The Caucasian capitals of Yerevan and Tbilisi have unmistakably different feels – Yerevan's wide roads contrasting strongly with larger Tbilisi's winding, narrow streets – but the two cities' shared Soviet past, the reckless development in the 1990s, and their mountainous surroundings mean that the challenges of developing them into modern metropolises are quite similar.

Over the last decade, the Georgian government and the municipality of Tbilisi, which faces the additional challenge of handling millions of tourists every year, have devised several urban development plans to rehabilitate the dilapidated downtown, most recently a plan called New Tiflis that was launched in February.

In support of these initiatives, the EBRD and other international financial institutions (IFIs), most notably the Asian Development Bank (ADB), have assisted Georgia with projects ranging from public transport and water distribution to a proposed green city scheme. Since 2008, ADB has financed municipal service projects that ranged from basic services like sewage and water distribution to urban transport, spending more than $500mn on transport projects. 

To complement existing projects, EBRD is about to launch a project to gradually replace the old buses in the city with modern ones that run on compressed natural gas (CNG), which is cleaner compared to conventional fuel. The €39mn initiative, of which EBRD would contribute some €27mn, will bring some 175 new buses onto Tbilisi's streets starting in September.

"Tbilisi needs more than 175 buses, but we cannot introduce them at the same time because it would burden the already congested traffic. Our intention is to gradually replace all the old buses with new ones to cover the major routes in the city," Catarina Bjorlin Hansen, EBRD Associate Director for Municipal and Environmental Infrastructure, explains in an interview with bne IntelliNews.

Tbilisi is a medium-size city of some 1.1mn, but its public transport system dwindled in the 1990s, when the tram and trolley systems from Soviet times were removed, leaving the subway and minibuses called marshrutka to cover public transport needs. "Marshrutkas are useful, but they should cover secondary routes and narrow streets where buses have a hard time operating, leaving the major routes to be covered by higher capacity buses," Hansen believes.

Looking ahead, EBRD is eyeing a more holistic approach to urban development in Georgia by introducing a green city approach to address environmental and health and safety issues in its cities. The framework could cost up €130mn and is still a work in progress, as it depends on the bank's negotiations with the Georgian finance ministry. While being open to EBRD's initiatives, Georgian authorities are careful to rationalise projects with external financing these days, so as to contain the country's rising external debt that reached $15bn or 107% of GDP at end-December.

Personalised solutions

Sharing Georgia's concerns about external debt, neighbouring Armenia has also sought to enhance the public transport system in capital Yerevan at the lowest cost possible. The solution has been to expand the trolleybus system instead of the subway network with help from EBRD.

"Expanding the subway system is not feasible because it is very expensive," Hansen says, while adding that EBRD has financed the rehabilitation of the Yerevan subway system in cooperation with the European Investment Bank (EIB) and the EU's Neighbourhood Investment Facility (NIF). "The trolleys can therefore work as a logical continuation of the existing subway system, one that is easier to finance."

While Yerevan is slightly smaller than Tbilisi and has wider streets, it shares some of the same characteristics - such as the fact that it is located in a valley between mountains - making traffic planning all the more difficult. So improving public transport is a priority to prevent bigger problems with traffic in the future.

Overall, EBRD's collaboration with Yerevan Metro Company that began in 2010 has been a success, Hansen believes. "This was their first collaboration with an IFI, but they have done a great job," she says, adding that EBRD financing has helped improve the subway's escalators, ventilation system and energy efficiency, among other features.

In addition to public transport, the bank has focused on municipal waste management in Georgia and Armenia. Just like other countries in Central Asia and Eastern Europe, the two countries used to lack basic infrastructure for waste collection and management, including sanitary landfills. The problem is even more acute in their capital cities, where more than a fourth of the population lives.

However, thanks to a joint programme financed by the EBRD, the European Investment Bank (EIB) and the EU Neighbourhood Investment Facility, Yerevan will soon have its very first EU-compliant landfill. Furthermore, the bank is also considering lending €10mn to Georgia for the acquisition of a new fleet of waste collection vehicles.

While waste processing facilities such as separation, incineration and composting plants could be used in the future, Hansen believes that such projects are not feasible in the Caucasian capitals at the moment because of the way in which Georgians and Armenians dispose of their waste.

"People here do not throw away glass containers, they tend to reuse them for homemade preserves. They also do not separate their waste, making it more difficult to process it efficiently afterwards," she explains.

And even when that does happen - the Georgian municipality of Rustavi is equipped with a separation facility - waste management companies face difficulties in finding a market for recycled goods. "Our [waste management company] client in Georgia has managed to sell some [recycled plastic], but at a very low price and in a sporadic manner," she explains.

This goes to show that greening the capitals of the Caucasus requires personalised solutions that take into account their infrastructure, population's habits and location. A green Tbilisi might be less cutting-edge than Stockholm, but sustainable solutions would be unsustainable if they were not adapted to the local cultures where they are applied; and EBRD has gone out of its way to make sure this does not happen in the Caucasus.

This is part of a series of articles marking the 25th anniversary of the foundation of the European Bank for Reconstruction and Development.