation- of tourism infrastructure as the Keti Bochorishvili, GNIA’s di- started business in 2010. Over the Radisson Blu hotel as well. There al travellers arrived, 43% more number of international rector,thinks the time is ripe for next four years, six global brands are more than 120 hotels in the re- from the same period last year. travellers in the country is investors to develop new hotels are expected to enter the Georgian gion. The Ministry of Economy increasing by 35-37% annually,” and invest in “this booming” busi- market. GNIA forecasts that by Vazha Diasamidze, acting projects that if the growth rate she said in an interview with ness. “We have secured commit- 2014, up to12 international hotel chairman of Tourism continues, the supply of hotels Georgia Today Ltd. She added that ments from investors to construct brands will be present in Georgia. Department of Adjara will not be sufficient to satisfy the the government expects 5 million several three-and five-star hotels The 4-star Holiday Inn, which Autonomous Republic, says that market demand. production locales WELCOME TO GEORGIA Continued from page 1 world, our energy sector offers signifi- over 4,000 years, stunning landscapes, cant investment opportunities, legendary hospitality and culinary close to each other.” responsible for attracting foreign di- gian government hopes that bringing With the introduction of Free Industri- ranging from hydropower,wind and so- riches. There are over 12.000 historical In addition to Tbilisi, the Indian del- rect investment, played host to the vis- Bollywood to the country could help al Zones we aspire to further the vision lar resources to the development of en- and cultural monuments in Georgia, egation visited a large number of sites it. According to Keti Bochorishvili, raise awareness of Georgia interna- of Georgia as a hub and connecting ergy transmission and distribution in- (four listed by UNESCO as cultural in the country’s regions, including Ba- the director of GNIA, Georgia, with tionally.India, with its increasingly bridge for regions around us. Offering frastructure. To meet the rapidly heritage sites), 103 resorts, 182 resort tumi and Kobuleti on the Black Sea its small size and diverse landscapes large and mobile middle-class could excellent physical infrastructure, com- growing demand for electricity,Geor- places and more than 2,000 mineral coast, as well as Paliastomi Lake and offers much cheaper filming opportu- become a great new source of tourists petitive labor and utility costs and most gian Ministry of Energy has springs which encompass ski and Poti Port. Their trip to western Geor- nities than its European rivals. Geor- keen to see the locations where their importantly full tax exemptions from announced a Greenfield hydro power snow,health spas and sea. With no visa gia also took in Mestia, a mountainous gia was a genuine discovery for the In- favorite films were shot. all five corporate taxes; these zones rep- development programme with the po- requirements for the citizens of 67 region famed for its medieval fortress- dian producers, with its untouched “The film industry is very much resent a great possibility to produce tential of 32 TWh and based on the countries and zero VAT liabilities on es and breathtaking landscapes. The nature and impressive geographic connected with tourism,” noted Roop and export from Georgia profitably.In- “Build-Own-Operate” principle. All tour operators for revenues from delegation also visited the town of features. One of the biggest Naik, who makes commercial adver- vestors have a choice of establishing new constructions are deregulated and incoming tourists, the sector remains Martvili in Samegrelo region where advantages is that travel between loca- tisements as well as feature films. their operations in already existing there’re no tariffs set for newly built one of the most promising investment they saw the famous Martvili cave, be- tions in the country can take as little “You have the beautiful places, FIZs, or start their own. The Poti free HPPs. With the no special fee for the avenues in Georgia. fore taking in the sights of the city of as a few hours, keeping expenses hospitable people and strong zone, a trendsetter in the region, has connection to the grid, free third party In short, we see Georgia becoming Kutaisi—Georgia’s historical cultural down, speeding up production. infrastructure.” seen foreign investments to the tune of access, no export license requirements THE place of choice for any company centre. Sataplia Cave near Tskaltubo It’s not