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Resettlement Plan May 2011 GEO: Road Corridor Investment Program, Tranche 1 Kobuleti Bypass, Kobuleti Batumi Section and Batumi Bypass Design Project (Kobuleti Section of Contract 1 (km 4.7 km 12.4 and km 31 km 33) Prepared by the Roads Department, Ministry of Regional Development and Infrastructure of Georgia for the Asian Development Bank.

CURRENCY EQUIVALENTS (as of 9 November 2010) Currency Unit lari (GEL) $1.00 = GEL1.67 ABBREVIATIONS ACS acquisition and compensation scheme ADB Asian Development Bank AR Adjara Republic CSC construction supervision consultant AH affected family AP Affected Person CBO community based organization DMS detailed measurement survey RDRD Road Development and Resettlement Division GoG Government of Georgia GRC grievance redress committee IA implementing agency IP indigenous peoples EMA external monitoring agency km Kilometre LAR land acquisition and resettlement LARC land acquisition and resettlement commission LARF land acquisition and resettlement framework LARP land acquisition and resettlement plan M&E monitoring and evaluation MFF multitranche financing facility MOF Ministry of Finance MPR monthly progress report MRDI Ministry of Regional Development and Infrastructure NAPR National Agency of Public Registry NGO non-governmental organization PEMI persons experiencing major impact PFR periodic financing request PPR project progress report PPTA project preparatory technical assistance PRRC Property Rights Recognition Commission R&R resettlement and rehabilitation RD Roads Department RDMRDI Roads Department of the Ministry of Regional Development and Infrastructure of Georgia RoW right of way RU resettlement unit SES socioeconomic survey SPS safeguard policy statement TRRC Transport Reform and Rehabilitation Centre NOTE In this report, $ refers to US dollars. LARP-II (Kobuleti section of Contracts 1)

This resettlement plan is a document of the borrower. The views expressed herein do not necessarily represent those of ADB's Board of Directors, Management, or staff, and may be preliminary in nature. In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

Table of Contents I. INTRODUCTION... 9 II. CENSUS AND IMPACT ASSESSMENT... 13 III. SOCIO-ECONOMIC INFORMATION... 20 IV. LEGAL AND POLICY FRAMEWORK... 28 V. INSTITUTIONAL ARRANGEMENTS... 38 VI. CONSULTATION, AND PARTICIPATION... 45 VII. GRIEVANCE REDRESS MECHANISM... 53 VIII. IMPLEMENTATION SCHEDULE... 56 IX. COSTS AND FINANCING... 59 X. MONITORING AND REPORTING... 66 LARP-II (Kobuleti section of Contracts 1)

List of Tables TABLE E.1 SUMMARY IMPACT ON LAND ACQUISITION AND RESETTLEMENT.. ERROR! BOOKMARK NOT DEFINED. TABLE E-2 COMPENSATION MATRIX... 6 TABLE 2.3: TYPE OF LAND OWNERSHIP... 14 TABLE 2.7: AHS BY IMPACT CATEGORY... ERROR! BOOKMARK NOT DEFINED. TABLE 2.8: VULNERABLE AHS... 18 TABLE 2.9: SUMMARY IMPACT ON LAND ACQUISITION AND RESETTLEMENT. ERROR! BOOKMARK NOT DEFINED. TABLE 3.1: DEMOGRAPHIC PROFILE OF APS... 20 TABLE 3.2: ETHNICITY OF AHS... 20 TABLE 3.3: URBAN RURAL DISTRIBUTION OF AHS... 21 TABLE 3.4 LEVEL OF EDUCATION OF APS... 21 TABLE 3.5: LAND HOLDING STATUS... 21 TABLE 3.6: MAJOR CROPPING PATTERN... 22 TABLE 3.7: ECONOMIC ACTIVITY OF THE HOUSEHOLDS... 22 TABLE 3.8: ECONOMIC ACTIVITY OF THE HOUSEHOLDS MEMBERS... 22 TABLE 3.9: AVERAGE ANNUAL HOUSEHOLD INCOME AGAINST NUMBER OF SOURCES 23 TABLE 3.10: AVERAGE ANNUAL HOUSEHOLD INCOME BY SOURCES... 23 TABLE 3.11: AVERAGE ANNUAL EXPENDITURE... 23 TABLE 3.12: POSSESSION OF DURABLE GOODS AND DOMESTIC ANIMALS... 24 TABLE 3.13: INDEBTEDNESS... 24 TABLE 3.15: SOURCE OF DRINKING WATER... 24 TABLE 3.16 TYPES OF TOILET... 26 TABLE 3.17 TYPE OF FUEL USE FOR COOKING... 26 TABLE 3.18 CONNECTED TO CENTRAL POWER SUPPLY... 26 TABLE 3.19: ACCESS TO HEALTH CENTRE... 26 TABLE 3.20: ACCESS TO SCHOOL... 27 TABLE 3.21: ACCESS TO ROAD... 27 TABLE 4.1: COMPARISON OF GEORGIAN LAWS ON LAR AND ADB RESETTLEMENT POLICY... 30 TABLE 4.2: COMPENSATION ENTITLEMENT MATRIXERROR! BOOKMARK NOT DEFINED. TABLE 6.1: SUMMARY ON PARTY CONSULTED AND CONSULTATION METHODS... 46 TABLE 8.1: GRIEVANCE RESOLUTION PROCESS... 53 TABLE 9.2: COST OF AFFECTED STRUCTURES... ERROR! BOOKMARK NOT DEFINED. TABLE 9.3: COST FOR CROP COMPENSATION... ERROR! BOOKMARK NOT DEFINED. TABLE 9.6: COST FOR ALLOWANCES... 64 TABLE 9.7 CAPACITY BUILDING AND MANAGEMENT COST... 64 List of Figures FIGURE 1.1 PROJECT LOCATION... 11 FIGURE 5.1 LAR ORGANIZATION CHART... 43 FIGURE 7.1 GRIEVANCE RESOLUTION AND ACQUISITION PROCESS... 55 Annex 4.1 Valuation Methodology Annexes LARP-II (Kobuleti section of Contracts 1)

