Financing Strategy for Urban Water Supply and Sanitation Sector in Georgia Merab Kandelaki Director“GeorgiaWaterChannel” ltd. Bucharest, may 2008

Water Supply Coverage (%) 0.00% 20.00% 40.00% 60.00% 80.00% % Average Tbilisi Big cities Small cities

Sanitation Service Coverage (%) 0.00% 20.00% 40.00% 60.00% 80.00% % Average Tbilisi Big cities Small cities

Financing Gap under the Baseline Scenario

Mobilizing Additional Finance Increase sharply collection of billed user charges: up to 85 percent of the billing for households and up to 100 percent for other customers; Raise tariffs reasonably while reducing considerably leaks and unit water consumption compared to overstated norms – by introducing metering; Increase funding from the state budget and/or international loans and grants.

Scenarios for Meeting the MDG Target for Water Supply and Sanitation Two scenarios were considered regarding people who currently have no sustainable access to safe drinking water: (1)Rehabilitation and development of existing water supply systems and ensuring intra-building tap water supply to that part of the population Capital investment until 2015 (excluding rural areas) will amount to MGEL, or USD 7 per capita per year. Funding from the state budget and loans would exceed 4 percent of the total public expenditure (2)Ensure water supply to that part of the population through apartment taps (in apartment blocks) or street standpipes (in areas with low-rise buildings) Capital investment will amount to approximately 171 MGEL or USD 2 per capita per year. Funding from the state budget and loans would amount to percent of the state expenditure budget

Инвестиционные проекты в ВКХ Грузии, финансируемые в рамках займов МФО по состоянию 2007 года Name of the Object Orientate Price of the object (million lari) Orientate Date of the start of project Orientate Date of the finish of project Donor 1 Rehabilitation of water supply system of city Poti 28.5December, 2006February, 2009 EBRD, MSG, World Bank 2 Rehabilitation of water supply system of city Kutaisi 30.5September, 2007September, 2009EBRD, MSG 3 Rehabilitation of water supply system of city Kobuleti 14September, 2007March, 2009MSG 4 Rehabilitation of sewerage system of city Kobuleti 34.5I quarter, 2008I quarter, 2010 EBRD, ORET-I, World Bank 5 Rehabilitation of water supply system of city Rustavi 43II quarter, 2008II quarter, 2010EBRD, MSG, EU 6 Rehabilitation of water supply and sewerage system of city Borjomi 35II quarter, 2008II quarter, 2010EBRD, MSG 7 Rehabilitation of water supply and sewerage system of city Bakuriani 9.5II quarter, 2008IV quarter, 2009Kartu, MSG 8 Rehabilitation of water supply and sewerage system of city Tskhaltubo 14III quarter, 2008I quarter, 2011MSG