Khudoni hydropower plant, Georgia

The 702 MW Khudoni hydropower plant (HPP) is proposed to be built on the Enguri River in the picturesque mountain region of upper Svaneti in Georgia. The area is inhabited by the Svans, an ethnic group which has retained its language and traditions over centuries.

The Khudoni HPP will resettle around 2000 people and flood some of the villages threatening to corrode traditional lifestyles of the Svans and destroy pristine nature.

Displacement and locals' fierce opposition

The Khudoni HPP will displace around 2000 people (of the 12 000 who live in Upper Svaneti). A village to be fully resettled is Kaishi with its 800 inhabitants.

One fifth of Khaishi’s households is recorded as socially vulnerable and is living on allowances, the majority relying on agriculture for their subsistence. They fear that their situation will only deteriorate with the resettlement.

Supported by numerous other Svan communities, the people from Kaishi are fiercely opposing the Khudoni hydropower plant and have organised numerous public protests, rallies and blockades.

In 2013, 200 families of Khaishi even took a traditional oath in church, vowing they would protect Kaishi from flooding or, should they fail, face a curse that will haunt them and their families for generations.

The project promoters’ unwillingness to respond to locals’ concerns has further deepened the mistrust and disagreement.

• Georgian authorities, instead of working with locals, responded to protests with increased police presence and intimidation.
• The project company Trans Electrica has failed to communicate the project’s effects and has not disclosed clear plans for compensation or resettlement.

This was worsened by the fact that more than 1500 ha land, part of which was traditionally owned by the local population yet not officially registered, were sold by the Georgian state to Trans Electrica for one dollar. Locals had not been informed about the deal.

Doubtful public benefits & dodgy company

Most of the benefits that the Khudoni HPP is supposed to provide for Georgia and local municipalities are highly doubtful.

Energy independence?

The contract signed by the concessionaire and the Georgian government will award 91 percent of the Khudoni generated electricity for exports. Georgia is only guaranteed to buy annually 133.9 mln kw/h (or only four days of power consumption in Georgia) at a fixed price of 5.84 US cents during the first ten years.

Tax revenues?

While electricity exports will improve Georgia’s trade balance, they will not generate fiscal benefits for the country as export is factually exempt from taxation with a tax rate of zero percent.

Apart from income tax on salaries, Trans Electrica Ltd. will only pay a property tax of 1 percent. It will not pay for the water usage.

Employment?

The experience with other Georgian hydropower projects such as Larsi, Paravani and Dariali (pdf) have shown that employment opportunities tend to be exaggerated and mostly limited to the construction phase. The operation of Khudoni will require skilled work force which is likely to come from far away.

Offshore company

The project company, Trans Electrica Limited, incorporated in the British Virgin Islands, is represented by Indian nationals who have been so far silent about the beneficial owners of the company and the sources of financing.

The terms of the agreement for the construction of Khudoni HPP on a build, own and operate basis has been changed several times by the Georgian government and Trans Electrica Ltd. The project is heavily delayed but it is unclear whether the company has paid any penalties for delayed works.

Other impacts

The Svaneti region is famous for it's medieval stone towers.

Cumulative impacts on water streams

The Enguri river already hosts the world's sixth highest arch dam, the 1300 MW Enguri HPP, and the 240 MW Vardnili hydropower cascade.

In addition to Khudoni, nine other hydropower plants (including three large dams with reservoirs) are being planned.

When combined, the plants will have significant impacts on water resources and the environment. However, the Ministry of Energy has not assessed the cumulative impacts of these installations.

Cultural impacts

Upper Svaneti is a candidate site to be listed by the UNESCO World Heritage for its natural importance and well-preserved medieval architecture.

While the dam is outside of the UNESCO site boundaries, the construction of a hydropower plant will interfere with the cultural sites (according to the official scoping document (pdf)). Twenty-seven villages will be impacted directly and indirectly by the project, including Khaishi which is regarded as a political and cultural gateway to Svaneti.

Khaishi’s church of St. George, Lakhani’s church of St. Nicholas, a cemetery and archaeological sites will be flooded.

Seismic risks and land slides

Severe landslides, rock falls and erosion were observed upstream of the Khudoni site. Combined with the high sediment load on the Enguri River, the high geological risks could decisively shorten the lifetime of the Khudoni reservoir.

Svaneti is a seismically active zone and a possible dam failure could result in flooding of vast areas in the western part of the country.