Georgia Compact

Building Energy Security Through Sustainable Investments in Georgia

Prior to MCC's compact with Georgia, the nation's north-south natural gas pipeline was poorly maintained and in danger of catastrophic failure.MCC's $36 million investment

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A Georgian Journey: Newly Paved Road Opens Doors for Rural Business

The $203 million compact initiative improves a major transport network

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In September 2005, the Millennium Challenge Corporation signed a five-year, $295.3 million compact with the Government of Georgia to improve the two main barriers to economic growth: a lack of reliable infrastructure and the slow development of businesses, particularly agribusiness. The compact projects focus on rehabilitating regional infrastructure and enterprise development to improve the lives of the poor by helping them integrate economically through improved access to jobs and markets, by providing more reliable access to basic services, and by providing capital and technical assistance for enterprise development. The compact in Georgia entered into force (EIF) in April 2006, formally initiating the five-year timeline for project implementation. The compact closed out in April 2011.

In November 2008, MCC and the Government of Georgia signed a compact amendment providing up to $100 million in additional funds available to complete works in the Roads, Regional Infrastructure Development, and Energy Rehabilitation Activities under the original compact.

For the most up-to-date information on implementation progress, please read the Quarterly Status Report.

  • Signed:
    September 12, 2005
  • Entry into Force:
    April 7, 2006
  • Completed:
    April 7, 2011

Financial data as of June 30, 2011.

This project aims to increase profitable investments in small and medium enterprises (SMEs) and improve the economic performance of agribusinesses. This project consists of the following activities:

  • Investment Fund Activity, created a professionally and independently managed investment fund, the Georgia Regional Development Fund, to provide long-term risk capital and technical assistance to agribusiness and tourism SMEs, primarily in the regions outside of Tbilisi, and
  • Agribusiness Development Activity, provides technical assistance and grants to farmers and agribusinesses in critical value chains that supply agricultural products to the domestic market or have export capacity.

This project aims to rehabilitate key regional infrastructure by improving transportation for regional trade, increasing reliability of energy supply, and improving municipal services in the regions. This project consists of the following activities:

  • Samtskhe-Javakheti Road Rehabilitation Activity, to rehabilitate and construct over 220 kilometers of main road traversing the Samtskhe-Javakheti region in southwest Georgia, which will improve access to markets to support economic growth. The Compact amendment has allowed for the full rehabilitiation and construction of the road as originally planned in the Compact, which will fully connect this region to Armenia, Turkey, and central Georgia.
  • Energy Rehabilitation Activity, to repair the north-south gas pipeline, the sole transmission line transporting gas to Georgia. In Georgia, natural gas fuels electric power generation and supplies power directly to households and businesses. As a result of the compact amendment, the Government of Georgia will undertake studies required to prepare for the construction of an underground gas storage facility to provide further energy security for Georgia. These studies consist of a full economic, geological and environmental study, technical design and public/private financing plan for the proposed gas storage facility and associated infrastructure.
  • Regional Infrastructure Development Activity, to fund the rehabilitation of municipal infrastructure for water supply and waste-water in five cities in Georgia. As a result of the compact amendment, projects in Borjomi, Kutaisi and Kobuleti have received additional funding to expand water services.

MCG (MCA-Georgia) Closeout: Energy Infrastructure Rehabilitation

The Energy Rehabilitation Activity, as part of the Regional Infrastructure Rehabilitation Project in MCC’s Georgia Compact, repaired the north-south gas pipeline, which is the sole transmission line transporting gas to Georgia.

