Project description
and objectives:
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The proposed project consists of the rehabilitation of Vardnili Hydro Power Plant (“HPP”) cascade including the upstream reservoir called “Gali” reservoir. The Vardnili cascade has four consecutive power plants (Vardnili 1,2,3 and 4 respectively), which are located in the Abkhazian territory in the North West of Georgia, downstream from the Enguri HPP.
The Project will consist of the following:
- Urgent safety works on the Gali reservoir to meet international safety requirements for large dams.
- Critical canal dredging and cleaning downstream from Vardnili 1 to mitigate potential flooding of the local area.
- Upgrade of the operational capacity of Vardnili 1 from 125MW to 210MW.
The main objectives of the project are three-fold:
(i) to enable a safe operation of the Vardnili HPP Cascade,
(ii) to increase the power production of the Enguri HPP (located upstream from the cascade) by removing the bottleneck effect the Vardnili creates on the tail waters of Enguri. The Enguri cascade could then provide up to 50% of the country’s electricity needs if operating at full capacity,
(iii) to increase the generation capacity of the Vardnili HPP itself.
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Transition
impact:
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The project will extend the transition impact of the Enguri project where construction is nearly completed. This consists primarily in providing a low–cost source of electricity to the country.
Furthermore, the project will be present additional transition impact from the following areas:
- Frameworks for markets. The Project will help support the on-going reform process in Georgia.
- Security and quality of supply. By rehabilitating the Vardnili HPP and removing the capacity constraints at Enguri HPP, the Project will help enhance Georgia’s power balance.
- Transfer of Skills. Hydro power is a critical source of electricity in the country. The rehabilitation programme of the Vardnili HPP will promote better use and maintenance of power assets in the country.
- Energy efficiency improvements. By displacing non-renewable energy sources, the Project will save emissions equivalent to 76,000 tCO2 per annum (which corresponds to the emissions of 45,000 cars).
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The client:
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The borrower is the State of Georgia that will on-lend to the project company, Enguhresi Ltd.
Engurhresi Ltd is a state owned special purpose company that owns and operates the Vardnili HPP as well as the upstream Enguri HPP.
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EBRD
finance:
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The project will be co-financed by EBRD and EIB, each providing respectively a EUR 25 million Sovereign loan. The remaining of the project costs will be financed by the Government of Georgia.
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Total project cost:
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The estimated project costs are EUR 60 million.
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Environmental impact:
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The project has been screened B/1, requiring an environmental audit of existing facilities as well as an environmental analysis of the planned investment project.
The Bank is in the process of carrying out its environmental and social due diligence of the project. This will include a site visit in the second half of 2008. A draft environmental review of the proposed project, prepared by international consultants, indicates that key environmental issues relate to dredging and clearance of sedimentation and their subsequent impact on water quality and flora and particularly fish populations in the river.
Although this is an issue for the entire stretch of the river it is particularly important downstream of Vardnili 1, where sediment removal is urgently required to mitigate against a potential risk of flooding. Similarly, water quality may be impacted by stabilization works on river banks. Based on available information loss of vegetation due to removal of overgrowth is not considered to be an important issue as areas affected are limited in size and generally not of great ecological importance.
There is likely to be a need to identify suitable storage areas for sediment and also to arrange for the safe collection and disposal of scrap metal and building materials at the dams and hydro power installations.
Nuisances during construction/rehabilitation work are limited (both in area affected and the time they may occur) and will not have a significant effect. The client will need to ensure that there is no soil and water contamination from construction sites and particularly from construction vehicles and machinery. Labour issues during construction will need to be reviewed.
The existing studies have not only identified these environmental impacts but have also suggested suitable mitigation measures. These measures will be assessed during the site visit and a final Environmental and Social Action Plan will be developed for project implementation.
Social and socio-economic implications of the project will also be assessed during the planned site visit and necessary mitigation measures will be included in the Environmental and Social Action Plan. Meetings will be held during the site visit including a review of fisheries use of the river and highlight any sensitive species and relevant mitigation measures required to avoid or minimize impacts. Information for stakeholders will include a summary of all identified environmental and social issues and the proposed mitigation measures.
The Project Summary Document (PSD) will be updated once due diligence is completed and the Environmental and Social Action Plan has been agreed.
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Technical
cooperation:
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Technical cooperation funds of EUR 200,000 to assist the Regulator in designing energy efficiency incentives, and reviewing the draft new tariff methodology based on price-cap regulations.
For consultant opportunities for projects financed by technical cooperation
funds, visit procurement
of consultants.
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EBRD contact:
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Laurent Chabrier, Operation Leader: chabriel@ebrd.com
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Procurement or tendering
opportunities:
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Visit EBRD Procurement
Enquiries: Tel: +44 20 7338 6794; Fax: +44 20 7338 7472, Email: procurement@ebrd.com
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General
enquiries:
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EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168; Fax: +44 20 7338 7380
Email: projectenquiries@ebrd.com
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