IFC and MIGA Approve Action Plan on Georgia Hydropower Project After Review

The International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA) have adopted a Management Action Plan (MAP) following a compliance investigation into the Adjaristsqali Hydropower Cascade Project in Georgia, overseen by the Office of the Compliance Advisor Ombudsman (CAO), IFC and MIGA’s independent accountability mechanism. The MAP focuses on addressing community concerns over water supply and ensuring biodiversity impact mitigation in line with international environmental and social standards.

Background of the Hydropower Project

The Shuakhevi hydropower plant, a 185-megawatt facility, was developed by Adjaristsqali Georgia LLC (AGL) with IFC and MIGA backing. The project was designed to support:

• Increased renewable energy output.

• Greenhouse gas emissions reduction.

• Investment attraction and cross-border energy trade between Georgia and Turkey.

• Job creation in the region.

In 2014, IFC provided an equity investment of $30.8 million and a loan of $70 million, while in 2015, MIGA issued a $63 million guarantee to Tata Power International Pte. Limited, covering IFC’s equity. The plant became operational in March 2020, and IFC exited its equity stake later that year after full debt disbursement.

The Compliance Investigation

In 2018, local communities lodged a complaint with CAO, citing concerns about:

• Loss of local springs used for drinking water, irrigation, and household use.

• Impacts on groundwater and water security.

• Biodiversity decline, including the disappearance of several local fish species, some classified as vulnerable.

CAO’s investigation found non-compliance by IFC in assessing and monitoring environmental and social (E&S) risks, particularly in groundwater management and biodiversity protection. The review determined that IFC’s due diligence fell short of ensuring no net loss (NNL) for endangered fish species, despite mitigation efforts such as fish restocking programs. Data showed a decline in fish diversity during construction.

IFC and MIGA’s Response

While IFC stated that there was no direct evidence linking the project to adverse impacts on community water supplies, it acknowledged shortcomings in supervision. Corrective measures taken by AGL included tunnel grouting, lining, and integrity monitoring, which reportedly reduced grievances. IFC also noted progress on biodiversity conservation through enhanced environmental flows and ongoing mitigation measures.

Importantly, IFC committed to working with AGL in line with CAO’s recommendations, focusing on sustainable water supply and ensuring measurable biodiversity outcomes.

The Board-Approved Management Action Plan

Following consultations with AGL, IFC and MIGA developed the MAP, which includes:

• Voluntary water supply support: AGL will engage with Shuakhevi Municipality to promote a long-term water supply solution in Rabati and encourage municipal maintenance of the current system as a short-term measure.

• Biodiversity analysis and monitoring: AGL will conduct statistical trend analyses and environmental flow (e-flow) suitability studies to assess biodiversity outcomes. If necessary, AGL will update its Operational Biodiversity Action Plan (OBAP).

• CAO oversight: The CAO will monitor MAP implementation and publish IFC’s progress reports, ensuring transparency and accountability.

Broader Implications

This case highlights the complexities of balancing renewable energy development with community needs and ecological preservation. Hydropower projects, while critical for reducing carbon emissions and expanding clean energy, often pose challenges for water security and biodiversity conservation.

The Shuakhevi case demonstrates how independent accountability mechanisms like the CAO play a vital role in holding development financiers to their environmental and social commitments. By adopting a Board-approved MAP, IFC and MIGA aim to strengthen trust with affected communities while advancing responsible renewable energy investments.

Next Steps

CAO will continue to oversee the implementation of the MAP and publish progress reports online, ensuring stakeholders remain informed. IFC and MIGA’s response illustrates a commitment not only to corrective measures but also to learning from compliance cases to improve future project oversight.