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New EIB support for Georgia’s transport infrastructure and connectivity

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New EIB support for Georgia’s transport infrastructure and connectivity

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  •  Release date: 19 February 2019
  •  Reference: 2019-052-EN
  •  EUR 250m loan for construction, rehabilitation and improvement of safety of roads located directly on the extended Trans-European Transport (TEN-T) Network, i.e. the East-West Highway in Georgia
  • EIB engagement in transport connectivity projects in Georgia brought to a total of EUR 1bn
  • Expected benefits include improved international connectivity, regional integration, local mobility and new jobs
  • EUR 6.1m technical assistance grant from the EU under the Neighbourhood Investment Platform (NIP), two experts provided thanks to the EPTATF [1]

Georgia will be better connected to the European Union and enjoy safer travel conditions within the country thanks to financial and technical aid from the EU. The European Investment Bank (EIB) and other EU institutions have announced today their support for a wide-ranging programme of transport infrastructure upgrading approved by the government of Georgia, which includes key works on the country’s East-West Highway.

The EIB will lend EUR 250m to finance an extended upgrade of Georgia’s East-West Highway, which is the main artery for long distance road traffic in Georgia and is also a direct part of Europe’s TEN-T[2] infrastructure. This will include road sections with a total length of around 100 km that are among the Georgian Government’s priority projects. Following its implementation, the project will have multiple benefits. It will increase Georgia’s global connectivity to Europe by improving road safety and travel conditions, lowering travel times and reducing vehicle operating and maintenance costs.  It will enhance the Georgian population’s local mobility and access to social services and economic activities. In terms of employment, the programme is expected to generate the equivalent of some 23,000 person-years[3] during the construction works.

The EIB loan is fully covered by the European Union’s Comprehensive Guarantee and brings to EUR 750m the total lending committed by the EU bank for transport infrastructure projects in Georgia. A previous EUR 500m loan, divided into two equal tranches, was signed in December 2016 and June 2017. Under the first operation, the EU bank financed the new construction and rehabilitation of road sections with an total length of nearly 39 km: the Grigoleti-Kobuleti Bypass (approx. 14.2 km), Ubisa-Shorapani F3 Section (approx. 13 km), and Chumeteleti-Khevi  F1 Section (approx. 11.6 km). Overall, the EIB loans will finance transport connectivity projects worth a total of EUR 1bn in Georgia.

The EU commitment does not stop there. The project benefits from a EUR 6.1m technical assistance grant provided by the European Union under the Neighbourhood Investment Platform (NIP). In this respect, under an agreement signed in December 2018 between the EIB and the EU – represented by the European Commission – the EIB will finance further studies when required (including for blackspot management in the vicinity of the road sections financed by the operations) and provide project management support to the Roads Department of Georgia’s project implementation unit. At the same time, under the Eastern Partnership Technical Assistance Trust Fund (EPTAFT), two EIB EPTATF experts will be mobilised to help implement the programme. These will consist of a road sector expert based in Tbilisi and working at the Roads Department of Georgia within the Ministry of Regional Development and Infrastructure, and a technical assistance expert.

Quotes

EIB Vice-President Vazil Hudák commented: “With this new loan the EIB is consolidating its position as a top financier of infrastructure in Georgia. We will contribute to improved mobility – a prerequisite for productivity growth – and road safety along a long segment of the East-West Highway. EU engagement will thus bring more tangible benefits to the Georgian people.”

EU Ambassador to Georgia, Carl Hartzell, stated: "Improved road networks, especially key ones such as Georgia's East-West highway are crucial for economic development, connecting people and facilitating trade and transit within Georgia and with the wider region. This project will lay the groundwork for 100 km of new and safer roads to be built in Georgia in the years to come, and is a part of the EU's commitment to further stimulating economic growth and job creation in Georgia".

Prime Minister of Georgia Mamuka Bakhtadze commented: "The European Investment Bank actively cooperates with Georgia, by being a supportive and significant partner of our country. This cooperation manifests itself in various dimensions of public and private sectors. EIB actively supports the development of small and medium enterprises (SMEs) in Georgia as well. In line with the Agreement concluded today with EIB, EUR 250 million will be allocated for the development and advancement of strategic transport infrastructure in the country, which is particularly important for the increased competitiveness of Georgia and enhanced transport functionality. I wish to thank the EIB for being an ardent supporter of Georgia."

Minister of Finance of Georgia Ivane Matchavariani said: “„The history of cooperation between European Investment Bank (EIB) and Georgia is exceptional. The Support of the European Union through the EIB has played a major role in our country's transformation. We have very important ongoing projects in public as well as private sector through the financial support of EIB. EIB financing of the construction of Georgia's East-West Highway is a demonstration of the importance of cooperation with the bank. The Finance Contract (Loan amount of EUR 250 million) for the project "Georgia Transport Connectivity II" which was signed today further underlines our strong partnership. The abovementioned loan amount will be directed to construction/rehabilitation of the vital sections of Georgia's roads. We hope that EIB will continue supporting the ongoing reforms within a country, the purpose of which is the support of rapid economic growth, the creation of jobs, improvement of livings of standard and alleviation of poverty“.

 


[1] The Eastern Partnership Technical Assistance Trust Fund (EPTATF)

[2] Trans-European Network – Transport

[3] Person-year defines the amount of work executed by an individual on the project during a working year










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