ITERA AND TBILISI FAIL TO AGREE ON METHOD TO WRITE OFF DEBTS OWED BY GEORGIAN STATE-FINANCED ORGANIZATIONS

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TBILISI, May 29 (RIA Novosti) - The international oil&gas group Itera is ready to write off the debts owed by Georgian state-financed organizations in exchange for a right to perpetuity of the controlling package of shares of the joint-stock company Azot, Itera CEO Valery Otchertsov told a Georgian-Russian business conference in Tbilisi.

According to Otchertsov, the Georgian side holds an opinion that Itera has not made sufficient investment in Azot, 96 percent stake in which was acquired by Itera for a term of 10 years. At the same time, the Itera CEO said, Georgian state-financed organizations owe the group $46 million.

"With due political will of the Georgian authorities, this problem could be effectively settled by the parties involved," he underlined.

Otchertsov suggested that Itera be granted perpetuity ownership of the Azot shares in exchange for withdrawal of the group's demand for debt repayment. He emphasized that Itera was ready to expand Azot's production capacity and make additional investment of up to $6 million in 2004-2006 for the purpose.

Itera has already invested $6 million in the company over the first three years of its 10-year tenure of Azot's controlling package of shares.

Itera has been operating on the Georgian market since 1996. Annually, it imports 7.5 billion cubic meters of natural gas to 11 Georgian cities and regions.

Georgia owes Itera $103 million for natural gas supplies in the 1996-2002 period, with the debts of state-financed organizations accounting for $46 million of the sum.

Georgia, however, cannot accept Itera's conditions regarding debt relief for Georgian state-financed organizations, Georgian Economics Minister Irakly Rekhviashvili told RIA Novosti on Saturday.

"Azot is not a kind of enterprise we can give away on such conditions," the Minister said.

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