Japanese ODA Loan
Ex-Ante Evaluation
Central Asia and the Caucasus Division
East and Central Asia and the Caucasus Department, JICA
1. Name of the ProjectCountry: Georgia
Project: East-West Highway Improvement Project (Phase 2)
Loan Agreement: September 4, 2018
2. Background and Necessity of the Project(1) Current State and Issues of the Transportation and Road Sector in Georgia
Georgia’s transportation system consists of land transport using railways androads connecting to neighboring countries, air transport and marine transport,
centered on the Port of Poti and the Port of Batumi along the Black Sea.
Georgia’s land transport heavily relies on its 22,000-km road network, which
carries one third of international freight traffic and more than 90% of passenger
traffic. Located on the shortest route connecting Europe and Central Asia, thecountry plays an increasingly important role not only as a transit nation for oiland gas pipelines from the Caspian Sea but also as a logistics base in theCaucasus region. Particularly, the East-West Highway, a 460-km international
corridor running from the border with the Republic of Azerbaijan to the coastal
Black Sea area, constitutes part of the important international road networks
connecting Europe and Asia. The traffic volume on the highway has increasedby 8.5% per year on average since 2007, and is projected to continue its steady
growth. Thus, the East-West Highway plays an extremely important role not onlyin Georgia but also in the Caucasus region as a whole.
The upgrading of the East-West Highway is included in the priority list ofGeorgia’s development strategy “Georgia 2020,” which places special emphasison road infrastructure development to heighten the efficiency of international anddomestic logistics, improve the safety of road transport networks, increase
Georgia’s competitiveness as a transit hub, and promote regional economies.
The Chumateleti-Argveta section, including the section covered by this Project,
is one of the unimproved sections of the East-West Highway. Because thissection runs through narrow mountain passes, there is a need to constructtunnels and bridges to improve traffic efficiency. In addition, since there is a riskof impassability due to slope failures, appropriate road safety measures, such as
rockfall and landslide prevention, are required to enhance traffic safety.

(2) Development Policies for the Transportation and Road Sector in Georgia andthe Priority of the ProjectThis Project conforms to Japan’s Country Assistance Policy for Georgia (April2014), which identifies “improvement of economic infrastructures” as a priority
area and promotes the Transportation Program to improve aging roadinfrastructure in rural areas. JICA has so far provided ODA Loans for the ongoingEast-West Highway Improvement Project (Loan Agreement signed in FY2009
for 17,722 million yen) and East-West Highway Improvement Project (II) (LoanAgreement signed in FY2015 for 4,410 million yen) as well as Grant Aid for theProject for Trunk Route Rehabilitation (Grant Agreement signed in FY2000 for
304 million yen).
Moreover, this Project is expected to contribute to Sustainable Development
Goals (SDGs) 8 and 9 as it is designed to upgrade an unimproved section andconstruct tunnels and bridges on the international corridor, one of the basic
infrastructure facilities in Georgia, to enhance the transport capacity of Georgia
and the Caucasus region and thereby contribute to the development of regional
economy, including neighboring countries.
(3) Other Donors’ Activities
The World Bank, the Asian Development Bank (ADB), and the European
Investment Bank (EIB) have so far funded 18 projects with a total of 941 milliondollars, 14 projects with a total of 672 million dollars, and five projects with a totalof 750 million euros, respectively, to support the transportation sector in Georgia,
mainly the development of the East-West Highway.
3. Project Description(1) Project Objectives
This Project aims to strengthen the transport system by constructing roads,bridges and tunnels and by upgrading roads on the unimproved
Shorapani-Argveta section of the East-West Highway, thereby contributing toeconomic development in the country and the Caucasus region.
(2) Project Site/Target Area
Imereti Province(3) Project Components
1) Road construction: constructing a new four-lane road (including 12 tunnels
at six locations and 14 bridges at seven locations) and upgrading andwidening the existing road (into four lanes), amounting to 14.7 km
2) Road safety and rockfall prevention measures3) Consulting services (including construction supervision, implementation ofconstruction safety measures, and monitoring of environmental and social
safeguards)(4) Estimated Project Cost (Loan Amount)
48,497 million yen (Loan Amount: 38,735 million yen)(5) ScheduleSeptember 2018 to September 2023 (61 months in total). The projectcompletion is defined as the commencement of the road facility services(scheduled in September 2021).
(6) Project Implementation Structure1) Borrower: Georgia
2) Executing Agency: Roads Department, Ministry of Regional Development
and Infrastructure (hereinafter referred to as “RDMRDI”)
3) Operation and Maintenance Agency: After the project completion, theRDMRDI will be responsible for operation and maintenance. Generally,
however, in Georgia, road operation and maintenance are usuallyoutsourced. This Project is also planned to have operation andmaintenance conducted by a private company selected through bidding
under the supervision of the RDMRDI Road Administration Division.
(7) Collaboration with and Division of Roles with other Projects and Donors
1) Japan’s Assistance Activities:
The Zestafoni-Kutaisi-Samtredia section, adjacent to the section of thisProject, is being developed through the East-West Highway Improvement
Project (I) and (II). Hence, the upgrading of the road section through thisProject is expected to create synergy effects with the other two projects.
2) Other Donors’ Assistance Activities
The East-West Highway is being developed, co-financed (parallel-financed)
with the World Bank, the ADB, and the EIB. Another section of theEast-West Highway (the Batumi Bypass Road) is being developed by theAsian Infrastructure Investment Bank (AIIB) in cooperation with the ADB.
With regard to the Khevi-Argveta section, including the Shorapani-Argveta
section covered by this Project, the ADB has prepared a draft of the EIA anda Detailed Design (D/D) based on the Feasibility Study (F/S) performed by
the World Bank. The World Bank will be financing the construction of theChumateleti-Khevi section, and the ADB and EIB will be co-financing theconstruction of the Khevi-Shorapani section.

