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Issue no: 808/9

• JANUARY 12 - 14, 2016

• PUBLISHED TWICE WEEKLY

In this week’s issue...

FOCUS

State Security Detains Three for Illegal Handling and Selling of Radioactive Substance

ON GAS Taking gas from Russia could damage Georgia-US relations, expert warns. But what about the Frontera find..?

PRICE: GEL 2.50

PAGE 5

PAGE 2

Adjara’s Tourism Department to Launch New Projects to Improve Tourist Services PAGE 3

U.S. External Policy Council Expert Stephen Blank

Fire it Up! Estimates for the Kakheti Gas Find Grow BY ZVIAD ADZINBAIA

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eorgiaTodaycontinuestoinform its readers about the recent groundbreaking finding by US independent oil and gas exploration and production company ‘Frontera Resources’ of more than 3.8 trillion cubic meters of gas in the Georgian region of Kakheti early in October. Late December, Frontera Resources announced an exciting operations update for its work in Georgia. Continued on page 4

Construction of Underground Gas Storage Facility to Guarantee Uninterrupted Supply to Georgia PAGE 5

Construction of Three-Star Park Inn By Radisson to Start Summer 2016 PAGE 6

Some American experts say the South Kakheti Gas Complex will rank as the 6th largest, just behind Russia’s giant Shtokman field, while Azerbaijan’s Shah Deniz field is currently ranked 18th largest at 42 tcf (Trillion Cubic Feet)

Dechert OnPoint: Internet Services PAGE 7 Prepared for Georgia Today Business by

Markets Asof08ͲJanͲ2016

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BUSINESS

GEORGIA TODAY

JANUARY 12 - 14, 2016

State Security Detains Three for Illegal Handling and Selling of Radioactive Substance BY KATIE RUTH DAVIES. SOURCE: ADMINISTRATION OF STATE SECURITY SERVICE OF GEORGIA

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he State Security Department under the State Security Service of Georgia has detained three persons for the illegal handling and selling of a radioactive substance. Officers of the State Security Department under the State Security Service

has been seized. The investigation established that the members of the criminal group illegally purchased and kept the radioactive substance – a radioactive isotope of Cesium - Cs137, a product of nuclear reaction which, according to the gamma ray emission and radiological expertise report, is dangerous for health. The investigation is on-going on the basis of illegal handling and selling of nuclear material (Article 230, Part I of the Criminal Code of Georgia).

of Georgia, as a result of operative and investigative activities, detained the members of a criminal group: Mirian B. (DoB 1979), Konstantine B. (DoB 1976) and Joseb Ch. (DoB 1976) for illegal handling and selling nuclear material- Cesium 137 – which they planned to sell for USD 100,000. The radioactive material

SOCAR May Provide Georgia with Iranian Gas BY TAMAR SVANIDZE

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ead of the Investment Department of State Oil Company of Azerbaijan, Vagif Aliyev, said the State Oil Company of Azerbai-

jan SOCAR, which is one of the largest oil and gas suppliers in Georgia, will provide Iranian gas to Georgia. Iran said last week it wanted to export its gas to Georgia through Armenia. According to the agreement with Georgia, Iran will deliver gas to the Armenian border whereby Georgia will receive it. However, according to the Azerbaijani

news agency Trend.az, in an interview with ANS TV channel, Vagif Aliyev said it is possible Azerbaijan will provide Georgia with Iranian gas, most likely on a small scale. Aliyev stated that for Tehran, possible gas supplies from Iran to Georgia will have a political context, not an economic one. “SOCAR has a strong position in Georgia. Georgia and Azerbaijan signed an agreement on gas deliveries until 2030,” Aliyev said. “We are the main supplier of natural gas to the country. What’s more, Tbilisi receives part of the volume as a transit fee for transportation of Russian gas through its territory to Armenia.” He added that, while Georgia is a close neighbor and strategic ally of Azerbaijan, each state determines its own energy strategy. “It is important to think how important the Georgian market is for Iran,” he said. Currently, Iran provides gas to Turkey and Armenia. Gas from Azerbaijan to Georgia is delivered via the Baku-TbilisiErzurum gas pipeline, which transports gas produced in the ‘Shah Deniz’ gas-condensate field in the Caspian’s Azerbaijani sector. SOCAR supplies its own gas to Georgia via a pipeline that passes through Azerbaijan’s Gazakh district. The power flow of gas through this pipeline is about three billion cubic meters a year. Azerbaijan is the main supplier of gas to Georgia with a share of 77.9 percent of total imports of this category.

World Bank Forecasts Economic Growth in Georgia BY ANA AKHALAIA

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he World Bank has forecast a 3% growth in Georgia’s economy in 2016, which is 0.5% higher compared to the same period the previous year. According to the World Bank’s new report, Global Economic Prospects, Georgia’s economic growth rate in 2017 will increase to 4.5% in 2017 and by 2018 will reach 5%. According to the World Bank, the global economic growth rate was 2.4% in 2015. According to the same report,

the Euro zone economy will grow 1.5% to 1.7%. The World Bank notes that economic development slowdowns could affect the world’s poverty reduction goals and general welfare. “More than 40% of the world’s poor live in developing countries where growth slowed in 2015,” World Bank President Jim Yong Kim stated, going on to stress that developing countries should focus on building resilience to a weaker economic environment and shielding the most vulnerable. The benefits from reforms to governance and business conditions are potentially large and could help offset the effects of slow growth in larger economies, he added.


