Poti faces cargo mobility challenges
The biggest challenge for a new terminal at Georgia’s Port of Poti will be ensuring there are feasible transport routes for delivering goods to key markets including central Asia, a finance expert has said.
Although the Port of Poti is the main port for Georgia and offers the quickest route to the Caucasus region and central Asia, PACE Group’s terminal project will need to negotiate cargo through several countries before it reaches its destination country, stated Kenneth Angell, managing director for project finance in small and medium-sized enterprise finance at the US-based Overseas Private Investment Corporation (OPIC) and team leader for the PACE Terminal Project.
Speaking exclusively to Port Strategy, Mr Angell said: “One critical and important challenge will be to be able to get the goods to different countries, say in central Asia. You may have to go through another country to reach Uzbekistan, for example.
“You’ve got to have the co-ordination of road, rail, as well as customs. That’s being discussed but it’s not a smooth flow and I think that that will be a challenge to move goods to those areas.”
PACE Group handle 97% of the bulk that goes through APM Terminals-owned Port of Poti and having purchased old property with a shipyard adjacent to the port, PACE is converting it to accommodate bulk and some limited container trade and will undertake dredging to ensure it can handle vessels up to 50,000 tons.
Approved in December and committed in January, the terminal project’s loan agreement of $50m is in the process of being negotiated and is the largest loan OPIC has made to a single project in Georgia.
Construction for the project is expected to take two years and Mr Angell said there is certainly a case for development as more traffic wants to use Poti. “No other port around the Black Sea is able to match what Poti is able to do on distance,” Mr Angell said.
He said issues including congestion at Russian ports and Georgia’s ban on wheat transport by trucks from Russia requiring transport by rail or ferry ensures the terminal will be in demand, alongside strong cargo growth for the geographies it will serve. However, container traffic development could be a challenge for the terminal.
All OPIC projects require a minimum of 25% US involvement and the organisation looks for strong, viable projects that generates cash flow and offer development benefits. OPIC, which follows the International Finance Corporation guidelines for ports, assesses project, sector and country risks, plus which of these should be borne by the shareholders and which ones should be borne by the investors.
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