Sustainable Urban Transport Investment Program (RRP GEO 42414-01)

SUMMARY SECTOR ANALYSIS Urban Transport

A. Urban Development in

1. Georgia has a population of 4.62 million and is one of the most urbanized countries in South Caucasus. Urban areas account for 53% of the population and they will continue to attract most of the investment, aggravating social and environment issues and stressing existing infrastructure. These trends require specific actions to create more sustainable economic development and better living conditions in urban areas. , the capital and largest city, has 1.4 million inhabitants representing 30% of the national total. , the second largest city, has only 235,000 people, highlighting the need to balance development and strengthen the secondary cities. 2. Strategically located at the crossroads between , the Middle East, and Europe, Georgia is traversed by a principal east–west highway, which connects the coast and the Turkish border with countries to the east. The existing road infrastructure has been tightly intertwined with urban development in recent decades. Most of the main cities are located along the east–west axis, with another important urban region along the Black Sea coast. Most secondary urban areas are on each side of the east–west highway and tourism is increasingly becoming an important source of revenue for these areas. Infrastructure development has been prioritized by the government as part of its poverty reduction agenda. The sector assessment has divided urban areas into three groups: (i) Tbilisi and the adjacent cities of and ; (ii) the main secondary cities of , Gori, Kutaisi, , and ; and (iii) cities with high tourism potential such as , Borzhomi, Gudauri, and . B. Urban Transport Issues in Tbilisi and Rustavi

3. The development of Tbilisi is a priority for the government. Traffic congestion, air pollution, deterioration of the road network, an underdeveloped public transport system, and lack of pedestrian zones are all important issues. Private car ownership is increasing and it is difficult to ensure the quality and attractiveness of public transport services. As a result, the quality of life for Tbilisi inhabitants is deteriorating. 4. Urban organization and economic development. Founded in the fifth century, Tbilisi has extended in a radial way. A longitudinal extension connects its two neighboring cities: Rustavi (population 122,000) and Mtskheta (population 20,000). The urban morphology of Tbilisi is determined by the numerous hills that surround both banks of the Mtkvari River. The railway line, the largest avenues and the first metro line are north–south oriented and parallel to the river, but taken together they create a series of urban borders that are difficult to cross. Government institutions, universities, and leisure facilities are concentrated in the city center, aggravating problems of congestion. In addition to the which maintains its strong tourism potential, new urban centers such as , Digomi, Vake, and Saburtalo continue to evolve into increasingly vibrant business, residential, and recreation centers. The most recent development initiatives include the uptown Tbilisi project; the new university campus in Digomi; retail and residential developments near the central station at and Ortachala; and the relocation of the rail line from the city center. These urban developments are deeply complex as they need to cross the Mtkvari or Vera rivers or the surrounding hills and cliffs to connect to the city center. 2

5. Urban mobility patterns. About half of Georgia's cars are registered in Tbilisi (about 275,000 vehicles in 2008). The average car ownership in Tbilisi is about 200 vehicles for 1,000 inhabitants. Recent strong growth car use is expected to continue. Road projects undertaken by the local authorities will partially resolve the bottlenecks and decongest the traffic. A good public transport network that offers an efficient and clean alternative to private cars is badly needed. Traffic congestion, secondhand cars, the age of the car fleet, and low-quality gasoline generate at least 80% of the air pollution in Tbilisi.1 The concentration of carbonic acid in the air already exceeds the norm by 1.5–2.5 times and increases health problems. Polluted air remains in the city as it is trapped by the surrounding hills. 1. Urban Transport Infrastructures

