ADB $500 Million to Improve Services in Georgia's Growing Towns

News Release | 31 March 2011

MANILA, PHILIPPINES - The Asian Development Bank (ADB) is extending a $500 million loan facility to support Georgia's drive to improve water and sanitation services in expanding secondary towns which are becoming major drivers of growth and employment in the Caucasus country.

The ADB Board of Directors today approved the multitranche financing facility for the Urban Services Improvement Investment Program. It will fund infrastructure improvements in six key towns and strengthen the capabilities of the country's leading water and sanitation provider, which services 60% of the population. The investment program supports the Government of Georgia's long-term sector development plan under which it will invest, with cofinanciers, around $1.65 billion to provide reliable, safe water and sanitation services to all urban residents by 2020.

"Georgia's secondary towns are fast becoming important centers for new growth and employment but there is a need to match the expansion with better services. This project will help meet that goal, resulting in improved quality of life for residents, reduced poverty and increased investment," said Juan Miranda, Director General at ADB.

Georgia, which sits at the crossroads of Asia and Europe and provides a transit point for regional trade flows, has seen a marked increase in migrants to secondary urban centers as economic growth has picked up in recent years. That trend is expected to accelerate as more job opportunities arise. Providing reliable, quality water and sanitation services to meet growing demand and to prevent health and environmental problems, is now a leading government priority.

A central element of the program will be strengthening the service capabilities of the United Water Supply Company of Georgia - the country's biggest service provider. The company is a relatively new business and an experienced, reputable overseas water firm will be contracted over a three-year period to help it improve its technical, management and financial performance. Support will also be given to government oversight agencies to enable them to regulate the sector more effectively.

The multitranche facility will include $250 million from ADB's ordinary capital resources, and $250 million from its concessional Asian Development Fund (ADF), with a first tranche of $80 million to be financed from the ADF. The initial loan will have a 32-year term, with an eight year grace period carrying an annual interest rate of 1%, rising to 1.5% for the balance of the term. Up to four tranches are expected to be provided, subject to government funding requests.

The Ministry of Regional Development and Infrastructure is the executing agency for the investment program which is due for completion by the end of March, 2019.