+ All Categories
Home > Documents > Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... ·...

Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... ·...

Date post: 20-Jun-2020
Category:
Upload: others
View: 5 times
Download: 0 times
Share this document with a friend
62
Document of The World Bank Report No: ICR00001513 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-36820 IDA-H3810 TF-50589) ON AN INTERNATIONAL DEVELOPMENT ASSOCIATION CREDIT IN THE AMOUNT OF SDR 7.9 MILLION (US$10 MILLION EQUIVALENT) AND AN ADDITIONAL INTERNATIONAL DEVELOPMENT ASSOCIATION GRANT IN THE AMOUNT OF SDR 1.6 MILLION (US$2.5 MILLION EQUIVALENT) TO THE REPUBLIC OF TAJIKISTAN AND AN INTERNATIONAL FINANCE CORPORATION FINANCING CONSISTING OF: AN “A” LOAN IN THE AMOUNT OF US$4.5 MILLION AND AN EQUITY SUBSCRIPTION OF UP TO US$3.5 MILLION TO THE PAMIR ENERGY COMPANY FOR THE PAMIR PRIVATE POWER PROJECT IN THE REPUBLIC OF TAJIKISTAN June 28, 2011 Sustainable Development Department Central Asia Country Unit Europe and Central Asia Region Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
Transcript
Page 1: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

Document of

The World Bank

Report No: ICR00001513

IMPLEMENTATION COMPLETION AND RESULTS REPORT

(IDA-36820 IDA-H3810 TF-50589)

ON AN

INTERNATIONAL DEVELOPMENT ASSOCIATION CREDIT

IN THE AMOUNT OF SDR 7.9 MILLION (US$10 MILLION EQUIVALENT)

AND AN ADDITIONAL INTERNATIONAL DEVELOPMENT ASSOCIATION GRANT

IN THE AMOUNT OF

SDR 1.6 MILLION (US$2.5 MILLION EQUIVALENT)

TO THE REPUBLIC OF TAJIKISTAN

AND AN INTERNATIONAL FINANCE CORPORATION FINANCING CONSISTING OF:

AN “A” LOAN

IN THE AMOUNT OF US$4.5 MILLION

AND AN EQUITY SUBSCRIPTION OF UP TO US$3.5 MILLION

TO THE

PAMIR ENERGY COMPANY

FOR THE

PAMIR PRIVATE POWER PROJECT

IN THE REPUBLIC OF TAJIKISTAN

June 28, 2011

Sustainable Development Department

Central Asia Country Unit

Europe and Central Asia Region

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Page 2: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

CURRENCY EQUIVALENTS

(Exchange Rate Effective December 31, 2010)

Currency Unit = Somoni

1.00 = US$ 0.23

US$ 1.00 = 4.40 Somoni

FISCAL YEAR

January 1 – December 31

ABBREVIATIONS AND ACRONYMS

ADB Asian Development Bank

AKDN Aga Khan Development Network

AKFED Aga Khan Fund for Economic Development

CapEx Capital Expenditures (Pamir Energy Company‟s own funds)

CAS Country Assistance Strategy

FM Financial Management

FMR Financial Management Report

GBAO Gorno Badakshan Autonomous Oblast

GoT Government of Tajikistan

HPP Hydro Power Plant

ICR Implementation Completion and Results Report

IDA International Development Association

IFC International Finance Corporation

IFI International Financial Institution

IFR Interim Financial Report

KfW Kreditanstalt für Wiederaufbau

LICUS Low Income Countries Under Stress

M&E Monitoring and Evaluation

O&M Operations and maintenance

PAD Project Appraisal Document

PEC Pamir Energy Company

PIU Project Implementation Unit

SECO State Secretariat for Economic Affairs (Switzerland)

WBG World Bank Group

Vice President: Philippe Le Houerou

Country Director: Motoo Konishi

Sector Manager: Ranjit J. Lamech

Project Team Leader: Imtiaz Hizkil

ICR Team Leader: Imtiaz Hizkil

Page 3: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

TAJIKISTAN

Pamir Private Power Project

CONTENTS

Data Sheet

A. Basic Information

B. Key Dates

C. Ratings Summary

D. Sector and Theme Codes

E. Bank Staff

F. Results Framework Analysis

G. Ratings of Project Performance in ISRs

H. Restructuring

I. Disbursement Graph

1. Project Context, Development Objectives and Design ............................................... 1

2. Key Factors Affecting Implementation and Outcomes .............................................. 5 3. Assessment of Outcomes .......................................................................................... 10

4. Assessment of Risk to Development Outcome ......................................................... 13

5. Assessment of Bank and Borrower Performance ..................................................... 14

6. Lessons Learned ....................................................................................................... 16 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners .......... 16

Annex 1. Project Costs and Financing .......................................................................... 18 Annex 2. Outputs by Component ................................................................................. 20 Annex 3. Economic and Financial Analysis ................................................................. 23

Annex 4. Bank Lending and Implementation Support/Supervision Processes ............ 32 Annex 5. Beneficiary Survey Results ........................................................................... 34

Annex 6. Stakeholder Workshop Report and Results ................................................... 35 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ..................... 36 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders ....................... 48 Annex 9. List of Supporting Documents ...................................................................... 49 MAP IBRD 31770 ........................................................................................................ 50

Page 4: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and
Page 5: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

i

A. Basic Information

Country: Tajikistan Project Name: Pamir Private Power

Project

Project ID: P075256 L/C/TF Number(s): IDA-36820,IDA-

H3810,TF-50589

ICR Date: 06/29/2011 ICR Type: Core ICR

Lending Instrument: SIL Borrower: GOVERNMENT OF

TAJIKISTAN

Original Total

Commitment: XDR 7.90M Disbursed Amount: XDR 8.29M

Revised Amount: XDR 8.29M

Environmental Category: B

Implementing Agencies:

Pamir Energy Company

Cofinanciers and Other External Partners: Pamir Energy Company International Finance Corporation

Aga Khan Fund for Economic Development (AKFED)

B. Key Dates

Process Date Process Original Date Revised / Actual

Date(s)

Concept Review: 05/31/2001 Effectiveness: 03/31/2003 03/31/2003

Appraisal: 03/18/2002 Restructuring(s): 07/31/2008

12/29/2010

Approval: 06/27/2002 Mid-term Review:

Closing: 12/31/2006 12/31/2010

C. Ratings Summary

C.1 Performance Rating by ICR

Outcomes: Satisfactory

Risk to Development Outcome: Moderate

Bank Performance: Satisfactory

Borrower Performance: Satisfactory

C.2 Detailed Ratings of Bank and Borrower Performance (by ICR)

Bank Ratings Borrower Ratings

Quality at Entry: Satisfactory Government: Satisfactory

Quality of Supervision: Satisfactory Implementing

Agency/Agencies: Satisfactory

Overall Bank Satisfactory Overall Borrower Satisfactory

Page 6: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

ii

Performance: Performance:

C.3 Quality at Entry and Implementation Performance Indicators

Implementation

Performance Indicators

QAG Assessments

(if any) Rating

Potential Problem Project

at any time (Yes/No): Yes

Quality at Entry

(QEA): None

Problem Project at any

time (Yes/No): No

Quality of

Supervision (QSA): None

DO rating before

Closing/Inactive status: Satisfactory

D. Sector and Theme Codes

Original Actual

Sector Code (as % of total Bank financing)

Power 100 100

Theme Code (as % of total Bank financing)

Infrastructure services for private sector development 33 33

Pollution management and environmental health 33 33

Rural services and infrastructure 34 34

E. Bank Staff

Positions At ICR At Approval

Vice President: Philippe H. Le Houerou Johannes F. Linn

Country Director: Motoo Konishi Dennis N. de Tray

Sector Manager: Ranjit J. Lamech Peter D. Thomson

Project Team Leader: Imtiaz Hizkil Raghuveer Y. Sharma

ICR Team Leader: Imtiaz Hizkil

ICR Primary Author: Peggy Janice Masterson

F. Results Framework Analysis

Project Development Objectives (from Project Appraisal Document)

The objective of the Project is, through private sector involvement, to improve the

reliability and enhance the quantity of supply of electricity in the Gorno Badakshan

Autonomous Oblast (GBAO) region in a financially, environmentally and socially

sustainable way.

