Global Beer Georgia

Location:

Georgia

Project number:

48332

Business sector:

Agribusiness

Notice type:

Private

Environmental category:

B

Target board date:

07 Sep 2016

Status:

Complete

PSD disclosed:

14 Jun 2016

Translated version of this PSD: Georgian

Project Description

A syndicated long-term loan package of up to €18.5 million to Global Beer Georgia LLC, a project company incorporated in Georgia and established by JSC Teliani Valley, a Georgian wine producer and distributor of beverages. The Company was established to setup and operate greenfield beer production facility in Georgia.

Project Objectives

The loan proceeds will be used to finance greenfield brewery in Georgia.

Transition Impact

The project's transition impact is expected to derive from:
1) Greater competition in the project sector - the project will facilitate the entry of a new player in a market currently dominated by only few players. The establishment of the new brewery will expand the choice of products available to consumers, leading to greater competition in the beer sector, resulting in overall improved price/quality balance.

2) Setting standards for corporate governance and business conduct - the project would integrate modern water and energy efficient technologies in the production process thus enabling to achieve energy performance levels in line with Best Available Techniques.

Client Information

GLOBAL BEER GEORGIA LLC

The company is a project company, established to operate greenfield beer production facility in Georgia. Global Beer Georgia is fully owned subsidiary of Teliani Valley, a joint stock company listed on the Georgian Stock Exchange. Teliani Valley is one of the leading Georgian wine producer and distributor of beverages.

EBRD Finance Summary

EUR 6,170,000.00

The financing will consist of a senior (A/B) and a parallel loan in aggregate amount of up to €18.5 million consisting of: A Loan for the EBRD's own account in the amount of €6.17 million, a B Loan in the amount of €6.17 million for the participant and a parallel loan in the amount of €6.16 million.

Total Project Cost

EUR 32,500,000.00

Environmental and Social Summary

Categorised B (ESP 2014). Independent third party environmental and social due diligence was commissioned to assess both the potential impacts related to the project, and the capacity of the Client to implement the Bank's Performance Requirements.

The land plot for the project was purchased in 2007 and was formally agricultural land. GBG successfully applied to have the land re-zoned in order to construct the brewery. Near neighbours include another brewery; a confectionery plant; a water bottling company, and soft drink manufacturer. The is also located across the road from the Tsilkani Refugee Settlement (established for Internally Displaced Persons (IDPs) who were displaced from Samachablo/South Ossetia in 2008); is approximately 1km from the village of Akhalubani; and 3-4km from the Tserovani Refugee Settlement (also for IDPs from Samachablo in 2008). Under Georgian regulations, a formal Environmental Impact Assessment is not required for the Project as the construction of a brewery in the proposed location is not considered a high risk activity. A permit has however been obtained for drilling a water supply borehole and an abstraction permit will obtained at the appropriate time under Georgian regulations.

The results of the Bank's environmental and social due diligence are that there are few significant potential environmental impacts. A hydrogeological study has shown that water resources are of high quality and the planned abstractions are not expected to impact the water availability for other local users. There may be limited impacts from construction such as noise, dust, and traffic though these will be monitored by the Construction Supervisor and will be confined to working hours only.

Waste water impacts are typically the most significant environmental issue in relation to brewing. The facility will require a waste water treatment facility to be constructed in compliance with Georgian and EU waste water discharge standards. The treated waste water will likely be discharged to a local river (Narekvavi) which currently receives a number of other industrial discharges, and the design on the treatment plant will therefore require to consider cumulative effects.

Consultations with the IDPs and local villagers living in the settlements closest to the Project area indicated that the general approach of local people towards the project is positive. The Company will need to develop a Local Employment and Training Management Plan and will need to include local employment objectives, labour and working conditions and employee grievance mechanism into the Contractor's Management Plans to address these issues in line with PR 2 requirements. Other social impacts identified during ESDD include construction and operation related disturbances such as noise, vibration, potential damage to local infrastructure (i.e. power supply network, gas supply network and on the road infrastructure), traffic safety, community safety, odour impacts, and impacts on communities' water resources which will be addressed with clear actions in the ESAP.

The Company has developed a Stakeholder Engagement Plan and a grievance mechanism to manage community issues in line with PR 10 during construction and operation of the plant. The SEP will include measures to ensure vulnerable groups such as IDPs will not be negatively affected by the project activities and operations.

An environmental and social action plan (ESAP) is being developed and will be agreed with the Company. The ESAP addresses the issues described above, in particular in relation to the water treatment plant and the PR2 issues.

Non Technical Summary

Technical Cooperation

Subject to the implementation of eligible climate technologies and of the approval of the Bank, the project might benefit from an incentive grant under the EBRD programme FINTECC

Company Contact Information

Koba Chanturia
k.chanturia@globalbeergeorgia.com
+995 32 231 32 45
+995 32 231 32 49
www.globalbeergeorgia.com
A. Isakiani Blind Alley, Tbilisi 0172, Georgia

Business opportunities

For business opportunities or procurement, contact the client company.

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