41198-013: Municipal Services Development Project | Asian Development Bank

Georgia: Municipal Services Development Project

Sovereign (Public) Project | 41198-013 Status: Closed

ADB is helping municipal governments in Georgia improve the delivery of basic urban services. The project will help rebuild infrastructure, including water supply, sanitation, waste management, and road transport services, through loans and grants to municipalities and local utility companies. It will also strengthen institutional capacity and project management.

Project Results



    households with new or improved water supply



    households with new or improved sanitation



    kilometers of water supply pipes installed or upgraded



    kilometers of road that have been built or upgraded



    average daily vehicle-kilometers using roads built or upgraded in the first full year of operation

The results data reported above are limited to ADB's core sectors, as defined under Strategy 2020 and tracked through indicators in the ADB Results Framework. For definitions of results indicators, please see the ADB Results Framework Indicators Definition.

Project Details

Project Officer
Goalou, Bertrand Central and West Asia Department Request for information
  • Georgia
  • Loan
  • Water and other urban infrastructure and services
Project Name Municipal Services Development Project
Project Number 41198-013
Country Georgia
Project Status Closed
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 2441-GEO: Municipal Services Development Project
concessional ordinary capital resources lending / Asian Development Fund US$ 40.00 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Gender Equity and Mainstreaming
Governance and capacity development
Sector / Subsector

Water and other urban infrastructure and services / Urban policy, institutional and capacity development

Gender Equity and Mainstreaming Some gender elements
Description The objective of the Project is assist project municipal governments to improve delivery of basic urban services. The Project comprises two components: investment projects and capacity development. The outputs of the investment component are loans and grants to municipalities and local utility companies to improve basic urban services and infrastructure. The outputs of the capacity development component are (i) feasibility, engineering design, environmental and social, and other related studies for project preparation and appraisal; (ii) decentralized process for identification, planning, preparation and implementation of subprojects; (iii) institutionalized corporate and business planning process within MDF; and (iv) studies and training to develop MDF capacity.
Project Rationale and Linkage to Country/Regional Strategy

Municipal services including water supply and sanitation, solidwaste management, road repair, and urban transport in Georgia have deteriorated due to economic collapse, political instability, and a vitiated policy and institutional environment since the dissolution of the former Soviet Union. Capital investments in infrastructure and

operation and maintenance (O&M) have been neglected nationwide.

As a result, the quality of municipal services is low. Ownership and delivery of these services belongs to municipal government. Although municipalities have a mandate to deliver these services, in many instances they do not have the financial and technical resources to do the job. Key service targets such as coverage, quality, and continuity have been falling or are already at unreasonably low levels. This situation affects the quality of life of people but also constrains investment, business development, and ultimately the creation of jobs. Most principal and secondary towns are equally affected by this problem.

The Government understands the issue and has started to put together a strategic framework and support actions to address it. The most effective of the measures taken is the establishment of the MDF. This fund provides finance and technical advice to municipal governments. Its work so far has been effective but coverage needs to be expanded further. To date, more than 10 municipalities have benefited from MDF operations. Decentralization was seen as central to achieving the objectives. Since 1997, the Government has carried out local government reforms in two stages, and in that time MDF has managed to extend finance to local governments while generating enough revenues to convert it into effectively a revolving fund.

The Project will focus on improving basic municipal services and the rehabilitation, repair, and extension of dilapidated urban infrastructure. It will also provide technical assistance to assist the participating municipalities in improving local revenues, financial management, and reporting systems. Moreover, an integral part of the Project is to provide institutional strengthening and capacity development to municipalities to ensure the sustainability of project benefits.

The Asian Development Bank (ADB) is not the only international financing institution working with the Government and MDF. The World Bank has already financed two municipal development projects. The European Bank for Reconstruction and Development has also participated in several large water supply projects, some of them cofinanced with the Millennium Challenge Corporation on a parallel basis. The Millennium Challenge Corporation is the largest bilateral source of grant aid for Georgia, and is mainly involved in the rehabilitation of water supply, sewerage, and irrigation systems. The other bilateral aid agencies are involved in the municipal sectors, mostly through technical cooperation by cofinancing with multilateral financial agencies.

