Georgia Compact

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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—with other investments by Georgia—has secured and diversified the gas supply.

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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—220 km—connecting the capital city of Tbilisi to Southern Georgia and to border crossings with Armenia and Turkey.

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May 7, 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.
Read
- The Millennium Challenge Corporation Names MCA Eligible Countries
  Press Release
June 9, 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.
Visit
- MCG discusses the Georgia’s Millennium Challenge Program with stakeholders prior to final negotiatio
  Web Page
September 13, 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.
Read
- Millennium Challenge Corporation Board Approves $295.3 Million Compact with Georgia
  Press Release
February 9, 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.
Visit
- ‘MCG Bulletin’ Feb. 28, 2006 (PDF)
  Web Page
March 24, 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 8, 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.
Visit
- Millennium Challenge Georgia’s Compact has Entered into Force
  Web Page
April 29, 2006

MCC Georgia Compact initial disbursement

The first disbursement, for $3.6 million in compact funds, is authorized.
August 9, 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 8, 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 31, 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 21, 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 29, 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 20, 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 7, 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 8, 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 24, 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 20, 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 26, 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.
June 15, 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.
September 1, 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 4, 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 2, 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 4, 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.
January 1, 2010

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 2, 2010

Bakuriani water tretament 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 17, 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.
July 1, 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 24, 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 23, 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 15, 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 29, 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 30, 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 15, 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 30, 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.

Program Overview
Enterprise Development Project
Regional Infrastructure Rehabilitation Project

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.

as of June 30, 2011

Total Grant Value:
$395,300,000
Total Amount Committed:
$386,362,634 (98%)
Total Amount Expended:
$383,362,634 (97%)
Expenditures are the sum of cash outlays and quarterly accruals for work completed but not yet paid or invoiced.

Signed: September 12, 2005
Entry into Force: April 7, 2006
Program Completed: April 7, 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.

Project Amount: $52,040,800.00

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.

Project Amount: $314,240,000.00

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.

Watch the video

MCG (MCA-Georgia) Closeout: Energy Infrastructure Rehabilitation

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MCG (MCA-Georgia) Closeout: Agribusiness Development Activity

As part of the Enterprise Development Project with MCC’s Georgia Compact, the Agribusiness Development Activity provided technical assistance and grants to farmers and agribusinesses in critical value chains that supplied agricultural products to the domestic market or have export capacity.

Watch the video

MCG (MCA-Georgia) Closeout: Agribusiness Development Activity

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MCG (MCA-Georgia) Closeout: President Mikheil Saakashvili

Mikheil Saakashvili, President of Georgia, explains how MCC’s Compact with Georgia has impacted the country and how it laid the groundwork for future economic growth.

Watch the video

MCG (MCA-Georgia) Closeout: President Mikheil Saakashvili

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Mikheil Saakashvili, President of Georgia, explains how MCC’s Compact with Georgia has impacted the country and how it laid the groundwork for future economic growth.

Success Stories
- Pipelines to Opportunity
  4/07/2010
- MCC Makes Headway: Growing Opportunity in Georgia
  7/21/2009
- MCC Makes Headway: Georgian Farm Services Centers Equip Farmers to Increase Productivity
  7/29/2008
Press Releases
- USTDA Encourages Sustainable Oil and Gas Development in Georgia
  2/24/2010
- MCC and Georgia Committed to Economic Growth
  11/20/2008
Blog Entries
- Hospitality, Friendship and Results
  Poverty Reduction Blog, 4/08/2011
- A Model That Works
  Poverty Reduction Blog, 4/08/2011
- Agri-Food Expo Highlights How MCC Investments Are Creating Jobs in Georgia
  Poverty Reduction Blog, 12/17/2010
Speeches & Testimony
- Remarks by MCC Vice President Patrick Fine at Georgia Closeout Ceremony
  3/30/2011
Photos & Video
- MCG (MCA-Georgia) Closeout: Georgia Regional Development Fund
  Video, 4/08/2011
- MCG (MCA-Georgia) Closeout: Regional Infrastructure Development
  Video, 4/08/2011
- MCG (MCA-Georgia) Closeout: Samtskhe-Javakheti Road Rehabilitation
  Video, 4/08/2011
- MCC in Europe, Asia, and the Pacific
  Slideshow, 8/03/2010
Events & Transcripts
- Public Forum with Resident Country Directors from Africa, Eurasia, and Central America
  Transcript
  10/05/2009

Country Scorecards

2012		OLD		NEW
2011	EN	FR	PT	SP
2009	EN	FR	PT	SP

Business Opportunities

Key Docs

Amendment 1: Georgia Compact
Amendment
Compact between MCC and Georgia
Compact
Georgia Compact Quarterly Status Report
Quarterly Status Report (QSR)
Georgia Compact Summary
Summary
Georgia: Attracting Investments, Contributing to Economic Growth
Country Brief

MCA Website

Visit: Millennium Georgia Fund (MCA-Georgia) website

Building Energy Security Through Sustainable Investments in Georgia

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

May 7, 2004

Georgia first named eligible for Millennium Challenge Account assistance

Read

June 9, 2004

Consultations in the regions of Georgia regarding

Visit

September 13, 2005

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

Read

February 9, 2006

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

Visit

March 24, 2006

MCG launches the Regional Infrastructure Development Activity

April 8, 2006

MCC Georgia Compact enters into force

Visit

April 29, 2006

MCC Georgia Compact initial disbursement

August 9, 2006

MCG launches the Agribusiness Development Activity

November 8, 2006

MCG launches Energy Rehabilitation Activity

January 31, 2007

MCG launches GRDF

September 21, 2007

The first phase of gas main rehabilitation is completed

November 29, 2007

Agribusiness Development Activity opens first Farm Service Center

May 20, 2008

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

June 7, 2008

MCG sends Georgian farmers to Israel for training

August 8, 2008

The five-day Russia-Georgia conflict begins

September 24, 2008

The second phase of gas main rehabilitation begins

November 20, 2008

Compact Amendment Signing

March 26, 2009

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

June 15, 2009

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

September 1, 2009

Opening of “Prime Concrete” factory in Poti

September 4, 2009

Agribusiness Development Activity opens first ISO certified enterprise

October 2, 2009

Construction companies lay first asphalt on the Samtskhe Javakheti Road

December 4, 2009

Re-opening of upgraded “Ecopex” hazelnut factory

January 1, 2010

Funding to improve road sustainability increases

May 2, 2010

Bakuriani water tretament plant repairs begin

June 17, 2010

Opening of hotel “Tetnuldi” in Svaneti

July 1, 2010

Rehabilitation of Borjomi water supply reservoirs begins

September 24, 2010

MCG re-opens canning factory two years after Gori bombings

October 23, 2010

MCC CEO Daniel W. Yohannes visits Georgia

November 15, 2010

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

November 29, 2010

Agribusiness Development Activity hosts agriculture expo

December 30, 2010

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

March 15, 2011

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

March 30, 2011

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

MCG (MCA-Georgia) Closeout: Energy Infrastructure Rehabilitation

MCG (MCA-Georgia) Closeout: Energy Infrastructure Rehabilitation

MCG (MCA-Georgia) Closeout: Agribusiness Development Activity

MCG (MCA-Georgia) Closeout: Agribusiness Development Activity