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MCC Compact Bans Georgia from Privatizing Gas Pipeline
Civil Georgia, Tbilisi / 14 Sep.'05 / 16:41

According to the Millennium Challenge Compact signed between Georgia and the United States, through the Millennium Challenge Corporation on September 12, the Georgian government undertakes a commitment not to sell its major gas pipeline network until the expiration of the agreement’s term – 2010.

The Georgian government also has no right to sell or transfer controlling shares in the Georgian Gas International Corporation, a state-run company which operates the gas pipeline system in the country.

“The Government shall not sell or transfer, or permit to be sold or transferred, the Pipeline and/or a controlling interest in the GGIC group (GGIC and its subsidiaries and affiliates) and shall not place or permit to be placed any Lien on the Pipeline, in each case until the expiration of the Compact Term, except as may be otherwise agreed by MCC in writing,” the Compact reads.

The U.S. allocated USD 49.5 million, through Millennium Challenge Account (MCA) assistance program, towards rehabilitating the gas pipeline system.

The Georgian President announced in February, 2005, that talks were underway with the Russian energy giant Gazprom over the privatization of the main gas pipeline network. The United States called on Georgia to exercise caution when making a final decision.

As a result, during the consultations which were held between the Georgian and the U.S. sides to outline MCA assistance priorities, it was decided to include rehabilitation of the gas pipeline network in this assistance program.

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