Annex 4.2 Legalization Procedure Annex 7.1 Information Leaflet GLOSSARY Beneficiary Community: All persons and households situated within the government-owned or acquired property who voluntarily seek to avail and be part of the Project and represented by a community association that is duly recognized by the community residents, accredited by the local government, and legally registered with the appropriate institutions. Compensation: Payment in cash or in kind of the replacement cost of the acquired assets. Entitlement: Range of measures comprising compensation, income restoration, transfer assistance, income substitution, and relocation which are due to Affected people, depending on the nature of their losses, to restore their economic and social base. Improvements: Structures constructed (dwelling unit, fence, waiting sheds, animal pens, utilities, community facilities, stores, warehouses, etc.) and crops/plants planted by the person, household, institution, or organization. Land Acquisition: The process whereby a person is compelled by a government agency to alienate all or part of the land a person owns or possesses to the ownership and possession of the government agency for public purpose in return for a consideration. Affected People (AP): Individuals affected by Project-related impacts. Affected Household (AH): All members of a household residing under one roof and operating as a single economic unit, who are adversely affected by the Project. It may consist of a single nuclear family or an extended family group. Rehabilitation: Compensatory measures provided under the Policy Framework on involuntary resettlement other than payment of the replacement cost of acquired assets. Relocation: The physical relocation of a AP/AH from her/his pre-project place of residence. Replacement Cost: The value determined to be fair compensation for land based on its productive potential and location.. The replacement cost of houses and structures (current fair market price of building materials and labour without depreciation or deductions for salvaged building material), and the market value of residential land, crops, trees, and other commodities. Resettlement: All measures taken to mitigate any and all adverse impacts of the Project on AP s property and/or livelihood, including compensation, relocation (where relevant), and rehabilitation of the damaged/removed infrastructure and installations. Sakrebulo: This is the representative body of local self-government. The middle level of local government consists of 67 rayons (districts) and six cities in Georgia: Tbilisi, Kutaisi, Rustavi, Poti, Batumi and Sukhumi. The representative branch of rayon level is the rayon level Local Councils (Rayon Sakrebulo) and the executive branch is represented by Rayon Gamgeoba (Gamgebeli). The self-government level consists of settlements (self-governed cities) or groups of settlements (municipalities). Settlements could be villages, small towns (minimum 3,000 inhabitants) and cities (minimum 5,000 inhabitants). The representative and executive branches of self-government are represented accordingly by Local Council (Sakrebulo) and the Gamgebeli of municipal level. The exclusive responsibilities of self-government include land-use and territorial planning, zoning, construction permits and supervision, housing, and communal infrastructure development. LARP-II (Kobuleti section of Contracts 1)

2 EXECUTIVE SUMMARY 1. The Government of Georgia (GOG) has received a loan (USD 500 million) from the Asian Development Bank (ADB) through a Multitranche Financing Facility (MFF) for implementing the Road Corridors Development Program (the Program) to rehabilitate, improve or construct several roads in various regions of Georgia. The program includes the 48.4-km Adjara Bypass around Kobuleti and Batumi (the Road) which will be financed under tranche 1 and 2, of the Program. 2. Construction activities for the Ajara Bypass under both tranches will entail land acquisition and resettlement (LAR.) and need the preparation of LAR Plans (LARP) satisfying the ADB Safeguards Policies requirements. To satisfy ADB requirements the Roads Department of the Ministry of Regional Development and Infrastructure of Georgia (RDMRDI) the Program Implementing Agency (IA) has prepared for tranche 1 two LARPs. LARP1 covers the sections of contract 1 in Guria Province while this LARP (LARP 2) covers the road sections of contract in Ajara Province. 3. This LARP 2 is final and is based on detailed design and the requirements of ADB Safeguards Policy update (2009). Its objective is to plan and implement LAR in the road sections under Contract 1 in Kobuleti Rayon in Ajara Province. The chainage points of these road sections are Km 4.7-12.4) and Km 31-33. Impacts along these road sections will entail acquisition of 361,274.11 sq.m of land from 197 plots subdivided in terms of tenure type as follows: Type 1: 21 titled plots (17 registered and 4 legalizable)in total 129382,4 sqm. Type 2: 91 public land plots of 83,239.6 sqm in total. These plots have been used on a long-term basis by private users who where legitimate land leasers under the old Soviet land administration system (non-legalizable, but eligible to land compensation) Type 3: 85 public land plots of 148,651,8 sqm. These plots have been used on an extemporaneous basis by users with no legitimate lease under the old Soviet land administration system (eligible to crops compensation but not land compensation). 4. Project impacts are summarized below in table E. Given these impacts magnitude the project under this LARP is classified as A for resettlement. Table E.1 Summary Impact on Land Acquisition and Resettlement No. Impacts Unit Quantity (sqm) Type 1 Type 2 Type 3 Total Land Tenure Patterns 1 Total Land parcels affected No. 21 91 85 197 2 Total land Area to be acquired Sqm 129,382.4 83,239.6 148,651.8 361,274.0 3 Private legal Plots No. 17 17 sq.m 125,332.1 4 Private Legalizable plots No. 4 4 sq.m 4,050.3 5 Compensable but not-legalizable plots No. 91 91 sq.m 83239.6 83239.6 6 Non compensable plots 1 No. 0.0 66 66 sq.m 46,830.0 46,830.0 7 Public land plots (non-agricultural and unused No. 19 19 agricultural sq.m 101,821.8 101,821.8 Land Compensation Categories 8 Agricultural land in residential area in v. Ochkhamuri No. 4 2 6