BUSINESS

GEORGIA TODAY JANUARY 12 - 14, 2016

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Adjara’s Tourism Department to Launch New Projects to Improve Tourist Services BY ANA AKHALAIA

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he Department of Tourism and Resorts of Adjara is launching three new projects this year. Projects: ‘Recommended by the Department of Tourism,’ ‘Training and Consulting Center’ and ‘Guide Licensing’ aim to develop the tourism sector and improve services in the region. The project ‘Recommended by the Department of Tourism’ aims to improve hospitality services, establish international standards and encourage technical standards. Participation in the project is voluntary, and those wishing to take part are asked to fill out an application in the Department of Tourism or on the website www. recomend.ge. After selecting the applications, par-

ticipant food and accommodation facilities will undergo a technical check which will be carried out with the globally recognized HotRec, Hot Star Union 21 principles. Facilities passing the check will be awarded ‘Recommended by the Department of Tourism’ status which will stand as a guarantee of quality and reliability for tourists. The ‘Training and Consulting Center’ will be established on the basis of the Tourism Department Services and the Tourism Product Development Department. It will provide current employees in the tourism sector with training, and food and accommodation facilities with training and consulting services. One-day training seminars will be held for selected staff at least five times a month. Trainings will be conducted by guests, as well as experienced staff of the leading local hotels and restaurants. The main goal of the Training and

Facilities passing the check will be awarded ‘Recommended by the Department of Tourism’ status, which will stand as a guarantee of quality and reliability for tourists

Consulting Center is to improve the service quality and establish international standards in the tourism industry. The Consultation Center will hold its first meeting on January 12th. The project ‘Guide Licensing’ is to provide the best quality service of tourist guides in the region and to grant a special status to those who excel. The first stage of licensing tourist guides includes licensing city guides, guides of mountainous Adjara and the protected area Mtirala National Park. The procedure of tourist guide recognition is preformed once a year, in autumn. Eager participants are asked fill out an application in the Department of Tourism and Resorts of Adjara or on the website www.recomend.ge. Selected candidates will be tested, interviewed and asked to organize demonstration tours, after which they will be awarded licenses. The project will contribute to increasing the value and quality of tourist guide services in the tourism sector.

“All three projects are important for the development of the tourism sector,” said the Chairman of the Department of Tourism and Resorts of Adjara, Mamuka Berdzenishvili. “If in the past year we were able to train 300 people, we believe this figure will increase to 1000 through the Training and Consulting Center. Training so many people every year will certainly yield results which will help to improve the overall service. The projects ‘Guide Licensing’ and ‘Recommended by the Department of Tourism’ will be the quality to which tourists can refer when selecting a particular hotel, restaurant or guide.” All related information and application forms of the new projects will be published on the website of the Department of Tourism and Resorts of Adjara www. recomend.ge which will be launched in the first half of January. The Department will publish quarterly newsletters for participants, in which new projects and participation procedures will be described.


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BUSINESS

GEORGIA TODAY

JANUARY 12 - 14, 2016

Fire it Up! Estimates for the Kakheti Gas Find Grow Continued from page 1 In October 2015 the American company that has long been operating in Georgia announced that ongoing work had assessed the gas resources associated with its exploration and production efforts at the South Kakheti Gas Complex to contain as much as 135 trillion cubic feet (3.8 trillion cubic meters) of gas in reservoirs found between 300 meters and 5,000 meters in depth. According to the recent update, since then extensive integrated geologic and geophysical studies conducted by the Company have continued within the Complex. “This ongoing technical analysis has provided a more detailed understanding of the extensive integrated gas resource potential that continues to evolve and now appears larger than previously identified in October- with as much as an additional 52.5 trillion cubic feet (1.5 trillion cubic meters) of gas in place added to the Company’s previous estimate. The overall estimate now stands at 187 trillion cubic feet (5.31 trillion cubic meters),” said Frontera representatives. Frontera says it is now in the process of completing the second independent assessment of its gas resource estimates associated with the South Kakheti Gas Complex. The South Kakheti Gas Complex is part of a prolific hydrocarbon region known as the Kura-South Caspian Megabasin that extends eastward from Eastern Georgia and through Azerbaijan to the South Caspian Sea and Western Turkmenistan. This regional megabasin contains the prolific Shah Deniz gas field that is situated approximately 400 kilometers to the east of the South Kakheti Gas Complex. Operated by BP, this field

