The FINANCIAL — With USD 416 million AGL (Adjaristsqali Georgia LLC) will bring the Shuakhevi HPP to Georgia. The implementation of this project incorporates: development of the hydropower sector; the creation of new jobs; cash inflow into the state budget by payment of taxes; an increase of qualified staff in the Georgian labour market; the development of the Adjara region; contribution to the independence of the Georgian energy system; and implementation of social projects which are designed to assist in the long-term development of the Adjarian highlands. The company is implementing about 70 CSR projects in Adjara, worth GEL 6 million.
“A company is a success when it demonstrates responsibility for the country and the society in which it does business,” Ronny Solberg, CEO at AGL (Adjaristsqali Georgia LLC), told The FINANCIAL.
AGL (Adjaristsqali Georgia LLC) is the special purpose vehicle set up to develop the hydropower resources on the Adjaristsqali River and its tributaries, in the Autonomous Republic of Adjara, in South Western Georgia. AGL is a joint venture between India’s Tata Power and Norway’s Clean Energy Invest (40 percent each), and IFC, a member of the World Bank Group (20 percent). The joint objective is to develop the Adjaristsqali project as a sustainable project from an environmental, technical and economic point of view.
The Shuakhevi HPP is the first scheme of the Adjaristsqali hydro power cascade. In total, 730 Georgians are employed by the Shuakhevi HPP. The local municipalities of Khulo and Shuakhevi also benefit from property tax revenue: GEL 3.2 million – in 2015, GEL 5 million – in 2016, and GEL 8 million – in 2017.
In his exclusive interview with The FINANCIAL, Solberg discussed the potential of the Georgian hydropower sector. He distinguished the importance of businesses carrying out socially responsible projects.
“Georgia is a developing country. Based on my observation, for the last few years there has been a growing trend among businesses towards implementing CSR activities. The social responsibility of businesses is the ethics of the modern business world. Hopefully, AGL activity will become inspiring for others,” said Solberg.
Q. The energy sector has been one of the most promising for Georgian officials in terms of attracting foreign investors. What are your suggestions for what needs to be done to create a more business friendly environment in this sector?
A. Georgia has great hydro power energy capabilities. The strengthening of this sector, reduction of energy imported into the Georgian energy system, and increase of energy exported, are extremely important in order to gain energy independence for the country.
The steadfast governmental support of capital providers and due and prompt response to evolving challenges is of primary importance to creating a more business-friendly environment in this sector.
Our company is implementing the construction of the Shuakhevi HPP cascade on Adjaristsqali. Within solely one year, a 187 megawatt clean energy generating power plant has been added to the Georgian energy system. While carrying out the project, we, on a daily basis, collaborate with the Georgian Government and realize its full backing.
Q. The Shuakhevi HPP is expected to be worth USD 416 million. However, usually in the initial stages businesses only issue a small sum in order to try their forces on a new market. What assured your company to take such a risky step?
A. Before the plan to build the Shuakhevi cascade was embarked on, numerous studies had been carried out, the market of the neighbouring country had been researched and all of the risks that might have arisen in the market subsequent to the project completion had been figured out and taken into consideration.
After our hydropower station is operational, Georgia will have a station with an installed capacity of 187 megawatts, which will produce an additional 440 million kilowatt-hours of electricity which, during the winter, will be completely used by the Georgian population. In the summer, when the production of electricity is extensive throughout Georgia, we will export electricity to Turkey and make our contribution to the export potential of Georgia.
Q. Before starting active operations AGL faced a negative attitude from the local population. We have seen that this is a common trend when talking about the implementation of new hydropower projects. Have you faced the same problem in other countries and what contributed to such an attitude in Georgia?
A. The construction of hydropower plants is accompanied by public outcry in other countries as well. Society is unaware of what to expect from the project during its implementation process or subsequent to its completion. The questions that have to be answered are whether their family welfare will change for the worse or what difference the project will make to the region. Therefore, it is of prime importance to raise the awareness of the local population about the pros of the project.
Since the start of the project our team meet daily with members of Khulo and Shuakhevi, they have visited villages and families and listened to their opinions. When it was necessary, the team informed the local population about the project and tried to help all to find themselves in this project and to see the success it may bring their families, region and country. Since the start of the construction phase of the project our company has opened information centres for effective holding of a direct line of communication with the population. The main function of these information centres is to increase the local population’s awareness about local projects. I think the above-mentioned clearly indicates our company’s purpose to implement the project with maximum transparency and active involvement of the population.
Now we are at that point when we are implementing Shuakhevi HPP in close cooperation with the local population. As time will pass, the people will see better what benefits this project will bring to the region.
