INTEGRATED SAFEGUARDS DATA SHEET RESTRUCTURING STAGE Note: This ISDS will be considered effective only upon approval of the project restructuring Report No.: ISDSR17394

Public Disclosure Authorized Date ISDS Prepared/Updated: 27-Jul-2016 Date ISDS Approved/Disclosed: 27-Jul-2016 I. BASIC INFORMATION

Public Disclosure Copy 1. Basic Project Data

Country: Project ID: P147348 Project Name: Transmission Grid Strengthening Project (P147348) Task Team Joseph Melitauri Leader(s): Estimated 25-Mar-2014 Estimated 13-May-2014

Public Disclosure Authorized Appraisal Date: Board Date: Managing Unit: GEE03 Lending Investment Project Financing Instrument: Is this project processed under OP 8.50 (Emergency Recovery) or OP 8.00 (Rapid Response to Crises and No Emergencies)? Financing (in USD Million) Total Project Cost: 61.88 Total Bank Financing: 60.00 Financing Gap: 0.00 Financing Source Amount

Public Disclosure Authorized Borrower 1.88 International Bank for Reconstruction and Development 60.00 Total 61.88 Environmental A - Full Assessment Public Disclosure Copy Category: Is this a No Repeater project?

2. Current Project Development Objectives

3. Project Description Public Disclosure Authorized The Transmission Grid Strengthening (TGS) Project will: (i) provide transmission services to the newly constructed hydropower station, (ii) improve stability of the south-western part of the transmission grid, (ii) establish power exchange platform, and (iii) assess the environmental impact of the sector strategy.

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Component 1. Transmission System Strengthening. This component finances construction of a high voltage transmission line from to . As a result of restructuring, it will provide resources for; (i) rehabilitation and upgrade of the three 220 kV lines; Sataplia, Ajameti-1,2 and Kolkhida-1, (ii) rehabilitation of four substations; Menji; Tskaltubo, and , and (iii) the upgrade of the Supervisory Control and Data Acquisition and Energy Management Systems (SCADA/EMS).

This component originally had three activities: i) Construction of a high voltage transmission line, including the supply and installation of a Public Disclosure Copy double-circuit 220 kV TL from Akhaltsikhe back-to-back (BTB) and 500/400/220 kV substation (Akhaltsikhe station) to Batumi 220 kV substation. It will connect with the two hydro power plants (HPPs): 175 MW HPP and 150 MW Koromkheti HPP. The estimated length of the TL is 142 km. It is composed of two sections: Section 1 is a 91 km TL from Shuakhevi HPP to Akhaltsikhe station and Section 2 is a 52 km TL from Batumi substation to Shuakhevi HPP via Koromkheti HPP.

ii) Construction supervision through procurement of consultant services for the supervision of the supply and installation of Akhaltsikhe-Batumi TL and

iii) Evaluation of bids through procurement of consultant services for evaluating of bids for works on Akhaltsikhe-Batumi TL, as well as procurement of consultant services for the preparation of (a) new transmission-system expansion plan, (b) prospective transmission line feasibility studies, and (c) basic designs for the prospective transmission.

The proposed restructuring will add fourth activity: rehabilitation and upgrade of the 220 kV substations Menji, Tskaltubo, Kutaisi, and Zestaponi, and of the 220 kV TLs connecting them. This will include provision of goods and equipment for rehabilitation and upgrade the total 102 km of the three 220 kV transmission lines; (i) Sataplia line connecting high voltage substations Tskaltubo and Kutaisi, (ii) Ajameti line connecting substations Kutaisi and Zestaponi, and (iii) Kolkhida line connecting substations Menji and Kutaisi and provision of protection and control equipment for the four substations; Menji, Tskaltubo, Kutaisi and Zestaponi. The goods and equipment include towers, foundations, conductors, Optical Ground Wire (OPGW), fittings, steel structures and protections and control equipment, and spare parts for the substations. Rehabilitation and upgrade will entail; (a) replacing the existing 15 km single circuit 220 kV transmission line from Tskaltubo to Kutaisi with 220 kV double circuit line; (b) replacing of the existing 21 km 220 kV single circuit line between Public Disclosure Copy Kutaisi and Zestaponi substations with 220 kV double circuit line; (c) rehabilitating the existing 66 km 220 kV single circuit line between substations Menji and Kutaisi; and (d) installation of the protection and control equipment in the substations Menji, Tskaltubo, Kutaisi, and Zestaponi. The fourth, new activity, will be carried out by GSE.

