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President Mikheil Saakashvili is due to make a keynote speech to the Georgian Parliament today (Tuesday) with the aim of increasing investor confidence in Georgia but in the meantime the controversy about Tbilisi mayor Gigi Ugulava's treatment of the company he hired to run the capital's parking is still growing.

The president's speech is said to mark the opining of a "new phase" in the economic development of Georgia, but comes at a time that the Georgian economy is doing much worse than initially predicted.

Foreign investment has slumped as the impact of both the August war of 2008 and the global downturn have hit. Georgia's economic health is now largely dependent on significant aid programmes from both the United States and the European Union.

Crucial to securing further western investment in the country's infrastructure will be investor confidence in the public service reform and privatisation: but the continuing row between Tbilisi Mayor Gigi Ugulava and the Israeli-backed CT Park is unlikely to do much to encourage foreign investment in the capital's public infrastructure.

CT Park won the exclusive right to manage the city's parking system for 15 years in a November 2007 auction and began work this year. Sixty per cent of their profits went straight into the city's coffers with a minimum payment of 1,000,000 GEL for this year

But the company's efficiency at handing out fines and enforcing the parking regulations - as well as increased charges to pay for investment and to generate revenue for the contract - soon earned motorists' ire.

Last month parliament changed the law on parking and the mayor announced he was effectively unilaterally cancelling the contract - claiming CT park had not delivered on their side of the bargain. At the same time he cut parking charges by a huge factor - though did not specify what the impact on the city's budget would be or if he proposed to compensate CT Park or fight them in court.

In response CT park said they were enforcing the rules the city had laid out for them and threatened legal action - as they are explicitly entitled to do under their contract.

Georgia Business Week report that CT Park have invested over 4,000,000 GEL in the city's parking infrastructure and are now locked in negotiations with the city about resolving the issue while there is still no answer to some of the big questions about the impact on investor confidence and the cost to the city of the whole saga.