only Bollywood producers The Indian producers said they are $1 bn and is expected to employ more and priority access for transmission to that would like to produce and trade in also made an unforgettable that are eager to find quality locations seeking long-term cooperation with than 20,000 people. Supported by the Turkey,HPPs present fantastic invest- our part of the world and do so impression on the filmmakers. In at low costs, Georgia expects that in- Georgia. They hope to come back by government’s policy of simplifying ment possibilities. We are currently profitably,interacting with lean-work- Eastern Georgia, the delegation visit- terest from filmmakers from other the end of May to carry out the next taxes, FIZs are geared to become an en- constructing three transmission lines ing, corruption-free administration. ed the city of Signagi in the winerich countries will follow.It is also hoped stage of their assessment. trepreneurial haven. Next to with the capacity of 800 MW connect- For these reasons, I would like to invite Kakheti region, toured the that a potential boom in the film Georgia as a filming location has al- production, country as a whole and ing with Turkey (and further west) you to come and explore Georgia, as we Aleksander Chavchavadze Museum industry will bring a corresponding so attracted interest from western these zones in particular offer further which will ensure that all investment are the country with a lot of untapped in Tsinandali, and the vineyards and rise in the number of international producers. Following the visit from opportunities to companies working in in Hydro Power Plants in Georgia will opportunities that has a lot to offer, wine cellars of the village of visitors. Bollywood movies could the Indian filmmakers, delegations of logistics and transportation. find markets and give good returns. even Argonauts centuries ago came to Napareuli. serve as the best advertisement Geor- TV and Film producers from the Another area of great opportunities Georgia is often considered Georgia in search of undiscovered trea- The Georgian National Investment gia could ever have: Indian movies are Czech Republic and Ukraine also vis- is the field of Hydro Energy.Having the Europe’s undiscovered secret, delight- sure and I invite you to come and Agency (GNIA), a government body popular around the world; the Geor- ited Georgia. second richest hydro resources in the ing visitors with a heritage spanning discover your own treasures! INDEPENDENCE DAY SPECIAL

THURSDAY, MAY 26, 2011 4

for the sale and purchase of electricity supply.Hydropower stations built after August 1, 2008 have been fully deregulated and are entitled to trade electric power and energy at unregulated tariffs. RENEWABLE ENERGY: Georgia has A Regional Energy Hub significant wind potential through which average annual electricity generation is evaluated at 4 bn KWh and installed capacity – at 1,500 MW. Georgia is a net exporter According to the wind energy potential the territory of Georgia is divided into of electricity.Its high, mean and low speed zones where the wind speed fluctuates from 2,5m/s hydroelectric potential up to 9,0 m/s. Taking into consideration geograph- ranks among the world’s ical location the effective radiation of the Sun is rather high in Georgia. In greatest most regions of the country annual du- ration of solar shining ranges from 250 EORGIA’s natural wealth com- up to 280 days amounting to prises principally water and wa- approximately 1900-2200 hours. The to- Gter resources. Georgia’s hydro- tal solar energy potential is evaluated electric potential (rivers, lakes, water at 108 MW.Since the end of the last cen- reservoirs, ice, underground water, tury the solar water boiling systems and bogs) ranks among the world’s have become prevalent. greatest. Generation of electric In Georgia solar transformers are rea- power in Georgia began in 1887 when a sonable to be used only in the mountain- heating engine was installed at the ous,non compact settlements and Georgian Drama theatre in Tbilisi. remote places due to their high efficiency. Georgia’s first hydro-electric station Nowadays very little of the potential (103 kW) was built in 1898 in the of existing renewable energy sources Borjomula gorge, near Borjomi. By the is utilized. By the attraction of invest- end of 1913 there were 7 small hydro- ments it is possible to utilise electricity electric stations and many heat engine produced through renewable energy electric stations, with a total capacity of sources at regional level in order to re- 9 MW,and an