3 sq.m 4,050.3 2,781.5 6,831.8 9 Agricultural land in residential area in v. No. 3 5 8 Sakhalvasho sq.m 1,563.9 3,516.9 5,080.8 10 Agricultural land in v. Alambari, Mukhaestate, Ochkhamuri No. 84 84 sq.m 76,941.1 76,941.1 11 Tea plantation around Ochkhamuri No. 14 14 sq.m 123,769.1 123,769.1 Land Use Patterns 12 Non-agricultural land No. 3. 3 sq.m 977.1 977.1 13 Unused Agricultural (State) No. 16 16 sq.m 100,844,7 100,844,7 14 Agricultural Land used for residential purpose No. 1 1 sq.m 917.2 917.2 15 Agricultural land used for agricultural purpose No. 20 91 66 177 sq.m 128,465.2 83,239.6 46,830 258,534.8 Agricultural Patterns 16 Area under Corn Cultivation Sqm 111,927.0 17 Area under Potato Cultivation Sqm 385.0 18 Area under Hay Sqm 10,784.61 19 Area under Tea Plantation Sqm. 121,907.8 20 Affected Trees No. 757 Affected Structures 21 Residential Structures /Houses No. 1 22 Cattle-shed No. 1 Affected Households 23 Severely affected Households No. 118 24 Vulnerable Households No. 21 0 21 25 Resettled households No. 2 2 0 2 26 AH with legal plots No. 4 3 0 4 27 AH with legalizable plots No. 3 4 0 3 28 AH with compensable but not-legalizable plots 86 5 29 AH with non-compensable plots No. 0 42 42 30 Total AH No. 134 0 134 31 Total Affected Persons No. 713 0 713 Table notes: 1.) Of 85 State-owned plots 19 are unused and 66 are illegitimately cultivated by users not eligible to land compensation; 2) Although there is only 1 house affected the relocated AH are two because both live in that house; 3) 1 of this 4 is a company Millenium Trans; 4) 2 AHs share 1 residential plot and each of them owns 1 legalizable plot separately. Thus 3 AHs own 4 legalizable plots; 5) 5 AHs in this category use 2 land plots. In total 86 AHs legitimately use 91 land plots. 1 of the AHs legitimately using land owns 2 legalizable plots and is already counted. Therefore, in all the AHs are 134 not 135, so far as 1 AH is double-counted 5. About half of the APs are women. The project pays particular attention to ensure that women are the recipients of the compensation pertaining to their activities and to ensure that women who are de-facto household heads are clearly listed as beneficiaries of compensation and rehabilitation proceedings under the loan. No impact on indigenous peoples (IPs) was identified and the requirements of the ADB Safeguards Policy Update (2009) will not be triggered in this project. 6. The legal and policy framework of the project on land acquisition and resettlement has been adopted to assist the APs and/or households for their lost land and assets, income and livelihood resources. Expropriation of land through eminent domain will not be applied unless approach for acquisition through negotiated settlement fails. Compensation eligibility is limited by a cut-off date as set for this project on the day of the beginning of the AP Census which is 27 May 2010. APs will be entitled for compensation or at least rehabilitation assistance under the Project are (i) all persons losing land irrespective of their title, (ii) tenants and sharecroppers irrespective of formal registration, (iii) owners of buildings, crops, plants, or other objects

4 attached to the land; and (iv) persons losing business, income, and salaries. However, this LARP identified no impact on tenants, sharecroppers, businesses, income or salaries. A summary entitlements matrix is included in Table E-2. Table E-2 Compensation Matrix Type of Loss Application Definition of AH/APs Compensation Entitlements Land Permanent loss of agricultural land AP losing productive land regardless of impact severity Owner with full registration Legalizable Owner (APs with title formalization pending and APs who are not registered but have residential land or agricultural plots adjacent to the residential land) Cash compensation at full replacement cost. If the residual plot becomes unviable for cultivation, the project will acquire it if the owner so desire. The ownership rights of these APs will be recognized, the land registered in NAPR and the APs provided with cash compensation at full replacement cost. Non-Agricultural Land AP losing their commercial/ residential land APs who are not registered but legitimately use agricultural land not adjacent to residential plots APs who are not legitimate land users or squatters (these are APs who were not land leasers under the old system or occupy a plot illegally) Agricultural Tenant Owner with full registration Legalizable Owner (APs with title formalization pending and APs who are not registered but have residential land or agricultural plots adjacent to the residential land) These will not be registered in NAPR. However the APs will be provided with cash compensation at full replacement cost, according to the Decree of the Government of 01.03.2011. One time self-relocation allowance in cash equal to 12 months at minimum salary (@304 GEL GEL per month x 12 months=3648 GEL x AH). A one time self-relocation allowance in cash equal to 1 year at minimum salary (@304 GEL per month x 12 months=3648 GEL x AH). Cash compensation at replacement rate or through replacement land equal in value to plot lost and at location acceptable to APs. The cash option has been selected for this project. The ownership rights of these APs will be recognized, the land registered in NAPR and the APs provided with cash compensation at full replacement cost. Buildings and Structures Residential and non residential structures/assets Non-legalizable land users (without registration/valid documents using land permanently). All AHs regardless of their legal ownership/ registration status (including legalizable and Informal Settlers) Loss Of Community Infrastructure/Common Property Resources Loss of common Community/Public Community/Government property resources Assets A one time self-relocation allowance in cash equal to 1 year at minimum salary (@304 GEL per month x 12 months=3648 GEL x AH). Full impact: Cash compensation for building/structures losses at full replacement costs free of depreciation and transaction costs Partial impact: repairs compensation. Reconstruction of the lost structure in consultation with community and restoration of their functions

