Blog entry

Fossil fuel subsidies by European public banks are underwriting climate change

The United States and Syria stand alone. With the recent adoption by Nicaragua of the Paris climate agreement, only those two countries appear to ignore the global imperative of phasing out fossil fuels if the world is to avoid the worst impacts of the climate crisis.

Within the EU, the acknowledgment of the need to phase out fossil fuel subsidies as a key part of the global effort to stem climate change has materialised in multiple policy decisions including the Europe 2020 Strategy and the recent EU 2030 Energy and Climate governance framework.

Yet, in spite of these policy pledges, a report released today shows that fossil fuels projects, in Europe and around the world, are still being enabled by billions in European public money.

In particular, the public banks – namely, the European Bank for Reconstruction and Development (EBRD) and the European Investment Bank (EIB) – which have repeatedly voiced their commitment to tackling the climate crisis and ‘greening’ their investment portfolios continue to dole out cash for fossil fuels extraction, distribution and consumption.

The report, co-ordinated by the Overseas Development Institute and Climate Action Network (CAN) Europe with input from Bankwatch, shows that between 2014 and 2016 fossil projects across the EU and beyond received EUR 2.3 billion from EBRD and more than EUR 6 billion from the EIB.

EU financial institutions’ green talk doesn’t hold water

In the span of these three years, the report finds, EU public banks and financial instruments have spent an average of EUR 3.2 billion every year on gas and oil production, mostly within the EU.

The Paris Agreement requires signatories to make “finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.” Over the year following the signing of this landmark accord in December 2015, the contribution of European public banks and financial instruments to fossil fuels projects has slightly dropped but at over EUR 2.4 billion in total it remained far too generous to facilitate the urgent energy transition required.

In particular, during 2014-2016, the EIB, the world’s largest public lender, provided a total of EUR 5.3 billion to one coal project, two oil projects and 27 gas projects in 12 EU countries.

At the same time, the bank invested almost a billion euros in fossil fuels projects outside the EU. One coal and five gas projects in five countries (Mongolia, Ukraine, Tunisia, Egypt and Moldova) were awarded a total of EUR 976 million in European public money.

Over the same period, 2014-2016, the EBRD channelled no less than EUR 2.3 billion to 31 coal, oil and gas projects in the Caucasus, Central Asia and the Middle East. In addition, six fossil fuels within the EU – in Estonia, Romania, Greece and Bulgaria – enjoyed a total of EUR 209 million in EBRD financing.

But there’s more to it. The European Fund for Strategic Investment (EFSI), which is managed by the EIB, was originally intended as a financial instrument to stimulate investment in sustainable infrastructure across the EU. Yet, already in its first two years of operation, 2015-2016, the Fund spent EUR 1.2 billion on eight gas distribution projects. Evidently, investment is desperately needed for defining ‘sustainable infrastructure.’

EU Budget also needs upgrade

Released just days after the European Commission’s conference on the Future of EU Finances, the new report also underscores the urgency of reforms to the EU Budget.

As the Commission moves to prepare the proposal for the next seven year EU budget cycle, the report’s findings expose the extent to which some of the very same programmes lauded as driving climate action, are at the same time bankrolling fossil fuels with billions of euros of EU Funds. These include the Connecting Europe Facility, which in 2014-2016 directed EUR 1.1 billion to gas projects, and EUR 930 million in the current programming period of the European Regional Redevelopment Fund.

In Czechia, for example, the EUR 45 million Operational Programme Environment was meant to cut air pollution from household heating but in practice funds new, supposedly cleaner coal boilers.

These figures therefore provide strong evidence that specific reforms will be needed to bring the EU Budget in line with the UN Sustainable Development Goals and the Paris Agreement.

Next: the mother of all fossil fuels subsidies

The next UN climate summit is less than two months away, and European public banks appear as eager as ever to enable even more fossil fuels infrastructure. The Southern Gas Corridor, the largest energy project the EU is currently pursuing, could soon receive unprecedented volumes of public finance.

The EBRD has already awarded more than half a billion euros in three loans to the Shah Deniz II gas drilling project in Azerbaijan which is intended to feed the massive pipeline project.

On October 18 both the EIB and the EBRD are expected to decide on new loans to the two main legs of the Southern Gas Corridor project. The EBRD is now preparing a USD 500 million investment in the Trans Anatolian Pipeline, while the EIB is considering a EUR 2 billion loan – in fact, the EU’s largest ever single investment – to the Trans Adriatic Pipeline.

