SCAR: Georgia: Port of Poti

Social Safeguards Report
GEO: Port of Poti
Social Compliance Audit Report
September 2010
This report is made publicly available in accordance with ADB’s Public Communications Policy
(2005). It does not necessarily reflect the views of ADB.
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GEO: Poti Sea Port
Social Compliance Audit Report
I.
Introduction
1.
The port of Poti (the Port) is Georgia's main port and is strategically located near the
confluence of the Rioni River and the Black Sea. It provides access to the Mediterranean Sea
via the Bosporus. Poti has been a major port city since the 19th century. In 2008, the Port was
sold to Ras Al Khaimah Investment Authority (RAKIA) through privatization. ADB is considering
providing financial assistance to the Poti Sea Port Corporation (PSPC) as an equity investor
with an investment of up to $50 million. The ADB investment will be used for modernizing
current port facilities and operations of Port of Poti.
2.
With respect to ADB's Safeguards Policy Statement (SPS), the transaction falls under
general corporate finance (GCF) and projects involving existing facilities, hence, Safeguards
Requirements (SR) 4 on Different Financing Modalities applies. SR4 requires a corporate audit
of the company's current environmental and social management system (ESMS) and an
environment and social compliance audit including on-site assessment, to identify past or
present concerns related to impacts on the environment, involuntary resettlement, and
Indigenous Peoples. A Mission1 was fielded between 12-14 August 2009 to visit the port,
conduct a corporate audit of the PSPC's ESMS or its equivalent, and a social compliance audit
to determine if there are any issues related to involuntary resettlement or Indigenous Peoples.
This report documents the findings of the mission on the social safeguards dimensions of the
compliance audit and other social aspects of the Port's establishment and operation. This also
includes recent updates from PSPC on the progress made with respect to the recommendations
of the Mission.
II.
Mission Findings
A.
PSPC's Environment and Social Management System
3.
PSPC’s Health, Safety, Security and Environmental Management System is being
implemented by the Health, Safety, Security and Environment (HSSE) Group comprised of five
departments namely, health care, ecology, safety, security, watchmen, and firefighting
department. There is no dedicated social staff responsible for managing social safeguards
dimensions, however, these issues are handled by the HSSE Group as part of the
environmental and social impact assessment.
4.
For any ongoing or planned port rehabilitation, modernization or expansion, PSPC will
follow the requirements of the Environmental Impact Permit Law of Georgia. This law requires
the conduct of an environmental impact assessment to study and examine a development
activity’s direct and indirect impact on people and the environment. Major considerations in the
conduct of an EIA include human health and safety, flora and fauna, soil, air, water, climate,
landscape, ecosystems and historical monuments, on cultural values (cultural heritage) and
social-economic factors, as well as impacts of land acquisition and resettlement. PSPC
periodically engages a scientific consulting firm, e.g. Gamma, to assist them in the conduct of
environmental and social studies and assessments.
1
The Mission comprised Armando Balloffet, Senior Environment Specialist [External Consultant], S.L. Tu, Senior Environment
Specialist, PSOC; J.E. Munsayac, Senior Social Safeguards Officer, PSOC.
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5.
In the event that the development or expansion of the port requires new acquisition of
land or resettlement of people, this is undertaken in accordance with the following Georgian
laws and regulations: Constitution of Georgia (1995); Civil Code of Georgia (1997), Law of
Georgia on Protection of Cultural Heritage (2007); Law of Georgia on Notary System (1996);
Law of Georgia on Privatization of State-owned Agricultural Land (2005); Law of Georgia on
Ownership of Agricultural Land (1996); Law of Georgia on Entitlement of Ownership Rights to
Lands Possessed (Employed) by Physical and Legal Persons of Private Law (2007); Law of
Georgia on Registration Rights to Real Estate (2005); Law of Georgia on Rules for
Expropriation of Ownership for Necessary Public Need (1999); Civil Procedural Code of Georgia
(1997); Presidential Decree No. 525 on Rules for Entitlement of Ownership Rights to Lands
Possessed (Employed) by Physical and Legal Persons of Private Law and Approval of
Ownership Certificate Format (2007). These laws provide that compensation for lost assets,
including land, structures and standing crops, should be based on the current market price
without depreciation. All the above laws/regulations state that the principle of cost compensation
at fair market price is reasonable and legally acceptable. The laws also identify the types of
damages eligible for compensation and indicate that compensation is to be given. These laws
envisage notification of affected people to ensure their in the process and prevent violation of
their rights.