5 Loss of Income and Livelihood Crops Income from crops affected on affected land, Trees Business/Employment Income from Trees affected Business/employment loss All APs regardless of legal status (including legalizable and Informal Settlers) All APs regardless of legal status (including legalizable and Informal Settlers) All APs regardless of legal status (including legalizable and Informal Settlers) Allowances Severe Impacts >10% income loss All severely affected AHs including informal settlers Relocation/Shifting Vulnerable Allowances People Temporary impacts during construction Transport/transition costs All AHs to be relocated AHs below poverty line, headed by Women All APs Crop are compensated in cash at market rate based on gross crop value by default. This is so whether harvested or not at time of impact to gross crop value of expected harvest. Cash compensation at market rate on the basis of type, age and productive value of the trees. Owner: (i). (permanent impact) cash indemnity of 1 year net income; (ii) (temporary impact) cash indemnity of net income for months of business stoppage. Assessment to be based on tax declaration or, in its absence, minimum salary. Permanent worker/employees: indemnity for lost wages equal to 3 months of minimum salary. Agricultural income: 1 additional crop compensation for 1 year s yield of affected land or an allowance covering 3 months of minimum salary for cases when crop compensation is not applicable. (@304 GEL per month x x 3 1 months=912 GEL per AH) An allowance covering transport and livelihood expenses for the transitional period. (@ 200 GEL as vehicle hire charge + 304GEL as minimum salary x 3 months = 1,112 GEL per AH) Allowance equivalent to 3 months of minimum salary and employment priority in project-related jobs (@ 304 GEL as minimum salary per month for 3 1 months= 912 GEL per AH) Due compensation to be assessed and paid when the impacts are identified based on the above provisions. Notes for the tables: 1 In absence of a minimum salary in Georgia the figures used are based on the minimum subsistence income x month calculated for a family of 5 persons. The most recent information from National Statistics Office of Georgia for January 2011 is 304 GEL per household (of five people). 7. ADB is the funding agency and RDMRDI is the Implementing Agency (IA) of the Project. RDMRDI has the lead responsibility for road construction, as well as implementation of this LARP through the Resettlement Unit (RU) under the Roads Development and Resettlement Division in RDMRDI. A Land Acquisition and Resettlement (LAR) Commission (LARC) will be assisting RU in all LAR activities and RU will be represented at the field by a Working Group comprising the legal, economics and engineering expertise from other departments of RDMRDI. In addition, RU will be assisted by LAR Team in the rayon level involving also the local selfgovernment bodies. Transport Reform and Rehabilitation Centre (TRRC) has been formed as an independent body for financial management of World Bank and ADB financed projects. In addition, a number of other government departments will play an instrumental in the updating and implementation of LARP-II. The National Agency of Public Registry (NAPR) within the Ministry of Justice will be assisting the Project through registration of land ownership and its transfer through purchase agreement from landowners to the RDMRDI. The local government at Rayon and village level will also be involved.

6 8. The designated official from RU was also an active member in leading role during the census survey. RU staff and local level LAR Team members were informally trained during the feasibility study. Members of LAR institutions will be trained prior to the implementation of LARP-II under the ADB RETA for capacity building of RU staff and its field operatives. 1 9. A grievance mechanism will be available to allow a AP appealing any disagreeable decision, practice or activity arising from land or other assets compensation. Grievance redress committees (GRCs) at local level involving the local government officials, representative of APs, representative of local NGOs and consultant. APs will be fully informed of their rights and of the procedures for addressing complaints whether verbally or in writing during consultation, survey, and time of compensation. Care will always be taken to prevent grievances rather than going through a redress process. 10. Consultation with likely APs in the project affected areas was conducted during the feasibility study of the Project (tranche 1) and preparation of draft LARP for section 1 in 2009. Specific to the section of the contract 1 road in Kobuleti Rayon, people were consulted through individual contact during the census survey under the feasibility study for identification of APs. At the preparation of LARP-II in detail design stage, all likely APs (available on site) were consulted through community level meetings and through individual contact at the time of census, socioeconomic survey and detail measurement survey. 11. AHs requiring physical relocation of their housing and structures will be assisted in the form of full replacement cost of their affected structures comprising of replacement value of structures (current fair market value of construction materials), cost of dismantling and shifting of salvaged materials, and cost of restoration at alternative sites. The relocating households will be provided with subsistence allowance for loss of income and workdays during the transitional period. Various allowances are included in the entitlement matrix for rehabilitation of APs and restoration of their livelihood resources. 12. LARP-II requires legalization of the 3 legalizable owners of land parcels under acquisition which is in progress and negotiation with all legalized land owners and APs will take May June of 2011. 85 land users non legalizable according to active legislation but legitimately using the public land, will be provided with cash compensation at full replacement cost, according to the Decree of the Government of Georgia 1 March 2011 on the Measures to be Implemented by the Road Department of the Ministry of Regional Development and Infrastructure to Ensure Construction of the Adjara Bypass Road. 13..Payment of compensation and cash allowances will be completed by end of June 2011. All activities related to the land acquisition and resettlement have been scheduled to ensure that compensation is paid prior to displacement and commencement of civil works. Public consultation, internal monitoring and grievance redress will be undertaken intermittently throughout the project duration. The resettlement cost estimate under this LARP is 2,580,208 GEL ( USD 1,545,034). 14. Land acquisition and resettlement tasks under the project will be subject to monitoring. Monitoring will be the responsibility of RDMRDI. Internal monitoring will be carried out routinely by RU/RDMRDI. The results will be communicated to ADB through the quarterly project 1 Regional Technical Assistance Project RETA-7433 REG: Mainstreaming Land Acquisition and Resettlement Safeguards in the Central and West Asia.

implementation reports. External monitoring will be carried out on a regular basis, and its results communicated to RU/RDMRDI and ADB through quarterly reports. The RDMRDI (through external help) will carry out a post-implementation evaluation of the LARP-II about a year after completion of its implementation. 7

