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EBRD FINANCED TBILISI PUBLIC TRANSPORT PROJECT








March 2008



EBRD FINANCED TBILISI PUBLIC TRANSPORT
PROJECT

Case Study












Author:
David Chipashvili, Association Green Alternative/CEE Bankwatch Network

Acknowledgements:
Manana Kochladze, Association Green Alternative/CEE Bankwatch Network























Editing:
Donald Mcleish, Greig Aitken, CEE Bankwatch Network











© 2008 CEE Bankwatch Network, Green Alternative 2
EBRD financed Tbilisi Public Transport Project - Case Study






Contents


Executive summary .............................................................................. 3

Introduction.......................................................................................... 4

EBRD project description...................................................................... 5

Project implementation ........................................................................ 5

Regulation of Tbilisi public transport scheme ..................................... 6

Travel fee collection on public buses ................................................... 6

Increased tariffs of buses.................................................................... 7

The project's economic viability ........................................................... 7

The project's transparency and corruption ......................................... 7

Conclusion ............................................................................................. 8

Footnotes .............................................................................................. 10




3
EBRD financed Tbilisi Public Transport Project - Case Study




Executive summary

Tbilisi, the capital of Georgia, with a population of more than 1.5 million people manifests all the signs of
environmental stress - poor air quality, excessive noise, traffic congestion, loss of green areas and
degradation of historical buildings and monuments. Road transport is responsible for an increasing share
of total air emissions, their contribution rising from some 70 percent in 1991 to about 91 percent in
2005
1
.

During Soviet times, Tbilisi was served by around 1,200 buses and by electric transport facilities (trolley
bus 272 kilometres; underground 27 kilometres; tramway 36 kilometres)
2
. At this time problems
already existed, especially during peak hours. After independence in the early 1990s, the large-bus and
electric transport, focused model of the Soviet period collapsed due to financial constraints, and private
operators started to complement the deficient public transport services through the introduction of
numerous flexible and frequent microbuses, which covered almost all of the city.

After the Rose Revolution, Tbilisi municipality took the correct decision to reform the public transport
management system and the European Bank for Reconstruction and Development (EBRD) was asked to
provide support. In July 2005, the EBRD lent EUR 3,1m to the Municipal Auto Transport Company Ltd
which is wholly owned by Tbilisi Municipality. The project was aiming to purchase 150 municipal buses,
spare parts and workshop equipment and reform the regulatory framework for public transport in Tbilisi.

With regard to the environmental impact of the project, it was assumed that modernisation of the bus
fleet would decrease traffic congestion, increase traffic safety, improve air quality and reduce emissions.
In addition, the project document specified that fuel efficiency requirements would comply with the
European Unions environmental standards for urban buses3.

However, the implementation of the project has actually led to increased environmental and social stress,
while the development of a sustainable public transport scheme that would mitigate existing problems is
still not defined.

In September 2006, the government banned all minibuses from main avenues and substituted them with
buses. The decision might have been successful if the amount of the buses had been sufficient. As there
were only 500 buses working on a few routes within the centre, it lead towards increased overloads on
public transport. Additionally, in November 2006, the city government discontinued the tram and trolley
fleet, which created an even more complicated situation for the citizens.

As a result, since the EBRD supported purchase of the so called yellow buses, which even became the
face of the Rose Revolution for the Government, the environmental situation in Tbilisi has become much
worse.

The EBRD Tbilisi public transport project attempted to establish and implement a fee collection system on
public transport. However, the system was only introduced in July of 2007 after the doubling of bus
service tariffs, and almost totally collapsed.

After a one month experiment with the system, the conductors were fired
4
due to increased expenditures
for the company related to the salaries of conductors and their supervision. This fact clearly shows that
the decision to implement the ticketing system was not based on sound calculations and was made
without proper planning.

One of the major problems related to the increased tariffs on travel fees is that Tbilisi municipality is not
ready to develop measures to assist vulnerable people. While the authorities make assurances that the 4
EBRD financed Tbilisi Public Transport Project - Case Study


poorest section of the population will pay only half of the travel fee, the amount of people living under the
poverty line is higher than has been identified by the municipal authorities. The 60,000 people identified
excludes internally displaced people, veterans and pensioners, who represent a very vulnerable part of the
population.

The projects economic viability and sustainability are questionable. While the city budget covers more
than 50 percent of the companys expenses, including the covering of the EBRD loan, the losses of the
company are increasing. In 2006, the company had losses of GEL 3m
5
, which should not be surprising,
taking into account the fact that the company still has no estimation of the real number of passengers
and no transparency in terms of real and fixed revenues and expenses related to the companys further
development. While the company requested Tbilisi municipality to double the travel fee from July 2007,
they have never presented the arguments in terms of pricing.

According to the income statement for the project for the first half of 2006, the self cost for transporting
one passenger was 0,451 GEL, while the average adopted tariff was 0,209 GEL. This difference was
supposed to be covered from the subsidy given by the municipality. According to the company, one of the
biggest expenses relates to fuel costs which exceed the incomes from the transfer of passengers. This
raises fears that shadow money is greatly spread throughout the system. The Green Alternative
rechecked this information with bus drivers to find out how much they spend on fuel. For instance, for bus
number 44, one route requires 20 litres of diesel which costs GEL 28, while the planned income was GEL
33. According to the drivers they spent less on fuel than is assigned to the route.

There is much to be done in order to reform the public transport management system in a way which
responds to the needs of Tbilisis citizens but the top priority should be given to the development and
public discussion of a Tbilisi City Sustainable Transport Management Plan (including tram, trolley, metro
and buses) and undertaking a social assessment to identify mitigation measures for vulnerable people.

Introduction

Tbilisi, the capital of Georgia, with a population of more than 1.5 million people manifests all the signs of
environmental stress - poor air quality, excessive noise, traffic congestion, loss of green areas and
degradation of historical buildings and monuments. Many stresses, especially from transport, are
increasingly leading to a deterioration