  • May 6, 2004

    Georgia first named eligible for Millennium Challenge Account assistance

    The Board of Directors selects Georgia as one of 16 countries eligible for MCC funding in 2005. The Board considered both past and current policy performance of candidate countries in the areas of democratic governance, economic freedom, and investing in the health and education of their people, as well as trends that indicated policy improvements or slippage.
  • June 8, 2004

    Consultations in the regions of Georgia regarding

    MCG presents Georgia's proposal for Millennium Challenge Account funding to multiple groups of stakeholders in Q&A and experience-sharing sessions.
  • September 12, 2005

    MCC and Republic of Georgia sign $295.3 million poverty reduction grant

    By focusing on rehabilitating regional infrastructure and promoting private sector development, the program will directly benefit approximately half a million Georgians.
  • February 8, 2006

    MCG contracts for feasibility study and design of MCG's Road Rehabilitation Activity

    Millennium Challenge Georgia Fund (MCG) signs a contract with Kocks Consult GmbH to prepare a feasibility study, environmental impact assessment and final design for the rehabilitation of 220 km of roads in the Samtskhe-Javakheti region. The Samtskhe-Javakheti Road Rehabilitation Activity seeks to restore the transport network in southern Georgia and a border crossing between Georgia and Armenia, and to build a new border crossing between Georgia and Turkey.
  • March 23, 2006

    MCG launches the Regional Infrastructure Development Activity

    The Municipal Development of Fund of Georgia signs a Collaboration Agreement with MCG to be the Project Implementing Unit for MCG's Regional Infrastructure Development Activity. The project seeks to improve delivery of municipal and regional services outside the capital, Tbilisi, providing the population with safer, more reliable drinking water supplies and improved city sewerage systems through infrastructure repairs in five cities and towns. MCG's monies are leveraged with funds from SIDA, EBRD, the World Bank and the EU.
  • April 7, 2006

    MCC Georgia Compact enters into force

    Entry into force of the Georgia Compact signals the beginning of the implementation phase and five-year program term. The initial stages of the compact focus on the competitive hiring of staff and the preparation of the procurements required for compact activities.
  • April 28, 2006

    MCC Georgia Compact initial disbursement

    The first disbursement, for $3.6 million in compact funds, is authorized.
  • August 8, 2006

    MCG launches the Agribusiness Development Activity

    MCG launches the Agribusiness Development Activity, which seeks to improve the economic performance of agribusinesses. Over time, the activity provides technical assistance and awards $15.8 million in co-financing to farmers in rural Georgia for primary production, value-adding agricultural production and Farm Service Centers.
  • November 6, 2006

    MCG launches Energy Rehabilitation Activity

    MCG officially launches the Energy Infrastructure Rehabilitation Activity with U.S. Ambassador John F. Tefft and Minister of Energy Nika Gilauri as participants. MCG
  • January 29, 2007

    MCG launches GRDF

    MCG launches the Georgia Regional Development Fund (GRDF). The $32 million project includes the investment fund (with a capitalization of $30 million), and technical assistance grants ($2 million), which prioritize agribusiness and tourism sectors outside of the capital. GRDF focuses on long-term growth-oriented investments in small and medium sized enterprises.
  • September 20, 2007

    The first phase of gas main rehabilitation is completed

    Phase one of the energy infrastructure rehabilitation project is complete. With compact financing, technical assistance from British Petroleum, and project oversight from stakeholder Georgian Oil and Gas Company, the project was able to make quick progress in repairing the six most hazardous sites of the gas main, as identified in the BP- and European Bank for Reconstruction and Development (EBRD)-funded condition assessment.
  • November 27, 2007

    Agribusiness Development Activity opens first Farm Service Center

    The first Farm Service Center (FSC) opens in Terjola, in the Imereti region of Georgia. The center provides approximately 3,000 local farmers with a full range of agricultural goods and services, including crop and veterinary inputs, machinery services, tools and small equipment, training and extension services, trade credit, and market information. This FSC created seven new jobs to staff the Terjola Center. There are a total of 33 compact-funded FSCs throughout the country.
  • May 19, 2008

    MCG signs contracts to kick off road rehabilitation work in Samtskhe-Javakheti

    The Millennium Challenge Georgia Fund signs a $65 million construction contract for rehabilitation of the road linking the rural Samtskhe-Javakheti region to markets in Tbilisi.
  • June 6, 2008