8 I. INTRODUCTION 1.1 Project Background 1. The Government of Georgia (GOG) has received a loan (USD 500 million) from the Asian Development Bank (ADB) through a Multitranche Financing Facility (MFF) for implementing the Road Corridors Development Program (the Program) to rehabilitate, improve or construct several roads in various regions of Georgia. The program includes the 48.4-km Adjara Bypass around Kobuleti and Batumi (the Road) which will be financed under tranche 1 and 2, of the Program. 2. Construction activities for the Ajara Bypass under both tranches will entail land acquisition and resettlement (LAR.) and need the preparation of LAR Plans (LARP) satisfying the ADB Safeguards Policies requirements. To satisfy ADB requirements the Roads Department of the Ministry of Regional Development and Infrastructure of Georgia (RDMRDI) the Program Implementing Agency (IA) has prepared for tranche 1 two LARPs. LARP1 covers the sections of contract 1 in Guria Province while this LARP (LARP 2) covers the road sections of contract in Ajara Province. Impacts along these road sections will entail acquisition of 361,274.11 sq.m of land from 197 plots divided in terms of tenure type as follows: 3. Given the magnitude of impacts (there are more than 200 severely affected APs) the project under this LARP is classified as A for resettlement. The project location map is shown in Figure 1.1 at the end of this chapter. Type 1: 21 titled plots (17 registered and 4 legalizable) in total 129382,4 sqm. Type 2: 91 public land plots of 83,239.6 sqm in total. These plots (non-legalizable, but eligible to land compensation) have been used on a long-term basis by private users who where legitimate land leasers under the old Soviet land administration system Type 3: 85 public land plots of 148,651,8 sqm. These plots (eligible to crops compensation but not land compensation). have been used on an extemporaneous basis by users with no legitimate lease under the old Soviet land administration system. 1.2 The Impacts Corridor 4. Contract 1 entails the construction of a green-field road. The final corridor of impacts will be about 25 m wide to accommodate a 14.5 carriageway, an embankment of variable width and 6 m of buffer land. As the impact corridor includes a correspondent strip of land acquired as reserve land the total impact corridor used for this LARP averages 50 m of width. Contract 3 instead, involves only road widening. The final corridor of impacts under this contract includes 18 m of new road (6 m of centre reserve, 7 m of traffic lanes and 5 m shoulders) while cut sections of the hills (extends up to 12m, and 3 m outside the edge of the cut). The width of the impacts corridor impact under this contract will vary between 18 and 33 m. 1.3 Minimizing Land Acquisition and Resettlement 5. Due considerations have been given during the alignment selection and engineering design to minimize the adverse impacts of land acquisition and involuntary resettlement. The Contract 1 of the bypass road has been selected away from the existing Poti-Batumi-Sarpi road mostly through open agricultural fields. Efforts have been put to incorporate best engineering

9 solution in avoiding large scale land acquisition and resettlement. Following are the specific measures adopted for the selection of the route: (i) (ii) (iii) (iv) Road alignment route has been well tuned on site to avoid densely settlement areas; Interchanges with local roads have been designed to avoid resettlement Designs of interchanges were reviewed by resettlement specialists and their recommendations were considered in the final design. Slope cutting has been reduced and massive revetment walls have been included in project design for Contract 3 road (widening of 2.28 km existing road) to avoid the risk of landslide in the remote land parcels and thereby avoid acquisition of land in the risk zone and relocation of 3 households from there. 1.4 LARP Preparation 6. This LARP is final and has been prepared as a condition to contract awards signing. It follows feasibility study draft prepared by RDMRDI in 2009 on the basis of which Tranche 1 and the Program were approved in 2009 and LARP II prepared in 2010. The document complies with relevant Georgian laws, the ADB s Safeguard Policy Statement (2009) and the Program's LARF. LARP preparation entailed: (i) a detailed measurement surveys (DMS), (ii) a detailed asset valuation/documentary research for each affected plot/affected item, (iii) a 100% AH census; and (iv) a socio-economic survey (SES) of 20% of the AHs. Intensive consultations with all the stakeholders including rayon authorities and the likely APs (APs) were conducted during the process. 7. The. LARP prepared in the feasibility study for Section 1 was reviewed and compared with the findings of the detailed design works. The document is based on a revised DMS, census and socio economic survey which were conducted between 27 May 26 June 2010 and finalized in July 2010. The updates include (i) update of impacts and AP figures reflecting design changes; (ii) micro plan for land acquisition and implementation of LARP-I; (iii) update of LAR budget; and (iv) loss and entitlement profile for individual owners of land plots and APs 8. The LARP II prepared in 2010 was revised and updated first of all due to minor changes in the design: the length of the Contract 3 was reduced by 850m and that caused difference of numbers of AHs 2 to be reflected in the revised LARP II. Besides, according to the new regulations, the procedures proposed in LARP II (2010) for the legalization of APs cannot be implemented for all categories of APs eligible for land compensation. Currently, there is no legal mechanism for legalization of APs who are not registered but legitimately use agricultural land not adjacent to residential plots. Special Decree of the Government (1 March 2011) has been issued to provide legal basis for paying land compensation to this category of APs 3 : the Decree enables the EA to execute compensation payments without prior registering the land ownership rights. The mentioned procedural changes are reflected in this revised LARP II. All illegitimate land users in the ex-choloki State Farm have been identified and considered in the revised LARP. 9. The LARP entailed intensive consultations with the stakeholders, especially the APs and their community were conducted to understand the extent of impact and validate the severity 2 2 land plots (2 AHs) have been taken out from the resettlement census list related to contract 3 3 Decree of the Government of Georgia 1 March 2011 on the Measures to be Implemented by the Road Department of the Ministry of Regional Development and Infrastructure to Ensure Construction of the Adjara Bypass Road

10 and compensation measures. The assessment of losses and land acquisition is based on the final engineering design as part of the detailed design study. 1.5 Pending LARP Implementation Tasks 10. Following this LARP approval LARP finances will be provided to the EA. Prior to the distribution of LARP finances to the APs the legalization of APs legalizable according to current legislation will be finalized and all APs will sign a contract agreement indicating that they accept the compensation provided to them. If an AP does not sign the contract the case will be passed to the appropriate court to initiate expropriation proceedings. This will be done after the compensation amount is deposited in escrow account. Escrow accounts will also be established for absentee APs. 1.6 Conditions for Project Implementation 11. Based on ADB policy/practice, the approval of project implementation will be based on the following LAR-related conditions: (i) (ii) Signing of Contract Award: Conditional to the approval of the LARP by ADB and Government. LARP-II reflects final impacts, final AP lists and compensation rates at replacement cost approved by RD. Notice to Proceed to Contractors: Conditional to the full implementation of LARP-II (legalization of legalizable owners, and full delivery of compensation and rehabilitation allowances).

