Bi-annual Environmental Monitoring Report

Project Number: 2974-GEO (SF) Reporting period: Jul 2014-Jan 2015 GEORGIA: POWER TRANSMISSION ENHANCEMENT PROJECT (Financed by the Asian Development Bank) Bi-annual Environmental Monitoring Report Prepared by: Zezva Khvedelidze, Environment Safeguards Specialist Environmental and Social Safeguards Unit, International Projects & Reporting Department Georgian State Electrosystem JSC Tbilisi, Georgia Endorsed by: Maya Pitskhelauri Head of International Projects & Reporting Department/PMU Manager Georgian State Electrosystem JSC February, 2015

ABBREVIATIONS ADB EA EARF EIA EIP EMP GoG GSE IA IEE MoENRP PMU RAP RPTEP SSEMP TA Asian Development Bank Executing Agency Environmental Assessment and Review Framework Environmental Impact Assessment Environmental Impact Permit Environmental Management Plan Government of Georgia Georgian State Electrosystem JSC Implementing Agency Initial Environmental Examination Ministry of Environmental and Natural Resources Protection Project Management Unit Resettlement Action Plan Regional Power Transmission Enhancement Project Site-Specific Environmental Management Plan Technical Assistance Page 2 of 21

Contents 1. INTRODUCTION... 4 2. CONSTRUCTION ACTIVITIES AND PROJECT PROGRESS DURING THE REPORT PERIOD 6 2.1 Project progress during 6 months period... 6 2.2 Changes in Project Organization and Environmental Management Team... 7 2.3 Relationship with Contractors, Owners, Lenders, etc.... 8 3. ENVIRONMENTAL MONITORING....9 3.1 Protection of Top Soil... 9 3.2 Subsoil Disposal... 10 3.3 Noise/vibration... 10 3.4 Air pollution... 10 3.5 Emission and Dust... 10 3.6 Impact on Flora and Fauna... 10 3.7 Waste Management... 10 3.8 Archaeology... 10 3.9 Soil and Water Contamination (pollution prevention)... 10 4. ENVIRONMENTAL MANAGEMENT... 11 4.1 Environmental Management System, Site-Specific Environmental Management Plan (SSEMP), and Work Plans... 11 4.2 Site Inspections and Audits... 12 4.3 Noncompliance Notices and Corrective Actions... 12 4.4 Consultations and Complaints... 12 4.5 Action Plan for the next period... 12 5. ANNEXES... 14 Annex 1. Measurement results of noise level at construction site... 14 Annex 2. Pictures of Project Sites (Khorga)... 15 Annex 3. Implementation Report on the Initial Environmental Examination (IEE) Mitigation Requirements: 19 Page 3 of 21