Page 7: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

iii

Revised Project Development Objectives (as approved by original approving authority)

The Project Development Objective was not revised.

(a) PDO Indicator(s)

Indicator Baseline Value

Original Target

Values (from

approval

documents)

Formally

Revised

Target

Values

Actual Value

Achieved at

Completion or

Target Years

Indicator 1 : Sign Concession Agreement between PamirEnergy and Government of

Tajikistan

Value

quantitative or

Qualitative)

Concession Agreement

signed at appraisal (May

24, 2002) for a term of 25

years.

Private

Concessionaire

operating

satisfactorily.

Private

Concessionaire

operating

satisfactorily.

Date achieved 05/24/2002 12/31/2010 12/31/2010

Comments

(incl. %

achievement)

Target 100% achieved and expected to continue for duration of Concession

Agreement.

Indicator 2 : Increased electricity sales in GBAO region

Value

quantitative or

Qualitative)

135,000 MWh/year 200,000

MWh/year

174,395 MWh in

2009;

163,215 MWh in

2010

Date achieved 12/31/2002 12/31/2010 12/31/2010

Comments

(incl. %

achievement)

Target 82% achieved in 2010. Generation was slightly lower than envisaged in

view of lower demand.

Indicator 3 : Residential consumers, especially the poorer section, consuming desired level of

electricity.

Value

quantitative or

Qualitative)

3 hours/day in winter 22 hours/day in

winter

22-24 hours/day in

winter

Date achieved 12/31/2002 12/31/2010 12/31/2010

Comments

(incl. %

achievement)

Target 100% achieved. The above electricity supply is to the main grid area,

which covers 80% of the electricity consumption in GBAO. Moreover, since

2008 PamirEnergy (PEC) has exported electricity to Afghanistan.

Indicator 4 : PamirEnergy improving collection rates.

Value

quantitative or

Qualitative)

Collection rates of 40% Collection rates of

95%

Collections were

100.35% of sales

for the year ending

December 31, 2010

Date achieved 12/31/2002 12/31/2010 12/31/2010

Comments

(incl. %

achievement)

Target exceeded.

Page 8: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

iv

(b) Intermediate Outcome Indicator(s)

Indicator Baseline Value

Original Target

Values (from

approval

documents)

Formally

Revised

Target Values

Actual Value

Achieved at

Completion or

Target Years

Indicator 1 : Implementation of the agreed Environmental Management Plan

Value

(quantitative

or Qualitative)

Environmental

Management Plan

prepared at appraisal.

Implementation of

the agreed

Environmental

Management Plan

is satisfactory.

Implementation of

the agreed

Environmental

Management Plan

is satisfactory.

Date achieved 06/30/2002 12/31/2010 12/31/2010

Comments

(incl. %

achievement)

Target 100% achieved. WB environmental specialist reviewed the

implementation of EMP during site visits in September 2009 and September

2010 and found it satisfactory.

Indicator 2 : Maintaining the maximum average tariffs in US cents/kWh as agreed in the

Concession Agreement.

Value

(quantitative

or Qualitative)

0.4 US cents/kWh

3.00 US

cents/kWh with a

tariff formula

allowing

adjustments for

inflation

3.25 US cents/kWh

maximum average

tariff

Date achieved 01/01/2001 12/31/2010 01/01/2010

Comments

(incl. %

achievement)

Target 100% achieved. This tariff is higher than the 2009 tariff of 2.89

cents/kWh and is likely to remain in line with the Concession Agreement in the

future.

Indicator 3 : Annually achieve the following financial performance targets: PamirEnergy

maintains a minimum Debt Service Coverage Ratio of 1.2

Value

(quantitative

or Qualitative)

Not available at appraisal

Minimum Debt

Service Coverage

Ratio of 1.2

Debt Service

Coverage Ratio of

4.48

Date achieved 12/31/2002 12/31/2010 12/31/2010

Comments

(incl. %

achievement)

Target achieved.

Indicator 4 : Minimum standards for service to individual customers: Voltage % change of

nominal and Frequency Hz

Value

(quantitative

or Qualitative)

Not available at appraisal

Voltage +/- 10%

of nominal;

Frequency 50 Hz

+/- 5%

Voltage: 210-220 V

Frequency 49-50

Hz

Date achieved 12/31/2002 12/31/2010 12/31/2010

Comments

(incl. %

achievement)

100% achieved. Voltage and frequency were within the targeted range.

Indicator 5 : Minimium standards for service to individual customers. Maximum duration of

outage for rupture of conductor, foreign obstacle on line, failure of insulators,

Page 9: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

v

breakage or failure of pole, fuse burn-out

Value

(quantitative

or Qualitative)

Not available 24 hours Less than 10 hours

Date achieved 12/31/2002 12/31/2010 12/31/2010

Comments

(incl. %

achievement)

This indicator has significantly improved and exceeded the end of project target.

Indicator 6 :

Minimum standards for service to individual customers. Maximum duration of

outage for failure of transformer, circuit breaker, or substation equipment, when

spare parts must be obtained in Khorog

Value

(quantitative

or Qualitative)

Not available 48 hours Less than 20 hours

Date achieved 12/31/2002 12/31/2010 12/31/2010

Comments

(incl. %

achievement)

This indicator has significantly improved with maximum duration of outage

reduced to half the end of project target.

Indicator 7 :

Minimum standards for service to individual customers. Maximum duration of

outage for transformer, circuit breaker or substation equipment failure when

spare parts must be obtained outside the region.

Value

(quantitative

or Qualitative)

Not available 30 days Less than 16 days

Date achieved 12/31/2002 12/31/2010 12/31/2010

Comments

(incl. %

achievement)

The maximum duration of outage has been reduced to almost half the end project

target.

Indicator 8 : Technical losses in the transmission and distirbution network reduced.

Value

(quantitative

or Qualitative)

Not available at appraisal,

although the financial

analysis indicated that

losses were estimated at

10%

8% 19.9%

Date achieved 12/31/2002 12/31/2010 12/31/2010

Comments

(incl. %

achievement)

This figure reflects both technical and non-technical losses as PamirEnergy

cannot calculate them separately. PEC reduced the total losses from 39% in

2006 and 24% in 2009 to 19.9% in 2010, a significant improvement in total loss

reduction.

G. Ratings of Project Performance in ISRs

No. Date ISR

Archived DO IP

Actual

Disbursements

(USD millions)

1 11/26/2002 Satisfactory Satisfactory 0.00

2 06/25/2003 Satisfactory Satisfactory 0.00

3 12/31/2003 Satisfactory Satisfactory 0.00

Page 10: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

vi

4 06/28/2004 Satisfactory Satisfactory 0.00

5 12/17/2004 Satisfactory Satisfactory 4.46

6 06/24/2005 Satisfactory Satisfactory 6.75

7 06/30/2006 Satisfactory Satisfactory 10.71

8 06/29/2007 Satisfactory Satisfactory 11.11

9 06/30/2008 Satisfactory Satisfactory 11.11

10 12/29/2008 Satisfactory Satisfactory 11.21

11 12/28/2009 Satisfactory Moderately Satisfactory 11.67

12 12/20/2010 Satisfactory Moderately Satisfactory 12.65

H. Restructuring (if any)

Restructuring

Date(s)

Board

Approved

PDO Change

ISR Ratings at

Restructuring

Amount

Disbursed at

Restructuring

in USD

millions

Reason for Restructuring &

Key Changes Made DO IP

07/31/2008 N S S 11.21

Additional IDA Grant of SDR

1.6 million (US$2.5 million

equivalent) was approved on

July 31, 2008, to cover the costs

associated with a financing gap

caused by the unexpected need

to restore and repair equipment

and facilities at the Pamir I

Hydro Power Plan, after a

catastrophic flooding on

February 5, 2007.

12/29/2010 N S MS 12.65

Cancellation of SDR 768,000

(US$1.2 million equivalent) of

the IDA Grant which were

expected to remain unutilized at

the Closing Date. PEC

managed to complete critical

works through various

procurement methods and

several other financial sources.

Less funds were spent than

initially planned.