Figure 1.1 Project Location 11

12 II. CENSUS AND IMPACT ASSESSMENT 2.1 Introduction 12. This impacts assessment details loss of land, structures and other assets in the 7.7-km section of Contract 1 and in the 2.00-km section of Contract 3 roads in Kobuleti Rayon and 0.28-km section of Contract 3 road in Khelvachauri Rayon in Adjara AR. Compensation and rehabilitation measures have been worked out based on these impacts. A detailed inventory of all the impacts has been done following the final alignment as per detailed engineering design of Kobuleti bypass in Contract 1 and part of the Kobuleti Batumi section in Contract 3. 13. Digitized cadastral maps were collected from the Kobuleti and Khelvachauri Rayon Registration Offices of NAPR. The final road alignment was superimposed on the digitized cadastral maps and land survey using DGPS was conducted on site to identify the affected land parcels, demarcation of land parcels including correction in geometric details and quantification of land parcels including affected part. With the cadastral details from land survey, detail measurement survey (DMS) and 100% AP Census were undertaken. These surveys were conducted started on 6 June 2010 and was terminated on 27 July 2010. Additionally, a socioeconomic survey (SES) of 20% sample households was carried out in the project affected areas in order to understand the socio-economic condition of the affected population. The start date of the and the AP census survey is considered as the compensation eligibility cut-off date for the project which is therefore 6 June 2010. 14. Census Survey and DMS Data were updated in February May 2011. The changes of design were considered. Besides, the individual AHs illegitimately using the Choloki State Farm owned lands were identified and are included in the RAP, instead of dealing with the management of failed Choloki Farm, as it was proposed in previous version of LARP. 2.2 Impact on Land, Other Assets and Income 2.2.1 General CIassification of affected land 15. In all land impacts amount to some 361,274 sq.m of land from 197 plots (see table 2.1 for details). Figures on Land impacts are provided in accordance to the land classification and legal categories that are relevant to determine compensation modalities and compensation amounts due to their owners/users. Land has been classified in three main types: Type 1: Private/public land that is compensable because it is titled or legalizable according to the law. Legalizable land is land occupied by a house or close to a house that is currently untitled but is occupied by users who were legitimate land leasers under the old Soviet land administration system. This land includes 21 plots (17 registered/titled and 4 legalizable). In total this land amounts to 129,382,4 sqm. Type 2: Public land that is compensable because used continuously by users who were legitimate land leasers under the old Soviet land administration system but is not legalizable because it is not occupied by houses or bordering houses. This land includes 91 public land plots amounting to 83,239.6 sqm. in total. Type 3: Land that is not compensable because not regularly used or used extemporaneously by users who were not legitimate leasers under the old Soviet land administration system. This

13 land is also non-legalizable asit is not occupied by houses or close to houses. This land type includes 85 public land plots measuring in all 148,651,8 sqm. Table 2.1: Impacts on Land Land Category/ use and Group Area (sqm) No of AH Plots No. Type 1 an2 Land (compensable) Agricultural in residential zone Agricultural in nonresidential zone Inside village Ochkhamuri Around villages Alamabri, Mukhaestate, Ochkhamuri 6,831.9 4 1 6 76,941.1 79 84 2 Inside Village Sakhalvasho 5,080.9 8 8 Tea plantation around Ochkhamuri 123,769.1 1 14 Total type 1 & 2 land 212,623.0 92 112 Type 3 Land (non compensable) Temporarily used (lands of Choloki State Farm) 46,830.0 42 66 Non used (3 nonagricultural + 15 agricultural) 101821.8 0 19 Total type 3 148,651,8 42 85 GRAND TOTAL 361,274.8 134 197 1 1 owner of residential land owns 3 plots (1 residential is shared with his brother). 2. 5 owners of agricultural land own 2 land plots 16. Out of the total 112 land parcels (type 1 and 2), 17 are registered as legal and 4 are privately owned but are not formally registered as per current law. These 4 plots are legalizable. 91 public plots of 83,239.6 sq.m legitimately used by private users (non-legalizable, but subject for land compensation). The owners will be compensated for land according to the Government Decree of March 2011. 66 public land plots are illegitimately used by the ex-employees of the Choloki State Farm. This land, as well as 19 unused public land plots are not subject for compensation. The current status of ownership of acquired land is provided in Table 2.2. Table 2.2: Type of Land Ownership No. Legal Status Owners No. Plots No. Acquired Land Area (sqm) 1 Registered 4 1 17 125,332,1 2 Legalizable 3 2 4 4,050.3 Total Private Land 7 21 129,382,4 3 Public/Legitimately Used (compensable) 86 3 91 83,239.6 4 State Temporarily used/non compensable land 42 66 46,830.0 Uncultivated/non compensable land 0 19 101,821.8 Total 134 4 197 361,274.8 1. 1 owner (Co Millenium Trans) ownes 14 registered plots 2. 2 owners own in total 3 land plots: 1 shared and each of them owns 1 plot separately. 3. 5 of the AHs own 2 land plots within this category 4 1 AHs of 86 in category 3 (legitimate) owns also lands in category 2 (legalizable) and is already counted 2.2.2 Impact on Crops 17. Affected crops identified on the acquired agriculturl land are corn, potato and hay. The total crop area for corn cultivation is 111,927 sq.m (11,19 ha), followed by hay 10,784.6 sq.m, (1,078ha) and by potatoes 385 sq.m (0.0385ha). A total of 125 households will be affected for

14 loss of crops (Table 2.4). 3 AHs have only potatoes, 6 have corn and hay, 9 only hay and 107 only corn. The change in land use from agriculture to road will permanently reduce the agriculture production in the impact area. Table 2.4: Impact on Crops No. Item AH Unit Quantity 1 Corn 113 Sqm 111,927 2 Potatoes 3 sq.m 385.00 3 Hay 15 sq.m 10,784.6 Total 125 (131 1 ) 123,096.6 1. Out of 15 AHs owing hay, 9 have only hay and 6 also have corn and already are counted. 2.2.3 Impact on Trees 18. Clearing right of way for construction of the road will cause felling down of only 741 productive and 16 non-productive fruit trees under private ownership. The affected 22 timber trees are totally state owned and are not included in the inventory list. However, loss of trees including the state owned timber trees will induce some impact on forest resources and counter program of replanting may be suggested. Table 2.5: Affected Trees Tree Type Unit Productive Non-productive Total Apple Tree 17 7 24 Pear Tree 29 0 29 Plum Tree 1 1 2 Tkemali Tree 36 0 36 Cherry Tree 2 2 4 Mandarin Tree 53 0 53 Peach Tree 3 4 7 Walnut Tree 17 1 18 Hazelnut Tree 509 8 517 Chestnut Tree 5 1 6 Fig Tree 15 0 15 Persimon Tree 17 5 22 Medlar Tree 0 2 2 Mulberry Tree 0 0 0 Fejoya Tree 0 3 3 Kiwi Tree 0 0 0 Grape Tree 17 2 19 Partial Total trees 721 36 757 Overall total trees 757 Tea Sqm 121,907.8 3467,2 125 375 sqm 2.2.4 Impact on Buildings/Structures 2.2.4.1 Type of affected Structures 19. The project will affect only 2 private buildings/structures owned by 2 AHs (Table 2.7). The residential house is 1 and is shared by 2 owners (brothers). One of the AH (AH 1 ) owns 2-nd storey of the shared house and cattle shed. The 2 nd storey is well decorated with finishing

