PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources was triggered as two HPPs (Kasleti 2 and Mestiachala 2) operate in areas of aquatic natural habitat and overlap with the Svaneti Key Biodiversity Area.

 All funds from the bond issuance will be used to refinance existing GRPO’s assets. Bond proceeds will not be used for development or acquisition of any new asset. The GRPO’s operations will be conducted within the existing E&S footprint and thus are expected to have limited E&S risks and impacts associated with the investment, most of which will be related to operation & maintenance activities of existing assets. This investment is therefore classified as Category B because a limited number of adverse E&S impacts may result which can be avoided or mitigated by adhering to generally recognized standards, guidelines, or design criteria.

Beyond the scope of this project, GRPO may acquire or transfer new assets from GRPC to its portfolio. GRPO under its ESMS will provide E&S due diligence of any new asset against national E&S requirements and IFC Performance Standards. The Client is committed to exclude acquisition/transfer of RE projects with high E&S risks (Category A type activities), that may result in: (i) significant involuntary resettlement; (ii) impact on lands to which ethnic minorities/indigenous people maintain collective/ancestral attachment; (iii) significant impacts on biodiversity; (iv) significant impacts on cultural heritage; or (v) significant occupational health and safety risks or significant risk of child labor and forced labor in the supply chain. 

Key environmental and social (E&S) risks for this investment include: (i) effectiveness of the Issuer's management systems and capacity to operate in a manner consistent with IFC requirements; (ii) occupational health and safety; (iii) risks related to infrastructure safety, emergency preparedness, and community safety; and (iv) high risk of exposure to natural hazards with high damaging and life-threatening potential, such as floods and landslides; and (v) biodiversity conservation and sufficiency of environmental flow.  

Policy, Environmental and Social Assessment and Management System

The Issuer follows the E&S Policy Framework adopted in 2020 at the corporate level. GGU is currently undergoing restructuring, which includes selling of water distribution facilities and separation of operations related to development of new RE assets to a standalone company (GRPC). The remaining activities under GRPO will be only O&M of brownfield RE facilities. Given the significant change in the business operations to be carried out going forward, GRPO shall review its E&S Policy and adjust it, where needed, to its operations related to management of operating RE facilities (ESAP #1) and will make employees familiar with it.

The current corporate ESMS in use is either established under GGU, which operations include water distribution and wastewater treatment services, design, development, construction, and operation of new RE facilities. An ESMS is supported by the relevant procedures covering the following: E&S planning, monitoring, and reporting; staff training and competence; document control and record keeping procedure; communication and notification; stakeholder engagement and grievance mechanism; and land acquisition and compensation policy. Each RE facility has developed its own package of ESMS documentation based on the corporate documents, which include operational procedures and ESMPs, such as Contractor’s Management Plan; Stakeholder Engagement Plan and Grievance Redress Mechanism; Emergency Preparedness and Response Plan; Chance Find Procedure; and E&S action plans for operational phase.

Due to the Company restructuring and changes in the business operations to be carried out going forward, GRPO shall review and update as needed its ESMS system and procedures and relevant ESMPs to make them well-tailored to the O&M activities and ensure they meet the requirements of IFC Performance Standards (PSs), good international industry practice (GIIP), and applicable WBG Environmental Health and Safety (EHS) Guidelines (ESAP #1 & #2).

Identification of Risks and Impacts

Prior to acquisition of Debeda, Kasleti, Akhmeta HPPs, and Qartli wind farm, which all were operational, the Company conducted technical and E&S due diligence to assess risks and potential liabilities related to environmental and social issues. Based on provided information, no regulatory red flags and legacy issues had been identified. Additionally in 2020 the Company completed a looking-back analysis of land acquisition practices against IFC PS5 requirements, which confirmed that land plots during the development of its current portfolio facilities had been acquired on ‘willing-buyer’ ‘willing-seller’ principle, no physical/economic displacement implemented, and PS5 requirements had not been triggered.

