Should the government continue building the Tbilisi Bypass Project?
The Tbilisi Bypass, launched in 2010, is one of the largest and most expensive infrastructure projects initiated by the UNM government in recent years. In September 2013, after spending USD 213 million – 65% of the project budget – Georgian Railway (GRAIL) published a statement containing a number of negative statements about the Bypass project. They denied allegations by the UNM opposition that the Bypass project is being suspended, GRAIL say they are conducting further research and a final decision will be taken by the government. Both sides present a number of reasonable arguments, which we have detailed below.
Ultimately, millions of tonnes of oil and other hydrocarbons are transported past Tbilisi residents’ homes and schools on a daily basis, TI Georgia believes that to guarantee their safety a solution should be found to finish this Bypass.
Arguments for finishing the Bypass
Reasons given for not finishing the Bypass
Millions of tons of oil are currently transported through the city center past homes and playgrounds
Outgoing President Mikheil Saakashvili and Tbilisi Mayor Gigi Ugulava accuse the Georgian Dream government of stopping the ongoing construction of the Tbilisi Railway Bypass, a USD 300 million project initiated by the previous UNM government, at a stage when the tunnels and bridges for the new railway are already finished. UNM politicians claim that halting the project will hurt the Georgian economy. Prime Minister Bidzina Ivanishvili has called the project “useless.” The state-owned Georgian Railways (GRAIL) denies that the project has been stopped, saying that it is under consideration.
What is not disputed is that the current route is a major environmental and health risk to city centre residents – the explosion of an oil cargo train in a populated area in Canada killed 47 people and destroyed a whole neighbourhood in July 2013. Meanwhile, oil cargo volumes transported by GRAIL are increasing; each year thousands of tonnes of crude and refined oil derivatives are transported directly past homes, apartment blocks and schools through the densely populated city centre of Tbilisi. This is the main route for freight on the east-west transport corridor through Georgia from Azerbaijan, Kazakhstan and Turkmenistan to the ports of the Black Sea.
In a recent interview Giorgi Zazashvili, who has headed the Bypass project at GRAIL since 2009, told TI Georgia: “Unfortunately, no economic and performance feasibility study was performed in the initial stages of the design when the route was selected.”
GRAIL, under the new management of Mamuka Bakhtadze since March 2013, asked the Austrian firm Mobility Consultants to conduct a “Comparative Calculation Study for the existing and the bypass line Tbilisi,” (“Comparability Study”), which they provided to GRAIL in June. The current design of the Bypass Project has two fundamental flaws, says Giorgi Zazashvili: first it will incur “huge” expenses in operating a line nearly twice as long – 62 kilometers, instead of the current 32 km route through Tbilisi – which is taking heavy freight over a mountainous route. The consultants predict an increase in operational expenses from USD 126 million to USD 198 million over the period of 11 years (USD 6.5 million of additional costs per year); second, but most importantly, the new Bypass route will cause a “24 per cent reduction in capacity”, Zazashvili says.
The problem for the new management of GRAIL is that the project is now at an advanced stage: “it is 64% complete, not 80% as the President says, and USD 213 million out of USD 300 million have already been spent on the Bypass,” says Zazashvili, “stopping the project at this late a stage would not make sense.” But these are problems that “we are currently deciding how to remedy,” he added, “if you construct a new project, it must be an improvement on your current capabilities. But to spend this much money and find that it actually reduces your capabilities, that does not make sense.”
Reduction in Capacity
The centre of Tbilisi where the current route passes is relatively flat; the new route is set at such an incline that it requires an additional engine to be fitted to the train in order to pull uphill, and slow downhill acceleration, according to representatives of Georgian Railways. It takes additional time to fit and remove the engines, leading to an overall reduction in capacity and increase in energy use compared to the current route. At the design stage this route could have been planned to level off these steep inclines and declines, says a senior employee at GRAIL who declined to be named, however, this would have cost more money to construct. But large scale earth moving now, at this late a stage, will also be expensive, he says; this is the major design flaw that GRAIL struggling with.
Akaki Jokhadze, Head of Transport at Tbilisi City Hall, says that operational expenses go up every year, regardless, and that this is also result of inflation. USD 6.5 million per year additional operating expenses does not seem an excessively large sum for a company with GRAIL’s annual profit (the company paid a dividend of GEL 150.7 million in 2012), and this diversion will have to happen at some point in the future.
Safety of Residents
Many cities that have oil cargo routes running through their centre have or are in the process of constructing Bypass routes to protect
city residents. “This is commonly accepted practice,” highlighted the Railway Bypass project manager at the European Bank for Reconstruction
and Development (EBRD). The EBRD are financing a number of these bypass projects and were originally going to fund 30% of the Tbilisi Bypass Project, until GRAIL announced that it would fund the project itself in November 2011.
