Beruflich Dokumente
Kultur Dokumente
September 2010
Progress Report
September 2010
September 2010
Table of Contents
September 2010
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Tbilisi Railway Bypass Project Progress Report
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Executive Summary
In 2010 Georgian Railway LLC (GR) launched Tbilisi Railway Bypass Project (the Project)
for developing a new railway route bypassing the central area of the capital Tbilisi. The main
goal of the Project is to improve the efficiency and the safety of railway operations as well as
free up over 80 hectares of land in the central area of Tbilisi, which will be available for
various urban development projects. The Project comprises the construction of a 28km long
double track electrified new railway bypassing Tbilisi. The existing railway infrastructure
between stations Didube and Navtlugi will be dismantled, thus, in total, 86ha area will be
freed up and used for urban development. The financing of the Project is secured through: (i)
the loan extended by the European Bank of Reconstruction and Development through the
Loan Agreement; (ii) the proceeds of the Euro Bonds issued by the GR; (ii) the cash-flows
generated by the GR internally.
With the aim, to identify feasibility of the project and ensure its successful implementation,
the GR has entered into number of contracts for procurement of services. These include:
procurement of the initial designs of the Project from KievGiproTrans, legal service related to
the Loan Agreement rendered by the Professional Legal Services BLC, supervision service
contract with ILF Beratende Ingenieure ZT GmbH (ILF) and Grauff Rail Engineering GmbH
& Co. KG (GRE), as well as service related to the resettlement process with Geographic
LLC.
On June 14, 2010, the GR has concluded a contract with the Joint Venture of Khidmsheni
JSC and China Railway 23rd Bureau Group CO. LTD (the Construction Contractor) under the
Standard form of contract of the FIDIC Yellow Book for the construction of the Tbilisi
Railway Bypass Project. Under the Contract, the Joint Venture is to construct the railway
bypass that includes:
Construction of the bypass railway line of the 38,612 km length from Zahesi Station
to Tbilisi-Marshalling Station;
Construction of the necessary engineering facilities;
Construction of new infrastructure complexes to replace the existing ones;
Construction of signalling and interlocking systems;
Construction of power supply facilities and catenary poles;
Installation of fibre-optic cables.
The works under the contract should be completed within 36 months. The contract price to be
received by the Joint Venture amounts to CHF 303 986 800.
During the reporting period, the progress in actual construction works has been related
mainly to the preparatory activities needed for the start of construction works. This included
the arrangement of proper legal and financial framework for the activities of the Construction
Contractor, finalization of design works, handing over of construction sites,
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assessment/approval of the work plan of the Construction Contractor, land acquisition and
resettlement process. Two out of four construction sites have already been handed over to the
Construction Contractor. On September 29, 2010, pursuant to restricted approval for the
beginning of preparatory works, the Construction Contractor commenced the works for the
construction of access roads to the construction site and relocation of existing electric poles.
The Construction Contractor has presented the Work Plan to the Supervisor. However, The
Work Plan was considered as incomplete and the Construction Contractor is to resubmit it by
October 25, 2010. Upon its approval by the Engineer, it will be submitted to the GR. GR has
received Advance Payment Guarantee under the Construction Contract on September 27,
2010 and respective payment will be made by the beginning of November, 2010. The
Construction Contractor has presented the Insurance policies issued by the Georgian
insurance company GPI Holding, elaborated in accordance with the requirements under the
Loan Agreement. Insurance policies are under the examination of the Supervisor.
As regards the resettlement and land acquisition process, 341 out of 358 state and
municipality owned land plots have already been registered in the National Agency of Public
Registry as the property of the GR. The remaining land plots will be transferred to the GR by
October 15, 2010. As for privately owned lands, the GR has purchased 66 private land plots
through Geographic LLC. The process is underway, and is planned to be finalized by the end
of December 2010.
The activities related to the construction works and resettlement are carried out in compliance
with the Environmental and Social Action Plan (ESAP).
The GR has set up a Project Implementation Unit, staffed by the key GR personnel, to ensure
effective and timely implementation of the Project.
In three months perspective, the GR plans, inter alia, to carry out the following activities with
respect to the implementation of the Project: conclusion of agreement between the GR and
the EBRD based on which, the latter will be granted with a first ranking mortgage over the
Existing Railway Land; finalization of the process of purchase and registration of Future
Railway Land; commencement of procurement procedure for Master Plan, and Land
Contamination Study. As regards the actual construction works, the Construction Contractor
is expected to complete the following works:
Finalization of detail design for renovation of the 10 km section of the Kakheti
existing line including the second railway track, all supporting infrastructure;
Mobilisation of equipment, machinery and manpower needed for the early stages of
construction by end of November, 2010;
Carrying out of detail geological survey for Lilo 1 Kvirike, and Kvirike - Avchala
sections of the alignment. In particular, for tunnels, land sliding and other sensitive
areas;
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Finalization of detail construction design for the section stretching from Lilo to
Kvirike;
Commencement of works on the detail design for the whole alignment by November,
2010;
Commencement of the design for sub-grade of the whole New Line by the end of
October 2010, to be finalized by the end 2010;
Commencement of the detail design for five tunnels by end of October 2010 to be
finalized by the end of 2010;
Commencement of the detail design for bridges, culverts and retaining walls by the
end of October 2010 to be finalized by the end of 2010.
On this early stage of implementation of the Project, the GR has not identified any serious
difficulties capable of causing delays as to the completion date of the Project. With respect to
the original costs of the Project, there are no factors that may seriously affect the estimated
amounts. The only changes may arise in the circumstances where the owners of the private
land appeal the expropriation orders, as the case may be, and the courts satisfy their claims of
increased compensations.
To the best of the GRs knowledge, no developments or activities have occurred that may
reasonably affect the economic viability of the Project.
As to the date of reporting, the GR is in full compliance with the covenants and undertakings
of the Loan Agreement.
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Abbreviations
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Tbilisi Railway Bypass Project Progress Report
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1. Introduction
The present Progress Report (the Report) is prepared pursuant to the Loan Agreement
between Georgian Railway and the European Bank for Reconstruction and Development and
covers the progress activities carried out in the course of implementation of the Tbilisi
Railway Bypass Project. The activities include, but are not limited to, the studies on the
economical viability of the project, securing necessary financing, procurement of necessary
services, execution of construction agreement, setting up legal and institutional framework
for effective implementation of the project, initiation of resettlement/compensation process
for the lands affected by the project, and commencement of physical works. The Report also
touches upon the actual or expected difficulties or delays in the implementation of the Project
and their effect on the completion date of the project as well as the costs of the Project. With
the three months look ahead, the Report outlines the activities that are expected to be carried
out for the furtherance of the implementation process. The financial statements and
expenditure details of the Project are also provided.
The current railway section running through the capital is the main route for freight on the
east west transport corridor through Georgia. The cargo mostly comprises of crude and
refined oil derivatives in transit from Azerbaijan, Kazakhstan and Turkmenistan to Black Sea
ports. Urban development surrounds a number of the rail terminals, siding and yards, many of
which are now either obsolete or derelict. The existing railway has few crossing points, and
also acts as a barrier to city development on the northern bank of the Mtkvari River and
depresses land value in its vicinity.