Page 11: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

vii

I. Disbursement Profile

Page 12: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and
Page 13: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

1

1. Project Context, Development Objectives and Design

1.1 Context at Appraisal

Tajikistan was the poorest country in the former Soviet Union, with an estimated income per capita

of about US$160, and the Gorno Badakshan Autonomous Regions (GBAO) was the poorest region

in Tajikistan. The Government had limited resources to provide basic public services for its

population, let alone carry out public investment to prevent the decay of the extensive infrastructure

inherited from the Soviet era. Tajikistan had an open economy with no effective borders with its

CIS neighbors. Merchandise exports (two thirds of which were aluminum and cotton) accounted

for 63 percent of GDP in 1999. Political and economic instability, geographic isolation and

corruption had deterred foreign investors. Foreign direct investment to Tajikistan was extremely

small -- US$10 million in 2000 and US$24 million in 2001. Tajikistan was one of the Low Income

Countries under Stress (LICUS) group of countries.

The Bank Group‟s 1998 Country Assistance Strategy (CAS) emphasized a strategy that supported

sustainable, employment-inducing investment, support for privatization with particular emphasis on

infrastructure and improving the quality of social and institutional capacity. It emphasized

assistance with repair of war damage, promoting privatization, assisting the most vulnerable and

developing/restructuring rural infrastructure. The Project addressed these CAS goals, particularly

those of privatizing infrastructure and developing rural infrastructure.

Tajikistan‟s energy resource endowment was predominantly hydro-electricity, with an estimated

hydroelectric potential of about 40,000 MW, of which just over 4,000 MW had been exploited. The

imbalance in energy resources created a deficit problem for Tajikistan, since hydropower potential

was reduced in winter when glacial melt was least and demand was highest. As a result, Tajikistan

imported electricity as well as fossil fuels in winter to meet energy needs. In 1999, energy imports

totaled US$103 million (electricity, natural gas and petroleum derivatives), while exports (primarily

electricity) amounted to just US$17.5 million. Tajikistan‟s power system was made up of three

separate power systems: the northern, the southern and the Gorno Badakshan Autonomous Oblast

(GBAO) electrical systems. The operational condition of the physical infrastructure had deteriorated

significantly during the 1990s, resulting in very high network losses and requiring during winter the

importation of even more energy to meet the demand. The Government maintained electricity

tariffs at very low levels, with tariffs at about 0.7 US cents/kWh on average, and this level was

insufficient to cover even the operating costs.

With assistance from the Asian Development Bank (ADB) the Government adopted a strategy for

the energy sector to expand and diversify Tajikistan‟s energy system to supply reliable, efficient and

affordable energy to more people, support poverty reduction, improve the standard of living and

bring economic development to rural areas. Its sector policies were designed to (i) facilitate the

development of a legal and regulatory framework for efficient operations; (ii) increase the level of

electricity tariffs to full cost recovery; (iii) encourage private sector participation in the generation

and supply of power (by enacting the Energy Law); and (iv) promote energy conservation.

Consistent with the overall sector policy framework, the Project was designed to cover the electricity

system in the GBAO region. The Project would: (a) develop indigenous hydro resources to meet

electricity demand, particularly in winter; (b) mobilize external resources, over 60 percent of them in

risk capital, to expand the generation capacity and to rehabilitate the transmission distribution

Page 14: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

2

networks; (c) bring private sector expertise to operate and manage part of the Tajik power system;

and (d) agree on a 25-year tariff path, under a Concession Agreement.

As the electricity system of GBAO was virtually separate from the other systems in the country, over

70 percent of the energy in GBAO before the break-up of the Soviet Union was provided by diesel

generators run on imported diesel fuel. Little attempt was made to develop locally available and

relatively low cost hydropower. When Tajikistan became independent in 1991, diesel deliveries

virtually ceased, and with them, a reliable electricity supply. GBAO was plunged into crisis, and

became the poorest region of the poorest of all former Soviet Republics. Power capacity in the

region was composed of several micro-hydroelectric plants and eleven small and medium-scale

hydroelectric plants, two of which, Pamir I (14 MW) and Khorog (7.2 MW), accounted for 84

percent of installed capacity at that time. No functioning diesel capacity remained. The

transmission and distribution system of GBAO was in very poor shape, having been largely

destroyed in the civil war. Only 15 percent of the 435 km of 35 kV lines was still in service. Access

was nearly universal, and the power system continued to provide electricity; however, outages were

scheduled on a rotational basis, particularly during winter, and the power cuts had become more

frequent and prolonged. There was no power in most districts of GBAO in winter.

In 1994, with funding from the US Government, and in cooperation with the Government of

Tajikistan, the Aga Khan Development Network (AKDN) put into operation two of the planned four

turbines at the Pamir I station (which had been planned and partially built at the end of the Soviet

period), and Pamir I became operational with 14 MW out of its 28 MW designed output. Even with

half of the designed capacity of the Pamir I station on line, 43 percent of residents had no electricity

during the winter and 10 percent had no electricity at any time during the year, despite “enjoying” a

connection to the grid. Winter temperatures in the GBAO fell as low as minus 30 centigrade. In

many areas, schools and hospitals were forced to close in winter due to lack of heating. As a result,

people resorted to cutting down the few trees in the area to keep from freezing in winter. The

Department of Forestry estimated that from 1992-2002, 70 percent of the region‟s tree cover had

been lost to firewood collection. In some cases, people cut down fruit trees for firewood,

aggravating the food shortage in the spring. Indoor pollution was acute, the natural resource base

was being degraded and economic activity was stifled.

In early 1999, the AKDN and the local administration of GBAO requested the International Finance

Corporation (IFC) to review the feasibility of completing Pamir I, including an upstream regulating

structure to ensure adequate winter flow, as the optimal solution to the energy crisis. The Project

was developed jointly by IFC and the Aga Khan Fund for Economic Development (AKFED).

The Project was designed to reconcile the commercial objectives of private investors with the social

objectives of the Government in an innovative way and had several unique features. It offered a

viable model of how to provide infrastructure to the poorest communities. It combined private

partnership with the concept of Output Based Aid, whereby aid (the Swiss grant funds, through a

Trust Fund administered by IDA, TF-50589 of US$5 million) was provided to a privately owned and

operated infrastructure service provider upon delivery of an output (e.g. electricity services) to

targeted beneficiaries. It was also a successful example of IFC/IDA collaboration and was intended

to serve as a model for Tajikistan as well as other countries.

Page 15: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

3

Although the development impact was expected to be high, the Project was also a high-risk

investment. It was intended to serve a community that was both extremely poor and heavily

dependent on electricity. The challenge of project design was to ensure affordability.

1.2 Original Project Development Objectives (PDO) and Key Indicators

The objective of the Project was, through private sector involvement, to improve the reliability and

enhance the quantity of supply of electricity in the Gorno Badakshan Autonomous Oblast (GBAO)

region in a financially, environmentally and socially sustainable way. Key indicators from the

Supplemental Letter were:

Increased electricity sales in GBAO region from 135,000 MWh/year to 190,000 MWh/year

in 2006 and 200,000 MWh/year in 2010;

Implementation of the Environmental Monitoring Management Plan (EMMP);

Maintenance of the maximum average tariffs in US cents/kWh as per the Concession

Agreement between the Government and PamirEnergy;

Payment of bills for electricity consumption by Budget Organizations to PamirEnergy, in

cash, within 30 days of billing; 1

PamirEnergy annual achievement of the following financial performance targets: debt

service coverage ratio of 1.2; collection rates of 90 percent in 2006 and 95 percent by 2010;

Reduced interruptions of supply, voltage and frequency fluctuations;

Technical losses in the transmission and distribution network reduced to 8 percent;

1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and

reasons/justification The PDO and Key indicators were not revised.

1.4 Main Beneficiaries

The benefits from the Project were expected to be primarily concentrated on consumers connected to

the main grid in GBAO, and the isolated grid taking power from the Vanj hydropower plant.

The main benefits were to be derived from improving the electricity supply, particularly in winter,

and subsequently enhancing the standard of living in one of the poorest regions in the world. The

Public-Private Partnership approach with Output Based Aid would provide a model for delivering

infrastructure services to poor consumers and enhance the country‟s opportunity to attract

investments. Environmental and health benefits were expected from reducing fuel wood related

emissions by increased use of clean hydropower for heating and cooking.