(8) Environmental and Social Consideration/Poverty
Development
1) Environmental and Social Consideration

Reduction/Sociali) Category: Aii) Reason for Categorization: This Project falls under the Road sector
specified in JICA Guidelines for Environmental and SocialConsiderations (published in April 2010; hereinafter referred to as the“Environmental Guidelines”).
iii) Environmental Permit: This Project was required by Georgian law toprepare an Environmental Impact Assessment (EIA) report. The report
was approved by the Ministry of Environment Protection andAgriculture in March 2018.
iv) Anti-Pollution Measures: During the construction, necessary
measures will be taken to meet the environmental standards for airand water quality, noise, etc. in Georgia, such as sprinkling water indry seasons, installing wastewater treatment facilities, and limiting
construction hours. After service commences, effective anti-noise
measures will be taken, such as installing noise barriers.
v) Natural Environment: This Project is likely to have a minimum adverse
impact on the natural environment since the project site is not locatedin sensitive areas or their vicinity, such as national parks.
vi) Social Environment: This Project will acquire 53.0 ha of land andcause the involuntary resettlement of 21 households (112 persons).
The land acquisition and resettlement process will be carried out inaccordance with the Land Acquisition and Resettlement Plan (LARP)
prepared based on Georgia’s relevant procedures and environmental
guidelines. No objection has been raised by affected people against
this Project at stakeholder meetings.
vii) Other/Monitoring: In this Project, construction supervision consultants
will monitor air and water quality, noise levels, the impact of tunnel
construction on aboveground structures, groundwater levels, etc.
during the construction and noise levels, etc. for two years after
service commences.
2) Cross-Cutting Issuesi) Poverty reduction and prevention: In the land acquisition andresettlement process, poor households (four households) will beprovided with special compensation (not only the compensation forloss of land and assets but also additional three months’ living
expenses and priority job opportunities in fields related to this Project).
ii) Considerations for people with disabilities: In the land acquisition andresettlement process, households headed by people with disabilities(12 households) will be provided with special compensation (not onlythe compensation for loss of land and assets but also additional threemonths’ living expenses and priority job opportunities in fields related
to this Project).
3) Gender Classification: Gender Informed (Significant)<Activities/Reason for Classification>
In the land acquisition and resettlement process, households headed byfemales (14 households) will be provided with special compensation (notonly the compensation for loss of land and assets but also additional threemonths’ living expenses and priority job opportunities in fields related to thisProject).
(9) Other Important Issues:
Japanese technologies are expected to be introduced through this Project,such as the construction of steel bridges and landslide and rockfall prevention.
4. Targeted Outcomes(1) Quantitative Effects
1) Performance Indicators (Operation and Effect Indicators)
Indicator

Target (2023)[Expected value 2 years
after project completion]

Baseline(Actual value in 2016)

Annual average daily traffic(vehicles per day)

13,755

18,600

Average travel time (minutes)

20.6

11.0

Average travel speed (km per5080Average number ofpassengers (persons per day)

46,843

63,343

Average cargo volume (tonsper day)

11,404

15,421hour)(2) Qualitative Effects
Vitalization of Georgian and Caucasian economies by improving the efficiency

of logistics; improvements in traffic safety and comfort(3) Internal Rate of Return
Based on the conditions indicated below, the Economic Internal Rate ofReturn (EIRR) of this Project is calculated at 13.03%. The Financial Internal
Rate of Return is not calculated because this Project will not generate toll or any
other revenues.
[EIRR]
Cost: Project costs and operation and maintenance expenses (excludingtaxes)
Benefit: Reduction in total travel time and fuel consumption for car users
Project life: 40 years
5. Pre-conditions and Important Assumptions(1) Pre-conditions: None in particular(2) Important Assumptions: None in particular
6. Lessons Learned from Past Projects
The ex-post evaluation of the Second Mekong International Bridge
Construction Project in the People's Democratic Republic of Laos indicated thatthe key to success in eliminating physical bottlenecks (missing links) in regionalroad networks is cross-border infrastructure development based on a wide andcomprehensive perspective. Therefore, it is essential to examine and analyze
not only the development progress and plan of the road networks integrated byconstructing the missing links but also those of other road and traffic networks inthe project planning stage. Based on the above-mentioned lesson learned, thisProject, which is also aimed at developing an international corridor, examined
the progress and plans of other road/traffic network development through thepreparatory study.
In addition, the East-West Highway Improvement Project and the East-West
Highway Improvement Project (II) were delayed because it took long to identify
landowners and acquire land necessary for the projects. Therefore, in
preparation for this Project, sufficient measures were taken to prevent therecurrence of this problem, such as referring to the land registry in the detailed
design stage.
7. Evaluation Results
This Project conforms to the development issues and policies of Georgia as
well as the assistance policy and analysis of Japan. Moreover, this Project is
expected to contribute to SDGs 8 and 9 by upgrading an unimproved sectionand constructing tunnels and bridges on the international corridor to enhance thetransport capacity of Georgia and the Caucasus region. It is therefore highly
necessary to implement this Project.
8. Plan for Future Evaluation(1) Indicators to Be Used
Per 4. (1) – (3)(2) Timing
Ex-post evaluation: 2 years after project completion