Public Defender’s Office has been studying the legality of the construction of Khudoni Hydro Plant on the ground of citizens’ appeal. Having analyzed all factual circumstances related to this case, Public Defender believes that without addressing anumber of issues concerning the implementation of the project, the fundamental rights of Khaishi residents will be violated.

Factual Backgrounds:

• On 29 June 2007, a Memorandum of understanding between the Government of Georgia and the Company Continental Energy LTD was signed.
• On April 2011, an Agreement between the Government of Georgia, Trans Electrica Limited, Trans Electrica Georgia, Ltd. Energotrans and Ltd. "Electricity System Commercial Operator" was signed on the necessary future stage of the implementation of the activities of theproject.

1.Decision Making Procedure on the construction of Hydro Plantaccording to the legislation (rightto livein healthy environment)

1. 1. Decision Making Procedure on the construction of Hydro Plant according to the legislation (right to live and health in a healthy environment)

Before the release of the environmental assessment permission, high political officials (ex - Prime Minister, Minister of Energy) made ​​public statements about the inevitability of the construction of Kudoni Hydro Power Plant.

• According to the agreement, the “Government” took responsibility to assist the company implementing the project to obtain all the relevant licenses and permits.
• According to this agreement, the Government of Georgia shall give an extra time to the “Project Implementing Company” for fulfilling of the obligations envisaged by present agreement if necessary permit are not obtained within the established deadline.
• A procedure of obtaining of permits is of a formal nature and doesn’t envisage a case of refusal to the company for on obtaining relevant licenses. Contrary to this, the Government assumes the responsibility to extend the time necessary for obtaining licenses.

2.Investment attractiveness and economic analysis

• The Ministry of Economy and Sustainable Development of Georgia has not conducted either the assessment on the attractiveness of the investments by Trans Electrica Limited or economic analysis.
• According to the letter of the Ministry of Energy, the project gives an employment opportunity to local residents. However, the investor does not assume such obligation by the agreement. Employment perspectives of the local residents depend only on the goodwill of the “Project Implementing Company”.

3.Environment impact

• On 29 July 2013, the Ltd. Trans Electrica Georgia has presented a report of environment impact of Kudoni Hydro Power Plant in the Ministry of Environment and Natural Resources Protection of Georgia for a public (preliminary) discussion.
• The Ministry of Environment and Natural Resources Protection of Georgia has prepared 111 remarks on the report of environment impact of Kudoni Hydro Power Plant and on 16 April 2013 and has sent it to the “Project Implementing Company”.
• According to our information, these remarks aren’t considered and subsequently, the permit on the environmental impact is not issued, regardless of the fact that 1 March is designated as a starting date for the construction.
• On24 March 2014 (repeated letter of 7 May), the PDO has asked the ministry of energy of Georgia to provide information on the extension of the date for commencing construction and additionally provide reasons for postponement of the starting date. However, the ministry has not responded to our letter yet.

4.Social issues

• A re-settlement Plan of local population is not so far approved.
• According to the order of the President of Georgia, on 11 January 2012, a purchase agreement was concluded between the Ministry of Environment and Natural Resources Protection of Georgia and Ltd. Tsans Electrica Georgia. According to mentioned agreement, "Project Development Company gained under the ownership the property (141 sites, in total 11940529 m²) in Mestia Registration zone for symbolic one US dollar.

• According to the article 4.15 of the agreement concluded between the investor and the Government of Georgia, if the “government” or a relevant State Office receives a capital of the “Project Performance Company” in possession by expropriation, nationalization or other mandatory means, the actives of the company implementing the project shall be refunded totally or partially, according to the present market value.

5.Cultural Heritage

• There are identified archaeological heritage sites, historical and archaeological buildings in Khaishi Community. However, the sites bearing a status of cultural heritage monuments are outside of flooding zone.
• Apart from the obligation of a protection of the material and cultural heritage, according to the convention on the Safeguarding of Intangible Cultural Heritage, of 17 October 2003, the State has an obligation to safeguard the Intangible Cultural Heritage.

6.Safety

According to the preliminary version of the Environmental Impact Assessment of the project of Kudoni Hydro Power Plant, in case of implementation of the project, the connecting road of Zugdidi-Jvari-Mestia will be flooded. In the case of construction of an alternative road, it will approximate the territories occupied by Russia. I consider it necessary to assess the implementation of this project in the context of state security.

According to above mentioned finding, I deem expedient:

1. 2. To bring the legal procedures related to the implementation of the project in full conformity with the international standards.
2. 3. The ministry on economy and sustainable development should conduct an investment attractiveness and economic analysis of the project through the engagement of highly qualified professionals into the process.
3. 4. An adequate, comprehensive and timely supply of the society with relevant information at the steps taken for the protection of the environment and the involvement of public in decision-making process must be ensured.
4. 5. In the process of issuance of the construction permits of the hydropower plant, all legal procedures envisaged by Administrative Code of Georgia, must be observed.
5. 6. A plan of resettlement, its policy and monitoring plan must be developed with the participation and agreement with the local residents.
6. 7. All necessary measures must be applied to protect tangibleandintangible cultural heritage;

The project must be assessed in the context of State Security.