Environment impact assessments (EIAs) in compliance with national regulations were developed and approved by the Ministry of Environmental Protection and Agriculture (MEPA) for all projects. ESIAs meeting lenders’ requirements were prepared for the wind farm and Kasleti HPP, which raised international funds for the construction.

After the flooding and rockfall accident at Mestichala-1 HPP in 2019, GRPO engaged a consortium of international experts to conduct an assessment and modeling of the existing geological and glaciological conditions, natural hazards, and flooding risks. The risks assessment for various scenarios was undertaken and adequate preventive and response options were undertaken, including development of early warning indicators.

Each RE operational facility maintains a register of environmental aspects (as per ISO 14001), H&S operational risks, natural hazards risks assessment, climate change impacts/risks assessment, and has E&S management plans with the respective mitigation measures.

Management Programs 

The RE facilities have developed their own management plans and procedures covering environmental, health and safety (EHS), and social issues such as waste management; pollution prevention; monitoring of ecological flows; structural stability and geological monitoring; and operational and maintenance procedures. The corporate contractor management procedure is in place and GRPO staff provides supervision and oversight of works performed by contractors. It was observed, that ESMPs haven’t been updated since 2020 and are predominantly focused on the construction period, rather than on O&M activities. As a part of this project the GRPO will review ESMPs for all RE facilities, identify the areas for improvement and revise accordingly to bring them in line with applicable requirements of IFC Performance Standards and WBG EHS Guidelines applicable to the current phase of the project (ESAP #1 & #2).

Organizational Capacity and Competency

At the corporate level, GRPO has an EHS team of 4 members who report to the Technical Director, who is supported by the field EHS teams, consisting of an Environmental Specialist, OHS engineer, and Community Liaison Officer. OHS specialists are responsible for implementation of the management system, operational risks analysis, staff training, supervision of performed works in accordance with safety instructions, incidents recording, and investigations.

Contractors are engaged for equipment maintenance services, limited construction/repairing works, security, and specialized services such as geological/biodiversity monitoring and waste management. A contractor management plan exists at the corporate level, which specifies EHS requirements, control, monitoring, and reporting measures. Equipment repairing and maintenance works and monitoring are provided by outsourced service providers and equipment manufacturers (e.g., Vestas, etc.) under long-term service agreements. External contractors are responsible for managing EHS related activities, ensuring staff training, and the provision of PPE. The RE facilities provide supervision and oversight of works performed by contractors and EHS clauses are specified in the servicing contracts. EHS trainings for employees are conducted on the regular basis, including on requirements of IFC PSs.

The Company engages local and international EHS and technical consultants on a regular basis to review its practices against IFI’s requirements and GIIP (i.e., ESMS gap-analysis, gap-analysis of land acquisition process for existing assets, technical assessment of RE facilities, climate risks assessment, and others) and recommend improvements where needed.

E&S training and qualification programs for staff are under the control and management of the corporate EHS team. The training modules are developed at the corporate level and implemented by the corporate E&S team. During COVID restrictions online staff training was conducted.

Emergency Preparedness and Response

RE facilities have developed emergency and response plans for operational accidents and emergency situations for different scenarios including earthquakes, fires, and other failures at powerhouse or electrical equipment, and penstock breakage (for HPPs).

Based on the outcomes of geological and natural hazards research completed following the flooding and rock falls experience at the Mestiachala 1 HPP in 2019, an emergency preparedness and response plan for the Mestiachala 2 HPP was amended to address identified risks, such as re-routing of evacuation routes and the relocation of assembling points, car parking, etc.

The Emergency Preparedness and Response Plan for Qartli wind farm was prepared by Vestas – the wind turbine manufacturer and adopted by GRPO. The documentation identifies the procedures to be followed by the Qartli wind farm and Vestas staff in case of different emergency scenarios, provides the contact details and notification procedure of emergency services available in the region, and contact information to access external service providers.

