Levan Akhvlediani was appointed as the CEO of the Anaklia Development Consortium in September 2014, and has been involved in development of projects since mid-2013. He has 10 years of experience in corporate and project finance, and has held senior leadership positions at various companies within TBC Holding, an affiliate of one of the largest Georgian banks, TBC Bank. He served as CEO of TBC Holding, leading various project development initiatives. Prior to this, he was the Chief Investment Officer in Georgia of Gazelle Finance, an SME focused impact investment fund. Prior to Gazelle Finance, he co-founded and served as the Managing Director of Kagri Ltd. Hong Kong, concentrating on agricultural commodity trading from the CIS region to Southeast Asia. Prior to Kagri, he was the Chief Financial Officer for TBC Holding’s Georgian Reconstruction and Development Company (GRDC) with a $60M asset portfolio, managing the finance department and gaining extensive experience in capital formation, project finance, real estate project development, and asset management. Prior to GRDC, he served as the Executive Director at TBC Holding’s New Construction Company, a leading construction company in Georgia. Mr. Akhvlediani holds a Bachelor degree in Business Administration with a concentration in finance from The George Washington University in Washington, DC.
Anaklia on the Middle Corridor
1:50 – My name is Levan Akhvlediani, I am the CEO of Anaklia Development Consortium, I have been with the project since day one, I finished my bachelors degree in the United States at GW, then since graduating I have been in a number of industries, I started out with commodity trading, then I moved into development, I moved back to Georgia in 2007, and I’ve been pretty much with TVC Group, which is one of the founding members of our consortium, since then, so I have been in different fields because we are a group of affiliated companies that share many shareholders are the top, but we are in different industries and I have been in construction, in development, and since the end of 2013 when the idea of Anaklia came about I joined this project and I have been here ever since.
2:47 – Actually Anaklia is not a new idea, it’s been around for a long time, to begin with, we looked in the archives and found the very first project here dated back to 1974, and there have been a number of iterations after that, there was one in 1994, in 2000, in 2009, and then there was this last one that we are in, so there have been a number of attempts to undertake this project. Since 2013, I have had the pleasure to lead this project on a day to day basis.
4:08 – the first telegraph wire, done by Siemens, I don’t know if you know this, but Siemens brothers usd to live here in Tbilisi and had their regional headquarters here and the first telegraph connecting London to Mumbai was actually going through Tbilisi, there is a map that we can show you, so our function as a transit country has always been there, one of the functions and economic drivers that we would like to take advantage of.
5:00 – our vision in terms of this project is very broad, we have two projects, one is the port, the deep sea port that we are constructing, and the other is the Special Economic Zone and the city behind it. We have done extensive research on both projects, of course the main one was the port because that was the kind of economic locomotive that would drive everything else so immediately we saw the potential of that and that’s why we issued this project in the tender which the government announced back in 2014. And then out of that actually was a spin off of the Special Economic Zone and the city which we envisage as a logistics hub, as an industrial hub, focusing on different types of industries, in a more initial phases would more focus on logistics, warehousing and some value-added light manufacturing industry type of activities, and in the long run we are also looking at possibilities of attracting other players – financial, education, healthcare and so forth. So the vision is broad, and as part of this vision of course our team has done extensive travelling around the world looking at successful examples, obvious ones being Singapore, Hong Kong, Dubai, and many others actually, and we are trying to draw best practices out of these examples and incorporate them here in Anaklia. I think that Georgia is the ideal place for such a regional hub, and we want to create a zone in which we can incorporate all of these best practices, and make a zone for the regional players, an international hub for doing business and actually connecting to the wider world.
7:19: Like every other hub you have mentioned Singapore, Hong Kong and others, the main function they serve is in connecting people, so in order to do that we need of course not only just physical infrastructure but the soft infrastructure and the legal infrastructure, so all of these directions are being pursued by our team at the moment. For example, some of the things that we are doing, the government has already included Anaklia within the Constitution, giving itself the right to establish a special economic and legal zone, but we are actually drafting now with international and local legal firms a concept paper which would basically establish the governance of this zone, along with the government obviously, so we want to create a zone, let’s say one of the ideas is for a zone which would be governed by English law for example, and English arbitration would be possible there, with international arbitration using UK courts. So these are a number of ideas that we are pursuing in the ultimate goal of creating a hub that can include all the best practices from around the world, and create a zone that can serve the regional players, definitely connecting Asia and Europe, Georgia as the gateway, and I think with our efforts within the next three to four years, we can establish Anaklia of being that connector of Asia and Europe, and a gateway of Asia and Europe.
