The unexplained backtracking of the EBRD and Tbilisi City Hall: why did they keep the contract with a Russian company?
The European Bank for Reconstruction and Development (EBRD) is providing funding to Tbilisi City Hall to purchase metro cars for the Georgian capital’s metro system from a Russian company, Metrowagonmash. The company is part of Transmashholding, whose shareholders – Russian oligarchs Iskander Makhmudov and Andrey Bokarev – are closely linked with the Kremlin and its defence industry. Metrowagonmash’s sister company is also reportedly providing engines for Russian warships.
13 March 2023
The Tbilisi Metro Project, which is co-financed by the Green Climate Fund, received finances from the EBRD in 2020 and the Russian supplier was selected in a two-tier tender in 2021. Russia’s invasion of Ukraine changed the context and stalled the official procurement procedures with Metrowagonmash.
- In March 2022, the EBRD suspended a transfer to the Russian company due to the risk of sanctions.
- In November 2022, the mayor of Tbilisi announced that the municipality and the EBRD had decided to terminate the contract and were in contact with alternative suppliers.
- In February 2023, a Tbilisi City Hall representative said that Metrowagonmash would remain on as the supplier, as it provided the most affordable tender proposal. The mayor of Tbilisi also stressed that he was forced to keep the existing agreement to avoid the imposition of fines and financial sanctions on the state – although it is not clear who would impose these.
Bankwatch urges the EBRD to terminate the contract with the Russian company and find an alternative supplier for the project. Despite multiple attempts, the Bank has not yet responded to Bankwatch’s requests to clarify the reasons for its decision to retain Metrowagonmash as a supplier for the project.
Manana Kochladze says: ‘We are not surprised that the Georgian authorities have chosen a Russian supplier. They have clearly turned to the Kremlin recently, ignoring the concerns of outraged citizens in Tbilisi. The EBRD’s silence on this issue, on the other hand, is surprising.’
Mariam Patsatsia says: ‘International financial institutions, including the EBRD, have halted their lending to Russia in response to Russia’s aggression against Ukraine. But this is not enough. Banks should take appropriate measures to prevent any indirect support to companies affiliated with the Kremlin and should not encourage trade with Russia through their financing.’
Manana Kochladze, Strategic Area Leader – Democratisation and Human Rights
Tel.: +995 599 91 66 47
Mariam Patsatsia, Community Support Coordinator
Tel.: +995 511 16 38 23
Notes for editors:
- In 2015, Bokarev and Makhmudov became two of the largest government contractors in Russia. Until 2017, they, along with Russia’s current deputy defence minister Alexei Krivoruchko, also held shares in JSC Kalashnikov Concern, which manufactures around 95 per cent of Russia’s guns. The weapons maker has been under US sanctions since 2014 following Moscow’s annexation of Crimea.
- After leaving Kalashnikov, the partners continued to provide engines for Russian warships through Metrowagonmash’s sister company, as evidenced in the company’s 2018 and 2019 annual reports.
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Theme: EBRD funding support for Russian business
Tags: Georgia | Russia | urban transport