The IFC Board of Executive Directors and the MIGA Board of Directors have approved a joint Management Action Plan (MAP) in response to findings from a compliance investigation by the Office of the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC and MIGA. The investigation was related to the Adjaristsqali Hydropower Cascade Project in Georgia and identified areas for improvement concerning community water supply and biodiversity impact mitigation.
The Adjaristsqali project was developed by Adjaristsqali Georgia LLC (AGL) to construct the Shuakhevi hydropower scheme, a 185-megawatt plant designed to provide renewable power for both Georgian and Turkish markets. The initiative aimed to expand renewable energy output, reduce greenhouse gas emissions, attract investment, create jobs, and facilitate cross-border energy trade. In 2014, IFC supported the project with an equity investment of US$30.8 million and a loan of US$70 million. In 2015, MIGA issued a US$63 million guarantee to Tata Power International Pte. Limited, covering IFC’s equity investment in AGL. The hydropower facility began operations in March 2020, with all debt fully disbursed, and IFC exited its equity stake later that year.
The CAO investigation was initiated in 2018 following a complaint from a local community about the project’s potential impacts on groundwater and biodiversity. Concerns included the loss of springs used for drinking water, household needs, and irrigation, as well as the decline of fish species, including vulnerable ones, in the Adjaristsqali River and its tributaries. CAO’s findings pointed to noncompliance in IFC’s assessment and monitoring of environmental and social risks, particularly groundwater management. It also found that IFC’s due diligence did not ensure adequate measures to achieve no net loss (NNL) for endangered and vulnerable fish species. Despite fish restocking and monitoring efforts, biodiversity data showed a decline in fish diversity during construction.
In its response, IFC maintained that there was no direct evidence linking the project to adverse impacts on community water supply or biodiversity. However, IFC acknowledged shortcomings in supervision and noted that AGL had implemented corrective measures, such as tunnel grouting, lining, and integrity monitoring, which addressed earlier concerns. AGL has not received any recent grievances regarding water supply, and biodiversity mitigation efforts are showing progress toward NNL and maintaining sufficient environmental flows. IFC has been engaging with AGL on these matters, and the company has agreed to actions aligned with CAO’s recommendations, focusing on sustainable water provision and biodiversity outcomes.
The approved Management Action Plan includes specific steps to address the concerns raised. As a voluntary measure, AGL will work with the Shuakhevi Municipality to explore long-term water supply solutions, offering support if needed for the municipal water supply project in Rabati and requesting maintenance of the existing water system as a short-term measure. Additionally, AGL will conduct a statistical trend and environmental flow suitability analysis to assess progress toward NNL of biodiversity. If necessary, AGL will update its Operational Biodiversity Action Plan (OBAP) to further strengthen biodiversity protection measures. This plan reflects IFC and MIGA’s commitment to improving environmental and social risk management while ensuring that hydropower development contributes positively to both communities and ecosystems.
Subscribe to get the latest posts sent to your email.
