Significant failures were found in the project’s compliance with the environmental and social policies of the European Bank for Reconstruction and Development (EBRD) and the European Investment Bank (EIB).
After more than two years of investigation, the Nenskra hydropower plant (HPP) project in Georgia was found non-compliant with the standards of two international financial institutions.1
The project does not meet the banks’ requirements in the following areas of human rights and environmental protection: indigenous people’s rights, the protection of cultural heritage, gender issues, assessment and management of environmental and social impacts, information disclosure and engagement of local communities and other stakeholders.
The investigation of the long-debated Nenskra HPP, planned to be constructed in the Svaneti mountains of Georgia, was launched after complaints2 were submitted to the EBRD and EIB in 2018 by CEE Bankwatch Network, Georgian non-governmental organisation Green Alternative, and community representatives from the potentially affected areas.
Both the EBRD and EIB have approved loans for the Nenskra HPP project, in the amount of USD 214 million and USD 150 million respectively. However, neither has signed the final loan contracts yet. The Asian Development Bank and the Asian Infrastructure Investment Bank are also involved in the project and are currently considering loans totalling USD 414 million.
The news that the project fails to comply with international standards comes as yet another controversy for the 280 MW hydropower plant project, which has already been the subject of years of opposition from local communities, warnings about its financial liability by IFIs, and abandonment by a major construction contractor, to name just a few.
The Nenskra HPP is intended to be one of the largest dams in Georgia’s plans for massive hydropower installations in the Upper Svaneti region. JSC Nenskra, a joint venture of Korea Water Resources Corporation and the Georgian State’s Partnership Fund is the Nenskra HPP project promoter. The HPP project was also financed by Korean Development Bank.
Anna Roggenbuck, EIB Policy Officer at CEE Bankwatch Network said: ‘ EIB Complaints Mechanism confirmed our allegations that this project simply violates the rights of the impacted community of Svans who risk their livelihood and culture being swept by the Nenskra project. The Mechanism confirmed that the project has been improperly implemented from the very beginning starting with the problematic consideration of the project’s alternative option. It is hard to imagine how the Bank could now effectively prompt the necessary corrections. Withdrawing public financing for this project is the only right way in this case.’
David Chipashvili, International Financial Institutions Monitoring Program Coordinator at Green Alternative: ‘I highly appreciate that IPAM [the EBRD Independent Project Accountability Mechanism] has found a number of areas of non-compliance, especially regarding lack of assessments of the project alternatives. Unfortunately, the EBRD and EIB have promoted the project without proper technical and financial justification, which can have not only irreversible environmental and social impacts, but also drastic financial impacts too, as other IFIs indicated earlier. In 2017 and 2018, the International Monetary Fund and the World Bank revealed assessments that pointed at specific threats to the fiscal stability of Georgia’s budget by incurring over USD 1.8 billion in fiscal costs between 2022 and 2041. Therefore providing public funding for the project is not reasonable and needs to be cancelled’.
For more information contact:
David Chipashvili, Green Alternative, Bankwatch Campaigner for Georgia
Anna Roggenbuck, Bankwatch, EIB Policy Officer
Rusudan Panozishvili, Green Alternative, Bankwatch Media and Community Coordinator