The project consists of building and operating a new oil terminal in the Port of Poti (Georgia). This includes purchase and installation of oil tanks and handling equipment for the on-shore storage facility to be built in two phases and construction of infrastructure elements necessary to install the oil tanks and permit operations at the terminal as well as terminal connection to hinterland transport routes.
The main project objective is to support the development of an efficient, state of the art, oil product terminal, enhancing the service standards offered to trading companies and shipping lines in the region through commercially operated facilities under private management and control, at the port of Poti.
Greater competition in the project sector: The proposed Channel Energy Poti Port oil terminal will enhance competition for oil products handling in Georgia and throughout the Black Sea region. The continuity, reliability, and high quality of the provided services will push competing port terminals, including Russian ports and Batumi, towards modernising their facilities, improving management practices and towards the establishment of a commercially competitive framework. The project will effectively open the least-cost export route for oil products from the Caspian to the Black Sea, therefore enhancing the Georgian economy through increased rail traffic and fostering the development of projects planned for the refineries in the Caspian region.
Private ownership: Tower Holding’s presence in the port will increase private involvement in port development, and will strengthen market-oriented and customer focused behaviour. The project will be an important and visible public-private partnership in the Caucasus region. It will demonstrate to the investment community that a close partnership between private operators and port authorities is possible in Georgia and does lead to concrete investment opportunities. Tower Holdings has established a very close partnership with the port authorities. It has initiated a knowledge transfer process (i.e. supervising the construction of the rail access and structuring the joint-venture agreement) and will continue to do so. Also, Tower Holdings’ management skills and especially its international experience in the oil products trade will be naturally passed on to local managers. This will allow the terminal to make full use of the local workforce in a few years' time, thus realising high economic benefits for the project. Tower Holdings will also introduce corporate governance standards in the joint-venture company through the establishment of a proper cost control and accounting system. Future managers recruited locally will be trained in Turkey. This will also ensure the continuity of this operation.
The client is Channel Energy (Poti) Ltd, a joint venture company established in Georgia in May 2000 as a joint venture between Channel Energy Ltd (EIRE) and Poti Sea Port (Georgia) under the sponsorship of the Tower Holdings group. Tower Holdings S.A. (Luxembourg), a holding company operating in the oil industry, will contribute its substantial international experience in oil terminal operations, particularly the management of high-quality oil product termnals as well as its established sales and logistics network.
A loan of US$ 11.6 million in parallel with a US$ 8 million loan from the Black Sea Trade Development Bank.
US$ 30.0 million (€35 million).
The project was screened A/0. An Environmental Impact Assessment (EIA) was completed on behalf of the client and disclosed by the EBRD on 13 October 2000. A final EIA was submitted to the Georgian Ministry of Environment on 23 October and disclosed to the public during public meetings, from 31 October to 1 November 2000, and in the EBRD's offices on 3 November 2000.
The environmental studies indicate that the Port’s existing emergency response capabilities, such as for fire and spills, need to be improved. The EIA also identified that, under adverse scenarios of an unmitigated oil product spill outside of the port, a potential for transboundary impacts may exist. Under adverse conditions and without appropriate mitigation, the Kolkheti nature reserve, a designated Ramsar Convention wetland area, may also be impacted.
Public consultation meetings were held for the project on a number of occasions, including 22-24 September 2000 in Poti, 7 October 2000 in Tblisi (initiated by the Georgian Greens), on 31 October 2000 in Poti, and on 1 November 2000 in Tblisi (hosted by the Georgian Greens). Key issues of concern raised, which are being addressed in the project design, were associated with the emergency response and effluent treatment capabilities of Poti Port.
The EIA has identified a number of recommendations to address issues such an emergency response, which have been incorporated into the project design. The EIA has been reviewed by the Georgian Ministry of Environment (MoE). In the positive conclusion of the EIA review, the MoE required that (a) additional technical parameters about the effluent treatment plant need to be presented for approval, (b) a detailed oil spills response plan be developed and coordinated prior to commissioning of the terminal, and (c) a self-monitoring programme be developed and agreed.
During a meeting with the Minister of Environment, the EBRD’s representatives referred to the Espoo Convention on EIA in a Transboundary context and recommended that neighbouring countries be informed about the project and its potentially adverse transboundary impacts under adverse scenarios. It is understood that the Minister is currently considering a notification to Georgia’s neighbouring countries. Supported by technical assistance from the Netherlands , Georgia is also developing its National Oil Spill Contingency Plan.
The port will continue to service medium-sized tankers of approximately 25,000 dead weight tons (dwt). For comparison, other crude oil terminals, located on Georgia's Black Sea coast service larger tankers of approximately 130,000 dwt. During 1999 and 2000, oil tankers comprised about 10 per cent of the total vessel movement at the Poti Port. The vessels entering the Black Sea en route to or leaving the Poti Port on their way to the Mediterranean have to pass through the narrow Dardanelles and Bosporos Straits. In 1998, approximately 49,000 ships over 1,000 dwt transited the Straits, including approximately 5,100 oil tankers. The initial throughput of the Poti Port (about 1 million tons of white oil products during Phase I) is expected to add about 40 tankers movements per year. The IMO, the UN and the Oil Companies' International Marine Forum are co-operating with the aim of achieving safe and environmentally responsible passage through the Strait.
A draft Environmental Action Plan (EAP) has already been agreed with the sponsor and will be finalised and covenanted within the Financing Agreements. The requirements of the MoE noted above will be added to the EAP.
There is an Environmental and Social Impact Assessment available for this project.
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