Component 2. Wholesale Power Exchange Platform. This component finances provision of hardware and software for the power exchange systems. It has two activities: i) Supply and installation of power exchange platform which includes hardware and software for metering, balancing, and trading systems, and

ii) Preparation of the design and supervision for the above platform.

The proposed restructuring will provide resources for updating the SCADA/EMS.

Page 2 of 14 Component 3. Strategic Environmental and Social Assessment. This component finances preparation of the Strategic Environmental and Social Assessment report.

No change in this activity is proposed.

Component 4. Project Management. This component finances Georgian State Electrosystem (PIU) for the effective project management.

No change in this activity is proposed.

Public Disclosure Copy 4. Project location and salient physical characteristics relevant to the safeguard analysis (if known) Most part of the Akhaltsikhe-Batumi transmission line corridor, being financed by the original project, passes through the Autonomous Republic of , and the rest of it is located in and Akhaltsikhe provinces of Samtskhe-Javakheti region of Georgia. Part of the corridor gets pretty close to the Georgia's State border with . The transmission line will connect the town of Akhaltsikhe - located on the plateau of semi-arid hills with continental climate, to Batumi - a sea port and beach resort on the Back Sea coast. The line will get over the Goderdzi mountain pass located 2025 meters over the sea level. The corridor will pass through highly diverse types of terrain, ranging from alpine meadows to subtropical forests and the coastal zone. These areas include populated and cultivated parcels of land, pastures, as well as parts remote and minimally transformed forests.

The proposed restructuring will finance rehabilitation and upgrade of the existing transmission lines and substations located in region, West Georgia. The rehabilitation will be carried out within the existing TL corridor. No new land take or relocation of towers is expected. However, should there be any cases requiring land acquisition for the new component, GSE will prepare site-specific as per the projects RPF. 5. Environmental and Social Safeguards Specialists Darejan Kapanadze (GEN03) Jorge E. Villegas (GSU03)

6. Safeguard Policies Triggered? Explanation (Optional) Environmental Yes TGS Project supports construction of a new power Assessment OP/BP 4.01 transmission line (TL) between Batumi and Akhaltsikhe

Public Disclosure Copy in a difficult terrain, including forested areas and river crossings, rural settlements, and cultivated land plots. Certain sections of this TL alignment may overlap with bird migratory routes. Rehabilitation and upgrade of TLs and substations in Imereti region to be financed after restructuring will have considerably lesser negative environmental and social impacts. The Project triggers OP/BP 4.01 and according to this Policy, is classified as an Environmental Category A, however additional works included after restructuring will be handled as environmental category B due to considerable lesser risks and expected impacts.

Page 3 of 14 The Borrower financed Environmental and Social Impact Assessment (ESIA) of the construction of Batumi- Akhaltsikhe TL, and environmental and social management planning for the rehabilitation of Sataplia, Ajameti-1, 2 and Kolkhida-1 TLs, as well as of the Kutaisi, Zestaponi and Tskaltubo substations. ToR of works on the Batumi-Akhaltsikhe TL was publicly disclosed and discussed with stakeholders. Draft ESIA report for this TL as well as Environmental and Social

Public Disclosure Copy Management Plan for rehabilitation of Sataplia, Ajameti-1, 2, and Kolkhida-1 TLs were also disclosed and consultation meetings held. Safeguard documents were finalized afterwards with incorporation of the public feedback.

The construction of Akhaltsikhe-Batumi TL is subject to the EIA, State ecological expertize, and environmental permitting as per the national legislation, while reconstruction of Ajameti-1, 2, Sataplia and Kolkhida TLs is not subject to ecological expertize. The Borrower is expected to fully meet all requirements of the Georgian law.