1.5 Original Components.

The Project would generate and supply electricity under a 25-year Concession awarded to a

private concessionaire, Pamir Energy Company (PEC). The Concession would involve taking

control of the assets of Barki Tajik in GBAO, which served around 250,000 people. The

Project comprised:

1 This indicator was in Para A2 of the PAD and in the Supplemental Letter, but was not in Annex 1 of the PAD.

Page 16: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

4

(a) Completion of the Pamir I Hydropower Plant to its original design capacity of 28 MW

from the current 14 MW by installing units 3 and 4, along with an associated regulating

structure at Lake Yashilkul;

(b) Rehabilitation of other hydro plants - Units 1 and 2 of Pamir I, Khorog, Vanj and

Namangut;

(c) Rehabilitation and reinforcement of substations, transmission and distribution lines; and

(d) Technical Assistance to PEC for: Project Engineering and Implementation, Operations

and Management and Environmental and Social Impact monitoring and mitigation.

The Project was expected to cost US$24.4 million, including supply of equipment,

construction/installation, consulting services and contingencies. Interest during construction

amounted to US$2.0 million, for a total capital expenditure of US$26.4 million.

1.6 Revised Components

The Project components were not revised, except that following the catastrophic flooding in

February 2007, the description of the Project was revised to add “Emergency Assistance, provision

of goods, works and consultants‟ services for Pamir 1 Power plant restoration and financial

recovery”. Under the Additional IDA Grant to cover an unanticipated cost overrun due to the

catastrophic flooding of Pamir I, the focus was on the rehabilitation of plant infrastructure and

provision of parts and equipment to ensure the plant‟s long-term sustained operation and prevent

further accidents.

1.7 Other significant changes

In December 2006, the closing date was extended from December 31, 2006 to December 31, 2007,

along with a reallocation among disbursement categories. Although key construction and equipment

deliveries were completed satisfactorily in 2006, the extension of the closing date was needed to

enable installation and testing prior to contractor payment.

In December 2007, an amendment to the Development Credit Agreement extended the closing date

to December 31, 2008, to support the restoration of damage caused by catastrophic floods in

February 2007. It included reallocating surplus funds from the SDR/Dollar exchange rate and

revision of the project description to include “Emergency Assistance, provision of goods, works and

consultants‟ services for Pamir 1 Power plant restoration and financial recovery”, and provided for

audits by international independent auditors acceptable to the Association. The Project Agreement

was amended at the same time to add the word “international” before independent auditors and

revise the procurement methods.

Following Board approval of the Additional IDA Grant in July 2008, both the Development Credit

Agreement and the Project Agreement were amended in November 2008 to include the additional

IDA Grant of SDR 1.6 million (US$2.5 million equivalent). The project scope and development

objective remained unchanged. Project management was based on existing arrangements, but relied

on a newly formed Project Planning and Implementation Department with staff from the PIU of the

original project. Incremental costs related to restoration of PEC operating capacity after flood

damage were US$8.3 million, of which US$0.5 million had already been covered by surplus funds

from the original Pamir Private Power Project. The financing plan was revised to include: SDR 1.6

million (US$2.5 million equivalent) from the IDA Grant, US$4.4 million from insurance and

US$0.9 million from Pamir Energy‟s (PEC‟s) own funds. Disbursement arrangements were revised

Page 17: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

5

to allow 100 percent financing for activities covered by the additional grant and to allow retroactive

financing of up to 56 percent of the IDA grant amount for eligible expenditures incurred after June 7,

2007. Additional methods of procurement were added. The Closing Date was extended to

December 31, 2010. The onlending terms to Pamir Energy were revised so that the repayment terms

were 15 years (2013-2027) instead of 10 years, and the interest rates were revised.

2. Key Factors Affecting Implementation and Outcomes

2.1 Project Preparation, Design and Quality at Entry

Soundness of Background Analysis: There was extensive project preparation and design work

before approval of the project. In 1999, IFC commissioned a consultant study to review alternative

energy sources. This study confirmed that the proposed expansion of the Pamir hydroelectric plant

was the most economic and the most environmentally acceptable alternative to provide electricity in

the Project region. In late 1999, the consultant engineer conducted a detailed study of the Project

that included: (i) an assessment of the construction costs and schedule; (ii) a review of

environmental impacts; (iii) an assessment of the ability of consumers to pay appropriate electricity

tariffs; and (iv) a brief audit of the electric utility services in GBAO. Based on the study, it was clear

that the Project would need to include the upgrading of transmission and distribution, and the project

company would also have to take over the supply functions (metering, billing and collection) to

ensure a viable project. Consequently, AKFED and IFC decided to expand the project from a focus

on generation to a full utility project and submitted a proposal in January 2000 to the Government of

Tajikistan for the establishment of a private company to manage and expand the electricity supply

system in GBAO. IFC drew on Swiss and IFC trust funds amounting to almost US$1 million and

committed significant staff resources to structure the Project.

Assessment of Project Design: The project design was appropriate and innovative. IFC took the

lead in (a) identifying the most effective solution over the short to medium term; (b) evaluating the

ability of consumers in the region to pay for electricity; (c) developing a concession framework

around which a privately-driven investment could be built; and (d) involving IDA in the Project.

IDA‟s participation was crucial to the Project coming to fruition, as IDA‟s concessional financing

was critical for the project‟s viability, i.e., to enable reliable electricity supply with a levelized tariff

of about US 2.1 cents/kWh. IDA‟s involvement was designed to reconcile the commercial

objectives of the private sector and the social objectives of keeping the electricity tariffs as low as

possible. The Project would ensure that a significant private investment of US$26 million would

occur in a country and region that found it difficult to attract private investors. IDA and IFC joint

involvement was also critical in mobilizing financing from the Swiss Government to enable the

Government of Tajikistan to meet its social protection obligations towards the Project, since a

considerable proportion of the residential consumers would be unable to pay even the US 2.12

cents/kWh tariffs. By the time of IDA project preparation/appraisal, all of the major steps had been

completed: engineering studies, an Environmental and Social Impact Assessment study which

included extensive public consultations, evaluation of construction arrangements and project

management alternatives; legal representation assistance to the Government; preparation of a

2 The weighted average tariffs were very low, about 0.08 US cents in 2007. The tariff level of 2.1 US cents for the

entire country, except GBAO, served by Barki Tojik, has been realized only in the year 2010.

Page 18: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

6

detailed Environmental Monitoring and Management Plan; and a design for a community outreach

program to promote the capacity of communities to manage their power resources for the support of

public services and for the benefit of community-based enterprises. All applicable World Bank

Group safeguards policies and guidelines were considered and addressed during the environmental

and social assessment of the Project. The initial project design was adjusted so as to be in

compliance with WBG safeguard policies and guidelines and appropriate environmental and social

impact mitigation measures were included.

Following extensive discussions between AKFED, IFC, IDA (whose involvement necessitated

observance of the World Bank Procurement Guidelines) and the Government, the approach to

project implementation during construction relied on the appointment of an experienced

international engineering and construction management firm to be appointed as the Owner‟s

Engineer to be responsible for detailed project design, selection of contractors, acquisition of

material and supervision of construction. Considerable attention was paid to procurement

packaging, as it was considered that the Project would not attract serious interest from international

contractors, given its remote location.

Adequacy of Government’s Commitment, Stakeholder Involvement and Participatory

Processes: The Government demonstrated its strong commitment to the Project and its objective

(see Section 5.2 (a)). Stakeholders (Government, AKFED, IFC) were closely involved in the design

and preparation of the Project as described above. An extensive participatory process was followed

during project design and preparation to ensure community support, with 17 public hearings

involving a broad cross section of the population.

Adequacy of Risk Assessment. The project team correctly described the Project as a high impact,

high risk project; all risks were covered including market risks, revenue risks, technical risks

implementation risks, operational risks, financing risks, economic risks, political risks, political

stability risks and legal framework risks in the two page risk table in the PAD. The market risk of

lower than expected demand, which was not expected to be an issue due to the severe shortages of

electricity, materialized during Project implementation and a Financial Restructuring Plan had to be

put in place to improve the financial performance of PEC.

2.2 Implementation

Work carried out prior to Pamir Energy‟s take-over of the Concession revealed that faulty metering

was a significant problem. In 2003, PEC with assistance from IDA, decided to undertake a

comprehensive Re-Metering Program over 18 months in order to reduce losses.