is estimated to contain approximately 40 trillion cubic feet (1.13 trillion cubic meters) of gas in place. According to the study, together with ongoing well operations, expansion of existing processing facilities has progressed and it is now anticipated that operations will bring daily gas production in excess of 7 million cubic feet per day during the first quarter of 2016. Frontera continues to advance evaluation of commercialization options to expand and accelerate efforts to bring this resource to not only Georgia’s domestic market, but also to nearby regional markets in Turkey and Europe. At the same time, Frontera has continued work related to a strategic Memorandum of Understanding that was signed with Ukraine’s national energy company, the National Joint Stock Company Naftogaz of Ukraine, as announced in July 2015. In addition, an engineering study continues with Naftogaz relating to the possibility of bringing liquefied natural gas (LNG) to Ukraine from Frontera’s ongoing gas work in Georgia. Steve C. Nicandros, Frontera’s Chairman and Chief Executive Officer commented, “Our gas holdings continue to materially grow in size, thereby establishing the basis for a strategic development initiative.” According to Nicandros, [their] oil holdings are experiencing breakthrough technical results that he continues to equate to similar advances in the United States that have transformed the country’s energy independence trajectory. Because of this, “we continue to believe that our ongoing work will serve to uniquely distinguish Frontera’s significant value and further serve to establish

Georgia’s domestic energy independence in the years to come, making it a strategic supplier of oil and gas to Europe and Turkey’s nearby consumption markets.”

ANALYSIS Exploring the topic in depth, last year Georgia Today exclusively interviewed Dr. Ariel Cohen, Senior Fellow at the Atlantic Council and Director of the Center for Energy, Natural Resources and Geopolitics at the Institute for the Analysis of Global Security. The expert said if the resources are proven and commercialized, Georgia, which is currently a mid-income country, would become a high mid-income country in terms of GDP per capita comparable with Azerbaijan and Kazakhstan. Cohen, asked whether Georgia needs to diversify its gas sector through Russia’s Gazprom, stated that Georgia has a conflict with Russia over Abkhazia and South Ossetia (Tskhinvali region), relations are tough and he does not understand why Georgia needs to diversify its gas sector away from friendly Azerbaijan. In search of an expert opinion on the subject, Georgia Today also interviewed a London-based energy expert and scientist working in the field of energy. The expert declared that the South Kakheti Gas Complex is truly a worldclass play, comparable with many of the larger fields in the world. “The Georgian gas potential can only strengthen relations between countries in the region as it contributes to the regional success as an energy supplier to mainland Europe through TANAP and other regionally significant projects.” The discovery by Frontera will almost certainly confirm that this field is one of

10 Galaktion Street

Some American experts say the South Kakheti Gas Complex will rank as the 6th largest, just behind Russia’s giant Shtokman field, while Azerbaijan’s Shah Deniz field (pictured) is currently ranked 18th largest at 42 tcf (Trillion Cubic Feet)

the largest gas fields on the planet. Some American experts say this field will probably rank as the 6th largest, just behind Russia’s giant Shtokman field, while Azerbaijan’s Shah Deniz field is currently ranked 18th largest at 42 tcf (Trillion Cubic Feet). The Shah Deniz field is currently the key reserve for the Southern Gas Corridor project, an initiative of the European Commission for gas supply from Caspian and Middle Eastern regions to Europe. Conveniently, the designated pipeline route of the Southern Gas Corridor travels across this new field in Georgia using existing infrastructure; relatively, the status of Georgia as a transit country will quickly be redefined as ‘key supplier.’ Energy experts believe that even though the South Kakheti Gas Complex is still in relatively early stages of development, possible high-caliber global interest is likely to guarantee that this strategic asset will be very quickly developed. The occasion may literally change the entire geostrategic picture not only in the region of the Caucasus, but also the Black Sea and Europe. More lucidly, Europe, which currently suffers from an over-dependence on Russian energy resources, will be able to diversify its energy sector through Georgia, previously considered no more than a transit corridor for various projects including Trans Anatolia Pipeline (TANAP) which is due to open in 2018. Yet Georgian Energy Minister Kakha Kaladze has been negotiating with Russia’s energy giant Gazprom, which is believed to be widely utilized for fulfilling Putin’s government’s political and

geopolitical interests. The Minister declares that Gazprom could fill a “gap caused by the energy shortage of Azerbaijan”, Georgia’s main gas and oil supplier since 2006, when Russia endeavored Georgia to pay its political price for Euro-Atlantic aspiration and, as a result, cut gas supply during a very cold winter. Likewise, U.S. External Policy Council Expert Stephen Blank this week told Georgian newspaper Kviris Palitra that gas import from Russia will negatively impact Georgia-U.S. relations. There is a reasonable notion that the case could be politically ‘muted’. At this stage, disclosing this world-shattering information could be exceedingly risky for both the Georgian government and the country’s national security, while economic lucrativeness and development of the field is the second main issue. Zviad Adzinbaia is an Analyst at Georgia Today newspaper covering regional politics, security, Russia-Georgia affairs and issues of Georgia’s Euro-Atlantic integration. He is also a fellow of a number of high-caliber programs at the Georgian Foundation for Strategic and International Studies (GFSIS). Related stories: http://georgiatoday.ge/ news/1909/Georgian-Gas-Potential-aWorld-Class-Play http://georgiatoday.ge/news/1636/ God%E2%80%99s-Gift-Revealed%3A-Georgia-Could-Become-a-Key-European-EnergySupplier http://georgiatoday.ge/news/1720/ArielCohen%3A-Georgia-Could-Become-an-EnergyExporter Go here to read Frontera’s official update: http://www.fronteraresources.com/recentnews/operations-update/

