Deal for Russian Investor to Restore Sokhumi Airport “Ratified”  

The so-called parliament of Abkhazia on July 26, ratified the agreement between Moscow and Sokhumi on the implementation of the investment project to resume the operation of the Sokhumi airport.  

The agreement had been signed in St. Petersburg on 16 June 2023 and regulates the implementation by a Russian legal entity of an investment project for the reconstruction of the airport and the resumption of air traffic and defines the rights and obligations of the parties.

The agreement signed with the investor, which will be identified by the “intergovernmental” commission, will be implemented “in the form of a public-private partnership”.  Following the ratification of the agreement, the master plan will be approved within 20-30 days.

According to the de facto “minister of economy” of the occupied region, Kristina Ozgan, the project will be financed by a Russian legal entity. 

Ozgan also said that the Abkhaz provide the “special investment regime, which includes guarantees to the investor the ownership of investment entities, as well as preservation of the conditions of the investment regime throughout the implementation of the project. In addition, Sokhumi will provide the investor with a fairly wide list of benefits on taxes and other payments.

“Given the strategic importance of the airport, the aerodrome and everything related to the aerodrome infrastructure will be retained by the state.  At the same time, the investor will finance all activities related to the restoration of this infrastructure exclusively at its own expense. Also, the object of historical and cultural heritage – the old airport terminal complex – remains in state ownership”- Ozgan said.

Notably, the representatives of the de facto legislature noted that “this is a social project” as it is not profitable for the investor, while also pointing to “certain risks” for the Sokhumi and the lack of possibility of attracting non-Russian investment.

According to reports, the Russian investor financing the project will be granted unprecedented privileges and preferences. Among them:

– All construction materials and equipment necessary for the restoration and continued operation of the airport, including aviation fuel and special fluids for aircraft maintenance, will be exempt from customs duties.

– The investor will be exempt from property tax and profit tax during the payback period of up to 25 years.

– For the electricity consumed, the investor will pay the tariff applicable to the most privileged category of legal entities, such as schools and hospitals.

The identity of the investor is being kept confidential, but it is believed to be the oligarch Oleg Deripaska, who is sanctioned by the United States and the European Union.

The deal was ratified by 30 votes in favor and 2 against.

The President of Georgia Salome Zurabishvili reacted to the deal twitting that she strongly condemns the decision, which is an “illegal act” by Russia:

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