6.
The Mission discussed ADB’s safeguards requirements and PSPC agreed to prepare an
Environmental and Social Management System acceptable to ADB. Over the past year, PSPC
with assistance from Gamma Consulting has developed an ESMS which the Mission deems
acceptable and consistent with ADB’s relevant objectives, policy principles and requirements.
B.
Social Safeguards Performance – Past and Current
7.
The town of Poti is located in the western part of Georgia and the eastern coast of the
Black Sea. It has a total land area of 59 square kilometers and a population of approximately
50,000 people in 2002.
8.
Involuntary Resettlement. The total area of occupied by Poti Sea Port Corporation
comprises 45.37ha: restricted area – 30.13ha; hydro-technical part of the berths – 11.76ha;
area under PSPC administrative building and the yard – 0.21ha; other areas including yachtclub, garage and wash-house – 3.2ha.. Plans to build a major port in the city of Poti in Georgia
began soon after Georgia was released from Turkish conquerors in 1828. In 1858, Alexander II
issued a Nominal Decree addressed ordering the Senate to constitute Poti City as a merchant
city for trade and industry. To fulfill this vision for Poti City, construction of a pair of breakwaters
at the mouth of the Rioni River was started. In 1872, the Poti-Chiatura railway lines for the
export of manganese ore was established. The reconstruction of the port continued during
1873-1888 with the construction of northern breakwater (the root part of this is now being used
for the construction of present south breakwater). At the same time when the northern
breakwater was constructed, Poti Port was relocated from the mouth of the Rioni River into the
new delimited water area with entrance into the port from the western part. In 1905, the
entrance from the western part was closed and a new entrance was constructed in the
northwest portion. Starting from this period, Poti Port has obtained the features of the present
port. Old illustrations and photos of the Port from the PSP Museum are available in Attachment
3. Reconstruction works such as the construction of a container terminal and a network of cargo
railway lines were also carried out inside the port premises in the 20th century under the Soviet
Union management. According to Poti Sea Port officials, all land utilized for construction of the
Port were uninhabited, state-owned non-agricultural lands. PSPC confirms that no issues of
relocation, land acquisition and compensation arose as these lands were primarily swamp land
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and were not being used for economic or residential purposes. Berth 14 is currently being
rehabilitated using EBRD financing. Rehabilitation works under EBRD financing are also not
expected to trigger EBRD’s Performance Requirement 7 on Land Acquisition.
9.
The Mission also visited the adjacent site (approx 300 ha) designated for the
development of a Free Industrial Zone (FIZ). As shown in the satellite image and the Poti FIZ
Master Plan (Attachment 2), approximately 100ha of land inside the FIZ is allocated to PSPC for
future port expansion which is not included in the currently proposed financing. Majority of the
land area (60 m from the coastline) of the site for future expansion has scant vegetation and is
comprised mainly of sand dunes. It is fenced and uninhabited and except for occasional grazing
of a few cattle and horses which is common in Georgian countryside, there is no evidence that it
is in active agricultural or other economic use. Photos taken during the mission are available in
Attachment 4.
10.
Indigenous Peoples. Prior to 1893, Poti City has an estimated population of about
1,000 people. When the port’s development and the opening of the railway started, new jobs
were created and migrants from all over Gergia moved to the port city of Poti. In a few years
time, the population increased to around 30,000 inhabitants. In 2010, the city's population is
approximately 47,000 people consisting mostly of 90% Georgians and 10% nationals from
different nations, such as Russians, Ukrainians, Polish people, etc. For more than a hundred
years, foreign ships have come to Poti Sea Port from different countries, and the locals are
always able to communicate with foreigners and display their traditional Georgian hospitality
and cordiality. Rehabilitation and modernization of the port is expected to increase port
operations and therefore resulting in direct economic benefits in terms of increase in availability
of jobs as well as indirect benefits from increase in business activities in the area and increased
government revenues which can be used to improve roads and other public facilities in Poti City.
These are expected to benefit all residents in Poti City regardless of ethnicity. Moreover, there
are no communities of people in Poti City who may be considered as Indigenous Peoples as
defined in ADB’s SPS, hence, the Project is categorized as Category C with respect to the SPS
Safeguards Requirements 3 on Indigenous Peoples.
C.
Other Social Dimensions
11.
