The Asian Development Bank (ADB) and the World Bank are extending assistance to the energy sector of the Kyrgyz Republic. ADB will provide a loan and a grant to help turnaround a power sector hampered by inefficiencies and losses, while the World Bank will provide funds for the energy needs of the country before winter begins.
ADB extends $45 million for power improvement
ADB will extend a loan of $16.7 million equivalent along with a separate grant of $28.1 million to help the Kyrgyz Republic address weak corporate and financial management in the sector, along with high system losses linked to ageing and dilapidated infrastructure.
The $45 million financial assistance will be for the Power Sector Improvement project (formerly Transmission and Distribution Metering Project), which will introduce an automated metering and data acquisition system to help reduce system losses, making more electricity available for domestic use. Funds will also be used to rehabilitate dilapidated substation equipment and install a supervisory control system which will improve the efficiency of dispatched electricity and cut technical losses.
A plan will be designed to improve the corporate and financial management capacity of the state-run National Electric Grid of Kyrgyzstan. A study will devise a settlement mechanism for wholesale electricity transactions to improve the commercial performance of utilities and streamline contractual arrangements for regional power trade.
The loan has a 32-year term, including an 8-year grace period, with interest set at 1.0% per annum during the grace period, and 1.5% for the rest of the term. The government and the National Electric Grid of Kyrgyzstan will provide counterpart finance of $11.2 million for a total project cost of $56 million.
The Kyrgyz Republic generates over 95% of its power from hydropower resources, but years of neglect since independence have left facilities in a poor state. Along with substantial transmission and distribution losses, power tariffs need to be revised and the financial performance of utilities is poor. These factors have undermined domestic supply, as well as the regional power trade where the country is the largest net power exporter of the Central Asian Power System.
The Ministry of Energy and the National Electric Grid of Kyrgyzstan will execute the project which is expected to be completed by December 2013.
World Bank to help keep services running
In August, the World Bank expressed its intention to assist the Kyrgyz Republic recover from social unrest in April and June this year. Among its overall commitment over the next 30 months is to provide $70 million worth of emergency assistance targeted for essential public spending and ensuring reliable energy supply. The funds will be used to keep essential government services running as well as for urgent reconstruction and energy needs of the country before the onset of winter.