Project ADC I TBILISI JULY 2018
GEORGIA - HIGH LEVEL DESCRIPTION Population (2018) GDP (2017*) 3.73 million US$ 15.2 billion GDP/Capita (PPP) (2017*) c.us $ 10,600 Real GDP Growth (2017*) + 5.0% Real GDP Growth (5m 2018*) + 6.1% Export (2017) US$ 2.72 billion (+29.3%) Import (2017) US$ 7.98 billion (+9.1%) EXTREMELY BUSINESS ORIENTED GOVERNMENT: 9 th Ease of Doing Business 16 th Freest Economy 8 th Tax Burden Level FDI (2017) US$ 1.86 billion (+16.2%) Unemployment % (2017) 13.9% Inflation % (2017) 6.0% Sovereign Moody s rating (March. 2018) Ba2 (Stable) (by World Bank) (By the Heritage Foundation) (By the World Economic Forum) *Preliminary data 2 PROJECT PRESENTATION
GEORGIA - CROSSROAD OF EUROPE AND ASIA Strategically located on a crossroad of Europe and Asia Non-resources based efficiency driven free market economy FTA DCFTA FTA FTA FTA GSP China Hong Kong EU28 CIS EFTA Turkey The USA Canada Japan Free trade access to markets with over 2.3 billion population The only country in the region that has signed free trade agreements with both the EU and China (incl. HK) The EU Associated Country, ongoing approximation of business environment and quality standards to the EU Floating exchange rate / no currency conversion regulations No restrictions on the import or export of capital 3 PROJECT PRESENTATION
ANAKLIA PORT PROJECT - KEY HIGHLIGHTS PROJECT SUMMARY ANAKLIA DEEP-SEA PORT Public-private partnership with the Government of Georgia ( GoG ) Build Operate Transfer ( BOT ) with 52-year concession Up to 9 development phases - 340 ha port development area 9.3 M ton capacity in Phase 1 Up to 2000 ha Special Economic Zone ( SEZ )* adjacent to port Design Port depth of 16m CD Able to accommodate vessels up to 10,000 TEU GoG to receive 2% of port revenues after 20 years Government providing all hinterland road and rail connections investment commitment valued at c. USD 120 M PHASE 1 DEVELOPMENT / FINANCING Opening in 2021 Up to 600,000 TEU initial capacity + 1.5 million tons of dry bulk Phase 1 development cost c. $ 594 M - 65% debt / 35% equity GoG investment: USD 100M subordinated debt in addition to rail & road investment GoG willing to provide traffic risk guarantee to the senior lenders European Fund for Sustainable Development considering to provide traffic risk mitigation Strategic Project of the Year - 2016 Global Infrastructure Leadership Forum in Washington, DC Best Investment Project of the Year - 2016 Dubai Annual Investment Meeting Outstanding Conceptual Design - BUILD (UK construction industry architectural journal) * SEZ is developed as a separate project with separate shareholding structure 4 PROJECT PRESENTATION
GEORGIAN PORTS CONTAINER CARGO TRANSPORTATION TREND PORT CONTAINER TRAFFIC TEU Oil Crisis, Currency Devaluation by 42% World Crisis, War with Russia 5 PROJECT PRESENTATION
GEORGIAN PORTS CAPACITY AND EXISTING MARKET GROWTH TREND PORT CONTAINER TRAFFIC TEU 6 PROJECT PRESENTATION
CURRENT BLACK SEA PORT DEPTHS GEORGIA CURRENTLY CANNOT ACCEPT VESSELS > 1,500 TEU CAPACITY Vessels up to 10,000 TEU Vessels up to 1,500 TEU Draft capacity limited by port infrastructure. Downtime in 2017 33% Draft capacity of Poti Port limits transport options to only feeder vessels. Feeder vessels encourage double handling of cargo, resulting in increased costs 7 PROJECT PRESENTATION
HIGH COSTS AND INEFFICIENCY OF GEORGIAN PORTS DOWNTIME DAYS THC COMPARISON Poti endured considerable downtime primarily due to wind and ineffective layout of the breakwaters open to main wave direction. 3-day average waiting time. Up to 7-day waiting time during bad weather conditions. Inefficient/old container handling equipment Absence of container yard Consistent downtimes and inability to receive large ships significantly affects Terminal Handling Cost. 8 PROJECT PRESENTATION
GEORGIA - SHORTCUT TO CENTRAL ASIA MARKETS Primary Market South Caucasus: Georgia, Armenia and Azerbaijan Landlocked 17m population US$ 62 bln. Total GDP +4% average GDP growth outlook Secondary Market Countries of Central Asia and North-West of Iran Landlocked 146m population US$ 655 bln. Total GDP +5% average GDP growth outlook 9 PROJECT PRESENTATION