Reduction of Pollution and Congestion for City Centre Residents
Mobility Consultants’ June 2013 Comparability Study highlights that, “the major benefit of the new system may lie in safety and environmental issues (noise).”
Jokhadze says the current railway route cuts the city in two, causing huge traffic congestion problems, with more than 3,000 cars and trucks funneling past the tracks at certain points during rush hour each day to reach the other side of the city. He showed TI Georgia the City Hall’s plans to construct a new road and motorway exits to prolong the Kakheti highway, as well as three additional metro stops. “Car usage in Tbilisi is going to increase from 25% of current car users to 35- 40%, imagine what will happen? We urgently need transport solutions that will take cars away from these bottlenecks and give passengers the option of using public transport,” Jokhadze says.
“Implementing these plans will save 2 million litres of fuel every year,” he added, “ask city centre residents how much better their quality of life will be then compared to now? Traffic congestion is killing the city centre and the old town.”
Visualisation of New Downtown Tbilisi, which will replace 70 hectares of GRAIL infrastructure between Didube and Navtlugi
Developing the City Center
Visualisation of New Downtown Tbilisi, which will replace 70 hectares of GRAIL infrastructure between Didube and Navtlugi, which will be dismantled
At the time the Tbilisi Bypass project was launched, President Saakashvili said that diverting the track and relocating the Central Railway Station would free up city centre real estate. Privatising this real estate would stimulate the economy and rejuvenate the city centre, he said.
But, GRAIL say that no analysis was done on the value of that property before embarking on the project, though the law at that time required such a study to be conducted. In May 2013, GRAIL instructed Ernst and Young, an international consulting company, to value the land. The area to be privatised spans approximately 74 hectares and the estimated market value, according to Ernst and Young, is only USD 30 million. “Twelve times less than the cost of building the Bypass, not taking into account the additional operating costs and the loss of revenue from reduced cargo capacity,” says Zazashvili. “GRAIL wants to have a positive balance sheet, our objective is transport and logistics, as a company we have no interest in real estate development, we are obliged to our shareholders, [the government of Georgia via the Partnership Fund], to create value [for GRAIL].”
Tbilisi Mayor's Office Akaki Jokhadze disputes these calculations and says the land released will be 150 hectares, as it borders on private land plots which will also be free to develop with the GRAIL infrastructure and tracks removed. Moreover, he argues that the total market value is significantly higher than the valuation by GRAIL, which “does not take in account the infrastructure such as roads and metro stations that we, the Tbilisi Mayor's Office, obligated ourselves to build.”
Jokhadze says the Tbilisi Mayor's Office will organise a big conference for all stakeholders and experts in the next few weeks to try and find a way through. He urges all parties to “sit down coolly and talk,” that with two-thirds of the money spent and the bypass two-thirds complete, “we should be looking for ways to solve these issues and finish the project, not looking for problems as a reason to stop construction.”
Impact of the Bypass Construction on Locals
During the first phases of the Bypass constructions, there were a number of problems, including cases of citizens and businesses who were forced to give up land but not properly compensated for their loss – TI Georgia at the time represented a number of these victims, who eventually received a fair compensation.
In September 2013, TI Georgia interviewed residents in Tsotne Dadiani street, Avchala 2 Settlement. Tunnel 1 of the Bypass was constructed under their village. The road to the village was destroyed when the construction was initiated two and half years ago, it has not been replaced and now no buses go to the village. Many of the houses in in the village have cracks appearing in the walls.
Village representative, Lela Ghambashidze, says that only after the tunnel was constructed, cracks appeared in the walls and foundations of many homes in the settlement.
According to tender documents, the contractor, Chinese state-owned China Railway 23rd Bureau Group Co. Ltd., must have insurance to cover any damage caused by building the Bypass, but representatives of China Railway told Ghambashidze they would not pay for a new road to the village or pay compensation for the damage caused to their homes. Ghambashidze says that representatives she has contacted at Georgian Railway ignore them.
In view of the above, TI Georgia believes that those responsible for deciding the fate of the Bypass should take two important factors into consideration: that finishing this project clearly serves the public interest by reducing pollution, congestion and fire hazard risks for Tbilisi residents, and the considerable state resources that have already been spent in bringing the project to this stage. While a thorough feasibility study should have been conducted, and made public, prior to initiating this project, this should not affect the outcome of this decision, which should be judged solely on the current situation, not a previous lack of preparation. Nor should the decision be influenced by politics, but based squarely on public interest; stopping this project was only discussed after the parliamentary elections and the appointment of a new head of GRAIL. Furthermore, TI Georgia urges GRAIL and China Railways to provide residents affected by the project with a replacement road, and fairly compensate all affected residents for the damage caused to their properties by the construction of the Bypass.
The existing railway route through the centre of Tbilisi