15 materials, with core utilities in good shape. The other (AH 2 ) owns 1 storey of the shared residential house. The first storey of the house is in poor condition: not decorated initially, not refurbished. No business structures or public buildings or community structures will be affected. In table 2.6 detailed data on these impacts are presented. The area of the buildings is the sum of each floor. Table 2.6: Impacts on Buildings No. Item Type of construction Number of Storey No. Structure Unit Quantity 1 Residential 1 Concrete/hollow blocks 2 1 Sqm 304,29 AH 1 Well redecorated 2 nd storey 1 Sqm 143.37 AH 2 In poor condition 1 st storey 1 Sqm 160.92 2 Cattle Shed Cement/ concrete 1 1 Sqm 15,35 Total 2.2.5 Relocation Needs and Strategy 20. The AH affected by house demolition are 3 since one house is inhabited by the families of two brothers living under the same roof. These 3 AH will have to resettle. As the resettlement strategy for the project is based on compensation of all affected assets and on a relocation assistance in cash no specific land reallocation plan is prepared under this LARP. 2.2.6 Business Impacts 21. LAR will not affect businesses although one business will lose 9% of its premises land. This loss will not affect the business operations or income nor the jobs of employees.. 2.3 APs and Communities 22. Overall the AH are 134 AHs (718 APs). Of these, 4 AH will lose registered agricultural land (used for agricultural needs), 3 will lose legalizable land plots (3 agriculturual and 1 residential plot) and 86 will lose legitimately used public land (91 plots). 1 AHs of 86 in category (legitimate) owns also lands in category 2 (legalizable) and is already counted. 2 AHs will lose structures 1 residential house shared between them and a cattle shed owned by 1 of these AHs separately. 131 AH will lose crops and/or trees., 5 AHs will lose only trees, 1 will lose only tea plantations; 5 AHs both trees and crops and 120 only crops. The AH losing houses are 2 (sharing 1 house) and those to be resettled are 2 since - the only affected houses is inhabited by 2 AH. 23. Table 2.1 provides more details about the impacts categories in terms of loss of land, loss of structure, and loss of crops and trees.

16 Table 2.10 Affected Households by Impact Category No. in Category No. of Ahs Absolute (without double counting) Net No. Of APs Impact Category Remarks A. Land A1. Agricultural Land 130 130 697 A1 only A2. Land in Residential Zone used as residential 2 2 A2 and A3 (2 AH share 1 house) A3. Land in Residential 2 AH only A3 and 2AH A3 and A2 (already included in A2) Zone used as agricultural 4 2 21 Sub-total (A) 136 134 718 B. Crops /Trees B1. Cops Losses 125 125 n.a.. B2. Tree Losses 10 1 5 0 5AH are Included in B1 B3 tea Losses 1 1 0 All AH included in A1 Sub-total (B) 131 46 246 85 AH out of these 131 already Included in A1 C. Permanent Structure0 C1. Residential Structure 2 0 0 All AH Included in A2 C2. Auxiliary Structure 1 0 0 All AH Included in A2 Sub-Total (C) 3 0 0 C3 Relocated AH 2 2 0 0 2 AH Included in A2 and in C1 D. Total 134 718 1 5AH are Included in B1 (losing crops and trees at the same time) 2 Two relocated AH live in the same house. 2.3.1 Impact on Employment and Agricultural Tenants 24. Road construction will not affect any employees or agricultural tenants. 2.3.2 Impact on Common Property Resources 25. Road construction will not affect any community or public property. 2.3.3 Severely Affected and Vulnerable Households 26. The project will physically displace 2 households comprising 10 persons. There is no impact on businesses. However, a total of 118 AHs will be severely affected due to loss of more than 10% of their productive land (this figure includes also the 2 relocated households). 27. Poor (receiving government subsidies) and women headed, are considered as vulnerable households. Households with members with disabilities or people in pension age will receive the allowance only if they are registered as poor. The vulnerable household requires special assistance for resettlement. The AHs in LARP-II section of the project road constitute 21 vulnerable AHs. These include 19 extremely poor, 5 women headed households, out of which 3 are below the poverty line (already counted) and 1 family is headed by disabled pensioner (already counted as poor) and 1 more family with 2 disabled persons, receiving subsidies as poor and already counted. See for details - (Table 2.8). 4 4 Households receiving government subsidies are the extreme poor households. The pensioners are mostly elderly people, who have small input in agricultural work and who are not working elsewhere.