Ultimately, by continuing to provide hefty support for fossil fuels projects the EIB, the EBRD and the EU’s other financial instruments are effectively fuelling the climate crisis whose fingerprints are all over disasters such as the latest string of monster hurricanes to hit the U.S. and the Caribbean or the recent massive floods across Bangladesh, India and Nepal that killed over a thousand people and affected tens of millions.

Ukrainian civil society resists efforts to be co-opted by big agro

The controversial Ukrainian agricultural company Myronivsky Hliboproduct (MHP) may be determined to further expand its operations, for which it has already bagged over half a billion euros in financing from three international financial institutions in recent years, but in the central Ukraine region of Cherkasy the company is not getting its own way.

There, in the historic town of Chyhyryn, the MHP subsidiary Peremoha Nova has since 2015 had designs on developing a major poultry production facility. It’s a project that could bring approximately one million chickens to the area, in close proximity to the village of Ratseve. As I’ve written about earlier this year, Peremoha Nova’s efforts to implement the project and its engagement with local communities has provoked a storm of controversies, including violent assaults against people opposed to the way in which the company is proposing to proceed in the region.

At issue has been the preliminary environmental assessment for the project which Peremoha Nova released for consultation in late 2016.

Its contents raised many eyebrows in Chyhyryn. For instance, the assessment failed to provide for a sanitary protection zone which is required by Ukrainian law: residential areas could thus be exposed to excessive levels of pollution from the poultry facilities under the company’s plans. Also missing is an assessment of the project’s potential impacts on potable water in Chyhyryn, not to mention a lack of information on the volumes of wastewater that will need purification and treatment. Air pollution threats too are neglected by the assessment, with a lack of clarity on how emissions from the poultry facilities will be handled.

These shortcomings and more were strongly voiced in sceptical community feedback to the plans, but the company has been oblivious to these concerns. Locals fear, that the company, instead of dealing with the community’s reservations, is signing individual land lease deals with some locals, in contradiction with the community’s majority opinion.

Hence in April and July this year, and only after 70 protestors from Chyhyryn in February descended on the mother company MHP’s headquarters in Kiev (and this too after numerous appeals to government officials as well as the Ukrainian president), representatives from Bankwatch sat down with the company to attempt to iron out differences and come to a better mutual understanding on the company’s overall performance and approach.

Previously in July the meeting with representatives from the Chyhyryn Regional State Administration made it clear that Peremoha Nova had yet to receive permission to start amending the ‘detailed territorial plan’ of the rayon (a sub-regional administrative division in Ukraine) encompassing the village of Ratseve. Procedurally, this is the first mandated step required to obtain the necessary permission documents for such a project.

The widespread concerns over the environmental assessment continued to be glossed over by the company, and following the meeting local activist Nina Martynovska, who was beaten up in February this year, summed it up:

“What we heard is pretty unambiguous. The company is sticking to its guns and continues to try to push forward its project against the will of 80 percent of the people in Ratseve. As things stand, with so many question marks hanging over the project and our valid concerns unanswered, it goes without saying that Peremoha Nova is unwelcome in our region.”

It took a few weeks, however, for MHP to put out an alternative take on the proceedings of the meeting, with its issuing of a press release entitled ‘MHP Establishes Cooperation with Public Organisations’.

Cribbing liberally from the stock ‘How to handle uppity civil society’ corporate playbook, MHP informs that:

“During the discussion, particular problems of certain communities and territories were presented and further steps to improve the relations and establish fruitful cooperation with all the representatives of the public were outlined.”

This interpretation of the proceedings is at odds with those of us from Bankwatch and our community partners – concretely, there has been no movement from the company since last December’s preliminary environmental assessment, including no response to the outstanding concerns with that assessment. Merely turning up to a meeting, and then not acting on valid concerns, does not entail ‘cooperation’.

As the company’s bogus press release claims seeped into local media, Ratseve residents protested on August 22 near the Chyhyryn Rayon Council against Peremoha Nova’s creeping efforts to obtain the necessary permission for amending Ratsevo’s territorial plan, the first step in advancing the industrial poultry house venture.