Emergency drills are conducted once a year and periodically with the involvement of municipal and EMERCOM services.

Monitoring and review

RE facilities implement environmental (biodiversity, environmental flow, water quality), health & safety (working conditions), geological (geohazards, ground water level, satellite pictures), hydrological, as well as engineering and structural integrity monitoring.

HPPs are equipped with automatic gauging systems downstream of water intakes, which provide daily measurements of ecological flow and quarterly reports are submitted to the state authorities. Each facility has an ESAP developed for the operational phase which describes the key E&S measures undertaken by the facilities following IFC PSs requirements.

The HPPs have units responsible for maintenance of civil structures and channels and are responsible for providing regular checks, investigations of stability and structural integrity of weirs and reservoirs, and sediment and riverbanks management.

For the wind farm a two-year post-construction monitoring of noise and shadow flickers confirmed absence of negative impacts and compliance with national noise threshold, hence continuation of further monitoring was considered as non-feasible. GRPO maintains a grievance mechanism for raising of any concerns by stakeholders on such topics.

In accordance with the ESMS, the Issuer conducts internal audits by the corporate E&S team with involvement of E&S specialists from the HPPs, in addition to daily checks, periodic visual controls and site visits conducted by onsite EHS team. Reportedly operational EHS reports are prepared on monthly, quarterly, semi-annual, and annual basis. Any accidents or non-compliances are reported through daily reports.  

 The Issuer employs 86 people at RE facilities and head office, whereas 53 are operational and technician workers at the plants, 33 are management and administrative staff.  The number of female employees (17% of the total workforce) is minor and this is common for the power generation industry, which remains one of the least gender diverse sectors. However, women representation at head office management and administrative positions reaches 45%. All employees have written contracts as required by the Georgian Labor Code.

Human Resources (HR) Policies and Procedures

The Issuer has in place HR policies and procedures that specify recruitment, orientation, training, compensation, internal rules, working age, leaves and termination of employment. The HR policies are supplemented by the code of conduct and ethics and other corporate-wide policies including anti-harassment policy; grievance policy; and procurement policy, which in particular specifies ethical standards for contractors. The Human Resource Policies are based on requirements of Georgian labor legislation and aligned with ILO and PS2 requirements.

Workers organization

GRPO is committed to comply with relevant laws of the country related to employees’ freedom of association and have this specified in its HR Policy. Currently employees are not members of any trade union, and the Issuer doesn’t prevent worker from unionization.

Non-discrimination and Equal Opportunity / Protection of Workforce

The Issuer has a policy which focuses on provision of non-discrimination and equal opportunities. All job opportunities are announced on the portal and the applicants are treated equally regardless of race, gender, skin color, religion, nationality, age, etc.

The Issuer has adopted a zero-tolerance policy on the sexual harassment at workplace and committed to investigate each case with diligence and provide prompt and effective response on allegations of sexual harassment. Each case of sexual harassment shall be considered seriously, with respect and protection of confidentiality. An Anti-sexual Harassment Policy is committed to provide a safe environment for all employees, which is free from any type of discrimination and harassment at the workplace, including sexual harassment.

The Issuer is non-tolerant to child and forced labor use, as specified in the HR Policies.

Retrenchment

The Company has adopted a Retrenchment Policy that is aligned with IFC PS 2 requirements, although there are no plans for staff retrenchment.

Grievance Mechanism

Employees/workers of the Issuer are encouraged to express their opinion and concerns on any topics, such as working conditions, labor discipline, career development, and promotion. The HR Department conducts interactive meetings with employees to share updated information, discuss concerns, and get feedback. The employee grievance policy explains how employees/contractors can voice their complaints, as well as describes an investigation and reporting process, which is managed by HR Department. Any grievances could be submitted via private communication, official letter, intranet, or anonymous grievance boxes installed in offices.  Established grievance mechanism allows submitting anonymous grievances as well as collective claims.