Activities of the original credit were implemented satisfactorily, and equipment deliveries under the

original project were completed in December 2006, but additional time was required for installation

and testing, so the Closing Date was extended to December 2007. The capacity of Pamir 1 HPP

was doubled to 28 MW, winter water flow for generation was enhanced through a regulating

structure at the upstream Lake Yashilkul, and other system assets were upgraded.

On February 5, 2007, catastrophic flooding severely damaged Pamir HPP-1 equipment and

infrastructure, forcing the plant‟s shutdown, causing a 67 percent energy loss of PEC‟s power

Page 19: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

7

generation capacity in the main grid and affecting over 18,000 consumers at the peak of the winter

period. The flood affected the lower level of the power plant, housing the turbines, and the

transformer yard outside the power house. The electric and electromechanical equipment in the

hydropower plant were severely damaged. Electronic protection and control instrumentation and

equipment were also damaged. Low and medium voltage switchgears and components of plant

auxiliary services, eg., batteries, building services, communication channels, etc. required complete

replacement. Of the four turbine-generator units, unit #2 was completely destroyed. Units #1, #3

and #4 were damaged to varying degrees. The flooding was deemed to have been caused by an

airlock from a piece of ice from the sedimentation basin, which draws water from the River Gunt

through the penstocks to the plant turbines. The ice airlock clogged the penstock, and subsequently,

under the increasing water pressure, moved in and blew the head cover of unit #2, unleashing the

flood in the power house, within 1-2 minutes.

PEC with support from AKFED reacted swiftly to address the problem and its aftermath on multiple

fronts. The Government helped with emergency food and fuel supplies. World Bank and IFC teams

arrived on site to help design an emergency action plan whose implementation led to recovering 67

percent of the plant‟s capacity. Rehabilitation efforts under the Additional IDA Grant approved in

July 2008, focused on restoring the plant to its full capacity and sustainability, so that the original

Project Development Objective could be achieved, and on implementing measures to prevent further

occurrences of these problems and addressing longer term sustainability issues. At the time the

Additional IDA Grant was approved, key engineering studies had been completed, and three of the

four units at the plant had been permanently restored. Critical remaining activities included the

restoration of unit #2, supply of spare parts and auxiliary equipment for the turbine generator units

and finding a full solution to the issues of sedimentation and ice formation at the regulating basin of

the plant in order to minimize the possibility of future accidents.

In late 2006/early 2007, the debt burden on PEC increased drastically as a result of losses and

investment requirements which turned out to be much higher than estimated at appraisal. In order to

alleviate the debt burden on the company, stakeholders agreed on a Financial Restructuring Plan in

June 2008 that focused on continuing the operation of PEC on a commercial basis and addressing the

issues of higher than anticipated losses and investment requirements. AKFED‟s existing

subordinated debt and additional contribution were converted to equity, and IFC‟s existing senior

loan was converted to equity. The existing on-lent IDA loan repayment terms were revised to a

repayment term of 15 years (2013-2027) instead of 10 years. Some interest was written off and

some was deferred. Stakeholders also agreed on measures to reduce losses, optimize operating costs,

improve collections and enhance revenue within the full application of the authorization given in the

Concession Agreement. The Financial Restructuring Plan ensured cash flow to the company to

cover operating and capital expenses, enabling annual investments in critically needed network

improvements.

Close supervision and ownership by IFC and AKFED contributed to greater accountability of PEC‟s

management and timely implementation. Implementation of the Private-Public Partnership

mechanism resulted in greater transparency and better operational performance in the utility.

Cancellation. Several restoration activities were implemented by PEC using its own and other

funds, thus, leaving about US$ 1.2 million unutilized. Based on a request from the Government of

Page 20: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

8

Tajikistan (the Borrower) SDR 768,000 (equivalent US$ 1.2 million) of the Grant was cancelled on

December 29, 2010. The remaining undisbursed balance at closing (SDR 362,359.82,

US$583,043.97 equivalent) of the original IDA Credit was canceled on May 5, 2011. The remaining

undisbursed balance of the IDA Grant (SDR 80,223.07) was cancelled on January 10, 2011.

2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization M&E Design.

The Project included adequate development and outcome indicators to assess progress in meeting the

project development objective and monitor the achievement of intermediate results. End of project

targets were indicated for both outcome and intermediate/output indicators, but no baseline was

given for the output indicator “technical losses in the transmission and distribution network reduced

to 8 percent”.

M&E Implementation. PEC regularly collected data concerning the indicators, and the actual

figures were compared to the target values and were available to IDA and PEC‟s stakeholders (GoT,

AKFED (70 percent share) and IFC (30 percent share) in both the quarterly FMRs/IFRs and PEC‟s

monthly progress reports, and an annual report each December.

M&E Utilization. PEC and its stakeholders utilized the reports for decision making when planning

capital expenditures, measures to improve collections and reduce losses, and in the discussions and

agreement on the PEC Financial Restructuring Plan.

2.4 Safeguard and Fiduciary Compliance

Environment.

The Project was subject to the Bank‟s OP 4.01 on Environmental Assessment, Natural Habitats (OD

4.04), Involuntary Resettlement (OD 4.30) and Safety of Dams (OP/BP 4.37), Projects on

International Waterways (Op/BP/GP 7.50) (formal confirmation was issued by IDA that notification

of riparians was not required), Policy on Child and Forced Labor (IFC), Environmental Health and

Safety Guidelines for Electric Power Transmission and Distribution (IFC).

The Project was rated as a category B Project because it was a rehabilitation, upgrading and

expansion of an existing power generation, transmission and distribution system. All applicable

WBG safeguards policies and guidelines were considered and addressed during the environment and

social assessments of the Project. The initial project design was adjusted to be in compliance with

WBG safeguards policies and guidelines and appropriate environmental and social impact mitigation

measures were included and monitored throughout the Project. A comprehensive Environmental

Monitoring and Management Plan (EMMP) set out measures to ensure compliance with all the

applicable Safeguards Policies during the construction and operation phases of the Project and Pamir

Energy took all necessary measures to implement the EMMP in a timely manner. IDA fielded

several environmental safeguard missions to review PEC‟s compliance with the EMMP, including

two comprehensive safeguard reviews in September 2009 and September 2010, which concluded

that the EMPP continued to be implemented satisfactorily, with no major deviations observed during

the site visits.

Financial Management.

The financial management arrangements at PEC, including accounting and reporting, internal

control procedures, planning and budgeting, external audits, funds flow, organization and staffing

arrangements were acceptable to the Bank. During 2002-2007 the FM ratings were consistently rated

Page 21: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

9

Highly Satisfactory. During this period both the entity and project audits were carried out by

auditors acceptable to the Bank, with timely submission of all the reports. However, due to changes

in the national legislation for audit services (effective on March 3, 2007), which required the

auditors to have local registration and local staff, PEC was unable to extend its contract with its

auditors and had to recruit new auditors, which caused delays in the receipt of the audit reports for

the year ending December 31, 2009. Subsequently, in 2009-2010 the FM ratings were downgraded

to Moderately Satisfactory and remained such at the project closing mainly due to delays with

submission of financial management and audit reports, which were received with a delay but were

acceptable to the Bank.

Procurement.

Procurement arrangements were considered satisfactory for the activities under the original Credit.

All the planned procurement activities were completed on time and within budget. Procurement

under the Project proved challenging, especially with International Competitive Bidding (ICB) and

Limited International Bidding (LIB) packages. Interest from potential suppliers/contractors in

project bids was weak, due to the remote location of Pamir HPP and transportation difficulties,

especially in winter. Despite efforts to enhance interest of potential bidders, only two bidders

participated in most of the tenders, and in one contract (supply of electrical and mechanical

components), no bidder purchased bidding documents. Bid submission deadlines had to be

frequently extended, and procurement often required re-bidding. Even for National Competitive

Bidding, there were instances where PEC had to extend the submission deadlines and sought

expressions of interest in neighboring countries. As per Bank recommendation, PEC even issued

bidding documents for such potential contractors free of charge in order to maximize competition.

A couple of procurements failed, either because the lowest evaluated responsive bid exceeded the

cost estimate or no firm submitted bids. Because of the urgent need to maximize the production

capability of the power plant during winter, the project team sought a waiver to sign a contract using

Direct Contracting, for purchase of cement, or instead of re-bidding, the contract was financed by

Aga Khan Development Network instead of from the IDA Credit. The Credit Agreement did not

originally provide for the Direct Contracting method of procurement, but it was added later when the

Credit Agreement was amended.

