Issue 1, 2018. February-March



Under his four-point plan, Georgian Prime Minister Giorgi Kvirikashvili has vowed to build connections -connections between villages, towns, provinces, neighboring countries and distant trading partners. Major projects are already underway and many more are slated to start this year.

The Georgian government has promised to improve infrastructure - not just continue construction on the main East West Highway project to connect the capital Tbilisi with Batumi and the Black Sea - but to expand and build the roads and byways needed to connect villages and rural communities to provincial centers and onward, to bigger markets and more opportunities. Construction and infrastructure figure prominently in Georgian Prime Minister Giorgi Kvirikashvili's four-point plan, the ruling Georgian Dream party's priorities for reforms.

When he announced the plan in 2016, the prime minister stated that by 2020, around 1000 km of highways will have been built or reconstructed. Kvirikashvili compared the country's roads and bridges to "oxygen" for local communities around the nation.

"[Infrastructure] has to provide more oxygen, more new blood to the regions, and create equal opportunities notwithstanding their geographic location," he said.

A year later, Kvirikashvili noted that "in 2016, 970 million lari was spent on infrastructure projects, while this year 1.35 billion lari will be spent, a 36-37 percent increase compared to last year [2016]. This has become possible by decreasing administrative expenses and effective work with financial institutions."

International financial institutions, such as the Asian Development Bank (ADB), the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), the Japanese International Copperation Agency (JICA) and the World Bank (WB), have already pledged to help Georgia improve its infrastructure and bolster connectivity around the country and around the region.

ADB loans and financing

The ADB Country Operations Business Plan for Georgia 2018-2020 focuses on "sustainable transport, regional connectivity and economic-corridor development."

The plan will support the government to "improve internal and regional market connectivity to enhance private sector competitiveness and broaden access to economic opportunities," as well as meeting several other goals in strategic areas like utilities development in secondary towns; energy security and stability; and SME development.

The plan includes $250 million in lending for the E60 East West Highway project, now known as the Khevi-Ubisa Road project in 2018, and two road projects in 2019 -$50 million in lending for the E70 Batumi-Sarpi Road project, and $100 million for the Kvesheti-Kobi Road project. From 2017-2019, the ADB is financing loans worth $478 million for transport-related projects, including the construction and rehabilitation of international, secondary, and local roads, according to the ADB's Country Operations Business Plan for those two years. The funds will also be used to develop road and transport policies and reforms as well as road maintenance, safety and urban transport planning.

EBRD loans and financing

The EBRD spends 9 percent of its 678 million euro budget in Georgia on infrastructure, according to its website.

That includes a loan of 6 million euro for the upgrade of three border control points along the border between the Republic of Armenia and Georgia.

EIB loans and financing

The EIB is funding several sections of the East-West highway. In 2016, the EIB signed three loan agreements worth 250 million euro for "the rehabilitaton and upgrading of municipal infastructure.

JICA Bank loans and financing

JICA has been funding work on a 57-kilometer portion of the East-West highway since 2009. In 2016, JICA signed an additional loan agreement with the government for the highway improvement project.

World Bank loans and financing

A recent World Bank Georgia Systematic Country Diagnostic highlighted the country's need to "shift gears" by, among other thing, "unlocking the export engine by improving connectivity, which would also allow firms to grow and become more productive." The report found that connectivity in Georgia is a "binding constraint" and "secondary road quality and air connectivity are top challenges." The current WB program for 2014-2017 (approximately $800 million) "has already built a strong focus on infrastructure to support inclusive growth," with infrastructure projects representing 83 percent of the total portfolio - 53 percent for transportation alone - according to a sector breakdown of spending. For 2018, WB has earmarked $420 million for investment lending in the transport sector: highways are slated to receive lending worth $235 million, with $185 million in lending for secondary roads.

Specific road projects include:

- Construction and supervision of the Zemo Osiauri-Chumateleti works (expected to be completed in 2021);
- Preparation of a Pre-Feasibility and Feasibility Study for the Samtredia-Zugdidi Bypass Road (including access road to Anaklia Deep Sea Port);
- Preparation of a Feasibility Study and Detailed Design for the Upgrading of the Rustavi-Red Bridge and Rustavi-Sadakhlo Roads;
- Preparation of a Feasibility Study for the Upgrading of Tbilisi-Bakurtsikhe, Tsnori-Lagodekhi Road and Detailed Design for the Upgrading of Tbilisi-Sagarejo and Sagarejo-Bakurtsikhe Road;
- Preparation of a Pre-Feasibility Study and Feasibility Study for the Jinvali-Larsi Road and Detailed Design for the construction of Kvesheti-Kobi Road Section;
- Rehabilitation of over 700km of local and secondary roads throughout Georgia, piloting the use of design and build contracting methodologies and of performance based contracting methodologies.