Occupational Health and Safety (OHS)

The occupational health and safety (OHS) management system at RE facilities is supported by procedures, a package of organizational and technical safety measures embedded into the technical design, as well as to rules, instructions, operational procedures. RE facilities provide operational risks analysis and maintain risk registers of hazards and mitigation measures. OHS safety procedures are developed for each type of operations and employees are trained on their application. Working clothes and personal protective equipment such as safety helmets, boots, high visibility vests, electrical safety tools, noise reduction headphones, and earplugs are provided to employees in accordance with the type of performed works.

EHS training programs are in place for employees, which cover such topics as occupational health and safety, first aid, fire safety, electrical safety, emergency preparedness and response, and environmental issues. The Qartli wind farm staff have undergone specialized training related to equipment maintenance and OHS risks management when working at height and in proximity to the turbines (e.g., use of lifts and emergency rappelling kits). Fire safety systems are in place and maintained in accordance national requirements.

Lost Time Incidence Rate (LTIR) is 1.07 that is below the average sector indicator (1.5 for electric power generation, transmission, and distribution https://www.bls.gov/iif/). Since 2020 the Issuer reported one lost-time injury. The Issuer has procedures for recording of fatalities, injuries, and accidents, as well as their investigation and reporting.

Internal EHS audits are conducted on a monthly basis with involvement of a RE Facility Manager, HSE manager, Chief Electrical Engineer, and Plant supervisor. The Issuer also practices conducting cross-audits, which are implemented by EHS teams from other RE facilities. The audit is conducted through the interview of the personnel, visual inspection of the equipment and the workplace, inspection of necessary documents, and assessment of the compliance of the safety rules by the workers. Audit findings are communicated with the relevant Chief Operating Officer.

Workers Engaged by Third Parties

E&S requirements (ethical standards) for contractors covering non-tolerance to discrimination/forced labor are specified in the procurement policy. The contracts with external contractors include provisions on health, job safety, and environmental protection, and sanctions are provided in case of non-compliance. Additionally, contractors shall ensure minimum age of employment in compliance with local laws.

 Resource Efficiency

GRPO has implemented a corporate-level Water, Energy, and Resource Management Plan that establishes general guidelines for its subsidiaries to ensure efficient use of resources during construction and operation of the Issuer’s renewable energy facilities. The Issuer’s HPPs and the wind farm also employ technologies best suited for effective resource use. GRPO’s HPPs continuously monitor water flow conditions to maximize efficiency. In the case of its HPPs drawing water from irrigation canals (Debeda HPP and Ahkmeta HPP) in which surrounding farmers are provided first rights to use water, there is regular communication with the operator of the canals, Georgia Amelioration (under the Ministry of Environment Protection and Agriculture), to ensure efficiency of operations and water availability.

GCAP’s renewable energy business supports Georgia’s energy sustainability transition plan and Climate Change Strategy. In 2021, the Issuer generated 265.8GWh electricity through its operational power assets and substituted 120.8 CO2 equivalent emissions in tons. GHG emissions resulting from the operation of the Issuer’s renewable energy projects is generally limited to maintenance activities and much lower than 25,000 tones CO2- equivalent/per annum.

Pollution Prevention

Operational hydropower plants do not typically generate significant wastes and wastewaters. One of the primary sources of solid waste results from floating debris trapped by screens in the water intake structures. Debris consists primarily of woody materials such as tree trunks, branches, and leaves, as well as other solid wastes in river systems. The waste is collected at the grills upstream from sedimentation basins and removed by municipal waste service organizations or private licensed companies in accordance with local legislation. Settling basins that collect sediment, stones, and sand before sending the water to the powerhouse is extracted by contractors that utilize the material for construction purposes or it is returned to the river system downstream from HPP powerhouses.

