GEORGIA-ZEMO SAMGORI IRRIGATION PROJECT

Promoter – Financial Intermediary

GEORGIAN AMELIORATION LTD

Location

• Georgia

Description

Modernisation of the Zemo Samgori irrigation scheme in Georgia (East of Tbilisi) to restore irrigation services and provide the basis for agricultural development in the region.

Additionality and Impact

The project will modernize and upgrade existing irrigation schemes, enhancing water resilience in perspective of less upstream water availability and more water requirements because of Climate Change impacts. The restored command area will be 19 129 ha of existing agricultural land. The peak of the system (before collapse) had been of 50 000 ha. In 2021 only 5 320 ha were irrigated.

The project is expected to enable a sustainable increase in agricultural productivity through the water vector, with particular regard to the efficient management of natural resources (arable land, water, fertiliser and other agricultural inputs) achieved through the modernisation measures to existing irrigation infrastructure. This will enable the shift towards an increased and diversified primary production, due to the improvement and expansion of irrigated areas and the crop pattern changes.

The operation is fully in line with the objectives of the European Neighbourhood Policy of the EU and with the Association Agreement between Georgia and the EU. The operation contributes to the policy priorities for the geographic programmes under the NDICI mandate, from which support is sought for the EIB financing. The Project supports notably economic development and market opportunities through agriculture and rural development, aligned with the strategy "Implement the Rural Development Strategy of Georgia 2017-2020" and with "Strategy of Agriculture Development of Georgia for 2012-2022", that foresees as priority (among others) the enhancement of irrigated agriculture through rehabilitation, reconstruction and modernization of old existing irrigation schemes.

The economic viability of the project is rated excellent, as its overall social benefit, due to the significant advantage that the project generates for the overall society. The project will generate sizeable permanent employment opportunities. The project has a high positive impact on the economic resilience of local communities in an area with a great agricultural potential, currently not being realised due to the bad condition of water conveying infrastructure. 

This project addresses Market Failures by creating net positive externalities in the fields of water conservation (increase in environmental flow downstream) and climate change resilience (both mitigation and adaptation), expanding sustainable agricultural practices linked to the use of modern irrigation techniques.

The EIB Technical and Financial Contribution to the project is Very Good. This is the result of the financial contribution and facilitation, and the technical advice provided to the project, especially at preparation stage, as well as promoting a holistic approach between public investments (upstream canals) and private contribution (on-farm modern technologies) that aligns water savings, agriculture production improvement and environmental positive impacts.

The EIB contribution is very good. The EIB has provided leadership on the scoping of the project through the Eastern Partnership Technical Assistance Trust Fund grant that was used to finance a feasibility study. The output of this study and its recommendations were used during the appraisal. The project also benefits from longer maturities and grace period.

Objectives

The project aims to modernise infrastructure on up to 25,800 hectares of irrigated land, including investments in the entire water distribution network and facilitating investments in on-farm irrigation equipment. The investment will enable farmers to increase and diversify their agricultural production.

Sector(s)

• Water, sewerage - Agriculture, forestry and fishing

Under Global Europe NDICI guarantee

Under EFSD+ Guarantee

Proposed EIB finance (Approximate amount)

EUR 60 million

Total cost (Approximate amount)

EUR 124 million

Environmental aspects

A comprehensive Environmental and Social Impact Assessment (ESIA), and Environmental and Social Management Plan (ESMP), including a Resettlement Action Plan (RAP) will be prepared in alignment with the EIB's Environmental and Social Standards.

Procurement

The Bank will require the Promoter to ensure that implementation of the project will be done in accordance with the Bank's Guide to Procurement.

Status

Signed - 22/12/2022