Georgia: Municipal Services Development Project - Phase 2

Sovereign Project | 43171-013

ADB is supporting infrastructure repairs and upgrades in selected urban municipalities in Georgia. The project will target high-priority urban transport projects in the capital, Tbilisi, and other municipalities, which were proposed for additional ADB financing under the first Municipal Services Development Project. It will also provide capacity development for municipal governments.

Project Results

  • 24,000 households with new or improved water supply
  • 264 kilometers of water supply pipes installed or upgraded
  • 102 kilometers of road that have been built or upgraded

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
  • Country
  • Modality
    • Loan
  • Sector
    • Water and other urban infrastructure and services
Project Name Municipal Services Development Project - Phase 2
Project Number 43171-013
Country Georgia
Project Status Closed
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 2534-GEO: Municipal Services Development Project - Phase 2
Asian Development Fund US$ 30.00 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Gender Equity and Mainstreaming
Governance and capacity development
Sector / Subsector

Transport / Urban roads and traffic management

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

Gender Equity and Mainstreaming Some gender elements

The proposed Municipal Services Development Project - Phase 2 (MSDP 2) finances investments in municipal infrastructure and utility services. It focuses on urban transport, but could flexibly respond to other municipal infrastructure. It will provide (i) proceeds to MDF for financing to selected municipalities for repairing and rehabilitating municipal infrastructure and local utility services, and (ii) capacity development for MDF and municipalities through incremental administration and technical assistance programs.

The MSDP 2 follows the Municipal Services Development Project (MSDP 1) approved in August 2008. It targets high-priority urban transport projects in Tbilisi and other municipalities, which were proposed for additional Asian Development Bank (ADB) financing under the MSDP 1. As available financing under the MSDP 1 is largely committed to other priority investments, a new facility is proposed.

Project Rationale and Linkage to Country/Regional Strategy

The double shocks of the August 2008 conflict with the Russian Federation and the global economic crisis undermined growth and stability in Georgia. Investor and consumer confidence deteriorated and liquidity in the banking system contracted, while infrastructure was left damaged. Investment and economic development declined and foreign direct investment slowed. This stressed the balance of payments, shrank public finances from revenue shortfalls, and increased expenditure needs.

Economic growth has plunged from 10.0% in 2007 to 2.1% in 2008. The Georgian authorities responded with macroeconomic policies, but the GEL2.2 billion stimulus has limited municipal funding.

Challenges in the urban transport sector are palpable. Tbilisi suffers from traffic congestion, and air and noise pollution. This is due to increased private car ownership, inadequate roads, and the deteriorating public transport systems including discontinuing tram and trolleybus services. About 80% of air pollution derives from motor transport. Road accidents have increased, with over 4,000 reported in Tbilisi in 2007, and a 62% increase in the number of people injured in 5 years.

Therefore, the Government requested ADB to urgently support a program of investments in Tbilisi's municipal transport systems, including roads, traffic management, and public transport.

The MSDP 2 will finance MDF, an effective agency, for improving municipal transport systems. The Project is technically feasible, institutionally sound, and economically viable. This new facility:

(i) supports government and ADB priorities;

(ii) responds swiftly to the Government's request;

(iii) complies with a mutually defined development framework;

(iv) capitalizes on the proven MDF arrangements; and

(v) reinforces ADB's long-term partnership in urban development with Georgia.

Impact Improved municipal environment, local economy, and public health in urban areas
Project Outcome
Description of Outcome Improved municipal infrastructure, service delivery, and better living conditions in urban areas.
Progress Toward Outcome Achieved.
Implementation Progress
Description of Project Outputs

Part A: Investment Projects Financing Facility

Increased quality of service, wider network coverage, reliability of urban transport system, water supply, waste water, and solid waste management

Part B: Project Management and Capacity Development

Improved capacity of municipal governments to prepare and appraise feasibility, engineering design, environmental, social, or other related studies

Improved capacity of municipal governments in project management

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

Project Completion Report was circulated on 26 June 2013 (IN. 145-13).

Rehabilitation projects (38 total) were completed by September 2012. Urban roads (total length 101.7 km) were improved under 34 subprojects in 27 municipalities. Water supply systems were rehabilitated and expanded with installation of 264 km of distribution pipes in 4 municipalities.