Labor and Working Conditions. Poti Sea Port has been operating over 100 years.
PSPC employs 1,297 people directly, and around 2,500 people are employed by shipping and
forwarding agencies dealing with port trade. Therefore, the Port plays an important role in
employment of local population and improving their socio-economic conditions. Georgian labor
law and regulations codify PSPC’s policies and procedures with respect to labor and safety
issues. Georgia has ratified all eight ILO conventions setting the core labor standards as shown
in Table 1.
Table 1: Core Labor Standards and Status of Ratification of Relevant ILO Conventions
Core Labor Standards
Freedom of
association and to
collective bargaining
agreement
Prohibition of all forms
of forced labor
Elimination of worst
forms of child labor
Non Discrimination of
Employment
Status of Ratification by Georgia of ILO Conventions
C. 87 Freedom of Association and Protection of the Right to
Organise Convention, 1948
C. 98 Right to Organise &Collective Bargaining Convention, 1949
Date Ratified
3.08.1999
C. 29 Forced Labour Convention, 1930
C. 105 Abolition of Forced Labour Convention, 1957
C. 182 Worst Forms of Child Labour Convention, 1999
C. 138 Minimum Age Convention (Min age specified:15 years)
C. 100 Equal Remuneration Convention, 1951
C. 111 Discrimination (Employment & Occupation) Convention, 1958
22.06.1993
23.09.1996
24.07.2002
23.09.1996
22.06.1993
22.06.1993
22.06.1993
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12.
PSPC enforces the Labor Code of Georgia which prohibits discrimination due to race,
color, ethnic and social category, nationality, origin, age, gender, sexual orientation, religion,
family opinion among others; and employment of under aged persons and pregnant or breast
feeding women to perform hard, hazardous and dangerous labor. While there is no trade union
presently operating in PSPC, employees may freely organize as per the Labor Code.
13.
Since the new PSPC Management took over in 2008, measures to improve corporate
governance at the Port are being implemented. With a new and experienced management
team, PSPC is not only providing better working conditions and a safe environment for its
employees, but had also taken further steps to enhance internal labor and safety policies
covering recruitment, compensation and benefits as well as introduced training and
development programs to facilitate the transfer and dispersion of skills. PSPC ensures that lines
of communication are open to employees and senior management. In May 2010, PSPC
Management issued an Employee Handbook to describe PSPC’s operations, vision for the
future, management philosophy, the responsibilities of employees and highlights the policies,
programs, and benefits developed by PSPC to benefit employees throughout the port. An
Employee Relations Unit was also created to directly address any employees’ concerns about
work conditions or compensation. This unit is tasked to resolve any conflict employees may face
at work and for continuously improving working conditions.
14.
With respect to hiring and career advancement programs, PSPC has an internship
program internship programs for students, a Training Center, an external education program, a
rotation/cross-training program to diversify skills and experience, a management training
program to establish a strong pipeline of leaders and free English language courses to
interested employees.
15.
With respect to compensation and benefits, PSPC provides competitive salaries to its
employees as well as other benefits such as hardship allowance in connection with the birth of a
child, social assistance to families in the event of a death of a family member (spouse, child,
parents, siblings), annual financial assistance to veterans of the Great Patriotic War, daily milk
supply for staff working in harmful and dangerous facilities, incentives for individual superior
performance in the form of quarterly bonus, annual premiums, and rewards for recognition.
PSPC also created a Pension Fund, a gratuity program to be used for rewarding employees’
merit and services.
16.
With respect to health and safety of employees, PSPC provides comprehensive medical
insurance insurance to all staff, pre-employment and periodic medical examination of staff;
personal protection equipment and overalls, and pre-employment and periodic occupation
safety and environmental protection training for staff. Since 1 August 2010, PSPC has
established a functioning Healthcare Department. Since 30 July 2010, PSPC has contracted
the insurance company Aldagi-BCI to set-up a Medical Centre inside Poti Port. The Medical
Center includes an Emergency Room (ER) and Family Doctor’s (FD) office which provides
medical support of the port employees. The Medical Centre’s Emergency Response Team is
available 24/7 with well equipped Ambulance. Besides the contractor’s staff, the port has its own
medical personnel, responsible for checking and controlling health level of each employee
before the beginning of work shift.
17.