1. INTRODUCTION The reliability of the GSE's transmission infrastructure have been vastly improved for recent years as a result of intensive capital investment programs successfully implemented with the support of international financial institutions and donors. Besides, the improved financial position of GSE for the last few years enabled GSE to implement a number of rehabilitation and construction activities with its own resources and funds. As a result of these joint efforts, about 80% of primary equipment and 30% of secondary equipment at GSE substations, as well as a significant part of transmission lines, have already been replaced or rehabilitated. These projects significantly improved the situation in GSE substations and lines, shortened the outages and maintenance, reduced transmission losses and improved the power transmission quality criteria. However, GSE is still investing in the remaining portions of the assets to achieve further improvement of the transmission grid. GSE is committed to have all the GSE substations fully rehabilitated/upgraded by 2015-2016, with all remaining primary and secondary equipment replaced and/or refurbished and effectively controlled from the National Control Center (NCC). The Regional Power Transmission Enhancement Project (the RPTEP) financed from the proceeds of the ADB loan is among the top investment priorities of GSE s Strategic Development Plan 2012-2020 and, once implemented, will further enhance the reliability and stability of GSE s transmission and interconnection infrastructure and remarkably improve the capability of cross-border energy exchange for export, import and transit. The RPTEP activities include the following two physical components: 1. Construction of a new 220/110kV Substation Khorga; The new Khorga substation, together with other ongoing transmission system investment projects, will improve the reliability of the grid and power supply quality. The new substation will strengthen and stabilize the transmission network operation. It will guarantee stable transmission of energy produced at Enguri HPP to the industrial zone of Poti and to Turkey through Batumi Substation. Besides, it will help stabilize transmission power flows providing additional event redundancy and lowering the incidence of outages. 2. Substation Rehabilitation and Improvement: Lot 1: Rehabilitation of the 500kV substation Ksani, including HV primary equipment and complete relay protection and control systems; Lot 2: Rehabilitation and expansion of Marneuli substation with 500/220/10kV bays, including: 501MVA autotransformer (3x167MVA +1x167MVA spare); connection to existing 220kV part of Marneuli substation via 220kV line (about 400m); realignment of existing 500kV lines Vardzia and Mukhrani to ensure looping in and looping out of 500/220/10kV substation. Lot 3: Supply and installation of one 125MVA autotransformer 220/110/10 kv for the 220 kv substation Menji, replacing one of the two existing 220/110/10 kv autotransformers (63 MVA). Once implemented, this project component: will improve the existing 500 kv and220 kv connections in the east part of Georgia, will serve as an additional/alternative source of power supply for Tbilisi metropolitan area in case of emergencies. Expansion of existing 500 kv link (Akhaltsikhe-Gardabani) with Ksani-Marneuli connection will further increase the reliability and stability of 500kV network, thus increasing the reliability of export/import/transit of electric energy. Page 4 of 21

Locations of the substations to be constructed and rehabilitated/extended under the Project are highlighted in the map below: Map 1: Location of the substations (Khorga, Ksani, Marneuli and Menji) Physical completion of the RPTEP is expected by end 2016. These two components of the RPTEP, the components 1 (Construction of a New 220/110kV Substation Khorga) and 2 (Substation Rehabilitation and Improvement) involve the activities that could have an impact on the environment. Following Environmental Considerations in ADB Operations of September 2006, the RPTEP has been classified as Category B requiring an Initial Environmental Assessment (IEE), which will not have significant irreversible or permanent negative environmental impacts during or after construction and requires preparation of Initial Environmental Examination (IEE). The environmental categorization of subprojects was conducted using ADB s Safeguard Policy Statement (2009). Page 5 of 21

2. CONSTRUCTION ACTIVITIES AND PROJECT PROGRESS DURING THE REPORT PERIOD Civil works under Component 1 - Construction of a New 220/110kV Substation Khorga Following the International Competitive Bidding (ICB) for this component, the contract was awarded to Siemens AG Osterreich (Austria) and the Contract Agreement was signed on 9 th of July, 2014. The implementation period from the effective date of the Contract Agreement is 18 months. During reporting period following activities have been carried out: Removal of grass and bushes from construction site; Cutting of trees; Installing of temporary office; Paving and leveling of access road; Removal of top soil from construction site; Installation of temporary refueling area; Leveling of construction site. The table 1 below shows project progress in percentage during 6 months period. 2.1 Project progress during 6 months period Table 1: Task name Weight Cumulative Baseline Plan Month Cumulative Plan Actual Variance Actual Variance Khorga 220/110 kv substation Design & Engineering 4% 55,0% 15,0% 15,0% 0,0% 55,0% 0,0% Site preparation works 1% 45,0% 10,0% 10,0% 0,0% 45.0% 0.0% Procurement 8% 70.3% 4.8% 4.8% 0.0% 74.0% 3.7% Manufacturing 60% 25.5% 5.0% 5.0% 0.0% 24.8% -0.7% Construction and 26% 2.8% 0.9% 0.9% 0.0% 2.0% -0.7% commissioning As built documents 1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Grand Total Progress 100 24.3 4.3 4.3 0.0 24.0-0.3 Civil works under Component 2 Substation Rehabilitation and Extension Menji International Competitive Bidding (ICB) for this component was announced on October 4, 2013 and the deadline for submission of bids was February 10, 2014. The turnkey contract has been signed by BEST on October 31, 2014. The effectiveness of contract will be on December 18, 2014. The implementation period from the effective date of the contract will be 18 months. Page 6 of 21

