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Anaklia Development Consortium: Following the New Silk Road

Dubbed the ‘Project of the Century’ in Georgia, ADC’s Anaklia Port is set to put the country on the trade map by opening them up to China’s Maritime Silk Road; one of the spokes of the ‘One Belt, One Road’ trade initiative. This build has been 42-years on the drawing board, and now that ADC are finally making it possible, they plan to be in this project for the long-haul.

Every ten to fifteen years, Georgia has a development project that will change the country. In the late 1990s, the government funded the BTC Pipeline – the country’s biggest infrastructure development in recent decades. However, in 2014 it opened a tender for a much larger development; Georgia’s first deep sea port. This project would not only generate jobs and business, but would boost Georgia’s world trading abilities and enable the country to fully participate on the Silk Road.

The tender was won by the Anaklia Development Consortium (ADC), a company formed by two equal partners: 110-year-old Conti Group, an American construction and engineering veteran, and Georgia-based business leaders, TBC Holding. ADC was formed in 2013 specifically to apply for the port tender and, following a lengthy and competitive application process, their success was finally announced in February 2016.

However, in relation to the project’s history, this process took no time at all. Plans for the Anaklia Port have existed since 1974, but were shelved due to political volatility. Since then, several successive governments have attempted to resurrect the project without success – that is, until now. ADC have received a 52-year BOT concession from the Georgian government; that’s 52 years during which the company may design, develop, finance and operate the port. Levan Akhvlediani, ADC and TBC Holding CEO, is keen to ensure that they use this time to its fullest potential: “This will not be a quick construction followed by a sale. This project is important to the lives of the Georgian people and the future growth of this country, and that demands that we dedicate our time.”

The plans for the ambitious build, which will cost ADC an estimated total of US$2.5bn, have clearly been designed with this long-term view in mind; there are nine phases planned in total, each one expanding the port’s scale and capabilities. The first stage will cost an estimated US$550 – US$600mn, and covers the creation of a cargo port with an 8-million-ton capacity, capable of accommodating Post-Panamax sized ships. From there, the next four phases are expected to be completed within 30-years, and the last four after that. Paul Force, Vice President of Conti International, explained the timeframe; “With a project of this scale, you need to build it in pieces, attract a volume of cargo, and build off of the success of these milestones.”

The power of partnerships

The partnership between Conti and TBC Holding itself is one based on long-term relationships. Whilst ADC is a young partnership, it was born out of a 20-year friendship between the companies’ presidents, Kurt Conti and Mamuka Khazaradze. The idea to form ADC occurred in 2013 at a Harvard reunion dinner hosted in Georgia; Mr Conti became taken with the country and enthused with his friend about finding a project that would not only test their companies, but would benefit the country in a lasting way. Mr Khazaradze suggested the port, and the Anaklia Development Consortium was born.

Whilst equal partners, TBC Holdings and Conti bring very different expertise to the table. TBC Holding have many have many Georgian companies affiliated within the group, including JSC TBC Bank, which was voted the best bank in Georgia for twelve of the last fourteen years, the world-famous Borjormi mineral water brand, leading tea producers GeoPlant, winery Chaeteau Mukhrani and even a successful high school the American Academy. The group also possesses a residential and a commercial real-estate company.

Conti, with their vast experience in construction and engineering, have a practised hand at every aspect of the port build. Between 2011-2014, they even performed an ambitious re-design and re-build of the ferry terminal between Staten Island and downtown Manhattan in New York, which had to be conducted without closing or disrupting the crossing. Force is confident of their abilities to take on the Anaklia port: “Mathematically, this is the largest project we have ever worked on. However, it is spread over such a long period of time that in practise, it is a familiar build.”

The driver for a prosperous Georgian economy

Anaklia Port layout

The port is part of the government’s push to boost Georgia’s economy; it will create countless jobs in Anaklia, both from the ongoing construction and the running of a busy industrial hub. As for trade, existing Georgian ports currently only accept up to 1500 TEU vessels, which are the smallest feeder vessels operating in the black sea. The new port will allow Georgia to accept larger vessels of up to 10,000 TEU, and it is estimated that this ability alone will yield savings of US$160 / TEU. Additional savings are also expected due to Anaklia’s efficient design, which will enable it to have 95% operational efficiency throughout the year -currently, Georgian ports’ down-time can reach up to 30% of the year).

In the initial phases, the port will exclusively receive straight cargo containers, but as it develops the range of cargo will expand; dry bulk, wet bulk, even LNG (liquefied natural gas). Each type of cargo requires different storage methods, and also different births to accommodate a range of transport vessels. On top of these developments, the government plans to support the build by investing US$100mn in improving access to the port by road and rail.

There is another exciting, unexpected aspect to the plans. As well as the business generated by the port itself, ADC have increased the benefit to local industry by adding a Free Industrial Zone to the plans. The initial plans for the port allowed 1000 hectors for the build, but ADC altered the plans to meet the same specifications on just 400 hectors, leaving 600 free for the Free Industrial Zone. The build will provide space for port logistics companies, financial and training services and light manufacturing companies. It also has large areas set aside for real-estate, food outlets and tourism. This innovation, designed with the help of a maritime consultancy, was part the reason that ADC beat their competition to the tender.

“Without the Free Industrial Zone, the port would just be a place to exchange cargo”, Force observed. “The Zone should be a catalyst for economic growth in the surrounding area, creating regional development and increasing employment.”

ADC keen to ensure that port construction has a minimal environmental impact

This social impact is ADC’s main motivation. Currently, Anaklia is a popular sea-side destination, with an attractive coastline and an annual music festival. ADC are firm that they do not want the port to disrupt this side of Anaklia life, but instead will support and add to it.

As a part of this aim, ADC are determined to strictly manage the port’s environmental impact. In particular, they are conscious to avoid affecting the port’s neighbour, the Kolkheti National Park. “Georgia is already a very green country,” explains Akhvlediani, “But even so, TBC Holding always go above and beyond existing regulations when we make our impact assessments. ADC is doing the same.” The company is currently working with marine surveyors and consultants to carry out studies on the local wildlife and the marine floor. From these results, they will deduce what adjustments need to be made in order to limit their disruption to the local ecosystem.

With the lives of Anaklia’s residents and Georgia’s wider population so close to their hearts, ADC are eager to keep up communication and transparency between themselves and the general public. To help achieve this, the company launched Anaklia magazine, which published its first edition in July 2016. This magazine aims to keep the people of Georgia informed and involved in the project, and in no doubt that the build is moving forwards as planned.

After failed attempts in the past from various governments, it is not surprising that people’s initial enthusiasm was tempered with, as Force described it, “a bit of ‘let’s-wait-and-see’”. However, now that production is underway, Akhvledian feels that the response to the port has been warm and welcoming, with people excited for the possibilities it will create. Force agrees; “Conti have been overwhelmed by the kindness and acceptance of the Georgian people. It is a pleasure to be here – we couldn’t be more honoured or more excited.”

Future collaborations are planned to build a dynamic, outward-looking Georgia

The future seems to hold further collaborations between Conti and TBC Holding. The companies have found a “synergy and synchronicity”, as Akhvledian described it, that reflects the friendship of their presidents. The horizon holds work on a hospital in Tbilisi, the Georgian capital, and future projects that the companies are yet to announce. However, through all of this, they will continue to develop their presence in Anaklia, expanding on a port that will in turn expand Georgia’s economy and global reach, benefiting the country in a lasting and significant way and thus achieving the dream that first inspired two friends as they shared a nostalgic meal.