Community members of the Rabati District of the Makhalakidzeebi village, Shuakhevi Municipality, Georgia
Increased risk of landslides and rockfalls, reduced groundwater levels, impacts on biodiversity, Company’s failure to address E&S risks of the project
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 megawatts (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 the 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$71 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 provides a $63 million guarantee to Tata Power International Pte. Ltd. to cover its equity investment in the project (MIGA project number 12315).
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 the 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 the Asian Development Bank’s (ADB) Office of the Special Project Facilitator (OSPF), respectively. EBRD and ADB are co-financing the Shuakhevi hydropower project.
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 jointly facilitated the dialogue process, with OSPF acting as an observer. In August 2020, after two years of engagement, the mediation process concluded without a final agreement regarding the issues raised in the complaint. In November 2020, the case was transferred to CAO Compliance for appraisal of IFC’s and MIGA’s performance related to the project, as provided by CAO’s Operational Guidelines for complaints that cannot be resolved through dispute resolution.
A compliance appraisal has been completed under the 2013 Operational Guidelines, based on the transitional arrangements agreed upon as part of the approval of the new CAO policy in June 2021. CAO conducted a preliminary analysis of the concerns raised by the complainants about landslides and rockfalls, groundwater flows, and biodiversity impacts. CAO concluded that an investigation is warranted regarding the issues of groundwater flows and biodiversity.
Updated as of December 23, 2021