9:22: The special economic zone and deep sea port are definitely complementary projects, of course they are united by trade, that is the umbrella of everything, the driver – whether it’s cargo, or logistics, or value added manufacturing, all of this then ends up being a part of trade, trade between different geographic areas, and definitely again as a connector, a gateway for Georgia to be a platform for say Asian companies trading or potentially having an opportunity to trade with the EU, and then even European and Western companies wanting to establish their base and do business in this region, we want to create a corridor for both directions.
I think again Anaklia, or Georgia, is unique in this case, and why we think it can be successful is due to our Free Trade Agreements, what we are trying to tap into is Georgia being able to give any international company, or local the ability to trade with, and sell their goods in wider consumer markets, and we have a Deep and Comprehensive Free Trade Agreement with the European Union, a Free Trade Agreement with China including Hong Kong, we have a Free Trade Agreement with Turkey, all the CIS countries, so basically we are a small country, size-wise, but our trade potential and consumer market outreach can be quite large, so anything produced here let’s say, can be exported to these countries, and as you probably already know through different reforms in the last say 10 to 15 years, Georgia has achieved the status of a country that is ranked among the top ten, I think number 8 in the world in Asia of doing business, and this is very true, we have a very non-bureaucratic system, we have one of the most developed financial sectors I think not only in the local region but in the wider region even including elements of Europe. So these are all beneficial to Georgia playing a role as a connector of trade, and Anaklia and the Special Economic Zone behind it, and the city behind it are just the vehicles, we want to create that platform, and then that will be the let’s say mutual benefit between those projects.
12:24 – We want to follow the most modern technologies that there are in port development, and at the same time we have to take into accounnt what is most commercially viable, of course there are some ports and terminals around the world that are fully automated, and in that specific location for objective or subjective reasons they believe in full automation. We believe that at this particular moment due to Georgia’s cheap labour and cheap energy, we want to kind of balance that, we are not going with fully automated terminals but we are going with semi-automated terminals, which is a bit more labour intensive, but at the same time we feel that this is very important for Georgia right now and for Anaklia for that matter to have that beneficial social impact and developmental impact, so that is one choice we have made, and again that’s a Cost Benefit Analysis.
14:03 – it is a mix and a balance between balancing local and international partners, obviously we are prioritising the locals, the Georgians, the Anaklian residents, again one of the main reasons why we are pursuing this project is actually to make a difference, to change the status quo, to make a really positive impact, and I think that this project has a magnitude to make a significant impact, of course many projects can make a positive impact but I think that a project of this scale, you are talking about phase 1 more than $600 million dollars of investment, and across all nine phases we are talking about $2.5 billion dollars of investment and job creation starting with about 2000 jobs all the way up to 20000 jobs, so again these are all the impacts that we are taking into account,
15:00: But Georgia cannot do it alone, that’s out of the question, we are not at the development stage as a country to be able to pull of a project of this complexity and of this nature, so obviously we need expertise from our foreign partners, like Conti, we have had very good other collarboations with European and U.S. companies like Moffat & Nichol, [cannot make out], Van Oord, Royal Haskoning, NTVS, so there have been a number of top top names we have tapped into to provide expertise in different fields, whether it’s environmental, or market, or commercial or otherwise, so it is important and it has to a balance where everyone participates, the locals and our foreign partners.
16:17: we expect to receive our first ship by the end of 2020. But there is always a ramp up period. Anaklia and the economic zone both will have a certain ramp-up period and we foresee in it being any where from 2 to 4 to maybe 5 years. Ports are long-term projects, they are not short-term projects so we are in it for the long term, so there will be lag until we reach full capacity and there is a plan also in terms of expanding even further, for example within the forecast we have for traffic in the coming years after operations concludes that in somewhere between 2027 – 2030 we will need to start phase 2 because we won’t be able to service the capacity that we will create within phase one.
17:30: This is not only a Georgian project, we have many international partners and institutions that are going to be funding this project, going to be participating in bringing added value, but the most important in any success is the alignment of interest between the parties,
17:56: And I think that our group TBC who has been on the Georgian market ever since the fall of the Soviet Union, we started our first company group, the company was established in 1992, we’ve attracted more than three million others of investment to Georgia over the last 26 years, and one of the successes for us was actually having a diversified shareholding structure with our international partners being involved, and obviously the main point is aligning interests, making sure it is a win-win for everyone, sometimes it goes as planned, sometimes it takes longer, but ultimately the main goal is to have a partnership and a group of shareholders, individuals and institutions who can see eye to eye, set common goals and be successful, the project yielding returns to all of them, that’s the key.