Three subproject appraisal reports (SARs) and 35 subproject summary reports (SSRs) were submitted to and approved by ADB.

Detailed design works for all 38 subprojects were contracted out to local consultants by MDF. Construction supervision was undertaken directly by MDF with participation of the municipal governments. Two consultants were engaged for construction supervision, one for the road project in Mestia and the other for the water supply project for Poti.

MDF staff is gender balanced (46.4% of staff were female in 2013 as opposed to 27.4% in 2008). Two impact performance targets are informed by sex-disaggregated data; 25% of public consultation participants are female.

Geographical Location K'eda, Oni, Shuakhevi, Tbilisi
Safeguard Categories
Environment FI
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects The Project will focus on subprojects with no significant adverse environmental impacts. However, in some exceptional cases where the needs for financing environmentally sensitive projects, e.g., landfill sites, are well justified, the Project can include such investments provided that ADB and the Government of Georgia's environmental assessment and management procedures are strictly followed, and environmental risks are minimized to an acceptable level as a result of a properly assessed and planned mitigation program.
Involuntary Resettlement No subproject that involves involuntary resettlement will be eligible for financing.
Indigenous Peoples As there is no group fitting the ADB definition of indigenous peoples in Georgia, the policy willl not be triggered by this Project.
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 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.

MDF will be responsible for undertaking and providing adequate resources for project monitoring, including social development outcomes. The assessment of social issues cannot be completed until the start of subproject feasibility. MDF will ensure that a social assessment is carried out in cooperation with the participating municipality to (i) identify possible social issues, including gender, vulnerability, labor, affordability, and other social risks, if applicable; (ii) identify measures to avoid or minimize these risks; and (iii) ensure that the proposed subproject is tailored to the needs and priorities of the participating community as identified through the consultation process. A summary poverty reduction and social strategy is in

MDF and participating municipal governments will furthermore ensure that there is no differential payment between men and women for work of equal value, and no child labor will be employed in the construction or maintenance activities.

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 will follow ADB's Guidelines on the Use of Consultants. The following methods of selection will be applied: (i) quality-and cost-based selection; (ii) quality-based selection; (iii) consultants' qualifications selection for small consultancy assignments that cost less than $200,000 per contract; (iv) least0cost selection for very small consultancy assignments that cost less than $00,000; (v) fixed budget selection; and (vi) single source selection and ADB individual consultant selection procedures for individual national or international consultants for the following types of assignments: environmental, social, tariff, and O&M studies.
Procurement All procurement will be carried out in accordance with ADB's Procurement Guidelines. Contracts for civil works that cost more than $1 million equivalent, and contracts for goods that cost more than $500,000 equivalent, will be procured using international competitive bidding. Civil works contracts that cost $1 million equivalent or less, and contracts for goods that cost between $100,000 and $500,000 equivalent, will be carried out through national competitive bidding. Prior to commencement of any procurement activity under national competitive bidding, ADB and the Government will review again the public procurement law to ensure that it is consistent with ADB's Procurement Guidelines. Modifications and clarifications to this law will be agreed and included in the procurement plan. Goods contracts that 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
Konstantine Mgeladze
[email protected]
150 David Agmashenebeli Avenue 0112, Tbilisi, Georgia
Concept Clearance 04 Mar 2009
Fact Finding 02 Mar 2009 to 08 Mar 2009
MRM 28 Apr 2009
Approval 28 Jul 2009
Last Review Mission -
PDS Creation Date 18 May 2009
Last PDS Update 31 Mar 2014

Loan 2534-GEO

Approval Signing Date Effectivity Date Closing
Original Revised Actual
28 Jul 2009 20 Aug 2009 28 Oct 2009 30 Jun 2014 - 30 Jun 2014
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 41.50 Cumulative Contract Awards
ADB 30.00 18 Nov 2021 29.62 0.00 100%
Counterpart 11.50 Cumulative Disbursements
Cofinancing 0.00 18 Nov 2021 29.62 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 Access to Information Policy (AIP) 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– Phase 2 Validations of Project Completion Reports Oct 2014

Related Publications

None currently available.

The Access to Information Policy (AIP) 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 - Phase 2 Procurement Plans Jun 2010