BTC/SCP and WREP Community Development Initiative Report for April-June,, 2013

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1 BTC/SCP and WREP Community Development Initiative Report for April-June,, 2013 GEORGIA BP s business activities in Georgia BP has been in Georgia since Our main business is all about the safe transportation and delivery of energy through our pipeline operations, where we are the lead investor and operator in three major oil and gas projects: Baku-Tbilisi-Ceyhan (BTC) pipeline The Baku-Tbilisi-Ceyhan (BTC) pipeline began operating in June With a total construction cost of circa $4 billion, the BTC pipeline is the first direct transportation link between the Caspian and the Mediterranean seas. At full capacity, it can deliver one million barrels of oil per day to market, generating important revenues for the Georgian government for decades to come. South Caucasus gas pipeline (SCP) The South Caucasus gas pipeline (SCP) started delivering gas from the Shah Deniz field in the Caspian to markets in Azerbaijan and Georgia from December 2006, and in Turkey from July 2007, representing an important new source of gas supply for the region. Western Route Export Pipeline (WREP) The Western Route Export Pipeline (WREP), also known as the Baku-Supsa pipeline, was our first investment in Georgia. This 830 km pipeline transports oil from the Chirag field in the Caspian Sea, via the Sangachal terminal in Azerbaijan, to the Supsa terminal in western Georgia, with just under half of the pipeline located in Georgia. WREP, which became fully operational in 1999, is capable of transporting up to 100,000 barrels of oil a day. BP Georgia Community Development Initiative (CDI) overview Community development along BTC/SCP pipelines The Georgia CDI was initiated in early 2003 in 77 communities along the SCP and BTC Pipeline route. Initially the program started with the title of Community Investment Program 1 (CIP 1). Later, in 2010 the title of the program changed into the Community Development Initiative (CDI). 1

2 CDI 1 The goal of CDI 1 during the construction phase was to enhance positive relations between BP and communities along the pipeline route through sustainable socio-economic development. The overall program budget during pipeline construction phase was $8 million over a threeyear period ( ). Similar program were created for Azerbaijan and Turkey. After the completion of construction of BTC/SCP pipelines and moving into the operations phase (2006), BP as operator of BTC and SCP, continued financing of the phase II of the CDI for additional 3 years ( ) with the aim to strengthen/solidify positive relationships with communities along the route of the BTC/SCP pipelines. CDI 2 The overall goal for Phase II of the CDI (CDI 2) was to enhance positive relations between BP and communities along the BTC/SCP pipelines route by investing in communities that demonstrate a commitment to become models for sustainable community development. The aim is to support communities to become increasingly able to implement and sustain self help projects with minimal external support, and to thereby improve the livelihoods and opportunities for the pipeline affected communities through a partnership relationship with BP. In the beginning of 2008 implementation of the marketing component of the CDI 2 - Farmers to Markets project (FtM) has started in addition to on-going activities. The initiative to start the project was prompted by the need to address and fill in a significant gap by assisting small farmers in getting their goods to market. For this reason the project was named as Farmers to Markets. Implementation of project activities was scheduled for three year period ( ) with the total budget 520,000USD. Due to the saving in the project budget at the beginning of 2011, No- cost extension of the project was approved. FtM project was prolonged by four months until the end of July, 2011 to fulfill the planned activities with the funds remaining in the project budget. Recognizing commitment of BP and its co-venturers to support enhancement of the quality of life of the communities in the countries of the three pipeline projects (BTC/SCP/WREP), and based on the company stakeholder development strategy the decision was made to continue supporting Community Development Initiative along the BTC/SCP and WREP pipelines in Georgia beyond Y2009. CDI 3 Third phase of the Community Development Initiative on BTC/SCP pipeline (CDI 3) started in May 2010 with CARE international as the lead partner. Smooth transition between the CDI 2 and CDI 3 was achieved through extending some of the activities of CIP2 until commencement of the new phase. The proposal submitted by CARE international for the CDI3 was reviewed both internally by BTC/SCP team and externally by an Advisory Board made up of representatives of key donor organizations active in the country - United Nations Development Program (UNDP), US 2