19:11: well, we are collaborating with the Chinese companies on different fields, one is in construction obviously because they have a lot of high level experience in construction, whether it is marine construction or terminal construction. One of the key directions that we are pursuing is also a procurement of cranes and equipment for the port which we also see as China being one of the favourite candidates for supply of such equipment, and also we continue talking with, one of the co-lenders, we have four big international financial institutions that are funding this project, I can name all four of them, the European Bank of Reconstruction and Development, Asian Development Bank, Overseas Private Investment Corporation from the United States, and the fourth one is actually the Asian Infrastructure Investment Bank which is actually China based, China initiated international bank, so all of these four institutions, including the Chinese, are part of the group of lenders that are considering this project, and other potential project partners are envisaged to come and join this project later, especially in the Special Economic Zone, I think there is a lot of potential there, I cannot name names at this stage, but there are definitely large Chinese industrial companies that we are talking with, both in tech, in trade and logistics, again to create a team that will bring the most added value to each specific project, and which ultimately determines the success of it.
21:04: CS: Anaklia has ambitions along with Georgia to be a primary transport corridor in the Silk Road Economic Belt, but with the electrification of the train lines in Iran, with the upgrading of the lines in Turkey as well as the construction of the Kars-Tbilisi line, do you think that Anaklia can viably function as this primary node? 21:29 LA: The Belt and Road Initiative has different corridors that it’s tapping into, so to say that we would be a primary node in Anaklia would be an overstatement I think, what we need to focus on is making Anaklia let’s say one of the most reliable alternatives within the Belt and Road, and I think that goal can be definitely achieved by us. The project and the initiative with the Chinese government, the regional players here have really caught on and made significant investments as you willl see along your trip I think creates an opportunity that should definitely be big enough for all of the players, and I don’t think that any one player can play an ultimate role in this, everybody will benefit. And Anaklia, I believe one thing that Georgia and the management of Georgia as a country in the region has created are the best practices that our group has incorporated in previous projects and what we are incorporating in this Anaklia project, both in the port and the SEZ will be an exemplary project in terms of governance and management structures, in terms of transparency and efficiency and reliability. So those are the key aspects that have made Georgia a success story, and that is what we are definitely going to emphasise on going forward, and we believe that we can due to these factors definitely compete with any alternative corridor or an infrastructure or a port, and have that established market share on the Belt and Road Initiative, every other player I am sure will get some certain share of that market, including Anaklia.
23:32: You know this is a greenfield port, this is a very new initiative, and of course this is a very complex project so bringing it to fruition is a challenge, it’s something that we are tackling every day, every hour, so that is definitely a challenge, bringing such a big project, such a complex project to fruition is definitely a challenge, and I think that everything else, we don’t have any major roadblocks that we see, at least from today’s perspective, that can hamper the project, the commercial viability is there, environmentally we are sound, and social impact, and environmental impact is manageable, and the resources are there, the partners are there, the consortium is in place, I think that the government is also very motivated to get this project really done as fast as possible, so I think that all of the components are there, I think the only challenge that remains now is to get our hands dirty and let’s say put this project to fruition as planned and receive them first vessels in 2020.
25:04 : In one word? This is difficult, the Belt and Road, what I can say is it is definitely a great initiative, it is definitely a vision. When I joined the project in 2013, at that time it was really a theory, and it was a theoretical vision, but since then I think today we can no longer call it a theoretical vision I think this is something that is becoming a reality, for example last year, the freight forwarders were placing orders for their customers along the Trans-Siberian route, that is one of the Belt and Road Corridors, could not give them a fixed rate for more than three months, actually sorry one month, and last year was three months. This year (2018) in January, the first 12 month contract was signed basically fixing rates, this is very important because this gives the customers the ability to plan ahead and to actually know what it costs them to transport something not in three months but in a year’s time, or in six months time, and this is for predictability and reliability reasons this is very important and a very good achievement from diffeent angles, so I think that the sheer fact that last year alone about 300,000 containers, TEUs have moved through the different Belt and Road corridors is definitely a great sign, so it is a vision that is becoming a reality, and we hope that it will continue this way, I think the biggest challenge for us with the Belt and Road especially will be to establish the Belt and Road and this vision no longer as a vision but as a viable alternative for trade, for moving goods and for connecting China and Europe and Asia and Europe and the West, so that is the ultimate goal I think and we hope that in the coming future that will be achievable.