Against this background, the Project will not only improve the efficiency and safety of rail
operations through the relocation of the existing rail facilities outside the urban area but also
result in urban development in the freed-up territories, in line with the citys new General
Plan for Prospective Development.
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Map 1: Tbilisi
Freed up Territory
The Project comprises the construction of a 28km long double track electrified new railway
bypassing Tbilisi. It will branch off the present main line at Zahesi Station, pass through the
territories of Avchala, Gladni, and the uplands north of Tbilisi Sea and connect to the existing
Kakheti railway line near Lilo Station. From the junction point at Lilo towards Tbilisi to
Tbilisi Marshalling Station, the existing Kakheti line will be upgraded to double track on a
length of 10 km by refurbishment of the existing single track and adding a second new track.
Tbilisi Central Station will be closed and stations Didube and Navtlughi will be constructed.
Navtlughi station will serve passengers to the east direction and Didube station to the west
direction.
The existing railway infrastructure between stations Didube and Navtlugi will be dismantled.
Thus, in total, 86ha area will be freed up and be used for urban development. The latter will
be redeveloped for the following two purposes: (i) planning for redevelopment of the section
between Central and Didube Station (some 73.2ha); (ii) the section between Central Station
and Navtlughi (circa 6km long) will be used for a new urban traffic corridor. See below the
map of the Project.
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The Government of Georgia and Tbilisi City Hall are fully supportive of the Project due to its
location, size and potential development impact on the capital city as well as on the railway
operations. It should be noted that together with the Loan Agreement (see below) to secure
financing of the project the EBRD entered into Direct Agreements with the Government of
Georgia, and Tbilisi Municipality. Those agreements underline the high importance of the
Project and reiterate full support on the part of the Government and Tbilisi Municipality. GR
is also planning to conclude a separate agreement with the Tbilisi Municipality providing for
the responsibility on the part of the latter to construct and maintain auto roads, street lights,
drainage systems, recreation parks, playgrounds and sport fields, public transport and other
infrastructure after completion of Tbilisi Railway Bypass project.
In order to secure financial resources for the realization of the Project, the GR approached the
EBRD in November 2008. Following the due diligence carried out by the Bank, a Loan
Agreement between the EBRD and the GR was signed on March 17, 2010. Pursuant to the
Agreement, the EBRD extended CHF 146,220,000 loan to be used for part-financing the
Project.
Co-financing of the Project was intended to be carried out by the European Investment Bank
(EIB). However, on July 22, 2010 GR has issued Eurobond notes. The Eurobond notes were
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issued for the principal amount of USD 250.000.000, with the maturity date July 22, 2015
that will accrue interest at the rate of 9.875% per annum from and including July 22, 2010
and will be payable semi-annually in arrears on January 22 and July 22 in each year,
commencing on January 22, 2011. For the abovementioned transaction the GR has engaged
Bank of America Merrill Lynch and J.P.Morgan as the Joint Lead Managers.
The GR was also consideringreceivingadditional finances in the amount of EUR 8.5 million
throughNeighbourhood Investment Facility(NIF).1 However,the initial funding was decreased
and currently amounts to EUR 2.5 million. These funds will be used for financing the
detailed investigation survey (land contamination study), and master plan (see below).
Against this background, the general financing scheme of the Project is as follows: the EBRD
is financing approximately 35% of the Project. The rest of finances will be provided by (i)
Euro Bond proceeds; (ii) cash-flows generated by GR internally; (iii) NIF funding.
The entire value of the Project is currently estimated at EUR 277.3 million, covering
following components of the Project:
Note: Design and Construction contract price is 303mln CHF, which is equivalent to 211mln Euros according to
the exchange rate at the date of receiving financial proposals.
1
The Neighbourhood Investment Facility (NIF) is an innovative financial mechanism launched by the European
Union aimed at mobilizing additional funding to cover the investment needs of the Neighbouring region for
infrastructures in sectors such as Transport, Energy, the Environment and Social issues.
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2. Procurement
With the aim to assess the feasibility of the Project and ensure its successful and timely
implementation, the GR has entered into number of contracts for procurement of services, as
well as construction contract.
2.1. Contract with the Ukrainian Company KievGiproTrans on Initial Design and
Feasibility Study of the Tbilisi Railway Bypass Project
On February 9, 2009, the GR has engaged KievGiproTrans (KGT) to prepare the initial
design and feasibility study for the railway bypass. The scope of services under the
contractincluded:
Elaboration of main design decisions;
Accumulation of initial data;
Engineer-geological, topographic research;
Elaboration of the design decisions on highways options, tunnels, depots, relocation
of the stations;
Agreement of the main design decisions with the GR and the Tbilisi Municipality;
Elaboration of the Environmental and Social Action Plan (ESAP), and Resettlement
Action Plan (RAP) based on the EBRDs Environmental and Social Policy 2008.
Provision of the above-mentioned services has already been finalised, although with
considerable delays (see below). Based on the works carried out by the KievGipro Trans, the
general parameters of the Project are as follows:
The new railway line bypassing the centre of the city (New Line) starts from Tbilisi
Marshalling Station (0.948 km), utilizes existing Kakheti Line (9.022 km) up to station Lilo
(and from that point goes north above the Tbilisi reservoir and connects back to the existing
line at Zahesi Station (28.648 km). In addition to the track with supporting infrastructure,
passenger rolling stock depot and other minor facilities (signalling department administrative
building; warehouse; freight yard; diesel loco depot) will be relocated. The passenger rolling
stock depot will replace 3 existing depots (Passenger Locomotive, Passenger Wagon, and
Electric Multiple Units (EMU)).
Land plot between Didube and Navtlugi Stations will be freed up. The plot covers 86 ha of
land of which 2 ha are sidings and 10 ha is a narrow line. It is the rest of the land
(approximately 73ha) that is intended for urban re-development. Zahesi - Didube and Tbilisi
Marshalling - Navtlughi railway sections will be used for passenger operations only. There
will be no passenger operations on the bypass, except for seasonal (summer) Yerevan-Batumi
route.
The constructed New Line will be double track. Maximal slope/gradient will be 18.
Traction type will be electrical DC. Automatic block system will be installed.
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Tunnels 5 / 3520m -
KievGiproTrans has fully provided the GR with services under the contract but with serious
delays. As a consequence, on July 28, 2009 the parties introduced an amendment to the
contract which envisaged the obligation on the part of the KievGiproTrans to submit the
Resettlement Action Plan (RAP) to the GR no later than October 20, 2009.
KievGiprotransfailed to fulfil this obligation by the deadline and provided RAP on April 29,
2010 only. As a result, the company has to pay a penalty in the amount of 0.1% of the
estimated total price of the contract for every day of delay in fulfilling the obligation pursuant
to Article 9.1 of the contract.
GR is ready to execute Letter of Acceptance (which serves as the bases for payment) for the
services duly fulfilled by KievGiproTrans, provided that this document covers the obligation
regarding payment of the abovementioned penalty. However, due to misunderstandings
between the parties Letter of Acceptance has not been executed yet.