annual production of al- (0.4 kV).The 576 km 500 kV line forms the HYDROPOWER duce greenhouse gas emissions. This most 126 000 kWh. backbone of the transmission grid and will also benefit Georgia in terms of the Today Georgia is a net exporter of elec- links Georgia with Russia and Azerbai- STATIONS BUILT AFTER development of environmentally clean tricity and current public and private jan.It also links the hydro generating re- AUGUST 1,2008 HAVE projects under the Kyoto Protocol. investments are pushing this market to gions in the West with the electricity con- WHY GEORGIAN ENERGY expand even more. According to the sumption centers in the East.Several BEEN FULLY SECTOR: Georgia’s excess supply of World Fact Book, in 2009 Georgia’s another transmission lines connect Geor- electricity can be used to offset part of nual per capita electricity gia with neighboring countries.A 220 kV DEREGULATED AND ARE the growing demand in Turkey,Russia, consumption was 1,800 kWh, as existing transmission line with a capaci- ENTITLED TO TRADE Azerbaijan, Armenia and possibly Iraq compared to 8,000 kWh in Germany, ty of 130 MW to Turkey is fully utilized. and Europe. The peak demand season 8,500 kWh in Japan, 13,500 kWh in the A 220 kV transmission line to Armenia ELECTRIC POWER AND (summer) in many of these countries US and 24,300 kWh in Norway. is used for export-import transactions. ENERGY AT occurs in Georgia’s peak supply season Georgia’s energy consumption per unit The governments of Turkey and Geor- — when river flows are at their highest. of GDP is one of the lowest in the CEE gia have agreed to construct a 500/400 kV UNREGULATED TARIFFS Turkey considered being the biggest region. It is anticipated Georgia’s con- transmission line to strengthen high- market where electricity consumption tinued economic growth will lead to a voltage connections between Georgia is increasing dramatically; this expan- larger domestic electricity market. and Turkey.Other planned transmission sion is expected to require its domestic TRANSMISSION CAPACITY: Georgia lines to Turkey include a 220-154 kV from a few kilowatts to 740 MW.Infor- REGULATIONS, TAXES, LICENS- and there’re no tariffs set for newly energy sector to double production ca- also has excellent export opportunities transmission line from Batumi mation for small- and medium-size de- ING PROCEDURES: To meet the built HPPs, no special fee for the pacity by 2020. Many other countries in to neighboring markets.The Georgian (Georgia) to Murati (Turkey) and a 110 velopments is summarized in a rapidly growing demand for electricity connection to the grid, free third party the region are also seeing consumption power grid is connected to the grids of all kV line from Paravani HPP (Georgia) to database posted on the Ministry of En- Georgian Ministry of Energy has an- access, no export licence requirements exceed domestic supply.At this point of contiguous countries and can work Kars substation (Turkey). Once all lines ergy’s web site, and information on nounced a Greenfield hydro power de- and priority access for transmission to approximately only 18% of Georgia’s synchronously with Russia and are operational,the total transmission larger sites can be requested. Total vol- velopment programme with the poten- Turkey.According to the electricity hydro-electric generation capacity is Azerbaijan.Georgia’s electricity trans- capacity will comprise 1,500 MW – 15 ume of investment at this point exceeds tial at 32 Tera Watt hours (TWA) and power Market Rules, licensed suppliers being exploited. This coupled with mission grid comprises approximately times the current capacity. $2.2 billion. The Cadastre of small hy- based on the “Build-Own-Operate” of electricity and any eligible strong government support for devel- 6,200 km of HV transmission (500 kV,220 PROJECTS (large, medium, dro power technical potential of Geor- principle. Electricity sector reforms of consumers (currently some of the larg- oping hydropower resources and kV,110 kV and 35 kV),a 20,500 km distrib- ongoing): There are a large number of gia’s rivers includes around 300 poten- recent years have considerably limited er wholesale customers) of electric increased simplification of procedures ution network (10kV and 6 kV),and a potential hydropower sites in Georgia. tial places for new hydro with a total the State’s involvement in the sector. power may make short term (one year) confirms that Georgia’s energy market 53,000 km (approx) low-voltage network Individual project opportunities range capacity of 4,000 MW. All new constructions are