Project Name Sustainable Urban Development Investment Program - Tranche 1
Project Number 42417-023
Country / Economy Armenia
Project Status Active
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 2752-ARM: MFF-Yerevan Sustainable Urban Transport Tranche 1
Asian Development Fund US$ 48.64 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Gender Equity and Mainstreaming
Private sector development
Sector / Subsector

Transport / Urban roads and traffic management

Gender Some gender elements
Description The investment program targets a range of urban connectivity and mobility improvements in all parts of Armenia, aiming to improve transport efficiency, reliability, and safety, and reduce congestion
Project Rationale and Linkage to Country/Regional Strategy

Armenia has a population of 3.24 million and is the most urbanized country in the Caucasus. Urban areas are the pillars of economic growth and home to 2.1 million people, or 64% of the total population. They can be classified into four groups: (i) Yerevan, the capital city; (ii) secondary cities such as Gyumri, Kapan, and Vanadzor; (iii) cities with industry and agro-processing potential such as Armavir, Artashat, Ashtarak and Ararat; and (iv) cities with high tourism potential such as Dilijan, Jermuk, Sevan, and Tsakhradzor. Together, these 12 cities generate almost 90% of the nation's gross domestic product; Yerevan with its 1.12 million inhabitants alone accounts for 60% of the national economy. Until the financial crisis in 2008, Armenia's landlocked economy enjoyed double-digit growth despite high transport and communication costs to the outside world. Since then, the economy has shrunk, and economic activity has become relatively more concentrated in Yerevan and, to a lesser extent, in Gyumri, Vanadzor, and Kapan

Urban development. Unbalanced economic growth among regions and the dominance of Yerevan have constrained national development. Most other cities have just one industry and lack a strong economic base. Even within Yerevan, since 1991, the most important urban trend has been the gradual collapse of heavy industry, which was mainly in the south of the city. This dramatically cut jobs, relocated centers of attraction, and caused a corresponding fall in demand for public transport on the metro, tramway, trolleybuses and buses serving these areas. While the city has since been revived with new commercial and residential developments, increased motorization has worsened the urban environment with poor air quality, excessive noise, traffic congestion, lost green areas, and degraded historical buildings. Other secondary and smaller cities have seen no major urban infrastructure investments since 1991, and they share common transport problems: poor and inappropriate road infrastructure, highly inefficient urban transport systems, rising traffic congestion and pollution. They need to revamp their urban services, particularly transport infrastructure, to boost competitiveness, provide more stable platforms for economic growth, serve growing and diverse urban mobility needs, and stimulate private sector investments. Each of the four groups of cities has its importance in the national economy. For instance, Gyumri and Kapan are on the northsouth road corridor, which is a major conduit for trade and flow of goods connecting the north and south gateways of the country

Traffic, road safety, and parking. Economic growth has brought widespread vehicle ownership, which has grown by 40% since 2004, including cars and taxis. The number of accidents in Yerevan has risen in parallel, from 260 fatalities in 2004 to more than 400 in 2008, with the number of injured more than doubling from 1,500 in 2004 to 3,125 in 2008. This has put road safety on the government agenda. Despite improvements in major arteries in the capital, the traffic signal system is outdated and inadequate. Environmental protection is now another major priority. Located in Ararat Valley, Yerevan has little natural ventilation, and congestion results in concentration of hazardous substances. Urban transport generated 90% of air pollution in 2008, with carbon dioxide emissions expected to increase by 160% by 2020. The limited number of bridges in Yerevan over the Hrazdan River creates bottlenecks and massive congestion during peak hours. In addition, a city bypass remains uncompleted, disallowing any diversion of passing traffic. Illegal and double parking, inappropriate driving behavior, and poorly enforced traffic laws further constrain mobility. In 2009, traffic exceeded design capacity on more than 20% of the road network, and a further 35% was about to reach its limit.

Public transport. Today, the Yerevan public transport system has microbuses, buses, trolleybuses, and metro routes. Public transport infrastructure is aged, and the vehicle fleet is old and poorly maintained, travelling an average speed of 16 kilometers (km) per hour. The system has a single 12.1-km metro line with 10 stations and a fleet of 70 old carriages. Metro ridership accounts for only 8.2% of total public transport ridership, which stood at 207 million passenger trips in 2009. Today, 85% of the passengers are carried by unsubsidized private microbuses, despite their expensive fares. While minibuses spared Yerevan a severe transport crisis in the 1990s, they now contribute to a nearly chaotic situation that has seen big and medium-sized buses pushed out. The quality of service is poor because of overloading and congestion. This shift has severely compromised the financial sustainability of other public transport and caused investment backlogs for trolleybus and metro, as fares are too low to cover operating and renewal costs. In other Armenian cities, urban transport issues are similar but less dire. They all have deteriorating urban road networks with inefficient or nonexistent systems of traffic management and inappropriate public transport that relies too heavily on microbuses. They need network restructuring, as routes often duplicate others, providing poor service and minimal comfort. Local capacity for municipal planning, operating, and monitoring transport services is limited, unable to propose solutions able to cope with congestion and poor road safety. In tourist centers, urban infrastructure is unable to cope with growing demand and inflows of tourists during peak seasons.

