For the development of the Port of Poti, we are going to invest more than 250 million Dollars -says Klaus Laursen, Managing Director of APM Terminals Poti in the interview with Interpressnews.
Klaus Laursen talked to Interpressnews about plans for the construction of the new deep-sea port in Poti, the developments about this project and the future plans of the company.
- First of all, let’s talk about the project, what has been the reason for you going to extend the port of Poti? What kind of infrastructure are you planning to develop and who are your partners?
- APM Terminals, which is global network, operating ports and terminal facilities purchased Poti Sea Port in 2011, and saw the opportunity to build a new deep-sea port. I have been planning and working on it for 2 years plus. The designs include construction, development and operation of a new breakwater, 700 meters of quay wall for dry bulk, containerized and general cargo and will be equipped with modern equipment such as Ship-To-Shore cranes in accordance with international standards. The project plan entails a 13.5 to 14.5-meter water depth at the 700-meter quay wall and 25 hectares of dedicated land for the bulk operation for yard and covered storage facilities.
Many companies expressed the interest in this project, but we will cooperate with the Georgian company called a “Poti New Terminals Consortium” and we are in the process of negotiation of the partnership terms.
As for the budget for the new port development project, we are going to invest more than 250 million dollars.
The constructing period will between 24-30 months, but it also depends on when we can start and of course that’s not something that we ourselves are determining.
- Also, let's talk about your company. As I know, in many countries your company is very successful and you are in Georgia since 2011, why did you decide to invest in Georgia, And why the port of Poti?
- Actually, the group has been her much longer, since 1998. This is an interesting market, location and region itself are interesting, business perspectives are interesting, it was a country that we believe was welcoming for investors. As for the Port of Poti, it has been operating for many years, last year we celebrated 160 years anniversary has very good location. Absolute majority of our employees are from Poti or from its vicinity, there are the strong logistic industries around the city of Poti, which is very important for the cargo owners.
- If you receive a construction permit and a new deep-sea port will be built in Poti, What benefits will the country get from here and what about the statistics, which is very positive. The number of containers, handled by the Georgian ports, increased by 35% during the first 5 months of this year. In these conditions the existing port infrastructure is enough or not?
- Infrastructure projects and ports particularly connect the country to the global trade this also the case for Poti and has been all along. Most aspect of peoples’ lives are impacted by the cargo that goes in and out of the port. So, by building the new port we will create more capacity, we see more cargo streams coming online especially in gas related production of bulk cargoes we see some interesting opportunities. So, cargo transportation through the Caucasus is of the creating opportunities and it is a central part of economic policies here. So, this will be the strong support for the efforts of attracting that kind of activity. Obviously building new facility gives us the opportunity to deliver better service and to improve the logistic chain to bring it up to the modern standards. We do it at our own part of the chain and then we try to work with both the shipping lines and also the trackers and other logistic players to get seamless, no-bureaucratic, efficient cargo flow that at the end of the day impacts every single citizen of Georgia - everything that we are going to do, will make your food, clothes and so on, cheaper so thanks to optimized logistical solutions.
Poti will continue as the primary access to the Caucasian and the Central Asian markets. We believe that we, as a part leading global logistics company, have the skills, ability and expertise to contribute to the economy of Georgia by persisting in our journey to further develop the Poti Sea Port.
There is no sign that we can’t handle with cargo flows, at current time. There is high increase in port of poti, because we already have strong capacity, we have been working hard to improve infrastructure. now we don’t have any problems by this way, but it is only now we have to work for future developments.
- I would like to ask you about recent developments around the construction of a new deep-sea port in Poti. Information was spread in media outlets, that you get the permission for construction of a new deep-sea port. But later Natia Turnava, Minister of Economy said that the document has been annulled. Also, the Head of the Construction and Technical Supervision Agency has been dismissed. The Minister also say that this document is not a construction permit. This is the document on the pre-conditions for land use. What is your comment about this process?
- It’s very difficult for me to comment on that, because essentially, I know nothing more than and nothing before thing was spread in media. We haven’t had an opportunity or time yet to analyze the background for the decision. We have requested to get the copies of the reports, evaluations, that are referred to, but not seen them yet. From my point of view, it is very important that things are done right and we’ve done things in collaboration with the Minister of Economy and Sustainable Development. Last year we started the formal process - applied for the permission and provide every technical information about our plans and received the order of May 2. Those are the facts.
- Tell us, regarding the permit for building a new port, did you have any negotiation with a former or new minister, did they know about your plans?