While this project is not being directly financed by the European Bank for Reconstruction and Development, the International Finance Corporation and the European Investment Bank, institutions which have supported MHP’s ascent to become Ukraine’s largest agricultural conglomerate, the cavalier approach to stakeholder engagement and public consultation being taken by one of its subsidiaries begs questions about the supposed positive impact these banks are having on the corporate culture of one of their blue-eyed boys in Ukraine.

‘Managing’ community relations via press release spin not only fails to address sensitive underlying issues – it also only worsens sentiment and further provokes bad feeling within communities like Ratsevo.

Georgia’s highlanders against hydropower

This article first appeared on openDemocracy.

Earlier this summer, I visited Georgia’s Svaneti region together with colleagues from Bankwatch. Svaneti, located high in the Caucasian mountains, borders the breakaway territory of Abkhazia, and is home to some of the most pristine rivers in the Caucasus. As a team of civil society members, we travelled there to talk with local people and analyse the quality of consultations over future development projects on their lands.

Together with the surrounding forests, Svaneti’s Nenskra and Nakra rivers have existed in a symbiotic bond with local communities for centuries. This strong interdependence between people and nature is visible everywhere in Svaneti — a constant reminder of the important role that local communities must play in designing infrastructure projects.

Yet in recent years, Svaneti has been transformed into a battleground between communities and the Georgian government with its plans for building large hydro power plants. The threat has united Svan people who are struggling to conserve what is left of their cultural heritage and the biodiversity of the region.

Public funding

The Georgian government’s ambition to build dozens of new hydro power plants (HPPs) in the Svaneti region has caught the attention of international financiers. The European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), the Asian Development Bank (ADB) and the new Asian Infrastructure Investment Bank (AIIB) have all expressed interest in financing the planned 280MW Nenskra HPP, the most advanced project in the government’s pipeline. Up to 75% of the project costs could come from international public sources and with the loan approval date coming up on 15 November for the EBRD, there is little time to act.

But while the dam is supposed to ensure energy security for Georgia during winter and eliminate imports from Turkey, locals and activists are opposing the project, which they view as a threat to Svan culture, the biodiversity of the region and the safety of local communities given the area’s seismic instability.

Seeing the awe-inspiring Svaneti region, the forests and rivers that will vanish for the Nenskra HPP, it is easy to understand these concerns, the anger and the feeling of hopelessness that locals express. Capturing water from these two serene rivers, the impacts of the project would stretch for dozens of kilometres, from the transmission lines to the power house, the site of the dam and over and across the mountains along the future water intake tunnel from the Nakra river. If the dam plans are implemented, it will get Nakra river down to 10% of its current flow and Nenskra to 5%. The project will affect numerous pasture lands and summer grazing areas for animals and its reservoir will flood hectares of forest.

A biodiversity expertise commissioned by Bankwatch identified several species of wild protected animals in the region including Eurasian lynx, brown bear, Persian leopard, booted eagle among many whose habitats will be disturbed by the future dam. Moreover, the region is experiencing annual mudflows and landslides and is well known for its geological instability, something people fear might be emphasized when the dam is built. Locals have also expressed great concerns over the impact the the dam will have on the humidity levels in the villages, causing numerous health problems as was the case of the Enguri HPP built in the region during soviet times.

A hiking trail in the Svaneti mountains. (Image (c) Rosa Vroom)

The project promoter is JSC Nenskra, a Georgian company established by Korean K-Water with a 10% share of a Georgian state owned company. JSC Nenskra has already benefitted from several deals with the Georgian government, among others receiving forest land for one dollar contracts (see page 20). The locals we spoke to and who have used this land for centuries told us they were not even aware of the deal.

Patronising perception of local culture

JSC Nenskra has committed to compensating the rightful owners for all pasture land and assets that will be lost due to the project. But during our visit and discussions with affected people, we discovered major flaws in the company’s assessment of the number of people that will be affected, their assets as well as the compensation they are entitled to. The shortcomings, which we have collected in a report, are proof and consequence of a lack of proper consultations with local communities.

The majority of people living in the two valleys own cattle that graze on summer pastures, lands which are inherited since generations and co-owned by up to five families. Customary law still dominates the region and people share both pasture and other assets such as summer cabins. During our discussions with affected households, we discovered that the project developer failed to map all the rightful users of these lands and assets. Instead, the company included single users in the compensation scheme, thus leaving behind numerous other co-users. This is the case for all the households we interviewed and from the assessment of the project documentation it seems it has been the practice for all the pasture lands that will be lost. In addition, a number of individual owners of land and cabins from the Nakra valley have been completely left out of the compensations scheme.

