Georgia's post-Covid connectivity plan targets investments of €3.9 billion

21 July 2021 | Melanie Mingas

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Connectivity has been put at the top of the agenda in Georgia, following a visit earlier this month from Europe's commissioner for neighbourhood and enlargement, Olivér Várhelyi.

In an address to officials – including the country's prime minister, Irakli Garibashvili (pictured right) – Várhelyi (left) said the country is facing issues due to its lack of communications connectivity with other nations and to vital utilities such as electricity.

As a result, during his trip Várhelyi announced a series of proposals to "improve access to digital services and broadband internet throughout the country, and also to introduce to Georgia our Green Deal and our Digital plans".

Confirming "five flagship initiatives" for Georgia on Black Sea connectivity, Várhelyi said the strategy "should bring in at least €3.9 billion" in investments over the coming years.

His remarks came a week after the Economic and Investment Plan for the entire region of the Eastern Partnership countries was announced to promote and secure socio-economic recovery post-Covid. This also includes strategies for Armenia, Azerbaijan, Belarus, the Republic of Moldova, and Ukraine.

Speaking about Georgia, Várhelyi told Capacity: "These five flagships will contribute to the socio-economic recovery from Covid-19 by stimulating growth and improving connectivity between Georgia and the EU, thus also increasing trade and economic integration.

"In particular, the flagship on Black Sea Connectivity will further integrate the Georgian market with the EU market through the deployment of a submarine fibre optic cable. This will create another direct connection between the South Caucasus and South-East Europe and will diversify/strengthen the connection between Europe and Asia. Citizens will benefit from a faster and more stable direct internet connection between Georgia and the EU," he continued.

The developments come less than four months since the Venice Commission and the Council of Europe Directorate General of Human Rights and Rule of Law said that new powers granted last year to the Georgian National Communications Commission (GNCC) were "not in line with European standards".

Although unable to comment on specific issues, Várhelyi said on the regulatory environment in Georgia: "Bearing in mind these planned investments in digital connectivity, the independence of the responsible regulator in the field of electronic communications is of crucial importance."

Change ahead

The developments could signal a break in a turbulent period for Georgia's connectivity sector, following challenges to NEQSOL Holding’s ownership of Caucasus Online and recent criticism from a key player in the mobile space.

While Várhelyi didn't specifically comment on these matters, he did tell Capacity that domestic and foreign investment would both be key to meeting the €3.9 billion investment potential.

He said: "We would expect the investment to come from within Georgia but also from other countries. The EU contribution will be a combination of blending grants, loans and in particular the guarantees under European Fund for Sustainable Development (EFSD+). This must be complemented by private sector or sovereign debt investments.

"We are working together with Georgia and all our partner countries to develop a pipeline of project proposals. Legal certainty, rule of law and trust in the judiciary are equally key elements to encourage (foreign) investment," he added.

Separately the GNCC has also contacted Capacity to say it is working to open the country’s telecoms market and “change the state of play”.

Refuting the allegations made by Magticom last month, acting chairman, Vakhtang Abashidze, said: “The objective of ComCom is to liberalize the fixed and mobile service markets thus changing the long-standing practices, whereby large operators refused to share their infrastructure. We believe that the market must be open and large companies should make their networks available to all operators at mutually beneficial commercial rates. Efforts of ComCom are motivated by the endeavour to ensure alignment of legal and policy framework with the best European practices.”

Abashidze said that while GNCC aims to foster competition in the market, he claimed that "MagtiCom are dissatisfied with these efforts, as they attempt to use their dominant position to prevent potential new market players from accessing their infrastructure."

 He added: “ComCom has been actively working to achieve Georgia’s ambition and place the country as a regional digital hub since 2015, while actively cooperating with the World Bank since 2018 to unlock this potential. This will also create an important cornerstone of better international digital connectivity for Georgia and in the region.”