3 Agency for International Development (USAID), Cooperation Office for the South Caucasus (SDC) the European Union (EU) and Swiss In May, 2010 formal agreement was signed with CARE international in the Caucasus to lead the program implementation together with two local organizations: Center for training and Consultancy (CTC) and Constanta Bank (micro loans). Program duration was planned till the end of January 2012 with the total budget of $ 1.865,081 million. Due to the saving in the program budget, the program was prolonged within the no-cost extension procedure by two months until the end of March 2012 to fulfill the planned activities with the funds remaining in the project budget. The goal of the third phase of the Community Program was to enhance and strengthen positive and harmonious relationships with communities along the pipelines route through sustainable social and economic development. Two main areas - agriculture and civil society capacity building - have been identified as the most suitable areas for further intervention taking into consideration country specifics and the results already achieved through the 1st and 2nd phases of the Community Development Initiative. During the first months of the project, CARE investigated alternative options for a local NGO to pick up responsibility for significant components of the project during the second year of the project implementation, in particular, rural infrastructure rehabilitation support, the agricultural advisory services and small business development. CARE international announced tender for selecting local NGOs to implement the field activities under the CARE supervision. Regional Development Association was selected in the West section communities, Center for Training and Consultancy was selected to implement activities in the East section communities. After the 8 months of the start-up of CDI phase three, CARE started handover process to the mentioned organizations, although CARE retained the oversight and guidance throughout the 2 year lifespan of the program. To maintain the existing level of relationship and impact on the communities affected by the business, as well as to ensure the business continuity and managing the reputation in the country, the 4th phase of CDI implementation was initiated. The Final External Evaluation of CDI 3, done by BP at the end of CDI 3, considered nationalization strategy process as correct step for further operation, considered local NGOs CTC and RDA capable to manage implementation of the next phase of the project and recommended to request the proposals from them via tender for CDI4 implementation. Community Development Initiative phase 4 (CDI 4) In March, 2012, BP Georgia announced Request for Proposals from CTC and RDA for the three - year CDI implementation (CDI 4). The proposals submitted for the CDI4 was reviewed both internally by BTC/SCP team and externally by an Advisory Board made up of representatives of key donor organizations active 3

4 in the country - the European Union (EU) and Swiss Cooperation Office for the South Caucasus (SDC) Both proposals were considered relevant to handle the implementation of CDI 4, CTC in the Eastern part and RDA in the Western part communities. Program duration is May, 2012 May 2015 with total budget of the program 3,116,631USD. The main goal of the 4 th phase of the project is to deepen the positive relations between BP communities along the BTC/SCP pipelines route, by investing in communities to provide positive contribution for sustainable improvement in communities and maintain and enhance sustainability of social-economic development. Main areas of the program include agricultural support, business development as well as community development through capacity building and sustainable activities. Such as rehabilitation of rural infrastructure as well as Social enterprise establishment by Community Based Organizations. The specific objectives of the CDI 4 are to promote sustainable forms of social cooperation and initiatives for community sustainable development and to enable economic opportunities for the pipeline communities to develop regional agro-business and provide public goods and services through established small and medium scale businesses. Community development Initiative Management and Coordination The CDI programs are managed by the Social Responsibility team in BP Georgia Tbilisi office. Community Development Initiative Adviser is dedicated full time to monitoring and evaluating the work of the NGOs through regular participation in field activities and review of monthly, quarterly, annual and final reports, trace the expenditure of the Projects contracts budget and other social sub-contracts through the recording of corresponding invoices, ensure that implementing partners practices and procedures are aligned with those of BP, that, those partners adhere to the principles of company Code of Conduct, including a contractual requirement to act consistently with the code when working on company behalf. The CDI Adviser reports to Social Responsibility Manager The NGOs that implement programs send to BP monthly reports, which provide a brief summary of activities for the month and outlines any issues or actions. Quarterly reports that are provided each calendar quarter go into more depth on financial management issues. An annual report focuses on results, monitoring and evaluation, programmatic changes, etc. Final report provides achievement and their resulting impacts, program overview and impact assessment, strength and weaknesses, lessons learned. Community Development Initiative for BTC/SCP 4 th phase 4

5 Objectives and key components Social / Institutional Objective and its components complementing the overall goal Sustainable forms of social cooperation and initiatives for sustainable community development are promoted 31 community infrastructure projects are implemented 11 Community Based Organizations (CBO s) establish Social enterprises to generate income to deliver services to their communities More than 25,000 residents benefit from improved infrastructure and social enterprises Economic Objective and its components complementing the overall goal Enabled economic opportunities for development of agro businesses in the communities and public goods and services are provided through established of small and medium scale businesses 105 small and medium scale business are established with participation of at least 40% of women 70% of funded start-up businesses achieve the profitability in 12 month from the start 3 Financial and legal Service Groups are established in Adigeni, Akhaltikhe and Borjomi districts 36 services are rendered by each Financial and Legal Service Group to project beneficiaries 100 on farm demonstration are established At least 150 farmers /producers ( 30% of women) linked to the urban channels to sell their products 1800 farming households achieved higher production margins as a result of use of modern technologies 470 Subsidized agro loans are provided to the pipeline farmers 20% increase is achieved in target household income Project Specific examples of summarized outcomes include: Main challenges The main challenge within the reporting quarter was concerns regarding the subsidized loan schemes in the East. East section implementing partner, CTC 5