Marneuli International Competitive Bidding (ICB) for this component was announced on October 4, 2013 and the deadline for submission of bids was February 10, 2014. The turnkey contract has been signed by BEST on October 31, 2014. The effectiveness of contract will be on December 18, 2014. The implementation period from the effective date of the contract will be 18 months. Ksani International Competitive Bidding (ICB) for this component was announced on October 4, 2013 and the deadline for submission of bids was February 10, 2014. The turnkey contract has been signed by Siemens on October 31, 2014. The effectiveness of contract will be December 22, 2014. The implementation period from the effective date of the contract will be 18 months. The construction activities have not been started yet. 2.2 Changes in Project Organization and Environmental Management Team Environmental Protection and Resettlement Unit (REU) comprised of three specialists has been established under the International Projects and Reporting Department of GSE. This unit will closely monitor the compliance with all safeguards requirements during the implementation of the RPTEP. GSE Projects Coordinator for Environment Issues is responsible for: Participate in working meetings related to projects. Ensure projects compliance with the Environmental Legislation of Georgia as well as with the rules and requirements of other donors (ADB, WB, EBRD, USAID, KFW, others) Ensure coordinating among involved parties during project implementation period. Participate in Environmental component monitoring. Review and analysis of existing documentation. Monitor Environmental protection issues; prepare reports in compliance with the requirements of the donors as well as in accordance with the Georgian Legislation. Review comments and complaints; elaborate recommendations. Prepare official letters to projects Implementation Company and/or consultant. Review documents submitted by contractors. Establish and have relations with other organizations, state bodies of Georgia, International organizations and bodies of other countries for the purpose of implementation of the objectives, tasks and functions specified under this document. The Supervision Consultant has employed national environmental specialist who is responsible for: Reviewing and approval of environmental documentation, submitted by the Contractor; Monitoring of construction activities; Relationship with the Contractor and the Employer; Support of the Contractor in obtaining of environmental permits and licenses; Correspondence with the Employer, the Contractor and local authorities. Page 7 of 21

The Contractor has hired national HSE specialist who is responsible for: To prepare environmental documentation, mentioned in Contract, EIA and IEE; To establish a routine system To ensure that physical monitoring is undertaken properly To review works schedules To participate in progress meetings Help identify practical solutions to actual and potential problems Use trends in monitoring data to predict/identify possible future problems To provide daily environmental field supervision To notify noncompliance and take relevant actions To keep records: maintain site diary and checklists, complete files Communicate with local community regarding works progress Receiving relevant permissions and licenses. Consulting Services for Project Supervision and Management The Contract for Consulting Services with Fichtner GmnH&Co.KG (Germany) was signed on 19 May, 2014. TOR for supervision consultant contains tasks for a national environment specialist to monitor the EMP implementation. The consultant is conducting environmental monitoring of project progress. 2.3 Relationship with Contractors, Owners, Lenders, etc. GSE ensures of availability of all environmental information and facilitates environmental supervision of the projects. The GSE through its environmental specialist reports to the ADB every 6 months on the status of environmental compliance of construction works by EMRs. Component 1 - Construction of a New 220/110kV Substation Khorga Construction Contractor has the following contractors/sub-contractors. Status of environmental permits and licenses submitted by the Contractor are reflected in the table 2 below: Permit for cutting of grass, bushes and trees, located on construction site Table 2: Status of environmental permits and licenses Item status Comment Not needed Land plot is a property of GSE.It is not needed to take any permission for cutting of grass, bushes and trees located on construction site. License for borrow pit Yes Contractor buys inert material from subcontractor- Prime Beton Ltd. Subcontractor has licensed borrow pit (license No1001289). License has been submitted to the Consultant. Page 8 of 21