6. Road network and safety. The main road corridors follow the Mtkvari River. The north– south arterials are connected by transversal corridors through nine bridges crossing Mtkvari River. Numerous streets and avenues need to be rehabilitated because of the low-quality or damaged surface, which undermines passenger safety, particularly on fast sections. Congestion is mainly at peak hours, particularly at major intersections in the city center.2 Significant efforts have been made in recent years to improve the quality of traffic management through marking or traffic lights but more needs to be done. Signals are not obeyed, there are frequent cases of unlawful and inappropriate behavior, and driving laws are poorly enforced. Road safety is a critical issue. For the whole of Georgia, there were 737 deaths and 7,349 injuries in 2007 (53% in Tbilisi), a 62% increase since 2002.3 According to the World Bank, 37% of deaths by car accidents in Georgia are caused by drunk driving. Drivers’ behavior, lack of pedestrian safety equipment, damaged roads, and dangerous intersections are responsible for the rest. The number of approved parking spaces is about 11,600 but there are numerous and uncontrolled non-approved parking spots. Parking rules for Tbilisi were approved by the Tbilisi city council in 2007 to establish the location of parking areas. The municipality establishes parking fees with different fares for residential or temporary parking (GEL25 for a year and GEL2 for 1 week). 7. Public urban transport. Public transport's still accounts for 55% of passengers 4 because the extensive public transportation network, including a reliable metro service, is able to compete with growing car use. Despite the aging equipment and infrastructure and the removal of the former tramway and trolleybus lines, investments from the municipality have maintained the reliable and popular bus and metro network. Daily boardings on the public transport network are (i) about 260,000 for the metro; (ii) about 215,000 for the bus network;5 and (iii) and about 430,000 for the minibus network (footnote 4). Rustavi, located in the Tbilisi conurbation, has its own public transport network, which includes buses and minibuses and serves 7,000–10,000 commuters travelling daily between the two cities. 8. Public transport sustainability. The current average operating cost is about GEL0.40 per passenger, the average revenue is GEL0.20, and the average operating subsidy is GEL0.10. Closing this gap is one of the main challenges for the Tbilisi public transport system. This situation is exacerbated by (i) the high passenger fraud rate and fare evasion (about 30%), and (ii) fares that do not take into account the length of trips. The problem is also affected by the urban morphology of Tbilisi: a north–south urban trip can be as long as 20 kilometers (km).

1 Source Non Governmental Organization , Better Outdoor Air Quality through Cleaner Fuels and Vehicles, 2008 2 In the center, most of the major corridors have reached their nominal capacity with 17,000 vehicles per hour, but some bottlenecks reduce the capacity to 11,000 vehicles per hour. 3 Source: Patrol police, Tbilisi. 4 Source: Systra Consulting Co. estimates, 2010. 5 Sources: and Bus Company, 2009. 3

9. The metro system, opened in 1966, consists of two lines totaling 27 km of double tracks and 22 stations. Line 1 (red line) is 20.5 km long, with 16 stations. The current metro fleet consists of 170 vehicles of six different types. Headway is 4 minutes at peak hours and 5–6 minutes during off-peak hours. Line 2 (green line, or ) is 6 km long, with six stations. It is connected to line 1 at Vagzlis Moedani (central station). In 2009, the total traffic was about 76.6 million riders. The metro provides a relatively good service. Four metro stations have been recently refurbished and extensive maintenance operations are in progress for the rolling stock. The completion of the 1.5 km extension of line 2 to the university, at the end of Saburtalo district; is expected to add 4.4 million passengers per year or nearly 18,000 new passengers per day. In 2009, the total operating expenditures for the metro network were about GEL34.1 million, about GEL4 per operating kilometer, or GEL0.44 per rider. 10. Bus and minibus operations are subject to permits and pay a monthly license fee. The bus network is 3,852 km long. It includes 126 lines and 1,665 bus stops. In 2009, the total traffic carried by the bus network was about 58.8 million riders, with four lines carrying over 5,000 daily boardings. The bus fleet consists of 900 vehicles and has been renewed for 5 years, with the purchase of 700 new buses reducing the fleet average age to 7 years. However, the service quality of the bus network is limited because of irregular schedules and lack of information for passengers on routes, schedules, and the location of bus stops. The total operating costs for the bus network were about GEL23.0 million in 2009, or GEL0.30 per operating kilometer and GEL0.39 per passenger. 11. Minibuses compete with buses on the main corridors and offer quick and stop-on- demand transport between almost all parts of Tbilisi. There are 188 lines operated by 43 companies with a total of 2,145 minibuses. Minibus companies are fully private but need a license issued by Tbilisi municipality which approves the routes within its administrative borders and defines intervals at peak and off peak hours. The licenses, issued in 2001, are expected to be renewed in 2010. Minibus fares are not regulated and are set by each operator based on market conditions. The microbus lines use vehicles older than 20 years that are generally obsolete. There is no information available for passengers. 2. Intermodality and Nonmotorized Transport

