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PRESS RELEASE

World Bank Supports Improvement of Accountability and Reliability of Electricity Supply in the Kyrgyz Republic

July 15, 2014

WASHINGTON, July 15, 2014 – The World Bank’s Board of Executive Directors today approved financing of US$25 million equivalent for the Electricity Supply Accountability and Reliability Improvement Project in the Kyrgyz Republic. US$13.75 million of this financing is a concessional credit, while US$11.25 million is a grant.

The objective of the proposed Electricity Supply Accountability and Reliability Improvement project (ESARIP) is to improve the reliability of the electricity supply in the capital city Bishkek, as well as the Chui and Talas regions – an area served by the state-owned power distribution company Severelectro JSC – and to strengthen the governance of Severlectro’s operations. By focusing on the service area of Severelectro, the ESARIP project will ensure that benefits accrue to the largest share of customers, since Severelectro is the largest distribution company, serving more than 40 percent of all residential customers in the country and delivering more than 50 percent of total electricity consumption.

“The ESARIP project will leverage the World Bank’s engagement in the energy sector of the Kyrgyz Republic. The project will: build on the recently completed Power Sector Policy Note by helping implement some of the key recommendations of the Note; the governance reforms that the Government has committed to implement under the development policy operations, including the establishment of a performance monitoring framework; and the ongoing technical assistance provided by the Bank to develop a transparent tariff-setting methodology, which will also help enhance the financial performance of Severelectro,” said Dinara Djoldosheva, acting World Bank Country Manager in the Kyrgyz Republic.

Specifically, the ESARIP project will aim to:

  •  improve power supply reliability in the service area of Severelectro by strengthening the distribution infrastructure of Severelectro (including investments in new substations to eliminate overloads and in advanced meters);
  • enhance quality of services to customers by providing Severelectro with better information management tools for a faster and more effective response to service interruptions and customer complaints;
  • improve financial viability of Severelectro through reduction of technical and non-technical losses in its service area; and
  • strengthen governance and internal controls in Severelectro through provision of access to real time and reliable corporate and commercial information, as well as institutional strengthening.

“Given the old age and poor condition of the power sector infrastructure and the current rate of electricity demand growth, the Kyrgyz Republic risks severe power shortages in the coming years,” said Ani Balabanyan, Senior Energy Specialist at the World Bank and Task Team Leader of the ESARIP project. “The proposed project will enhance the reliability of power supply in Severelectro's service area and make Severelectro more responsive and accountable to customers for the quality of its services. For example, the incorporation of management information systems and business process re-engineering will facilitate customers’ communication with Severelectro through a 24/7 customer call center, and ensure that the customer inquiries and complaints are executed in a timely, accountable, and transparent manner.”

The project will be implemented over five years by Severelectro JSC and will be overseen by the Project Steering Committee, established by the Ministry of Energy and Industry of the Kyrgyz Republic.

The World Bank’s overall mission in the Kyrgyz Republic is to reduce poverty and to promote economic growth and shared prosperity. 45 percent of the World Bank’s assistance to the Kyrgyz Republic is in the form of grants. The other 55 percent is in highly concessional credits with no interest, and only a 0.75 percent service charge. Credits are repayable in 38 years, including a 6-year grace period, while grants require no repayment. The Bank’s financial assistance to the Kyrgyz Republic since 1992 amounts to over US$1 billion, in the form of grants and highly concessional credits.

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PRESS RELEASE NO:
2015/034/ECA