The Project is the first ADB intervention in the country. It will build on the experience of other multilateral and bilateral financial institutions' projects. Cooperation with other financial institutions is critical and the Ministry of Finance has taken an impressive lead in ensuring such cooperation. This is particularly important for the

institutional strengthening activities under the Project, which will be designed in consultation with other international aid agencies. This will maximize benefits, avoid unnecessary and costly overlap, and prevent confusion in policy matters.

Impact Improved urban environment and public health within urban areas.
Project Outcome
Description of Outcome Improved service delivery and better living conditions within urban areas.
Progress Toward Outcome As of date, 105,000 households benefit from improved municipal services.
Implementation Progress
Description of Project Outputs

Part A - Investment Projects Financing Facility

Part B - Project Management and Capacity Development

Status of Implementation Progress (Outputs, Activities, and Issues) Project Completion Review Mission fielded on 4-9 September 2012. Draft Project Completion Report to be circulated in October 2012.
Geographical Location Abacha, Akhalkalaki, Akhaltsikhe, Akhmeta, Ambrolauri, Bagdadi, Batumi, Borjomi, Dedoplistskaro, Dmanisi, Ducheti, Gardabani, Gurdjaani, Kareli, Kaspi, Kazbegui, Kharagauli, Khelvatshauri, Khobi, Khoni, Kobouleti, Kvareli, Lagodekhi, Lantchkhuti, Lentekhi, Martvili, Mestia, Mtskheta, Oni, Ozurgeti, Roustavi, Sagaredjo, Signakhi, Tchkhorotsku, Tchokhatauri, Telavi, Terdjola, Tetritskaro, Tianeti, Tkibuli, Tsagheri, Tsalendjikha, Tshiatura, Tskhakaia, Vani, Zygdidi
Safeguard Categories
Environment FI
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design The main stakeholders will be MDF, participating municipal governments, communities, and civil society organizations. MDF and participating municipal governments (MG) will ensure that for all subprojects the results of social assessments and stakeholder consultations will be adequately taken into account in identifying investment priorities. Consultation will be carried out through public hearings, surveys, workshops, and other meetings during project implementation and monitoring.
During Project Implementation i) Municipal Government to prepare and submit a project proposal to MDF; ii) Municipal Government to provide necessary information, statistics, and project data during various studies including feasibility of the subproject; iii) MDF to carry-out preparation of investment projects; iv) MDF responsible for the coordination and overall management of its activities; v) MDF to carry-out all financial management activities in accordance with Georgian law and regulations, and donors' requirements; vi) MDF to overseas day-to-day operations of project management office and manage project implementation; vii) MDF to provide technical and logistical support required for efficient operation; viii) Municipal Government to provide necessary inputs such as logistics during project implementation; ix) Municipal Government to join commissioning of the project facilities after completion of the project facilities; x) Municipal Government to operate and maintain the project facilities in accordance with the operations manual of the project facilities prepared; xi) MDF to carry-out procurement for investment projects.
Business Opportunities
Consulting Services

The selection and engagement of consulting services to be financed under the Project will be in accordance with ADB's Guidelines on the Use of Consultants (2007, as amended from time to time) and the procurement plan. The following methods of selection will be applied: (i) quality-and cost-based selection; (ii) quality based selection; (iii) consultants' qualifications selection for small consultant assignments that cost less than $200,000 per contract; (iv) least cost selection for very small consultant assignment that cost less than $100,000; (v) fixed budget selection; (vi) single source selection and ADB's procedures for individual consultant selection for individual international or domestic consultants for following types of assignments: environmental, social, tariff, and O&M studies.

Advance Contracting and Retroactive Financing -

To be able to start construction in June 2008, preparation work must begin in April 2008. The Government has requested, and ADB approved advance contracting and retroactive financing for recruitment of consultants for feasibility studies, detailed engineering designs, and preparation of bidding documents for subprojects, and associated civil works.

