Additional financing will help to further reduce the commercial losses and support strategic energy sector studies
WASHINGTON, February 14, 2012 – The World Bank Board of Executive Directors today approved additional financing of US$ 18 million for the Energy Loss Reduction Project in Tajikistan. The project assists in reducing the commercial losses in the electricity and gas sectors, and lays the foundation for the improvement of the financial viability of the electricity and gas utilities in a socially responsible manner.
The Energy Loss Reduction Project was initially approved in June 2005 and was funded by an International Development Association (IDA) credit and grant of US$ 19 million, and a US$ 8 million grant from the Government of Switzerland’s Secretariat for Economic Cooperation (SECO). The project was restructured in February 2011 to include financing for the assessment studies for the proposed Rogun Hydropower Project.
To date, the project enabled Barki Tajik to install 170,000 electricity meters in Dushanbe. As a result, electricity billed increased by 50 percent in two years, improving efficiency, reducing losses, and helping to put the utility on a sounder financial footing.
“The energy sector is crucial for the growth of Tajikistan’s economy, and more importantly, for the well-being of the Tajik people,” said Ms. Marsha Olive, World Bank Country Manager for Tajikistan. “We hope that this additional financing will help further the energy security agenda and will inform the Government’s strategic energy development objectives.”
The project will scale-up metering and collection efficiency, contributing to further loss reduction in the sector. Furthermore, the additional financing for the project includes several strategic studies to help in achieving improved system reliability and energy security, particularly during the critical winter months, such as for rehabilitation and sedimentation studies for the Nurek Hydropower Plant. In addition, it provides advisory support needed by the Government of Tajikistan for the preparation of electricity export arrangements such as the Central Asia South Asia Regional Electricity Market development initiative (CASA-1000 project).
The additional financing will also support continuation of the international process of the assessment studies for the proposed Rogun Hydropower Project in Tajikistan, as envisaged by earlier project restructuring. The Government of Tajikistan is expected to define a detailed implementation schedule for the assessment studies in line with international standards. It is expected that the draft feasibility studies will be available in about nine months for subsequent review and consultations in Tajikistan and with the riparian countries.
The expected outcome of the additional financing is the increased capacity and ability of the Government to make strategic decisions for the growth and sustainability of the energy sector and the country’s economy. The project is also expected to deepen the impact of the metering program through increased billing and higher collections, which would subsequently lead to improvement in the financial viability of the sector, and build better accountability of energy and revenue flows. The completion of the metering and billing component would provide the customers with satisfaction of fair treatment and assurance that they are paying for what they actually consume, thus supporting the project’s objective of loss reduction in a socially responsible manner.
The World Bank is also currently preparing a power supply options study for Tajikistan. This study will assess the energy supply options available to Tajikistan taking into account power, economic, environmental, social, and water management considerations. The World Bank’s overall engagement in the energy sector supports the Government of Tajikistan’s strategy to ensure reliable supply to consumers, deal with the severe winter energy shortages, reduce electricity system losses and strengthen financial management system to improve the financial condition of the energy sector, and develop a regional trade scheme to achieve sustainable export of summer surplus electricity.
The overall active portfolio of the World Bank in Tajikistan currently consists of 14 projects with net commitment of US$ 192 million covering energy and water (35 percent), agriculture and rural development (31 percent), education, health and social protection (30 percent), and economic policy and public sector (4 percent).