On October 14, 2009, the GR concluded a contract with DB International GmbH to procure
certain consultancy services. The scope of work under the contract provided by the DB
international covered the following:
Management and Coordination of Design:
o reviewing progress achieved by each of the design consultants against the
agreed programmes, and bring any delays to the attention of GR;
o agreeing any necessary measures to be taken by the design consultants to
recover any delays;
o reviewing draft design submissions to ensure compliance with the required
design standards, suitability for construction purposes and suitability for
procurement following Open tendering procedures as prescribed in Section 3
of the Banks Procurement Polices and Rules (May 2009);
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All the works under the abovementioned contract has been successfully finalised by the DB
International GmbH.
2.3. Contract with Professional Legal Services - BLC on Provision of Legal Services
regarding the Loan Agreement
On March 9, 2010 GR engaged Professional Legal Services (BLC) for provision of the legal
services covering:
Review of the draft of the Loan Agreement with the EBRD;
Explanation of all obligations undertaken by the GR under the Loan agreement;
Advices regarding variations and amendments to the draft contract for the benefit of
the GR;
Participation in the negotiations between GR and EBRD;
Preparation of the legal opinion needed for the disbursement of the loan proceeds.
All the services under the contract have been provided in due course.
2.4. Contract with the Dewey & LeBoeuf on Provision of the Legal Services
The GR has also engaged Dewey & Leboeuf for provision of legal advices regarding the
Loan Agreement by assisting the representatives of the GR during the negotiations held with
EBRD in London, UK.
2
Decree of the Ministry of Economic Development of Georgian N1-1/823 on Approval of the Temporary Rules
for Compulsory Expertise of the Construction Design of the Objects of High Importance (August 24, 2006).
3
Decree of the Government of Georgian N57 on the Rules of Issuance of Construction Permits and Terms of
Permissions (March 24, 2009).
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On June 14, 2010, the GR has concluded a contract with the Joint Venture of Khidmsheni
JSC and China Railway 23rd Bureau Group CO. LTD (the Construction Contractor/Joint
Venture) under the standard form of contract of the FIDIC Yellow Book for the purposes of
construction of the Tbilisi Railway Bypass Project.
Under the Contract, the Joint Venture is obliged to construct the railway bypass which
includes:
Construction of the bypass railway line of the length of 38,612 km from Zahesi
Station to Tbilisi-Marshalling Station which consists of two sections:
1. New line alignment from Zahesi Station to Lilo Station with arrangement of
intermediate stations Kvirike, and Lilo-1 (New Line);
2. Reconstructed single-track line in Kakheti direction from Lilo station to
Tbilisi-Marshalling station with the newly installed second railway track
(Kakheti Line).
Construction of the following engineering facilities:
Engineering Facilities New Line Kakheti line
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The works under the contract should be completed within 36 months. The contract price to be
received by the Joint Venture amounts to CHF 303 986 800 excluding VAT. Advance
payment amounts 20 % of the contract price; 10% of the contract price shall be transferred by
beginning of October, 2010. Two instalments in the amount of 5 % of the contract price shall
be paid respectively upon substantial design completion of the tunnels, and substantial design
completion of the bridges. The rest of the payment shall be made based on interim payments
(minimum amount CHF 700 000) in accordance with the works completed.
2.6. Contract for Consultants Services with ILF Beratende Ingenieure ZT GmbH
(ILF) and Grauff Rail Engineering GmbH & Co. KG (GRE)
On July 1, 2006, the GR concluded a contract with ILF Beratende Ingenieure ZT GmbH
(ILF) and Grauff Rail Engineering GmbH & Co. KG (GRE). Scope of the ILFs work under
the Contract includes but is not limited to the following:
Supervision of works, which includes:
o Carry out the duties of the Engineer4 as required by the relevant clauses of
FIDIC Conditions of Contract for Plant and Design-Build and the Particular
Conditions as agreed under the Main Works contract;
4
The terms Engineer and Supervisor are used interchangeably in this report.
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2.7. Contract with Geographic LLC on Land Acquisition and Resettlement Services
On June 23, 2010, the GR has engaged Geographic LLC to provide services that includes,
but is not limited to:
Examination of the legal basis of the ownership of the land plots affected by project;
Ensure purchase of private land plots affected by the Project (see above the Future
Railway Land);
Preparation of purchase contracts and registration of the respective land plots in
NAPR under the name of GR;
Ensure proper administration of expropriation procedures in full accordance with the
applicable laws and regulations;
Cooperation with the NAPR for the correction of geometric data of the affected land
plots and proper registration;
Submission of weekly and monthly reports.
Geographic LLC has been fully discharging its obligations under the contract.
EBRD has engaged Georgian Law Office Begiashvili & co. Limited for carrying out due
diligence of the GR. Price of the contract is to be covered by the GR.
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Within its due diligence process, the EBRD has engaged world leading consulting company
Booz & Co to assist the GR in project preparation. The price of the contract was covered by
the GR. The scope of work covered four main tasks:
1. Traffic Forecast;
2. Assessment of benefits and disadvantages from the investment (Project);
3. Prepare a Financial Model of the GR;
4. Asses Restructuring progress and potential for further improvements.
Locum Consulting & Colliers CRE has been contracted by the EBRD to assist the bank in
carrying out due diligence of the GR. The component parts of this study were defined as
follows:
Market research and analysis;
Land valuation;
Financial appraisal, including a flexible model that can test different scenarios and
sensitivity to key variables;
International best practice for similar type of land developments;
Vision and development strategy;
Delivery and Procurement (project brief)
Locum Consulting & Colliers CRE has fully completed the works under the contract.
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During the reporting period, the progress in actual implementation of the Project has been
related mainly to the arrangement of proper legal and financial framework for the activities of
the Construction Contractor, finalization of design works, handing over of construction sites,
assessment/approval of the work plan of the Construction Contractor, land acquisition and
resettlement process, reconstruction/development of Didube and Navtlughi stations.
1st phase Kakheti railroad, including Tbilisi Marshalling Station and Tbilisi
Junction area;
2nd phase Existing Lilo Railway Station to tunnel #3 (included), 129+35 141+35,
and from projected Lilo I Railway Station to projected Kvirike Railway
Station;
3rd phase Tunnel #3 to Zahesi Railway Station (included), on Tunnels #1 and #2,
Avchala Railway Station and on other sites (except Didube station);
4th phase
Didube Passenger Station building ;
The GR handed over the first section of the site to the Construction Contractor on August 5,
2010 under the Handover Protocol-Phase 1. The second section of the site was handed over
on August 30, 2010. Handover of the third section of the site will take place after 6 months
from the date of the conclusion of Construction Contract. The whole process will be
concluded after two years from the date of the conclusion of Construction Contract by
handover of the fourth section of the site.
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To date of this report, all 341 state owned land plots have already been registered in the
National Agency of Public Registry (NAPR) as the property of the GR.As a result of active
support from governmental agencies (Ministry of Economy and Sustainable Development;
Ministry of Environment and Natural Resources; Ministry of Justice) status of 17 state owned
land plots has been changed from agricultural to non-Agricultural. The change was carried
out due to applicable Georgian legislation, which prohibits construction works on the land
plots with agricultural status. The change of the status was made free of charge and as a result
of this assistance, the GR spared approximately GEL 60 000 of additional expenditures. Find
the list of all the state owned land plots in the Appendix A that are already under the
ownership of the GR.
