Inaccurate projections can reduce the financial viability of projects and lead to unoptimal use of resources. At project appraisal, populations in Anaklia and Mestia were forecast to grow significantly with Anaklia’s planned port construction and tourism development of Mestia as an international ski resort and historic heritage site. As it turned out, towns in Georgia, including the three towns, witnessed out-migration and reduction in population in the last decade. Commencement of the port construction in Anaklia was delayed until 2024 and the development of resorts in Ureki was slower than anticipated due to COVID-19 pandemic. The reduction of the project beneficiaries against the projections is the main driver of the decreased EIRR. It is expected that tourism will reach pre-pandemic level by 2023. A more conservative approach to the expansion of water supply and sanitation facilities in smaller towns would have resulted in a more efficient use of resources.
Urban Services Improvement Investment Program - Tranche 1