Typical hazardous materials stored at GPRO’s facilities include turbine and transformer oil stored in metal barrels designed for oil and oil products, and maintenance materials or chemicals (such as paints and solvents). Small amounts of oil and oil products used for wind turbine maintenance are held at the turbine locations. The overall amounts are limited and easily manageable.

The transformers at all the HPPs have secondary containment structures integrated into the plant designs to capture accidental spills or leaks. GRPO has no PCB-containing equipment at its facilities.

GRPO will review its storage procedures at each of its facilities and ensure that all bulk storage containers holding hazardous materials also have secondary catchment systems (e.g., collection pallets) and install them as needed (ESAP #4).

Hazardous wastes streams for operational HPPs and wind farms are generated during rehabilitation, repair works, and during operation of electric power distribution facilities. The majority of hazardous waste is comprised of used oils. Hazardous waste is managed by specialized contractors with relevant licenses and permits in place. The overall amount of hazardous materials and waste managed by the Issuer is quite low.

GRPO has internal design capacity and extensive technical expertise to maintain operations of generation and distribution assets. The Issuer has developed and implemented procedures to manage potential operational risks at its HPPs and maintenance and rehabilitation programs are prepared regularly based on the results of technical investigations and diagnostics. Visual controls of operational equipment and facilities are conducted on the daily basis by project staff. In the case of the Qartli wind farm, turbine management and maintenance is conducted by the Danish company Vestas as part of supply/operation contract.

Power generation and distribution facilities can represent risks to users and other community members. In general, the project sites are located in mountainous areas (Mestiachala 2 and Kasleti 2) or in agricultural areas (Debeda HPP, Akhmeta HPP, and Qartli wind turbines) and away from residential areas. GRPO use signs and physical barriers to fence/lock equipment and access, unarmed security guards, and community awareness raising campaigns. Security for physical assets and access control are provided by licensed third party-service providers which have codes of conduct and operating procedures and ensure proper selection process and training of staff. The Issuer has adopted a Security management plan, which specifies requirements and mitigation strategies of risks related to security forces.

Heavy vehicles are used periodically by GRPO projects for maintenance activities by employees and contractors. A Contractor Management Plan exists to ensure a systematic approach to the management of contractors so that their work does not adversely impact the health and safety of themselves or others. A corporate-level Transport Management Plan exists which identifies required actions to minimize negative impacts to the environment and stakeholders that may be caused by the GRPO operations, maintenance, and construction activities.

Georgia is at risk of hydrometeorological hazards and natural disasters. Frequent natural disasters include landslides, floods, flash-flooding, mudflows, droughts, avalanches, heavy winds, and storms which are expected to be exacerbated and heightened through expected climate changes. GRPO has developed Community Emergency Preparedness and Response Plans for each project site which outline the main risks and establish procedures to be followed by staff in emergency situations. Glaciological and geological studies are conducted by the Issuer on a quarterly basis by a contracted specialist at the Mestiachala 2 HPP and Kasleti 2 HPP sites, which are in mountains areas. Employees are also trained to identify potential hazards through visual inspections following significant weather events.

The Akhmeta and Debeda HPPs are located within pre-existing irrigation channels where river flow was modified prior to the construction of the asset. Mestiachala 2 and Kasteli 2 HPPs overlap with the Svaneti Key Biodiversity Area (KBA). From review of available information, neither of the two bird species that trigger the KBA (Caucasian Snowcock Tetraogallus caucasicus (LC) and Caucasian Grouse Lyrurus mlokosiewiczi (NT)) would meet critical habitat thresholds and the habitats they occupy are unlikely to be associated with the operational area of the projects. Given?the projects are existing and no expansion is envisaged, it is considered that the biodiversity features of the KBA will not be impacted, and no additional conservation actions are required under this project.?

Mestiachala 2 HPP is also located within a planned Central Caucasus Protected Area, the area was outlined in the 1990’s but has yet to be formalized into a legally protected area. The Issuer under its ESMS will collaborate with the relevant authorities to ensure that the HPP’s operations remain consistent with the legal requirements and management plan of this protected area, if established.