Inventory of Emissions of hazardous substances in to ambient air from batching plant Not needed Contractor buys concrete from subcontractor- Prime Beton Ltd. Disposal of domestic waste No Municipal waste is temporarily storing in covered containers on construction site. The Contractor was instructed to sign written agreement with local waste management company for handling of non-hazardous waste. Hazardous waste No Hazardous waste is temporarily storing in covered containers on construction site. The Contractor was instructed to sign written agreement with licensed company for handling of hazardous waste. 3. ENVIRONMENTAL MONITORING The monitoring measurements are not requested nor according to IEE prepared by ADB neither EIA prepared according to Georgian legislation. According to IEE document the Construction contractor is obliged to conduct daily visual inspections and fill out the relevant checklists. During site inspections, the environmental specialists of the Contractor and the Consultant monitored the following issues: availability of relevant permissions and licenses, waste management, pollution prevention, top soil protection, community safety, air emissions, protection of private property outside Construction Site, etc. (See table below reflecting the schedule of conducted audits and monitoring). Khorga Site visit Organization Date 1 Audit and monitoring GSE and Fichtner 31 Oct. 1 Nov. 2014 environmental specialists 2 Audit and monitoring GSE and Fichtner 11-12 Nov. 2014 environmental specialists 3 Audit and monitoring GSE and Fichtner 9-10 Dec. 2014 environmental specialists 3.1 Protection of Top Soil In general removal of top soil was going on during wet weather conditions. During reporting period top layer of the ground was always wet and commencement of construction activities was impossible without violation of top soil protection rules. Currently stockpiles of top soil are temporarily stored at the west part of construction site. The Contractor was instructed to take all necessary measures to protect top soil from damage, decay and erosion processes and in nearest future remove top soil stockpiles to final disposal area (before starting of reinstatement procedures). In the beginning of construction activities the Contractor disposed heavy construction equipment and temporary office directly on top soil. Also top soil has not been removed from access roads, disposed on construction site. The contractor was instructed to follow top soil protection procedures, mentioned in the IEE. Immediately after instruction, all necessary measures have been implemented by the Contractor: top soil was removed from all access roads and parking areas. Page 9 of 21

3.2 Subsoil Disposal After removal of top soil, construction site has been leveled, all extra subsoil was used for filling of existing channels on the construction site. 3.3 Noise/vibration Construction site is located far from settlement. Noise and vibration do not disturb local people. The consultant every month measures noise level at construction site. Results of measurement are less, than maximum permissible level (80Db). Measurement results of noise level at construction site are given in Annex 1. 3.4 Air pollution No significant pollution was observed. 3.5 Emission and Dust During reporting period significant emissions and dust have not been observed on construction site and access roads. Due to cold and wet weather condition, watering of access road is not necessary. 3.6 Impact on Flora and Fauna N/A. 3.7 Waste Management In the beginning of construction activities, the Contractor was disposing all types of waste directly on ground, without any containers, drip trays, or secondary containment devises. During the first site visit the consultant has instructed the Contractor to follow waste management procedures, mentioned in IEE and prepare own waste management plans soon as possible. In response to the instruction, the Contractor has brought to the construction site different containers for hazardous and non hazardous waste. Currently waste management issues are in compliance with relevant procedures. 3.8 Archaeology No archaeological findings have been observed during reporting period. 3.9 Soil and Water Contamination (pollution prevention) Significant spillages during reporting period have not been recorded. The Contractor has installed drip trays under oil barrels, diesel generators and containers with hazardous materials. The contractor was instructed allocate acceptable place for constructing of temporary refueling area, which conditions should be in compliance with pollution prevention management plan. Page 10 of 21