These systemic gaps in how JSC Nenskra assessed people’s land rights reveals not only the poor quality of public consultations, but also a patronising perception of local culture and livelihoods. Our visits to the region have left no doubt that the company has failed to recognise locals’ dependence on their land and the way their communities are functioning, based on strong internal rules of sharing and inheritance.

The poor quality of consultations is also reflected in the unjust amounts of compensation. As detailed in our report, the project documentation does not thoroughly assess the economic situation of affected households. The company’s assessment does not take into consideration the number of cattle that a family owns and which of these families would lose access to pasture and therefore to fodder. It also does not account for the numerous internally displaced people in the communities, or acknowledges the impact of changes in logging activities. In sum, the company has overlooked major aspects of the socio-economic profile of locals which are crucial for a just compensation scheme.

Khaishi villagers discussing the Nenskra HPP. (Image (c) Rosa Vroom)

Moreover, the company is still delaying an assessment of the impacts of facilities associated with the hydropower plant such as transmission lines and a waste disposal site. Needless to say that also the consultations with affected communities has not happened yet.

While the project documents made available by JSC Nenskra do not contain information on the location of these associated facilities, cadastral plans obtained from the Georgian authorities show that the location has already been agreed on. Local residents, who have signed letters demanding to be consulted about the locations of these facilities and the compensation they are entitled to, are understandably outraged.

Many still fear to speak out about the project and have asked for confidentiality during our interviews, afraid there might be repercussions on their families or jobs. A change in the logging licence system from 2015 has restricted the possibility for locals to obtain licences, forcing many into the illegal logging and timber sales business.

But the threat of losing parts of their identity along with the development of the project drove more than 300 people to sign a letter this June expressing their opposition to the project and their disappointment with the company’s failure to take account of customary law and local culture. And some are still taking the risk of openly opposing the project — in August, Bankwatch witnessed a large group of locals stepping out from the last round of public consultations held by the company.

International standards

Assessments of expropriation and compensation are not the residents’ own ideas, but international standards that JSC Nenskra has to respect to receive international public finance. Yet countless breaches of these standards are evidence that the Nenskra hydropower project is a serious threat to the local Svan communities.

If realised, this project will strip over 200 people, some of whom already living in poverty, of their pasture lands and livelihoods. The project must not go ahead until the project company is conducting individual assessments in order to have a full picture of the socio-economic situation and the fair amounts of compensations.

Multilateral development banks have so far delayed their approval date for loans for the Nenskra project in light of the numerous environmental and social concerns. With Georgia’s hydropower sector marked by controversies and major errors in the past, international investment ought to tread more carefully with approving any more projects.

When banks’ clients lack the capacity and willingness to understand the contexts in which they operate, the irreversible disruption of the fabric of entire communities is inevitable.

[Campaign update] EBRD confirms negative impacts of Albanian hydropower plants on people and the environment

It’s been a hot summer all over the Balkans. A heatwave called Lucifer struck Albania, drying up its river and causing numerous forest fires. Since Albania relies 90% on hydropower for its electricity, the drought resulted in a significant drop in production, forcing Albania to import 80 percent of it electricity. This is a stark warning to financiers and investors involved in the current hydropower frenzy that climate change is not only real but that it increases the risks of investments in climate sensitive hydropower.

It’s been a hot summer for the staff of the European Bank for Reconstruction and Development (EBRD) too. The EBRD commissioned teams to verify the findings from a Bankwatch fact-finding mission from June this year. During our mission we uncovered the destruction left behind by the Rapuni and Ternove hydropower plants that are financed by the bank. The EBRD’s own findings confirm many of our observations as the bank told us in our ongoing email communication. [1]

Rapuni

In a nutshell for the Rapuni 1 & 2 plants close to the eastern city of Librazhd, the EBRD confirms that the lack of water in the Quarishte and Rapuni river beds is causing among other impacts a lack of water for a cornflower mill that 200 people are using.

The EBRD also criticises the connected Rapuni 3 & 4 hydropower plant, saying that the construction “without an environmental flow and without a fish pass is unacceptable and shows a deficit of control by the Albanian authorities”.

