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Document of
The World Bank
Report No: ICR00001745
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(IDA-H2040)
ON A
GRANT
IN THE AMOUNT OF SDR 3.5 MILLION
(US$5.0 MILLION EQUIVALENT)
TO
GEORGIA
FOR AN
INFRASTRUCTURE PRE-INVESTMENT FACILITY PROJECT
September 28, 2011
Sustainable Development Department
South Caucasus Country Unit
Europe and Central Asia Region
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CURRENCY EQUIVALENTS
(Exchange Rate Effective January 31, 2011)
Currency Unit = Lari
Lari 1.00 = US$ 0.59
US$ 1.00 = Lari 1.68
FISCAL YEAR
January 1 to December 31
ABBREVIATIONS AND ACRONYMS
CPS Country Partnership Strategy
EMP Environmental Management Plan
FY Fiscal Year
HPP Hydro-Power Plant
IBRD International Bank for Reconstruction and Development
ICR Implementation Completion Report
IDA International Development Association
IPF Infrastructure Pre-Investment Facility
MoE Ministry of Energy
MoED Ministry of Economic Development
MOU Memorandum of Understanding
MW Megawatt
OPCQC Operations Services/Quality Assurance & Compliance
PAD Project Appraisal Document
PDO Project Development Objective
PPIAF Public-Private Infrastructure Advisory Facility
PSO Project Service Organization
QAG Quality Assurance Group
RAP Resettlement Action Plan
SEA Strategic Environmental Assessment
SF Safeguard Framework
TA Technical Assistance
TOR Terms of Reference
TRRC Transport Reform and Rehabilitation Center
Vice President: Philippe H. Le Houerou
Country Director: Asad Alam
Sector Manager: Henry Kerali /Ranjit Lamech
Project Team Leader: Bjorn Hamso
ICR Team Leader: Joseph Melitauri
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GEORGIA
Infrastructure Pre-Investment Facility
CONTENTS
Data Sheet
A. Basic Information
B. Key Dates
C. Ratings Summary
D. Sector and Theme Codes
E. Bank Staff
F. Results Framework Analysis
G. Ratings of Project Performance in ISRs
H. Restructuring
I. Disbursement Graph
1. Project Context, Development Objectives and Design............................................. 1
2. Key Factors Affecting Implementation and Outcomes ............................................ 4
3. Assessment of Outcomes ....................................................................................... 9
4. Assessment of Risk to Development Outcome ...................................................... 11
5. Assessment of Bank and Borrower Performance ................................................... 12
6. Lessons Learned .................................................................................................. 13
7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners .......... 14
Annex 1. Project Costs and Financing ...................................................................... 16
Annex 2. Outputs by Component ............................................................................. 17
Annex 3. Economic and Financial Analysis .............................................................. 19
Annex 4. Bank Lending and Implementation Support/Supervision Processes ............ 20
Annex 5. Beneficiary Survey Results ....................................................................... 22
Annex 6. Stakeholder Workshop Report and Results ................................................ 23
Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR .................... 24
Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders ...................... 27
Annex 9. List of Supporting Documents ................................................................... 28
MAP
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A. Basic Information
Country: Georgia Project Name: Infrastructure Pre-Investment Facility
Project ID: P098850 L/C/TF Number(s): IDA-H2040 ICR Date: 09/28/2011 ICR Type: Core ICR
Lending Instrument: TAL Borrower: MINISTRY OF FINANCE OF GEORGIA
Original Total Commitment:
XDR 3.50M Disbursed Amount: XDR 2.93M
Revised Amount: XDR 2.93M Environmental Category: B Implementing Agencies: TRRC Ministry of Energy; PSO Ministry of Regional Development and Infrastructure (MRDI) Cofinanciers and Other External Partners: B. Key Dates
Process Date Process Original Date Revised / Actual Date(s)
Concept Review: 10/31/2005 Effectiveness: 04/04/2006 04/04/2006 Appraisal: 12/20/2005 Restructuring(s): Approval: 02/16/2006 Mid-term Review: Closing: 09/30/2009 01/31/2011 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Satisfactory Risk to Development Outcome: Moderate Bank Performance: Satisfactory Borrower Performance: Satisfactory
C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings
Quality at Entry: Satisfactory Government: Satisfactory
Quality of Supervision: Satisfactory Implementing Agency/Agencies: Satisfactory
Overall Bank Satisfactory Overall Borrower Satisfactory
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Performance: Performance: C.3 Quality at Entry and Implementation Performance Indicators
Implementation Performance Indicators QAG Assessments
(if any) Rating
Potential Problem Project at any time (Yes/No):
No Quality at Entry (QEA):
None
Problem Project at any time (Yes/No):
No Quality of Supervision (QSA):
None
DO rating before Closing/Inactive status:
Satisfactory
D. Sector and Theme Codes
Original Actual Sector Code (as % of total Bank financing) Power 56 69 Railways 9 Roads and highways 35 31
Theme Code (as % of total Bank financing) Export development and competitiveness 25 25 Infrastructure services for private sector development 50 50 Trade facilitation and market access 25 25 E. Bank Staff
Positions At ICR At Approval Vice President: Philippe H. Le Houerou Shigeo Katsu Country Director: Elene Imnadze D-M Dowsett-Coirolo Sector Manager: Ranjit J. Lamech Motoo Konishi Project Team Leader: Bjorn Hamso Tamar Sulukhia ICR Team Leader: Joseph Melitauri ICR Primary Author: Joseph Melitauri Elena Y. Chesheva F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The development objective of the Project is to facilitate infrastructure investments that have strategic importance and/or special complexity by ensuring that proper feasibility
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work is carried out in a timely manner in order to enable the government to make sound investment decisions, and where appropriate, to proceed expeditiously with further preparatory steps and mobilize adequate financing for implementation. The focus on energy and transport sectors is consistent with Governments investment priorities and CPS objectives. Specifically, the Project will finance technical assistance (TA) to assess the feasibility and effectiveness of identified investments through preparation work including technical and sectoral studies, engineering design, and analysis of economic, financial and environmental feasibility, as well as financial and legal advisory services, where required. Revised Project Development Objectives (as approved by original approving authority) (a) PDO Indicator(s)
Indicator Baseline Value
Original Target Values (from
approval documents)
Formally Revised Target Values
Actual Value Achieved at
Completion or Target Years
Indicator 1 : Studies required to lead to sound investment decision in the following areas are carried out promptly, efficiently, and are of high quality; (1) Khudoni HPP, (2) East West Highway ; (iii) other inv decisions (subject to availability of funds).
Value quantitative or Qualitative)
No studies exist 4 4
Date achieved 01/19/2006 01/01/2008 01/31/2011 Comments (incl. % achievement)
Target achieved 100 %.