Works required for the rehabilitation and upgrade of Sataplia, Ajameti-1,2 and Kolkhida-1TLs and Menji, Kutaisi, Zestaponi, and Tskaltubo substations were screened for their potential environmental and social risks. Potential negative impacts of these work were found minimal because all of them will be undertaken within the existing environmental footprint. Main types of works to be performed are: replacement of towers (new ones to be of the same size and to be located in the same corridor), stringing between them, and installation of additional equipment in the existing substations within fenced

Public Disclosure Copy territories of these substations. Potential impacts are confined to those that may happen in case of applying generally improper construction practice: poor technical condition and inadequate operation of construction vehicles and machinery, disorganized disposal of construction waste, and neglect of work-site safety rules. Mitigation measures for such possible impacts are conventional, easy to apply and to monitor, and all of them are included into the Environmental Management Plan. Natural Habitats OP/BP Yes OP/BP 4.04 Natural Habitats is triggered by original 4.04 project because about 10 km long lower section of the Akhaltsikhe-Batumi TL alignment falls within the

Page 4 of 14 important international migratory corridor of birds, out of which the potential impacts of the TL construction and operation may be significant within 5-6 km segment, where birds are known to fly closer to the earth surface. The original project is expected to have modest impact on the forest habitats as well.

There is no additional impact on natural habitats that may be caused by the activities to be included into TGS

Public Disclosure Copy Project after restructuring. The safeguard policy will remain triggered due to the originally planned activities. Forests OP/BP 4.36 Yes Significant part of the Akhaltsikhe-Batumi TL corridor that is being constructed under original project passes through forested areas. Placement of towers and arrangement of service roads require tree cutting. Natural forests, predominantly located on mountain slopes, will therefore be affected. A land strip under the power cables shall be maintained free of high-growing vegetation throughout operation of the TL. OP/BP 4.36 Forests is triggered to address risks associated with the expected impacts of the original project on the forest stands.

Additional activities proposed through restructuring will have no additional impact on forests, as the rehabilitated and upgraded lines will remain within the right of way (ROW) of the existing lines. The safeguard policy will remain triggered due to the originally planned activities. Pest Management OP 4.09 No OP 4.09 Pest Management was not triggered under original project, because ESIA confirmed that no herbicides will be used during construction and operation of the TL with the purpose of clearing and/or controlling vegetation.

It will not be triggered upon restructuring either, because Public Disclosure Copy the ESMP developed for the additional works confirms that there will be no herbicide use for the purposes of operating Sataplia, Ajameti-1, 2, and Kolkhida-1 TLs either. Physical Cultural Yes Akhaltsikhe-Batumi TL will pass the area with a number Resources OP/BP 4.11 of registered historic monuments. Although the TL is designed the way to avoid direct impacts on the these cultural assets, a need for the construction and operation of service roads, construction camps and other supporting infrastructure carries certain risk of negative impacts. Also, there is a likelihood of encountering chance finds during earth works required for the construction of towers under original project. OP/BP 4.11 Physical Cultural

Page 5 of 14 Resources was triggered by the original Project to manage any possible impacts on the cultural property.

No such impacts are expected from works to be financed through restructuring. However, the safeguard will remain triggered due to the originally planned activities. Indigenous Peoples OP/ No BP 4.10 Involuntary Resettlement Yes GSE carried out ESIA for the construction of the Public Disclosure Copy OP/BP 4.12 Akhaltsikhe-Batumi TL, which included analysis of alternatives to ensure minimal physical and economic displacement of people. However, some economic and physical displacement was unavoidable and for this reason GSE prepared a Resettlement Policy Framework (RPF) and six separate Resettlement Action Plans (RAPs) in line with Bank policy and the national regulations. Some RAPs have been updated to reflect the fact that during the micro-alignment design by the Construction Contractor further impacts and risks were avoided. These RAPs have been received No Objection from the Bank and are being implemented. To date GSE has demonstrated commitment and capacity to manage risks and impacts associated to land take and resettlement. There is a Grievance Redress Mechanism in place being managed by GSE in coordination with local municipalities. The Bank coordinates with GSE as needed to respond to questions and complaints received directly by the Bank. To date only one complaint has been received directly by the Bank from the Adjaristskali village regarding land acquisition and it is being addressed.

