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MP Calls for U.S. Intervention to Stop Railway Privatization
Civil Georgia, Tbilisi / 19 Feb.'08 / 13:21

Lado Papava, an independent lawmaker, called on the United States to intervene and persuade the Georgian authorities to stop the privatization of the state-owned rail network.

“Privatization of the Georgian Railway must be removed from the [government’s] agenda. Our friends, the Americans, are capable to doing this, so I appeal to them [to do so],” MP Papava, who is a senior fellow at the Tbilisi-based think-tank Georgian Foundation for Strategic and International Studies (GFSIS), said in Parliament on February 19.

Opponents of privatization, including opposition parties, have warned  several times that it poses a threat to Georgia’s strategic role as a regional transportation route, given the fact that the Russian state-run railway operator has already signed a 30-year management deal of Armenia’s rail network.

The Georgian Economy Ministry invited interested parties to express an interest in Georgian Railway last October after a deal to hand over the management rights of the network for 99 years with a mysterious company, Parkfield Investment, had fallen through.

According to the Georgian Economy Ministry five companies have expressed an interest in buying the network:

  • Stratton Holdings, which the Economy Ministry said was a U.S.-based firm;
  • Centr Invest Capital Partners - the Economy Ministry said it was a Russian company, but no other information is available;
  • Capital Investment Group AG – the Economy Ministry said it was a Swiss company; no other information is available; 
  • East Capital – the Economy Ministry said it was a U.S. company; an internet search, however, produced a company with the same name based in Stockholm and specializing in asset management with a focus on Eastern European markets;
  • Silk Road Group – a company with diversified business interests in transportation, real estate, financial services; the holding operates a fleet of about 3,000 rail tank cars.

Submitting a proposal, the details of which still remain confidential, does not necessarily mean that the country’s railway network will be sold, the Economy Ministry said. It also said it still hadn't even decided whether the network would be privatized or the management rights handed over. A share issue was also an option, officials have said.

An expression of interest by a potential investor, according to the Economy Ministry, does not oblige the Georgian side to sell any entity. The Economy Ministry said it reserves the right at any time to withdraw from the purchasing procedures; or suspend or change or exclude any interested party from the purchasing procedure.

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