(b) Intermediate Outcome Indicator(s)
Indicator Baseline Value
Original Target Values (from
approval documents)
Formally Revised
Target Values
Actual Value Achieved at
Completion or Target Years
Indicator 1 : Khudoni feasibility study produced and accepted Value (quantitative or Qualitative)
No feasibility study exists Feasibility study produced/accepted
Khudoni feasibility study produced/accepted
Date achieved 01/19/2006 09/30/2009 01/31/2011 Comments (incl. % achievement)
Target achieved 100%, Khudoni feasibility study has been produced and accepted by the Panel of Experts
Indicator 2 : Khudoni environmental and social impact assessment produced and accepted Value No environmental and Khudoni Khudoni
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(quantitative or Qualitative)
social impact assessment exists
environmental and social impact assessment produced and accepted
environmental and social impact assessment produced and accepted
Date achieved 01/19/2006 09/30/2009 01/31/2011 Comments (incl. % achievement)
Target achieved 100%, Khudoni environmental and social impact assessment produced and accepted by environmental/social Panel of Experts
Indicator 3 : Decision to proceed with investment project or otherwise made by the Government
Value (quantitative or Qualitative)
No plans to invest exist
Decision to proceed with investment project or otherwise made by the Government
A Memorandum of Understanding to proceed with investment in Khudoni signed with the Private Investor
Date achieved 01/19/2006 09/30/2009 01/31/2011 Comments (incl. % achievement)
Target achieved 100%, Government has signed a Memorandum of Understanding with the investor to proceed with the construction of Khudoni
Indicator 4 : Detailed designs and bidding documents produced and accepted (this indicator is optional based on the indicator above)
Value (quantitative or Qualitative)
No detailed designs and bidding documents exist
Detailed designs and bidding documents produced and accepted
Detailed designs and bidding documents for road sections produced and accepted
Date achieved 01/19/2006 09/30/2009 01/31/2011 Comments (incl. % achievement)
Target achieved 100%, detailed designs and bidding documents for road sections produced and used for the tenders
Indicator 5 : Preliminary design and Environmental Impact Assessment produced and accepted
Value (quantitative or Qualitative)
No preliminary design and Environmental Impact Assessment exist
Preliminary design and Environmental Impact Assessment produced and accepted
Preliminary design and Environmental Impact Assessment produced and accepted
Date achieved 01/19/2006 09/30/2009 01/31/2011 Comments (incl. % achievement)
Target achieved 100%
Indicator 6 : Final designs and bidding documents produced /accepted for Roads Section 1 Value (quantitative or Qualitative)
No final designs and bidding documents exist for section 1
Final designs and bidding documents produced
Final designs and bidding documents produced /accepted
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/accepted for section 1
for section 1
Date achieved 01/19/2006 09/30/2009 01/31/2011 Comments (incl. % achievement)
Target achieved 100%
Indicator 7 : Final designs and bidding documents produced /accepted for Road Section 2
Value (quantitative or Qualitative)
No final designs and bidding documents exist
Final designs and bidding documents produced /accepted for section 2
Final designs and bidding documents produced /accepted for section 2
Date achieved 01/19/2006 09/30/2009 01/31/2011 Comments (incl. % achievement)
Target achieved 100%
Indicator 8 : Final designs and bidding documents produced /accepted for Road Section 3
Value (quantitative or Qualitative)
No final designs and bidding documents produced /accepted for section 3
Final designs and bidding documents produced /accepted for section 3
Final designs and bidding documents produced /accepted for section 3
Date achieved 01/19/2006 09/30/2009 01/31/2011 Comments (incl. % achievement)
Target achieved 100%
G. Ratings of Project Performance in ISRs
No. Date ISR Archived DO IP
Actual Disbursements (USD millions)
1 03/31/2006 Satisfactory Satisfactory 0.00 2 08/08/2006 Satisfactory Satisfactory 0.50 3 10/06/2006 Satisfactory Satisfactory 0.50 4 02/15/2007 Satisfactory Moderately Satisfactory 0.60 5 10/10/2007 Satisfactory Satisfactory 1.27 6 03/13/2008 Satisfactory Satisfactory 2.01 7 11/24/2008 Satisfactory Satisfactory 3.77 8 09/21/2009 Satisfactory Satisfactory 4.36 9 06/18/2010 Satisfactory Satisfactory 4.57
10 02/12/2011 Satisfactory Moderately Satisfactory 4.57 H. Restructuring (if any) Not Applicable
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I. Disbursement Profile
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1. Project Context, Development Objectives and Design
1.1 Context at Appraisal
Georgia is a small country south of the Caucasus mountain range, sharing borders with Russia to
the north, Armenia and Turkey to the south, Azerbaijan to the east, and the Black Sea to the west.
Georgia was part of the centrally planned Soviet economy and suffered from lack of
infrastructure investment. By 1999, the power and road infrastructure had deteriorated to the
point of near-collapse; in 2000, the power sector could deliver electricity only few hours a day
and parts of the country had not received electricity for months. Georgia’s highways were also in
poor condition, which lengthened transit times, constrained the movement of goods and people,
and raised costs for road users.
In 2003, the Rose Revolution brought a new government that was committed to reviving the
economy and achieving sustained economic growth by addressing infrastructure problems.
Government declared infrastructure a priority and tackled power infrastructure on several fronts:
(i) increased budget allocations to key power facilities to arrest deterioration and restore
functionality; (ii) set electricity tariffs to cost-recovery levels (in 2006) to help make the power
sector financially sustainable; (iii) addressed power sector legacy debts to restore the sector’s
cash flow; (iv) tackled corruption and power theft through aggressive metering and collection
enforcement; and (v) revived power sector privatization efforts to offload investments from the
budget.
Government emphasized road infrastructure improvement and increased funding for the transport
sector. In 2004, an IDA Credit for US$20 million equivalent was approved to finance
rehabilitation of 500 to 750 km of local and secondary roads. To improve the main road network,
Government focused on the main transit corridor—the East-West Highway, which runs from the
port of Poti on the Black sea to the Azerbaijan border at the Red Bridge, via Tbilisi. The study
funded by Public-Private Infrastructure Advisory Facility (PPIAF) analyzed options for
upgrading the road to highway standards, and Government opted to upgrade the existing road to
four lanes and move swiftly to prepare investments. Government asked the World Bank to help
finance feasibility studies and detailed designs.
1.2 Original Project Development Objectives (PDO) and Key Indicators
The Project development objective was to facilitate infrastructure investments that have strategic
importance and/or special complexity by ensuring that proper feasibility work is carried out in a
timely manner to enable Government to make sound investment decisions, and where appropriate,
to proceed expeditiously with further preparatory steps and mobilize adequate financing for
implementation.
The achievement of the development objective was measured by the following indicators;
The Project outcome indicator was formulated as, ―sound investment decisions are made, and
where appropriate further preparatory steps are taken and adequate financing is mobilized for
investments.‖ This indicator was revised as discussed in Section 1.3 below. The revised indicator
was formulated as follows: ―studies required to lead to sound investment decisions in the
following areas are carried out promptly, efficiently, and are of high quality;‖ (1) Khudoni Hydro
Power Plant (HPP); (2) East-West Highway; and (3) other investment decisions (subject to
availability of funds).
Intermediate outcome indicator for each component was formulated as follows:
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Component 1: (Khudoni Hydropower Plant studies):
a. Feasibility study produced and accepted
b. Environmental and social impact assessment produced and accepted
c. Government decision on whether to proceed with investment project
d. Detailed designs and bidding documents produced and accepted (if investment goes
ahead).
Component 2, sub-component 2 A: (Studies for the East-West transport corridor projects
completed):
a. Preliminary design and environmental impact assessment produced and accepted
b. Final designs and bidding documents produced and accepted for road section 1
c. Final designs and bidding documents produced and accepted for road section 2
d. Final designs and bidding documents produced and accepted for road section 3
Component 2, sub-component 2B; to be decided pending funding availability.
1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and
reasons/justification
The PDO was not revised; however, the PDO indicator was revised to more accurately monitor
Project objectives. The original PDO indicator was formulated as; ―sound investment decisions
are made, and where appropriate further preparatory steps are taken and adequate financing is
mobilized for investments.‖ The indicator was revised and re-formulated as follows: ―studies
required to lead to sound investment decisions in the following areas are carried out promptly,
efficiently, and are of high quality;‖ (1) Khudoni HPP, (2) East West Highway; (3) other
investment decisions (subject to availability of funds). Reformulating PDO indicator and
introducing reference to ―studies required to lead to sound investment‖ instead of ―sound
investment‖ sharpened the indicator focus and improved monitoring and evaluation. Component
2B was cancelled due to lack of funds and its outcome indicator was dropped.
1.4 Main Beneficiaries
The Project target beneficiaries were the Ministry of Energy and Ministry of Economic
Development, which was in charge of transport policy at the time.1 The Project funded feasibility
studies that supported sound and cost-effective decision making by the ministries, which is
anticipated to benefit the energy consumers, the road users, and in turn, to benefit the overall
economy.
1.5 Original Components
The Project had two components: Component 1, funding of technical assistance (TA) for
preparation of the proposed Khudoni hydropower station; Component 2, with subcomponents A
and B, aimed at funding transit corridor project preparation. Components 1 and 2A were well-
defined but subcomponent 2B was broadly defined for transit corridor projects and dependent on
funding availability after Components 1 and 2A were completed. During Project preparation,
Government contemplated potential investment in railways; this subcomponent 2B could have
1 This function was later transferred to the Ministry of Regional Development and Infrastructure which was established
in February 2009.
