Dariali HPP

Translated version of this PSD: Georgian

Project Description

The EBRD is considering extending a senior A/B loan to JSC Dariali Energy (the “Borrower”) of up to USD 80 million (EUR 57 million equivalent) for the financing of the development, construction and operation of Dariali HPP, hydroelectric power plant to be located on the Tergi river in north-eastern Georgia (the “Project”). Dariali HPP will have installed capacity of 108 MW with expected electricity output of 510 GWh at P50 scenario (implied load of 54%).

Transition Impact

Transition impact potential of this transaction is expected to arise from the introduction of a new majority private player into the Georgian electricity generation where state owned generators account for 45% of electricity consumption. This project is also one of the first energy projects in Georgia to rely on limited recourse to the Sponsors and, under an A/B loan syndication structure, could provide a demonstration of new financing methods to other project developers in the market. Private generation projects in Georgia to date have relied on various forms of recourse to sponsors, many covering unlimited cost overruns and debt service and providing corporate guarantees. The Project has the potential to be the first energy project to deliver carbon neutral construction in Georgia. The Project includes a reforestation component which would target the full compensation of all greenhouse gas emissions associated with the project over its lifecycle (construction and operation), through the capture of carbon in vegetation.

The Client

JSC Dariali Energy is a special purpose vehicle established in Georgia for the sole purpose of constructing Dariali HPP. JSC Dariali Energy is jointly owned by PERI Ltd (31%), The Robbins Company (23%), Georgian Energy Development Fund (23%) and Energy LLC (23%).

EBRD Finance

The EBRD transaction will be a senior A/B loan of up to USD 80 million (EUR 57 million equivalent) to the Borrower.

Project Cost

USD 123 million (EUR 92 million).

Environmental Impact

The Project has been Categorised A in accordance with the Bank’s 2008 Environmental and Social Policy. The categorisation is based primarily on the particular location of the proposed Project and sensitivities around hydropower development in Georgia in general, rather than due to dam height or other criteria.
The Sponsor has prepared and disclosed for public review and comment an Environmental and Social Impact Assessment (ESIA) package, including: Environmental Impact Assessment (EIA) prepared for submission to the Competent Authorities for public hearing and permitting purposes; supplementary terrestrial and aquatic biodiversity studies prepared to meet international standards; a Stakeholder Engagement Plan (SEP); Non-Technical Summary (NTS); and an Environmental and Social Action Plan (ESAP).

E&S due diligence was undertaken by an independent firm of international E&S consultants on behalf of the Bank. ESDD included detailed document review, a visit to the Project location and interviews with the Sponsor, NGOs and relevant ministries. ESDD highlighted the need for additional studies to be undertaken on the impact of the Project on the aquatic and terrestrial environments to meet international standards. These studies, including recommendations for the development and implementation of an adaptive management plan, have now been completed and are included in the disclosure package.

The assessment of impacts to the aquatic environment has been undertaken in accordance with the “building block” methodology and made direct comparisons between this Project and other similar projects in the EU and elsewhere. The resulting adaptive management plan from the impact assessment will be implemented by the Sponsor, a commitment that has been formalised through the ESAP.

In addition, the Sponsors are in the process of agreeing a programme of reforestation in the area with the relevant authorities, which has the potential to result in the first carbon neutral construction project in Georgia and for the EBRD in all regions. Other project benefits include the remediation of informal waste disposal sites along the river bank and assistance to the municipalities for the development of a suitably engineered alternative facility. This will improve soil, surface and groundwater quality, community safety, waste management practice and visual amenities of the river gorge. The Sponsor has also agreed to limit and mitigate any further visual impacts and the cultural heritage value of the river.

The ESIA package has now been disclosed during and after which all comments will be considered. The Bank’s environmental and social due diligence determined the ESIA package was fit for purpose and meets the EBRD’s Performance Requirements. The ESAP, agreed by the EBRD and the Sponsor, includes key actions the Sponsor has agreed to implement in order to achieve the Bank’s Performance Requirements for both construction and operational phases of the Project. The Project will be monitored by the Bank in line with the commitments in the ESAP, regulatory requirements and the Performance Requirements.

There is an Environmental and Social Impact Assessment available for this project.

 

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