deregulated or long term (5 years) direct contracts has great potential. Where did the come from? wineo you know the answer to heritage rather than an alcoholic the question? The query beverage. may sound silly,but is EVERY BOTTLE TELLS A STORY… “Traditional kvevri wine is my enough to give you the urge favorite,” recalls Isabelle Legeron an to google it pronto. As you’d award wining wine taster whose documen- expect, the first answer to tary “That Crazy French Woman in Geor- Dyour enquiry comes from Wikipedia, say- gia” has recently been premiered in Lon- ing: “Archaeological evidence suggests don and broadcasted to 150 countries via that the earliest known production of the US Travel Channel. wine, made by fermenting grapes, took The idea behind the film is to help Geor- place as early as 8,000 years ago in gian companies market their wines Georgia”. abroad. As the key challenge for exporters Georgia? … and new questions random- is that there is a low level of awareness of ly striking your mind in confusion make Georgian wine among potential importers, you surf further,unconsciously streamlin- films like Legeron’s are expected to make a ing you to the news articles, to prove to significant contribution to the image of yourself that if it hadn’t been Georgian wine abroad. discovered recently,you’d “Ironically,when Among all regions of Georgian King’s descen- Russia has been the largest importer of been aware of the answer Moscow was in the Georgia,Kakheti is dent Ivane Bagrationi Georgian wines up until its 2006 embargo, long before. And voila! Here process of banning all renowned as the wine –Mukhraneli started believed to be due to political reasons, but comes the article by the In- wine imports from Geor- homeland.Kakhetian production of Georgian Georgia started to diversify its export mar- dependent, dated 2003: “Sci- gia,Tbilvino received an prince Alexander sparkling wines using kets and regardless of war with Russia in entists have discovered award for excellence from Jorjadze (1878-1918) was the French method of 2008 and the world economic crisis, wine the world's oldest wine – a Russian Wine Cartmaga- a well-known wine-mak- second fermentation in exports show a growing trend. vintage produced 8,000 zine.The same year our er in his times and his bottles in the middle of Georgian government under the leader- years ago. The find push- wines did extremely well family was famous for XIX century.For the first ship of President Mikheil Saakashvili es back the history of in London’s IWSC, developing Georgian time the wines acquired puts its emphasis on economic growth wine by several hundred Decanter and other inter- wine-making.Family world-wide acknowledg- through rising exports and wine is an im- years. New discoveries national competitions,” traditions are carried on ment in 1882 in Saint-Pe- portant part of the strategy.Georgia show how Neolithic man says Jeff Aston,an Aus- by the WineMan compa- tersburg where it was exports are tax free and the country takes was busy making red wine in tralian Chief winemaker ny founded in 2000 by awarded the highest advantage of preferential trade regimes Shulaveri (Georgia). Although no of Tbilvino,the company Alexander Jorjadze Jr., prize —Grand Prix on with more than half of the world through liquid wine from the period has which produced nine of who keeps the royal spir- the International Exhibi- schemes like MFN, GSP+, Free Trade survived, scientists have now found and ten wine bottles sold in it by making the high tion.Bagrationi 1882 is Agreements with CIS and other states. tested wine residues discovered on the in- the country and abroad quality wines,skillfully the largest sparkling Such benefits, together with relatively low ner surfaces of 8,000-year-old ceramic stor- during the Soviet times. using and harmoniously wine producer in Geor- cost production due to inexpensive and age jars.” Tbilvino makes wines un- combining traditional gia and even after 129 highly skilled labor force, quality raw ma- They call ceramic storage jars der 3 trademarks and ex- methods of wine-making years,remains the most terials and cheaper energy as compared to “kvevri” in Georgia, the country ports to 20 countries and present-day popular brand in Geor- most winemaking countries, make Geor- of about five million, bridged worldwide through 24 im- technologies of produc- gia and throughout Cau- gian wine competitive in the niche where between Europe and Asia, porters. tion and bottling. casus. quality,rather than quantity is the major where wine is more of a cultural pricing factor.