12. Interchange and transfers. Since there are no discounts for transfers, the transfer rate is quite low, about 1.1. The main interchange stations are: Akhmetelis Teatri, Didube, , Vagzlis Moedani, and Varketili . They all connect with at least one metro line, urban buses, long-distance buses, and international coaches but without specific transfer facilities. All need to be redesigned and developed to improve their accessibility as the depths of metro stations and streets with dense traffic, highways, and railway tracks slow down passenger transfers. 13. Ticketing, fares, and affordability. The fares and discounts for public transport services are defined by municipalities. Whenever the municipality sets a discounted fare, it subsidizes the difference between the original fare and the discounted fare. The Tbilisi Transport Company can also introduce discounts that are not subsidized by the municipality. For other activities, e.g., lease of space at metro stations, the company is free to set the rent or other fees. The current fare system does not promote changes between transport modes. Any rider transferring during the same trip between different bus lines or a bus line and the metro has to pay at each transfer. There is also no integration with microbus lines. This has important impacts: (i) many people prefer to spend more time using a door-to-door bus line rather than to transfer and use the metro; and (ii) people who transfer between a bus line and the metro often do not pay for the use of the bus line, resulting in a high fraud rate on the bus network (30%– 40%). Tbilisi Transport Company has not yet proposed monthly or yearly passes, which does 4 not encourage frequent use of public transport. Riders use tickets or magnetic cards for each trip. 14. Information and signage. Lack of information is a key issue for the public transport network. There is no public transport network map for passengers and no information on possible connections with the bus network. The bus network lacks a timetable, a map, and a website. In the streets, bus stops are generally not marked with the name of the bus stop or line numbers. 15. Nonmotorized transport. The city of Tbilisi is not convenient for pedestrians. Pavements are damaged and/or occupied by parking cars. There are few zebra crossings and they are generally not respected by car drivers. Walking is not safe and quite dangerous for old or disabled people. The municipality plans to build 37 footbridges to cross the main roads and 10 are already being built. The city's steep slopes do not promote the use of bicycles and car drivers’ behavior makes riding two-wheelers very dangerous. C. Urban Transport Issues in Main Secondary Cities

16. Other Georgian cities also need assistance to improve their municipal infrastructure and urban transport network. Batumi, Gori, Kutaisi, Poti, Rustavi and Zugdidi, among others have populations between 40,000 and 250,000 people. These cities hosted various Soviet industrial conglomerates, which have mostly collapsed since the dissolution of the . Cities such as Poti Port, Batumi, and Kutaisi are in the process of economic regeneration through foreign investments in tourism infrastructure. The government is strengthening these cities by redistributing government offices, e.g., the national parliament has moved to Kutaisi. Urban transport issues are less prominent in these cities than in Tbilisi but four common features can be found in all: (i) a deteriorated urban road network, particularly embankments along rivers and coastal roads; (ii) an inefficient traffic management system; (iii) an inappropriate public transport system that usually relies on an old bus fleet and unregulated microbuses, and (iv) a poor and unfriendly urban environment particularly for pedestrians and two-wheelers. 17. Kutaisi, with 235,000 inhabitants, is the second largest city in Georgia and is the major connection node on the east–west trade corridor. With the transfer of the national parliament in 2011, it needs a more balanced urban development with efficient and sustainable transport services. Its public transport network currently includes: (i) 20 bus routes operated by a fleet of 180 poorly maintained vehicles serving about 50% of the territory, and (ii) 30 microbus routes operated with 165 vehicles (out of a fleet of 316) serving about 80% of the population. In 2008, 142,000 passengers were transported daily by the public transport network. This figure decreased to 95,000–98,000 in 2010 because of (i) a shift to cars (car traffic increased by 30%), (ii) competition from regional minibuses (allowed to provide intra-city transport), and (iii) a decrease in the overall population mobility due to the economic crisis. 18. Batumi, with almost 215,000 inhabitants, is experiencing rapid growth and economic development. The third largest city in Georgia, it is benefiting from a continuing flow of international investments particularly in tourism as the region has turned into a major regional seaside resort. As the city's population doubles during the summer season, this has environmental repercussions. Public vehicles (buses, minibuses, and taxis) are fully loaded and the promenade road is congested. Tailored transport solutions are needed to match peak demand and adapt infrastructure and service delivery to these specific patterns. The public transport network includes 11 bus routes and 20 minibus routes covering the city main districts. In 2008, the European Bank for Reconstruction and Development financed the $2.5 million Batumi Public Transport Project, including the purchase of 100 buses, spare parts, 5 depot rehabilitation, and technical assistance for public transport system restructuring. The loan also includes the development of a public service contract and consultancy services to the operating company in order to improve cost recovery. 19. The region of Poti relies on microbuses, but it has changed significantly since the emirate bought 51% of Poti port in 2008 to develop a free industrial zone. Construction of a new port terminal and related private investments will change transport issues and mobility patterns. In the north, in Anaklia city, resorts have developed to take advantage of the coastal scenery but they will generate traffic and sustainable transport solutions that favor two-wheelers and pedestrians are needed. 20. In these cities, the municipal capacity for planning, monitoring, and operating is usually limited and there is no strategic master plan to prioritize urban transport projects, identify adequate solutions to emerging congestion, and improve road safety. Investment is needed (i) to upgrade road network, including some missing links; (ii) to improve bus facilities and interchanges; and (iii) to develop urban renewal projects on major corridors and avenues to favor nonmotorized transport. The Asian Development Bank (ADB) has been already financing urban infrastructure and road improvements in some of these cities since 2008,6 but more needs to be done.