Tel: (995 32) 2 45 08 08 E-mail: info@peoplescafe.ge


BUSINESS

GEORGIA TODAY JANUARY 12 - 14, 2016

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Construction of Underground Gas Storage Facility to Guarantee Uninterrupted Supply to Georgia

US Expert: Russian Gas Import May Negatively Impact Georgia-US Relations BY ZVIAD ADZINBAIA

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nited States External Policy Council Expert Stephen Blank told Georgian newspaper Kviris Palitra that gas import from Russia will negatively impact Georgia-U.S. relations.

media regarding the possible import of Iranian gas by saying that no particular agreement with Iran has yet been signed. According to Deputy Energy Minister Ilia Eloshvili, Georgia will have financial liabilities with Gazprom, the pipeline which will potentially provide Georgia with gas from Russia. Minister Kaladze and Gazprom representative Elena Burmistrova met in Zurich on December 27.

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onstruction of an underground gas storage facility, capable of storing 230-250 million cubic meters of gas, is to begin this year with a USD 230-250 million investment. “Georgia is the only country that does not have a gas storage facility, which is a significant problem in case of an unplanned termination of gas, as well as the seasonal imbalance between supply and consumption,” the Georgian Oil and Gas Corporation stated. The amount of gas able to be stored in the new facility amounts to around 10-15% of the current total annual consumption. French company GEOSTOCK SAS, selected through an international tender,

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will complete a feasibility study of the underground gas storage facility early this year. Georgian specialists will also participate in preparation of the gas storage feasibility project. The agreement between the Georgian Oil and Gas Corporation and SOCAR, signed in June, 2015, promises the gas storage project European standards and technical regulation compliance, as well as safety and environment protection in accordance with international standards. According to preliminary estimates, in case of a delay of gas supply from outside the country, the gas storage facility will be able to fully provide an uninterrupted supply to the country’s population and energy sector in critical situations. Construction is planned for completion in 2019.

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Blank says he cannot see any need for Russian or Iranian gas while Azerbaijan is providing Georgia with a sufficient volume of natural gas, calling it “a policy of private and not social profit.” The US expert said the policy undermines Georgia’s opportunities to resist Russia and will negatively impact Georgia-U.S. relations. Georgia’s Energy Minister, Kakha Kaladze, responded to reports by the

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6

BUSINESS

GEORGIA TODAY

JANUARY 12 - 14, 2016

Georgian Domestic Dried Fruit by Skigi Now on the Market BY ANA AKHALAIA

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eorgian domestic dried and farm delicacies produced by Skigi have recently appeared on the Georgian Market.

Skigi produces dried fruits from various produce grown on their own agricultural land and land purchased from locals. They produce dried fruit from kiwi, apple, tangerine, churchkhelas from nuts, hazel nuts and raisins, and Tklapis- traditional Georgian pureed fruit rolls. “Before their final form, the products

The fruits are protected in order to maintain their beneficial properties go through quite a lengthy and complicated process. The fruit is dried in a

special drier through which the fruits are protected from insects and environ-

mental impact, in order to maintain their beneficial properties,� Skigi Director Darejan Berdzenishvili stated. The company plans to negotiate with a Georgian-Polish firm. Three people are employed at the company at this stage. Skigi was financed under the Produce in Georgia program with a grant of 5000 GEL.

Handcrafted Georgian natural wines and tapas style food 6, Erekle II str (old town) 0322 93 21 21

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Construction of Three-Star Park Inn By Radisson to Start Summer 2016 BY ANA AKHALAIA

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he Partnership Fund is working to build the threestar hotel Park Inn by Radisson with investment company Bloc Invest, an active player in the real estate market. Park Inn by Radisson will be oriented towards the middle social class and is to include 200 rooms, a restaurant for 120 people, a bar, lobby-bar, conference halls, meeting rooms and parking places for 40 cars. According to the Fund, USD 25 million has been invested in the project. The Director of the Partnership Fund Investment Department, George Cherkezishvili, said that there is demand for a three-star branded hotels and the Fund plans to fill that deficit. The JSC Partnership Fund was established by the Government in 2011. The State owns 100 percent of the Fund and has assets exceeding 5 billion GEL. The Fund holds shares of Georgian Railway, Georgian Oil and Gas Corporation, Georgian State Electric System, Electricity Commercial Operator and Telasi, dis-

tributor of electric power in Tbilisi. One of the main objectives with investment directions is proper corporate management of these shares. The new hotel will be built at Chanturia Street N10, in place of hotel Tori. Construction will begin in summer 2016 and will be completed by 2017.