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As for the land plots owned by the Tbilisi Municipality, the latter has already waived its
property rights on the mentioned 17 land plots. Accordingly, the registration of 17 land plots
on the name of the GR is to be completed by November 15, 2010.
As regards the private land plots, the GR has already purchased 66 out of 886 land plots
through Geographic LLC. See the details of the purchase agreements executed by the GR in
the Appendix B.In the course of the coming months (October, November, December), the GR
plans to conduct intense negotiations with the remaining private land plot owners through
Geographic LLC and finalize land purchase agreements with them by the end of 2010.
At this early stage of project implementation, the activities carried out under ESAP relate
mainly to preconstruction phase. These include the issues of staffing; obtaining of relevant
permits; elaboration of water protection; resettlement and compensation process; stakeholder
engagement.
Staffing: The GR has established the Project Implementation Unit (PIU) in order to ensure
timely and effective implementation of the Project. Currently, the PIU is working actively to
establish a management system responsible for environmental, social, health and safety
issues. The system should cover the components of ESAP implementation, training/informing
of the GR personnel, managing of contractors, monitoring and review of performance, and
reporting. In this regard, the GR is considering to procure the above-mentioned services as
part of the PIU assistance.
Permitting and Regulatory Compliance: On September 24, 2009, the GR has applied to the
Ministry of Economic Development of Georgia and provided the main information on the
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Project (including main design solutions, routs of the rail tracks, plans regarding allocation of
the existing railway infrastructure) as well as stated its high importance and complexity. The
main objective of this letter was to request assistance from the Government of Georgia in the
process of obtaining all necessary permits for the construction works of the Project. The
Government responded positively to the request and has been fully supportive throughout the
process. As a part of this assistance, an amendment was introduced the Decree No.57 of the
Government of Georgia on the Rule for the Issuance of Construction Permit and Terms of
Permits (March 24, 2009) on December15, 2009. The goal of the amendment was to
accelerate the process of issuance of construction permit and it provided for issuance of
specific permits without prior submission of property documentation. 5
On April 22, 2010, the Ministry of Environmental Protection and Natural Resources issued a
Report on Ecological Expertise of the Project based on applicable Georgian laws and
regulation. The abovementioned Ecological Expertise was issued considering following
preconditions:
1. According to the strategy described in the ESIA report, Georgian Railway LLC shall
ensure elaboration of additional engineering solutions for the surface (Gldani Great
lake, Upper Samgori magistral channel) and soil waters (Gldani Great lake territory,
Ex-Varketili agricultural territory, soil waters of not deep circulation), on the basis of
which the railway bypass shall be constructed and the abovementioned waters
protected from the possible pollution during the exploitation phase. For the Territories
of Gldani Lake, the water surface indicator shall be taken into account. The protective
measures shall additionally be referred for approval to the National Environmental
agency at the Ministry of Environment Protection and Natural Resources of Georgia.
2. Georgian Railway LLC shall not permit the polluted waters to stream east from the
Tbilisi Sea (to the river Ghrmaghevi).
3. Georgian Railway LLC shall submit the design solutions for the areas between
existing railway line and projected railway line (PK 0+06-PK 36+60) and Gldanula
district (PK 50+69) to the National Environmental agency at the Ministry of
Environment Protection and Natural Resources of Georgia.
4. Georgian Railway LLC shall protect population from the noise and vibration in
accordance to the applicable normative act (SN 2.2.4/2.1.8.000-00 on defining
qualitative norms of environment) and softening measures defined under the ESIA
report (chapter 6.1.8 - softening measures during the exploitation period)
5
The amendment introduced 53.41 to the Decree:
Object of class 5 representing the buildings and complexes of high state and social importance financed by
international financial and other investment companies, according to the decision of the Ministry of Economic
Development may be provided with the construction permit on land plots without submitting documents
evidencing property rights or rights of use of the land plots to the authority entitled to issue construction permit.
In this case, the terms of construction permit shall define the deadline for submission of the abovementioned
documents, which is the precondition for the start of construction works.
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5. In order to maintain the national safety and ecological equilibrium in the country and
minimize the risks of spread the infectious diseases harmful both for human beings
and cattle as a result of anthropological effect on the natural-territorial complexes in
collaboration with the LEPL Agrarian Radiology and Ecology Institute at the
Ministry of Education and Science of Georgia the management of Georgian Railway
LLC shall ensure carrying out of the landscape-epizootological-ecological monitoring
before the start of construction on Railway line and in case of need, take relevant
preventative measures. If the railway line runs through cattle graves the management
of the Georgian Railway LLC shall ensure variation of line direction and undertake
relevant procedures defined by the legislation;
6. Georgian Railway LLC shall ensure elaboration of optimal plans for the waste
management in the frame of the Railway Bypass project construction and refer it for
approval to the Ministry of Environment Protection and Natural Resources. The
abovementioned plans shall consider safe management of waste created during the
railway construction works, exploitation, as well as dismantling of the existing
railway infrastructure;
7. Before the start of the bypass project construction works, the amount and species of
the plants on the affected territory, especially on the crossings of the railway line and
construction sites on the territory of the Tbilisi National park shall be defined. The
populations and species of bats on the territory of the Tbilisi National Park as well as
place and number of the shelters to be arranged for them shall be defined. The amount
of effected soil shall be determined in order to assess the negative effect on the Tbilisi
National Park. Considering all the above mentioned specific compensation events
shall be elaborated and submitted for approval to the LEPL Agency of Protected
Territories.
8. It is necessary to define the species and number of trees for the greening noise
protection line to be created on the territory of the Tbilisi National Park and area of
the greening line; also the compensation events for the impairments to the Tbilisi
National Park shall be defined precisely.
9. In order to protect the territories from oil and oil product pollution, the concrete
culvert and reservoirs of appropriate size shall be installed.
10. Ensure separation of the areas from the wood-agricultural fund, subordination to the
Wood Department (including providing certain categorization to the plants, or
removing them from the fund), and cutting wood in full accordance with the
legislation.
11. Before the start of Tbilisi bypass construction works, in order to maintain
biodiversity, the species of the flora listed in the Red Book and the quantity of the
species to be cut down, as well as species of fauna listed in the red book, the types and
scales of effect on them shall be defined, and on the basis of the research data precise
softening and preventative activities shall be elaborated. In case of need compensation
events shall be defined.
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12. Detail designs of the projected railway lines that will cross 31 gorges and rivers as
well as crossing types and relevant coast protecting works and the activities on
preventing activation of dangerous geological processes defined by the detail design
shall be submitted for approval to the National Environmental Agency at the Ministry
of Environment Protection and Natural Resources. It shall also cover the issue of
pollution of the surface water objects, in terms of possible effect on the biodiversity of
water, and the actions shall include plating mountain channels on the upper side of the
railway line with concrete in order to prevent avalanche.
13. Temporary construction camps shall be constructed in accordance with environmental
requirements. After finishing construction works and liquidation of camps the camp
territories should be brought back to their previous conditions.
14. During the exploitation of the Tbilisi Railway Bypass the stationary objects of air
pollution associated with its functioning (locomotive depot, technical stations of
passenger wagon, etc.) shall be provided with air protection documentation defined by
the legislation.
