ENKA Terminates Namakhvani HPP Contract with Georgia

Istanbul-based ENKA Insaat notified the Government of Georgia to terminate Namakhvani HPP project contract, citing the breaches of contract and force majeure. 

The Turkish industrial conglomerate, which served as the key investor in controversial HPP project in western Georgia, posted the relevant update on Istanbul’s Public Disclosure Platform on September 20.

The decision, coming some 10 days before hotly contested October 2 local elections in Georgia, does not mean the Namakhvani HPP project is automatically cancelled, as the Government of Georgia could still look for other investors to continue the construction.

It was not immediately clear which force majeure condition triggered ENKA’s decision. The 2019 contract listed over a dozen force majeure circumstances, including any public protest that would hinder the project construction for more than 21 days within any six months period as one of many force majeure conditions.

The news comes few days after the Save Rioni Valley movement, a group of local activists leading protest against the HPP construction for some 11 months now, quit 3-months-long mediation between the government and project opponents led by the European Energy Community Secretariat.

ENKA did not participate in the mediation, and had preparatory works paused as per the mediation terms throughout recent months.

In the meantime, the mediation efforts continue, involving the government and several CSOs opposing the project. The Social Justice Center, Tbilisi-based CSO involved in mediation said they continue participating in the process, that should result in environmental impact assessment and commercial review documents, evaluating the contract terms, among others. The SJC on September 16 also appealed the HPP construction permit in the Tbilisi City Court.

Varlam Goletiani, Save Rioni Valley movement leader expressed his satisfaction with ENKA’s decision in an interview with Georgian Bureau of the Radio Free Europe/Radio Liberty. He noted that activists expected the move as the company has been filming activists blocking preparatory works in order to gather evidence for arbitration.

The company and the Government of Georgia, according to the contract, are entitled to resolve the dispute via international arbitration in Paris if they fail to come to terms on their own.

The deal also includes provision obliging parties to ensure confidentiality about the arbitration dispute, including keeping the information secret about its existence, meaning the arbitration proceedings may never become publicized for a wider public.

The contract further involves provision, that if company cancelled the contract at the stage of preparatory works – which is now the case – it may request from the government to purchase the company’s assets. This includes hundreds of hectares of lands it purchased for a symbolic price from the state, that may now be sold back to the state for market price.

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