PPP სააგენტო

Why do we Finance the Public Private Partnership Agency led by the Wife of Irakli Kobahidze?

Authors: Natia Mikhelidze, Mariam Kachkachishvili

Overcoming poverty, an increase of prosperity, creation of reliable investment practices and advancing of business environment – these are the goals of the Public Private partnership Agency led by Natalia Motsonelidze, the wife of the Chairperson of the “Georgian Dream” Irakli Kobakhidze.

The goal and the mission are thoroughly written, but do they reach those goals, this is the question.

“It doesn’t function”, that’s how Nino Tsilosani, the MP of the “Georgian Dream,” responded about the work of the Agency in 2019.  You might be surprised but since then, her thoughts have not changed. We asked her f she thinks the same, and she confirmed. As it seems, the agency’s performance is so useless that even members of the “Georgian Dream “do not avoid its criticism.

In the article, we will talk about the function of the Agency and the results achieved after four years. We will respond to the question about the necessity of its existence. Especially now, when more than 900 thousand were spent.

 Why was the Public-Private Partnership Agency created?

Public and Private Partnership (PPP) is a form of cooperation between the government and the private sector. The state partners with investors to make joint agreements where both parties take their share of responsibility for contributing to the development of large infrastructural projects. For instance, Hydropower projects, airports, or highways.

How does the government decide with whom to enter into a PPP agreement? There are two ways to identify a project:

In one case, a private company independently reaches out to a certain Ministry, offers an idea, and then discusses the importance of the project with the Agency and the Ministry. Economic benefits, risks, and strategic and public importance of the project are considered when deciding.

In the second scenario, the agency can independently search for a project that will become part of the PPP cooperation. At first, the agency selects projects, then independently evaluates them and prepares a recommendation for the government. Finally, the government considers the agency’s opinion and decides whether to accept the proposed proposal.

The agency tries to find projects related to innovation, the digital economy, transportation, the energy sector, the trade industry and education.

The law on Public-Private Partnerships came into force in May 2018. After a year, in February 2019 Agency of Public and Private Partnership was established. PPP is accountable to the Prime Minister. The Chairperson of the agency is hired and released by Prime Minister as well.

By the end of 2021, Prime Minister Irakli Gharibashvili appointed Natalia Motsonelidze, the wife of Irakli Kobakhidze, as a chair of an agency. Before that, she was acting as Deputy Chair and Acting Chair.

Natalia Motsonelidze is a lawyer. She has been a lecturer at Tbilisi State University law school since 2008. From 2016-2019 she was the Head of the Quality Assurance Department and Advisor to the Rector at the Academy of the Ministry of Internal Affairs.

For the position of the Chairperson of the agency, she received 93 thousand GEL as her salary in 2021-2022. 

The agency cannot fulfill its function

As mentioned, the agency aims to attract successful and beneficial investments for the country. However, in May 2021, the chairperson said:

“So far, as long as agency exists, meaning since 2019, we do not have a specific project that has been launched”.

In 2022 we financed an agency that is useless by 269 thousand GEL. From this, 182 thousand GEL was spent only on the salary of the agency’s chairperson, the senior analyst and the administrative manager.

The lack of performance of the agency is also evidenced by budget underspending.

The agency’s annual reports read about hundreds of coordination meetings held with prospective investors, state institutions, international organizations and diplomatic missions; participation in conferences and public documents. In 2022, investment projects worth 1580 million dollars were also discussed. However, the result is unclear.

The chairperson herself says that the discussed projects have not seen the sunlight. While working on this article, we asked Natalia Motsonelidze if there have been even one successful project in three years.

According to her, 67 proposals have been processed since 2019. 36 of them moved to the second stage requiring to conduct of necessary studies for analysis. However, Motsonelidze did not mention anything about the already implemented projects.

We could not get information if recommendations for the government have been prepared. This information is not public to interested parties. The agency is not prone to public relations. Davit Chipashvili, a member of the organization “Green Alternative”, tells us that even people interested in the field of the energy sector have not heard about the existence of the agency. Chipashvili also shared his experience that the agency did not provide the positively assessed recommendations about “Alpana” and other HPPs and redirected him to the Ministry of Economy.