The Rapuni 3 & 4 dam, owned by the Albanian Orthodox Church, is connected with Rapuni 1 & 2 projects with a water tunnel, but it is not directly financed by the EBRD.

The Orthodox Church declined to talk with Bankwatch and our partner Eco Albania about the environmental catastrophe their their dam has caused, even after repeated attempts to draw their attention to the problem.

Rapuni-sonmill — A son of the miller's family standing next to the millstone that has become useless.

Ternove

It is virtually impossible not to notice the heavy erosion and deforestation caused by the Ternove hydropower plant close to city of Bulqize. A system of lakes is used to feed the Ternove hydropower plant here. As part of the project, a system of channels transports water from smaller lakes to the main lake Liqeni i Zi from where the Ternove power plant is being fed.

Based on its own findings, the EBRD admitted to the need for revegetation of the area.

The bank, however, downplayed Bankwatch’s finding that the glacial lakes in the area are affected by the sediment inflow – calling the impact ‘limited’ – a judgement that is difficult to understand seeing the channels full of brown water that transport water from the other lakes to the lake Liqeni i Zi. With the water transported to Liqeni i Zi visibly containing large amounts of earth, the Bank must ensure that its own recommendation to install sediment traps will be implemented.

A map showing a system of lakes that is used both for hydropower and irrigation purposes. — Several lakes are used both for hydropower and irrigation purposes.

Ternove-channel — The channels transporting water full of sediment to Liqeni e Zi.

Lack of communication

The villagers that we met back in June reported a serious lack of communication with the company. The extremely hot summer, they told us now, caused severe problems with irrigation in August.

To our great surprise, a lack of a grievance mechanism was one of the EBRD’s findings. The villagers were not able to direct their complaints to the company. And the main complaint is everywhere the same: lack of water for irrigation. Since the same system of lakes is used for the hydropower plant, the farmers suspect that the lack of water in summer months has to do with the hydropower plant. The frustration was so great that it escalated into physical conflict a few years ago. Had the company established a contact point and a grievance mechanism for locals, these issues may have been prevented.

Since the monitoring reports and environmental and social action plans have not been made public, neither Bankwatch nor the Albanian public can find out what really happened.

Too little too late

What comes as a great surprise for me is how these problems haven’t been identified during previous monitoring missions of the EBRD. Or, if they have been identified, why nothing was done. Since the monitoring reports and environmental and social action plans have not been made public, neither Bankwatch nor the Albanian public can find out what really happened.

If the EBRD insisted on greater transparency, the company would have to be more accountable and to resolve the outstanding issues. But more than that, providing access to monitoring data can be beneficial to all stakeholders. If the EBRD went a step further and required from its clients to release open data about key environmental indicators (like residual water flow in case of a hydropower plant), public oversight could act as a controlling mechanism and save money and time by identifying problems early enough.

But just looking at the damage done by this year’s drought and the destruction unleashed by the hydropower plants built so far, I am more and more certain that a change in policies will not be enough. A shift in investment priorities is needed. The EBRD should prioritise solar and wind to be able to reach its renewable investment targets. Investors need a signal from big players such as the EBRD to choose other, more climate-resilient power sources. So that Albania’s people do not spend another summer with their rivers dried up while fire is destroying their forests.

The EBRD’s recently signed Memorandum of Understanding with the Albanian Ministry of Energy and Industry is only one step in the right direction to stimulate sound investments in solar power generation.

Notes:

1. The lack of transparency has been a major obstacle in addressing grievances of locals so far. Considering the severe problems that the plants have caused and the shortcomings in dealing with them, we decided to publish the EBRD’s email exchange with us.

Bulgaria’s Struma motorway becomes test case for European Commission’s commitment to EU nature protection law

Bulgaria’s government has proven yet again its determination to disregard inconvenient truths and opinions at a public hearing on the Environmental Impact Assessment (EIA) and Appropriate Assessment (AA) of the Struma Motorway, connecting Sofia and Thessaloniki, that was held on Monday, September 11, in the town of Kresna.

With two thirds of the motorway built, the bottleneck is the road’s middle section that threatens the Kresna Gorge, Bulgaria’s richest biodiversity site. But while five alternatives are on the table, the government has already decided that it should be the one that breaches EU law.

