PSD updated 7 October 2019
Translated version of this PSD: Georgian
The Project aims to make improvements to the Enguri HPP to alleviate the critical power shortage in Georgia at a low cost and to enhance the environmental benefits of the Enguri Hydro Power Plant facility and to rehabilitate and restore to full operating condition the derelict Vardnili 2, 3 and 4 hydropower cascade (40 MW capacity per plant; total rehabilitated capacity 120 MW) as part of the Enguri HPP. The plants were designed to harness the residual energy potential of the water discharged from the Enguri HPP along the route from Enguri to the Black Sea. All three plants, which were constructed in the early 1970s, are damaged and are not in operation. The Project generally aims to increase the capacity and availability of non-polluting renewable energy in Georgia.
The loan extension proposed for consideration in the fourth quarter of 2019 will be targeting further improvements to the Enguri hydro power plant through the rehabilitation of the Vardnili 2, 3 and 4 hydropower cascade.
The Project is in line with the Bank's Green Economy Transition (GET) Approach and will deliver Green transition impact with strong climate change mitigation benefits through rehabilitating and upgrading a major zero-carbon power plant.
The Borrower is Georgia. The loan proceeds will be on-lent to Engurhesi Ltd, a state-owned special purpose company that owns and operates the Enguri HPP.
Loans were arranged in 1998 (USD 38.7 million), 2006 (USD 10.0 million), 2010 (EUR 20.0 million) and 2018 (EUR 28 million) for the rehabilitation of the facility with co-financing provided by the European Union, the Japanese Government, KfW, EIB and the Government of Georgia.
The next phase of the Project will be covered with a loan extension for up to EUR 40.0 million with possible co-financing from the EIB, the European Commission and the Government of Georgia for the remaining project cost.
The project cost for the extension project is estimated at EUR 80 million with the European Investment Bank expected to provide co-financed with a EUR 40 million loan.
The original phases of the project were categorised B/1 and Phase V of the Enguri HPP - Climate Resilience Upgrade is now categorised B (2014). The rehabilitation of components of the Enguri hydropower scheme (namely Vardnilli 2, 3 and 4) is anticipated to be associated with environmental or social impacts that can be readily identified and addressed. Environmental and social (E&S) due diligence for this phase of the rehabilitation of the Enguri hydropower scheme will be undertaken both internally and with the support of external consultants. The main E&S risks or issues that are to be assessed during the due diligence are: (i) the occupational health and safety risks associated with the rehabilitation of Vardnilli 2, 3 and 4 powerhouses, (ii) the potential for key biodiversity features and social dependencies to have established since the Vardinilli scheme has been out of commission, (iii) the contextual risks triggered by the fact that works will need to be implemented on both sides of the administrative boundary line, and, (iv) the management of contractors undertaking the rehabilitation works. This approach remains consistent with the previous phases of the project, however, a new environmental and social action plan (ESAP) will be developed for this component of the project as it is sufficiently discrete from the previous phases, and will be agreed with Engurhesi, in order to address the identified E&S risks. This section of the PSD will be updated following the completion of the ESDD.
A pre-investment, feasibility study to be funded under the EBRD GET Project Preparation and Implementation Framework.
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