4. ENVIRONMENTAL MANAGEMENT 4.1 Environmental Management System, Site-Specific Environmental Management Plan (SSEMP), and Work Plans GSE s environmental specialist carried out on-site monitoring of ongoing contracts to check environmental compliance of construction works and effectiveness of supervisory company s activities. Records of on-site environmental monitoring will be kept at GSE and at construction camp. Khorga Site visit Organization Date 1 Audit and monitoring GSE and Fichtner 31 Oct. 1 Nov. environmental specialists 2 Audit and monitoring GSE and Fichtner 11-12 Nov. environmental specialists 3 Audit and monitoring GSE and Fichtner 9-10 Dec. environmental specialists The environmental staff has created a project environmental safeguard files and an electronic track record system. Contractors will submit monthly progress reports to the supervisor and GSE which will include a chapter on environmental performance. The contractor has been requested to prepare and submit Site-Specific EMP (SSEMP) to GSE by 10-th of February 2015. At the initial stage of the RPTEP, the Project Initial Environmental Examination (IEE) was prepared for component 1 (Construction of a New 220/110kV Substation Khorga) under the ADB s TA Program and was approved by ADB in September 2012. The IEE was updated in March 2013 including the component 2 (Substation Rehabilitation and Improvement). Status of Management Plans The table below shows the status of management plans to be submitted by the Construction Contractor: Management Plan Environmental Management Plan Environmental Monitoring Program Fire prevention and management plan Waste management plan for construction phase Hazardous materials and waste management and handling plan. Oil spill Emergency response plan HS plan Status Submitted, not approved Has not been submitted Submitted, not approved Has not been submitted. Deadline for submission is: 15.02.2015 Has not been submitted. Deadline for submission is:15.02.2015 Approved Approved Page 11 of 21

4.2 Site Inspections and Audits Weekly site inspection and monitoring visits were carried out during the reporting period by Siemens environmental specialist. Some monitoring visits were conducted jointly by GSE and Supervision Consultant - Fichtner. During the field visits a number of EHS issues were noted and brought to the attention of the Environmental Consultant and the H&S manager of Siemens. Mitigation measures were then discussed with the contractor on-site and detailed written instructions were given. Site monitoring visits during the reporting period have been carried out on: 31 October and1 November 2014,11-12 November 2014, 9-10 December 2014. Monitoring Compliance and Inspection monitoring forms have been filled in during the site visits. 4.3 Noncompliance Notices and Corrective Actions Non-Compliance at Khorga Sub-Station All corrective actions requested after the monitoring of sites were mostly improved immediately by the Construction Contractor; The non-compliance notices have not been issued by the supervision consultant s environmental specialist, during the first site visit he has instructed verbally the Contractor to follow top-soil and waste management procedures, mentioned in IEE. As it was requested in IEE the following documents have not been prepared before construction activities by the Construction Contractor, in particular: 1. Waste management plan for construction phase; 2. Hazardous materials and waste management and handling plan; 3. Site-Specific EMP (SSEMP) The supervision consultant has requested from the Contractor to submit the above mentioned management plans. Deadline of submission is: 15.02.2015 4.4 Consultations and Complaints Consultations have not been conducted so far. At present complaints register book is kept at GSE office. The complaints register book will be placed at construction camp at the nearest future as well. 4.5 Action Plan for the next period Item Action Deadline Hazardous and non hazardous waste is temporally storing on site Signing of agreement with relevant companies for removal of all types of waste from construction site; preparation of waste management plan. 20.02.2015 Page 12 of 21

Preparation of management plans: Environmental Management Plan Environmental Monitoring Program Fire prevention and management plan Hazardous materials and waste management and handling plan. Management plans should be prepared by the Contractor and submitted to the Engineer. 25.02.2015 Page 13 of 21

5. ANNEXES Annex 1. Measurement results of noise level at construction site Location Noise level, db 20.11.2014 18.12.2014 Max. permissible level Khorga substation 63 75 80 Page 14 of 21

Annex 2. Pictures of Project Sites (Khorga) Containers with fuel and oil are disposed on ground, without drip trays Heavy equipment is disposed directly on top soil Top soil was removed during wet weather condition; top soil is mixed with subsoil Top soil has been removed from, construction site Page 15 of 21