€756 million of EU taxpayers money were allocated for the construction of the Struma motorway, of which €274 million has already been spent for the other sections. Bulgaria’s environmental minister was quoted that Bulgaria is expecting to get €680 million from the EU for the finalisation of the project.

In view of this the European Commission and the Bulgarian Government must ensure that the project is completed by 2023 in full compliance with EU nature laws. Otherwise the Bulgarian Government risks having to repay some or all of the grants. At stake is a biodiversity hotspot of European importance containing 35 especially protected EU habitats for 92 EU-protected species, such as land tortoises, Leopard and Fourlined snakes, 12 species of bat, golden eagles, griffon vultures, bears, wolves, otters and other species.

The EIA and AA present five alternative routes of the highway. The main choice is between a full eastern alternative (G20), which by-passes the gorge completely, and a semi-eastern alternative (G10.50), which routes the south-bound traffic on the existing road through the gorge, but by-passing Kresna town, and the north-bound traffic over the hills east of the gorge.

Map of the Kresna gorge showing the alternative favoured by locals and environmental campaigners.

Environmental groups and nearly 1000 locals have supported a petition in favour of the full eastern alternative outside the gorge, which leaves the existing road for the needs of local communities.

People stressed at the public hearing that the existing local road through the gorge ensures a more direct and cheaper (toll-free) connection to their agricultural lands, to nearby mountain villages and to the main employment, business and educational centers, Blagoevgrad and Sofia, to the north. A semi-eastern alternative is designed to primarily serve the needs of tourists traveling at higher speed to the Greek seaside. It will force the locals to use a much longer, high-speed road at higher altitudes.

The government’s favourite alternative

As consultations often go, not all alternatives are equal.

Inside the overcrowded meeting hall project promoters, the Kresna mayor and the Blagoevgrad regional governor advertised the semi-eastern alternative and the promises for commercial zones on the motorway. They all emphasised that it is virtually the only option and that there is no real choice or room for discussion. Their argument was the urgent need to find a solution and to prevent the bottleneck, which has caused a significant increase of casualties in both the gorge and the town of Kresna.

The overcrowded meeting hall where the Kresna gorge was discussed.

The superiority of human life and safety and the imperative to prevent further road accidents were used very effectively by the event organisers to hijack the purpose of discussing the EIA/AA. Biodiversity protection was juxtaposed as an inferior cause of fanatical ecologists, not as a requirement of EU law and a condition for receiving EU funds for the project.

But the Bulgarian government and the Roads Infrastructure Agency, have actively promoted the semi-eastern alternative even before the public meetings. In fact already in April this year the Agency announced that it had selected an extended conceptual design for the motorway on the semi-eastern option, well before the EIA and AA were finalised. Accordingly, the EIA/AA presented at the public hearings had their scope and analysis carefully crafted to favour this option. But there are several serious problems with the semi-eastern alternative.

First of all a recommendation by the Bern Convention from 2004 requires from the Bulgarian government to find a route outside of the gorge. Based on this recommendation and after Bulgaria’s accession to the EU in 2007, an Appropriate Assessment from 2008 ruled that, to mitigate the impacts of the motorway on the Kresna Gorge, (i) transit motorway traffic must be routed outside of the Gorge, and (ii) the Kresna section must be completed before other sections, in order to avoid an increase in traffic on the existing road and avoid serious adverse impacts on the integrity of the Kresna Gorge. The second condition has already been breached. Now the government seems to believe it can get away with breaching the first condition, too.

The second major shortcoming is the scope of the assessments. According to public statements of Bulgaria’s minister for regional development, Mr. Nikolay Nankov, the semi-eastern alternative will require ‘widening, rehabilitation and straightening of the turns’ of the existing road through the gorge, as it will take the traffic from Sofia to Greece. The impact of these works are not assessed in the EIA or the AA.

Moreover at the public hearing in Kresna project promoters advertised to local people the additional commercial, parking and recreational zones along the motorway – to be situated in the most fertile agricultural land of Kresna. The impacts of these areas, and of the accompanying power and water infrastructure, have not been included in the EIA/AA scope and have not been assessed either.

The Bulgarian government has indicated that it plans to finance the ‘rehabilitation’ of the existing road through the gorge from the national budget. This will have adverse impact and will cause irreversible harm to the gorge. The hope, apparently, is that with EU-funding only channeled to half of the motorway, the other half, and the promised commercial zones, can be built in breach of EU Directives, and possibly without an EIA.

