Project Name Urban Services Improvement Investment Program - Tranche 5
Project Number 43405-027
Country / Economy Georgia
Project Status Active
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 3291-GEO: Urban Services Improvement Investment Program - Tranche 5
Ordinary capital resources US$ 43.00 million
Loan 3292-GEO: Urban Services Improvement Investment Program - Tranche 5
Asian Development Fund US$ 32.00 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Gender Equity and Mainstreaming
Governance and capacity development
Knowledge solutions
Sector / Subsector

Water and other urban infrastructure and services / Urban sanitation

Gender Effective gender mainstreaming
Description Project 5 will finance the sewerage system in Zugdidi and Mestia, the secondary cities covered by the Investment Program. The first component of the project will support infrastructure investments to construct sewerage system in Zugdidi and Mestia, and benefit approximately 20,600 households in Zugdidi and a population of 6,500 in Mestia (including floating tourist population). The second component will include project implementation support.
Project Rationale and Linkage to Country/Regional Strategy

The Investment Program includes, (i) infrastructure improvement to rehabilitate and expand WSS services; (ii) enterprise resource planning and management to improve the service utility's efficiency and sustain investments in the long-term; and (iii) Investment Program management and implementation support.

Georgia has an estimated population of 4.93 million (2013) with over 53% classified as urban, and serves as an important nodal point for inter-regional trade flows connecting the South Caucasus and landlocked Central Asia with the Black Sea and Mediterranean basins. The country's gross domestic product (GDP) is $15.98 billion (2012). Georgia's overall economic outlook remains positive with expected GDP growth forecast of 5.5% in 2014 and 6.0% in 2015. Structural reforms targeting higher quality public investment are expected to boost productivity, catalyzing growth in manufacturing and other trading goods. The agricultural sector is expected to expand, reflecting increased government support to the sector. Services are also projected to grow, fueled by projected expansions in the transport, communication and financial intermediation sectors.

To address imminent pressures on physical infrastructure, the Ministry of Regional Development and Infrastructure (MRDI) has undertaken various initiatives, and in particular, interventions to improve water supply and sanitation (WSS) across the country. MRDI has developed an urban WSS sector development plan (SDP) with a vision to ensure continuous and reliable water supply and safe sanitation services to all of Georgia s urban residents by 2020. The SDP's objectives include (i) technical sustainability and environmental protection; (ii) institutional and financial sustainability; and (iii) enabling legislative and regulatory framework. To achieve the vision and objectives laid out in the SDP, the government's investment plan for urban WSS includes physical and non-physical investments.

WSS services are now provided by three service utilities: (i) Georgia Water and Power Company (GWP) that serves Tbilisi and Rustavi; (ii) Batumi Water Company and Adjara local self-governments that serves the Adjara Autonomous Region; and (iii) United Water Supply Company of Georgia LLC (UWSCG) that serves the rest of the country. Georgian National Energy and Water Regulatory Commission is responsible for economic regulation.

Most economic growth centers proposed for development by the government are in the region served by UWSCG. In this region, only 69.7% urban population has piped water supply and 15.5% urban population has access to sewerage system. Sewage from the reticulated network is discharged directly into streams or water channels without any treatment. The Investment Program socioeconomic surveys (which included an assessment of WSS coping strategies and willingness to pay) indicate that WSS services are irregular and severely affect the poor and internally displaced persons.

The Investment Program fits within the overall growth context and the efforts underway to match infrastructure with the emerging needs. It will focus on improving WSS services in priority cities under the Program and benefit approximately 335,000 persons (38% of urban population in UWSCG region). It will also comprehensively improve WSS services in the selected economic centers rather than spreading thin the investments and diluting the impact. The Investment Program is consistent with the government's agenda to improve WSS service delivery through effective implementation of legal, economic, and financial frameworks for local self-governance.

Impact

Improved health of residents in the cities of Georgia.

Project Outcome
Description of Outcome

Sanitation services improved.

Progress Toward Outcome The two contracts for the construction of a WWTP and 178 km sewerage network in Zugdidi will be completed by the end of 2020. The WWTP contract in Mestia was awarded in November 2019 and is expected to be completed in 2022.
Implementation Progress
Description of Project Outputs

Infrastructure Improvement: Sewerage and sanitation system efficiency improved through construction and expansion

Project Implementation Support: Public awareness program effectively implemented, information on hygiene and sanitation disseminated

Institutional Effectiveness: UWSCG operations improved

Status of Implementation Progress (Outputs, Activities, and Issues)

Construction of sewerage network in Zugdidi completed, turnover to UWSCG by end-Sept 2020. Actual length of sewerage network laid is 191 km.