    MCG sends Georgian farmers to Israel for training

    Georgian farmers attend a seminar hosted by MCG and Mashav Center for International Cooperation of the Ministry of Foreign Affairs of Israel. The week-long seminar educates Georgian livestock farmers in dairy sector-related management, including new technologies in milking and processing industries, artificial insemination of cows, veterinary issues and other related topics.
  • August 7, 2008

    The five-day Russia-Georgia conflict begins

    Conflict erupts in South Ossetia, the central northern region of Georgia. Tens of thousands of people flee their homes, and the conflict leaves Russian forces occupying the breakaway Georgian regions of South Ossetia and Abkhazia.
  • September 23, 2008

    The second phase of gas main rehabilitation begins

    MCG launches the second phase of gas main rehabilitation works by signing an agreement with joint venture New-Energy-Tbilisi-Sakhydro. This is the first time a Georgian company executes such large-scale rehabilitation works on one of Georgia's key gas main pipelines.
  • November 18, 2008

    Compact Amendment Signing

    MCC's Board of Directors approves $100 million in additional development assistance to the $295.3 million compact between MCC and Georgia. The additional funding will support enhancements to compact activities, including rehabilitation of roads linking Georgia with Armenia and Turkey, water supply and wastewater projects outside Tbilisi, and priority energy sector studies.
  • March 25, 2009

    MCG finances replacement of the water distribution system in the auto factory district of Kutaisi

    As a result of the additional $100 million available under the compact amendment, projects in Borjomi, Kutaisi and Kobuleti receive additional funding to expand water services and increase access to clean water.
  • July 14, 2009

    MCG awards contracts to four companies for its North-South Gas Main Pipeline Phase III Rehabilitation Works

    MCG signs four contracts for Phase III rehabilitation works on the North-South Gas Pipeline. Phase three marks the final stage of MCG-funded repair works. The project implementing company, Georgian Oil and Gas Corp., plans, designs, manages and supervises repairs for 22 sections in total, with most of Phase III repairs concentrated in the high mountainous district of Kazbegi.
  • August 31, 2009

    Opening of "Prime Concrete" factory in Poti

    GRDF invests $2 million in a concrete factory near the port city of Poti. The factory produces a variety of concrete mixtures including a sulfate-resistant concrete, a fairly new technology to Georgia which performs better in coastal conditions. The factory is well-poised to meet the demands of Georgia's burgeoning infrastructure development and growth at Poti's Free Economic Trade Zone.
  • September 3, 2009

    Agribusiness Development Activity opens first ISO certified enterprise

    The Agribusiness Development Activity funds the construction (by Georgian Business Zone LLC) of a modern dairy plant equipped with an automated production line in the Samtskhe-Javakheti region of Georgia. The enterprise received certification from the International Standards Organization (IS0) several months later.
  • October 1, 2009

    Construction companies lay first asphalt on the Samtskhe Javakheti Road

    Azerinsaatservis Construction Company lays the first layer of asphalt for the new Sulda-Kartsakhi-Turkish border crossing on the Samstkhe-Javakheti Road Rehabilitation Project.
  • December 2, 2009

    Re-opening of upgraded "Ecopex" hazelnut factory

    GRDF invests $2 million to upgrade a hazelnut processing plant in the village of Misaktsieli, near the city of Mtskheta. The company used this investment to purchase a hazelnut plantation, renovate the facility, add storage and drying facilities, make additional factory upgrades, and purchase raw materials. Thanks to the upgrades, Ecopex now exports processed hazelnuts to the EU.
  • December 31, 2009

    Funding to improve road sustainability increases

    The Government of Georgia increases its road maintenance budget, as required by the MCC Compact, by 40% between 2006 and 2010. The increased availability of maintenance funds will help ensure the sustainability of the compact-funded Samtskhe-Javakheti road repairs.
  • May 1, 2010