D. Urban Transport Issues in Secondary Towns with Touristic Potential

21. Small and medium-sized cities like Gudauri, Kazbegi, Mestia, Anaklia, , and others are already undergoing significant municipal infrastructure rehabilitation and expansion. With strong support from the government and World Bank,7 these cities have all benefited from ecotourism development. Five national parks have also been created. For these cities with 5,000–10,000 inhabitants, existing urban transport infrastructure needs to be upgraded as it is unable to cope with growing demand and flows of tourists during peak seasons. The focus should be mainly on accessibility, road improvements, street lighting, sidewalks, and parking. Seasonal bus shuttles should be provided, linking the main tourism locations. Parking facilities for coaches and cars should be developed near the city centers to avoid road congestion.

6 ADB. 2008. Report and Recommendation of the President to the Board of Directors: Proposed Loan to Georgia for the Municipal Services Development Project. Manila (Loan 2441[SF]-GEO); and ADB. 2009. Report and Recommendation of the President to the Board of Directors: Proposed Loan to Georgia for the Municipal Services Project – Phase 2. Manila (Loan 2534-GEO) have been approved in 2008 and 2009 and provide $70 million for urban infrastructures improvement and upgrading. 7 World Bank. 2010. Protected Areas Development Project. Washington, DC ($30 million). 6

Problem Tree Analysis

Environment Decreased city Limited economic degradation and Degraded city livability attractiveness and growth prospects and Effects unsustainable policy and poor public health limited private access to employment investment opportunities

Core Problem Inadequate urban transport services

Financial Causes Poor urban transport Technical Weak or inappropriate Institutional Insufficient funds for services coverage sustainability institutional capacity sustainability efficient delivery sustainability

Severe safety Limited transport Limited integration Lack of legal and Poor asset Insufficient and Low tariff and risks and quality of planning and or coordination regulatory management inadequate inappropriate services problems coordination with between urban framework practices government customer incentive urban transport modes financing for policy Decreasing development Inability to enforce Lacking capital availability of the No transfers' regulations and knowledge on best expenditure Poor knowledge rolling stocks and Inadequate facility or incentivize service practices on applying equipment investigations interchange hubs delivery Poor tariff prudent financial resulting collection and cost management inappropriate Limited training recovery to meet practices No PPP Ageing assets design No integrated tariff capacity operating framework for underperforming or ticketing policy expenditure urban transport Undeveloped and unviable to Urban sprawl and extra revenue operate and inefficiency for Increase of policy, lack of maintain public transport operating demand expenditure due to management and Inefficient urban old infrastructure marketing transport services and fleet Lack of demand responsiveness Proposed EBRD Proposed World Bank EBRD Loan for Loan for rolling technical assistance Tbilisi Railway stock renewal in for Mtkvari bridge bypass Tbilisi and Batumi feasibility study

EBRD = European Bank for Reconstruction and Development, PPP = Public-private partnership-