Completion by end-Sept 2020.

Construction of WWTP in Zugdidi (Design-Build) on track for completion by end-Sept 2020. WWTP in Mestia (Design-Build) awarded on 8 Nov 2019. Completion of Mestia WWTP by 2022 because of initial delays due to inclement weather conditions.

Public awareness campaigns are actively conducted in Zugdidi.

Complied with.

Geographical Location Zugdidi
Safeguard Categories
Environment B
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects An environmental assessment and review framework, updated in May 2015, was endorsed and used to prepare two IEEs for Zugdidi and Mestia. The environmental assessment established that project 5 is category B, as it will not have significant irreversible environmental impacts during or after construction. Most of the predicted impacts are common during construction, such as dust, noise, vibration, and other disturbance to residents' livelihoods and traffic, as well as discharge of treated sewage and sludge disposal during operation of the WWTPs in Zugdidi and Mestia. UWSCG will require contractors to prepare and implement site-specific EMPs, which will be endorsed by the construction supervision consultants and approved by UWSCG. Impacts during the operation stages of the WWTPs will be managed through design and build contracts to ensure the effluent discharge meets national environmental standards. While UWSCG has a safeguard specialist under the IPMO, the institutional capacity of UWSCG and the local service centers in Zugdidi and Mestia needs to be strengthened through on-the-job training with the help of a consultant to improve (i) the quality of the environmental safeguard documents, and (ii) monitoring and reporting on implementation of the EMPs. The climate change impact on the project is high, as the sites are in high flood zones owing to heavy rainfall events, and snow mountain areas. Climate risk mitigation measures have been considered in the project design, including site selection.
Involuntary Resettlement On 17 December 2010, the government adopted a land acquisition and resettlement framework, upon which social safeguards compliance for all projects is based. Involuntary resettlement due diligence was conducted to determine the impacts, and project 5 is classified category C. The project facilities are being built on government-owned sites. Further, no people are or have been living or farming informally on these lands, and no other outstanding claims exist on this land. Any unforeseen temporary or permanent impacts during construction will be addressed under the provisions of the land acquisition and resettlement framework.
Indigenous Peoples The investment program area does not include communities that may be defined as indigenous peoples under ADBs Safeguard Policy Statement (2009). Consequently, the indigenous peoples impact classification for all projects is C.
Stakeholder Communication, Participation, and Consultation
During Project Design At the time of IEE preparation, consultations were undertaken with the stakeholders who were informed of the benefits of improved sanitation.
During Project Implementation Stakeholders will be informed of likely environmental impacts during construction and mitigation measures planned and actually conducted. The public consultation will be continued to encourage people to get connected to the sewerage system, and to disseminate hygiene/sanitation practices.
Business Opportunities
Consulting Services

One QCBS Construction supervision consultancy contract (301 person-months) estimated at $2.87 million

One LCS Auditor consultancy contract (15 person-months) estimated at $0.24 million

Procurement

One ICB civil works contract for Zugdidi sewerage system ($31.37 million)

One ICB designbuildoperate contract for sewage treatment plants in Zugdidi and Mestia($44.70 million)

Responsible ADB Officer Tskhvitava, Avtandil
Responsible ADB Department Central and West Asia Department
Responsible ADB Division Georgia Resident Mission (GRM)
Executing Agencies
Ministry of Regional Development and Infrastructure of Georgia
Timetable
Concept Clearance -
Fact Finding -
MRM 19 Jun 2015
Approval 29 Sep 2015
Last Review Mission -
Last PDS Update 15 Sep 2020

Loan 3291-GEO

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
29 Sep 2015 26 Oct 2015 19 Jan 2016 30 Jun 2019 29 Mar 2024 -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 58.00 Cumulative Contract Awards
ADB 43.00 09 Jan 2024 36.61 0.00 85%
Counterpart 15.00 Cumulative Disbursements
Cofinancing 0.00 09 Jan 2024 36.24 0.00 84%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating Satisfactory Satisfactory Satisfactory Satisfactory Satisfactory Satisfactory

Loan 3292-GEO

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
29 Sep 2015 26 Oct 2015 19 Jan 2016 30 Jun 2019 29 Mar 2024 -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 32.00 Cumulative Contract Awards
ADB 32.00 09 Jan 2024 27.18 0.00 86%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 09 Jan 2024 27.55 0.00 87%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating Satisfactory Satisfactory Satisfactory Satisfactory Satisfactory Satisfactory
 
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