    Bakuriani water treatment plant repairs begin

    Works commence for construction of water treatemt plant in mountain resort town of Bakuriani. The treatment plant is designed to effectively operate in the cold climate of Bakuriani. The project is designed to alleviate water shortages and improve water quality for town residents and tourists.
  • June 16, 2010

    Opening of hotel "Tetnuldi" in Svaneti

    GRDF funds construction of the Tetnuldi hotel in Svaneti. Svaneti is a remote mountainous region of Georgia, home to a UN World Heritage site, picturesque mountains and medieval stone towers. The Georgian Government has been rehabilitating infrastructure to make it easier for local and international tourists to visit the region.
  • June 30, 2010

    Rehabilitation of Borjomi water supply reservoirs begins

    Five reservoirs are constructed/rehabilitated using compact funds; the work will enable the water supply company to manage water supply and control flow in Borjomi. For the last 20 years, Borjomi residents received drinking water directly from its sources, without storage or proper management.
  • September 23, 2010

    MCG re-opens canning factory two years after Gori bombings

    MCG finances procurement of new equipment at juice plant Geoconcentrate LLC in Gori (Shida Kartli), the city which was the epicentre of bombings during the Russia-Georgia War in 2008. Two years later, 45 locals work in the plant and about 300 farmers earn their living selling fruits and vegetables for processing there. Geoconcentrate invested $225,000 and ADA invested $150,000 to purchase an automatic packaging system and capping and labeling system to reduce production costs.
  • October 22, 2010

    MCC CEO Daniel W. Yohannes visits Georgia

    MCC Chief Executive Officer Daniel W. Yohannes visits Georgia to review progress on Georgia's $395.3 million compact. Mr. Yohannes, President Saakashvili and Prime Minister Gilauri travel the Samtskhe-Javakheti Road and visit developing enterprises that received co-financing from MCG's Agribusiness Development Activity.
  • November 13, 2010

    President of Georgia, Mikheil Saakashvili, opens Samtskhe-Javakheti Road

    President of Georgia Mikheil Saakashvili, First Lady Sandra Roelofs and U.S. Ambassador to Georgia John Bass inaugurate the newly repaired 220-kilometer road.
  • November 27, 2010

    Agribusiness Development Activity hosts agriculture expo

    MCG hosts an Agricultural Exposition of ADA grantee farmer products. Since 2007, a total of 280 projects have been co-financed with $15.7 million in compact funding, and an equivalent amount invested from private funds. As a result of ADA Activity implementation, grant recipients report 2,867 new jobs have been created as of December 2010, primarily in rural areas.
  • December 28, 2010

    City of Kobuleti's water supply becomes available 18 hours a day

    Water supply rehabilitation works are completed in the coastal town of Kobuleti. The activity funded construction of a new reservoir at an elevation to improve water delivery, rehabilitation of the headworks, installation of supply management software, and rehabilitation of the majority of the town's water supply and sewage networks. As a result of project implementation,the population of Kobuleti has access to a clean and safe water supply 18 hours of every day in winter.
  • March 14, 2011

    MCG and Georgia's Department of Statistics celebrate three years of partnership

    MCG’s three-year implementing entity agreement with Georgia Department of Statistics (now GeoStat) draws to a close. U.S. Ambassador John Bass attended the event showcasing the results of this partnership, including the Village Infrastructure Census. With MCG funding and technical assistance, GeoStat has built capacity in collecting, maintaining, and analyzing data. These efforts not only increase confidence in GeoStat's data collection for their own purposes, but also for other stakeholders.MCG will be using GeoStat’s household surveys in longer-term impact evaluations of the compact's road and agribusiness programs.
  • March 29, 2011

    The five-year, $395 million Georgia Compact officially concludes with celebratory closeout events in

    MCC Board member Alan Patricof and Vice President for Compact Operations Patrick Fine travel to Tbilisi to celebrate the successes of the first Georgia Compact with Georgian government leaders, civil society representatives, business leaders, and program beneficiaries.