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accommodated such investment preparation had Government later decided to proceed (and if
funds had been available).
Component 1: TA for hydropower project preparation (US$3.3 million).
The Grant financed feasibility studies for the Khudoni Hydropower Project to assess technical,
economic, and financial viability and determine potential environmental and social impacts of the
proposed hydropower station development. The safeguard studies included an Environmental and
Social Impact Assessment; an Environmental Management Plan; and a Preliminary Resettlement
Action Plan. On the engineering side, top priority was given to dam safety for the hydropower
station.
The study had three phases (and an optional fourth): Phase 1 studied the original dam design;
Phase 2 developed and assessed alternative dam and hydropower concepts; Phase 3 studied the
feasibility of the selected alternative, and also included an overview study of potential export
markets for Khudoni power and of Project financing options. Under a possible Phase 4 (which
was not undertaken), consultants were to develop detailed designs and specifications, undertake a
prequalification process, develop bidding documents for dam and power plant construction, and
assist during the bidding process, provided that the Government decided to proceed with the
Khudoni investment project. At the time when conclusions from Phase 3 were available, the
Government decided not to continue with Phase 4 within the time frame of this TA Project, as
according to the Ministry the private investors would undertake detailed design and there was no
need in duplicating the effort by funding Phase 4.
Component 2: TA for Preparation of Transit Corridor Projects (US$2.55 million in two sub-
components):
Sub-component A: TA for Preparation of East-West Highway Improvement Project (US$1.6
million) financed a feasibility study, preliminary design and environmental assessment of Agaiani
to Sveneti road section. Preliminary review was followed by detailed design and preparation of
bidding packages for each section. The environmental and social implications of the corridor
improvement project were analyzed as part of the technical studies. The component prepared
studies for two investment projects subsequently approved by the Board at the end of 2006 and
end of 2007: the First East-West Highway Improvement Project in the amount of US 19 million
equivalent, which financed upgrade of a 13 km section between Agaiani and Igoeti, and the
Second East-West Highway Improvement Project in the amount of US 35 million equivalent,
which financed upgrade of a 24 km section between Igoeti and Sveneti.
Sub-component B. TA for Preparation of other transit corridor projects (US$0. 95 million). The
sub-component scope was broadly defined as for transit corridor projects (road or railways) and
allowed for flexible Project design. It was anticipated that during the first phase of Project
implementation, Government would decide on appropriate use of the funds allocated under this
subcomponent, depending on priorities and funding availability after the funding needs of the two
other priority Project components were satisfied.
1.6 Revised Components
The components were not revised, though Sub-component 2B was not realized. In January 2007,
Government decided to utilize these funds under the Khudoni component.
1.7 Other significant changes
There has been no change in Project scope other than what is described above.
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2. Key Factors Affecting Implementation and Outcomes
2.1 Project Preparation, Design, and Quality at Entry
Project design reflected lessons learned from IDA-supported operations, Bank policy dialogue,
and similar projects implemented elsewhere. Based on lessons learned, the following factors were
considered key to Project success: adequate Government commitment; comprehensive Terms of
Reference (TORs) for the studies; availability of competent consultants; detailed review of
consultant outputs; and wide consultations with stakeholders and donors. These factors were
taken into consideration and were incorporated in the Project design.
The lending instrument choice was appropriate given urgent Government intentions to move
ahead with selected investments and the lack of funding to prepare necessary studies. The TA
loan was one of the few in the Bank that focused on preparing future investment projects, and it
served its purpose successfully.
The IDA had a wealth of background information on power and road infrastructure that served
Project preparation well; IDA has been reviewing potential construction for the Khudoni
hydropower station as part of formulating a power sector strategy since it was pre-assessed as the
least-cost sizable power development prospect in Georgia; and IDA was active in the road sector
and engaged in sector dialogue. To ensure efficient Project implementation, the financial
management team reviewed Georgia’s public financial management system and evaluated its
suitability for implementing IDA-funded projects in general and the IPF project in particular.
A Strategic Environmental Assessment for the power sector was undertaken during Project
implementation, but was not part of the Project design. Although the Government had made
similar studies in the past, it was during implementation realized that undertaking a SEA would
strengthen the understanding of and credibility of the Khudoni project as the project then would
be placed in merit order among alternative electricity supply-enhancing or demand-reducing
projects, and with the application of ―filters‖ that took into account environmental and social
impacts of the various alternatives. Sometime after the Government agreed with the Bank team to
undertake a SEA, it appeared that there would not be sufficient funds in the IDA grant to finance
such study. Ultimately the SEA was developed under Bank management and with Bank budget
funding.
The PPIAF funded study for the East-West highway provided analytical underpinning for
selecting road upgrade options and helped Government decide to move ahead with feasibility
studies for the Agaiani-Sveneti sections.
The Project objective was well formulated and sufficiently specific. The task was complex but the
Project objective was realistic. Project components were well defined and matched the Project
objective. Project design also envisaged a possible sub-component 2B, which was not specifically
defined and allowed sufficient flexibility without jeopardizing the main Project objective.
Project design envisaged a line ministry managing each of the two components, which turned out
to be an efficient organizational arrangement. The Ministry of Energy was responsible for the
Khudoni study (Component 1) and the Ministry of Economic Development was responsible for
implementing the transport corridor studies (Component 2), with an MoED subsidiary, the Roads
Department, managing the technical side of implementation. The financial management function
was split for each component, which was a successful arrangement. The Project Service
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Organization (PSO) was responsible for the financial management and procurement for
Component 1, and the Transport Reform and Rehabilitation Center (TRRC) was responsible for
financial management and procurement for Component 2; both agencies had successful Project
implementation track records. In addition, TRRC was in charge of the ongoing road portfolio
incorporating four projects and two additional financing operations.
Government commitment was achieved by designating responsibility to respective Deputy
Ministers for project management. Government commitment was essential for Khudoni
component success—component outputs were widely discussed with all stakeholders.
During Project preparation, slow decision making was identified as one of the greatest risks to
Project implementation and sustainability. Despite this, Project decision making was established
in the Ministry of Energy; the Deputy Ministers, who typically have limited time, were charged
with Project management. The risk of slow decision making with regards to Khudoni hydropower
station remained high. (Risk mitigation measures and degree of mitigation are discussed below.)
The Project correctly identified key risks and proposed adequate mitigation measures. However,
Project preparation missed identifying the risk associated with the Khudoni Project site proximity
to an area outside central Government control, and the site of potential military activities.
Therefore, no mitigation measures were established for these risks. Throughout Project
implementation the risk of military activities materialized, delaying Project implementation and
contributing to overall Project delay. See section 2.2 for detailed description of the risk.
2.2 Implementation
Several actions from Government and IDA contributed to successful Project implementation; the
most important of these follow:
a. Broadening Government engagement. Government and the Bank broadened Government
agency engagement and involved the Ministry of Culture and Ministry of Environment in the
feasibility study review for the Khudoni HPP.
b. Engaging top-level experts and establishing a local panel of experts. The Bank engaged
top-level environmental and technical experts as Project team members to ensure report
quality2. In addition, for Component 1, Government assembled a panel of local engineers
with prior knowledge of the Khudoni project to work in parallel with an international Panel
of Experts mandated by Bank rules. Both panels provided comments to the reports, which
provided comfort to the Government and improved Project ownership.
c. Project team participating in public consultations. Government led the public
consultations on the environmental and social impact assessments for Khudoni, and the Bank
attended all the consultations. For Component 1 Bank staff held supplemental public
meetings with Project-affected people. Consultations on environmental and social impact
assessment for the highway were later done under the subsequent First and Second East-
West Highway Improvement Projects.
2 This arrangement benefitted mostly the Khudoni component, which had longer implementation period. Roads
component was implemented very quickly given the request by the Government to prepare the East-West Highway
Improvement projects expediously. Limited timeframe didn’t allow for a thorough review of the road designs and some
weaknesses of the design of one section Igoeti-Sveneti were identified later during construction.
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d. Government commitment. High-level Government attention to preparing priority road
investment projects on East-West highway contributed to speedy procurement and
implementation of the studies under Component 2A, effectively completed by end-2007.