Q. Climate change is the main concern of the developed world. What is its impact on the hydropower industry?
A. During any construction process, the first priority must be the meticulous study of the environment where the hydro energy project is to be implemented. The environmental impact of the Hydro Power Industry is minimal on provision that the total study has been pursued and the environment appraisal report complies with all international obligations.
I would like to inform that Shuakhevi HPP is the first hydropower project in Georgia certified by the United Nations Framework Convention on Climate Change (UNFCCC) for carbon emission reductions. The Shuakhevi HPP is expected to reduce greenhouse gas emissions by more than 200,000 tons per year.
Before the start of the Shuakhevi HPP a number of studies and reports were prepared. These were carried out by foreign specialists working alongside Georgian professional experts. Based on these studies the environmental impact assessment report (EIA) was prepared, it describes in detail the direct and indirect impacts of the activities on human health and safety, plant cover and fauna, soil, air, water and climate. After evaluation and detailed study of these documents the Ministry of Environment and Natural Resources Protection of Georgia gave permission to “Adjaristsqali Georgia” to start the Shuakhevi HPP.
Our company’s commitment and responsibility are not fulfilled just with the studies prior to construction. We are constantly conducting monitoring in different directions (hydrology, geology, biodiversity). Monitoring results are periodically sent to the Ministry of Environment and Natural Resources Protection of Georgia. I can assure you that the environmental monitoring will continue even after the completion of the construction (for approximately 10 years), and in the event any minor changes are revealed these will be responded to in an appropriate way.
I would like to note that minimal environmental impact of the project is one of our top priorities. Thus the company uses every possible means based on international standards of compliance and the experience of local professionals to ensure maximum reduction even of minimal environmental impacts caused by construction activities.
Q. AGL plans to spend GEL 6 million on its CSR projects. How did you distinguish which directions would be prioritized?
A. It is important for us that all CSR projects are primarily tailored to the interests and needs of local communities. In order to be a successful project, it is a prerequisite that the project has been planned jointly with the involvement of local communities and municipalities. We are implementing about 70 CSR projects in Adjara.
Q. Could you please provide a list and brief description of the CSR projects implemented by AGL?
A. Our priority is to support the long-term development of Adjara. In this regard, our company is distinguished by the high social responsibility that we have in relation to the communities where we work.
I would like to note that education is one of the most important priorities for AGL. Our company tries to implement educational projects that support the growth of education for the next generation of Adjaran highlanders. Recently, we also implemented an educational project for English teachers. This project aims to improve teachers’ knowledge of English and to enhance their professional skills. Over 40 English teachers from the Khulo and Shuakhevi districts took part in the project. We also held English-only after-school activities for gifted and talented students to develop their English and critical thinking skills in an informal atmosphere and held an essay competition in which 44 local students participated.
Infrastructure projects are an important part of regional development. We have quite a long list of infrastructure projects, which we are implementing in cooperation with local municipal governments. These projects include building road infrastructure, improving drainage systems, and providing local communities with permanent water supplies. This is just a short list of the projects which are currently in progress or which have already been implemented. We are also improving school facilities.
Empowering communities is one of the most important issues for the development of highland Adjara and consequently is a key direction for our company. We have recently started a project of funding start-up businesses by awarding grants and promoting household businesses. This project includes training in both practical and theoretical aspects of running a business.
We have also launched a beekeeping project in the Khulo and Shuakhevi municipalities. The aim of this project is to improve and restore the livelihoods of affected farmers to pre-project level. Farmers are trained in new trends and modern technologies of beekeeping to acquire the skills for setting up beekeeping enterprises. Apart from training, participants are provided with bee families, beehives, and any other necessary equipment.
All social projects that are implemented by the AGL are focused on long-term goals. We will do our best to ensure that our planned projects will bring actual results to the region’s development process.
Q. For some, CSR is perceived as just another PR tool for big business, a drop in the ocean that does more good for that company’s brand than it does for others. Share with us your experience of why CSR is important for all businesses, regardless of their size?
A. CSR is the participation of society in a long-term development project which is equally significant both for large and small businesses. The most important thing is to know your society and be aware of its needs. Any small and big steps that companies take in this direction make an important contribution to the common cause that can be referred to as public benefits.
Q. What are the main benefits of CSR for the community?
A. The objective of the projects implemented by our company is the long-term development of Adjara. It is essential that the standard of living of the local population does not decline after the project has been completed and when our company no longer employs local people. This is primarily the main aim of our social projects. As an example, we have contributed a lot to the development of bee-keeping in this region. Namely, we have provided bee-keepers with all the necessary equipment, taught them all the modern methods used in bee-keeping and how to prevent the escape of honeybees. The aim of all this is to equip a bee-keeper with knowledge essential to do his business and earn his living.
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