15. Before the start of construction works on the railway line, the design documentation
on artificial passages to be arranged for domestic and wild animals (considering their
migration paths) should be processed and agreed with the Ministry of Environmental
Protection and Natural Resources.
16. Prior to start of the construction works the management of the Georgian Railway LLC
shall process and submit an environmental protection management plan for additional
consideration to the ministry. The plan shall integrate ground removal, transportation
and keeping plans according to ESIA, plans for prevention of erosion and ground
restoration over the whole construction site and separately for Tbilisi National Park,
different plans for issues regarding flora and fauna. The risks reports (the plan on
how to react on dangerous situations) shall be processed and agreed with the ministry
of Environmental Protection and Natural Resources where, among other questions,
the effects on biodiversity, especially water biodiversity shall be considered, together
with other scenarios considering different incidents and other dangerous situations.
17. On the rivers and gorges, the 1% provision of water cost shall be strictly
maintained on the areas which are crossed by the railway line.
18. The construction work around Tbilisi should be implemented under the
supervision of the representative of the Georgian Water and Power Company.
Georgian Railway LLC and Georgian Water and Power Company shall carry out
constant monitoring on the water quality of Tbilisi reservoir. At the end of each
year the results of the monitoring shall be submitted to the Environmental
Protection Inspection of the Ministry of Environmental Protection and Natural
Resources.
19. The activities needed for the arrangement of the infrastructure necessary for the
operation of the railway line that are governed by the article 4 of the Georgian
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Throughout the reporting period, the GR and the Construction Contractor have been working
actively in order to ensure compliance with all the terms and requirements of the construction
permit in due course.
Water Protection: A significant section of the Tbilisi Bypass Railway line runs round the
Tbilisi Reservoir (Tbilisi Sea) from the north-east.6 According to the ESIA, the Tbilisi Sea
section is the most sensitive section for the Tbilisi Railway Bypass, since this section of the
railway bypass is located within the Tbilisi Sea water catchment area and oil spilled on its
slopes will definitely reach the water reservoir. The most sensitive in this respect is the
Kvirikobiskhvi river, where in case of spill (even in case of maximal water discharge
occurring once in 10 years) the oil will reach the water reservoir in 40 minutes, and the
chemical substances will be diluted in water in 50 minutes. In light of the above-mentioned,
the ESAP protection measures in this regard, are incorporated into requirements for design,
construction, operation and maintenance of the railway bypass.
Against this background, the following initial design solutions have been developed:
The railway line on this section will run through the tunnel (section pk129 pk141, L=1200
m), it will cross the Kvirikobiskhevi, and from there, the major part of the section will be
located in the trench (pk143-pk180). Location of line in the trench will make the movement
of trains invisible from the side of the Tbilisi Sea and thus protect the reservoir from pollution
and noise. In addition, trees will be planted along both sides of the trench. In order to prevent
leakage of oils or other harmful substances spilled on the surface of the Tbilisi Sea, the trench
6
At this section the planned railway bypass passes through the II zone of sanitary protection of the Tbilisi
Water Reservoir the boundaries of which are defined by the Decree of the Minster of Labour, Health and Social
Affairs (Decree No. 297/N dated August 16, 2001 of the Minster of Labour, Health and Social Affairs on
Approval of Standards of Environmental Quality).
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will be equipped with oil collecting concrete culvert. The location of the railway line ensures
that in case of oil spills, the oil will flow through the culvert in the direction of River
Khevdzmara gorge and River Lochini gorge that do not reach the Tbilisi Sea. The reservoirs
collecting oil will be installed on both sides of the trench.
The most sensitive area of the section, that is, Kvirikobiskhevi will be protected by the
special engineering facility. It has been decided to let the flow of the river Kvirikobiskhevi
through a tunnel built under the railway bridge to prevent penetration of accidentally spilled
oil products into the Tbilisi Sea. The carrying capacity of the tunnel as well as the structure of
the railway tunnel has been determined considering the maximal flow (86.0 m3/sec of
Kvirikobiskhevi of 0.333% occurrence (once in 300 years). The same protective facilities will
be used in case of all small rivers flowing into the Tbilisi Sea.
All the above-mentioned measures are subject to further specification during the detail design
phase.
Noise Protection: In certain areas Tbilisi Railway Bypass line runs through the settlement
where the permitted noise level according to the initial calculations may exceed allowable
levels of noise. On the basis of initial data it has been defined that noise level will exceed the
allowable standard in the Avchala and Zahesi sections. The initial design defined the noise
barrier as well as greenery line as the noise absorption facilities for the abovementioned
sections:
Noise barrier- PK12-14 (206m on the right side); PK20-27 (700m on both sides);
PK27-32 (428m on the right side); PK32-36 (43m on the left side); PK48+20 PK51
(175m+33m on both sides).
Greenery line - PK63-PK70; PK63-PK70;PPK79-PK87;PPK91-PK94;PPK96-
PK97;PPK102-PK104;PPK109-PK118;PPK122-PK124;PPK125-PK130;PPK143-
PK189; Pk190-Pk192; Pk193-Pk195; Pk197-Pk203; Pk205-Pk209; Pk213-Pk216;
Pk224-Pk228; Pk234-Pk238; Pk244-Pk247;
Resettlement and compensation: The GR has prepared the RAP ensuring compliance with
Georgian legislation and the requirements of EBRDs Environmental and Social Policy
(Performance Requirement 5). The resettlement and compensation process, which is managed
by the Geographic LLC, is being carried out in full accordance with the RAP. All land
acquisition agreements are being documented in the appropriate form.
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In this regard and as a part of the preparatory process, meetings and consultation were held
with the high-level stakeholders, NGO and scientific communities, relevant state agencies
and municipalities, Georgian patriarchate, companies connected to the railway system via the
rail sidings.
In terms of disclosure of information, the Project received wide media coverage through radio
and television. To ensure broad public outreach about the project, GR installed the hot line
and Comments & Suggestions boxes in concerned Municipalities and the Georgian Railway
Administrative office, prepared a leaflet of the Project for public information that were placed
next to the Comments & Suggestions boxes. GR also prepared a Public Social Advertisement
(PSA) about the Project. In addition, Georgian Railway maintains a hot line through which
stakeholders could raise their concerns. All incoming calls are registered and taped.
As regards the engagement with the affected population, at stage the Environment Impact
Assessment the consultants have had information meetings and consultations with the active
groups of the population. They have been provided with the information about the project
(about the availability of a Project Brochure, Comments & Suggestions Boxes) and the
opportunity to express their views/comments. Since the start of the land acquisition and
resettlement activities, the engagement process with the population is carried out by jointly
by the Geographic LLC and the GR. The specific data on the affected population has been
identified and analyzed and the activities are carried out accordingly. These include, the
meetings and consultations with the affected population, their representatives and the NGOs
protecting their interest. The GR has appointed one of its employees who is responsible for
answering the questions of the affected population, sharing of information about the project
and receiving claims/suggestion concerning the land acquisition and resettlement. The claims
are transferred to the PIU and it hold special meetings to react upon them.