There is demand for three-star branded hotels and the Partnership Fund plans to fill that deficit


BUSINESS

GEORGIA TODAY JANUARY 12 - 14, 2016

7

Dechert OnPoint: Internet Services

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echert Georgia, through the contribution of partners Archil Giorgadze and Nicola Mariani, joined by senior associates Ruslan Akhalaia and Irakli Sokolovski, as well as Ana Kostava and Ana Kochiashvili, is partnering with Georgia Today on a regular section of the paper which will provide updated information regarding significant legal changes and developments in Georgia. In particular, we will highlight significant issues which may impact businesses operating in Georgia. Dechert’s Tbilisi office combines local service and full corporate, tax and finance support with the global knowledge that comes with being part of a worldwide legal practice. Dechert Georgia is the Tbilisi branch of Dechert LLP, a global specialist law firm that focuses on core transactional and litigation practices, providing worldclass services to major corporations, financial institutions and private funds worldwide. With more than 900 Lawyers in our global practice groups working in 27 offices across Europe, the CIS, Asia, the Middle East and the United States, Dechert has the resources to deliver seamless, high quality legal services to clients worldwide. For more information, please visit www.dechert.com or contact Nicola Mariani at nicola.mariani@dechert.com.

I. INTERNET SERVICES: CUSTOMERS’ RIGHTS UNDER GEORGIAN LAW The Georgian National Communications Commission (“GNCC”) is the primary state organ entrusted with the regulation of the telecommunications sector in Georgia. The GNCC issues binding legal regulations in the field of electronic communications. The GNCC regulates the conduct of electronic communications sector operators (the “Operators”) who are persons (both natural and legal) authorized to operate in the Georgian market for electronic communications services. Consumer-related legislation is a material component of telecommunications regulation in Georgia. The GNCC regulates the delivery of services and protection of consumer rights in the field of electronic communications. Accordingly, GNCC resolution #3, dated 17 March 2006 (as amended, the “Regulations”) sets out and protects the rights of subscribers of telecommunication service providers. The Regulations cover all fields of electronic communications, including internet service provision. This edition of OnPoint provides an overview of the Regulations related to the provision of internet services to end users/subscribers.

II. OBLIGATIONS OF THE OPERATORS Operators have various obligations with respect to internet service provision. For example, Operators are only allowed to provide internet services to customers on the basis of an agreement executed in written form. Such agreement is concluded pursuant to the application of an end user to the Operator. The end user shall provide for the necessary access to its premises to the Operator as required for the establishment of the relevant local network. The Operator, as the service provider, shall have the means to detect and disconnect relevant end users in cases of fraud, embezzlement, provocation, etc. Private or work e-mails are confidential and can only be reviewed pursuant to a court order or in cases of necessity as prescribed by law. The e-mail hosting service provider shall protect end users from unauthorized access to their e-mails by third parties. The e-mail service pro-

Photo: www.advertising-design.tk

vider as well as internet service providers shall take all reasonable means within their authority to protect end user accounts from unsolicited communications. Where internet games are operated by or used by the Operators, the Operators are obliged to regulate access, including restricting access to minors, to games that include monetary gains or losses. The Operators are required to post information about the gaming rules on the same webpage where the game itself is accessed. A different set of obligations applies to web page and internet domain owners. Web page owners are responsible for the security of links available on their web pages and shall publish alerts about potential viruses as well as a guide on how to avoid viruses. The internet domain shall not be confusing and shall not serve the purpose of shadowing other web pages. The Operators are additionally obliged under the Regulations to register the details of end users when providing chat services. Other obligations exist as well. For example, the Operator shall at any time, at the request of an end user, make available without any charge to the end user information on the type of service provided, tariffs, service plans and the speed of the provided internet connection. The end users shall also freely receive information about their consumption, traffic and charges for a specific period. The obligation to provide information additionally covers: the rules of payment, the schedule; notice about the suspension/ termination of services; information about the service interruption times and duration, as well as the amount of relevant compensation due for undelivered services; the quality and/or terms and conditions of provision of internet services; the measures to be taken by the

Operator in case of breach of internet usage rules by the end user; etc. The Operators are obliged to have a 24/7 hotline. The information provided to the consumer must be accurate, reliable, comprehensive and understandable, and must not be of a misleading or fraudulent nature. The Operators are only allowed to change the terms and conditions in case they duly inform the customer of any changes no later than 10 working days in advance. The Operator shall provide the customer a notice to provide information, services, terms and conditions of such modification which increases customer commitment volume or changes service conditions in a way likely to significantly influence the customer’s decision on the continuation of services. The Operator shall post information for the users of the service offered, including service packages and tariffs, as well as information services, suspension and termination conditions and amendments to the service package. The Regulations set out strict timeframes for remedying service interruptions and downtime, the latter being defined as the time when the supplied internet was lower in speed than promised by the relevant internet tariff plan. Shall the Operator be unable to remedy the cause of interruption and fully reinstate the services, service credits apply and the time of interruption shall be deducted from the next month’s bill. The Regulations grant certain freedoms to the Operators with regards to reasons for suspending services and calling for immediate renewal of services once the reason behind the suspension ceases. However, the Regulations only allow termination of internet services in case of a lapse of 45 days after the services have been suspended for one of the reasons established in the terms and condi-

tions of the relevant agreement between the end user and the Operator. The Operators are additionally responsible for proper marking of content which is not intended for adolescents and can cause physical and psychological harm. The Operators shall utilize all reasonable means to avoid the access of adolescents to non-adolescent content on the internet, including limiting the accessibility of certain web pages to relevant age groups, etc.