The Project Appraisal Document (PAD) explicitly envisaged cancellation of component 2B if no
savings resulted from other components. Near mid-term Project implementation, no Project
savings were expected, and it was anticipated additional funding would be required for further
geological surveys under Component 1, so Project Component 2B was canceled.
Factors impeding Project implementation
Several factors impeded Project implementation.
e. Inability to use Bank procurement rules until Project effectiveness. To expedite Project
implementation, Expression of Interest for selecting engineers for the Khudoni studies was
issued prior to Project negotiations. However, engineer selection was delayed because, until
Project effectiveness, Government could use only local procurement procedures, which are
inconsistent with the Bank procedures.
f. The procurement evaluation committee for the Khudoni studies was too large, slowing
evaluation. A seven-person evaluation committee, created by Presidential Decree, reviewed
TA proposals for Khudoni. The committee included five deputy ministers who had limited
time to review proposals, making the process inefficient. During Project implementation, the
Bank requested creation of an expert working group to assist the committee with evaluation.
The Minister of Energy created such a group, which speeded up procurement and overall
Project implementation.
g. Component A (Khudoni) required data from the Soviet-time Khudoni project, and
access to data was impeded by privatization of the entity Hydropower Project only a
month after the Engineering Consultant started his work. The old data still belonged to
the state although they were now held in a private entity. The engineering consultant
ultimately obtained access to the relevant data, but MoE could have helped the Consultant
obtaining access to the data source in a more timely fashion.
h. A one-year Closing Date extension was given on the expectation of activities that only
partly took place. The Closing Date extension was based on the understanding that the
MoE would seek additional funds from other sources to bolster Component 1. To execute a
Phase 4 for the Khudoni project (i.e. developing detailed dam and powerhouse designs and
procurement documents ready for the subsequent investment phase), more funds (upwards of
USD 500,000) would have to be mobilized in order to undertake a geological survey and
drilling program in the dam foundation area. Such program would also benefit Phase 3
(feasibility study) in that more precise estimates could have been developed for the dam
construction based on better known geology. As Khudoni’s position in the priority list of
large hydropower projects slipped, the MoE decided to postpone such further drilling and
investigation program, i.e. let it be the responsibility of a future investor. However, due to
the slow decision process in this matter, the final work on the feasibility study was delayed,
impacting the overall completion schedule.
i. Pressure to speed up Project implementation in the road sector stretched existing
capacity and reduced attention to quality. Overall, the project was successfully
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implemented and two investment projects were prepared based on the studies funded under
the Project. However, the intense schedule and high pressure to deliver strained the capacity
of counterparts (Roads Department and the PIU), the companies hired to prepare road
designs, and the Bank team. The design companies were given limited budget and very
limited time frame to prepare designs. Some design weaknesses on the Igoeti-Sveneti section
(SEWHIP project) became apparent later during construction. It should be mentioned that
the problems with SEWHIP implementation and the costs overruns during civil works
primarily stemmed from the failure of the supervising engineer company to identify and
address any weaknesses and issues in the designs early on in the project implementation.
This will be covered in more detail during the preparation of the Implementation Completion
and Results Report (ICR) for the SEWHIP project (due in 2012). In hindsight, under the IPF
Project more time and resources should have been allocated for consultants to produce the
studies and for thorough review of all outputs, additional experts should have been involved
to strengthen the capacity of the Roads Department in monitoring the quality of the outputs.
Other significant factors affecting Project implementation are discussed below:
The Project was not formally restructured although the monitoring indicator was revised to more
accurately reflect development objective achievements. The impact of revising the indicator is
discussed in Section 2.3.
Beyond the 12 months extension of the Closing Date—until September 30, 2010— as referred to
above, the Closing Date was extended for another four months—until January 31, 2011—to
conclude pending contractual issues with the Engineering Consultant and to incorporate the
comments of the international Panel of Experts into the final feasibility report. The Panel of
Experts pointed to shortcomings in the feasibility study in a particular field (dam construction
materials) that thereafter were remedied, and the Panel’s endorsement of the feasibility study was
considered important by MoE to enhance the standing of the study work by future investors. The
contractual dispute between the MoE and the Engineering Consultant involved additional work
undertaken by the Consultant without having signed a contract addendum and cost implications
of the stretched-out completion period for reasons out of the Consultant’s control, such as the
time implications of Georgia’s armed conflict with Russia in August 2008, and other incidents.
The contractual issues were solved.
Throughout Project implementation, overall progress was rated Satisfactory, except in February
2007 when a Moderately Satisfactory rating was caused by implementation delays in Component
1, and in the last implementation status report (January 2011) when in the Bank team’s view to
conclude remaining tasks and to resolve the contractual dispute mentioned above took excessive
time (Component 1), again resulting in a Moderately Satisfactory rating.
The decision not to undertake a drilling program in the Khudoni dam area to better establish the
geological/geophysical situation was a judgment call by the Ministry of Energy in a situation
where (a) it would have to mobilize funds outside the Project to fully finance such drilling
program, and (b) it did not consider the additional information from a drilling program as
essential at that very point in time but rather an activity that future investors could finance. The
Engineering Consultant added a substantial premium to its cost estimate for the dam/power plant
to take into account the lack of detailed geological insight, but nevertheless was in a position to
deem the Project technically feasible, to which the Panel of Experts agreed. Without the drilling
program, the execution of Phase 4 of the project (development of detailed dam and powerhouse
designs and procurement documents) was impossible. The MoE made the decision not to
undertake the drilling program in late 2009, i.e. well into the last year of the project following the
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one-year Closing Date extension. That left funds unused in the Project (the amount was not
known exactly at the time due to then still unsolved contractual dispute with the Engineering
Consultant); however, the Government apparently considered this as too late for starting new
studies under the Infrastructure Pre-investment Facility, ref. the optional Component 2 B that was
not implemented. About SDR 560,000 equivalent was ultimately returned to IDA.
No Quality Assurance Group (QAG) review was done for the Project.
2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization
Project monitoring and evaluation was simple and straightforward; the Project envisaged TA to
develop studies for sound investment decisions, and achievement of the development objective
was measured by delivery of those studies with adequate quality. The M&E implementation was
simple in principle—indicator values were assessed during supervision missions, and captured in
the Implementation Status Reports (ISR). The supervision effort was nevertheless comprehensive,
and for the hydropower component the Bank’s project team ensured that adequate technical
hydropower expertise was included in addition to drawing on the insights from the Panel of
Experts. Furthermore, the team also drew extensively upon additional technical, environmental
and social safeguard resources from OPCQC (Operations Services/Quality Assurance &
Compliance), including on several missions.
The Monitoring system was not utilized beyond the Project, as M&E had a simple design;
indicators were linked to delivery of high-quality reports, which were then used for investment
decision making for the roads sector as described in Section 2.5 below, and expectedly to be used
for the hydropower project as well.
2.4 Safeguard and Fiduciary Compliance The Project was designed to finance only preparation of follow-on activities; provision of goods
or works was excluded so no negative impacts on the environment or society were expected from
Project implementation. However, since anticipated investments under the Project umbrella
would include components likely to rank environmental Category A or B, the Project was
classified as Category B. Investment-specific instruments of environmental due diligence could
not have been applied to this technical assistance Project, though, and a Safeguard Framework
(SF) was prepared to meet Bank safeguard requirements for this type of operation.
The Project triggered OP/BP 4.01 Environmental Assessment. The OP/BP 4.01 guiding
principles were incorporated during Project environmental classification and in developing and
disclosing all environmental documents produced during Project preparation and implementation,
in particular the public consultation process and especially for Khudoni hydropower plant-related
environmental and social work—civil society participated in developing TORs for studies, and
discussing the reports produced. The World Bank OP/BP 4.12 Involuntary Resettlement was
triggered because follow-on investments may potentially include resettlement. Therefore, the
Project developed resettlement action plans (RAPs). The RAP for Khudoni was developed into a
framework on which to base a more detailed future RAP, because studies pertaining to Khudoni
power plant have not yet been followed by investments and establishing a detailed RAP now is
premature as it would be out of date in the medium to long term. Also, an Environmental
Assessment (EA), Environmental Management Plans (EMPs), and Resettlement Action Plans
(RAPs) were prepared under Component 2 (roads), and these documents and plans were used in
the subsequent investment projects for the East-West Highway.
