Shuakhevi hydropower plant, Georgia
Entrusted with leading Georgia towards energy independence, the Shuakhevi plant has achieved anything but. Long after its completion in June 2017, it is as far as it could be from fulfilling its promise for energy security. Instead, it managed to collect an impressive ‘portfolio’ of problems in a wide range of areas: from biodiversity, to gender impacts, to community relations.

Stay informed
We closely follow international public finance and bring critical updates from the ground.
Key facts
Location: Adjaristsqali river in south-western Georgia Two dams, 39 metres and 22 metres high, with an installed capacity of 185 MW with expected electricity output of 452 Gwh, and three diversion tunnels of 5.8, 9.1 and 17.8 kilometers. Total project cost: USD 417 million- the EBRD: USD 86.5 million
- the IFC: USD 90 million, 20% equity in the project
- the ADB: USD 90 million (source)
Key issues
- extensive damage to the local ecosystems following the construction of the hydropower plant. The adequacy of the mitigation and biodiversity offsetting measures in ensuring conservation of valuable habitats and species is questionable.
- Lack of detailed assessment of geological risks threatens both hydropower investments as well as communities living in the shadow of the 2 big dams, 1 wier and 32.7 kilometers of tunnels.
- A failure to safeguard local women residents by conducting proper gender impact assessment and ensuring meaningful participation of women in consultations and decision-making
Background
A press release from the Ministry of Energy of Georgia from 24 June 2017 announced that project construction was completed, claiming that by adding its 187 MW to the total installed capacity of the country “the Shuakhevi HPP project will significantly contribute to Georgia’s path toward energy independence”.
Long after that, the project is still not operational. On-going problems with the tunnels of the project raise questions about the robustness of the project design, impact assessment and implementation, as well as about financiers’ prudence in conducting due diligence before decisions were made on public money spending, and in monitoring of the project implementation.
One of the villages heavily impacted by the construction, submitted arequest for problem-solving to the EBRD’s, the IFC’s and the ADB’s respective accountability mechanisms. The complainants have brought up concerns of unmitigated negative impacts on community safety and access to water, as well as of inadequate handling of their grievances by the lenders and the client Adjaristsqali Georgia LLC (AGL).
In view of the continued ambition of the Georgian government to build risky dams and of the lenders like the EBRD to provide public money investments for these projects, Bankwatch and Green Alternative call for a transparent process of compliance review to ensure accountability and lessons learned for the institutions involved.

Environmental impact
A 2017 report commissioned by Green Alternative and cited in the complaint documented extensive damage to the local ecosystems following the construction of the hydropower plant, which destroyed 93 ha of natural habitats – the area 10 times higher than the 9,2 ha estimated in the project’s impact assessment.
Some of the report’s key findings:
River and riparian habitats
Biodiversity offsetting or compensation were proposed only for forest habitats. The loss of key river and riparian habitats was not offset at all and grassland habitats were not restored. Worse still, some additional areas were destroyed during afforestation activities.
Tree planting
Despite the clear requirements in EU Directives, tree planting was only done after the habitats had been destroyed and it will never be able to recreate habitats with similar ecological functions to the destroyed habitats.
Local fish populations
By the end of the project’s construction local fish populations were found to be almost completely extinct throughout several kilometers below the two dams and the weir, and the remaining fish populations above the dams/weir were in a bad state.
Red list species
The Adjaristsqali basin is considered a critical habitat for the Eurasian otter (Lutra lutra), a red list species in Georgia. If the minimum ecological flow in the river is indeed limited to 10% and there are daily changes in the water release from the Shuakhevi powerhouse, the viability of the local otter population would be further threatened.
Bird and bat conservation
The introduction of bird and bat conservation measures have been totally inadequate as they cannot offset the loss of natural, especially riparian, habitats. Two other impacts on bird species are not addressed properly – the migration barrier effect of new powerlines and the impact on the Chorokhi delta because of changed hydrological and sedimentation regime;
Biodiveristy hotspots
The river banks, where traces of wolves, golden jackals, and brown bears have been documented, should be considered a biodiversity hotspot where no effective offsetting is possible.
Gender impact
It is unclear whether the bank and AGL ensured gender equality and proper safeguarding of women as a vulnerable group, and whether or not local women participated in decision-making and were consulted in a culturally appropriate manner.
The project’s impact assessment included no information on gender impact or special provisions for protection of women from local communities, for example in view of influx of workers, no mention of women-headed households or opportunities for women entrepreneurs.
It didn’t present any consideration for the cultural barriers to women’s participation in consultations, in view of the traditional and religious background.
The Land Acquisition and Livelihood Restoration Plan makes a reference to the number of female-headed households, however, it does not analyse the land ownership and land use patterns or the impact on women’s livelihoods if compensation is given to male property owners.
Green Alternative’s 2016 report Gender Impact of Shuakhevi HPP Project And Its Compliance With EBRD Requirements concludes that:
“The Shuakhevi HPP construction has revealed a lot of gender-sensitive problems, on which the project developer failed to respond adequately, as comprehensive social and environmental assessment including gender analysis and assessments has not been conducted at the stage of the project development. […] In addition, there are no evidence that can verify the fact that the project brought sustainable benefits to the affected population and simultaneously strengthened women in Adjara.”
The report recommended that the lenders, in close coordination with the Georgian government, demand from the project developer to draft gender assessment and action plan, and then strictly monitor its implementation – a recommendation that was never followed.
Latest news
A hydro-powered Bitcoin boom in Georgia
Bankwatch in the media | 4 November, 2019How hydroelectric dams are powering cryptocurrency mining on the eastern edge of Europe. Ed Butler travels to Georgia to visit the Bitcoin mines benefiting from cheap electricity and tax benefits.
Read moreAhead of Asia Infrastructure Investment Bank meeting in Luxembourg, over 89 000 petition bank to drop Nenskra dam project in Georgia
Press release | 12 July, 2019Luxembourg, Prague, Tbilisi – Representatives from the “Stop Nenskra” campaign [1] showed up in Luxembourg at the Asia Infrastructure Investment Bank (AIIB) annual meeting on July 12th and delivered a petition to the international development banks calling them on not to finance the Nenskra hydropower plant project [2] in Svaneti, Georgia.
Read more‘Stop Nenskra’ campaign asks international banks not to finance Nenskra HPP in Georgia | MENAFN.COM
Bankwatch in the media | 12 July, 2019(MENAFN – Trend News Agency) Baku, Azerbaijan, July 12By Tamilla Mammadova – Trend:Representatives from the ‘Stop Nenskra’ campaign s Source: ‘Stop Nenskra’ campaign asks international banks not to finance Nenskra HPP in Georgia | MENAFN.COM
Read moreRelated publications
Can the EIB become the “EU Development Bank”?
Report | 9 November, 2020 | Download PDFThis report analyses the EIB’s track record in the development field and offers a series of detailed recommendations for fundamental reforms at the EIB, so that the Bank can better support partner countries’ development priorities and ultimately become a credible candidate for the “EU Development Bank” seat.
Complaint to the European Ombudsman regarding the EIB’s non-disclosure of information
Briefing | 14 May, 2019 | Download PDFThis complaint is based on the Memorandum of Understanding signed by the EIB with theEuropean Ombudsman allowing the complainants who are not satisfied with the outcome of the procedure before the European Investment Bank-Complaints Mechanism (EIB-CM)
Nenskra hydropower project: May 2019 update
Briefing | 14 May, 2019 | Download PDFGiven the complexity of the Nenskra project and its immense impact on indigenous Svan communities and the country’s fiscal stability, the EBRD should take responsibility and not provide financial support until the project is properly assessed. Read mor