Sector strategy, road map, and institutional reform. The national government and Yerevan municipality have invested more than $110 million in upgrading urban infrastructure to energize the local economy. The long-term investment requirements stemming from Armenia's urban development strategy for the country as a whole have been estimated at $960 million from 2011 to 2025. The Government of Armenia needs help to address this challenge, and boost economic growth by balancing territorial development, with an emphasis on developing city clusters. The strategy comprises sequenced investments, to be mobilized through private, public, and publicprivate initiatives, and municipal reforms relating to policy, planning, and regulation. The investment requirements include both physical and non physical components, sequenced in two phases that address medium and long term needs.


Improved urban environment, local economy and enhanced private sector in Yerevan

Project Outcome
Description of Outcome

Efficient, reliable and affordable urban infrastructures and services provided in Yerevan

Progress Toward Outcome

Two civil works contracts are completed for two southern road links of Yerevan bypass.

Design for two overpasses on Arshakunyats street are finalized. Decision on implementation and technical solutions of the flyovers are under discussion by the municipal government with intention to tender out by Q2 2019.

New public transport network has been developed and planned to be implemented by the Yerevan Municipality in 2019. Delays are expected because of the political changes in the municipal and central government.

Implementation Progress
Description of Project Outputs

Urban infrastructure extended, rehabilitated and improved in Yerevan

Appropriate institutional capacity strengthened in Yerevan

Establishment of skilled and efficient program Implementation Unit in Yerevan

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

5.4 km of Yerevan bypass implemented.

2 multiple level intersections completed.

1 footbridge implemented.

Not yet due.

Partially completed.

Implementation of road/bus improvement design is in progress.

Not yet due.

Recruitment of 9 PIU staff completed, remaining 2 staff ongoing.

DESC, IMA and PMIC consultants recruited.



To be prepared by PMIC consultants.

Not yet done.


Under preparation.

Under preparation.

Geographical Location Argavand, Karmir Blur, Nerkin Shengavit'
Safeguard Categories
Environment B
Involuntary Resettlement A
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects Tranche 1 project is classified as category B, and two initial environmental examinations have been prepared. Tranche 1 subprojects will not have significant irreversible negative environmental impacts during or after construction. Yerevan municipality will require the contractor to implement the environmental management plan outlined in the intial environmental examination and in the framework. The plan has been a part of the construction contract.
Involuntary Resettlement Tranche 1 project is classified as category A. Both subprojects under Tranche 1 involve land acquisition for which two land acquisition and resettlement plans were approved on 24 September 2010. LARPs were implemented and compliance reports approved by ADB.
Indigenous Peoples The investment program areas do not include communities that may be defined as indigenous peoples under the ADB Safeguard Policy Statement (2009). Tranche 1 is classified as category C.
Stakeholder Communication, Participation, and Consultation
During Project Design Consultations were carried out with all stakeholder groups during program preparation throughout the program. Stakeholder consultations have been held with local residents and civil society in municipalities and affected neighborhoods. Consultations were also held at various levels of government such as with the Ministry of Economy, Ministry of Finance, Ministry of Environment, and Ministry of Culture, as well as with municipality districts governments, universities, and nongovernment organizations.
During Project Implementation Local communities were consulted throughout preparation to minimize adverse impact, ensure social acceptance, and improve equitability. The process will continue during implementation. The views and concerns of all stakeholders were and will be taken under consideration.
Business Opportunities
Consulting Services Detailed design consultants, program management and institutional consultants and independent monitoring consultants recruited. Recruitment for transport sector reorganization and creation of Yerevan transport authority not yet started.
Procurement Procurement of major equipment not yet started. Procurement of 2 new junctions not yet started.
Responsible ADB Officer Karapetyan, Vardan
Responsible ADB Department Central and West Asia Department
Responsible ADB Division Armenia Resident Mission (ARRM)
Executing Agencies
Ministry of Territorial Administration and Infrastructure
Concept Clearance 08 Mar 2010
Fact Finding 09 Mar 2010 to 31 Mar 2010
MRM 14 May 2010
Approval 09 May 2011
Last Review Mission -
PDS Creation Date 26 Jul 2010
Last PDS Update 05 Apr 2019

LoanĀ 2752-ARM

Approval Signing Date Effectivity Date Closing
Original Revised Actual
09 May 2011 19 May 2011 19 Jul 2011 30 Jun 2016 31 Dec 2023 -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 60.05 Cumulative Contract Awards
ADB 48.64 25 Jan 2024 38.06 0.00 97%
Counterpart 11.41 Cumulative Disbursements
Cofinancing 0.00 25 Jan 2024 38.99 0.00 99%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating Satisfactory Satisfactory Satisfactory Satisfactory - Satisfactory
This page was generated from /projects/42417-023/main on 02 February 2024

Source URL: