The EBRD is providing financing for construction and operation of the Paravani HPP, an 86 MW run-of-river facility, and associated electricity transmission facilities, located in Samtskhe-Javakheti region of Georgia. Financing includes both debt and equity. The power plant will be connected to a converter substation located in Akhaltsikhe, Georgia allowing for connection to the Georgian grid and seasonal electricity export to Turkey. The substation is part of the Black Sea Energy Transmission System project, which is also being financed by the Bank.
Transition impact is expected to come from:
1) Demonstration effect arising from the project. The project would be the first green field hydro power plant of its size in Georgia since the early 1980s and is pioneering the effective financing of several other renewable projects for which concessions were awarded to various international and national developers. Finally, the Bank’s participation will ensure that the project is implemented in accordance with best environmental practices.
2) Promotion of private ownership. The Bank will support strategic private investor in the Georgian wholesale energy sector. Anadolu Group’s joint ventures with other major Turkish groups active in the sector, hiring of comprehensive team of experts and state of the art contractual agreements for the Paravani plant construction, mitigate construction and operation risks and send a strong signal to other potential investors.
3) The project may stimulate competitive behaviour in the wholesale electricity market that could result in increased cross-border energy trading.
Georgian Urban Energy (GUE) is a special purpose company created for the purpose of the Paravani HPP. GUE is majority owned and controlled by Anadolu Kafkasya Enerji Yatırımları A.Ş., which in turn is majority owned and controlled by Anadolu Endustri Holding A.S (AEH).
The proposed transaction consists of (i) up to a US$ 44 million senior loan and (ii) up to 10% equity equivalent of approximately US$ 5 million investment to the Company.
Anticipated to be up to approximately US$ 160 million.
The Project is categorised as “A”, with potentially significant adverse environmental and/or social impacts. Construction of the Project will involve environmentally sensitive activities such as tunnelling and rock management, access road improvement and construction, diversion weir construction in a mountain stream, and construction of 30km transmission line.
As part of the Bank’s environmental and social due diligence, a local consultant prepared two Environmental Impact Assessments (EIAs) under Georgian law, one for the hydropower plant (in 2009) and one for the transmission line (2010). The impact assessments were completed under TORs prepared by the EBRD, and included biological and archaeological surveys.
The primary potential impacts of the HPP include reduced streamflow in the Paravani River between the intake and the confluence with the Mktvari River (up to 90 percent reduction of annual average flows) and associated effects on aquatic habitat and biodiversity; these flows will be re-evaluated during operation. The dam will include a fish pass to allow free movement upstream and downstream. In addition, impacts will be monitored carefully before, during, and after construction to allow modifications and changes to operations to be implemented if needed to protected biodiversity. Spoil from tunnel construction is required to be managed in a way to avoid erosion. In addition, concerns were raised during public consultations about increased flooding in the Mktvari River in and near Khertvisi village. Although initial predictions are that should be no significant changes in water levels that could cause flooding, further modeling studies are being undertaken and appropriate mitigation will be developed if needed.; modeling results will be shared with local residents in summer 2012. No significant impacts are expected from the transmission line. Some land will be needed for tower foundations, and land acquisition will be guided by a Land Acquisition and Compensation Plan. To avoid any impact on cultural heritage, part of the transmission line was re-routed so it would not be visible from Khertvisi Castle. The need for mitigation measures to protect birds from the transmission line will be evaluated prior to construction of the line.
The ESIA package for the entire project – the two EIAs, a combined NonTechnical Summary of both EIAs, an expanded and updated Stakeholder Engagement Plan, and an Environmental and Social Action Plan – were disclosed for a 60-day period and further public consultations were held in accordance with the Stakeholder Engagement Plan.
Information about disclosure of the ESIA package. The project was approved by the Board of Directors in May 2011.
The EBRD will monitor the project throughout construction and operation, and the Company will submit periodic reports on the status of each requirement in the Environmental and Social Action Plan. The company will discuss results of the information on water levels and flooding with relevant communities when modeling is completed in mid-2012.
Georgian Urban Energy (GUE)
Contact Person: Onur Tosunoglu
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