REDUCING POVERTY AND ENHANCING ACCESS TO

RESOURCESMAY 24, 2010

Best Practices for World Bank Energy Investment in Central

Asia

Current and Projected World Bank Energy Portfolio in Central Asia

Successes and limitations of current WB Investment Strategy

Successes• Kazakhstan successfully

restructured energy sector

• Flexible responses in emergency situations for Kyrgyzstan and Tajikistan

• Innovative approach in Pamir 1

Limitations • Energy sector restructure is

limited in Kyrgyzstan, Tajikistan

• Rural areas receive limited electricity and energy resources

• Little new generating capacity has been added

Overall: WB trend seems to favor energy trade

- but should also address distributive aspect, particularly needs of the rural poor

Poverty and Energy Access in Kyrgyzstan

An estimated 31.7 % of the population lives below the poverty line and 6 % in extreme poverty.*

* UNDP/UNEP Poverty-Environment Initiative

98% of the population has access to the electrical grid; but there are forced blackouts and rationing when hydropower gets low during the winter

*The Electricity Governance Initiative

Poverty and Energy Access In Tajikistan

Tajikistan is the poorest country in Central Asia with 53% of the population living below the poverty line and 17.1 % in absolute poverty.*

*UNDP/UNEP Poverty-Environment Initiative

Over 1 million people in Tajikistan, of a population of less than 7 million, have little or no access to an adequate energy supply, particularly during the winter.*

*UNDP/UNEP Poverty-Environment Initiative

Small Investments=Large Results

Large Renewable Energy (RE) Projects in Central Asia

Provide cheap, reliable energy

Justified for export or to power industry

Take years to develop and build due to risk factors

Can be environmentally risky

Low local input

Micro energy projectsTarget poor &

marginalized firstFaster implementationCreate services &

expertise for future SMEsEmpower local peopleEnvironmentally friendly Tap local capital and

entrepreneurship

Examples of Effective Micro-Energy Projects

Small wind turbines to support shepherds in Kazakhstan

Solar drier units for fruit growers in Kazakhstan

Two micro hydro power stations in Tajikistan: one for private enterprises, another supporting a school and 85 families

Biogas reactor for energy in Kyrgyzstan

Success factors for Micro Energy Projects

Grants fund portion of capital costsCo-investments from community, local

governmentReasonable cost recovery + social benefits Support from local governmentsEmerging local expertise/specialization in

small REEmerging favorable fiscal regime

Renewable Energy Best Practice Attributes

Assisted project financing Designed around revenue-generating

activity Jointly implemented with community and

governmentsEstablished owner & energy rulesStrategy to popularize success factors

Recommendations

1. WB creates trust fund to support RE in Central Asia

a) Low interest rates and long term capitalb) Innovative guarantee, insurance, collateral services

2. Removes barriersa) Helps decentralize & streamline energy production

through incentivesb) Supports common goods: hydromet service, feasibility

studies etc.

3. Invests in developing local technical capacity

a) Manufacturing and service capacity b) Research and development

4. Raise awareness of RE potential