6 negotiated with sub-contractor, Bank of Constanta to continue the component with the improved conditions, e.g. 30% of interest rate instead of existed 36% with 50% subsiding by CDI and use loan by loan payment, Bank of Constanta refused to change loan provision scheme. CTC contracted Bank of Georgia ( BoG) to handle the component implementation in the East with the same scheme as used in the West, which is 30% of interest rate and loan by loan payment. At the beginning of the reporting quarter demonstration farms in 5 communities in Tsalka municipality was heavily hailed. Grain and fodder beet plants are practically destroyed in the villages of Beshtasheni, Shua Kharaba, Kariaki, Bashkoi and Karakomi. The project agricultural staff members are working on calculating the damage and assisting farmers with recommendations on additional feeding of plants and their treatment with contact fungicides. Strengthen institutional capacity in the community, CBO activities CDI West started customized training sessions designed on the basis of the analysis of skills assessment tests. The analysis help determine strong and weak sides of the persons and which assists in selection of trainings for improvement of weaknesses. Leadership and Communication trainings were carried out for 20 CBO members in the reporting quarter, where CBOs. CDI East conducted second round of trainings on Organizational Development issues for CBOs. Total of 28 CBO members from 14 communities were participating in the training. Community infrastructure projects 15 new rehabilitation projects were selected during the second round of the competition. 13 projects started implementation. Average contribution form the communities is 41%. During the reporting quarter the project has conducted second round of trainings on Organizational Development issues for CBOs. Total of 28 CBO members from 14 communities were participating in the training. 6

7 Social Enterprise Five new Social Enterprise (SE) proposals were selected via the competition process. One of them, from the village Kokhta ( Tsalka District), have launched activities and provided agromachinery service for the villagers as well as to the neighbourhood villages. They managed to provide 25 services and generated the income of the amount of 2,500 GEL. CDI West started third round of SE proposal selection, relevant trainings of CBOs in Social Entrepreneurship were also provided. Two applications were submitted for farther revision. Two SEs from the villages Ivlita and Agara, services to their communities. provided discounted agricultural machinery This spring season has been the first for the villages when they managed to complete agricultural works in set time and even rendered services to 22 external customers (12 ha) in neighboring villages. With cumulative proceeds for the season (6,530 GEL), both SEs made reinvestments for purchasing of spare parts for the machinery in order to prepare for the July mowing season. Agricultural support, new business start-up activities and subsidized agricultural loans will support the communities to improve their livelihoods Agriculture The project continues working with all 105 demonstration plots. During the reporting quarter total of 49 group training and about 400 individual consultations were conducted with participation of more than 1,000 farmers. Total of 19 cross visits were conducted with participation of 93 farmers. The visits were dedicated to introduce various agro-technology processing, identifying quality seeds and vet preparation, as well as familiarize with modern technologies of apple crop sizing and antibacterial treatments. 7

8 The cross visits have largely contributed to the ratio of technology replication in CDI4 communities which is evidenced by the fact, that apples and vegetables, which have been the topic of the visits, account for 77% of technology transfer by the farmers. Project observes interest from the client farmers and other villagers and consequently technology transfer. The demo plots attracted 128 neighboring farmers who arranged similar demonstrations, whether it was using the new technology via adopting the mixed fodder for the cattle or establishment different vegetable plots, or purchasing the new seed materials. Case study We are lucky to cooperate with the project. I and my neighbors have planted the corn and kept all the recommendations. As you can see the corn plantings are good - no weeds. Before we were doing it manually. It was very interesting to see that one of the neighbors didn't use the herbicide and the difference was apparent. He of course regrets about it and asked for advice on what to do further. It is our first try to plant corn and we are looking forward to a good harvest" - says Papala Avaliani, crop demo farmer and her follower Tamaz Khardziani form the village Nagebi. Farmers association Samtskhe Association Samtskhe started new cycle of cultivation of virus-free high class potatoes in May and purchased 1500 seedlings of Tbilisi Institute of Bio Technologies. The seedlings were transferred into open ground and as a result of the intensive treatment by the Association in consultation with CDI West agricultural specialists, association managed to save the highest number of seedlings possible. Association is considering seeking for external funding for set-up of mini-laboratory, in order to produce seed potato from scratch. 8