2.5 Post-completion Operation/Next Phase

Pamir Energy Company (PEC), a special purpose company for the Project, and operating the 25-year

Concession, was formed under the laws of the Republic of Tajikistan as a joint stock company,

owned 70 percent by AKFED and 30 percent by IFC. The Concession Agreement was signed on

May 24, 2002, by GoT and PEC and provides the policy, regulatory, technical, environmental,

financial and operational framework for the Project, both during the construction and operational

phases. Now that the construction phase has been completed, PEC will continue to manage all

Government-owned electricity assets in GBAO for the remaining 16 years of the Concession

Agreement. PEC, with the support of AKFED, has prepared a business plan for 2010-2015, based

on a new financial model developed by PEC based on its experience of the last several years. Today

Pamir I is a sustainable power plant. The investments made under the project are expected to have a

lifetime of at least 25-30 years. PEC carries out several activities annually at Pamir I to further

improve safety and reliability. Necessary budgets for plant maintenance are allocated annually.

Staff have been trained and participate in annual intensive capacity building programs. PEC has

Page 22: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

10

indicated that the performance indicators of other projects to be implemented by PEC will be similar

to those under the IDA financed Project.

3. Assessment of Outcomes

3.1 Relevance of Objectives, Design and Implementation

The Project remains highly relevant to Tajikistan‟s National Development Strategy for 2006-2015,

whose key priorities include improving public administration, developing the private sector and

attracting investment, and developing human potential. The 2007 power sector strategy developed

by the Government of Tajikistan aims to ensure reliable electricity supply to meet the needs of the

population and productive sectors to sustain growth and contribute to poverty reduction. The target

is to become self-reliant by 2017 and gradually develop power exports and strengthen regional

cooperation to increase electricity export revenues and generate a new source of growth. It fits into

the “Production Block” on food security, agriculture, infrastructure, energy and industry of the

Bank‟s Poverty Reduction Strategy for 2010-2012. The Project continues to be relevant to the goal

of the Country Partnership Strategy for FY10-13, to improve the reliability of electricity and gas

services and increase energy support potential. The Project was designed to reconcile the

commercial objectives of the private sector and provide reliable power supply to the poorest

mountainous region and the social objectives of keeping the electricity tariffs as low as possible;

which continues to be relevant to both the Government strategy and the current CPS and Poverty

Reduction Strategy.

3.2 Achievement of Project Development Objectives

The Project Development Objective has been achieved. The Project generates and supplies

electricity in the GBAO region under a 25-year Concession awarded to a private concessionaire,

Pamir Energy Company (PEC). Before the Project daily power supply in GBAO was about 3 hours

per day, especially in winter. PEC now provides around 24 hours of power supply per day in winter

to customers of the main grid (over 70 percent of the total customers); this excludes some remote

areas, where the power supply varies from 8 to 16 hours per day. The supply position is better than

most areas in the rest of the country covered by Barki Tajik. The schools and hospitals can function

properly in winter with available power supply. Annual supply of electricity has increased from

135,000 MWh/year in 2002 before the Project to 174,000 MWh/year in 2009. In 2010 consumption

at 163,215 MWh was slightly lower than the end of project target due to lower demand. Instead of

rationing, which was the norm before the Project, there is now a surplus of energy, which allows

PEC to have a planned maintenance of units in capital repair at the same time, without affecting the

reliable supply of energy. Collection rates have improved from 40 percent before the Project to about

100 percent of sales for the year ending December 31, 2010. Unit 2 at Pamir I HPP was

commissioned in January 2011, and full plant capacity under the original project scope has been

restored. PEC now delivers uninterrupted power supply in its main grid, manages the water flow

from Lake Yashilkul, has resolved the issues with sedimentation and fragile ice, which led to the

catastrophic flooding in February 2007, has improved the reliability of the electro-mechanical parts

of the plant, and has improved the security of the plant (closed circuit television cameras). In 2010

anti-filtration measures were taken at Yashilkul regulating structure which made it possible to

conserve more than 20 million m3 of water at the lake, which provides PEC enough water to deliver

reliable energy to its customers, even if the winter lasted longer than usual. A dredging pump was

procured in 2010, which solved the issue with sediments at Pamir I sedimentation basin. Now PEC

does not have to stop the plant for one month every two years to remove the sediments, thus

Page 23: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

11

substantially increasing availability of the units. Two ice blocking systems were built, which solved

the issue of fragile ice getting into the basin and damaging the turbines and bearings. The social

subsidy plan, financed by the government and the Swiss Grant, worked as envisaged through 2011,

protecting the end consumers from higher tariffs. The project is sustainable with transformative

benefits to the poorest region of Tajikistan and has set up a successful example of Public-Private

Partnership in a difficult environment. It displaces the environmentally unfriendly use of diesel and

fire wood for energy supply, as had been the practice in the past; has a well established mechanism

to target subsidy delivery to the most vulnerable population; has set up a culture of commercial

discipline among the consumers and obligation on part of the supplier to serve its consumers.

Although the operational situation of PEC has improved, its consumers would need continued

support with tariff subsidies and PEC would need softer onlending terms to continue its investment

program in the remote areas (financing currently under consideration by KfW (Germany) and SECO

(Switzerland) through the Government of Tajikistan.

3.3 Efficiency

Detailed economic and financial analysis of the project was carried out at the appraisal stage to

estimate the economic and financial efficiency and impact of the project. The economic costs and

benefits of the project were calculated excluding taxes and subsidies. The projection of financial

performance of PEC was done at the appraisal stage for 2002-2012.

Economic analysis: The main economic benefit of the project was the incremental electricity

supplied to consumers as a result of power system investments. Specifically, improvements to the

power system eliminated the significant winter and summer black-outs experienced by the customers.

The main economic costs were the capital investments and the incremental operation and

maintenance (O&M) costs.

The completion stage economic analysis of the project yielded an NPV of US$ 3.9 million and an

EIRR of 12.2%, compared to the appraisal stage NPV of US$ 17.6 million and an EIRR of 19%.

Reduction of economic return of the project is primarily due to a 19% investment cost over-run due

to the catastrophic accident and 2003-2010 electricity sales below the levels projected at appraisal.

Specifically, the total actual project costs were around US$ 31.4 million, compared to the appraisal

stage estimate of US$ 26.4. The actual electricity sales in 2003-2010 were 35-40% lower than

projected at appraisal (see Annex 3 for details). The overall economic return considering the other

non quantified benefits such as positive environmental impact, improved quality of life (homes,

schools and hospitals and businesses) would be significantly higher.

Financial analysis: The main financial benefit of the project is the incremental financial revenue

that accrues to PEC due to incremental supply of electricity and higher tariffs. The financial benefits

from incremental supply of electricity were estimated at the weighted average end-user tariffs. The

financial costs are the capital investment costs and the incremental O&M costs.

The completion stage financial appraisal of investments yielded an NPV of US$ (2.3) million and an

FIRR of 8.9%. The appraisal stage project company level financial analysis estimated the FIRR at

9.8% (see Annex 3 for details). The reason for financial under performance of PEC are the higher

actual investment costs, and downward revision of electricity demand. The global economic

Page 24: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

12

recession has also contributed to lowering the anticipated demand growth with the slowdown of

economic activities.

Financial performance of PEC: The actual financial performance of the company in 2006-2009

was below the appraisal forecast, due to slower tariff increases than anticipated by the Concession

Agreement, lower-than-projected electricity sales that reduced the operating cash flow of the

company, almost two-fold depreciation of TJS/US$ exchange rate, and higher operating costs driven

by over 10% average annual inflation in 2006-2009.

The company‟s operating income and cash flow became positive in 2009 and has improved. The

company‟s ability to meet its short-term and long-term financial obligations improved. Specifically,

in 2009, the company‟s highly liquid assets at hand were more than 14% of the short-term liabilities,

improving from 5% in 2006.

3.4 Justification of Overall Outcome Rating

Rating: Satisfactory.

Based on Sections 3.1-3.3, the overall outcome is rated as Satisfactory. The Project was relevant to

the Government‟s National Development Strategy, the latest Poverty Reduction Strategy and the

latest Country Partnership Strategy. The Project successfully met its development objective, has set

up a replicable, successful example of a Public-Private Partnership, and was well justified based on

reasonable economic and financial performance even after the global recession impacts on the

economy.