Regarding the activities under the proposed restructuring, including the rehabilitation and upgrade of Sataplia, Public Disclosure Copy Ajameti-1, 2 and Kolkhida-1 TLs as well as of the Menji, Kutaisi, Tskaltubo and Zestaponi substations will be carried out within the existing corridor of TLs and fenced territories of the existing substations, and therefore no land acquisition or economic of physical displacement resettlement is expected. Should there be any need for land acquisition of land the Borrower will prepare RAPs as per the projects RPF. Safety of Dams OP/BP Yes TGS Project - neither originally nor after restructuring - 4.37 includes any physical activities on dams and is not directly dependent on the safe operation of dams, however, construction of HPPs associated with TL entails placement of two large dams with the height of 22m and

Page 6 of 14 39m and the OP 4.37 is triggered. The Bank team reviewed arrangements in place for ensuring dam safety under the IFC-supported Adjaristskali Cascade Project and will track how the quality control will actually work at the dams design, construction and operation phases as activities for the arrangement of HPP reservoirs progress. The restructured project activity does not include any additional physical activity on dams. The safeguard will remain triggered due to original project activity.

Public Disclosure Copy Projects on International No TGS Project - neither originally not after restructuring - Waterways OP/BP 7.50 will trigger OP 7.50. Three HPPs to be constructed under the associated Adjaristskali Cascade Project, under original project, will abstract water from the rivers of Chorokhi basin that drains into the Black Sea in the territory of Georgia. Construction of these HPPs will not have any trans-boundary impacts. The activities under restructured project will have no impact on rivers, therefore the safeguard will not be triggered. Projects in Disputed No Areas OP/BP 7.60

II. Key Safeguard Policy Issues and Their Management A. Summary of Key Safeguard Issues 1. Describe any safeguard issues and impacts associated with the Restructured project. Identify and describe any potential large scale, significant and/or irreversible impacts: The TGS Project supports construction of a new Akhaltsikhe-Batumi TL, most part of which will pass through the Autonomous Republic of Adjara, and the rest of it will be located in Adigeni and Akhaltsikhe provinces of Samtskhe-Javakheti region of Georgia. Part of the TL corridor gets pretty close to the Georgia's State border with Turkey. The transmission line will connect the town of Akhaltsikhe - located on the plateau of semiarid hills with continental climate, to Batumi - a sea port and beach resort on the Back Sea coast. The line will get over the Goderdzi mountain pass located 2025 meters over the sea level. The corridor passes through the highly diverse types of terrain, ranging from alpine meadows to subtropical forests and the coastal zone. These areas

Public Disclosure Copy include populated and cultivated parcels of land, pastures, as well as parts remote and minimally transformed forests.

Despite proximity to several designated protected areas, historic monuments, an evolving skiing resort, and numerous human settlements, works in the TL corridor will not affect these protected areas, will not destroy or fragment significant natural habitats, will have the least negative impact on the aesthetic appearance of the landscapes, and will carry minimal needs of resettlement. The selected most optimal alignment of Akhaltsikhe-Batumi TL still has a few kilometers overlap with a sensitive section of an international migratory corridor of birds, where the only option is to design the TL towers and conductors applying best practice features to reduce the likelihood of bird collisions and electrocutions. This will include placing of conductors within the distance established to avoid electrocutions while perching, and equipping the cables with bird reflectors to increase their visibility and rescue collisions. Bird monitoring will be ensured at Akhaltsikhe- Batumi TL operation phase to check bird mortality rate, verify effectiveness of mitigation, and

Page 7 of 14 determine the need for additional measures. Mitigation of the construction-phase negative impacts will be possible by applying conventional good environmental practice and strong supervision of works. In addition to that, the humid subtropical climate of the Autonomous Republic of Adjara provides favorable conditions for a rapid natural regeneration of a number of construction impacts in most parts of the Project area.

