The FINANCIAL — The Asian Development Bank (ADB) is providing Georgia $300 million in loans for an urban transport overhaul which will ease chronic traffic congestion, improve the environment, and boost growth and jobs in its cities.
The ADB’s Board of Directors today approved a multitranche financing facility which will help fund part of the government’s huge urban investment program, earmarked at $1.1 billion between now and 2020.
"The capital Tbilisi and secondary cities make up the backbone of Georgia’s economy, but they are blighted by rising traffic jams and road accidents, pollution, poor infrastructure and inefficient public transport systems. The government has formulated a strategic sector roadmap and wide-ranging reforms to address the problems as well as to help urban centers unlock their potential as engines for growth and job creation," ADB informs.
“The investment program, with support from our financing facility, will improve the efficiency, reliability and affordability of urban transport services, resulting in expanded economic growth, job opportunities, and greater environmental sustainability of cities,” said Arnaud Dauphin, Urban Development Specialist in ADB’s Central and West Asia Department.
The ADB funds will be released in three tranches, with the first $85-million tranche earmarked for the extension of a metro rail in Tbilisi, and for roads, pedestrian and cycle paths that could stimulate tourism in cities, including Mestia which is a UNESCO heritage site.
Other urban centers that will benefit from ADB assistance include Batumi, Kutaisi, Poti, and Rustavi as well as Anaklia, which along with Mestia, has significant tourism potential.
The assistance will also be used to reorganize and build the capacity of municipal transport agencies and urban transport operators to deliver more efficient, high quality, and safer services. By increasing people’s mobility and reducing travel times, the program will be especially beneficial to women, the elderly and students who rely on mass transport to access health and education services.
“This facility will be the first of its kind for ADB in Central Asia as it promotes clean and sustainable urban solutions favoring public and nonmotorized transport. It echoes the ADB’s Sustainable Transport and Climate Change Initiatives and paves the way to reach the 30% urban transport operations target for ADB by 2020,” Mr. Dauphin added.
As the overall financing requirements are so large, ADB will also consider joint and parallel cofinancing partnerships. The ADB-financed interventions are designed to complement urban development improvement work being carried out in the country by other donor agencies such as World Bank, European Investment Bank, European Bank for Reconstruction and Development and other bilateral funds.
The investment will be financed from a blend of concessional and commercial resources. The first tranche loan will come from the concessional Asian Development Fund. It has a 32-year term, including a grace period of 8 years, with an annual interest rate of 1.0% during the grace period and 1.5% for the balance of the term. The second tranche will total $100 million, and the third tranche, $115 million, mainly from ADB ordinary capital resources.
The Municipal Development Fund of Georgia, which is currently overseeing all donor assistance in the urban sector, is the executing agency for the program. The program is expected to be completed by 2018.