III. PROCEDURE OF END USERS’ DIRECT COMPLAINTS TO THE GNCC For the effective resolution of consumer complaints, the Regulations provide that Operators must have internal dispute settlement bodies responsible for handling subscribers’ claims and keeping records of such claims. Moreover, the Operators must also adopt respective claims handling procedures and publish them on the relevant web page, along with providing information about such procedures in the agreement with end users. This internal dispute settlement body must make decisions on claims within 15 days from receipt of the claim. The subscribers’ have a right to appeal such decisions at the GNCC or Georgian courts. The GNCC addresses consumer complaints against Operators in accordance

with the administrative procedure prescribed by the General Administrative Code of Georgia. The Consumer Protection Inspector, a special organ within the GNCC, represents, guides and aids consumers regarding their complaints. In general, an oral hearing is held with both the consumer and the Operator duly represented and given the opportunity to present their case. The Consumer Protection Inspector is additionally allowed to present the Complaint before the GNCC on its own motion, based on the information provided by subscribers.

IV. CONCLUSIONS On a final note, Operators, and especially the Operators with significant market power, tend to have all the terms of their standard end user agreements first approved by the GNCC before concluding them with subscribers. However, such approval from the GNCC does not exclude the possibility of valid claims against such agreements under the Regulations, and against illicit conduct by Operators. *** Note: this article does not constitute legal advice. You are responsible for consulting with your own professional legal advisors concerning specific circumstances for your business.


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BUSINESS

GEORGIA TODAY

JANUARY 12 - 14, 2016

Van Dyck ‘Smuggler’ Claims Picture was Legally Transported to Turkey with Help of Ministry of Culture BY DIMITRI DOLABERIDZE

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eorgian businessman Malkhaz Makharadze and Azerbaijani businessman and Gardabani resident, Zahir Huseynov, purchasers in 2010 of a painting recently discovered in Istanbul and confirmed as a genuine work of famous 17th century Flemish painter Anthony van Dyck, have said that it was bought in Tbilisi and legally transported to Turkey with the help of the Georgian Ministry of Culture. Turkish media reported the arrest of the two businessmen in Turkey, who were accused of smuggling the valuable Van Dyck picture from Georgia. Both the Ministry of Internal Affairs and Ministry of Foreign Affairs of Georgia have denied a connection to Georgia or Georgian citizens. The investigation revealed that the picture had arrived in Georgia via Russia from Europe. The artwork has been valued at USD 14 million. Members of the Abashidze family from Tbilisi claim that the painting was their property until 2010, having been bought in a thrift shop 15 years prior for USD 5,000. They further claimed they

were forced to sell it on for financial reasons, unaware of the identity of the artist who had painted it. “Two men came to us- Malkhaz Makharadze and Zahir Huseynov,” said Eka Abashidze, one of the previous owners of the Van Dyck. “We agreed to

We agreed to sell them the painting for USD 37,000. We were then given USD 7,000, and they disappeared with the picture

Source: The Van Dyck Painting found in Istanbul. Photo: Istanbul Police Department Anti-Smuggling and Organized Crime Unit/AFP

sell them the painting for USD 37,000. We were then given USD 7,000, and they disappeared with the picture. We waited for them to come and bring us the remaining amount, and when we realized that they weren’t planning on paying us, we did everything we could to contact them. Huseynov always answered the phone, talked to us, but always lied. We eventually took them to court.” “Me and my friend Malkhaz Makharadze bought the painting from the Abashidze family with full observance of rules,” Zahir Huseynov told TV channel Rustavi 2. “We had all the necessary documents when we took the canvas to Turkey. Everything was legal. We left the painting at my friend’s house, but as we later found out, my friend’s son stole it. We filed a lawsuit with the local Prosecutor’s Office, though the case has yet to be investigated.” Art historians in Georgia say they had no knowledge of the Anthony van Dyck artwork having been in Tbilisi. Van Dyck was a Flemish Baroque artist who became the leading court painter in England after enjoying great success in Italy and Flanders (present-day Belgium). Van Dyck completed some 800 paintings before his death at the age of 42 in 1641.