Adjaristskali Cascade Project is an ongoing activity for the construction of four HPPs in the Autonomous Republic of Adjara, implemented with financial participation of IFC, MIGA and EBRD, which is associated with the construction of TL. Namely, TL will evacuate power generated in the four HPPs under construction. In accordance with IFC Access to Information Public Disclosure Copy Policy, early drafts of the ESIA of Adjaristskali Cascade Project were disclosed at IFC's website on May 24, 2013. Updated ESIA documents were re-disclosed on October 3, 2013 along with an Environmental and Social Summary prepared by IFC. The Banks Task Team preparing the TGS Project reviewed the Environmental and Social Impact Assessment (ESIA) report, Environmental and Social Management Plan, Construction Environmental Management Plan, Resettlement Plan and several other thematic management plans developed for Adjaristskali Cascade Project, and was satisfied to see that all important environmental, social, and cultural heritage aspects related to the Cascade Project are covered in these reports and it received clarifications as required. The WB has been in close contact with IFC and shared information about community complaints and how they are being addressed.

IFC requires that AGL maintains in-house environmental staff and also hires a technical supervisor (Owner's Engineer) or tacking compliance of construction contractor performance with IFC's Performance Standards. Environmental Manager of Owner's Engineer will undertake internal auditing of work at least quarterly. IFC, ADB, and EBRD, in the capacity of lenders, may require independent external monitoring of works by an industrial environmental management specialist every six months. MIGA, as a provider of financial guarantee to the project owner, will also track environmental and social performance of the Adjaristskali Cascade Project. The Bank maintains dialog with IFC be up-to-date on the status of project adherence with the Performance Standards and will receive environmental audit reports on regular basis. Joint supervision of the associated projects of TGS and Adjaristskali Cascade may also be considered, as suggested by IFC.

IFC has hired a lender's environmental and social monitor which undertakes quarterly reviews comprising alternating site visit and desk review. There have been audits/review beyond the Public Disclosure Copy monitor reviews including the owner's engineer hired by AGL. In addition, Tata group, as a shareholder of Adjaristskali Cascade Project, undertook an owners review in March 2016.

Inclusion of the rehabilitation and upgrade of 220 kV Sataplia, Ajameti-1, 2 and Kolkhida-1 TLs as well as the Menji, Kutaisi, Tskaltubo and Zestaponi substations into the Project work plan through the Project restructuring will not trigger any safeguard policies in addition to those already triggered by the TGS Project. Environmental category of the TGS Project remains A. Restructuring of the three additional TLs will imply (i) upgrade of Sataplia TL to double circuit, (ii) upgrade of Ajameti 1, 2 TL to triple circuit, (iii) connection of the newly built double circuit sections of Ajameti 1 and Ajameti 2 TLs with a 50-60 meter long new power line; (iv) replacement of conductor for Kolkhida line; (v) upgrade of the switch gears, and of the control panels in Menji, Tskaltubo, Kutaisi and Zestaponi substations; and (vi) upgrade of SCADA/EMS. Tower replacement will be performed within the existing tower spotting. Overall heights and widths of towers will remain the same. Works at substations will be confined to the installation of

Page 8 of 14 the additional equipment within the fenced boundaries of these substation and will not include replacement of batteries and transformer oils. Hence handling of hazardous substances will be excluded. 2. Describe any potential indirect and/or long term impacts due to anticipated future activities in the project area: The operation and maintenance of the Batumi-Akhaltsikhe TL under the original project will cause a number of specific environmental and social impacts. There will be certain limitations to the land use within the right of way due to the need for protecting health and safety of people from the potential threats of living and/or working under a high voltage overhead TL, for which an RPF

Public Disclosure Copy and RAPs are in place. Despite the initially provided bird safety installations, collisions and electrocutions may not be entirely ruled out. Monitoring data for the first several years of TL operation would allow to judge sufficiency of the provided means and design additional mitigation measures as required. Maintenance works will imply common risks for health and safety of workers which are usually effectively managed by strict adherence to the rules of conduct of maintenance works and regular use of personal protective gear.

