Poti Sea Port Development

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In April 2008, the government of Georgia agreed to sell a 51% share in the Poti Sea Port Corporation, which held the right to manage the port of Poti, to RAK Investment Authority, an investment arm of the Ras al-Khaimah (RAK) Emirate of the United Arab Emirates (UAE). The RAK Investment Authority paid US$80 million for the 51% share in the port management right that the investor could exercise for 49 years, the government retained 49% share. Located 400 km (250 miles) from the capital Tbilisi, the port was one of the largest ports on the Black Sea coast. The Poti Sea Port was also one of the largest dry cargo handler in the Caucasus and an essential part of the Caucasus transit transport network, providing direct waterway access to major ports of Europe and Asia, including ferry connections to major Black Sea Ports of Ukraine, Russia and Bulgaria. The port had a direct connection with the country’s railway network, motorway links with all towns and cities of Georgia, and access to Poti and Batumi (80km) international airports. In 2007, Poti handled about 7.7 million tonnes of cargo. The Ministry of Economic Development of Georgia awarded RAK Investment a 51% controlling stake in Poti Sea Port Corporation through a competitive tender held in mid 2007. The Poti Sea Port Corporation held a 49-year management right for the port. The tender, in which eleven companies participated, was a part of the government’s integrated Port and Free Industrial Zone Development project. Under the terms of the tender, the concessionaire, in addition to the port management and expansion, would also be responsible for development of a free industrial zone around the port. The other companies that submitted their expression of interest were: Zim Ports (Israel); International Container Terminal Services incorporated (ICTSI) (Philippines); DP World and Jafza (United Arab Emirates); Hutchison Westports (UK); Hazer international holding (Turkey); Consortium created under coordination of Turkish exporters’ union (Turkey); Ashtrom international Silk Road Group (Israel); CMA CGM (France); Land Mark Worldwide (Korea) and Hamburger hafen-Und Logistic Aktiengesellschaft (Germany). RAK Investment agreed to invest $200 million in building a new port terminal near the current port at Poti, and developing a free industrial zone around the port in the next three to four years. RAK also agreed to pay $80 million for a 51% stake in the port management right, plus a further $10 million for the purchase of more than 300 hectares of land in its vicinity for the industrial zone. The Georgian government retained a 49% stake in the Poti Sea Port Corporation and a controlling vote in the decisions of the port’s governing board. Under the agreement, the RAK Investment was responsible for development of infrastructure essential for the industrial zone including building necessary facilities, establishing relevant procedures and rules and managing the zone in accordance with Georgian laws. RAK Investment would also attract global companies to invest in the industrial zone thus increasing the flow of cargo through the port. In December 2008, RAK Investment Authority acquired the 49% state-owned shares of the Poti Sea Port Corporation for $65 million. The Georgian government estimated that the newly created free industrial zone would attract export-oriented companies which would create about 20,000 jobs in the region. Companies which would choose to operate in the new industrial zone would be exempt from value-added, profit and property taxes. The government estimated that Poti's capacity would rise to between 35 million and 40 million tonnes a year from its current maximum capacity of 8 million. As of April 2011, RAKIA's share was acquired by APM Terminals A/S (part of Maersk Group). APM Terminals announced the acquisition of a 80% share in Poti Sea Port. the capacity size will triple after 200 investment