Turkish Company, Georgia at Odds over Tbilisi Airport Deal

Turkish Companies compete to reconstruct Tbilisi International Airport.

The Turkish Çelebi Holding said on September 9 that the Georgian authorities have violated a contract with the company concerning a deal over the reconstruction of the Tbilisi International Airport and warned that it may “resort to international legal action” to protect its rights.

Çelebi Holding was part of an international consortium that also included the Luxembourg-based Gestion en Technique Spéciale (GTS) and the U.S. company A&J and which won the bid in May to reconstruct the Tbilisi airport. News broke in early July that two companies – GTS and A&J – quit the consortium, but the Çelebi Holding remained committed to starting the reconstruction project and began project finance negotiations with international financial institutions.

Georgian Economy Minister Irakli Chogovadze announced on September 3 that the Çelebi Holding failed to provide necessary financial guarantees due by a September 2 deadline and the Georgian authorities launched negotiations with other two Turkish companies – TAV and Urban. As a result of these latest negotiations, a contract was signed with a new consortium on September 6.

But in a statement issued on September 9 the Çelebi Holding claims that: “The contract we have signed [with the Georgian side] is still valid and in force. There is no formal letter annulling the contract issued to Çelebi by the Tbilisi Airport Authority, a party to the contract. All records and documentation prove that we have fully met all our obligations emanating from the contract to date. We will resort to international legal action to protect our rights.”

The Çelebi Holding also denies that the company had to provide any financial guarantee as claimed by the Georgian side.

“In the contract signed on 1 July 2005, there was no provision stipulating the submission of a document concerning the securing of finance, nor was there a date set for securing finance for the project,” the Çelebi statement reads.

The Turkish company also accused the Georgian side of attempting to thwart the company’s talks with international financial institutions.

“The new Minister of Economic Development of Georgia stated to the international financial institutions with which Çelebi Holding had commenced project finance negotiations that the contract signed by Çelebi Holding was null and void. This resulted in delays in negotiations held for obtaining project finance and in the case of some institutions the negotiations halted altogether. Despite these adverse circumstances, a preliminary agreement was reached with a U.S. financial institution for project finance,” the statement reads.

Neither Georgian Economy Ministry, nor the Tbilisi Airport administration made a comment regarding the accusations of the Çelebi Holding yet.

Minister Chogovadze and chief of the Tbilisi airport Nika Manjgaladze signed a contract with TAV and Urban on September 6, according to which reconstruction of the airport should start in November.

The Turkish consortium will invest USD 62 million in the project. According to the agreement, the Tbilisi airport will be transferred to the Turkish companies with 15-years management rights. The two companies plan to invest an additional USD 18 million in the Tbilisi airport during this period of time.
 
According to the Georgian Economy Ministry TAV and Urban also expressed a readiness to invest USD 15 million in the reconstruction of the Batumi airport, in the Adjara Autonomous Republic.

The TAV and Urban were also participating in the tender competition announced by the Georgian government in May. But a consortium led by Çelebi won that tender together with GTS and A&J.

The Georgian side wants the new airport to serve Airbus 330/340 sized aircrafts and handle a turnover of 2000 passengers an hour.