3.5 Overarching Themes, Other Outcomes and Impacts

(a) Poverty Impacts, Gender Aspects, and Social Development

Reliable energy supply changed the economic life of the poorest region of Tajikistan. Before the

Project, shops and factories used to operate only in summer, as no energy was available in winter.

Today shops, producers and businesses work year round, and consumers are accustomed to have

energy available year round. According to studies in 2009, electricity supplied by hydropower is the

cheapest and cleanest option for lighting, cooking and heating in GBAO, compared to wood, coal,

diesel and other sources. Thus, improving the quantity and reliability of the energy supply in GBAO

had a positive impact on poverty reduction. Before the Project women spent a considerable amount

of time gathering wood for cooking and heating. Today they use electricity for cooking and heating

and have more time for other interests. Indoor air pollution was a major problem before the Project

due to the use of diesel fuel lamps for lighting, and wood for heating. The risk of illnesses due to

indoor air pollution, especially for children, was either removed completely or minimized

significantly. Having a reliable energy supply allowed Government and donors to equip schools

with computers and other technologies. Today every school in GBAO has at least one computer and

more children/youth are comfortable using the new technologies. Health facilities and hospitals can

operate without rationing of electricity, which was common in the 1990s. Some hospitals in the

region have received new electronic medical equipment from donors, which is used daily now that

reliable electricity is the norm.

(b) Institutional Change/Strengthening

The Project included a capacity building program that enabled PEC to improve its performance

throughout Project implementation. The plan included the extensive use of consultants to initially

Page 25: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

13

manage project implementation and advise local management going forward, as well as annual

training programs. As part of the capacity building program the PEC General Director and two other

key staff had a technical exchange with Sweden to learn how hydropower plants exposed to similar

harsh winters coped with sedimentation and fragile ice and then implemented measures to resolve

these issues for Pamir I and Khorog HPPs. It was an enormous challenge for PEC to turn around a

historically loss making utility, operated and accepted as a free social good, in the poorest, most

isolated region of the poorest country of the Former Soviet Union, by raising tariffs, increasing

collections, and implementing construction projects at extremely high altitudes, while trying to

maintain budgets, build human resources and deliver financial results. PEC met this challenge by

identifying a qualified local manager who was able to deal with the local community and understand

the nuances of local politics, while at the same time recognizing what is possible and leading

organizational change. In the past the electricity in GBAO had always been subsidized and the

population viewed energy as a free gift, which led to high losses, theft and unwillingness to pay,

which resulted in limited power supply in Khorog and no power supply in the more remote areas.

PEC began by installing meters at the generation plants and further down at the transmission and

distribution network, including meters for end consumers. PEC established disconnection teams, a

Customer Service Center, and a new billing system to make bills accurate. PEC introduced a bonus

system for sales specialists, which increased collections as a percent of sales to more than 100

percent. As electricity supply became more reliable and bills became more accurate and

understandable, people changed their behavior and began to view electricity theft as a crime instead

of as a way to game the system. From the beginning, PEC made serious efforts to improve

community relations, by visiting the communities so that residents could talk directly with the

General Director; PEC worked with TV stations, radios, newspapers, distributed brochures and met

with community leaders to improve PEC‟s reputation and relations with the communities. The

lessons learned by PEC in Bank procurement procedures and developing procurement plans are

being applied by PEC in procurement financed by its own funds.

(c) Other Unintended Outcomes and Impacts (positive or negative) In 2006, when energy rationing was common in GBAO, it was inconceivable that PEC would export

electricity to Afghanistan, beginning in 2008. PEC now provides energy year round to over 1000

households in Afghanistan. As a result of the Project, PEC has become a benchmark company for

Central Asia and other countries and is providing consulting services to Afghanistan, Uganda and

Kyrgyzstan.

3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops

Not Applicable

4. Assessment of Risk to Development Outcome

Moderate, given that the financial performance of PEC is below the targeted level. On the positive

side, the risk is offset by the Concession Agreement, which would continue to be in force for the

next 16 years; the 70 percent equity in PEC held by AKFED and 30 percent by IFC, who would

continue to work with PEC; and the significant improvements in increasing collections and reducing

losses. The economic and financial analysis indicates that the financial health of the company has

turned around to the positive, and with additional export opportunities to Afghanistan being realized,

some of the impact of less than anticipated demand would be partially offset. Moreover, SECO is

Page 26: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

14

considering providing additional grant funds to provide targeted subsidies to the vulnerable sections

through 2014.

5. Assessment of Bank and Borrower Performance

5.1 Bank Performance

(a) Bank Performance in Ensuring Quality at Entry

Rating: Satisfactory

IDA‟s performance in ensuring quality at entry was satisfactory. Preparation and appraisal was done

jointly by IFC and IDA, with each organization providing specialist staff who made relevant

contributions to the decisions and report preparation of the two organizations, without duplicating

efforts. All applicable Bank group safeguards policies and guidelines were considered in the design

and addressed during the environment and social assessment of the Project. A socio-economic

survey conducted as part of the environment and social assessment of the Project estimated the

average annual income for the typical project area family and the willingness to pay for energy. The

initial project design was adjusted so as to be in compliance with World Bank Group safeguards

policies and guidelines, and appropriate environmental and social impact mitigation measures were

included. Seventeen public hearings engaging a wide range of the GBAO population including

townspeople, rural villagers, teachers and hospital workers were conducted in October 2000. The

legal framework governing the Project was substantial.3 The Concession Agreement was signed,

the owners‟ engineer had been appointed and was working, and procurement activities had already

begun prior to presentation to the Bank‟s Board of Executive Directors, and the project was

adequately prepared and ready for implementation. The only shortcoming during preparation was

that based on the information provided in the feasibility study, the IDA/IFC team assumed that most

of the consumers were metered with working meters, and that non-technical losses including illegal

connections and improper metering and billing appeared to be moderate (losses were estimated at 10

percent on the main grid and at 20 percent for the remote areas), which proved not to be the case

after Project implementation began, and it was learned that the existing meters were inoperable or

inaccurate. Actual losses reached 30 percent on the main grid and were even higher in the remote

areas.

(b) Quality of Supervision Rating: Satisfactory

IDA‟s performance during the implementation of the Project was satisfactory. Sufficient budget and

staff resources were allocated, and the project was adequately supervised, with a comprehensive

skills mix, and supervision was conducted jointly with IFC. Based on the supervision staff costs in

Annex 4, a complex project such as Pamir Private Power Project requires significantly more

resources than the average supervision coefficient. The Procurement and Financial Management

functions were provided by field based staff, which greatly facilitated Project implementation. The

3 The legal framework included: the Concession Agreement between PEC and GoT; a Subscription Agreement

between Pamir Invest S.A. and PEC, an Investment Agreement between IFC and PEC, A Shareholders Agreement

between IFC, AKFED, Pamir Invest and PEC, a Project Funds and Share Retention Agreement between IFC and

AKFED/Pamir Invest to provide financing for cost overruns; a Development Credit Agreement between IDA and

the Government, a Project Agreement between IDA and PEC, and a Subsidiary Loan Agreement between the

Government and PEC.

Page 27: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

15

IDA team helped PEC develop a re-metering program to reduce losses. The IDA and IFC teams

responded promptly to the two major crises that arose, the deteriorating financial situation of PEC

during 2006-2008 by developing the Financial Restructuring Plan; and the unexpected catastrophic

flooding in February 2007, which severely damaged the Pamir I Hydropower Plant. The

Management comment on ISR No. 8, commented on the dedication of the IDA and IFC staff, who

worked under extreme conditions (18 hour trip on bad roads, 16 hour workdays, sub-freezing

temperatures at 10,000 feet altitude with no space heating, one meal a day, etc) in March 2007, to

help bring much of Pamir capacity back on-line following the catastrophic accident. IDA also

provided an Additional Grant to ensure that the restoration of Pamir I Hydropower Plant would be

permanent instead of a temporary fix and that the original Project Development Objective could be

achieved.

(c) Justification of Rating for Overall IDA Performance Rating: Satisfactory

Based on IDA‟s performance during the lending and supervision phases as discussed above, the

overall IDA Performance is rated as Satisfactory.

