ECONOMIC Development Minister Giorgi Arveladze announced on August 16 that the cabinet had approved the transfer of Georgian Railways from the government to UK-based Parkfield Investments Ltd.

The concession period was originally announced as 89 years, but amended to 99 years when the Prime Minister signed the decree. Arveladze said the state will retain ownership of the 1 560 km network, but Parkfield will be required to invest US$1bn in infrastructure rehabilitation and capacity improvements within 10 years, which the government would not have been able to provide. Tariffs must be maintained until the end of 2008; later rises above inflation must be agreed with the Ministry of Economy.

Parkfield Investments was established to take on the concession by a group of individual backers, and a spokesman told local media they will be named once the deal is finalised. A western European partner is now being to sought to operate the railway on behalf of the investors. This 'should be a leading international company with experience in railway management', said Arveladze, adding that the government would not intervene in the selection.