World Bank O.P. 7.50 Projects on International Waterways was relevant to the Project because a
future Khudoni hydropower plant would be located on a river that flows into the Black Sea. The
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Commission for the Convention on the Protection of the Black Sea against Pollution was notified
about the Project and the safeguard requirement was met. Project compliance with environmental
and social safeguards is rated Satisfactory.
The Financial Management (FM) arrangements in place at the TRRC and the PSO for
implementation of the project were satisfactory and acceptable to the Bank. The ISR FM rating
throughout the project implementation was ―Satisfactory‖. [insert text if Audit no submitted].
All procurements under the project were carried out in consistence with the Bank guidelines and
in accordance with the methods and thresholds specified in the Grant Agreement. The Project
procurement rating was ―Satisfactory‖ till September 2009. In 2009 the rating was downgraded
to ―Moderately Satisfactory‖ due to protracted contract payment disagreement between the
Ministry of Energy and the contractor. The rating remained Moderately Satisfactory as the
disagreement was only resolved after the closing of the project.
2.5 Post-completion Operation/Next Phase
In relation to Component 1, a Memorandum of Understanding (MOU) was signed with a private
consortium for the construction of the Khudoni hydropower station. An MOU in generally is not
an investment decision however, the Government confirmed that the based on this MOU the
investment decision has been made by private investor. At the time of this ICR the feasibility
study was not provided to the private consortium in contrast with the Environmental and Social
Impact Assessment; the latter was also made publicly available on MoE’s and the World Bank’s
websites.
Studies produced under component 2A were used to prepare two Bank-financed investment
projects on the East-West Highway. In December 2006, the First East-West Highway
Improvement Project (FEWHIP) was approved and financed upgrading of the Agaiani-Igoeti
section. The Project was successfully implemented and in 2009, Additional Financing was
approved to rehabilitate the Rikoti tunnel, currently under implementation. In December 2007,
the Second East-West Highway Improvement Project (SEWHIP) was approved; most of the
works are completed and the Project will close in February 2012.
3. Assessment of Outcomes
3.1 Relevance of Objectives, Design and Implementation
The Project development objective (PDO) and design remain highly relevant to existing
Government development priorities. On June 7, 2006, Parliament adopted the Main Direction of
the Energy Sector, which defined national strategic priorities; a key element is energy supply
security. Georgia intends to achieve energy security by developing its hydro power potential.
Khudoni hydropower station is among the largest and the most complex infrastructure to be
developed by private investors. Thus, the PDO remains fully aligned with this strategic
Government goal. The PDO is consistent with the current Country Partnership Strategy (CPS) for
FY10-13; one of two pillars of the CPS is restoring growth and competitiveness; reliable and
efficient power supply is fundamental to Georgia’s economic growth. Upgrading of the East-
West Highway remains a national priority, and Government has requested a series of three Bank-
funded projects to date, now under implementation.
The focus on energy and transport sectors was consistent with Government investment priorities
and Country Partnership Strategy (CPS) objectives. Specifically, the Project aimed to finance
technical assistance (TA) to assess investment feasibility and effectiveness using technical and
sector studies, engineering design, economic, financial, and environmental feasibility analysis;
and by providing financial and legal advisory services where required.
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In 2004, Government formulated a power sector policy that identified self-sustainability and
energy security as two primary strategic objectives. Using Georgia’s vast hydro resources cost-
effectively was seen as key to reducing national import dependency on fossil fuels. Power and
road infrastructure investment was seen to contribute to goals of the 2006-09 CPS. Improved
electricity and gas infrastructure, and improved transport infrastructure were among the CPS
priorities under the overarching theme of Enabling Income and Employment Generating Growth.
3.2 Achievement of Project Development Objectives
The Project development objective was fully met, that is to facilitate infrastructure investments
with strategic importance and/or special complexity. Khudoni hydropower station exemplifies
both strategic importance and special complexity. Upon completion, Khudoni would be the
second largest hydropower station in Georgia with an installed capacity of 700 MW. Khudoni is
located upstream of hydropower station Enguri, the largest station the country with an installed
capacity of 1300 MW. Khudoni would have significant positive impact on the operation of
Enguri.
Khudoni hydropower station is also complex due to its size, location, and construction history.
Khudoni construction was halted in 1986 due to concerns about safety of the chosen design, and
environmental impact. Also financial constraints of the Government over two decades made
continuation of construction impossible. The current Government has identified Khudoni as
among the hydropower stations that will contribute to Georgia’s strategic development in the
longer term.
Component 1 output is a feasibility study and environmental and social impact assessment for
Khudoni hydropower station, studies that there is reason to expect will provide a basis for private
investment. An MOU for project development has been signed with an investor consortium thus
the rating of this component is suggested as satisfactory.
Component 2A funded development of all necessary studies for preparation of two investment
projects in the total amount of about US$54 million. This included preparation of feasibility study,
environmental assessment, and detailed designs and bidding packages for two East-West
Highway sections. As a result, 37 km of this critical Georgian transport corridor have been
rehabilitated and upgraded from 2 lane to 4 lane. Thus, the Project outcomes were fully achieved,
however, given the weaknesses in the design for Igoeti-Sveneti section, the rating of this
component is suggested as moderately satisfactory.
Investments in the East-West Highway, based on feasibility studies and designs, proceeded
expeditiously. Investment for Khudoni has yet to materialize. Government has taken adequate
steps to secure investment, but a direct causal link between feasibility studies for Khudoni and
private sector investments is difficult to establish. Nevertheless, the Project achieved its
development objective to facilitate infrastructure investment in that quality studies are available
to investors, shaving years of study work off investment plans going forward. It is clearly
expected that further project development work for Khudoni, detailed designs and completion of
safeguard arrangements prior to investments, would build directly on the work done under the
Project. It is important that the international Panel of Experts recognized the techno-economic
study of Khudoni to be on level of feasibility, and also that the international environmental/social
Panel of Experts accepted that the safeguard (framework) studies undertaken are adequate for this
stage of the project, although they have a series of critical comments to the safeguard studies that
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are made in the panel’s last report and which thus constitutes an important supplemental report
for future investors in the hydropower project.
3.3 Efficiency
The Project funded TA for Khudoni hydropower station and East-West corridor to prepare for an
investment project; therefore, no economic and financial analyses of the TA project as such were
conducted during Project appraisal or at Project completion.
3.4 Justification of Overall Outcome Rating
Rating: Satisfactory
The Project development objective was highly relevant and fully achieved as measured against
the monitoring indicators presented in the Results Framework Analysis and Section 1.2. Project
efficiency was not assessed because the Project funded TA for Khudoni hydropower station and
East-West Highway. Closing Date was extended by 16 months due to Component 1; however, it
was never expected to be a bottleneck with respect to implementation of the Khudoni investment
project. Despite the delays in implementation of the Component 1 and quality issues with output
of the Component 2 A, the overall outcome is rated as Satisfactory.
3.5 Overarching Themes, Other Outcomes and Impacts
(a) Poverty Impacts, Gender Aspects, and Social Development
The Project itself had no direct poverty, gender, or social impact because it funded TA for
infrastructure rather than infrastructure itself. The assessment of the poverty, gender and social
impact of the follow-up infrastructure investment is outside the scope of this ICR.
(b) Institutional Change/Strengthening
The project has led to strengthening and mobilization of the local hydropower engineering
capacity, this engineering capacity was later used for the design of other hydropower station
throughout Georgia.
(c) Other Unintended Outcomes and Impacts (positive or negative)
The practice of using a local panel of experts was effective for the Khudoni hydropower station
and was replicated for other hydropower station schemes in Namakhvani and Mtkvari.
3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops
No beneficiary survey or stakeholder workshop was conducted.
4. Assessment of Risk to Development Outcome
Rating: Moderate
The Project outcome was sound Government investment decisions in the East-West Highway. As
with regards to the hydropower component, at the time of this ICR, a private investment
consortium signed a Memorandum of Understanding for investing in the Khudoni hydropower
plant and based in the Government information the consortium is committed to proceed with the
investment. However, it cannot be excluded that the construction decision for Khudoni could be
pushed into a distant future as no construction has started at the time of the ICR. On that basis,
the risk to development outcome has been rated Moderate rather than Low for the overall Project.
