EU to lend €250 million to Georgia

The European Investment Bank (EIB) has said that it will lend €250 million ($283.7 million) to Georgia to upgrade a section of the country’s East-West Highway (EWH), which is the main connection for long distance road traffic in Georgia and a direct part of Europe’s TEN-T infrastructure. Ports Europe in the article EU to lend €250 million to Georgia for improvement of the highway between Caspian and Black Seas writes, that the wider aim is to improve Georgia’s connectivity to Europe via a highway that connects Baku in Azerbaijan on the Caspian Sea via Georgia (the start of EWH is in the capital Tbilisi) to Turkey and the ports of Poti and Batumi on the Black Sea. The EWH is also vital for landlocked Armenia as it provides the country with access to Georgian Black Sea ports.

Approximately 100 km of the 410 km highway will be upgraded which will improve road safety and travel conditions, lower travel times and reduce vehicle operating and maintenance costs. The EIB loan is covered by the European Union (EU)’s Comprehensive Guarantee. As a financial institution of the EU, the EIB activity outside the EU is directly contributing to the implementation of the EU’s external policies. 

The East-West highway is the main artery for long distance road traffic in Georgia and is being used by most traffic from Azerbaijan and Armenia to the Black Sea ports and to Turkey, as well as long distance traffic to and from Tbilisi. This highway is also part of the Pan-European corridor linking the EU with Central Asia through the Caucasus and part of the Transport Corridor Europe-Caucasus-Asia (TRACECA) programme.

The upgrading of the East-West Highway, which started in 2006, is one of the top priorities for Georgia. It will enhance the country’s position as the main conduit of regional trade. By supporting this project, the EU Neighbourhood Investment Facility (NIF) and the EIB help regional integration through increased connectivity. Officially launched in 2008, NIF was renamed the Neighbourhood Investment Platform (NIP). It is a mechanism aimed at mobilising additional funding to finance capital-intensive infrastructure projects in EU partner countries covered by the European Neighbourhood Policy (ENP) in sectors such as transport, energy, environment and social development. It does so by pooling grant resources from the EU budget and the EU Member States and using them to leverage loans from the European Financial Institutions as well as contributions from the ENP partner countries themselves. In September 2018 the Asian Development Bank’s (ADB) Board of Directors has approved a $300 million loan to finance the construction of a four-lane, 12 km long section of the East-West Highway between Khevi and Ubisa.

The EWH, an integral part of one of the six key corridors connecting member countries of the Central Asia Regional Economic Cooperation (CAREC), currently carries about 60% of Georgia’s foreign trade despite representing only about 2% of the country’s entire road network length. The EWH serves some 13,000 vehicles per day with an annual traffic growth rate of over 10% since 2005.

Financing for different projects for the improvement and development of the East-West Highway is provided by the World Bank, Asian Development Bank, Japanese International Cooperation Agency (JICA), European Investment Bank, Chinese Development Bank (CDB) and the European Bank for Reconstruction and Development.