Financing Strategy for Urban Water Supply and Sanitation Sector in Georgia

1. Financing Strategy for Urban Water Supply and Sanitation Sector in Georgia Merab Kandelaki Director“GeorgiaWaterChannel” ltd. Bucharest, 14-16 may 2008

3. 100.00% 80.00% Average 60.00% Tbilisi Big cities 40.00% Small cities 20.00% 0.00% 1998 1999 2000 2001 2002 Water Supply Coverage (%)

4. 100.00% 80.00% Average 60.00% Tbilisi Big cities 40.00% Small cities 20.00% 0.00% 1998 1999 2000 2001 2002 Sanitation ServiceCoverage (%)

7. Financing Gap under the Baseline Scenario

8. 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.

9. 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 417.5 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 2.7-3 percent of the state expenditure budget

10. Инвестиционные проекты в ВКХ Грузии, финансируемые в рамках займов МФО по состоянию 2007 года