Furthermore, construction of Khudoni HPP is a relatively high-risk undertaking because it is
complex—technically, financially, environmentally and socially—as is often the case with large-
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scale hydropower projects. The size of the completed Khudoni HPP will have a substantial effect
on the national and regional energy balance. Therefore, due to complexity and size, the
construction carries considerable risk, which is among the reasons why cascade developments
like Namakhvani HPP, where investments can be broken into smaller segments and spread over
time, recently have been perceived as more attractive for investors. An added complexity for
Khudoni is its location upstream of the Enguri dam. The Enguri HPP has its reservoir in Georgia
proper and the powerhouse and control room located in the conflict region of Abkhazia. The two
power plants would need to coordinate their operations in order to enhance the economic results
for Enguri, and also for dam safety reasons for Enguri.
The East-West Highway studies financed under the Project were utilized as inputs for the Bank-
funded road investment projects. The preliminary design and environmental impact assessment
for the Agaiani-Sveneti road section and the detailed design for Agaiani-Igoeti were used for the
First East-West Highway Project (IDA-42480). Detailed design, EMP, RAP were used for the
Bank-funded Second East-West Highway Improvement Project (IDA-43730). Studies funded by
IPF have facilitated timely and efficient investment into the First and Second East-West highway
projects. Therefore, the risk to development outcome is rated Negligible to Low for this
Component 2 when assessed isolated from Component 1.
In consideration of the above, the risk to the development outcome for the overall Infrastructure
Pre-investment Facility is assessed as Moderate.
5. Assessment of Bank and Borrower Performance
5.1 Bank Performance
(a) Bank Performance in Ensuring Quality at Entry
Rating: Satisfactory
Based on the assessment of Project preparation and design outlined in Section 2.1, Bank
performance in ensuring quality at entry is rated as Satisfactory. Project objectives and
components were well-defined and consistent with national priorities and CPS objectives. The
project risks at the Project preparation were assessed realistically. Respectively the project was
identified, prepared, and appraised in the way that ensured that the planned development outcome
was achieved.
(b) Quality of Supervision
Rating: Satisfactory
The World Bank conducted extensive Project supervision, involving two infrastructure sub-
sectors—energy and transport; seven supervision missions included both Bank staff and external
consultants from the two sub-sectors. In addition, the Project road sub-sector component was
supervised in parallel with the current road portfolio. The task management and supervision was
partly decentralized to the country office, which facilitated continuous Project supervision and
ensured high-quality and responsive Bank inputs.
On several occasions supervision teams were reinforced by senior Bank staff responsible for
Bank-wide oversight over dam safety and environmental and social safeguards, which heightened
supervision quality and ensured compliance with environmental and social safeguards.
In addition, the complexity of the proposed Khudoni hydropower project encouraged the Bank to
undertake extra supervisory precautions. The Project funded TA, not actual construction, but the
Project was nevertheless environmentally rated Category B. During Project supervision, the
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Bank was actively involved in the substance of the Khudoni study and utilized its considerable
expertise in hydropower construction to the benefit of the Project. The Bank’s Project Team was
also benefitting from the hiring under the Project of a highly competent international
Engineering/Dam Safety Panel of Experts and an international Environmental/Social Panel of
Experts.
(c) Justification of Rating for Overall Bank Performance
Rating: Satisfactory
The Project quality-at-entry and supervision are rated Satisfactory, which warrants Satisfactory
rating for the overall Bank performance.
5.2 Borrower Performance
(a) Government Performance
Rating: Satisfactory
The Ministry of Energy and the Ministry of Economic Development were the primary
counterparts. The Ministry of Energy was active in reviewing and commenting on studies.
Government was leading public consultations for Khudoni hydropower. Despite some contractual
issues with the Engineering Consultant took an excessively long time to resolve the overall
Government performance was satisfactory. The Roads Department at the Ministry of Economic
Development participated in implementing road-related Project activities from the technical side.
Government commitment to rapid upgrade of East-West Highway contributed to the timely
completion of all Project-related studies, and quick preparation and approval of subsequent
investment projects, however the high stress level inflicted on staff and contractors for
accelerated delivery and limited time frame and budget allocated for preparation of the studies
impacted the quality of outputs.
(b) Implementing Agency or Agencies Performance
Rating: Satisfactory
The Project Service Organization, which had a track record of satisfactorily implementing
previous Bank-funded operations (Power Rehabilitation Project, Electricity Market Support
Project), implemented also the Project’s Component 1 successfully. Component 2 was
successfully implemented by TRRC, which also had satisfactorily implemented road investment
projects. The PSO and TRRC performance in financial management and procurement functions
were satisfactory.
(c) Justification of Rating for Overall Borrower Performance
Rating: Satisfactory
6. Lessons Learned
Six lessons emerged from the implementation of the Project. The lessons are summarized below:
First; Hydropower studies are notorious for cost overruns, most notably because the
geology on the dam site is typically not fully known at project start. Therefore, contingency
funds for additional studies should be ample or a strategy for expedient allocation of
additional funding should be identified during project preparation.
Second; When requested by government for assistance with hydropower development –
even if the request is only for undertaking studies – Bank project teams need to be mindful
of the larger river basin context and make sure that enough is known about optimum
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placement (and types) of dams if a multi-dam development could be envisaged for the
future. Comprehensive river basin plans would of course address many issues beyond
hydropower. In the case of Khudoni, the government already had elaborate river basin
development plans, but they were from the 1990s and, prompted by suggestions from the
international Panel of Experts, were revisited during Project implementation, directly impacting
the implementation schedule by about three months. These further river basin studies, undertaken
by the Engineering Consultant, reconfirmed the adequacy of the original Khudoni dam location.
Third; Undertaking a Strategic Environmental Assessment (SEA) is prudent policy
whenever new power generation is contemplated and past SEAs are non-existent or dated.
Undertaking a SEA was originally not part of the Project’s hydropower component, and the
Government was originally of the opinion that sufficient studies of this nature had been made. In
retrospect, the Bank’s team concluded that a SEA should have been incorporated in the Project’s
initial plans. The Government agreed during Project implementation to undertake a SEA;
however, since available IDA funds at a critical point in time seemed inadequate to also finance
such study, the development of the SEA was ultimately managed by the Bank and financed over
the Bank’s supervision budget.
Fourth; Allocation of sufficient resources and time for preparation of feasibility studies and
designs is essential. Only 6 months were given for the designs, when about 12 months would
have been more appropriate and the budget allocated for the designs was only at about 1.5% of
the construction costs, when usually about 5% is allocated for projects of similar size and
complexity, The Bank should intervene in cases when the budget allocation seems insufficient for
good quality outputs, or when the delivery is too rushed.
Fifth; When a line ministry is in charge of the contract management/supervision of
consultancy assignment; a lump-sum contract, as opposed to a time-based contract seems to
be more effective. The line ministries sometimes have constrained resources for the supervision
and monitoring of the time based contract which requires close monitoring of staff-days worked
and processing monthly payments. Linking payments to the consultant to the specific
deliverables/outputs would ease the pressure on the line ministry and make implementation of the
consultancy assignment more effective.
Sixth; The Projects which envisage work s located near areas of potential military activities
or areas which are not fully under the Government control should build into the project
design mitigation measure for the potential implementation delays.
7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners
(a) Borrower/implementing agencies
The Borrower reviewed the ICR and provided comments which were largely of a factual nature
and have been reflected in the document. The Borrower broadly agreed with the findings of the
ICR. The Borrower's comments are also attached in Annex 7.
(b) Cofinanciers
N/A
(c) Other partners and stakeholders
The Bank’s Project team communicated extensively with Georgian NGOs that had local interest
in the Khudoni area; that had particular interest in environmental issues, and that were overseeing
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15
Bank-financed projects in general. Also the Government communicated with these NGOs,
although mostly through the public consultations that took place. At the time when the Project
team realized that the development of a Strategic Environmental Assessment could add value to
the study work, i.e. by placing Khudoni in the context of other electricity supply enhancing or
demand reducing options, NGOs made the same point. The NGOs engagement gave a helpful
impetus to the plans to develop a SEA in the context of the Khudoni studies. The SEA was made
publically available.