No additional long indirect and/or long term impacts will be caused by supplemental activities to be included into the TGS Project after restructuring, because these activities will improve reliability and quality of power transportation through the existing infrastructure which will be upgraded within the existing environmental footprint. 3. Describe any project alternatives (if relevant) considered to help avoid or minimize adverse impacts. No project alternative without the electric transmission infrastructure would have zero adverse impacts on the environment however, this would disallow provision of electricity produced at the Adjaristskali Cascade Hydropower Scheme to surrounding communities, Georgian grid and for the export to Turkey, having significant negative economic and social implications. Furthermore, because the Adjaristskali Cascade Project is already underway, power evacuation from its HPPs is not optional and the Government will provide transmission infrastructure using any available source of funding.

Several design and routing alternatives were considered during development of the preliminary design of the Akhaltsikhe-Batumi TL. An underground cable system was one design alternative. Though visually appealing in the long run, it would cause more disruption during construction and decommissioning as would involve a larger area for excavation and hence greater negative

Public Disclosure Copy environmental and socio-economic impacts, especially in residential areas. Also, the TL right-of- way runs through the areas prone to erosion and landslides, making any extensive excavation activities highly disruptive. So the reasons why underground options are not considered as alternatives to the Project are, first - technical difficulties, complexity, as well as safety and reliability of an underground line, and secondly - a significantly higher cost.

A number of alternative solutions were considered for aligning Akhaltsikhe-Batumi TL and selecting locations of its towers. Final choices were made after examining geotechnical, environmental, heritage, and social aspects. Boundaries of the existing protected areas and more valuable forest stands were avoided. Much effort was applied to choosing the TL alignment in the sections were its corridor overlaps with the migration routes of birds and technical means for decreasing chances of collusion and for safe perching were provided. Alignment was designed the way to follow the natural topographic lines, so that geology and vegetation pattern would allow to minimize scope of intervention and decrease visual impact. Throughout the design work, the goal

Page 9 of 14 of keeping the need for involuntary resettlement as low as possible had been pursued.

Re-routing of parts of Sataplia, Ajameti-1, 2 and Kolkhida-1 TLs had been considered at an early planning stage for their upgrading. Although re-routing would shorten the overall length is these TLs in the benefit of their operation, associated costs of mitigating the considerable negative environmental and social impacts would be much higher pushing overall project cost up as compared to TL reconstruction within the existing corridor. Therefore re-routing alternative was dismissed pretty soon in the conceptual design process. 4. Describe measures taken by the borrower to address safeguard policy issues. Provide an assessment of borrower capacity to plan and implement the measures described. Public Disclosure Copy The World Bank safeguard policies as well as the environmental legislation of Georgia required carrying out of a full scale environmental assessment of the Batumi-Akhaltsikhe TL construction. The Borrower financed Environmental and Social Impact Assessment (ESIA) from its own proceeds and carried it out through a qualified consultant company. ESIA covered environmental, social, and cultural aspects of the TL construction and operation. An environmental and social management matrix was developed as part of the ESIA report, which lays out measures for mitigating expected negative impacts of the Project and provides a plan for monitoring implementation of the mitigation plan. Because the detailed designs will not be finalized and the construction works will not commence along the entire corridor or the TL at the same time, a number of technical details of construction will become known at later stages of the Project cycle. Works contractor(s) will be obligated to develop site-specific management plans for handling waste and excess material, regulating traffic, protecting biodiversity, reinstating area, and ensuring workers health and safety. The Project implementing entity will carry responsibility for ensuring that all of these site-specific plans are developed prior to commencement of works in a particular site, are of adequate quality, and the contractor(s) follow the plans throughout their activity within the site.

Works required for the rehabilitation and upgrade of Kolkhida, Sataplia and Ajameti TLs as well as of Menji, Kutaisi, Zestaponi, and Tskaltubo substations were screened for their potential environmental and social risks, and the expected impacts were found to be minor. Although the TGS Project falls under category A due to new construction of Batumi-Akhaltsikhe TL, activities to be included after restructuring do not carry similar risks and will be handled as category B interventions. ESMP for works to be financed after Project restructuring was prepared by GSE, its draft was shared with the Bank for review, disclosed upon approval, and a stakeholder consultation meeting was held. Public Disclosure Copy

GSE is the implementing entity for the entire project - all components and all activities: those originally planned and those to be added through restructuring. GSE has undergone an institutional re-arrangement in 2014, which resulted in the creation of an Environment and Social Safeguards Unit under the International Projects and Reporting Department. The unit has one full time and one part time environmental staff and one full time social specialists. In addition, the GSEs permitting department has a large number of specialists including; social specialists, waste management specialists, forest specialists that provide cross support to the Environmental and Social Unit. GSE hires addition experts such as land valuators and land cadaster specialists on an as need basis. GSE also uses services of an international supervision engineer to ensure quality of works under TGS Project, and monitoring of safeguards application are an integral part of the consultant assignment. Additional consultancy may be sought to supplement GSE's in-house capacity as required.

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TGS Project rating on safeguards performance has been satisfactory throughout its life. Physical works are not in a full swing but rather taking off, as the detailed designs and RAPs had to been under development for Akhaltsikhe-Batumi TL. GSE is now in the process of reviewing and approving construction contractor's management plans covering site-specific details of handling construction waste, excess soil and biodiversity; and ensuring health and safety at workplace. Local population has concerns about HPP construction works carrying a threat of activating landslides in the geologically active area of the IFC-financed Adjaristskali Cascade Project, which has been in an active construction phase for a while. Already sensitized and mobilized stakeholders are now engaging themselves into TGS Project-financed activities, demanding full Public Disclosure Copy transparency of the consultation process on RAPs and of the information pertaining precise alignment of Akhaltsikhe-Batumi TL. The Bank receives from IFC full information on the grievances and their redress under Adjaristskali Cascade Project and will advise GSE on civic engagement into TGS Project based on the lessons learned. 5. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on safeguard policies, with an emphasis on potentially affected people. The primary beneficiaries of the Project are the retail consumers of electricity to be generated by new HPPs in the Autonomous Republic of Adjara and evacuated by Batumi-Akhaltsikhe TL as well those being served by Sataplia, Ajameti 1, 2, and Kolkhida TLs. Small and medium businesses will also benefit from a more reliable, high-quality power supply. TGS and the associated Adjaristskali Cascade projects will indirectly benefit entire country through the improved transmission grid stability are additional clean energy generation. Therefore, the Ministry of Energy and GSE are significant stakeholders of the Project. People residing in the settlements along the TL corridors will be directly affected by the construction and operation of the TL.

Prior to commencement of the ESIA of the construction of Batumi-Akhaltsikhe TL, the Borrower shared ToR of this task with the Bank for comments to ensure that the ESIA report is in line with the requirements of the Bank's safeguard policy and meets quality expectations. This ToR was disclosed to the Project stakeholders and a discussion was held on the scope of the upcoming ESIA on September 17-19, 2013. Draft ESIA report was also disclosed and discussed with the Project stakeholders in GSE's office in and Batumi, where centrally located stakeholders as well as local communities affected by the Project had an opportunity to voice their questions, concerns, and comments. ESIA report was finalized afterwards with the documented information on the public consultation process attached to it. Public Disclosure Copy

Draft ESMP for the rehabilitation and upgrade of Menji, Kutaisi, Zestaponi and Tskaltubo substations and the TLs connecting them was prepared by GSE, cleared by the Bank as a draft for disclosure, disclosed on June 24, 2016, and discussed with stakeholders on July 25, 2016 in Kutaisi. B. Disclosure Requirements Environmental Assessment/Audit/Management Plan/Other Was the document disclosed prior to appraisal? Date of receipt by the Bank 11-Nov-2013 Date of submission to InfoShop 17-Dec-2013

Page 11 of 14 For category A projects, date of distributing the Executive 17-Dec-2013 Summary of the EA to the Executive Directors "In country" Disclosure Georgia 25-Nov-2013 Comments: Resettlement Action Plan/Framework/Policy Process Was the document disclosed prior to appraisal? Date of receipt by the Bank 11-Nov-2013

Public Disclosure Copy Date of submission to InfoShop 13-Mar-2014 "In country" Disclosure Georgia 13-Mar-2014 Comments: If the project triggers the Pest Management and/or Physical Cultural Resources policies, the respective issues are to be addressed and disclosed as part of the Environmental Assessment/ Audit/or EMP. If in-country disclosure of any of the above documents is not expected, please explain why:

C. Compliance Monitoring Indicators at the Corporate Level OP/BP/GP 4.01 - Environment Assessment Does the project require a stand-alone EA (including EMP) Yes [ ] No [ ] NA [ ] report? OP/BP 4.04 - Natural Habitats Would the project result in any significant conversion or Yes [ ] No [ ] NA [ ] degradation of critical natural habitats? If the project would result in significant conversion or Yes [ ] No [ ] NA [ ] degradation of other (non-critical) natural habitats, does the project include mitigation measures acceptable to the Bank? OP/BP 4.11 - Physical Cultural Resources Does the EA include adequate measures related to cultural Yes [ ] No [ ] NA [ ] property? Public Disclosure Copy Does the credit/loan incorporate mechanisms to mitigate the Yes [ ] No [ ] NA [ ] potential adverse impacts on cultural property? OP/BP 4.12 - Involuntary Resettlement Has a resettlement plan/abbreviated plan/policy framework/ Yes [ ] No [ ] NA [ ] process framework (as appropriate) been prepared? If yes, then did the Regional unit responsible for safeguards or Yes [ ] No [ ] NA [ ] Practice Manager review the plan? Is physical displacement/relocation expected? Yes [ ] No [ ] TBD [ ]

Provided estimated number of people to be affected

Page 12 of 14 Is economic displacement expected? (loss of assets or access to Yes [ ] No [ ] TBD [ ] assets that leads to loss of income sources or other means of livelihoods)

Provided estimated number of people to be affected OP/BP 4.36 - Forests Has the sector-wide analysis of policy and institutional issues Yes [ ] No [ ] NA [ ] and constraints been carried out? Does the project design include satisfactory measures to Yes [ ] No [ ] NA [ ] Public Disclosure Copy overcome these constraints? Does the project finance commercial harvesting, and if so, Yes [ ] No [ ] NA [ ] does it include provisions for certification system? OP/BP 4.37 - Safety of Dams Have dam safety plans been prepared? Yes [ ] No [ ] NA [ ] Have the TORs as well as composition for the independent Yes [ ] No [ ] NA [ ] Panel of Experts (POE) been reviewed and approved by the Bank? Has an Emergency Preparedness Plan (EPP) been prepared and Yes [ ] No [ ] NA [ ] arrangements been made for public awareness and training? The World Bank Policy on Disclosure of Information Have relevant safeguard policies documents been sent to the Yes [ ] No [ ] NA [ ] World Bank's Infoshop? Have relevant documents been disclosed in-country in a public Yes [ ] No [ ] NA [ ] place in a form and language that are understandable and accessible to project-affected groups and local NGOs? All Safeguard Policies Have satisfactory calendar, budget and clear institutional Yes [ ] No [ ] NA [ ] responsibilities been prepared for the implementation of measures related to safeguard policies? Have costs related to safeguard policy measures been included Yes [ ] No [ ] NA [ ] in the project cost?

Public Disclosure Copy Does the Monitoring and Evaluation system of the project Yes [ ] No [ ] NA [ ] include the monitoring of safeguard impacts and measures related to safeguard policies? Have satisfactory implementation arrangements been agreed Yes [ ] No [ ] NA [ ] with the borrower and the same been adequately reflected in the project legal documents?

III. APPROVALS Task Team Leader(s): Name: Joseph Melitauri Approved By Safeguards Advisor: Name: Nina Chee (SA) Date: 27-Jul-2016

Page 13 of 14 Practice Manager/ Name: Ranjit J. Lamech (PMGR) Date: 27-Jul-2016 Manager: Public Disclosure Copy Public Disclosure Copy

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