Economic Overview

The privatization is a significant part of the reforms being implemented by the new government. More than 15,000 enterprises have been privatized since 1992 when the privatization process started in Georgia. The state still owns quite a large number of enterprises - about 180,000 small, medium and strategic enterprises, which employ over 180,000 people. The ongoing privatization policy envisages quick transfer of remaining assets into a private ownership and a radical deregulation of the economy for the mobilization of private investments. The new government intends to attract foreign investors and to create more favorable business environment in the country. The ministry of economic development releases information about the privatization through its own print medium and other newspapers as well as posts it on www.privatization.ge website

The Enterprise Management Agency sets up supervisory councils and prepares enterprises for the privatization. In order to make them more attractive for investors, the enterprises are restructured, broke up into separate assets or combined with others into one cluster. In some companies it is preferred to launch a liquidation or bankruptcy procedure, while in others - to implement rehabilitation programs. In order to ensure transparency and competition, the Enterprise Management Agency has worked out the privatization procedures. It invited an international audit into several large enterprises.

The privatization in Georgia's one of the regions, Ajara, was carried out on a very small scale. Following the political changes in this region in 2004, Ajara has opened up for private investors offering the whole lot of interesting proposals to them. Interesting facilities in this region include tourist facilities, the Batumi seaport and other enterprises.

372 enterprises should be privatized within two years. One of the large enterprises, the Ocean Shipping Company, has already been sold for 93 million USD. The shipping company had a huge debt and 15 vessels. Tbilaviamsheni, the 60-year-old aircraft construction plant, has also been sold. The enterprise was purchased for 67 million USD by a company, which was established by its former management and which took over its management a year before the acquisition. Among other privatization deals are the Georgian Telecom, sold by 5 million USD; Elmavalmshenebeli, the electric locomotive building plant, sold by 4 million USD; the Intourist Hotel in Adjara, built in 1938, which was sold by 3 million USD, and the Iveria Hotel with 330 rooms in Tbilisi, which was sold for 2.8 million USD.

Several large enterprises are being geared up for sale. One of such companies is the joint stock company Azoti, which is specialized in chemical industry and employs up to 3,000 people. It can annually produce 162,0 thousand tons of ammonia, 266,4 thousand tons of nitric acid, 337,5 thousand tons of ammonium nitrate, 9,0 thousand tons of pure sodium cyanide, 140,0 thousand tons of ammonium sulfate. The Rustavi metallurgic combine is the only metallurgic enterprise in the Caucasus region. It produces pipes, which are used in gas and oil extraction and transportation business. The enterprise has debts and, therefore, the bankruptcy procedure has been launched there. The Batumi oil processing plant stopped oil processing in 1990 and since than it has not been rehabilitated. However, the plant is used for storing and transferring oil. The plant is linked to the Batumi seaport both by rail and pipeline. The demand on oil storage and transportation is increasing every year. Five power generating companies and 29 gas distribution companies are being prepared for the privatization as well.