- Absolutely, the previous Minister of Economy and Sustainable Development has also been updated about our plans, we have been very open for dialogue and it has been imperative for us that the minister of economy and Georgia as such are aware of what we are doing, I mean we aren’t sneaking in a port and one day it is there. So yes, there has been several meetings with the ministers and many meetings with other officials representing several ministries.
- If so, what are the statements now made that this is a new information and no one knows about this?
- I think we have to look at this from the point that the minister of economy has only been in the office for few weeks. Actually, I was called by the minister to have an introduction meeting on May 29, so it is natural for any new minister to take time to get to know what’s going on, but the ministry and the government have certainly been aware of all our plans.
- Do you already receive an official order on cancellation of the document and are you going to use for legal proceedings?
- The cancellation was published on the web site of the agency that issued the order on May 30 and we got an official letter this Monday. We have responded so far to the letter, that we received on following Monday, requesting access and insights to those reports that are mentioned in the letter to us. We have a right to see the background to understand the legal argumentations. If there is anything wrong in legal argumentation, I don’t know by this time. If something is wrong, we would have expected the ministry to reach out to the receiver of the permit to in collaboration to rectify any issue. It is a little bit difficult to understand why we had to read it in the media. However, we intent to engage in cooperation with the ministry as fast as possible to address the issues that has been in their internal procedures to get things done right, so we can progress.
- The Minister of Economy and Sustainable Development stated that your company was going to build the port in the state-owned land and “National Agency of State Property Management” didn’t know anything about this. How correct is this formulation?
- So, this is the story: there is a river Rioni, that every year send out the siltation. Approximately 159,000 squares meter new land has been reclaimed since 2011, so that land has needed to be registered as part of Georgia – so the cadastral codes were issued by the National Agency of State Property Management late April. We had been waiting for the cadastral codes and they sent us a permit when the land had been registered, because that had to be done before they could issue the order they have sent us. So, no, I don’t see that in any way that has been kept as a secret.
- How long are you interested in constructing a deep-sea port in Poti and what is the main hindering factor in this process?
- It is not about hindrance. Building a port or any infrastructure when you spend more about hundred million dollars you have to do things very carefully. Both to take care of financial interest and technical parts. Also, equally important is environment and for us city of Poti. I am fortunate to work in the group that builds ports all around the world. In last 3-4 years, we built four ports around the world, so I have huge group of people who can help. Therefore, there is not hindrance, its progressive process. So, the two thing that we are awaiting right now is obviously another permit because we are good corporate citizens and we live up to the country’s law. Once we have a permit then we have to do an environmental study it has been done once but we need to redo it. It is assessment of the impact on the environment which is very important for the citizens of Poti so when it is done we make sure they understand what happened.
At the same time, we are working with our partners in the Poti New Terminals Consortium company on agreeing on a very long-term contract, on commercial terms, on business terms we are going to work on standards, safety and on very complex things. Once we have the environmental study, we will go on with the next phase of the multi-stage process and so on.
- I would like to ask you about Anaklia port, if the Port of Anaklia will be built before you get construction permits, will this be problem for you? Generally, what do you think about the competition, do you think Georgia needs two deep sea ports?
- I think, that it is absolutely important to understand, that there has to be free and fair competition in a country. Without free and fair competition, you have to have very serious doubt whether it is a place you can invest. Any businessperson will look at that but certainly the foreign investors would think about that why would I put my money in your country if local business people will get different and better terms, whereas I could also invest in another country in another part of the world. And that is obviously when you start having concerns about now. That is not just about whether you built first or not, but also the hindrance put for one and the opportunities getting to other. Those two things are super important. To be free, fair, and live up to the competition legislation of your country, you have agreements with the European Union and normal cooperation with other countries and understand you have an interest in foreign direct investment.
I don’t think, that anybody thinks Georgia needs two deep sea ports. There is no cargo volume to it.
- In conclusion, how is your expectations about the process?
- I have clear expectation of the Georgian government that there is a free and fair competition. I would certainly expect to fast-track the engagement on the permit process, I would expect them not to give a preferential treatment to anybody I am not asking for preferential treatment I am just asking to have a level playing field.
What was going on in the media, in the last days seems to be highly political, it is not our business but we see lots of incorrect statements and facts. So, the facts are: we have for long time worked on a deep-sea port project, we have a partner, they are seriously looking at and spending money on figuring out how we will do this. We have been open with our communication with the Ministry of Economy and Sustainable Development. So, this is the project that, without any doubt, technically can be done and we see now contrary to what happened before regarding the cargo opportunities, so the timing has become right to actually build the port. And again, the most important statement will be that there has to be free and fair competition.