We had all the necessary documents when we took the canvas to Turkey. Everything was legal

Automotive Company GT Group Importing Wine-Making Equipment

BY ANA AKHALAIA

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utomotive company GT Group has added a new affiliate to the holding, GT Enology, which imports winemaking equipment. According to the company’s General Director, Levan Gogsadze, GT Enology imports equipment from France and Italy. The services of the company have been used by a number of wine producers, amongst them Teliani Valley, Kakhetian Traditional Winemaking, GVSE, Château Mukh-

rani, and Kimerioni. Gogsadze stated that this direction has resulted in being both convenient and acceptable for the wine companies, who actively order equipment and wine materials. GT Group is a diversified trading and service company which imports trucks, motor and special oils, agricultural and construction equipment, specialized equipment (fire trucks, rescue vehicles, cleaning machines, etc.) and building materials. Since 2005, the company has regularly been awarded certificates for being a large taxpayer to the state budget, as one of the largest importers of lubricants in Georgia.


BUSINESS

GEORGIA TODAY JANUARY 12 - 14, 2016

9

Georgian Wine Export Decreased by 39% in 2015 BY ANA AKHALAIA

President to Name NBG Chief Candidate by the End of January

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he export of Georgian wine decreased by 39% in 2015 compared to the previous year. According to the National Wine Agency, Georgia exported more than 36 million bottles of wine to 46 countries, worth more than $98.1 million. Georgia exported 2.6 million bottles to China in 2015. There was also significant growth in export to EU countries. To Estonia there was a 54% increase, the Netherlands a 58% increase, France a 190% increase and 100% growth in Denmark. 31% more wine was exported to the United States, with a total export of 248,075. 48% more was exported to Canada. The top export countries were: Russia, with more than 18.3 million bottles, Kazakhstan with more than 5.1 million, Ukraine with more than 3.4 million, China with over 2.6 million and Poland with over 1.6 million bottles. Despite the increased export to Euro-

BY ZVIAD ADZINBAIA

pean countries the drop in total wine export was caused by a decrease in two larger export countries, Russia and Ukraine, due to economic difficulties in the regions. It should be noted that the total export decreased in 2015 only compared to 2014 and 2013, when the opening of the

Russian market after several years of embargo caused the country’s exports to reach its peak. For example, in 2012, Georgia exported about 23.3 million bottles, in 2011 19 million, 2010 14.8 million bottles, 2009 10.9 million bottles and in 2008 only 12.2 million bottles were exported.

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he term of office of the National Bank President Giorgi Kadagidze and members of the board is to expire in February 2016. Head of the Presidential Administration, Giorgi Abashishvili, told reporters that the President of Georgia will likely name a candidate for the membership board by the end of January. According to Abashishvili, consulta-

tions on the issue will be held with experts before the president presents the candidacy to parliament for further discussion. “We welcome professional discussions, but it will not be justified if a candidate selected through open process is not supported. This will be wrong from a political point of view as well as in terms of macroeconomic stability.” Abashishvili added that candidates for the position have been nominated and his expectation is that the President will name his candidate by the end of January.


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BUSINESS

GEORGIA TODAY

JANUARY 12 - 14, 2016

Georgia Loses Tourists from Azerbaijan BY DIMITRI DOLABERIDZE

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he devaluation of the Azerbaijani national currency Manat has once again hit Georgian tourism hard. This is especially true of the ski resorts Gudauri and Bakuriani, where traditionally large numbers of visitors head over from Azerbaijan for the winter season, particularly during the New Year holiday. This season saw a distinctive reduction in the number of Azeris on the slopes. The loss comes as a second blow to

the tourism sector of Georgia following on from the introduction of the visa regime. Custom saw 80-90% of tourists in the winter resorts being citizens of Georgia’s neighbouring Azerbaijan, a fact that many small family hotels depended on. This year the situation changed, claimed the hotel owners, who say that they’ve also noticed a general decrease in tourists, not only Azeris. While the Georgian National Tourism Administration (GNTA) is doing all it can to promote the image of Georgia as the place to be this winter, the depreciation of a currency is too great a force to overcome, with the Azerbaijani Manat having recently fallen in value by 50%.

According to the management of the hotel ‘Vere Palace Bakuriani,’ where a one bed room costs USD100 a night and a suite USD300, the current New Year holidays have seen far fewer tourists from Azerbaijan. “Our main customers are the Azerbaijanis, but now the flow has visibly decreased, as well as there being a reduction in the number of local tourists. The Azeris do not come in such quantity as before because of economic difficulties [in their country]. Due to the devaluation of the Manat, revenue has declined sharply, and now they have no money to spend on this kind of trip.” A significant reduction in the number

of Azerbaijani tourists has also negatively affected the running of hotel ‘Europe Bakuriani,’ where a one bed room starts at 90 GEL. “In the past our guests comprised mostly of citizens of Azerbaijan. The situation has changed- because of the crisis Azerbaijanis just cannot come to ski in Georgia this year,” said a ‘Europe Bakuriani’ representative. “It’s having a very negative impact on the situation of hotels located in Bakuriani. As for Georgian tourists, their number also decreased. Many of those who have the money have bought an apartment in Bakuriani, and now they don’t need to spend money on hotel accommodation.” The situation is repeated in hotel ‘Ritz’

who last year claimed 80% of its guests as Azerbaijani. “Now that number has reduced,” they said. The ‘Hotel Apartment Company’ claim that because of the devaluation of the Manat, there is an increased tendency of Azerbaijani guests cancelling previously made reservations. On December 21, 2015, the Central Bank of Azerbaijan announced the transition of the national currency – the Manat - at a floating rate, and then immediately made a 50% collapse. On January 7, 2016, Azerbaijani banks stopped sales of the currency and the State imposed restrictions on the purchase of dollars and euros.