9 Marketing This quarter has mostly been passive in terms of marketing, because it is a crop seeding season and there is no harvest to sell. During the reporting period, CDI West assisted 70 farmers of 19 villages to sell kg of agricultural goods for 53,041 GEL. Within the demo farming component, 175 farmers were attracted to purchase 35,750 kg of combined feed with 30% discount funded by CDI. Marketing activity was assisted with consultations about norms of use and storage of combined feed. Technologies for seeding of onion rush. The priorities of marketing support is provided in figures in table 1. Table 1. Products sold via CDI marketing Q2/13 Product Volume kg Sales GEL Price Table Potato Meat Seed potato Cheese Beet Milk Total: ,041 Business start-up All small entrepreneurs are functioning and running their business, serving customers and gaining incomes. The information on number of served beneficiaries, expenses and income has been accumulating in the account books. The average monthly income for each business varies between 300 and 900 GEL. 9

10 Within the second round competition, 26 new start-up businesses were awarded grant in the West.18 businesses already have started operations. CDI East has announced the second round of start-up business grant competition. Cumulative number of businesses in both section is 63, total number of grantees is 87, where there are 39 women and 48 men leading businesses. The number of employed in total is 105 (48 women). Subsidized Micro-Loans (SML) During the quarter, 22 agricultural loans were disbursed loans in the West villages. Total number of disbursed loans by end of the reporting quarter is 58 leveraging 146,500 GEL loan portfolio from the bank. There are no delays in repayments. Service Group Financial and Legal Service Groups (FLSG) component ran through third round of application solicitation and selected one of the three applications from Borjomi for funding. FLSG will provide services to project CBO, business startup grantees as well as will establish training courses on accounting. By end of the reporting quarter, two FLSGs operate each in Akhaltsikhe (Count Service Ltd.) and Adigeni (David Ltd.). Count Service Ltd. generated 3,470 GEL profit for 26 paid services (10 contracts with CDI4 beneficiaries) during the quarter. Upon consultation with Count Service Ltd., within the framework of the mentoring initiative, Adigeni FLSG planned accounting training courses and started outreach for attraction of applicants. Next Quarter 10

11 CDI 4 East The following activities are planned for the next quarter: Work with CBOs to create strategic documents Launch the second round of SE grants competition Selection of the second round start-up business grantees CDI 4 West ALL 9 infrastructure rehabilitation Projects shall be in implementation phase 1 Social Enterprise shall be selected and funded All second round Start up projects will be operational. All CBO Skills assessments (40) shall be conducted and Cumulative analysis shall be done Harvest of 90% of demos shall be finalized Community Development Initiative in the villages along WREP In 2009 the decision was made to bring WREP Georgia community Development initiative under the same management framework as for the BTC/SCP, which resulted in engaging local NGO in project implementation through the Request for Proposal (RFP) process, with focus on youth capacity building component defined as a target area for investment. The Youth Capacity Building Project was launched in May, Georgian Organization of the Scout Movement (GOSM) was selected as the project implementing partner through the tender process. Georgia organization of the Scout Movement co-operating with local NGO Center for Training and Consultancy as with sub-partners within the project framework. The project was due to May, Total budget was 482, 013 USD out of which the amount requested from BP for the implementation of the proposed project was 299,923 USD. 173, 490 USD was contributed by GOSM and its partner NGO - Center for Training and Consultancy (CTC) as well as by the project with the Swiss Guide and Scout Movement. During the implementation of the project additional 55,500 USD was allocated for the additional activities, which included establishment of the second summer camp, and civic education training course for the teachers in target schools. All mentioned activities were included into the project scope based of the need assessment of the target schools and youth group members. To fulfill the new activities, project was extended till the end of June The project ended within the reporting period. To continue the project interaction in the communities along WREP, company announced A new RfP in the 3Q 2012 to identify the IP for the new CDI along the WREP. 11