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Annex 1. Project Costs and Financing
(a) Project Cost by Component (in USD Million equivalent)
Components Appraisal Estimate
(USD millions)
Actual/Latest
Estimate (USD
millions)
Percentage of
Appraisal
Component 1. TA for Khudoni
Hydropower Project Preparation 3.30 3.86 117
Component 2: TA for Preparation
of Transit Corridor Projects.
2.A. for Preparation of East-West
Highway Improvement Project;
2.B. TA for Preparation
2.60 1.50 58
Total Baseline Cost 5.90 5.36 91
Physical Contingencies
0.00
0.00
0.00
Price Contingencies
0.00
0.00
0.00
Total Project Costs 5.90 5.36
Front-end fee PPF 0.00 0.00 .00
Front-end fee IBRD 0.00 0.00 .00
Total Financing Required 5.90 5.36 91
(b) Financing
Source of Funds Type of
Cofinncing
Appraisal
Estimate
(USD
millions)
Actual/Latest
Estimate
(USD
millions)
Percentage of
Appraisal
Borrower 0.90 0.77 85
IDA Grant 5.00 4.58 92
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Annex 2. Outputs by Component
Component 1: TA for hydropower Project preparation (Cost US$3.3 million)
The Grant financed two major studies; a feasibility study for the Khudoni Hydropower Project
that assessed technical, economic, and financial viability, and an Environmental and Social
Impact Assessment, the latter including an Environmental and Social Impact Assessment per se;
an Environmental Management Plan; and a Preliminary Resettlement Action Plan. In addition,
this component financed services of an international panel of experts to review technical and
environmental studies.
Activity Output
TA, Preparation of Feasibility
Study for Khudoni Hydropower
Station
Phase 1, 2, and 3 reports of Feasibility Study.
TA, Preparation of Environmental
and Social Impact Assessment
Khudoni Hydropower Station Environmental and
Social Impact Assessment
Financing of Technical and
Environmental Panel of Experts
Comments on the Feasibility Study and Environmental
and Social Impact Assessment
Component 2: TA for Preparation of Transit Corridor Projects (total component cost is US$2.55
million, divided into two sub-components)
Sub-component 2A. TA for Preparation of East-West Highway Improvement Project (sub-
component cost is US$1.6 million). The sub-component financed a feasibility study, preliminary
design and environmental assessment of road section from Agaiani to Sveneti. The preliminary
review was followed by detailed design and preparation of bidding packages for each section.
Initially it was envisioned that the Agaiani–Sveneti road would be divided into three sections, and
there would be three assignments for detailed designs and bidding documents. However, during
procurement the RD and the Bank team agreed to combine sections 2 and 3, which resulted in
preparation of designs for Agaiani–Igoeti and Igoeti–Sveneti sections, leading to two investment
projects. Environmental and social implications of the corridor improvement project were
analyzed as part of technical studies.
There were some issues with implementation of the contract for preparation of designs for the
Agaiani – Igoeti section by the consulting firm. The timeframe given for design preparation was
very tight, and there were some delays to the schedule in incorporating comments into the final
designs. As a result the Roads Department penalized the company and didn’t issue the last
payment, even though the overall designs were of good quality and the Bank team recommended
full payment. The designs for the second section (Igoeti – Sveneti) were prepared by another
company, and have experienced similar problems with very limited time allocated and pressure to
deliver. The quality of the final designs for this section was not as strong as for the first, and some
weaknesses of the designs related to profile and pavement structure became apparent later during
the construction. The review of the designs missed these weaknesses. At this time the capacity of
the RD was rather stretched, the summer vacation season further made it difficult to allocate staff
for review, and there was a big rush to issue the bidding documents.
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Sub-component 2B. This sub-component was canceled due to lack of funding and no activities
were performed. Project design anticipated this component as contingent on savings from other
components, which did not materialize.
Activity Output
TA, Preparation of a Feasibility
Study, Preliminary Design and
Environmental Assessment Study
for Agaiani- Sveneti
Feasibility Study, and Preliminary Design
Environmental Assessment Study, EMP and RAP for
Agaiani- Sveneti
Final Designs and bidding
documents for 3 sections of
Agaiani- Sveneti road
Detailed Design and bidding documents for a section
Agaiani- Igoeti
Detailed Design and bidding documents for a section
Igoeti - Sveneti
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Annex 3. Economic and Financial Analysis
No economic and/or financial analysis was conducted.
The Project funded studies for Khudoni Hydropower station and East-West corridor to prepare an
investment Project.
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Annex 4. Bank Lending and Implementation Support/Supervision Processes
(a) Task Team members
Names Title Unit Responsibility/
Specialty
Lending
Supervision/ICR
Josephine A. Kida Program Assistant ECSSD
Elena Y. Chesheva Operations Officer ECSS5
Jane Olga Ebinger Sr. Energy Specialist SEGES
Majed El-Bayya Lead Procurement Specialist ECSO2
Daryl Fields Sr. Water Resources Spec. ECSS2
Bjorn Hamso Sr. Energy Economist SASDE
Satoshi Ishihara Sr. Social Development Specialist EASTS
Surekha Jaddoo Operations Analyst ECSS2
Darejan Kapanadze Sr. Environmental Spec. ECSS3
Zarafshan H. Khawaja Sr. Social Development Specialist OPCQC
Martha B. Lawrence Sr. Transport. Specialist ECSS5
Olivier P. Le Ber Lead Transport Specialist MNSTR
Antonio G. Lim Consultant EASHD
Ramon Lopez-Rivera Consultant ECSS2
Lorraine McCann Kosinski Temporary ECSSD
Joseph Melitauri Sr. Operations Officer ECSS2
Philip W. Moeller Consultant ECSSD
Marjorie Mpundu Counsel LEGAF
Alessandro Palmieri Lead Dam Specialist OPCQC
Gennady Pilch Sr. Counsel LEGOP
Wolfhart Pohl Sr. Environmental Specialist ECSS3
Lucian Bucur Pop Sr. Economist HDNSP
Kristyn E. Schrader Sr. Communications Officer ECAEX
Karl Skansing Consultant AFTSP
Radhika Srinivasan Sr. Social Scientist OPCFC
Tamara Sulukhia Country Sector Coordinator ECSSD
Arman Vatyan Sr. Financial Management ECSO3
Elizabeth C. Wang Sr. Financial Officer ECSS5
Richard Wong Consultant ECSSD
Ghada Youness Sr. Counsel LEGEM
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(b) Staff Time and Cost
Stage of Project Cycle
Staff Time and Cost (Bank Budget Only)
No. of staff weeks USD Thousands (including
travel and consultant costs)
Lending
FY06 23 76.63
Total: 23 76.63
Supervision/ICR
FY06 10 41.73
FY07 32 221.54
FY08 35 164.26
FY09 30 145.87
FY10 18 70.19
FY11 13 31.12
Total: 138 674.71
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Annex 5. Beneficiary Survey Results
Not Applicable
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Annex 6. Stakeholder Workshop Report and Results
Not Applicable
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Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR
The Borrower reviewed the draft ICR and on September 2, 2011 the Ministries of Energy
and Natural Resources and Infrastructure and Regional Development provided comments.
The comments and recommendations are presented below. The recommendations are also
incorporated into the ICR’s section Lessons Learned.
1. Comments and Recommendations provided by the Ministry of Energy and Natural
Resources.
Comments:
1. Ref. 2.2 Implementation (c)
MOE had provided to the consultant part of Component A (Khudoni) required available
data (as undertaken by the contract for Consultants’ Services-annex F), but significant
part of historic data was held in archives of the design company, which was privatized
soon after engineering Consultant started his work. Although MOE was obliged for
assisting in obtaining data from only Government agencies, it still assisted the consultant
by sending support letters to Hydro Project and correspondingly receipt of the materials
was confirmed by the letter from the Consultant shortly after the effective date of the
contract.
