CAO Cases

Arne Hoel, The World Bank

Europe & Central Asia

Georgia / AGL-01/Makhalakidzeebi

Complainant
Community members of the Rabati District of the Makhalakidzeebi village, Shuakhevi Municipality, Georgia
Date Filed
February 15, 2018
Concerns
Increased risk of landslides and rockfalls, reduced groundwater levels, impacts on biodiversity, Company’s failure to address E&S risks of the project
Case Status
Open
 

Synopsis

Project Overview
The Adjaristsqali Georgia LLC (AGL) project involves the construction of a cascade of hydroelectric power plants in the Adjaristsqali region, Adjara, Georgia. The cascade was originally proposed to include three phases, namely the 185 megawatt (MW) Shuakhevi scheme, the 150MW Koromkheti scheme, and the 65MW Khertvisi scheme.

 

The Khertvisi scheme was not pursued by AGL due to significant economic and environmental risks and Koromkheti is in early stages of development under a separate InfraVentures project. Therefore only Shuakhevi is considered ‘the Project’ and is being developed by Adjaristsqali Georgia LLC (AGL) as a joint venture between India’s Tata Power, Norway’s Clean Energy Invest (40 percent each) and IFC (20 percent). IFC’s investment consists of an A loan of up to US$70 million and straight equity of up to $34 million (IFC project numbers 33435 and 37781). IFC also had an Advisory Services project to advise on AGL’s retrenchment strategy and associated implementation plans, including sustainable livelihood opportunities for the communities and workforce (IFC project number 601449).

 

In addition to IFC, MIGA is providing a $63 million guarantee to Tata Power International Pte. Ltd. to cover its equity investment in the project (MIGA project number 12315). 

 

Complaint
The complaint was submitted to CAO in February 2018 by 17 residents of the Rabati District of the Makhalakidzeebi village, Shuakhevi Municipality, Adjara. The Complainants claim that construction activities related to the Shuakhevi power plant have had a negative impact on their lives, causing an increase in risk of rockfalls and landslides, a decrease in groundwater levels, as well as negative impacts on the biodiversity of the Adjaristsqali river, including the disappearance of local fish species. They allege that AGL failed to properly address the geological and social risks linked to the project, and failed to comply with an agreement entered into in 2014 with the Government of Adjara and the village residents, to provide compensation in case of damages caused by the construction.

 


In addition to filing a complaint to CAO, the Complainants submitted a complaint to the European Bank for Reconstruction and Development’s (EBRD) Project Complaint Mechanism (PCM) and Asian Development Bank’s (ADB) Office of the Special Project Facilitator (OSPF), respectively. EBRD and ADB are co-financing the Shuakhevi hydropower project.

 

 

CAO Action
In April 2018, CAO found the complaint eligible and began an assessment of the complaint. During the assessment, the Complainants and the Company agreed to engage in a voluntary dialogue process to try and resolve the dispute. As requested by the parties, CAO and PCM will jointly facilitate the dialogue process, with OSPF acting as observer. CAO’s assessment report is available in English and Georgian under "View Documents" below.

 

Status
A dispute resolution process is underway.

 


Note: A CAO assessment does not entail a judgment on the merits of complaints.  Rather, the aim is to listen to people's concerns, understand the different perspectives, and determine what options are available to address the complaint through CAO's Dispute Resolution and Compliance functions.

 

Status as of August 15, 2018

Project information

Institution
IFC & MIGA
Project Name & Number
Adjaristsqali Georgia LLC 33435, 37781, 601449 (IFC) and MIGA (12315)
Department
Infrastructure
Company
Adjaristsqali Georgia LLC (AGL)
Region
Europe & Central Asia
Country
Georgia
Environmental Category
A
Commitment
$70m Loan, $34m Equity (IFC) and $63m guarantee

Case Tracker

Ombudsman

  • Eligible: Completed
  • Assessment Period: Completed
  • Facilitating Settlement: In Process

Compliance