Gender and Development. PSPC strictly follows the Labor Code which prohibits
discrimination based on gender. Due to the nature of port operations, there can be limitations in
terms of the type of positions that can be occupied by women. Nevertheless, out of its 1500
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employees, PSPC has approximately 216 women staff. Some key technical positions such as
the Ecology Department is headed by a woman. Presently employed women are given the
same remuneration and benefits as men and applicants will be evaluated based on skills,
competencies and qualifications.
18.
Cultural Heritage and Protected Areas. There are cultural monuments built in the late
19th and early 20th centuries in Poti Port that are considered attractions of Poti City. This
include the Central Control Tower of Poti Sea Port which is protected as cultural heritage of
Georgia. The Port is also located next to Kolkheti National Park, which includes the areas of
Khobi and Lanchkhuti, Lake Paliastomi with adjacent small islands, small rivers, and rich flora
and fauna. Port modernization is also not expected to affect these buildings/areas.
19.
Stakeholder Engagement. Since the new PSPC management took over in 2008,
several rounds of consultation activities including meetings with various stakeholders in the
operations of the Port. These include line ministries such as the Ministry of Economic
Development, the Ministry of Environment Protection and Natural Resources (MEPNR) and its
Inspectorate for Environmental Protection, the Poti City Government, the port employees,
employees of shipping and forwarding agencies, port clients and other investors in the area and
the communities surrounding the Port. PSPC will continue this engagement along established
lines of communication. For instance, PSPC consults and seeks approval from MEPNR for
various safety, health and environmental management plans. These plans are disseminated to
port employees and appropriate signages are posted in strategic areas to ensure that port
employees and contractors are aware of these. PSPC’s Ecology Service also liases with
facilities and contractor companies to monitor their HSE condition as well as conducts training
with port employees and contractor companies representatives concerning regulating norms
and law in environmental issues and aspects of industrial ecology. Joint inspections of port
operations from ecological protection and pollution control perspective are conducted together
with Black Sea Convention Inspection representatives.
20.
With respect to community engagement has established a good relationship with the
local government of Poti City and the general community. PSPC has discussed the need to
improve roads and bridges, enhanced vehicle traffic in Poti City to avoid populated areas and
has communicated the concerns of the local community to truck operators and drivers and to
the local government. PSPC also periodically receives requests from the local community for
sponsorship and funding of various community development and environmental projects in Poti
City. Examples of community projects funded by PSPC are construction of a mini soccer field
and public garden, greening of several main public thoroughfares, development of a beachfront
in Maltakva area for use by the local community, donations to orphanages, sponsorship of
tournaments and special children’s activities, among others. A yacht club was also opened to
public which features a restaurant and free boating lessons for children by licensed instructor
contracted by PSPC.
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III.
Conclusions
21.
PSPC's Environment and Social Management System PSPC with assistance from
Gamma Consulting has developed an ESMS mainly to deal with environment, health and safety
aspects of port operations. PSPC has designated staff to ensure that the ESMS is
operationalized. These include a senior HSSE Manager, and environment specialist, and
policy/social advisor. They are responsible for review and evaluation of environmental and
social compliance of the Company with applicable requirements; supervise projects against ongoing compliance with the applicable requirements; reviewing the annual monitoring reports
submitted by Poti Sea Port; and compiling and preparing the Annual Environmental and Social
Performance Report to be submitted to ADB.
22.
While the port modernization Project is categorized as C with respect to involuntary
resettlement, the ESMS includes policy principles and procedures covering involuntary
resettlement consistent with ADB’s involuntary resettlement safeguards requirements. These
present arrangements are acceptable and consistent with the relevant objectives and policy
principles of the SPS particularly for social safeguards category C projects.
23.
PSPC’s Compliance record with Laws and Regulations Related to Social
Safeguards. All land utilized for construction of the Port were uninhabited, state-owned nonagricultural lands. PSPC confirms allocation of land have complied with Georgian laws and that
no issues of relocation, land acquisition and compensation arose as these lands were primarily
swamp land and were not being used for economic or residential purposes. The ongoing
modernization program will be confined to the existing port facilities and will not require any land
acquisition or involuntary resettlement impacts.
24.
With respect to Indigenous Peoples, there are no communities of people in Poti City who
may be considered as Indigenous Peoples as defined in ADB’s SPS, hence, there are no issues
related to IPs. Moreover, with respect to cultural monuments, the Central Control Tower of Poti
Sea Port is a cultural heritage and is protected by Georgian laws. Poti Port’s modernization
activities will not affect this building.
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