As regards the Geographic LLC (Consultant) proper grievance mechanism has been
established in order to receive claims from the affected persons and provide reasonable
feedback in a timely manner through effective communication channels (hotline, grievance
post box in an affected community and GR office). The grievance mechanism shall be active
through the entire land acquisition and railway construction period. However, the Consultant
will be responsible for the administration of grievance mechanism only for the period of the
contract with the GR, (before December 1, 2010). After that date, the GR will take
responsibility for the overall management and administration of grievances.
The Consultant operates a hotline service for the collection of grievances and complaints
related to the Tbilisi Bypass Railway project issues. The hotline is free of charge for the
callers and operates from 10:00 hrs to 18:00. Hotline operator is hired to log grievances into
custom-made database software, which includes grievance categorization, progress status,
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description of case, contact details of a complainant and proposed action list. Grievances
logged through the hotline will be forwarded to the PIU, that will respond within 5 workdays
after receiving a complaint. The GR is obliged to provide substantiated written reply to the
grievances to the Consultant, within 10 workdays after the receipt. Once the reply is received
from the GR, the Consultant will contact the complainant and provide information about the
solution of the claim. The GR is responsible to close out the grievance and report to the
Consultant about specific action(s) taken to resolve the problem.
The Consultant has also installed grievance post boxes in the project affected community
municipalities in order to enable people to report project-related claims. Grievance boxes are
checked once a week to collect complaints, log them into the grievance database and submit
email notification to the PIU for further action within 5 workdays after receiving a complaint.
The Consultant will also use the project post box installed in the GR office for collection of
complaints and GR shall provide access to the contents of the box to retrieve grievances on
weekly basis. The GR will be responsible to provide substantiated reply to the grievances,
within 10 workdays after the receipt in a written form, to the Consultant. Once the reply is
received from the GR, the Consultant will contact the complainant and provide information
about the solution of the claim. The GR is responsible to close out the grievance and report to
the Consultant about specific action(s) taken to resolve the problem.
Project affected population are being notified about the grievance mechanism through brief
fliers distributed through project-affected municipalities, as well as special posters displayed
at the municipalities and the GR central office. Moreover, an announcement about the Tbilisi
Bypass Railway projects grievance mechanism will be placed in several central newspapers
to inform project-affected persons about the grievance procedures and raise overall awareness
of the public on available recourse mechanism.
All the above-mentioned ensures that there is a meaningful engagement process through
which the GR discloses appropriate information regarding the project, carries out
consultations with the affected population, and there is a procedure for making comments and
complaints.
7
Article 2.1. Law of Georgia on Entrepreneurs.
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consequence, Georgian commercial banks were deprived of the possibility to open a bank
account under the name of the Joint Venture and carry out the respective financial
transactions, since this can only be done with respect to entities incorporated under Georgian
legislation. In order to solve the problem, the GR held intensive consultations with the
Supervisor, NAPR and the Ministry of Finance of Georgia. Based on these discussions, it was
decided to create a Tbilisi Railway Bypass Project LLC. The entity will be responsible solely
for receiving Project related financial amounts on behalf of the Joint Venture.
On September 3, 2010 GR and Capital Property LLC has entered into 49 year lease
agreement envisaging obligations of the Capital Property to develop the abovementioned two
stations. Under the agreement, the Capital Property LLC is to reconstruct and develop two
passenger stations in accordance. Additionally, the Capital Property LCC will develop first
modern grocery markets with good parking ratio on both locations. Construction works
should be finalized within three years after the date of the agreement. The lease payment
under the contract amounts to USD 300 000 (with three year grace period).
Based on the assessment of the landscape and land plots in Didube West (land plot of 15.400
sqm) and Navtlughi East (land plot of 10245), the Capital Property plans to develop
passenger stations on both sites and with retail building only on Navtlughi station (first phase
of the project). After railway tracks are relocated from Didube West in three years, the retail
building will be developed on as a second phase. The cost of the first phase of the project
amounts to USD 6 mln and the costs of the second phase to circa USD 1.5 million.
In terms of financing of the project, the Capital Property LLC plans to fund the first phase of
the project (USD 6 million) with 50% equity and 50% debt. It is estimated that to develop
second phase of the project, additional USD 1.5 2.0 million equity will be needed. On the
equity side for the first phase of the project, two leading Georgian financial institutions, TBC
Bank JSC and IC Group LLC (Insurance Company) have already signed up for USD 770 000
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both, leaving USD 2.23 million to be raised. See below equity investment Schedule:
Equity investment by the TBC Bank JSC and IC Group JSC shall be made according to the
following schedule:
As for the debt, the Capital Property LLC intends to approach IFIs to sign long term loan
agreement for the USD 3 million. The involvement of the EBRD in Tbilisi Bypass Project
and the experience of the Capital Property make it realistic to achieve raising funds from the
above-mentioned banks. Preliminary negotiations with the EBRD have already been
conducted and the Bank has shown strong interest to provide debt to the project. The Capital
Property LLC plans to approach other banks as well. See below the following anticipated
financial terms for the debts:
Fees:
- Arrangement 2% of loan amount
- Non Utilization 1% of not utilized loan amount
- Monitoring $5 000 per annum
Below is the schedule providing detailed information about uses of financial sources acquired
through equity as well as debts for the East/West stations development:
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Uses Sources
Land $0 0% Equity:
Acquisition
Predevelopment $100 000 2% Existing 770,000 13%
Development $4 568 718 76% To be raised $2 230 000 37%
Opex $100 000 2% Total Equity $3 000 000 50%
Working $222 674 4%
Capital
Financing Costs $225 000 4% Total Debt $3 000 000 50%
VAT $783 608 13%
Total Uses $6 000 000 100% Total Sources $6 000 000 100%
Find the detailed financial assumptions of the Capital Property LLC, as well as Development
pro-forma in the Appendix C.
As for the second phase of the project, the terms of the subscription of the new equity will be
determined in 3-4 years, when first phase of the project will be completed with potentially
increased value of the company.
Based on the respective studies, the project shows strong economic viability. This is due to
attractive location of both sites; strong market fundamentals supporting grocery market
development coupled with Tbilisi Municipalitys recently implemented rule prohibiting street
grocery trading; medium-size project with multiple exit strategies; competitive rental rate;
and experienced team. Financial model of the project estimates levered IRR of circa 28% and
NPV of circa USD 2.35 million with discount rate of 18%.
As of the date of this report in the frame of the East/West Stations development project
following progress has been achieved:
On September 3, 2010 Lease agreement has been signed, notarized and registered in
the public registry;
Concept of the development and accordingly concept design drafts have been created
in order to facilitate gross and net area calculation for the financial model;
Development team has been identified and terms have been agreed.
September 2010
detailed information regarding the Existing Railway Land according to the schedule of the
NAPR:
The GR and the EBRD have been working on drafting of the Immovable Mortgage
Agreement. The draft Agreement is to be finalised in the nearest future and upon its
conclusion, the GR shall lay mortgage over the above-listed land plots accordingly.
Future Railway Land consists of 886 private land plots and 358 state owned land plots.
4.2.1. State owned land plots
GR works intensively in order to finalise registration of the state non-private plots under the
name of the GR (see above). The process is to be completed by November 15, 2010.
4.2.2. Private land plots
8
Future Railway Land as defined by the Loan Agreement means the land to be acquired by the GR for the
implementation of the Project.