In short, EU money – EU rules; Bulgarian money – Bulgarian rules. This calculation of the Bulgarian government is extremely bold and dishonest. It can only pass, if the European Commission exhibits the same level disregard for EU law.

Systematic shortcomings will deprive people affected by Georgian dam of compensation

An official assessment of land assets and livelihoods of people affected by the Nenskra hydropower plant in Georgia contains many mistakes and inaccuracies, as a report released today reveals. The shortcomings of the so-called Land Acquisition and Livelihood Restoration Plan, which is a prerequisite for public financing for the project, will cause severe damage to locals in the Svaneti region in Georgia.

The Nenskra hydropower project in Georgia’s Caucasus mountains will have a significant impact on local communities of indigenous Svans. Since the plans for the project became known, locals have tried to influence the decision-making and protested against impacts they fear will undermine their livelihoods.

Partly to address these concerns, and those of international public lenders who are lining up to finance the project, the project developer JSC Nenskra Hydro released an extensive Environmental and Social Impact Assessment (ESIA) package earlier this year. With about 75 percent of the project costs planned to come from public financing sources, preparing an ESIA, which is a pre-requisite for such support, is a crucial stepping stone for JSC Nenskra Hydro’s plans.

The package includes a section on the Land Acquisition and Livelihood Restoration Plan (LALRP). Its content should provide a detailed mapping of the socioeconomic situation of people affected by the project, the use of their assets, the expected effect on livelihoods, etc.

However a field investigation conducted by Bankwatch in July revealed large discrepancies between the project promoter’s assessment and the reality on the ground. Severe shortcomings have been uncovered in the findings and the methodology used to assess the situation of the people affected by the project.

Confronting representatives from villages in the Nenskra and Nakra valleys with JSC Nenskra Hydro’s impact assessment, Bankwatch learned that the information initially collected was either incomplete or has been misinterpreted, resulting in inaccuracies in the data about people’s vulnerability statuses, pasture land usage, asset usage and ownership, and financial situation, among others. Much of the impact of the Nenskra hydropower plant on households has so far been overlooked due to these incoherencies. In consequence, the compensation offered to locals has been miscalculated in several cases, with dire results.

For instance, several households in the communities are dependent on the use of pasture lands for grazing purposes and wooden cabins that would be temporarily or permanently lost. The cabins are often used by several households in parallel. However in the cases investigated by Bankwatch, the compensations for the loss of such an asset were offered to a single user with no compensation guarantee for other users or households.

Accumulated mistakes

What is worse, a single household often suffers from a combination of such errors. For instance in the case of the women-headed household of Iso Chkhvimiani, the LALRP fails to indicate her ownership and usage of a cabin which would be temporarily lost despite it being built by her deceased husband. Instead, the compensation was offered to another household using the same cabin but with no further detailed instructions about dividing the compensation sum.

But other shortcomings and misrepresentations are additionally reducing the compensation Chkhvimiani’s and other households receive. Among others:

The number of household members is wrong.
Internally Displaced Persons (IDPs) – of which there are many in Svaneti following the conflict in the neighbouring region Abkhazia – are not recognised as a „vulnerable group“. This deprives them from additional or better services from the company, including jobs, trainings, compensation, etc.
Internally Displaced Persons are not defined as „poor“ in the company’s report, regardless of their financial and social status, defacto further depriving them of support. The basis for the company’s categorisation of people living in poverty is whether they receive a poverty allowance from the Georgian state. IDPs, however, receive a separate IDP allowance and are not entitled to receive the poverty allowance.

Assessment failed

One of the key aims of Land Acquisition and Livelihood Restoration Plan is mapping the situation of affected households and communicating it to them. Yet it was evident that the people we spoke to were unaware of the discrepancies between the assessment and their real situation. Neither had they been informed about their right to complain, feeling powerless against the developer’s actions. The aim of the Land Acquisition and Livelihood Restoration Plan has therefore not been fulfilled by the project promoter.

International financial institutions who are considering financing the Nenskra hydropower plant will have to make sure that these shortcomings have been rectified before deciding on pumping hundreds of millions of dollars into a project that’s set to ruin lives.

Download the report as pdf >>

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