“Information about agency’s mission and goals is one thing and another – what is in practice. It does not feel to be accountable to the public. To whom it is accountable, only to Prime Minister? Why does it need a website? They can directly present their recommendations to Prime Minister. In my opinion, the agency does not fulfil its function and duty today, in the context of openness, diligence and involvement of the interested society,” says Davit Chipashvili.

“IFact” had the same experience. We requested the documents for the Memuli hydropower project from the agency. The project is already in the second phase and positive recommendations are prepared. According to them, the project contributes to the achievement of the United Nations Sustainable Development Goals, poverty reduction, clean energy, economic growth and the creation of jobs.

We were interested in the basis of these thoughts. They gave us a short answer to the letter requesting public information, and for additional questions, we were also redirected to the Ministry of Economy.

The lawyer of the Social Justice Center speaks about the Public Private Partnership agency’s obligation to justify its recommendations. Especially when the law on public and private partnerships requires maximum publicity.

“In this case, the public has an even greater right to know on what basis decisions are made regarding these projects, where the state helps a private entity with its public resources. This is the essence of this legislation, therefore the public and private partnership agency is obliged to justify any of its decisions, both positive and negative,” says Salome Shubladze.

How order #515 reduced the function of the agency

The law established private and Public Partnership Agency on 4 May 2018. Three months after publishing the law, on 17 August, the government adopted resolution 426. This document describes in detail what procedures the project must go through and what criteria it must meet to be included in the scope of public-private cooperation.

For instance, according to the law, the initiative of a private investor is assessed by several public institutions before the government. First, the Ministry of Economy evaluates the benefits, costs, possible threats and risks of the project. It then begins communication with the Ministry of Finance and the Public-Private Partnership Agency, which independently prepare conclusions and recommendations. The Ministry of Economy considers their opinion and forwards the project to the government, which has the final say.

“Other agencies provide an additional perspective to the Ministry of Economy, they evaluate the project from their point of view at the initial stages, and accordingly, a more multi-faceted, democratic and competent system is created…” – says lawyer Giorgi Tsintsadze. He was an author of a study about Public-Private Partnership practices conducted by the Social Justice Center.

Since the end of 2018, the agency has not been part of the process. How?

On October 28, the government adopted decree no. 515, according to which energy projects were considered exceptional and introduced to a simplified procedure. For example, the government can consider the idea of a hydropower project without considering the opinion of either the agency or the Ministry of Finance.

Only the Ministry of Economy is involved in this process. It alone reviews the feasibility study of the energy project, independently decides whether it is advisable to accept the proposal and directly addresses it to the government. As we can see, the agency is no longer an intermediary in this process.

The “Social Justice Center” study reads that the majority of hydropower projects initiated in 2019-2021 fell within the framework of resolution no. 515. The number of hydropower projects exceeded 60 and the Public and Private Partnership Agency was not involved in any discussions. It is clear that until October 2018, the agency had an important function, and resolution no. 515 reduced its duties. However, the chairperson of the agency does not agree with that.

“This resolution applies to those projects in the energy sector, which by the Law of Georgia on “Public and Private Partnerships” is not a PPP project. Therefore, the resolution cannot hold up the operation of the agency,” wrote to us Natalia Motsonelidze.

The chairperson did not lie. According to the rule, the law should make an exception only for such projects which not fall under the PPP category. But the fact is that in practice, everything is different.

Based on the “Social Justice Center” study, the practice has shown that resolution no. 515 covers those projects which are included in the Public Private Partnership model. The Namakhvani hydropower project is an example of it. Neither the Ministry of Finance nor the agency interfered in the working relationship between the investor and the Ministry of Economy. However, according to the lawyers, the “Enka” project was a part of the PPP model. Accordingly, undergoing the strict procedures of resolution 426 was required.

The Public and Private Partnership Agency have poor functions which are not even performed effectively. Despite this, thousands of GEL are still spent by the public budget.

It is logical to question the existence of the agency. Is it functional because of the wife of the “Georgian Dream” Chairperson? 

We wanted to know what Natalia Motsonelidze thought about this concern. She replied to us in written form that this question is not related to the activities of the Public and Private Partnership Agency.

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