Tbilisi Railway Bypass Takes a Time-out
12 December, 2013
Tbilisi Railway Bypass Takes a Time-out
The Tbilisi Railway Bypass project, budgeted at 350 million USD, is taking a 3-year time-out. Meanwhile, Georgian Railway JSC, the state-owned enterprise that initiated the project in 2010, has to find a way to increase the competitive power of the South Caucasian railway corridor.
According to a recent feasibility study, the Project is expected to decrease both the speed and the volume of the cargo turnover in this corridor. But if a solution is not found, GR management may try
to find a way to save the project. The Project was initiated by the former government to reroute rail traffic outside Tbilisi, for the sake of efficiency, safety, and the environment, and to free up about 83 hectares of land for urban renewal. It was scheduled to be completed by June of this year, but the contracted construction company Joint Venture (JV) – including a JSC group of 23 bureaus of the Chinese Railway and JSC Khidmsheni - failed to meet the deadline. According to the new management of GR, which took office early this year, only 80% of the planned works and 60% of the Project are implemented, while USD 213 million has been spent. The Project was funded by a loan GR got after issuing Eurobonds, but new management revealed that this was undertaken without a feasibility study. So, before spending the USD 137 million remaining in the budget, they hired the Austrian MC Mobility Consultants GmbH to make the study this past spring.
The study revealed that the Project is something of a failure; if completed it will decrease railway capacity by 24%, while GR’s expenses go up 57%. Nor will environmental and safety risks be diminished by rerouting the tracks from the capital, and the 83 hectares made available are expected to earn only USD 30 million, twelve times less than the cost of construction of the project as emphasized by Ernst and Young.
On 4 December, the Economic Council set up by the Prime Minister of Georgia last week discussed the Project and the revelations of the feasibility study, and decided to halt the Project for 3 years, until a reasonable solution is found, one that will make the Project maximally profitable at a minimum expense.
“If the Project comes true, total expenses of GR increase by 57%; that equals an extra USD 70 million to be spent within nearly 10 years,” Konstantine Guntsadze, Chairperson of Supervisory Council of GR, reported to media on 6 December. “Railway maintenance, operational and infrastructure related costs will increase by 51% each year. But the most negative aspect is a 24% drop in railway cargo turnover, which is the most important factor to improve in the South Caucasian railway corridor.”
The speed of railway transportation also is reduced, since the Bypass makes the route 60 kilometers longer, and on more difficult terrain, requiring more locomotives and more maneuvering.
“As a result, instead of 213 trains that pass through Georgian Railway per 24-hour period, we can handle only 167, or have a 24% drop,” Guntsadze said in an interview with Georgian Journal. However, he acknowledged that even if a financial and engineering solution is not found, the Project will be conserved.

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