Covered containers are disposed on site for different types of waste Power generator and container with oil are disposed in secondary containment devise Top soil has been removed from parking area Khorga, access road All access roads was graveled and leveled Page 16 of 21

Relevant safety signs are installed All workers us PPE Foot bridge is fenced by colored tapes Refueling area Page 17 of 21

(Khorga, Ksani, Marneuli and Menji SSs) Khorga Substation Area Ksani Substation Area Marneuli Substation Area Menji Substation Area Page 18 of 21

Annex3. Implementation Report on the Initial Environmental Examination (IEE) Mitigation Requirements: Item Requirement Action to date Action required/comment Protection of top soil Impacts on cultural heritage sites Biological recontamination during earthworks The topsoil should not be handled when: i) The topsoil is frozen; ii) The site is experiencing persistent rainfall; iii) The topsoil is saturated; Segregation from subsoil stockpiles; The storage of topsoil in stockpiles; No more than 2m high with side slopes at a maximum angle of 450;Dedicated storage locations that prevent the stockpiles being compacted by vehicle movements or contaminated by other materials; Erosion protection measures (erosion matting, berms etc.). No storage where there is a potential for flooding. No storage at less than25m from river/streams, subject to site specific topography. Topsoil from the sites, which should not be reinstated to the initial conditions should be distributed carefully on the surrounding area. If physical cultural resources are encountered during the construction phase, all works at the find site should be immediately halted. The find should be assessed by a competent expert, and procedures to avoid, minimize or mitigate impacts to the physical cultural resources should be developed by the expert in cooperation with the relevant local heritage authority. Permanent monitoring during land clearance and excavation activities. Stoppage and suspension of construction activities in case of burial site findings. Notification to the local division of Veterinary Department. Veterinary clearance before start up. Improved partially Contractor s environmental Specialist instructed to follow topsoil protection rules No impacts during reporting period No impacts during reporting period

Noise and Dust Caused by Construction Activities and Emissions of Harmful Substances Into the Atmosphere Air Potential to pollute nearby water bodies, underground water and namely drainage channels and irrigation canals Pollution prevention issues Require adherence to engine maintenance schedules and standards to reduce air pollution; Use of defined, well planned haulage routes and reductions in vehicle speed where required; Periodically water down temporary roads on site; Wet or cover trucks carrying stone/ sand/ gravel; Haul materials to and from the site in off peak traffic hours; Halting work during excessive winds; No truck movements in inhabited areas between22:00 and 6:00. Fuel, oil and hazardous materials should be stored in designated areas with temporary impermeable bunds at distance of at least 100m from any watercourse. Refueling of machinery, equipment and vehicles should be undertaken at distance of at least 100 m from any watercourse. Any major work including oil changing and engine maintenance with the potential for oil to be spilled will be done in designated areas at distance of at least 100m from any water course and with containment to prevent any oil spills washing away. Waste oil shall be collected and taken away for recycling. Oil contaminated material shall be disposed off at designated waste disposal facilities. Contractors should ensure the proper handling of lubricants, fuel and solvents. All tanks should be placed in a bund of at least 110% of the tank s maximum capacity. Accumulated rainwater in bunds should be pumped out of the bund to either drains or onto the ground if uncontaminated. In case of fuel spillage the spilled fuel should be recollected and the contaminated bund shall be treated using the absorbents: In compliance with IEE requirements, do not need improvement Improved partially Improved, the Contractor has disposed all containers with hazardous materials in to drip trays The Contractor was instructed to construct proper refueling area before 01.03.2015 Page 20 of 21

sawdust, sand or straw. All fuel/hydrocarbon dispensing nozzles are to be of a drip control design and securely locked when not in use. Vehicles should not be left without the supervision during refueling process. All refueling operations on the working sites should use absorbent pads and/or straw to minimize spills, which shall be put in place prior to the commencement of refueling operations. Page 21 of 21