12 Georgian organization of the Scout Movement was selected to implement the project Small Business development Project ( SBDP) along the entire length of WREP. The projects started in October, 2012 and is due to the end of December, Total budget of the projects is 1,302,190 USD out if which the amount requested from BP is 1228,385 USD and leveraged amount from Scouts Movement is 73,805 USD. The project is intended to implement small business start-up activities in the communities along WREP pipeline located within 2 km corridor (1km from each side) also, in communities located within 4 km corridor (2km from each side) along the Access Roads to the BP above ground facilities as well as affected due to some increased company operational activities. In addition to the target villages, the project will be also implemented in 4 IDP camps, located along WREP pipeline within 2 km corridor (1km from each side). The main initiatives conducted at IDP camps should be focused only on empowering the youth at IDP schools. Description of the Key objectives and main themes of Small Business Development Project are represented in below paragraphs/chapters. Small Business development Project (SBDP) - Objectives and key components: Enable the opportunity-driven process for the pipeline communities to develop small scale agro and off farm-businesses through equipping them with necessary skills, knowledge and tools. Support the environmental educational achievements of the secondary school students only in 4 target IDP settlements by enabling life long learning and influence on behavior of youth towards natural environment. Increase GOSM capacity to diversify the portfolio of quality service provision. Some of the key achievements of the program will be: Creating opportunities for 275 start-up businesses to emerge and at least 75% of them become financially sustainable, reinvesting the profits for expansion and further development; At least 275 new jobs created; 50% of the disbursed grants managed by women; IDP settlements further prioritized and supported by working closely with schools and introducing a World Environmental Programme. Project Specific examples of summarized outcomes include: Main challenges Project Methodology towards the Socially Unprotected candidates was the following: to give a preference to socially unprotected candidates in case of equal proposals. Although 12

13 some candidates (10 so far) have changed mind and didn't submit the second round proposals being afraid that they would lose social protection as soon as they get business grant. The following section provides detailed overview of the project activities and describes major accomplishments, impact and outcomes: 1669 business project proposals have been finally submitted by the inhabitants of all 116 villages 697 contestants have been shortlisted by the reviewing committee for attending the business proposal writing trainings 356 monitoring visits have been made in the target villages to verify shortlisted candidates and check details on the ground. About 180 shortlisted candidates were replaced as a result of the monitoring visits 37 Business proposal writing trainings were held in Tbilisi, Gori, Chiatura, Sachkhere, Kutaisi and Lanchkhuti. 654 candidates have attended the trainings, 312 female (48%) and 342 male (52%) All 4 IDP settlements micro-grant proposals were approved and Contracts were signed. Youth Groups have started implementation of the micro-grant projects. The topics of the projects are as following: Creating Garden in Tserovani settlement, arranging trash cans and resting areas in Sveneti and Khurvaleti settlements, arranging biology room in Shavshvebi School 4 planting actions were implemented by the IDP youth groups. 560 trees were planted by the group members of all target IDP settlements. The planting action was initiated by Scouts of Georgia in cooperation with the Ministry of Environment Protection. Tree plants were granted for free by the Ministry 10 small scale environmental activities were implemented by the IDP youth groups. These educational activities from the World Scout Environment Programme address key environmental challenges facing the planet. Some of them are presented indoors and some in outdoors, allowing the youth to explore and discover the natural world. 13

14 Case study 4 planting actions were implemented by the IDP youth groups in April. 560 trees were planted by the youth group members of all target IDP settlements. Population of the target settlements was very satisfied with the action. Generally all agree that the environment should be protected and the trees should be planted, but people don t put in practice these views. Those are mere words. While we ve been provided an opportunity to achieve our dream and do such an important job. Thanks to the Small Business Development Project, We ve planted 250 trees in our settlement. We are ready to take care of these trees and make sure that they are growing up together with us Tamar Javakhishvili, Khurvaleti IDP settlement. It s a great happiness to do something positive for the future of the country. We ve gladdened the nature and the nature will rejoice our hearts. Tserovani settlement youth group, together with the Tserovani village youth group members have planted 200 trees on the territory of the settlement. It was a great fun and we ve promised to take care of our babytrees. Salome Mindiashvili, Tserovani IDP settlement. Next Quarter Select second round business proposals and award grants Finalization of the micro-grant environmental projects Implementation of the summer camp Conduct Baseline opinion poll of the beneficiaries List of acronyms BTC/SCP WREP Baku Tbilisi Ceyhan/South Caucasus Pipeline Western Rout Export Pipeline 14

15 CDI CIP FtM YCBP SBDP NGO RDA CTC RFP CBO FLSG Community Development Initiative Community Investment Program Farmers to Market Youth capacity Building Project Small Business development project Non-Governmental Organization Regional Development Association Center for Training and Consultancy Request for Proposal Community Based Organization Financial and Legal Service Group END 15