Advance contracting allows the Government and MDF to undertake procurement procedures, at its own risk, prior to the loan becoming effective. The Government and MDF were informed that, for expenses incurred under advance contracting to be eligible for ADB's rectroactive financing, such procedures (including advertising) must comply with ADB's Procurement Guidelines and ADB's Guidelines on the Use of Consultants. Once the loan becomes effective, up to 20% of the amount may be used to finance eligible expenditures incurred, pursuant to advance contracting, during the period not exceeding 12 months prior to signing the Loan Agreement. Alternatively, the Government and MDF may opt for advance contracting without retroactive financing, in which case the procurement procedures completed under advance contracting do not conclude with the award of contract until after the loan becomes effective. The Government and MDF acknowledged that such advance contracting will be undertaken at their own risk, and that any concurrence by ADB with the procedures, documentation, or proposal for award of contract does not commit ADB to finance any such expenditures or the Project. The ADB project team will orient Government and MDF staff regarding ADB's Procurement Guidelines and ADB's Guidelines on the Use of Consultants.

Procurement All procurement financed under the Project will be carried out in accordance with the ADB's Procurement Guidelines (2007, as amended from time to time). Contracts for civil works that are estimated to cost more than $1 million equivalent and contracts for goods that are estimated to cost more than $500,000 equivalent will be procured using international competitive bidding procedures. Civil works contracts estimated to cost $1 million equivalent or less, and contracts for procurement of goods estimated to cost between $100,000 and $500,000 equivalent will be carried out through national competitive bidding (NCB). Prior to commencement of any procurement activity under NCB, ADB and the Government will review the public procurement law to ensure that it is consistent with ADB's Procurement Guidelines. Any necessary modifications and clarifications to the public procurement law will be agreed between ADB and the Government and included in the procurement plan. Goods contracts estimated to cost less than $100,000 equivalent will be carried out through shopping procedures. Goods valued below $10,000 and civil works valued up to $10,000 may be purchased directly from the supplier and contractor.
Responsible ADB Officer Goalou, Bertrand
Responsible ADB Department Central and West Asia Department
Responsible ADB Division Urban Development and Water Division, CWRD
Executing Agencies
Municipal Development Fund of Georgia
Mr. Konstantine Mgeladze
[email protected]
150 D. Agmashenebeli Ave., 0112, Tbilisi, Georgia
Concept Clearance 09 Oct 2007
Fact Finding 11 Feb 2008 to 22 Feb 2008
MRM 01 Apr 2008
Approval 12 Sep 2008
Last Review Mission -
PDS Creation Date 04 Mar 2008
Last PDS Update 27 Mar 2013

Loan 2441-GEO

Approval Signing Date Effectivity Date Closing
Original Revised Actual
12 Sep 2008 11 Nov 2008 12 Dec 2008 30 Jun 2013 - 27 Feb 2013
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 63.25 Cumulative Contract Awards
ADB 40.00 12 Sep 2008 38.22 0.00 100%
Counterpart 23.25 Cumulative Disbursements
Cofinancing 0.00 12 Sep 2008 38.22 0.00 100%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - Satisfactory Satisfactory Satisfactory - Satisfactory

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

The Public Communications Policy (PCP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.

The Accountability Mechanism provides a forum where people adversely affected by ADB-assisted projects can voice and seek solutions to their problems and report alleged noncompliance of ADB's operational policies and procedures.

In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

Safeguard Documents See also: Safeguards

Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

None currently available.

Evaluation Documents See also: Independent Evaluation

Title Document Type Document Date
Georgia: Municipal Services Development Project and Municipal Services Development Project Phase 2 Project Performance Evaluation Reports Dec 2017
Georgia: Municipal Services Development Project Validations of Project Completion Reports Nov 2014

Related Publications

None currently available.

The Public Communications Policy (PCP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.

Requests for information may also be directed to the InfoUnit.


No tenders for this project were found.

Contracts Awarded

No contracts awarded for this project were found

Procurement Plan

Title Document Type Document Date
Municipal Services Development Project Procurement Plans Aug 2008