Georgia : Sustainable Urban Transport Investment Program - Facility Concept

An MFF is the preferred funding modality on account of its flexibility, sequencing of investments and the existence of a sound policy framework, strategy, and roadmap. The size of the MFF is $300 million. The MFF is structured into five tranches. The first tranche amounts to $85 million equivalent and included four subprojects and already completed the civil works of the Tbilisi Metro. Tranche 2 is $64.8 million equivalent and included one subproject for the improvement of two sections of the Tbilisi - Rustavi road. The civil works under Tranche 2 is completed. Tranche 3 is $73 million and included one subproject for the improvement of one section of the Tbilisi - Rustavi road and is under implementation. Tranche 4 is $20 million for the improvement of the Batumi coastal area and is under implementation. Tranche 5 was approved in 2017 for $12.27 million equivalent for the safety improvements of the Tbilisi Metro. The main outputs of the investment program could be summarized as follows:

(i) Extension, rehabilitation, and improvement of urban transport infrastructure in Anaklia, Batumi, Kutaisi, Poti, Rustavi, and Tbilisi.

(ii) Increased institutional effectiveness, including the reorganization and reforms at the Tbilisi municipality, other municipalities and urban transport service providers.

(iii) Establishment of program management team with a capability and funds to handle project preparation, technical design, contract bidding, evaluation and award, contract supervision, progress monitoring and reporting.

Georgia has a population of only 4.62 million but is one of the most urbanized countries in the Caucasus. Urban areas are the pillars of economic growth and account for 53% of the total population, nearly 2.5 million people. Urban areas can be divided into three groups: (i) the conurbation of Tbilisi and the adjacent city of Rustavi; (ii) the main secondary cities of Batumi, Gori, Kutaisi, and Poti; and (iii) cities with high tourism potential such as Anaklia, Borjomi, Gudauri, and Mestia. Although they differ in size, they all have common transport problems: rising traffic congestion, pollution, poor and inappropriate road infrastructure and highly inefficient urban transport systems. Tbilisi, the capital and largest city, is home to 30% of the national population and generates 50% of Georgia's gross domestic product. It is also the main employment center.

The central government wants the cities to be the engine of economic growth and job creation. The government emphasizes city cluster development and the delivery of quality infrastructure and urban services. These are considered essential to increase quality of life, attract investment and increase productivity and competitiveness. The strategic vision is shared by all municipalities. In this regard, the Government has been working out an urban renewal strategy and supporting business plan. The work is complete, although some refinements to both will be needed overtime. Urban transport and various related services lie at the core of this strategy and business plan. A policy framework is in place for this purpose. It outlines key guiding principles and criteria for investment and follow-up operations, including competition, private sector involvement, efficiency, fairness, transparency, environmental sustainability, value for money with regard to capital investment, maintenance and sound service provision.

The long term investment program underpinning the urban strategy amounts to $1.1 billion. This is an estimate for the period 2010-2020. A medium term slice of this program (for 2010-2016) is estimated at $700 million. This is over and above the $400 million already spent between 2005 and 2010. With regard to urban transport, the target is to improve its reach, quality and continuity. It also pursues greater efficiency and tighter environmental safeguards. One policy directive is to favor nonmotorized transport use to reduce pollution, noise, and traffic accidents, and improve living conditions. The strategic objectives for urban renewal and transport are fully consistent with the strategy agreed by Georgia and ADB for the purposes of the ADB assistance program in the country and in line with ADB's sustainable transport objectives. The roadmap comprises sequenced investments, including private, public and public/private initiatives. It also includes municipal reforms and capacity building (policy, planning and oversight). The government, the Municipal Development Fund of Georgia (MDF), and the Tbilisi and other municipalities have asked ADB to help them tackle the urban transport problem within the framework of the urban renewal strategy. The existence of a policy framework, strategy and roadmap also happens to be preconditions for the use by ADB of the multitranche financing facility (MFF) as a funding modality.

Improved urban environment, expanded local economy, and better living conditions within urban areas

Efficient, reliable, and affordable urban transport services provided in relevant cities

Urban transport infrastructure extended, rehabilitated and improved by MDF and relevant municipalities

Institutional and management capacity of MDF and relevant municipalities strengthened

Establishment of skilled and experienced units to oversee the management and the implementation of the program in MDF and the relevant municipalities

1. Extension, rehabilitation, and improvement of urban transport infrastructure in Anaklia, Batumi, Kutaisi, Poti, Rustavi, and Tbilisi.

2. Increased institutional effectiveness, including the reorganization and reforms at the Tbilisi municipality, other municipalities and urban transport service providers.

3. Establishment of program management team with a capability and funds to handle project preparation, technical design, contract bidding, evaluation and award, contract supervision, progress monitoring and reporting.