UPSIDE POTENTIAL The shortest route between Europe and Asia Transit time of 11 days from North-West China to the borders to Europe Georgia is founding member of TITR association Integral part of the South-West Transport Corridor Significant potential of China not included in the Base case container forecast 10 PROJECT PRESENTATION
PROJECT STATUS UPDATE - CONSTRUCTION Construction preparatory works started Dec 2017 More than 95% completed up to now Detailed design started in April 2018 Marine UXO to be completed in August 2018 Dredging works contracted to begin in August: International tender with leading industry players Van Oord was awarded the contract. 5,000,000 cubic meters of material from sea bed to construction site Installation of wick drains 11 PROJECT PRESENTATION
EARLY WORKS CONSTRUCTION PROGRESS 12 PROJECT PRESENTATION
ENVIRONMENTAL & SOCIAL PROGRESS ESIA and supporting studies prepared according to international standards Created by Royal Haskoning and Ecoline International Numerous supporting studies prepared: bat, biodiversity, botany, entomology, mammals, etc. Resettlement process practically completed Successfully managed by National Agency of State Property Adequate compensations provided to affected households Project is involved in numerous initiatives to provide social benefits: Joint CSR program with USAID with a US$ 2 million budget English trainings provided to local population Local employment preference 13 PROJECT PRESENTATION
STRATEGIC PARTNERSHIPS ALONG THE CORRIDOR Significant interest of a number of countries along the middle corridor MOUs expressing strong interest signed with a number of key players: Constanta Port Alyat/Baku Port Port of Kuryk Aktau Port Turkmenbashi Port Khorgos dry Port Lianyungang Port Ongoing negotiations with a number of other projects ESTABLISHING STRONG RELATIONSHIPS WITH FUTURE PARTNERS Associated member of TITR since May 2018. Harmonizing tariffs across the route GoG strongly believes in the project and is willing to provide a traffic guarantee to the lenders 14 PROJECT PRESENTATION
EQUITY UPDATE Equity already invested $ 22.6 million Additionally committed by existing shareholders in 2018 $ 35.6 million SSA Marine to invest at financial close $ 12.4 million Van Oord to provide in kind equity $ 5.2 million GoG providing Mezzanine loan $ 100 million Negotiations ongoing for the remaining equity requirement $ 32 million 15 PROJECT PRESENTATION
SUPPORTING INFRASTRUCTURE PROJECTS IN GEORGIA Georgian Railway Modernization East-West Highway Construction Annual throughput capacity to double from 27 million tons to 54 million tons Works performed by China Railway Construction Corporation Project completion in 2019 Project costs - $ 450 million Over 500km of road construction Connecting Anaklia, Batumi, Poti and Zugdidi to Tbilisi and beyond Project completion in 2020 Project costs - over $ 5 billion 16 PROJECT PRESENTATION
SUPPORTING INFRASTRUCTURE PROJECTS ALONG THE ROUTE OIL PRICE DOWNWARD DYNAMICS IS RESHAPING REGIONAL PRIORITIE INCREASING CONTAINERIZATION RATE IN CENTRAL ASIA IS FUELING NEW INFRASTRUCTURE DEVELOPMENTS ALONG THE CORRIDOR Alyat Port Completely new port in Azerbaijan Full commencement of Phase 1 by end of 2018 Capacity Phase 1: 12m tons + 100,000 TEUs All phases: 25m tons + up to 1m TEUs Khorgos Dry Port On the border of Kazakhstan and China Commenced operations 2017 Capacity: 540,000 TEU COSCO 24.5%, Lianyungang Port 24.5% Turkmenbashi Port New port in Turkmenistan Commenced operations in 2018 Capacity: 17m tons + 400,000 TEUs Kuryk Port New port in Kazakhstan Commenced operation in 2017 Rail and truck ferry terminal Capacity 6m tons Upgraded Aktau port- capacity reached 20m tons of cargo 17 PROJECT PRESENTATION
THANK YOU FOR YOUR ATTENTION! www.anakliadevelopment.com 18 PROJECT PRESENTATION