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In the course of the coming three months (October, November, December), the GR plans to
conduct intense negotiations with the remaining private land plot owners (see above Land
Acquisition and Resettlement) through Geographic LLC and finalize land purchase
agreements with them.
In accordance with Georgian legislation and based on the contract with Geographic LLC, the
GR has set up the following procedure for the acquisition and compensation of private land
plots:
Correction and update of the NAPR data on private land plots affected by the Project;
Valuation of the real estate and income loss;
Preparation and distribution of compensation offers that include the following
documents:
o Compensation offer letter;
o Compensation offer receipt-delivery act;
o Compensation acceptance act;
o Calculation of compensation act;
o Compensation offer refusal act (in case of negative outcome of negotiations).
Note: The landowners will have up to two weeks to make a decision on the acceptance or
refusal of the offer.
Negotiation meetings:
o Real estate acquisition through compensation payment:
After an affected owner/user of land agrees to the amount of compensation, a
specific document will be signed by both parties - the Consultant (Geographic
LLC) and the owner/user, to enable the Consultant to proceed with the land
acquisition. The Consultant has to ensure that the landowner signs a
compensation offer receipt-delivery act and an acceptance form, providing
detailed information on the compensation and affected property;
o Real estate Acquisition through alternative property:
In case the landowner wants to receive an alternative property, instead of
money compensation, the Consultant will have to make an offer of an
alternative property as agreed with the GR. If the Consultant is not able to find
a respective alternative property, it shall submit a letter from a subcontractor
broker or a brokerage company detailing the reasons of failure to find the
property. This written notification shall relieve the Consultant of the
responsibility of offering an alternative property to the interested owner. In
case the replacement property is found and the Consultant has a landowners
approval for the purchase of alternative property, the Consultant is responsible
to carry out the transaction with the approval and on behalf of the GR.
Expropriation of Land through Law on Eminent Domain:
If the affected owner of land does not agree on the compensation as well as the
replacement property offer, then the GR may resort to the applicable legislation of
Georgia for the exercise of the right to expropriation. The Consultant shall obtain a
signed written refusal from the landowner with detailed information about the real
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estate and its owner. The Consultant shall also explain to the landowner consequences
of the refusal and procedures of expropriation. If the landowner refuses to sign the
compensation refusal form then the Consultant shall ensure that this fact is evidenced
by a GR representative on site, provided that the GR will have an available staff
member to visit the Consultants place of negotiation and approve the fact of refusal
in a written form within 5 workdays from Consultants notification;
Preparation of legal documents for property acquisition transaction;
Registration of GRs ownership title in the public registry;
Sending notifications to the owner requesting to free up the property.
Currently intensive works are carried out based on the above procedures and the GR has been
purchasing the private land plots. As regards the instances of expropriation, for the time
being, there are 42 cases identified where the GR has to resort to the procedure of
expropriation. GR uses its best endeavours to secure interests of the private land plot owners
and prevent increase of the cases when compulsory expropriation is unavoidable.
Despite the number of compulsory expropriations all the proceedings regarding the issue are
supposed to be finalised not later than December 2010.
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Shortlisted Companies
Companies Sub-contractors Countries
/partners
MOTT McDONALD BROADWAY MALYAN, UK
COLLIERS INTERNATIONAL,
GRANT THORTON INTERNATIONAL
APUR SYSTRA SPECTRUM BURO HAPPOLD/UK France
On September 28, 2010, RFP packages were sent to the above-mentioned shortlisted
companies.
The assignment is expected to start in the fourth quarter of 2010 and last for eight months.
Maximum Budget available for the assignment is EUR 1.5 million, not including VAT.
The both assignments (Master Plan and Contamination Study) worth of EUR 2.5 million will
be financed through technical assistance grant provided by the NIF.9
9
The Neighbourhood Investment Facility (NIF) is an innovative financial mechanism launched by the European
Union aimed at mobilizing additional funding to cover the investment needs of the Neighbouring region for
infrastructures in sectors such as Transport, Energy, the Environment and Social issues.
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For the three months look ahead presented by the Construction Contractor see the Appendix
D.
The mentioned difficulties are not regarded to cause any substantial delays in Project
implementation. Apart from developments mentioned above and to the best knowledge of the
GR, there are no other actual or expected difficulties identified. Representatives of the GR,
the Supervisor, and the Construction Contractor are holding monthly progress meetings as
well as weekly work meetings with the aim to identify and/or prevent any kind of difficulties
that may arise during the Project implementation.
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As of the date of the reporting, and to the best of the knowledge of the GR, there are no
reasons/conditions that may cause changes in the Project Completion Date.
7. Key Personnel Changes in the Staff of the PIU, the Consultants or the
Contractors
On the bases of the Order of the Director General of the GR # 598/1 of June 3, 2010, the
Project Implementation Unit was established with the following composition:
1. Dimitri Kemoklidze Head of Strategic Projects and Development;
2. Nodar Balavadze Adviser to the Director General;
3. Zaza Jiqia Deputy Head of Infrastructure;
4. Temur Kopadze Deputy Head of Infrastructure;
5. Guram Modebadze Traffic Safety General Inspector;
6. Megi Mumladze Head of the Property Management Agency;
7. Giorgi Zazashvili Head of Construction and Repair Works Coordinating
Department;
8. Akaki Saghirashvili Head of the Legal Service;
9. Kakha Gudiashvili Head of the Dispatching Control Department;
10. Mamuka Talakhadze Head of the Economic Department.
On the basis of the Order of the Director General of the Georgian Railway LLC # 598/1 of
August 3, 2010, several changes were made in the composition of the PIU. Considering that
the Property Management Agency, as well the Strategic Development Department has been
abolished following members were removed from the PIU:
1. Head of the Property Management Agency Megi Mumladze
2. Head of the Strategic Projects and Development Dimitri Kemoklidze
3. General Inspector of the Traffic Safety Guram Modebadze
Following employees of the GR became the members of the PIU:
1. Head of Operations Management Alexandre Abashidze;
2. Head of Business Analytics George Tsimakuridze;
Considering that Operations Management Department became the assignor of the Strategic
Projects and Development Department, Head of the Operations Management Department
became the Chairman of the PIU.
With the aim to enhance efficiency of the PIU recently following changes have been made to
the composition of the PIU:
- Following members have been removed from the PIU:
Kakha Gudiashvili Head of the Dispatching Control Department,
Nodar Balavadze Advisor to the Director General.
- Following members have become members of the PIU:
Deputy Director of Passenger SBU Gia Labadze,
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The total price for the acquisition of private land plots amounts to GEL 27 million as
evaluated by LEPL Levan Samkharauli National Forensic Bureau. As mentioned above, there
have been identified 42 cases where the GR needs to use the right on compulsory
expropriation. After going through all necessary steps for expropriation required by law, the
GR is immediately granted with the ownership title over the property in question. However,
under of the Article 21.3 of the Constitution of Georgia, the former owners of the property
have a right to apply to the Civil Court demanding higher compensation than they have
received. If the court decides to satisfy their claims, the total costs of land acquisition may
increase, as the GR shall have to pay higher compensation price. It is up to the courts to
determine the exact amount of increased compensation and currently the GR is not in a
position to specify the potential increase. However, taking into consideration the genuine
evaluation process and expected low number of expropriation cases, the GR expects the
above-mentioned possible increase not to have any significant affect on original Project cost
estimates.