2. Ref. 2.2 Implementation (d)
Reasons for requesting the Closing Date extension by the MOE was clearly defined by
the letter of the ministry to WB No: 02/2883 dated 27.09.2010, indicating that additional
time was needed for – reviewing assessments by the POE and also local experts of draft
final feasibility study; negotiating amendment to the contract with engineering
consultants to agree on costs associated with past activities; completion activities.
The finalization process of feasibility study was also impeded by delayed submission of
reports by the consultants, also considering that some of them were lacking significant
information and were deemed as incomplete by the MOE and POE. Thus additional time
was needed for revising the documents in proper manner for acceptance, finally
impacting the overall completion schedule. Moreover in the process of assignment
additional scope of work was identified requiring additional time and funds.
Consequently consultations regarding this particular matter took specific time resulting in
the delay of initiating next phase of the assignment.
3. Ref 4. Assessment of Risk to Development Outcome
The decision to build Khudoni HPP has been taken by the investor, thus project
implementation agreement is already signed and effective.
4. Ref 5.2 Borrower Performance (a)
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Same as comment 1
Recommendations
Contract for consultancy services shall reflect interests of a client more clearly and adequate
mechanism in order to ensure contract management is carried out in a time efficient manner. In
particular it would be more productive payments to be linked with specific millstones and
deliverables rather than reported workdays converted into monthly payments.
2. Comments and Recommendations provided by the Ministry of Infrastructure and
Regional Development
Ministry of Regional Development and Infrastructure and Roads Department of Georgia have
positive approach on the World Bank N:IDA-H2040 Grant project, concerning of TA of
Agaiani-Sveneti road section.
The MRDI and RD comments, concerning Component 2 ―(i) feasibility study, preliminary
design and environmental assessment of Agaiani to Sveneti road section and (ii) Detail Designs
and Bidding Documents for the Agaiani-Igoeti and Igoeti-Sveveti sections‖ are following:
• On the page 6 and 7 (sub-chapter e) it is mentioned, that the design companies were
given limited budget and very limited time frame to prepare designs. The design budget was
defined by the tender and also the time frame was agreed with the World Bank.
• Last sentence of the same sub-chapter is saying, that in hindsight, under the IPF Project
more time and resources should have been allocated for consultants to produce the studies and
for thorough review of all outputs, additional experts should have been involved to strengthen
the capacity of the Roads Department in monitoring the quality of the outputs. The tender
qualification requirements should be stronger; this is the main reason of the design weakness.
• The last sentence of chapter on page 13 states that the Government commitment to rapid
upgrade of East-West Highway contributed to the timely completion of all Project-related studies,
and quick preparation and approval of subsequent investment projects, however the high stress
level inflicted on staff and contractors for accelerated delivery and limited time frame and budget
allocated for preparation of the studies impacted the quality of outputs. There was not any
pressure on the time frame and again we mention that the main reason is a very low qualification
requirements were foreseen in the tender.
• The same comment pertains to the statement on page 14, the price was defined by the
tender and World Bank has provided no objection on this. And the time frame was also agreed
with the World Bank.
• Last chapter on the 17th page is states that Roads Department penalized the consultant
company and didn’t issue the last payment for the Agaiani-Igoeti section. Foreseen that the there
were mistakes in the design; the payment was issued to the contractor company who hired the
new design company and has incorporated all mistakes.
• The last sentence of the same chapter is saying, that at this time the capacity of the RD
was rather stretched, the summer vacation season further made it difficult to allocate staff for
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review, and there was a big rush to issue the bidding documents. The reason of the weakness is
only the low qualification of the consultant and we can say that RD staff was not on the summer
vacations.
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Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders
Not Applicable
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Annex 9. List of Supporting Documents
1. Strategic Environmental Assessment
2. Country Partnership Strategy for Georgia For the Period FY10-FY13
3. Supervision Aide Memoires for IPF and East West Highway Projects
4. Project Implementation Status Reports
5. IPF Project Appraisal Document
6. Second East West Highway Implementation Progress Report
7. Khudoni Hydropower Station Feasibility Study
8. Khudoni Hydropower Station Environmental and Social Impact Assessment
9. Comments on the Feasibility Study and Environmental and Social Impact
Assessment
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Proposed KHUDONI Hydropower Plant
Project Study:AGAIANI-SVENETI
ChinvaliChinvali
KobuletiKobuleti
AhalciheAhalcihe
OniOni
ZugdidiZugdidi
KuleviKulevi
AhalkalakiAhalkalaki
NinocmindaNinocminda
LagodehiLagodehiMtskhetaMtskheta
KazbegiKazbegi
TkvarceliTkvarceli˘̆
GagraGagra
MestiaMestia
AmbrolauriAmbrolauri
AhmetaAhmeta
OcamciraOcamcira˘̆ ˘̆
AkarmaraAkarmara˘̆
SupsaSupsa
SenakiSenakiChaltuboChaltubo TkibuliTkibuli
SachereSachere˘̆
BorjomiBorjomi
ValeVale
BakurianiBakuriani
MarneuliMarneuli GardabaniGardabani
VakhtangisiVakhtangisiKazretiKazreti
GurdzaaniGurdzaani˘̆
TelaviTelavi
Snoris TskaliSnoris Tskali
Dedopis-CkaroDedopis-Ckaro
DzvariDzvari˘̆
SuramiSuramiMukhianiMukhiani
BrotseulaBrotseula
OzurgetiOzurgeti
KutaisiKutaisi
BatumiBatumiTBILISITBILISI
KhasuriKhasuri
SamtrediaSamtrediaPotiPoti
RustaviRustavi
GoriGori
ZestaponiZestaponi
ZZagesiagesi
FFonichalaonichala
RRed Bridgeed Bridge
SokhumiSokhumi
Kobuleti
Ahalcihe
Oni
Zugdidi
Kulevi
Ahalkalaki
Ninocminda
LagodehiMtskheta
Kazbegi
Tkvarceli˘
Gagra
Mestia
Ambrolauri
Ahmeta
Ocamcira˘ ˘
Akarmara˘
Supsa
SenakiChaltubo Tkibuli
Sachere˘
Borjomi
Vale
Bakuriani
Marneuli Gardabani
VakhtangisiKazreti
Gurdzaani˘
Telavi
Snoris Tskali
Dedopis-Ckaro
Dzvari˘
SuramiMukhiani
Brotseula
Ozurgeti
Kutaisi
Sokhumi
Chinvali
BatumiTBILISI
Khasuri
SamtrediaPoti
Rustavi
Gori
Zestaponi
Zagesi
Fonichala
Red Bridge
R U S S I A N F E D E R A T I O N
T U R K E Y
A R M E N I AA Z E R B A I J A N
R U S S I A N
F E D E R A T I O N
Enguri Hydropower Plant
B l a c k
S e a
Rion
i
Rioni
Rioni
Enguri
Chen
iscka
li
Enguri
Mtkvari (Kura)
Cho
roki
Mtkvari
Kvirilk
Aragvi
Iori
Iori
Alazanl
Ala
zanl
Iori
(Kura)
ToZagatala
To Gazah
ToAlaverdiTo Tasir˘
To Gyumri
ToSoci˘
To Vladikavkaz
To Trabzon
43°42°
41°
44° 45° 46°
43°42°41° 44° 45° 46°
40°
40°
43°
42°
41°
43°
42°
41°AZERBAIJAN
ARMENIA
ISLAMIC REP. OF IRAN
TURK
MEN
ISTANT U R K E Y
SYRIAN ARAB REP. IRAQ
GEORGIA
U K R A I N E
RUSS IAN
FEDERAT ION
KAZAKHSTAN
Tbilisi
Casp ian
Sea
B lack Sea
GLACIER AREAS
RIVERS
SELECTED CITIES
NATIONAL CAPITAL
INTERNATIONAL BOUNDARIES
ROAD SECTION STUDIED UNDER THE PROJECT
EAST - WEST ROAD CORRIDOR
MAIN ROADS
EAST - WEST RAILWAY CORRIDOR
OTHER RAILWAYS
PROPOSED KHUDONI HYDROPOWER PLANT
IBRD 34376
DECEMBER 2005
G E O R G I A
INFRASTRUCTURE PRE- INVESTMENTFACIL ITY
0 15 30 45 60 75 KILOMETERS
This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries.