Adjaristsqali Hydropower Project

Semi-annual Environment & Social Monitoring Report (July to December 2017)

Environmental and Social Performance Report December 2019

GEO: Adjaristsqali Hydropower Project

Prepared by Adjaristsqali Georgia LLC

The Environmental and Social Performance Report is a document of the borrower. The views expressed herein do not necessarily represent those of ADB’s Board of Directors, Management, or staff, and may be preliminary in nature. Your attention is directed to the “Terms of Use” section of this website.

In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

SEMI-ANNUAL ENVIRONMENTAL AND SOCIAL MONITORING REPORT

REPORTING PERIOD: 01 JULY 2017 – 31 DECEMBER 2017

TABLE OF CONTENTS

Sr No Chapter Page No

1 Certification …………………………………………………. 1 2 Summary ……………………………………………………. 2 3 Compliance evaluation …………………………………….. 4 4 Major environmental and social achievements …………. 5 5 Major challenges and issues for the Company …………. 5 6 Key Project implementation data relevant to E&S ……… 8 performance evaluation 7 Compliance with IFC Performance Standards / ……….. 9 EBRD Performance Requirements / ADB Safeguard Policy Statement (SPS)

Annexure 1 HSE Performance Indicators ……………………………… 31 Annexure 2 Construction Phase Environmental and Social Action Plan (ESAP) as per Schedule 12 Annexure 3 Operation Phase Environmental and Social Action Plan (ESAP) as agreed with Senior Lenders

SEMI-ANNUAL ENVIRONMENTAL AND MONITORING REPORT 1. Certification: Georgia: Adjaristsqali Georgia LLC Semi-Annual Environmental and Social Monitoring Report (SAMR) Reporting Period: 01 July 2017 – 31 December 2017

Company and Project Information: Company: Adjaristsqali Georgia LLC ("AGL" or "the Company") Physical address of the Company: 6 Irakli Abashidze Street Batumi - 6010 Georgia

Company website: www.agl.com.ge

Project: The development, construction, operation and maintenance of the Shuakhevi and Skhalta hydro-electric power plants with total electricity generation capacity of 187MW, to be located on the Adjaristsqali River in Georgia.

Authorised AGL representative who can be contacted by Lenders on the SAMR:

Name: Rahul Shah Title: Chief Financial Officer Company: Adjaristsqali Georgia LLC Tel: +995 577 15 00 84 Email: [email protected]

Certification of the SAMR by Adjaristsqali Georgia LLC

I certify that the data contained in this SAMR completely and accurately represents Adjaristsqali Georgia LLC during this reporting period.

Rahul Shah ______Adjaristsqali Georgia LLC Signature

2. Summary:

On August 4, 2017 rock fall / collapses were suspected in the transfer tunnel from Skhalta to Didachara as no water was flowing from the tunnel outlet. Subsequent investigations confirmed collapses at about 170m from the Didachara outlet. Similarly, after commencing generation from 2nd October 2017, abnormalities were observed in operating parameters in the form of higher than normal guide vane opening and lower upstream pressure (meaning higher head losses) which indicated potential blockages in the Head Race Tunnel (HRT). The HRT was also drained for inspection which revealed about 6 major rock falls / full collapses and several small rock falls in various sections of the HRT. Detailed investigations and collection of rock samples for confirming the geological aspects of various rock classes in these sections and assessment of required remedial support works are in progress. In parallel, the design of the tunnel rock support classes is being reviewed which will be finalized after the receipt of the results of geological tests. It is envisaged that the tunnel repair works shall be completed by the first quarter of 2019, but better certainty on the schedule and quantum of works shall only be known after the receipt of geological reports for finalisation of support structure design.

The Ministry of Economy / Technical Supervision Agency has extended the construction permit for Didachara Skhalta transfer tunnel, Chiruki-Skhalta transfer tunnel, Skhalta dam, Chiruki weir and Skhalta Power house till 08 November 2018. Reconstruction permit for the Main Headrace tunnel was issued by Ministry of Economy / Technical Supervision Agency also in the month of January 2018 for a period of one year.

Below is a summary of construction works for the reporting period:

Civil Works: The civil works have greatly reduced in this period as the major works have been completed. In addition to the tunnel repair works (HRT + Transfer Tunnel), works continues at the Didachara downstream road, plus punchlist work around the project.

Tunneling Works: With the discovery of tunnel collapses in August (transfer tunnel) and October (headrace tunnel), all tunnels in the project have been de-watered and inspected. Several full collapses are visible in the HRT, and two full collapses are visible in the transfer tunnel. Adit plugs have been removed and utilities installed to commence repair works. Repair works in the transfer tunnel have started by end of 2017.

Didachara dam area: Didachara reservoir was filled completely in May and held water up until the first week of October. All performance issues with the dam are satisfactory. Reservoir is currently empty. Minor punchlist work continues as does slope stability and road construction on the downstream side of the bridge.

Skhalta dam area: Skhalta reservoir was filled completely in May and held water up until August. All performance issues with the dam are satisfactory. Reservoir is currently empty.

Skhalta Power House: CKD Blansko of the Czech Republic (subcontractor to AGE) has completed erection works and carried out certain dry checks. Filling of Chirukhi to Skhalta tunnel is kept on hold to carry out minor strengthening works at approx 50 m long section of the tunnel as per recommendations made by MML & 3G-Consultants. AGL is reviewing the approach to this section of Tunnel either from Skhalta or Chirukhi end. The E&M contractor, CKD, has demobilized and will be back at site after the tunnel is filled and the 35 kV line is nearing completion. Until such time CKD has provided preservation plan for the equipment in power house which is being taken care by AGE (under AGL supervision), weekly checks being carried out as per the plan. It is 2 expected that the commissioning activities of the Skhalta power house shall start by June 2018 after completion of 35 KV transmission line.

Chiruqistsqali weir: Weir construction is complete and downstream flushing gates remain open to pass the river flow. Minor punchlist activities are ongoing.

Ghorjomi Bridge: Bridge and upstream road works are complete. Downstream road has slope stability work and road construction works.

Diakonidze Weir: AGL has carried out a water balance study for the Diakonidze stream. E-flow assessment shall be taken up in due course and presented to the E&S teams of lenders before moving forward to the scheme. Based on the joint consensus on the approach, work will be started, and adequate monitoring system will be put in place.

EM Works: All the commissioning tests have been completed, except for the reliability run tests and performance tests. Shuakhevi HPP received Generation License on 21 September 2017.

35 kV Transmission Line: Out of total 133 towers, 66 foundations and 31 towers are completed. Land purchase process is ongoing. For the house in the buffer zone, lenders E&S teams have been approached for guidance to relocation process. All the documentation related to HSE etc. safety checklists have been adhered through daily supervision by AGL.

3. Compliance evaluation: Was the Company in material compliance with (i) environmental and social (E&S) requirements of the Lenders (ADB, EBRD and IFC), including the "Environmental and Social Action Plan" (Schedule 12 (Form of Action Plan) of the CTA), (ii) environmental, health and safety regulations, standards, and permits of the host country? If No, please summarize the non-compliance status and corrective actions that were taken or being taken.

Adjaristsqali Georgia LLC (AGL) has designed Environmental and Social Management System (ESMS) for the operational phase and developed various management plans to ensure that the Company operates in compliance with lenders’ E&S requirements. In September, AGL received power generation license issued by the Electricity System Commercial Operator. However, due to unexpected tunnel failure and investigation activities commercial operation of the power plant had to be suspended and the plant can now resume operations only after the required remedial works are completed.

Due to resumption of construction activities AGL continues operation according to the construction stage management plans, such as SEP, BAP, Emergency Preparedness and Response Plan, etc. AGL re-developed stakeholder engagement strategy to address concerns raised by locals regarding tunnel repair activities. Khulo PIC was moved to Didachara camp, it facilitated AGL social team to follow grievances from communities and workers in a structured and coordinated manner. AGE re-opened workers’ grievance log and AGE community liaison officer (CLO) together with AGL social team work on addressing concerns raised by communities. AGL maintains strong organizational capacity and Stakeholder Engagement Specialist (SES) remains the primary point of contact for communities and local authorities.

Land acquisition is still ongoing for the 35kV Transmission line project. Land acquisition and compensation transaction are carried out according to the “Principles for Additional Land Acquisition” to ensure compliance with lenders requirements. There is one condemned structure which falls under the Right of Way and from safety perspectives it is recommended to relocate a tenant family residing in the building. AGL approached lenders to provide guidance about relocation process and preparation of Resettlement Action Plan (RAP).

Livelihood restoration activities are delivered as per DLRP, LALRP and 35kV Transmission Line LALRP Addendum. For the reporting period AGL undertakes mainly monitoring as all projects and activities envisioned by these plans have been implemented.

As for the environmental compliance of the Shuakhevi HPP with Georgian Environmental Legislation, ESIA requirements and other project document are regularly monitored by the Environmental Supervision Agency (ESA) of the Ministry of Environment and Natural Resources Protection of Georgia through various inspections by the ESA. There were several short-term site inspections carried out by the ESA during the reporting period where only one non-compliance related to excavation of aggregates was found. There was violation of excavation rules by the Contractor and regulatory investigation is ongoing.

The Company has been engaging throughout the reporting period with the Lenders and their E&S advisor on Lenders’ compliance requirements. A few outstanding requirements were identified to avoid non-compliances, some of which have been addressed during the reporting period and some of which are being actioned upon currently.

AGL recognized and respects fundamental right of all stakeholders to have information about all risks and impacts endured by project activities in effective and timely manner. Especially after the tunnel failure which has attracted lot of interest, AGL was frequently approached by communities and the media. AGL’s social, environmental and technical teams were working together in a coordinated manner to address locals concerns over the tunnel collapse. Several meetings were 4 conducted with communities involving AGL’s engineers. These types of meetings were supported by visual materials, such as presentation slides, maps, photos to ensure that locals were able easily understand and digest the information. AGL gave interviews and provided comments to all media outlets upon request. See section 7.7 for more details about the media coverage.

4. Major environmental and social achievements: Please summarize notable E&S achievements of the Company during the reporting year (e.g. awards received, higher performance achieved or recognized, improved community relationship).

Effective communication and community interaction strategy turned out to be very efficient during recruitment process of local workforce also. There were no blockages or demonstration obstructing construction activities. Opening Didachara PIC at the Didachara camp facilitated direct interaction with workers. AGL and AGE social officers acted in a coordinated manner which enabled timely resolution of communities and workers’ concerns.

5. Major challenges and issues for the Company: Please summarize major environmental and social challenges of the Company faced with (e.g. major incidents, spills, fire, explosion or unplanned releases, failure of emissions or effluent treatment, legal / administrative notice of violation, penalties, complaints, litigation, protest, negative media attention, chance finds of cultural heritage, labor unrest or disputes, local community and civil society concerns) and actions taken during the reporting year.

The main challenge for the project is managing healthy & safe working environment during the tunnel repairs. The nature of this work has certain risks which were not envisaged during traditional tunneling work undertaken in the construction phase. AGL is very focused on highlighting this with AGE and the OE to ensure staff on the project have experience on prior projects with such issues, the procedures specific to tunnel repairs are adopted, and that appropriate safety practices are put in place to meet the risks of working in collapsed tunnels.

The key challenge for the project during reporting period from environmental and social perspective is preparation of operational phase ESMS. AGL has engaged environmental consultant company ERM who have provided their inputs for developing the Operations phase ESMS document. ESMS has been reviewed to align with ISO 14001 management system. Key management plans and their implementation mechanism for most key/risks are either completed or are well progressed. A simple and useful ESMP Tracker of action has been devoted to guide implementation of environmental monitoring commitments environmental flow, sediment management and biodiversity.

Another key challenge faced by the Company is related to the delay in construction of 35 kV transmission line. In August 2017 Supplemental E&S Assessment report was approved by lenders and disclosed on AGL website. Construction activities started at the end of September with the supervision of AGL.

AGL continues geological monitoring on various construction sites: 1. Ongoing landslide monitoring in Chanchkhalo village (permanent system supplied by AGL and monitored by Government of Georgia) 2. Survey monitoring monuments in (village by Skhalta – Kinchauri). Permanent survey monuments supplied by AGL, to be monitored by Khulo municipality 3. Various site monitoring: a. Didachara area, land mass on non-river side by downstream road (periodic) b. Didachara area; land mass on river side between public road and river (periodic) c. Tunnel convergence monitoring (Skhalta transfer tunnel post-collapse)

d. Monitoring of specific locations in relation to observations / social requests (Gorkanauli - periodic inspection, surface rock mass monitoring during tunnel operations)

Change Management

Currently AGL addresses any change management requirements through various processes such as Emergency Response Plans, Risk Management framework.

Under the Risk Management Framework, AGL has developed the Risk Universe for the Construction and Operations phase and has identified the top risks under various categories such as Operational, Environmental, Social, Reputational, Legal or Financial etc. Appropriate mitigation measures and action plans are defined for the various top risks identified.

The recent setback on account of the tunnel collapses was a key change requiring AGL to develop a new approach for addressing the situation. AGL has addressed the change by systematically evaluating the impact of the event and the key requirements for remedying the situation by identifying the steps needed to progress the project, the organizational structure required including assessment of the skills / competencies required and sourcing the same. By December 2017, the project team was re-mobilised and geared up to commence the repair works.

Main Environmental challenge during reporting period is closing company’s construction phase obligation such as rehabilitation of SDAs, camp and constructions sites. For the reporting period, the contractor company developed tentative timetable for restoration activities:

Table 1 Tentative timetable for restoration activities

Location / Permitted Current Status Planned Planned Planned SDA N Storage Volume (See drop timeframe for timeframe timeframe Comments Volume Used downs) completing re- for for engineering completing handover according to the replanting approved SDA plans) 1A - 145000 135500 Closed and Feb-18 Sep-18 Sep-18 Chirukhi re-engineered but not yet replanted 3 - 123000 128000 Closed but not Apr-18 Sep-18 Oct-18 Didachara yet re- engineered according to the approved SDA plans 3A - 63500 39700 Still in use Mar-19 Mar-19 Nov-18 Diakonidze adit Diakonidze 4 - 342500 340500 Still in use Mar-19 Mar-19 Dec-18 Vashlovani adit Vashlovani 4A Zamleti 17250 15540 Closed, Sep-17 Sep-17 Jan-19 Plantation - @ replanted and 300 Samplings handed over. 5 88750 89000 Still in use Dec-18 Mar-19 Feb-19 Concrete Batching Plant & 35 KV Trans. Line Storage Area 6 240000 213500 Closed and Mar-18 Sep-18 Mar-19 Concrete re-engineered Protection & but not yet Drainage replanted channel rerouting in progress 7 51000 50300 Closed and Mar-18 Sep-18 Apr-19 re-engineered but not yet 6

replanted

7A 172300 170500 Still in use Dec-18 Mar-19 May-19 Akhaldaba Adit, HPHRT Adit 23 210000 72000 Still in use Mar-19 Mar-19 Jun-19 Skhalta Outlet Camp & Closed but not Plan needs to be 2 Months Jul-19 Camp not yet Batching yet redeveloped & after plan dismantled by Plant - engineered approved by approval AGE. Camp Chirukhi according to GOG. (GAAMA structures the approved QUOTE) dismantling will SDA plans All establishment commence by from the area will 20th Feb 2018 be vacated by March 2018 Camp Site Still in use Plan needs to be 2 Months Aug-19 Camp will be - Skhalta developed & after plan required during approved by approval Skhalta PH GOG. (GAAMA Commissioning QUOTE) and then will All establishment be dismantled from the area will by Dec 2018 be vacated by December 2018 Camp Site Still in use Mar-19 May-19 Sep-19 Camp will be - required during Didachara Tunnel Commissioning and then will be dismantled by Mar-2019 Storage Still in use Mar-19 May-19 Oct-19 Camp will be Site - required during Akhaldaba Tunnel Commissioning and then will be dismantled by Mar-2019 Camp Site Still in use May-19 Aug-19 Nov-19 Camp will be - Kichauri required during Project Commissioning and then will be dismantled by May-2019

Spoil disposal areas A1, 3, 4A, 6, and 7 are all in the process of being engineered in line with the approved SDA plans. SDA’s 3A, 4, 5, 7A, and 23 will be further utilized during the tunnel repair works. The SDA’s being engineered are being reviewed by MML and Gamma for compliance with the approved plans.

As the project is back to re-construction activities camps and construction sites became operational again. While there is no requirement from the Government of Georgia to hand back those land plots which are owned by the Company but not put to use, the Company is evaluating each plot based on the local population’s requirements. As part of this evaluation 4 plots were identified for handing back to original owners/users and a de-mortgaging process was started with Senior Lenders.

Restart of rehabilitation working activities, limited employment options by AGE are major challenges for the company from social perspective.

6. Key Project implementation data relevant to E&S performance evaluation: 6.1. Start of construction date: 26 July 2013 6.2. Start of commercial operation date: 178MW Shuakhevi Project received Generation license on 21 September 2017. (subsequently suspended due to HRT collapses) 6.3. Gross electricity generation capacity (MW): 187 MW (Shuakhevi HPP – 178 MW, Skhalta HPP – 9 MW) 6.4. Net electricity generation capacity (MW): will be updated on COD 6.5. Gross Electricity generated during the reporting year (GWh/year): 3.23373 GWh 6.6. Net Electricity generated during the reporting year (GWh/year) – 3.05976 GWh Total, a portion exported to Turkey - NA, a portion delivered to Georgia:3.05976 GWh 6.7. Plant capacity factor (%) – Gross Electricity generated (GWh/year) / Gross electricity generation capacity MW x 8,760 hour/year: 0.0002 (Low as plant operated for testing period and only 02 days, thereafter the power plant is out of operations due to tunnel repair works.) 6.8. Number of workers as of December 31st of the reporting year 6.8.1. Number of direct employees of AGL: 52 in total disaggregated as 12 expatriates and 40 Georgian.

6.8.2. Contractors: Civil Works Contractor: AGE Batumi Number of employees: 290 of which 173 employees are expat (mainly Turkish workers) and 117 are Georgian workers Electro-Mechanical Works Contractor: GE Alstom Number of employees: 21 of which 11 are expat employees and 10 Georgian employees Owners’ Engineer: Mott Macdonald Ltd UK Number of employees: 11 of which 3 are expat employees and 8 Georgian employees

7. Compliance with IFC Performance Standards / EBRD Performance Requirements / ADB Safeguard Policy Statement (SPS):

7.1. PS1/PR1/SPS – Assessment and Management of Environmental and Social Risks and Impacts:

AGL developed Environmental and Social Management System (ESMS) for operational phase for managing environmental and social risks and impacts in a structured way. As the project is back to construction phase the operational phase E&S procedures are implemented only for limited areas and construction phase E&S procedures are applied where relevant.

Monitoring of flora, fauna and aquatic environment during reporting period through the local NGOs was conducted as scheduled. Based on the reports provided by NGOs no impacts on the environment were incurred as a result of the Project construction activities. In addition, AGL and AGE has regular joint inspections of the sites and monitoring of dust, noise and water conditions. There have been no serious non-compliance issues reported.

The collapses in the tunnels have created concerns within the local population. For this purpose, AGL undertook several meetings with communities, mainly with Ghurta villagers as the blockage was estimated around 170 meters away from the tunnel outlet in Didachara reservoir. During these meetings, AGL explained the scale of the blockage, required remedial actions, and ensured that blockage would not cause any landslide as the tunnel was located deep inside the mountain. Official statements were made via local TV and newspaper also. AGL always highlighted that safety of local population was the main priority for the company.

Upon completion of construction activities demobilization of temporary workers started. AGL developed Retrenchment Plan to facilitate demobilization process and mitigate adverse impacts from the lay-off procedures. The Retrenchment Plan reflected procedures such as timely notification, consultation processes, lay-off timeline, grievance mechanism, additional assistance, such as training programs in computer skills, English and accounting which was conducted through local NGOs targeting local workers needs and interest in order to support their integration into the labour market. More than 300 workers were demobilized smoothly and efficiently without any tensions.

AGL finished implementation of LRP projects and permanent monitoring of effectiveness is carried out. Monitoring is conducted via field visits, focus group meetings, face-to-face interviews.

Throughout the reporting period, AGL social team have been productively applying the grievance procedure by engaging with stakeholders in their own communities on regular basis, as well preparing responses to grievances and ensuring their timely delivery. After restarting working activities AGE social team has been monitoring closely the workers’ grievance log, kept by the contractor company. AGL SES and AGE CLO remain the points of contact for grievances and comments for the reporting period in both communities.

(a) E&S Assessment and Management System / Policy: Please provide an updated summary description of the environmental, health and safety (EHS) management system of the Company (organizational chart, budget, reporting lines, responsibilities, policies, procedures). Please attach the Company’s latest EHS and social policy statement. If the Company’s EHS management system was internationally certified (e.g. ISO 14001, OHSAS 18001), please attach a copy of the certification.

The project employs an active management system towards matters of health, safety and environment based on UK standard and principles.

The OE supervision teams and the HSE teams communicate near- miss and accidents to the AGL HSE Manager who collates a master spreadsheet on HSE performance.

The HSE Management system is aimed to comply with ISO Standards.

One AGL employee (with support) is working full time on Environmental Compliance and along with the HSE Team, they ensure that EIA and all permitting requirements for the project are being adhered to. In addition, AGL has employed services of ERM for monitoring and managing environmental requirements during the operations phase and for supervising and training local staffs.

(b) Identification of Risks and Impacts: Based on the actual operation of the Company (including construction phase) during the reporting year, please provide a summary of the key risks and impacts that the Company was faced with and the actions taken.

As the Project recommences works in the tunnels, and with particular emphasis on tunnel repairs, the HSE management of this work will be key. Much time is being dedicated to setting up all teams with experienced tunnel works, experienced supervision, and strict focus on the safety aspects of these works.

As during construction, the environmental aspects of work in the tunnels will be managed by effective mitigation controls and as a result, no impacts were recorded in the environment as a result of project activities.

The Civil Contractor, AGE and the E&M Contractor, GE-Alstom have dedicated skilled teams who perform their tasks in accordance with the Risk Assessments and Method Statements.

The Owner’s Engineer, Mott MacDonald provided necessary supervision and direction with a view to achieving the required quality standards and safety requirements.

As the Project has not gone into operations phase, the Operations phase E&S processes have been developed but kept in abeyance. For example, although the methodology and infrastructure for ensuring, monitoring and reporting minimum stipulated environment flow is in place the same is not being implemented as the gates are fully open and all the water inflow in river is currently being released any diversion.

(c) Organizational Capacity and Competency: Please provide a summary of the latest organizational structure of the Company (roles and responsibilities) in charge of EHS and social issues. Please provide a summary of training programs carried out including planned capacity building programs, if any.

As the project moved back into construction phase, the company decided to retain all key members of the social team in both municipalities in order to have an experienced team that reaches out to all stakeholder groups during the first year of operation. The social team consists of a community information officer (CIO), community liaison officer (CLO), a stakeholder engagement specialist (SES), a CSR Manager and a Social Director.

AGL has rehired a key HSE staff member who has experience working on a tunnel collapse repair project. As the HRT opens up more work fronts, AGL will review and reinforce the HSE staff as necessary to provide sufficient oversight. In fact, it has redeployed some of its O&M team members for overseeing safety aspects after imparting them necessary training for the tunnel 10 works. AGL HSE department has one Turkish Manager with prior experience of handling such tunnel repairs and is supported through one dedicated Georgian resource. They are site based and undertake daily inspection of construction sites.

Since AGL was nearing operations phase, complete Organization Structure for operations phase is in place including the Operations and maintenance Engineers, who were recruited and trained for O&M phase. AGL has involved Environmental Resources Management (ERM) to complement environmental capacity of the company. Operations Phase Org. Chart is provided below for reference.

Figure 1 Operations Phase Organizational Chart

All the Engineers were provided statutory training at Paravani hydro power plant. As per the Georgian regulations, all engineers have been trained with various levels and are certified for carrying out the O&M activities of hydro power plant. 4 Engineers (mainly maintenance engineers) were also trained at Tata Power plants from on various processes, structures and international maintenance practices. Engineers were also trained under O&M both classroom and on the job training. 6 Engineers have been trained on English speaking skills, as a part of building appropriate competence of the whole AGL team.

(d) Emergency Preparedness and Response:

AGL established Emergency Preparedness and Response system for the operation phase. It enables to company to respond to emergency situations on a timely manner and mitigate any harm which may cause threat to community and/or environment. Prior to operations, AGL conducted informational sessions with affected communities, namely living in the vicinity of the project area, upstream and downstream of the dams and presented Emergency Preparedness and Response Plan. AGL explained the main safety issues around the dam, notification and warning process in case of emergency, and community’s responsibility during operations. These meetings were held in Shuakhevi and Khulo municipality administration buildings also.

For serious occurrences that could have a material adverse impact on the Project, the AGL Project Director & Chief Financial Officer will notify the Lender group as per the CTA to inform about the occurrence, measures taken and rectification action that will be adopted to redress loss and prevent recurrence with future activities or emergencies that concern the affected communities.

(e) Monitoring and Review: If the Company publicly reported on overall E&S performance (e.g. sustainability report), please describe how it was done. Please also provide a summary of the Company's internal inspections and audits conducted to verify E&S performance compliance.

AGL has established internal monitoring procedures to measure the effectiveness of the programs and evaluate its performance against the management plans. For social activities AGL social officers monitor the implemented social and livelihood restoration projects through meetings with beneficiaries and field visits in order to verify the progress against the desired outcome. Social Officers prepare weekly reports which are sent to Land & Social Director for review. Partner organizations prepared reports either monthly or upon the completion of the activity and submitted to AGL. All activities are covered in monthly reports to lenders. Apart from it, AGL updates Land, Social and Accounting report on a monthly basis, which is shared with ARUP and the report cover such topics as grievance procedure and data management, community engagement, labour issues, CSR activities, land acquisition and compensation measures, as well assessment of the progress against the planned land acquisition process and employment data. In order to keep the track of all projects, AGL updates regularly CSR and LRP project database.

AGL has put in a significant effort for internal monitoring of the HSE performance and compliance with the project HSE Plans, Risk Assessment and Method Statements (RAMS) and Lender's requirements too. AGL periodically conducts a week long HSE inspection process that is inclusive of senior managers from AGE, AGL and MML. These joint inspections are conducted on day as well as night shifts and then the reports are issued in a formal written note to both the Contractors for action, where required. These HSE inspection reports are also shared with the Lender’s independent E&S advisor, ARUP.

AGL conducted a review of the HSE performance data from July to December 2017 and noted a decrease in the number of Lost Time Incidents during demobilization period but a noticeable increase was observed for a First Aid Case that is classified as a minor injury.

Some major incidents with high potential consequences happened during this period such as AGE’s form worker was suffered a cut hand while using chainsaw, GE-Alstom’s vehicle went off the public road, tumbling down of a AGE’s tunnel transportation vehicle from road embankment while mobilizing to Akhaldaba and AGE’s welder suffered minor skin burns that caused by flash fire. All events were investigated thoroughly by the contractors and corrective and preventative actions have been taken as per findings.

Tunnel repair works were commenced since Nov-2017 and HSE procedure for underground repair works have been developed by the contractor prior to commencement of the works and also remobilization activities were carried out in line with this procedure and project’s requirements.

HSE observation system have been developed to ensure a systematic and adequate periodic reporting of daily walkthrough at site. All observations are kept centrally by the AGL HSE Department and data analysis were circulated within the organization on a monthly basis. Data analysis for November and December 2017 are in attachment.

Near miss awareness training was provided to tunnel repair teams to create systematic reporting on near miss event. All project members including senior staffs were inducted and trained by AGL and AGE HSE teams.

Specific training modules as per scope of the works were developed after completion of the training tunnel authorization card is issued by the contractor HSE Department to prevent untrained and unauthorized person access into the tunnels. 12

Top HSE issues were discussed with all project partners during weekly coordination meetings to take robust actions on HSE risks.

Risk Assessments as a part of RAMS was provided by the Contractor and also AGL and MML require the Contractor to conduct Job Safety Analysis (JSA) prior to specific activity. JSA is also shared with the workers during toolbox talks/start-up.

The project is supported by the senior environmental specialist teams from the UK branch of MML. As well, similar to H&S, environmental issues and compliance are raised and discussed at progress meetings between all parties.

Regular environmental site inspections are carried out with AGE, MML & AGL representatives. The findings are recorded and issued to the respective contractor. Corrective actions are agreed on site and timescales for closure decided upon.

External monitoring is provided by ARUP for environmental, safety and social matters with Lahmeyer providing the technical assessment for the Lenders. Both organizations report back to the Lenders and AGL for action.

(f) Stakeholder Engagement:

From July 2017 until December 2017, the company carried out stakeholder engagement activities according to Stakeholder Engagement Plan, which was developed by the late stage of construction phase. In particular, AGL social team in partnership with the Operations technical team started mapping of the important stakeholder groups based on the nature and severity of the impact during the operation phase, as well as the potential interest in and influence upon/by the Project operation. In addition to this, AGL social team conducted regular informational meetings with affected communities and local authorities and kept active engagement with laid off local workers by offering various skills development programs as well job and financial counselling.

Due to high interest of locals to recent developments in the Project AGL focused more on local media1 for providing information about the Project activities. AGL continues publishing monthly informational article in Adjara newspaper which is distributed in administration of municipalities and other public entities.

Opening of the PIC at Didachara camp facilitated interaction not only with communities but also with workers. AGL still maintains Community Information Officer at Skhalta and Khichauri Main Camp as they also serve as another information point.

One of the main queries raised by communities are related to employment opportunities, reasons for the tunnel failure and results of the investigation. In addition, old concerns about Chanckhalo road, cracked houses, lost spring waters still persist. These are the issues that have been covered by local media as well.

7.2 PS2/PR2/ADB’s Social Protection Strategy 2001 – Labor and Working Conditions:

1 Adjara TV, TV 25, Newspaper Adjara 13

(a) Human Resources Policies and Procedures: If the Company received complaints through internal grievance mechanism for workers or through national regulatory agency/courts, please provide a summary of those, particularly about issues of labor union membership, non – discrimination, provision of mandated benefits including wages and medical and other social insurances, involuntary retrenchment, local employment and occupational health and safety.

The project did not receive any grievance through national regulatory agency and courts concerning labour issues.

A Human Resource Handbook and Employee Code of Conduct was presented to AGL’s Board of Directors in September. A worker’s grievance mechanism is in place. AGL stakeholder engagement specialist works closely with AGE community liaison officer to ensure timely response to grievances. Upon the commencement of reconstruction activities, AGE re-recruited local workforce, for the reporting period 320 people are working at site, majority of them are Turkish and 50 people are local. Information about the local recruitment was provided via meetings with communities and local authorities. Labour contracts have been arranged for each employee with the duration of max 1 year. Didachara camp became operational again. Accommodation is provided mainly to Turkish workers. Decision about recruitment is made on the basis of experience and required skills.

(b) Workers Organization: Please provide a summary of whether the Company complied with national law in allowing workers to form and join worker’s organizations without retaliation or discrimination. Please provide a summary of worker’s organizations with numbers in member workers relative to total employees.

Name(s) of the workers' organization(s): To date no organizations have been sought out by workers despite the fact that Labor Code of Georgia allows to do so.

AGL developed a Retrenchment Plan before starting lay off process at the end of 2016. The document was designed in consultation with the contractor company (AGE Batumi) and other partners by using IFC’s guidelines. The retrenchment plan addressed issues such as the actions undertaken before retrenchment process, schedule of the layoff process, retrenchment methods and procedures, grievances mechanism. It also offered assistance and provided job and financial counseling to demobilized workers. The retrenchment procedures contained a range of good practice measures such as development of community investment projects and implementation various social projects. All local stakeholders were involved actively in development and implementation process.

AGE and AGL followed major guidelines of retrenched strategy throughout the whole demobilization process. As result of the joint actions from both companies, more than 300 local workers were laid off with timely notification and effective grievance mechanism. Ultimately, the skills development programs ensured smooth transition for local workers and provided them with required support as they reentered the job market.

(d) Grievance Mechanism:

The contractor company set up a separate grievance mechanism for workers. AGE’s CLO records grievances for Georgian and Turkish workers according to the Labour Grievance Plan. Grievance 14 mechanism is easily accessible for workers as there is a complaint box at each camp and AGL/AGE CLOs conduct meetings permanently. From July to December 4 complaints have been registered, mainly in December as the recruitment process became active in November. Main concerns relate to: compensation for overtime work, arrangement of new contracts, provision of special uniforms for those working in food supply and kitchens, food quality. All grievances are closed out for the reporting period.

(e) Child Labor / Forced Labor:

The Company is in compliance with the child and forced labour requirements of the performance standards. AGL social team monitors that the contractor and sub-contractor companies are compliant with the Child Labor Standards and the Child Labour laws of Georgia.

(f) Occupational Health and Safety (OHS):

The Project employed an average of 320 people between July to December 2017. Majority of them are Turkish workers. This figure includes all office and support personnel based at the camp areas and Batumi Offices.

From July to December 2017, the Project recorded 33 accidents and incidents including near misses. The majority of the events are low potential occurrences. Two Lost Time Incidents (LTI’s) were recorded during this period. These incidents resulted 200 working hours lost in production time and Injured persons returned to work and resumed normal duties. Please see graphs for Accident / Incident statistics in Annexure 2 Section A, B, C, D and Table 11 for events register.

All Lost Time Injuries (LTI’s) will continue to be subject to additional focus to ensure that AGL is preventing harm and managing absence effectively with appropriate health support in place for employees. During the period, AGL have continued to encourage their employees and contractors to make positive interventions and take action where there are unsafe acts or conditions observed.

There have been some significant dangerous occurrences reported during this period. These have included construction site issues or working inside tunnel and some reported unsafe behaviors. All of these were thoroughly investigated and process changes / additional controls implemented, as appropriate. AGL will continue to encourage the reporting of significant incidents and will treat them seriously and ensure that learning from these incidents are used to effectively manage risks. While our safety performance has continued to show improvements, AGL cannot be complacent and will continue to ensure that we continue to make positive interventions to prevent injuries and that all employees and contractors are involved, as safety concerns every person.

The transfer tunnel and headrace tunnel are high risky areas where collapse repair works are carried out by the contactor. Necessary risk mitigations will be in place to achieve project’s safety target. And also the contractor will be enforced to follow up HSE procedure, project’s specification and BS 6164 standards. AGL and MML will ensure that adequate supervisions are provided during execution of the works and the contractor teams are capable to cope with this situation.

On the EM front the focus remains on work around energized equipment. Lock out tag out procedures are closely monitored as well as permit to work authorization so that relevant persons are aware of the nature of work undertaken in respective areas and the work parties involved in execution.

The Environment engineer’s responsibility in the OE team is monitoring environmental issues due to the construction efforts. Weekly inspections are carried-out jointly in a written format with the 15 civil Contractor and corrective actions and preventive measures implemented. Environmental concerns and achievements are discussed at the weekly environmental meeting involving both contractor and OE.

Arup/Lenders documentation review and site visit in September 2017

In September the Lender’s Project Auditor ARUP undertook E&S assessment of project performance. No non-compliances were identified during the audit, while some outstanding requirements were identified, which are prioritized for next several months to meet all compliance requirements. These priority actions are as follows:

Developing and implementation a committed programme to deliver rehabilitation and hand- back for each construction site, with the objective of commencing replantation in spring 2018. Securing project sites and infrastructure with fencing and signage; Further updating emergency preparedness and address ARUP’s pervious concerns, testing these and addressing community anxiety about predicted impact of dam break, flushing, and emergency release scenario;

Table 2 Occupational Health and Safety Performance (Construction Phase) during this semi-annual period

Number Item Target Employees Contractors Total – H2 2017 A: Fatalities: - 0 - B: Total Lost Time Accidents - 2 2 (including vehicular): C: Total number of lost workdays - 20 20 resulting from incidents.

D: Total man-hours worked this 61,776 428,929 490,705 reporting period: E: Incidence during this reporting - 0.000004 0.000004 period: (Note: Incidence = total lost workdays / total hours worked) F: Lost Time Injury Frequency - 4.07 4.07 Rate (Number of lost time accidents x 1,000,000 hours / total man-hours worked = injuries per million hours worked) G: Lost Time Severity Rate (Total - 40.76 40.76 7.5 or less Lost workdays x 1,000,000 (construction hours / total man-hours worked = phase) lost workdays per million hours worked)

Table 3 Improvement Trend of Occupational Health and Safety Performance

Item 2014 2015 2016 2017 A: Fatalities: 0 2 0 0 [Employers] [Contractors] [Total] B: Total Lost Time Accidents (including vehicular): 14 7 14 6 [Employees] [Contractors] [Total]

C: Total number of lost workdays resulting from 69 694 38 45 incidents: [Employees] [Contractors] [Total] D: Total man-hours worked this reporting period: 2,367,795 4,045,801 5,079,279 1,952,527 [Employees][Contractors] [Total] E: Incidence during this reporting period: 0 0.006 0.00000784 0,000016

F: Lost Time Frequency Rate (employers) 5.91 1.73 2.76 2.58 (Contractors) (Total) G: Lost Time Severity rate (employees) 29.14 171.53 7.48 23.04 (Contractors) (Total)

1 Please attach separate reports detailing the circumstances of each fatality. Also discuss how the company has provided benefits/assistance to the worker's family. 2 In capacity to work for at least one full workday beyond the day on which the accident or illness occurred. 3 Lost workdays are the number of workdays (consecutive or not) beyond the date of injury or onset of illness that the employee was away from work or limited to restricted work activity because of an occupational injury or illness.

Note: Specific data for employees and contractors have been given in the earlier Occupational Health & Safety table.

(g) Workers Engaged by Third Parties: Please provide a summary of how the Company is managing and monitoring the performance of third party employees in relation to the requirements of the PSs / PRs.

Third parties such as subcontractors and consultants are subjected to weekly and monthly monitoring checks by AGL, MML and AGE management. Records, such as inspections and audit are maintained at the main camp. AGE (contractor) employ third party organizations for calibration services and testing or key site items such as lifting equipment and cranes. These third party employees or visitors are subjected to the same induction and supervision practices as full time Project employees on the Shuakhevi HEPP.

7.3 PS3/PR3/SR1 – Resource Efficiency and Pollution Prevention:

(a) Resource Efficiency – Greenhouse Gas (GHG) emissions avoidance: Please provide the Company’s estimate about the GHG emissions avoidance effect of the Project: GHG emissions avoidance of the Project: Project is in Construction Phase during reporting period

Pollution control and prevention measures are implemented through the Project’s CEMP Sub-plan 004 - Spill Prevention and Chemicals Storage Plan. This plan is incorporated into the Contractor’s HSE Plan at site level and reviewed for compliance by the HSE inspection teams on a weekly basis and daily by supervisor and the OE environment engineer.

Table 4

Year Gross electricity Auxiliary Net electricity Grid emission GHG generation electricity generation factor (tonCO2 emissions (MWh / year) consumption (MWh / year) / MWh) avoidance (MWh / year) (tonCO2 / year) A B C = A – B D E = C x D PDD for CDM Actual 2015 2016

2017

Table 5 Estimated CO2 Emissions from Mobile Sources (Gasoline Vehicles)

Total Total Gasoline Gasoline CO2 CO2 number of length of consumed vehicle emissions emissions vehicles distance (litre) (TJ - efficiency factor (tonCO2) travelled LHV) (litre / km) (kgCO2/TJ- (km) LHV) A B C D=B/A D=69300 E=BxD/1000

2014 2 400 30 69300 0,00225

0,075 2015 3 532 105 0,080 70850 0,00386 2016 3 86800 8680 0,1 69300 0,868 2017 3 54,000 5,400 0,1 69300 0,54 (total) Note: CO2 emissions factor (gasoline) 69300 kgCO2/TJ-LHV from 2006 IPCC Guidelines.

Table 6 Estimated CO2 Emissions from Mobile Sources (Diesel Vehicles)

Total CO2 Diesel consumed Diesel Total length of emissions CO2 vehicle number of distance factor emissions (TJ - efficiency vehicles travelled (litre) (kgCO2/TJ- (tonCO2) LHV) (litre / km) (km) LHV) A B C D=B/A D=74100 E=BxD/1000 2014 292 400 30 0,075 69300 0,00225 2015 294 1153988 873852 0,7572 74100 661,68 2016 340 6868600 4120187 0,6 74100 2472,1 2017 170 3778740 2553531 0,675 74100 1725,58 (total)

Note: C02 emissions factor (diesel 011) 74100 kgC02IT J-LHV from 2006 IPCC Guidelines.

Pollution Prevention - Waste: Please provide a summary of non-hazardous and hazardous waste generation and minimization activities using the table below. Please add a summary description of major recycling activities conducted.

Table 7 Non-hazardous and Hazardous Waste Minimization Activities

Item Non-hazardous waste Hazardous waste

Generated Re- Disposed Recycling Generated Re- Disposed Recycling (ton) cycled (ton) ratio (%) (ton) cycled (ton) ratio (%) (ton) (ton) A B C=A-B D=B/A E F G=E-F H=F/E 2014 285 - 285 0% 13,71 13,71 - 100% June - Dec

2015 236,4 - 236,4 0% 27,30 27,30 - 100% Jan- June

2015 91,35 - 91,35 0% 20,94 20,94 - 100% July - Dec

2016 Jan – 374,06 - 374,06 0% 53,55 53,55 - 100% June

352,8 - 352,8 0% 62,8 62,8 - 100% 2016 July - Dec

279,6 - 279,6 0% 10,5 10,5 - 100% 2017 Jan – June

395,1 - 395,1 0% 10,5 10,5 - 100% 2017 Jul - Dec

Please add a summary description of major recycling activities conducted.

Even if the contractors follow a suitable waste segregation system in the workplace and camp areas, it does not affect the final output due to the general waste management system in the country. Our system comes in the form of color-coded waste bins. However, this waste is then taken to a licensed refuse in Batumi where no such waste segregation of recyclable waste exists resulting in mixing of the waste categories. This waste is then collected in suitable vehicles under license and taken to Tbilisi where a license hazardous disposal factory receives the waste. AGL has made several calls to the waste disposal unit in Tbilisi to confirm receipt of the correct quantities of the hazardous waste as per hazardous waste types segregated and removed in the workplace but has not received any such confirmation.

At power house and dam area, wooden waste which came along with river flow is given to locals. Apart from this no significant waste is generated.

7.4 PS4/PR4/SR1 – Community Health, Safety, and Security

(a) Implementation of key actions for community health and safety (dam safety):

Initiatives for community safety and emergency preparedness for the operation phase has already been implemented since H1 2017. AGL held Community Safety information sessions in co-ordination with the local municipal representatives and community leaders from surrounding villages in both municipalities. Sirens and safety signage have been installed around the dam area. People residing downstream and upstream the dam have been briefed about the water release and safety actions to be taken. AGL hired life guards from local communities and trained them.

Residents of Ghurta village raised concern about possibility of their livestock falling into the Didachara reservoir once it is filled. They requested the company to fence the reservoir area. AGL Safety manager and technical team representative have surveyed the area, for marking steep sections for fencing. Currently, due to tunnel repairing works fencing of these areas has been put on hold and will be implemented upon the completion of tunnel repairing works and filling out reservoir.

Another concern raised by one local from Gorkhanauli was related to increase of spring water discharge from the slope which locals attributed to tunnel filling. AGL approached the resident several times and offered preventive measures such installation of drainage system to divert the water, but the same was rejected by the concerned resident. Following the HR tunnel failure and de-watering of tunnel, water still emerges from that slope. It became obvious that the problem is not directly linked to tunnel filling and comes naturally.

The major concern for Chanckhalo residents is a public road which was closed down by the local municipality based on the decision of the Geological Department at the Environmental Protection Agency of Adjara. Landslide has been activated and causes risk for transportation, therefore for safety purposes geologists suggested locals to use by-pass road for transportation. The by-pass road goes over mountains, it is longer and very unsafe for transportation, especially in bad weather when the visibility decreases. Locals attribute landslide activation to tunneling activities and increased traffic movement. AGL does not agree to this allegation as this area has been known to be a landslide prone area even before construction commenced but has showed its willingness to support any road repairs, if the Shuakhevi municipality initiates any road repairing project in the area.

In order to mitigate traffic movement and facilitate safe transportation of local residents AGL arranged service of mini buses which transports locals from villages to Khulo center and back. Currently, there are 3 mini buses operating: Diakonidze to Khulo center (for school and kindergarten children, general public also); Didachara to Khulo center (general public) and from Didachara camp to Khulo center (people from Ghurta, Paksadzeebi, Geladzeebi, Dioknisi, Kortokhi villages benefit from this service). Prior to recruiting drivers AGL HSE Manager conducted safety induction to drivers and visual inspection of vehicles.

(b) Implementation of key actions for security personnel management: Please provide a summary of the planned key mitigation measures of the security staff about appropriate use of force where applicable toward workers and affected Communities.

In March 2017, the security arrangements were reviewed during ARUP’s audit and compliance was recorded to the required standards. During this reporting period, no use of force was needed, and no situations arose that required the use of security personnel attention.

The security staff have direct supervision on site and are aware of their responsibilities through induction and refresher on the Security Code of Conduct Policy.

(c) Implementation of key actions to other incidents. Please provide summary of incidents recorded including date, scale of damage and injury, if any; authorities in charge of investigation / recording and media or community reactions, if any; action taken to respond to the incident; and any outstanding issues and proposed measures. Please provide any other health and safety events or out-reach activities including incidents that have caused damage to the environment or to human health, and/or attracted attention of outside parties (e.g., fire, explosion, chemical or oil spill, and pollution release).

The Civil Contractor, AGE, has provided refresher training to their employees who were involved in any unwanted occurrences. All new workers for tunnel repair works were inducted with appropriate tunnel safety training and these training sessions were organized by AGL and AGE HSE Manager.

Training sessions for Emergency Preparedness were initiated and this will be continued in the next period.

There has been one court case against AGL accusing the Company in damaging Batumi- Akhaltsikhe Road section 58-68 KM. During end-November the Roads Department of Georgia applied to the Court claiming that certain section of the Batumi-Akhaltsikhe highway has been damaged due to heavy transport movement exceeding national transportation norms. The Department requests the Company to pay the compensation amount of 7 million GEL needed for repairing works (making new road - according to the international standards). AGL disagrees with the accusation and provided all the documents, works performed, and evidences to the court proving the compliance of heavy trucks movement with the national requirements. AGL is still in the process of obtaining all the necessary evidences for the court as well as AGE the actual party to perform works on this road is preparing all the documents to substantiate our defense. The first hearing is yet to be scheduled.

There haven’t been any major community incidents from July to December 2017 other than a few protesters demanding AGL to fix problems related to lost spring waters, Chanchkhalo road and activation of landslides. All these events have been covered by local media. AGL met media representatives and addressed these accusations by providing detailed explanation on various issues.

7.5 PS5/PR5/SPS – Land Acquisition and Involuntary Resettlement: (a) Land Acquisition. Livelihood Restoration: Please provide a summary of the land acquisition and livelihood restoration, including implementation of the Land Acquisition and Livelihood Restoration Plan. Identify any gaps and the corresponding measures/corrective actions undertaken by the Company.

Land acquisition is ongoing only for the 35kV transmission line project. Acquisition is conducted according to the Addendum LALRP and the “Principles for Additional Land Acquisition.” 286 out

22 of 307 contracts for the 35 kV Transmission Line are in place and the registration is under progress. Out of this, 90 locations are clear for construction. 286 land owners and land users have been compensated till date. Detailed Cadastral maps that are mandatory for submitting for registration have been prepared. Below is the summary and current status of the registration process. It should be noted that number of land plots may not coincide with the number of registered land parcels as land plot owned by one person may be divided into several parcels during registration (such as tower location, forestry fund, road, etc.). Table 8 Current status of the registration process

Total Identified Drawings Submitted to Registered Transferred are prepared the Public on the State2 to AGL3 Registry Land plots to be 124 124 124 20 0 0 purchased/leased (to be registered)

Owned by AGL 40 40 40 40 - 40

Forestry Fund 124 124 124 124 107 0

Other land plots 222 222 222 222 199 30 (road, riverbed, private-owned, etc.) Total land plots 510 510 510 406 346 70 needed for 35kV T- line

Majority of the land plots have already been purchased though there are certain challenges with acquisition process, as there are several land owners whose expectations are much higher than our valuation. For example, in village Furtio NMG has encountered major challenges in terms of getting people agree on the offered price (market price plus 10% vulnerability markup). Offered amount is 50,000GEL vs expectation of 200,000GEL of the land owners. NMG at the moment is assessing viability of shifting the line in parallel direction within the village. There still remain land plots that are under dispute among relatives in Skhalta area. For the time being, 9 land plots are still under dispute.

AGL is implementing livelihood restoration activities as per DLRP and Addendum to LALRP for 35kV T-line project. AGL provided additional assistance to 5 households which are run by females and are regarded as vulnerable according to lenders safeguards. Additional assistance was based on their individual needs, such as house roofing, house foundation arrangement, and other essential house items. Four women have been supported already, the fifth one will receive assistance in February.

AGL provided agricultural trainings in beekeeping, cattle-breeding and hazelnut production. Totally 56 APs attended the trainings. Though, compared to the Shuakhevi Livelihood programs farmers showed less interest in attending trainings as they were asking for other material

2 Other parcels are in the process of registration 3 Those land plots which were under private ownership

23 benefits such as bee boxes, livestock, etc. AGL undertakes permanent monitoring of the LRP projects, and at meetings beneficiaries always express their concern about not receiving any material benefit apart from trainings. Since the impact on land is less in 35kV T-line project than in Shuakhevi project and according to the Addendum to LALRP there is no significantly affected household, AGL does not consider provision of other material assistance as justifiable and this has been communicated to locals several times.

In the beginning of December AGL purchased and delivered fruit tree saplings to the households who lost fruit bearing trees. Based on consultations with affected households it was determined to provide walnut (Chandler walnut) seedlings instead of fruit trees, totally 1,025 walnut saplings were purchased and delivered to 68 households. 4

AGL social team undertakes permanent monitoring of overall LRP projects. Monitoring envisages field visits and interaction with beneficiaries. Beekeepers are complaining about decrease of honey sales due to lay-off of Turkish workers as they were main consumers.

(b) Please provide a summary of PS5/PR5/SPS related stakeholder engagement and outcomes.

AGL information officers are actively involved in information provision and complaint solution for 35kV transmission line project. Affected communities are well informed about the status of construction works, AGL CLOs are visiting communities, meeting APs/AHs and explain and deliver all the information which are requested by communities. AGL CLOs always accompany NMG technical team whenever field visit to communities is planned.

During ARUPs visit last September some APs in Skhalta valley raised concerns that AGL did not provide back copy of land purchase contracts and asset valuation reports. For the reporting period, all APs whose contracts are signed by two parties received copies and valuation reports.

7.6 PS6/PR5/SR1 – Biodiversity Conservation and Sustainable Management of Living Natural Resources

AGL commissioned ERM to prepare Operational Phase Biodiversity Action Plan based on the original and updated construction phase BAPs prepared by MML. BAP was sent to lenders for approval and after that will be disclosed on AGL website. In order to ensure proper delivery of Operational BAP commitments ERM developed Biodiversity Monitoring, Management and Mitigation Plan, internal document which was submitted to Lenders for no objection.

During reporting period ecological surveys were continued based on Operational BAP. Large mammals, otter, fish, macroinvertebrates, bat and bird surveys were conducted as per the BAP

4 Chandler walnut has been introduced by the Ministry of Agriculture of Ajara recently and been prized by local farmers for its high quality of kernel and productivity. The mature tree gives production of 40-45kg, harvest starts in the 3rd year and reaches full production in 8 years. It fits well with local climate and during consultations with local residents they asked instead of fruit trees to deliver Chandler walnut saplings. Besides, walnut kernel is more expensive and gives more income through selling.

24 actions by environmental NGOs. Relevant reports were submitted to AGL. Monitoring data has been reviewed by ERM.

Fish pass monitoring equipment was purchased from Biotactic and installed. Fish specialist from local NGO, who is also conducting seasonal monitoring of fish along with the consultant company Blue Rivers will be responsible for monitoring images/videos recorded by the equipment.

Three rounds of maintenance activities and monitoring of survivals was conducted by local NGO “Mta-bari” in September 2017 in Vashlovani and Didachara. The mentioned organization which has been involved in surveys and monitoring activities since 2013 assessed survival rates which is around 60%. Around 1,500 saplings were replaced with new saplings.

As mentioned above Construction BAP implementation is progressed very well only two action items are behind the schedule:

Implementation of off-site forest creation to compensate for the permanent forest loss under the footprint of the project (Action B2.1); Habitat Restoration plan for Camp and other construction sites;

Actions related to off-site forestry creation and habitat restoration are very complex issues. Several actions were taken by AGL to complete these actions:

Biodiversity Specialist from Georgian State University has been involved through Gamma consulting to develop habitat restoration and off-site forest creation plan. Batumi Botanical Garden and National Nursery were contracted to provide company with tree saplings as required; Adjara Forestry Agency has been involved to identify Forestry Agency lands suitable for tree planting; Several alternative ways for compensation were reviewed, especially regarding the compensation of red listed trees, which is quite a big number. AGL and the Ministry of Environment verbally agreed at the meeting and also later a letter was sent by AGL with the same request to enter into a contract with Adjara Forestry Agency to deliver AGL’s obligation and AGL would pay for tree planting and maintenance for 10 years. AGL has requested that it should have the possibility to monitor activities delivered by Adjara Forestry Agency. AGL is also now required to replant a reduced number of trees as fewer trees were cut than what had originally been permitted.

(b) Ecological flow management:

Main document for managing environmental flow “Low flow Mitigation Strategy” (LFMS) has been finalized and disclosed via AGL website on 27 September 2017. The mechanisms itself by which ecological flow will be delivered in practice are covered in the Operational and Maintenance (O&M) Manual.

All required instruments for the monitoring such as flow meters and gauging station has been installed. Fish pass has been installed with the function to deliver EF entirely using a fully automated system

As per LFMS commitment to strengthen AGL staff with aquatic specialist and geomorphologist, AGL commissioned environmental consulting company Blue Rivers who has conducted field survey during 04-16 July 2017 with supervision of ERM. The monitoring was conducted at all three headworks sites – Chiruqistsqali, Skhalta, Didachara (Adjaristsqali River) in conditions of natural and environmental flow. Based on the hydro morphological measurements, maps of isobaths (depths) and isotaches (velocities) were produced for all three headworks sites for two scenarios – natural and environmental flows.

Blue Rivers monitoring report concluded that flow/habitat connectivity was maintained under EF condition and changes in flow, depth and width were not problematic while compared to the baseline conditions. Blue Rivers recommends conducting the similar monitoring after each flushing action, and after each significant (10% probability) flooding event.

Lenders consultant has undertaken a review of initial Blue rivers EF report and shared several suggestions with AGL to consider for future surveys.

Environmental flow data has been disclosing monthly on AGL website from September 2017.

AGL continued hydrological monitoring through gauging stations downstream of dams. Information from gauging station on water discharge and water level are submitted to the Ministry of Environment on quarterly bases.

7.7 PR10/SPS/ADB’s Public Communications Policy 2011 – Stakeholder Engagement (a) Implementation status of key actions:

AGL social team has set up an effective and systematic communication procedure for stakeholder group after completion of construction works. In these regards, Public Information Centers (PIC) continued to play an important role in communication with the local communities and local authorities. From November 2017, AGL re-opened PIC at the main working camp in Didachara contributed significantly to daily communication with the affected communities and workers. PIC at Skhalta has been closed down, but AGL’s community officer is still in place. Compared to previous months, number of visitors at PICs has lowered, this is mainly due to the reduction of construction activities. Totally 165 people visited our information centers for the reporting period: 98 visitors at Didachara and 67 at Khichauri main camp.

Meetings with various groups of stakeholders are ongoing. Below is a communication timeline:

Table 9 Information Disclosure and Communication Procedures

Stakeholders Communication Issues Frequency Tools Government officials Meeting Ongoing issues Project Monthly Letter update / status Printed material Community concerns

Workers Meeting Lay Off, Labour Monthly Letter Grievances, Phone calls employment Community members including Meeting Ongoing issues Monthly community heads, elder people, Focus group

26 teacher also vulnerable groups Letter such as women, female-headed Presentation household members, socially Printed material disadvantaged, disabled Field visits persons Project Affected People Meeting LRP projects Monthly Focus group Land Printed material Media Media representatives Meeting Project update Monthly Interview When needed Article

Shuakhevi project has always been in the core of local media interest, though after tunnel failure and general attitude of Georgian society towards hydropower development process in the country, the interest has intensified. The highest percentage of coverage by media comes from Adjara TV (32%) which is a public broadcaster, compared to other sources. It should be highlighted that AGL is in close contact with local media and always provides feedback on information requested, therefore AGL has always been praised for its social responsibility in terms of information disclosure. For the reporting period Shuakhevi project still remains under the coverage of local media.

Below are charts showing the media coverage statistics.

Chart 1 Statistics of media outlets covering the Shuakhevi project

39% 41%

17%

Internet Press Television Radio

Chart 2 Evaluation of Media Coverage

(b) Information Disclosure:

All relevant documents related to the project implementation are disclosed on the web page www.agl.com.ge and hard copies are available at PICs. Further, AGL social team has been permanently sharing information on social, land, environmental and technical issues among the local community leaders and representatives of the mayor’s office. AGL technical and social team conducted informational sessions for local TV and newspaper representatives. AGL is partnering regional newspaper Adjara and is publishes informational page on a monthly basis. Newspaper is distributing in Adjara highland, AGL additionally purchases 100 copies and disseminates newspaper in affected communities via social officers and mini bus drivers.

AGL stakeholder engagement specialist and AGE community liaison officer compile, analyze and report the information gathered from PIC officers, prepare the responses to grievances and ensure they are delivered to the complainant in a timely manner.

In overall, grievances during the reporting period have been categorized based on validity and risk level by the AGL and AGE social team. Social team members together with AGL and AGE management work closely to investigate the grievance and decide whether it is Project related or whether a relevant authority outside the Project is able to address it appropriately.

The Chart below summarizes the type and number of grievances received. For details on these grievances please refer to the latest monthly report.

Table 10 Grievance registry from July-Dec 2017

Grievance title N of complaints Actions taken

Reduced spring waters 19 AGL explained in a written form that all these spring waters were located outside the tunnel alignment and could not have been affected by the tunneling works. Though for some villages AGL undertook water supply projects and currently no family is left without water supply. House deformation 5 AGL renounces blame that house cracks and deformation have any connection with tunneling works. During joint inspection in previous years, these houses were identified as naturally damaged and not by blasting works. Although, AGL allocated compensation to municipal fund to some houses who required reinforcement works. Land 12 Land grievances are related to acquisition to the remaining part of the land which is not affected by the project as landowners/user find them not useful for further agricultural activities. Several complaints are related to mortgage release. Currently there are around 10 land plots to be released from mortgage from which the most urgent are 4 land parcels: 3 of them in Okruashvilebi and one in Diakonidzeebi. Lenders have already been approached by AGL to start legal procedures. 35kV T-Line 7 Majority of claims referred to compensation payment period and damage caused by construction activities. Construction related claims were addressed by the contractor company. All complaints are closed. Other 8 Other relate to such grievances as employment, landslide activation, rock fall, damage compensation, etc. All complainants have been reached and explained, for the reporting period all these grievances are closed. Total 51

In mid-August AGL was approached by IFC Tbilisi office regarding the letter prepared and sent by the Chairman of the fraction United National Movement at the Supreme Council of Adjara Autonomous Republic Mr. Elguja Bagrationi. The letter stated that hydropower projects (including transmission line) caused environmental and social impacts on local communities and triggered risks to safe living conditions. Even though the Shuakhevi project was not directly mentioned in the letter and AGL never had direct communication with the claimant, AGL was ready to meet the chairman and provide all requested information. However, Mr. Bagrationi never reached the company and the case was closed down with the response letter sent by IFC Tbilisi Office.

In parallel to this, AGL learnt that lenders also received complaint letters from 3 villages: Gorkhanauli, Makhalakidzeebi and Khinchauri. The grievances of the same complainants have been processed by AGL earlier through its grievance redress mechanism and responses with clear explanations provided. However, locals were not satisfied and sent complaints to lenders offices. To follow up on the issue, ADB safeguard specialists visited the site on September 20- 21. AGL organized meetings for ADB with signatories to the three complaint letters and provided ADB with all correspondence it had with these communities. ADB intends to follow up with the complaint.

Several grievances have progressed through the court hearing, namely the claimant from

Akhaldaba village required additional compensation for fruit trees and did not agree on multipliers 5 and 8 years which were selected by AGL. The case was heard in court on September 27, and the second hearing was conducted on October 10 and the court made decision on November 8 in favour of AGL. Though, claimant appealed against the decision at the Court of Appeal in Kutaisi and the new hearing is planned in March 2018.

Claimants filed a case against the Ministry of Economy and Sustainable Development of Georgia about the issuance of the Construction Permit and requested revocation of the construction permit for Shuakhevi hydropower project. The case was heard in court on August 15, and the decision was made in favor of the Ministry on December 26.

(d) Corporate sustainability activities:

AGL has been implementing a wide-ranging social responsibility programs. AGL’s social responsibility efforts included infrastructural projects, community development programs, education, and awareness raising. In all social projects, AGL collaborates with local mayor offices, regional government’s entities as well local NGOs and other organisations.

The main goals of AGL’s CSR efforts are: To improve conditions in the project area and ensure that local stakeholders and project affected people share in benefits from the project. Provide community investments as a mechanism to mitigate negative social impacts associated with the project. Create positive relations between AGL and the communities and reduce community related risks for the project.

In the second half of 2017 AGL reduced its community investment profile and did not initiate new projects. AGL social team members carry out monitoring of already launched projects and ensures sustainability of the implemented activities. For the time being AGL has only several ongoing projects, these are alpine botanic garden at Goderdzi Resort and Khulo textile factory. Construction of the garden facilities has been progressed. Parking area, ticket office, tourist routes have been arranged, foreign experts and specialists are involved in arrangement of alpinarium. AGL information officers undertake monthly monitoring of construction activities. AGL continues financing of local students’ tuition fees. Totally, 25 students received scholarship though due to fail in interim exams 3 students were excluded from the financing scheme.

Annexure 1: HSE Performance Indicators 2013,2014,2015,2016

Section A: Accident Frequency Rate – Man-hours by Year

Section B: Total Recordable Injury (TRI = LTI+MTC+RWC) – Man-hours by month in 2017

Section C: Injury vs Non-Injury % by Year

Section D: Accident – Incident Classification by % in 2017

Table 11 Health and Safety Accident – Incident Register for Period July-Dec 2017

Description of Incident types of injury/ illness/ Date Company Activity Location Type of event Comments / Sequence of Events classification emission/ material damage

Collision between 01/07/2017 AGE Construction Driving Road RTA vehic les or mobile Damage to vehicle Vehicle drove into the puclic's vehicle equipment Person caught in/on or 06/07/2017 AGE Construction Shuttering Didachara LTI Cuts, Lacerations A formworker suffered a cut hand while using chainsaw between objects Workers were performed the job at height wiothout fall prevention and protection 13/07/2017 AGE Construction Grouting Didachara NM Unsafe Condition No Injury system Pedestrian, nonpassenger struck by Sprains, strains or 19/07/2017 AGE Construction Driving Didachara MTC A car reversed into worker. The worker's left leg was jimmed between a car and road barriers. vehic le or mobile tears equipment Person caught in/on or walking up the access stairs to Didachara gallery, an MML Engineer accidentally touched an 10/08/2017 MML Inspection Didachara NM Electrocutions between objects exposed section of electrical cable and received a small electric shock.

Struck by falling, Stones fell down to powerhouse area and hot the drainage channel pipe. This accident 10/08/2017 AGE Construction Fencing PH MD Damage to pipe swinging or flying object has been also recorded as Hi-Po near miss incident Vehicle struck 12/08/2017 Alstom Driving Road RTA stationary object or Damage to vehicle GES vehicle was went off the road and hit the trees equipment Workers were performed the job at height wiothout fall prevention and protection 29/08/2017 AGE Construction Grouting Didachara NM Unsafe Condition No Injury system 07/09/2017 AGE Construction Excavation Skhalta NM Unsafe Condition No Injury The excavator was located underneath of the powerline Vehicle struck 07/09/2017 AGE Construction Driving Didachara RTA stationary object or No damage Dump truck sank in the edge road whilst hauling material equipment Workers were performed the job at height wiothout fall prevention and protection 14/09/2017 AGE Construction Maintenance Didachara NM Unsafe Condition No Injury system 10/10/2017 AGE Construction Electrical works PH NM Unsafe Action No Injury A person was not used safety harness while working at height (over 6 m) Struck by falling, Sprains, strains or 12/10/2017 AGE Construction Shuttering Skhalta FA swinging or flying Falling stone hit the worker whilst working underneath slope tears object Due to heavy storm many materials was flooded and equipment was washed downn 16/10/2017 AGE Construction Material Storage Akhaldaba MD Unsafe Condition Damage to Material into the river 16/10/2017 AGE Construction Road Construction SDA 3 NM Unsafe Condition Damage to road The road was slide down due to heavy rain

16/10/2017 AGE Construction Road Construction SDA 4 NM Unsafe Condition Damage to road The road was slide down due to heavy rain. And road was almost blocked by material. Due to heavy rain and storm a landslide happened at didachara downstrream access 16/10/2017 AGE Construction Road Construction Didachara NM Unsafe Condition No damage road 16/10/2017 AGE Construction Mucking Skhalta NM Unsafe Condition No damage Due to heavy rain the drainage channel at skhalta downstream was overflowed Struck against moving Ladder slid and worker tried to grab tray to prevent fall and worker was suffered a cut 16/10/2017 AGE Construction Cabling PH FA object, sharp edge or Cuts, Lacerations Stepped on object hand whilst he grabbed tray's sharp edge. A landslide occurred across the access road to didachara dam. 30 m section was 17/10/2017 AGE Construction Road Construction Didachara MD Unsafe Condition Damage to road alomost move down and damaged Struck by falling, A stem rod was dropped on the drilling machine operator's’ foot during drilling activity for 03/11/2017 AGE Construction Drilling Didachara LTI swinging or flying Fractures soil nailing at Didachara site object Struck by falling, While adjusting a stuck sling under the boxes, a jig suddenly released from hand and hit 13/11/2017 Alstom Lifting PH FA swinging or flying Cuts, Lacerations his forehead. object Electrical arcing was occurred at battery room and cables and connectors were 28/11/2017 AGL Electrical works Chirukhistsqali MD Unsafe Condition Damage to panel burned. Damage to gabion Due to heavy rain landslide occurred and gabion wall was failed and moved toward 24/11/2017 AGE Construction Road Construction Didachara MD Unsafe Condition wall public road Struck by falling, Shotcrete/rock peieces fell nearby tunnel inspection team. This incident classified high- 30/11/2017 AGL Tunnelling HPHR Tunnel NM swinging or flying No injury potential near miss and further control measures were taken by Engineer and Owner object team. A backhoe was stuck into the muddy and potholes nearby edge of the road while 08/12/2017 AGE Construction Tunnelling Akhaldaba Road NM Unsafe Condition No damage clearing snow off the road.. Damage to electrical 10/12/2017 AGE Construction Maintenance Skhalta Camp MD Unsafe Condition Electrical fired happened due to voltage fluctuation at worker's dormitory panels and cables The vehicle was operating by electrician when he attempted to drive uphill at first bend 12/12/2017 AGE Construction Driving Akhaldaba Road RTA Noncollision accident Damage to vehicle on the road and the vehicle drifting backwards then vehicle suddenly tumbling down a 10-15 m from road embankment. Vehicle struck An AGE's vehicle was operating by Cumali Ovec was hit smoothly the accumulated 15/12/2017 AGE Construction Driving Didachara Camp RTA stationary object or No damage equipment snowfall while reversing. Struck against moving 17/12/2017 AGE Construction Tunnelling Vashlovani Adit MD object, sharp edge or Damage to breaker The adit plug's gate fell onto the hyraulic breaker's jib during dismantling works. Stepped on object Fall to same or lower Grazing to the bridge M.Talliss slipped on a fallen rock and fell forward then his helmet struck a fallen rock 18/12/2017 MML Tunnelling HPHR Tunnel FA level of nose and glasses caused grazing to the bridge of his nose Vehicle struck Minor straches on 18/12/2017 AGL Driving Vashlovani Adit RTA stationary object or AGL's vehicle was operating by Tarik Tanriverdi hit smoothly to cable reel while parking. equipment the front bumper Person in contact Burned onto face Flash fire caused skin burns onto welder's face during heating the hydraulic pipe of the 20/12/2017 AGE Construction Hot works Workshop FA with extreme skin machine temperatures

Annexure 1: CONSTRUCTION PHASE ENVIRONMENTAL & SOCIAL ACTION PLAN No Action Source of Implementation Target For Successful Current Status requirement schedule Implementation / Reporting Requirement 1 Report to Lenders on the ADB SR1 - Semi-annually Submission of reports Latest Semi-Annual report issued to status of each ESAP EBRD PR1 throughout in format to be mutually Lenders covering period July-December requirement and IFC PS1 construction until agreed, acceptance by 2017 compliance with commissioning Lenders PRs/PSs/SRs. - Annually during ESHS Reporting operation Requirement: - Completeness and adequacy of ESHS Report

2 Finalize development of ADB SR1 Prior to - Finalized ESHS with Operational ESMS was finalized; the ESHS Management EBRD PR1 commencement of all aspects included. Tracker of operational E&S System to include (as IFC PS1 Best construction works - Lender approval of commitments were developed; required by ESIA, vol. IV, Practice and then prior to monitoring program Operational management plans: sec.4.2.2): commercial - Monitoring of BAP, Low Flow Mitigation - Register of environmental operation environmental Strategy, Sediment Management, and social aspects management (including Solid Waste Management, - Register of requirements design change Emergency Preparedness and and conditions in management) and Response Plans are completed; legislation, consents, mitigation as per AGL Draft of key performance permits, etc. ESHS. indicators for operational phase is - Schedule of monitoring Report to Lenders: developed and requires further program, including - Status of ESHS improvement. required and Management System Organizational structure for recommended surveys / development operations phase is in place inspections/audits (EHS - Metrics of key including the Operations and Monitoring Schedule) performance indicators Maintenance Engineers, who were - Development of as set down in AGL recruited and trained for O&M Environmental ESHS phase. Improvement Plan through - Summary of audit development of: - E&S results of AGL ESHS Management and implementation Monitoring procedures - Environmental Operating procedures - Preparation of action lists and responsibilities - Environmental Operating procedures - Preparation of action lists and responsibilities - Development of training materials and key - Design Change Management procedure 3 Acquire and comply with all Georgian law Prior to beginning - Permits & AGL has put in place a tracker of required permits and ADB SR1 any activities that authorizations received Environmental Permits, which includes authorizations EBRD PR1 require permits or - Reports submitted information about permits / IFC PS1 authorizations Report to Lenders: - authorizations to be obtained. AGL Compliance status Environmental Compliance Manager is - Report immediately monitoring implementation of any formal Environmental Permit requirement to enforcement actions ensure compliance. Moreover, AGL for non - compliance together with Mott is conducting regular monitoring of contractors’ permits registry. AGL is in full compliance with statuary requirement during reporting period. Required reports were submitted to the relevant authorities: quarterly hydrological and geodynamic risk monitoring report in June and December 2017, 6 months’ biodiversity report in December 2017, also reports on the amount of excavated aggregates.

4 Implement ESMP and all ADB SR1 Throughout - ESMP and all plans Noise, dust and water discharge are associated plans EBRD PR1 construction and implemented being monitored as per the ESMP & IFC PS1 Best operation - ESHS impacts CEMP control documents. practice avoided, minimized, mitigated or compensated Report to Lenders: - Highlights of implementation, including major deviances

5 Use best efforts to ensure ADB SR1 Throughout - Transmission line AGL contractor companies DG ESIA on Batumi- EBRD development of ESIA meets Consulting and Alligator are working on Akhaltsikhe transmission PR1 IFC ESIA and international standards ESIA and RAP revision for Segment I. line is completed PS1 construction/ - Construction and in accordance with operation of line operation in They have already finished working on international best practice Accordance with ESIA and RAP for Segment II in August. and that required agreed mitigation Construction works on Segment II is mitigation measures are ongoing. fully implemented. Report to Lenders: - Status of transmission line ESIA and approval process - Summary of construction and operation

6 Further develop OHS plan ADB SR1 Prior to construction - OHS plan further Specific HSE procedure for tunnel repair to be specific to EBRD PR2 developed, adopted, activities has been developed by the Adjaristsqali project(s) IFC PS 2 and implemented Contractor. and ensure that the Best Practice - Minimum lost time procedures and HSE incidents and fatalities Observations for negative and positive manuals referred within it - Monitoring of findings are recorded and statistics are are an integral part of environmental and circulated within the organization. health safety and social management environmental and mitigation as per Lost injuries and significant near-miss management on site AGL ESHS occurrences are recorded in accordance Monitoring Schedule with the Contractor’s and AGL’s HSE Report to Lenders: Plans and elaborated upon on in monthly - Status of updating of reports when they happen. OHS plan - Outcome of OHS The monthly report contains, summaries, monitoring as per causation and trend analysis into ESHS Monitoring negative site activities. Schedule. - Summary of OHS Monthly assessments are also made on issues, including incident camp / accommodation arrangements as and/or fatalities part of the ESMP along with possible Enforcement statistics, effects of nose and dust on local status of training, etc. communities directly or indirectly affected Report to cover AGL by the Project – Ongoing. and contractor workforces - Report to Lenders immediately in case of major accidents

7 Implement Labor ADB SR1 Throughout - Plan implemented, Workers’ grievances continue being Grievance Plan (2012), EBRD construction and mechanism made registered in the AGE Workers Grievance including grievance PR2 IFC operation available. Log-Book. Public Information Center mechanism made PS 2 - Timely resolution of all (PIC) is reopened in Didachara working available to all AGL and grievances camp to monitor grievance procedure and contractor workers Report to Lenders: response workers’ concerns in a timely - Outcome of labor manner. grievance monitoring asThere have been only 4 grievances - Summary of registered related to recruitment process. grievances and All of them have been resolved. resolutions

8 Review Spoil Management Georgian law Prior to spoil - Site specific spoil Spoil Management Plans were Plan to ensure: ADB SR1 generation management plans developed and approved by the - Plan is consistent with EBRD PR3 developed / approved Ministry of Environment in 2016. ESIA and project design, IFC PS3 by AGL including estimated spoil Best Practice - Spoil managed During reporting period, the SDAs’ being quantity according to plan engineered are being reviewed by MML - Specific method - Monitoring of and Gamma for compliance with the statements and risk environmental approval plans. The contractor company assessments are management and developed tentative timetable for completed for each mitigation as per AGL restoration activities. spoil disposal site ESHS Monitoring - Clarity on potential Schedule land acquisition Report to Lenders: - Site specific subsidiary - Status of site specific plans to cover spoil management management of each plans individual site during fill - Outcome of spoil and subsequent site monitoring as per reinstatement EHS Monitoring - Designs sufficient to Schedule prevent erosion due to specified flooding events

9 Complete all necessary Georgian law Prior to - Surveys, reviews, N/A additional surveys, ADB commencement of consultations reviews and consultations SR1/SR2 construction completed identified in the ESIA and EBRD PR3 - ESMP modified as project permit approval IFC PS3 Best needed conditions. Modify ESMP Practice Report to Lenders: and associated plans as - Status of additional needed to incorporate surveys and impacts of findings into outcomes on ESMP environmental and social management.

10 Identify mitigation ADB SR1 Prior to - Mitigation measures N/A measures for concrete EBRD PR3 commencement of identified - ESMP within CEMP11 and IFC PS3 construction modified as needed ensure appropriate Best Practice Report to management techniques Lenders: - are employed through the Updated ESMP. CEMP12 - Outcome of CEMP12 implementation monitoring as per EHS Monitoring Schedule 11 Identify within CEMP09 Georgian law Prior to - Solutions identified - As the Project is back to construction specific solutions with ADB SR1 commencement of CEMP09 modified AGL follows the CEMP09 and the new regards to the need for EBRD PR3 construction Report to Lenders: - waste management plan which was management of waste at IFC PS3 Updated CEMP09 developed and approved by the appropriately licensed Best Practice - Status of site – Ministry of Environment in 2016. landfill or other sites. specific spoil waste disposal site risk Specific risk assessments and a assessments and hazardous waste management plan are method statements in place as per CEMP 09. AGE has - Outcome of contracted licensed company to monitoring spoil transport hazardous waste. management practices as per EHS Monitoring Schedule

12 Identify and evaluate risks ADB SR1 Prior to creation - Community H&S risk Initiatives for community safety and to community health and EBRD of assessment for all emergency preparedness for the safety from construction PR1 IFC potential risks project stages operation phase has already been and operation of the PS1 - Mitigation / prevention implemented since H1 2017. project, develop and measures developed implement commensurate and implemented Emergency Preparedness and Response preventive measures and - ESMP monitoring and Plan has been prepared to ensure safety plans to address them. reporting of community. Report to Lenders: - Status of risk Concerns related to reservoir safety have identification and been considered by AGL such as fencing mitigation, and Didachara reservoir (most steep slopes) in planning order to ensure livestock not falling in the - Outcome of monitoring reservoir. Once reservoir becomes of H&S management operation AGL will implement this. of risks to the AGL continues geological monitoring at community as per various construction sites. EHS Monitoring Schedule To ensure health and safety of locals AGL installed landslide online monitoring system in Chanchkhalo. Data is being transferred to the server of Ministry of Environment for interpretation.

In order to mitigate traffic movement and facilitate safe transportation of local residents AGL arranged service of mini buses which transports locals from villages to Khulo center and back.

13 Develop and enforce a ADB SR1 Prior to Code of Conduct The Code of Conduct as applicable for Code of Conduct for EBRD PR4 commencement of developed and AGL employees (HR manual). It is being Security Personnel IFC PS1 construction enforced adhered as per the contractual terms for Best Report to Lenders: all security personnel at the operations practice - Status of Code of area. It is already implemented as per Conduct development contract. - Outcome of monitoring of effectiveness of Code of Conduct for Security Personnel as per EHS Schedule

14 Develop and enforce ADB SR1 Prior to - Code of Conduct Worker Code of Conduct is displayed at Worker Code of Conduct EBRD PR4 commencement of developed and the Khichauri and Didachara working in accordance with the IFC PS4 the construction enforced camps; Worker Behaviour Best phase Report to Lenders: Guidelines Practice - Status of Code of AGL Stakeholder Engagement Conduct Specialist and AGE community Liaison Development – Officer are monitoring implementation of Outcome of monitoring the document. of effectiveness of Regular informational meetings are kept Worker Code of in order to ensure that AGE follows Conduct as per ESHS worker behavior guidelines Schedule

15 Implement the LALRP, ADB SR2 Throughout land - LALRP implemented Land acquisition is still ongoing for 35kV including timely disclosure EBRD PR5 acquisition process - Up-to-date land Transmission Line Project. Acquisition is of up-to-date land IFC PS5 acquisition and conducted according to the Addendum acquisition and resettlement LALRP and the “Principles for Additional resettlement documentation Land Acquisition.” 286 out of 307 documentation, summary available on AGL’s contracts are in place and the registration of LALRP and website and locally. is under progress. information on progress Report to Lenders: (e.g. monthly Information - Status of acquisition Diakonidzeebi Weir is still under Letters, booklets, - Summary of consideration. brochures, etc.) disclosures

16 Implement the BAP, Georgian - Develop schedule: - BAP implemented BAP actions are implemented by including: law ADB Prior to construction - ESMP monitoring and AGL and contractor environmental - developing and SR1 EBRD - Implement reporting team according to the action plan. implementing detailed PR6 IFC monitoring Report to Lenders: During the reporting period monitoring schedule for PS4, 6 schedule: as - Status of schedule monitoring of invasive species, small evaluation and reporting specified in BAP development and large mammals, birds, of ecological impacts and throughout during - Outcome of ecological amphibians and reptiles, fish and recognizing findings of construction monitoring as per macroinverbrates were conducted additional surveys and operation Monitoring Schedule by local NGOs. Relevant reports undertaken - Monitor flow: - Summary of minimum were submitted and reviewed by - monitoring flow throughout flows against AGL and ERM (environmental upstream and operation requirements consultant of AGL). downstream of all dams to - Ecological - Summary of ecological verify required minimum assessments: as assessments, including In December 2017 six months’ flows are met per BAP need for adjustments in report on Biodiversity monitoring - Ecological assessments minimum flows. was sent to the Ministry of as performed to verify Environment as required. flows are adequate to preserve biodiversity, or to redefine minimum flows AGL continued hydrological monitoring through gaging stations downstream of dams. Information from gauging station on water discharge and water level are submitted to the Ministry of Environment on quarterly bases, mainly in June and November 2017.

As per Low flow monitoring Strategy (LFMS) AGL commissioned environmental consulting company Blue Rivers who has conducted field survey during 04-16 July 2017. Monitoring was conducted at all three headworks sites – Chirukhistsqali, Skhalta, Didachara (Ajaristsqali River) in conditions of natural environmental flow. Based on the hydromorphological measurements, maps of isobaths (depths) and isotaches (velocities) were produced for all three headworks sites for two scenarios – natural and environmental flows.

Monitoring report concluded that flow/habitat connectivity was maintained under Environmental flow condition and changes in flow, depth and width were not problematic while compared to the baseline conditions. 17 Conduct additional ADB - Survey of area: - Surveys conducted N/A surveys to determine SR1/SR2 prior to disturbance - Consultations held and presence of graveyards, EBRD PR8 of the area actions agreed and if needed work with IFC PS8 - Consultation with Report to Lenders: communities to minimize communities to - Summary of impacts minimize impact: surveys and actions prior to disturbance taken (consultations, of graves etc.) - Outcome of monitoring of graveyard protection as per EHS Monitoring Schedule

18 Update CEMP01, Georgian Prior to construction - Updated Chance Finds N/A Chance Finds Procedure, law ADB Procedure to call for archaeologist to SR1 EBRD Report to Lenders: be on site as needed to PR1 IFC Status of ADB SR1 verify archaeological PS1 EBRD PR4 finds, provide advice to a - IFC PS1 updated nominated AGL Chance Finds representative, and liaise Procedure with relevant authorities. - Outcome of chance finds procedure implementation, monitored per EHS Monitoring Schedule

19 Implement Stakeholder ADB SR 1 Throughout - SEP implemented AGL redeveloped stakeholder Engagement Plan EBRD construction and Report to Lenders: engagement strategy to the new working PR10 IFC operation - Summary of environment and at the same time the PS1 stakeholder Company returned to the guidelines from engagement the construction phase SEP approved by lenders.

Informational meetings are in place on daily and weekly bases with all stakeholder groups (note: local authorities, affected villages, workers, media etc.).

Public Information Center (PIC) is reopened in Didachara working camp to cover Khulo municipality.

AGL closed PIC in Skhalta, however, the Company keeps community liaison officer in this area as a member of social team and primer contact for the local communities in this area.

Khichauri main camp serves as another public information point for Shuakhevi municipality.

20 Evaluate and update SEP ADB SR1 Evaluation and - SEP evaluated and The SEP is being followed and reported to improve/ refine EBRD update: annually updated if needed periodically. stakeholder list, PR10 during

21 Communication methods, IFC PS1 construction, Report to Lenders: - AGL keeps publishing an informational media, etc. biennially thereafter Updated SEP page in the regional Newspaper Ajara which provides the Project news, updates and information to local communities on monthly bases. Furthermore, AGL has been actively participating in popular, regional TV shows during last months (TV Ajara, TV 25).

Annexure 2 – OPERATIONAL PHASE ENVIRONMENT & SOCIAL ACTION PLAN

No Action Implementation schedule Indicator For Successful Current Status Implementation / Reporting Requirement

1 Prepare and submit annual reports on Six monthly summaries of Agreement on formats for six AGL has developed initial KPIs E&S performance (ESRs) agreed KPI data monthly and annual reports which have been shared with ARUP. Annual detailed ESR Frequency and formats modified by mutual agreement

2 Finalize development of the Prior to commencement of ESMS plan, with implementation ESMS was sent to Lenders Environmental, Social, Health & Safety commercial operation details provided to lenders consultant for comments. AGL Is Management System (ESMS) for working to address comment and

operational phase, aligned with ISO14001, finalise the document. OHSAS18001 and SA8000). To include Before any physical works Diakonidze ESIA and supporting management of change processes (e.g. for (including pre-construction) on mitigation, monitoring and Diakonidze Weir) and to cover Diakonidze Weir: assessment management plans subcontractors and service providers’ and proposed mitigation and

activities and the delivery of E&S management of E&S aspects to commitments to lenders’ and GoG lenders’ satisfaction satisfaction. To include E&S staffing and

resources (see #3).

First ESMS third party audit 12 Copy of third party ESMS audit Verification of ESMS performance through months after commencement and management review/response (annual third party audits of commercial operation and provided to lenders annually thereafter (or until

certification)

Copy of memo/presentation Within 24 months after Presentation of ESMS strategy to board, submitted to board of directors commencement of commercial including formal certification options and details and rationale for

Annexure 2 – OPERATIONAL PHASE ENVIRONMENT & SOCIAL ACTION PLAN

No Action Implementation schedule Indicator For Successful Current Status Implementation / Reporting Requirement operation decision/response

3 E&S technical capacity and accountability. Prior to operation and Experienced and qualified senior Organizational chart has been throughout operation. E&S management personnel non- developed and shared with lenders. (1) Retain experienced and qualified objected by lenders, in position senior E&S management personnel to Senior E&S management is in place. (named and under contract) take overall responsibility for HPP ERM has been hired to assist AGL.

operations including delivering and assuring E&S compliance with ESAP,

ESIA/ESMP, BAP, SEP, Georgian Permit

and lenders’ requirements related to environmental and social issues, closing

remaining commitments on the LALRP

and reporting to lenders and Georgian authorities on these matters.

(2) Organizational chart, clearly defining Prior to operation. (Can be Organogram and supporting reporting lines for all staff accountable provided as part of submission for documents provided to lenders’ for E&S delivery. To include who is ESMS – see #2) satisfaction responsible for reporting E&S

performance to the AGL board.

Prior to operation. (Can be (3) Job descriptions for senior E&S Job descriptions provided to provided as part of submission for management personnel, covering (i) lenders ESMS – see #2) overall E&S responsibility (see above); (ii) social director, (iii) environmental compliance officer and (iv) h&s officer.

Annexure 2 – OPERATIONAL PHASE ENVIRONMENT & SOCIAL ACTION PLAN

No Action Implementation schedule Indicator For Successful Current Status Implementation / Reporting Requirement To include resources (staff, budget) available to them

4 Submit a schedule and work plan to Before operation: schedule and Schedule and work plan reviewed Al remaining items are being complete remaining ESAP/corrective work plan submitted to lenders by lenders and agreed monitored through a work plan action items from HPP construction phase under the Construction Phase ESAP.

and E&S monitoring activities. On completion of construction, these Plan implemented in accordance Final closure of all priority items will be monitored under to the committed/ agreed outstanding items remaining from Operational ESAP. timeframe construction phase activities and E&S monitoring undertaken by the lenders within agreed timeframe.

5 Acquire and comply with all required Prior to beginning any activities Permits & authorizations received AGL was in compliance with all permits and authorizations and lenders’ that require permits or permits and authorization

requirements. authorizations requirements during reporting Reports submitted to authorities period.

as required

In December 2017, 6 months biodiversity monitoring report was submitted to the Ministry of Environment and Agriculture.

Twice during the reporting period, in October and December 2017 quarterly geological and hydrological reports were submitted to the Ministry of Environment and

Annexure 2 – OPERATIONAL PHASE ENVIRONMENT & SOCIAL ACTION PLAN

No Action Implementation schedule Indicator For Successful Current Status Implementation / Reporting Requirement Agriculture. AGL has not received any comments/recommendations form the Ministry regarding reports.

6 Develop and implement O&M plans and Prior to the commencement of Plans/procedures addressing Environmental flow mitigation procedures, as appropriate to address the operations specified topics approved by strategy (LFMS) has been following: lenders finalised and disclosed via AGL

website on September 27, (Environmental) low flow mitigation Throughout operations 2017. strategy Report to lenders (in ESRs – see Flow monitoring is under Flow monitoring and information #1) implementation according to dissemination LFMS and the mechanism Sediment management described in Operational & Maintenance manual (O&M). Solid waste management (including Flow disclosure is happening via solid waste collected at intakes) AGL website Operational (occupational) health Sediment management and and safety management solid waste management plans Re-vegetation, vegetation has been developed and maintenance approved by The Ministry of Environment, plan is under implementation. Revegetation plans for construction and camp sites will be developed by Gamma consulting. Revegetation plans for SDAs are in place, engineering of SDAs is under progress and will be completed

Annexure 2 – OPERATIONAL PHASE ENVIRONMENT & SOCIAL ACTION PLAN

No Action Implementation schedule Indicator For Successful Current Status Implementation / Reporting Requirement in Spring and implementation will be in autumn 2018.

7 Identify and evaluate risks to Prior to the commencement of Community H&S risk assessment An Emergency Preparedness and community health and safety operations and plan for operational stage Response Plan has been developed. associated with operational phase of the AGL undertook community Mitigation/prevention measures project, develop and implement briefings. AGL will continue safety developed and implemented commensurate preventive measures and information campaign once the plans to address them. To include: project is in operations. Reviewed and modified as identification and assessment of risks to necessary throughout operations Report to lenders (in ESRs – see #1) the public; a map indicating the community risk profile; mechanism of communication of public safety risks;

and definition of the mitigation measures that are to be put in place (e.g. emergency preparedness signing, fencing, community engagement / information).

8 Develop and implement HPP operational Prior to commencement of CoC developed and enforced Workers’ CoC is incorporated in HR procedures for labour and working operations handbook. Records of checks made to conditions and enforce a workers’ code of enforce the CoC Workers’ Grievance Mechanism is in conduct (CoC), including a grievance place. mechanism, in accordance with lenders’ Grievance mechanism in place requirements for O&M staff and and timely resolution of all

contractors, including security personnel, grievances that will assure the delivery of lenders’ Throughout operations

requirements on working conditions.

Report to lenders (in ESRs – see

#1), including outcome of monitoring of effectiveness of CoC

Annexure 2 – OPERATIONAL PHASE ENVIRONMENT & SOCIAL ACTION PLAN

No Action Implementation schedule Indicator For Successful Current Status Implementation / Reporting Requirement

9 Monitor the effectiveness of the LALRP During the first full year of Routine monitoring and evaluation AGL undertakes frequent monitoring and DLRP, and deliver post-project operation of the completed LALRP and DLRP of delivered activities. measures. Finalise completion audits for activities Completion audit will be conducted any LALRP activities. Report to lenders (in ESRs – see once all land acquisition is finalised in #1), including outcome of the project. Land acquisition for 35kV monitoring of the effectiveness of T-line project is still ongoing. the completed LALRP and DLRP activities

10 Implement the BAP, including: Operational Phase BAP has been completed and final version was developing and implementing Implement monitoring schedule: Report to lenders (in ESRs – see provided to lenders for non- detailed monitoring schedule for as specified in BAP throughout #1), including status of schedule objection and disclosure in January evaluation and reporting of during construction and development; outcome of 2018. ecological impacts and recognizing operation ecological monitoring as per findings of additional surveys monitoring schedule; summary of AGL has also developed Operational Monitor and disclose undertaken minimum flows against Biodiversity Management, environmental flow data: requirements; determination and Monitoring and Mitigation plan monitoring and disclosing (e.g. on throughout operation confirmation of no residual adverse (OBMMMP), which is internal website) environmental flow data to Ecological assessments: as per impact on critical habitat values, document and provides detailed demonstrate and verify that required BAP summary of ecological schedule of monitoring, summery of minimum flows are being met assessments, (including need for methodology, monitoring sites, ecological assessments to verify flows adjustments in minimum flows), adaptive management threshold, are adequate to ensure no net loss of the approach taken on implementing Agency and AGL staff biodiversity, or to redefine minimum environmental flow disclosure and responsible for action. This is very flows any other lender requirement on good document to ensure timely and biodiversity conservation that is proper implementation of BAP identified as applicable during requirements. monitoring and review. Environmental flow is disclosed on the website from September 2017.

Annexure 2 – OPERATIONAL PHASE ENVIRONMENT & SOCIAL ACTION PLAN

No Action Implementation schedule Indicator For Successful Current Status Implementation / Reporting Requirement Ecological assessment to verify flows are adequate is conducted according to LFMS and OBAP. Flow assessment was conducted during 12 days in July by international consultant company Blue Rivers. Monitoring was done in natural flow condition and while engaging ecological flow. Monitoring report was review by ERM and AGL. Results are satisfactory, it was concluded that flow/habitat connectivity was maintained under ecological flow condition and changes in flow, depth add width were not problematic when compared to the baseline conditions. Blue rivers were assisting by Georgian Fish expert from local Environmental NGO.

11 Implement and maintain an operations Prior to the commencement of SEP evaluated and an updated AGL follows construction phase SEP. phase Stakeholder Engagement Plan, operations version for operation phase including appropriate information approved by lenders, reflecting

dissemination and grievance mechanisms staffing and accountabilities (see #3)

Reviewed and modified as Report to lenders (in ESRs – see Evaluate and update SEP to improve/

Annexure 2 – OPERATIONAL PHASE ENVIRONMENT & SOCIAL ACTION PLAN

No Action Implementation schedule Indicator For Successful Current Status Implementation / Reporting Requirement refine stakeholder list, communication necessary throughout #1), methods, media, etc. operations