Georgia to Sell ‘Borjomi’ Production Rights

A license for production of Borjomi mineral water will be sold on auction with a starting price of USD 8 million, the Georgian Economy Ministry said on February 17.

The auction for selling the license for 25 years will be held on March 20, it said.

The license is currently held by Georgian Glass & Mineral Waters (GG&MW) company, which since 2002 is owned by Salford Capital Partners Inc. – a private equity and investment management firm, which was also involved in managing late tycoon Badri Patarkatsishvili’s assets in Georgia. GG&MW obtained 10-year license for Borjomi production in 1997. Since 2007 the license had been extended once in every six months and in January the license was extended only for three months.

Companies willing to obtain the license can apply the Economic Ministry from February 19 to March 19.

GG&MW spokesperson told Civil.Ge on Wednesday that the company would announce whether it would apply for license or not on February 19. 

Irakli Rukhadze, a chief executive of Salford Georgia, said in his recent interviews to the Georgian press that his firm had been experiencing uncertainty over Borjomi production, related to short-term extensions of the license.

He has also claimed that senior Georgian officials, in particular Gigi Ugulava, the Tbilisi mayor and then defense minister, Davit Kezerashvili, met him last year and told to give up GG&MW in favor of Wimm-Bill-Dann, a leading Russian food producer; Rukhadze said that he had refused. Wimm-Bill-Dann purchased Georgian Foods Ltd in 2007, which at that time was the third largest dairy producer in Georgia.

GG&MW said that the company had lost GEL 25 million in 2006 after Russia banned import of Georgian mineral waters. It, however, said that by 2008 the company managed to overcome the crisis and sales volumes reached to pre-2006 figures. The sales and export of Borjomi mineral water dropped again starting from October 2008 by 30-40% because of the global financial crisis, according to GG&MW.

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