Based on information available, Mestiachala 2 and Kasleti 2 HPPs may have ongoing operational impacts to aquatic natural habitat (and migratory fish). To meet national requirements, monitoring has been undertaken regularly and 10,000 fry were released upstream of the intakes in 2021. Fish passages are constructed at both the Mestiachala 2 and Kasleti 2 HPPs, but more robust monitoring of changes to fish populations is needed above and below the weirs to assess their effectiveness in reducing the barrier effect. GRPO will contract specialists with recognized biodiversity expertise to undertake an independent evaluation of the status and distribution of migratory fish along the Mestiachala River and Kasleti River above and below the dams in different seasons (ESAP #6). GRPO will also contract specialists with recognized expertise in the functioning of fish passages to undertake an independent evaluation on the effectiveness of the fish passages at the Mestiachala 2 and Kasleti 2 HPPs and adopt any recommendations made by the specialists (ESAP #7). The hydrological methods used to establish minimum ecological flows for Kasleti 2 HPP are not in line with best practice established by the IFC’s Good Practice Handbook on Environmental Flows for Hydropower Projects and GRPO will contract specialists to conduct independent Environmental Flow Assessment (EFA) and develop and implement an Environmental Flow Management Plan based on any recommendations from this assessment (ESAP #8).

The Qartli wind farm does not overlap with an IRA/PA and the main potential operational risk for biodiversity is from bird and/or bat collisions with turbines. IBAT screenings have not identified any species that would qualify the area as critical habitat. The Issuer conducted birds monitoring over two years post-construction and no risks for avian fauna was confirmed. Currently the wind farm undertakes daily fatality monitoring using a methodology developed by an ornithologist.

For Mestiachala 2, Kasleti 2, Akhmeta, Dedeba HPPs, and Qartli wind farm the EIA processes included full scale involvement of the state organizations, stakeholders of the project, environmental NGOs and local population. Official public hearings were conducted and the EIA reports were updated accordingly. GRPO has a Community Liaison Officer at each facility for communication with external stakeholders/community.

Stakeholders Engagement Plans (SEP) are developed for each facility describing the key groups of stakeholders, communication and engagement strategy, responsibilities, stakeholder engagement activities conducted during EIA and construction process, grievance mechanism procedure, monitoring, and reporting. In line with good international practice, the Issuer will review all SEPs adopted for the facilities to ensure they include up-to-date information (ESAP #1 & #2) and will update them, accordingly, as needed on a regular basis going forward.

As per the established grievance redress mechanism (GRM), any complaints can be filed through the corporation web page, grievance boxes at head office/facilities, through Community Liaison Officer (CLO), or via submission of official letters. The grievance system allows to submit anonymous grievances as well as collective claims. The SEPs and GRM documents are currently not disclosed on the Issuer website, therefore GRPO will ensure that these are made publicly available (ESAP #3).

During development of the Mestiachala HPPs, the project faced social protests led by NGOs diving a national movement against HPPs, with a focus on large HPPs. In response, the Issuer improved their stakeholder engagement process to explain the project’s scope and environmental impacts and address their concerns. They also implemented CSR activities to support local communities. GRPO has a Community Liaison Officer at each facility for communication with external stakeholders/community.

During construction of Mestiachala 2 HPP, several community complaints were raised about noise. Further noise studies were undertaken by the Issuer and a mitigation strategy was developed and implemented to address the issue. No other complaints about noise were recorded from the community following those improvements.

 Contact Person: Mariam Kharashvili

Issuer Name: Georgian Renewable Power Operations JSC (GRPO)

Address: 10 Medea (Mzia) Jugheli Street, Tbilisi 0179, Georgia

Email: mkharashvili@grpc.ge

Phone: +995 598 456 422