BUSINESS

GEORGIA TODAY JANUARY 12 - 14, 2016

11

Aliyev: “Tensions between Russia and Turkey Undesirable” BY DIMITRI DOLABERIDZE

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zerbaijani President Ilham Aliyev said that the strained Turkish-Russian relations of the past year, the two countries both being close neighbors of Azerbaijan, have created an undesirable situation. At a meeting in Baku of the Cabinet of Ministers, chaired by President Ilham Aliyev, the results of socioeconomic development in 2015 were discussed. President Aliyev noted that in 2015 there was a worsening of economic, political and military crises, as well as continued bloody clashes, throughout the world and the region. The President highlighted that the result of the Middle East clashes has been the loss of hundreds of

thousands of lives, with millions becoming refugees or displaced persons. In Europe, which is now seeing a flood of refugees from the troubled regions, there is a strengthening of radical forces with Islamophobic tendencies. President Aliyev stressed that the current situation is leading to misunderstandings and conflicts between cultures. “These are factors of concern to Azerbaijan,” he said. “Unfortunately, in the past year strained Turkish-Russian relations have become a concern to us, alongside tensions developed between Iran and Saudi Arabia, as this situation affects the events taking place in the Muslim world.” In his speech President Aliyev touched upon the Nagorno-Karabakh conflict. He noted that last year no progress in resolving the Armenian-Azerbaijani Nagorno-Karabakh conflict occurred, “once again demonstrating the truth that Armenia does not

want peace,” said the President. Stressing that Azerbaijan’s position is based on international law and UN Security Council resolutions, President Aliyev noted that Azerbaijan, having achieved benefits on the frontline by dictating its will, will continue to increase its combat potential. In 2016 a number of structural reforms are planned, including the development of information and communication technologies and the development of the tourism and transport sectors.

Referring to the importance of taking measures related to the efficient operation of transport corridors, the President said that for the transport of goods in transit through the territory of Azerbaijan, established by the Coordinating Council, at present, Azerbaijan, Georgia and Turkey share a common tariff policy. At the end of his speech, President Aliyev announced 2016 as the “Year of Multiculturalism” in Azerbaijan.

Armenia Develops New Water-Saving Fertilizer BY DIMITRI DOLABERIDZE

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irector of Eco Technology, Ashot Baghdasaryan, has revealed a new fertilizer which is capable of holding water. “The fertilizer granules take water from the soil (either from rain or irrigation) and return them to the plant, when and as needed.” The fertilizer, he added, not only saves water, but also preserves nutrients in the soil. “Typically, a plant does not always have time to fully absorb what is then lost to the ground water. Nutrients can sink into deep waters, and the earth becomes poorer for it. Our fertilizer granules accumulate not only water but also those nutrients,” said Baghdasaryan. According to the company, the fertilizer not only softens the consequences of unfavourable climatic conditions, be it drought or excessive damp, but also creates normal conditions for plant growth by absorbing and giving up to 90% of the accumulated moisture to the plant regardless of soil quality or type. In general, the new fertilizer is claimed to help increase the yield of a crop by 40 - 60%. In addition, the material is biodegradable, meaning that ground waste does not remain. The fertilizer, named ‘Aquasource,’ has already passed a series of tests by volunteer farmers. In addition, the fertilizer is being tested in a number of international programs - one of the World Bank’s projects, WWF’s tree planting project in the Trchkan gorge, Armenia, and the United Nations Industrial Development Organization (UNIDO) which involves the planting of an orchard on the banks

of Lake Sevan. The new product has already captured interest overseas - in Iran, Russia, the USA, India, the UAE, South Africa and Namibia. “We want to deliver commercially, but need to produce more,” Baghdasaryan said. “At present we are turning out 1.5 tons per month; we aim to bring that up to 15 - 20 tons with the funds awarded us by the grant program ‘Matching Grants’ of the Enterprise Incubator Foundation (EIF), to the amount of USD 50 thousand (the same amount in terms of investment that it took to build the company itself). 1 kg of fertilizer can benefit 330 plants, or, on average, 90 kg is required per 1 ha. of land. Of course, not all of our farmers believe in it yet, thinking it an unnecessary expense, but when you sit down and calculate just how much it can increase productivity, it’s easy to see the benefits will soon outweigh the costs of the fertilizer,” he added.

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Issue #808 Business  

Jan. 12 - 14, 2016

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