As mentioned above, KievGiproTrans has fully provided the GR with services under the
contract but with serious delays. On July 28, 2009 the parties introduced an amendment to the
contract, which envisaged the obligation on the part of the KievGiproTrans to submit the
Resettlement Action Plan (RAP) to the GR no later than October 20,
2009.KievGiprotransfailed to fulfil this obligation by the deadline and provided RAP on
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April 29, 2010 only. As a result, the company has to pay a penalty in the amount of 0.1% of
the estimated total price of the contract for every day of delay in fulfilling the obligation
pursuant to Article 9.1 of the contract. The contract price was based on the special formula,
according to which the final price amounted EUR 2 658 859 (net). The GR has already paid
EUR1 440 000 (net) Euros thus the remaining price to be paid before the imposition of
penalties was EUR 1218859. Pursuant to Article 9.1 of the contract, the GR has calculated
the penalty (0,1 % for every day of delay) to be EUR 743 850. As a result the final amount
that has to be paid, including the penalty deductions, is EURO 475 009 (net). The GR is
ready to execute the Letter of Acceptance (which serves as the bases for payment) for the
services duly fulfilled by KievGiproTrans, provided that this document covers the obligation
regarding payment of the abovementioned penalty. However, due to misunderstandings
between the parties Letter of Acceptance has not been executed yet.
The GR is in full compliance with all covenants under the Loan Agreement. Accordingly GR
has complied with the following obligations:
GR has provided the EBRD with audited Financial Statement of the GR for the
Financial Year 2009 prepared in compliance with IFRS;
GR has provided the EBRD with the Resettlement Action Plan (RAP);
GR has opened Escrow Account in the Georgian commercial bank HSBC Bank
Georgia, in order to deposit part of the Euro Bond Proceeds (EUR 80 000 000) that is
supposed to cover project implementation expenditures. The Escrow Account has
been opened in full compliance with the requirements of the EBRD Consent to the
Issue of a Eurobond, dated June 18, 2010;
GR has provided EBRD with the Direct Agreement with the Ministry of Economic
Development and LEPL Enterprise Management Agency, and Direct Agreement with
the Municipality of Tbilisi;
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GR has established Project Implementation Unit (PIU) which is composed of the key
employees of the GR;
GR has already provided EBRD with the Certificate of Incumbency and Authority in
accordance with the form provided in the Exhibit B of the Loan Agreement;
GR has made relevant arrangement for appointment of the Service of Process Agent
for the purposes of the Loan Agreement and shall provide EBRD with acceptance of
such appointment by the agent in the nearest future.
GR is finalizing elaboration of the unaudited semi-annual IFRS consolidated
Financial Statement as well as financial performance report separately for each SBU
and shall furnish the documents to EBRD, together with a management discussion
and analysis of results for such six months period, statement of all transactions
between the GR and each of its Affiliates and the Shareholder for such six months and
a statement on the compliance with all financial covenants and ratios in the nearest
future.
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13. Appendices
Appendix A: Land Plots Under the Ownership of GR (Former State Owned Land Plots)
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Owners name & ID Type of property area Contract price Date of contract
ID - 01021011802
ID - 31001047868
ID - 1027007411
ID - 12001063097
ID - 101904188
ID - 1017002453
ID 1011013725
ID - 1017003095
ID - 1008010716
ID - 1024017362
ID - 1030007271
ID - 1026000394
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Tbilisi Railway Bypass Project Progress Report
September 2010
Development Pro-forma
Land 25,645
Pre Development Costs 100,000
Total Property Costs 7,400 14 100,000
Opex 100,000
Working capital 222,674
Financing Expenses 225.000
Total Operational Expenses 58 547,674
VAT 783,608
Total Budget $6.000.000
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Tbilisi Railway Bypass Project Progress Report
September 2010
Existing line
16 Start construction for the portal of 2010.11.1
tunnel 1#
17 Start construction for partial 2010.11.1
culverts on section PK0-PK100
18 Second line Start erection for concrete mixing 2010.11.15
Construction plan station
19 Start erection for laboratory 2010.11.15
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Tbilisi Railway Bypass Project Progress Report
September 2010
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Tbilisi Railway Bypass Project Progress Report
September 2010
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Tbilisi Railway Bypass Project Progress Report
September 2010
Note: Design and Construction contract price is 303mln CHF, which is equivalent to 211mln Euros according to the exchange rate at the date of
receiving financial proposals.
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Tbilisi Railway Bypass Project Progress Report
September 2010
VAT (18%)
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Tbilisi Railway Bypass Project Progress Report
September 2010
1 Works contract
CHF CHF CHF CHF CHF
4Q2010 86,274,002.50 81,433,375.00 - 4,840,627.50 -
CHF CHF CHF CHF CHF
1Q2011 20,999,901.27 17,359,916.50 - 3,639,984.77 -
CHF CHF CHF CHF CHF
2Q2011 20,999,901.27 17,359,916.50 - 3,639,984.77 -
CHF CHF CHF CHF CHF
3Q2011 41,120,551.80 25,848,377.00 - 15,272,174.80 -
CHF CHF CHF CHF CHF
4Q2011 41,337,387.72 25,848,377.00 - 15,489,010.72 -
CHF CHF CHF CHF CHF
1Q2012 36,348,701.56 21,931,363.00 - 14,417,338.56 -
CHF CHF CHF CHF CHF
2Q2012 36,348,701.56 21,931,363.00 - 14,417,338.56 -
CHF CHF CHF CHF CHF
3Q2012 22,804,249.76 9,790,291.76 - 13,013,958.00 -
CHF CHF CHF
4Q2012 CHF 22,804,249.76 (4,413,725.76) CHF - 27,217,975.52 -
CHF CHF CHF
1Q2013 CHF 5,409,797.60 4,362,740.00 CHF - 1,047,057.60 -
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Tbilisi Railway Bypass Project Progress Report
September 2010
2 Supervision
4Q2010 920,841 827,722 93,119
1Q2011 300,049 206,931 93,119
2Q2011 610,445 517,326 93,119
3Q2011 610,445 517,326 93,119
4Q2011 610,445 517,326 93,119
1Q2012 610,445 375,751 141,575 93,119
2Q2012 610,445 517,326 93,119
3Q2012 610,445 517,326 93,119
4Q2012 610,445 517,326 93,119
1Q2013 610,445 517,326 93,119
2Q2013 610,445 517,326 93,119
1Q2015 610,445 517,326 93,119
Resettlement
Services
3 Contract
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Tbilisi Railway Bypass Project Progress Report
September 2010
GEL GEL
4Q2010 132 173.3 132 173.3
Resettlement
4 Costs
GEL GEL
4Q2010 25 832 125. 23 25 832 125. 23
MasterPlan
Preparation
5 Costs
EUR 1500000 1500000 Euro
Land
Contamination
6 Study Cost
EUR 1000000 1000000 Euro
Remarks: MasterPlan Preparation and Land Contamination Study payments are in accordance with the Request for Proposal documents
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