17 Table 2.8: Vulnerable Ahs AH CATEGORY No. AH Poor households receiving subsidies 19 Women headed households 5 (3 of 5 poor) Disabled headed households 3 (all 3 poor) AHs headed by pensioners 1 21 (7 out of 28 are double Total vulnerable counted) 1 1. Out of 5 women headed households, 3 are below the poverty line (already counted) and 1 family is headed by disabled pensioner (already counted) and 1 more family with 2 disabled persons, receiving subsidies as poor and already counted 2.4 Impact on Indigenous Peoples 29. An assessment of impact on indigenous peoples was undertaken in accordance with ADB s Safeguard Requirements 3 of SPS 2009. The project will primarily affect Georgian people which are almost 95% of the total population. Some of the other Ethnic Minority group is also present in the program area, which are insignificant in number. These groups are mostly Russian. These groups are fully integrated into the Country institutional, cultural, and economic processes, and they do not fit the IP definition of ADB. Therefore, ADB s policy on indigenous people will not trigger to this project. 2.5 Gender and Resettlement Impacts 30. The project impact extends to 552 peoples comprising 47% male and 53% females: 348 male and 478 females. Further, 2 of the 200 AHs are headed by women. Special attention will be given to the impact of resettlement on women and other vulnerable groups during monitoring and evaluation of the LARP-II. The project will have a positive impact on gender, and civil works contracts will include provisions to encourage employment of women during implementation. Additionally, women headed households have been considered as vulnerable and special assistance was provided in the LARP entitlements. 2.6 Summary of Impacts 31. A summary of Project impacts is included in Table 2.9 below. Table 2.9 Summary Impact on Land Acquisition and Resettlement No. Impacts Unit Quantity (sqm) Type 1 Type 2 Type 3 Total Land Tenure Patterns 1 Total Land parcels affected No. 21 91 85 197 2 Total land Area to be acquired Sqm 129,382.4 83,239.6 148,651.8 361,274.0 3 Private legal Plots No. 17 17 sq.m 125,332.1 4 Private Legalizable plots No. 4 4 sq.m 4,050.3 5 Compensable but not-legalizable plots No. 91 91 sq.m 83239.6 83239.6 6 Non compensable plots 1 No. 0.0 66 66 7 Public land plots (non-agricultural and unused agricultural sq.m 46,830.0 46,830.0 No. 19 19 sq.m 101,821.8 101,821.8 Land Compensation Categories

18 8 Agricultural land in residential area in v. Ochkhamuri No. 4 2 6 sq.m 4,050.3 2,781.5 6,831.8 9 Agricultural land in residential area in v. No. 3 5 8 Sakhalvasho sq.m 1,563.9 3,516.9 5,080.8 10 Agricultural land in v. Alambari, Mukhaestate, Ochkhamuri No. 84 84 sq.m 76,941.1 76,941.1 11 Tea plantation around Ochkhamuri No. 14 14 sq.m 123,769.1 123,769.1 Land Use Patterns 12 Non-agricultural land No. 3. 3 sq.m 977.1 977.1 13 Unused Agricultural (State) No. 16 16 sq.m 100,844,7 100,844,7 14 Agricultural Land used for residential purpose No. 1 1 sq.m 917.2 917.2 15 Agricultural land used for agricultural purpose No. 20 91 66 177 sq.m 128,465.2 83,239.6 46,830 258,534.8 Agricultural Patterns 16 Area under Corn Cultivation Sqm 111,927.0 17 Area under Potato Cultivation Sqm 385.0 18 Area under Hay Sqm 10,784.61 19 Area under Tea Plantation Sqm. 121,907.8 20 Affected Trees No. 757 Affected Structures 21 Residential Structures /Houses No. 1 22 Cattle-shed No. 1 Affected Households 23 Severely affected Households No. 118 24 Vulnerable Households No. 21 0 21 25 Resettled households No. 2 2 0 2 26 AH with legal plots No. 4 3 0 4 27 AH with legalizable plots No. 3 4 0 3 28 AH with compensable but not-legalizable plots 86 5 29 AH with non-compensable plots No. 0 42 42 30 Total AH No. 134 0 134 31 Total Affected Persons No. 713 0 713 The notes in the above table are as follows: 1.) Of 85 State-owned plots 19 are unused and 66 are illegitimately cultivated by users not eligible to land compensation; 2) Although there is only 1 house affected the relocated AH are two because both live in that house; 3) 1 of this 4 is a company Millenium Trans; 4) 2 AHs share 1 residential plot and each of them owns 1 legalizable plot separately. Thus 3 AHs own 4 legalizable plots; 5) 5 AHs in this category use 2 land plots. In total 86 AHs legitimately use 91 land plots. 1 of the AHs legitimately using land owns 2 legalizable plots and is already counted. Therefore, in all the AHs are 134 not 135, so far as 1 AH is double-counted

19 III. SOCIO-ECONOMIC INFORMATION 3.1 Introduction 32. A census of 100% of the AHs available on site was conducted to enumerate the APs. A sample socio-economic survey was included in the project area covering 17 households which is approximately 20% of the total AHs covered in census. The objective of the socioeconomic survey was to gather general information on socioeconomic condition of the affected people. The socioeconomic information of the affected population as per census and socioeconomic survey is presented hereunder. 3.2 Affected Population 3.2.1 Demography 1. The project road is Kobuleti Rayon, as per detail measurement survey, will be displacing (physically and economically) 103 households comprising of 552 persons. Census of 52 AHs identifies that a little more than 50% of the APs (APs) are female constituting a male/female ratio of 98 (98 males per 100 female). The average family size is 5.87 members per household (Table 3.1). Table 3.1: Demographic Profile of APs Male Female Total Average/ Household Age Group No. % No. % No. % Children (Below 6 Years) 16 10.60 13 8.44 29 9.51 0.56 Children (6 15 Years) 21 13.91 19 12.34 40 13.11 0.77 Adult (16 65 Years) 104 68.87 104 67.53 208 68.20 4.00 Senior (66 70 Years) 5 3.31 3 1.95 8 2.62 0.15 Over-aged (70 Years+) 5 3.31 15 9.74 20 6.56 0.38 Total 151 100.00 154 100.00 305 100.00 5.87 % 49.51 50.49 100 3.2.2 AH Ethnicity 2. AHs are all Georgian (100%). None of the usual ethnic minority groups in Georgia including Russians, Armenians, Jews or Ukrainian are affected in the project. Ethnic diversity does not mark any difference in overall national development in Georgia and the minorities are mainstreamed as a common nation. Table 3.2: Ethnicity of AHs Sl.No. Ethnicity Total No. of Households % 1 Georgian 99 100 2 Armenian 0 0 3 Russian 0 0 4 Jews (citizens of Israel) 0 0 5 Ukrainian 0 0 3.2.3 Urban Rural Proximity Total 99 100