5.2 Borrower Performance

(a) Government Performance Rating: Satisfactory

Government participation in the planning and development of the Project was intensive. Ministers

and senior civil servants participated on a sustained basis in the Working Group charged with

negotiation of the Concession Agreement; the Cabinet and Presidential administration considered it

in detail before giving Government approval; and Parliament ratified critical sections of the

Concession Agreement. Government‟s contribution to this Public-Private Partnership Project

included: (a) contribution of existing electricity assets in GBAO (including all generation,

transmission and distribution facilities) to the Concession; (b) Government‟s request for IDA

financing of US$10 million equivalent, at a time when the IDA allocation for Tajikistan was

severely limited; (c) Government‟s agreement to use the interest rate spread (between the IDA Credit

to Government and the Government‟s on-lending to PEC) to meet part of the costs of social

protection; (d) Government‟s request for grant financing of about US$5 million from the Swiss

Government to enable the Government to meet the remaining costs of social protection; and (e)

Government provided rebates in various taxes to PEC.

During Project implementation, Government continued its support to the Project and to PEC. The

good progress and satisfactory achievement of the Project objective has been based on strong

political championship and alignment of vision and strategy among the key ministries (Ministry of

Finance, Ministry of Energy and Industry, Ministry of Economic Development and Trade), whose

keen interest and monthly reviews of implementation progress helped keep the project on track. As

part of the Financial Restructuring Plan, the Government agreed to defer interest payments until

2011.

(b) Implementing Agency or Agencies Performance

Rating: Satisfactory

PEC implemented the Project almost according to the original schedule, until the catastrophic

accident in February 2007. It provided intensive monitoring and oversight of the Project by

dedicated operational teams. It established a Health, Safety and Environment Unit at project

Page 28: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

16

headquarters in Khorog to implement the Project‟s Environmental Management Plan. PEC‟s project

management team constantly monitored Project progress, addressed bottlenecks and provided

overall guidance to ensure that Project momentum was maintained. It initiated a metering program,

improved collections, established a customer service department, improved community relations in

the areas it serviced, and procured and installed the necessary equipment, both to rehabilitate the

plant and to protect it against future accidents. PEC also initiated social projects to help the

communities with other issues such as installation of a clean water pipeline and sponsorship of chess

classes in the schools. From 2008-2010 PEC financed US$3.78 million of Project costs from its

capital expenditure fund (compared to US$0.9 million planned when the Additional IDA Grant was

prepared). The only shortcomings were: delayed submission of the audit report for the year ending

December 31, 2009, and some delays in submission of revised IFRs – both the audit report and the

IFRs were eventually received;4 and the failure to procure all the equipment planned to be financed

by the additional IDA Grant before the Project Closing Date. Using its own funds and the Bank

procurement guidelines, PEC managed to complete all the activities envisaged under the IDA grant,

except for the remaining electrical equipment, resulting in cancellation of part of the grant. PEC has

informed IDA that it will finance the remaining electrical equipment, estimated at US$440,000 in

phases by 2012. PEC plans to announce the tender for electrical equipment shortly.

(c) Justification of Rating for Overall Borrower Performance

Rating: Satisfactory

Based on the ratings of Satisfactory under (a) and (b), the overall Borrower performance is rated

Satisfactory.

6. Lessons Learned

Given the difficult environment in which the Project operated, the goals set for the Project

and the limited resources available, high quality management is an important pre-requisite

for success.

Importance of good community relations, including personal visits to the communities and

listening to the consumers‟ concerns is critical for a successful public service entity.

A Public-Private Partnership can work, even in one of the poorest regions, by introducing

improved governance, provided there is adequate commitment of Government, the private

company, the Sponsor, and the IFIs.

A high risk project, with significant development impact is worth doing, but it will require

significantly more resources, commitment from all parties, and a good project design and a

motivated implementing agency.

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies

PEC provided its Implementation Completion Report and all other information requested by IDA.

PEC proposed to rate the overall outcome as Highly Satisfactory and its own performance as

implementing agency as Highly Satisfactory. The ICR team maintained both ratings as Satisfactory,

given PEC‟s fragile financial situation, which could pose a moderate risk to the development

4 According to PEC, one of the reasons for the delay in audit reports was the treatment of the deferred interest rate

and the recent changes in IFRs regarding treatment of the Concession assets.

Page 29: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

17

outcome. IDA recognizes the need for softer onlending terms from GoT to PEC (current onlending

rate is 6 percent), and the need for continued subsidies for the poorest segments of the population, in

order to ensure PEC‟s continued financial viaibility.

The Ministry of Energy and Industry confirmed its agreement with the positive assessment of the

Project by letter dated June 24, 2011 (Annex 7).

(b) Cofinanciers

AKFED provided comments in Annex 8.

No comments were received from IFC.

(c) Other partners and stakeholders

Not applicable

Page 30: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

18

Annex 1. Project Costs and Financing

(a) Project Cost by Component (in USD Million equivalent)

Components

Appraisal

Estimate

(USD

millions)

Additional

Financing

Estimate

(USD

millions)

Appraisal +

Additional

Financing

Estimate

(USD millions)

Actual (USD

millions)

Percentage

of Appraisal +

Additional

Financing

A. Completion of Pamir

I Hydro Plant and

Associated Regulating

Structures:

(i)Lake Yashilkul

Regulating Structure

5.10

5.10 5.10 100

A (ii) Tunnel, Penstock

& Surge Tank;

Installation of Units 3

and 4

7.50

7.50 7.50 100

B. Rehabilitation of:

Khorogh; Pamir I (units

1 and 2); Vanj and

Namangut hydro plants

2.90

2.90 2.90 100

C. Rehabilitation of:

35 kV Pamir-Khorog

Transmission Line (incl.

spare parts);

35 kV Substations (Biz,

Rosh, Jomi, Navo, Pam

Oro, DES and Spares)

3.10

3.10 3.10 100

D. Technical Assistance

(i) Computerization,

Training,

Consulting

Services

(ii) Project Engineer &

Implementation

(iii) Operation &

Management

1.70

2.90

1.20

1.70

2.90

1.20

1.70

2.90

1.20

100

Additional Financing to

Restore Pamir I 7.80

4.95 63

Total Baseline Cost 24.40 7.80 32.20 29.35 91

Physical Contingencies

0.00

0.00

0.00

Price Contingencies

0.00

0.00

0.00

Total Project Costs 24.40 7.80 32.20 29.35 91

Interest during

Construction 2.00 2.00 2.00 100

0.00 0.00 .00

Total Financing

Required 26.40 7.80 34.20 31.35 92

Page 31: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

19

(b) Financing

Source of Funds

Type of

Cofinancin

g

Appraisal

Estimate

(USD

millions)

AF

Estimate

(USD

millions)

Appraisal

+ AF

Estimate

(USD

millions)

Actual

(Original +

AF.l

Percentage

of

Appraisal

and AF

Borrower (PEC internal funds) 0.20 0.90 1.10 0.20 18

Borrower (PEC CapEx,

including insurance) 4.40 4.40 4.40 3.78 86

International Development

Association (IDA) 10.00 2.50 12.50

11.17 89

International Finance

Corporation (IFC) 8.00 8.00 8.00 100

AKFED 8.20 8.20 8.20 100

Total 26.40

7.80

34.20

31.35 92

Page 32: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

20

Annex 2. Outputs by Component

Component A: Completion of Existing Pamir I Hydro Plant and Associated Lake Yashilkul

Regulating Structure

Subcomponent A (i): Lake Yashilkul Regulating Structure. This subcomponent included civil

works carried out by local contractors for an access road to the diversion/spillway area; a small channel

at the spillway diversion area to temporarily lower the lake water level to an elevation of 3,717 m during

construction; a control house and accommodation for operation and maintenance of the gates, including

cement and steel. The regulating structure was constructed at the outlet of Lake Yashilkul, which had 2

natural outlets flowing over a very large rock-slide which formed the lake several centuries ago. The

main natural outlet passed over sand, gravel and stones of the old rockslide along the left bank, and the

secondary outlet passed over very large boulders near the right bank. A temporary diversion channel

and a spillway at the location of the secondary outlet were constructed, and a permanent outlet

regulating structure at the main natural outlet was also constructed. The objective was to regulate the

lake outflow to increase the water available to the Pamir I Hydro Power Plant in winter, during the low

flow period in the Gunt River and to retain the water in the summer.

Subcomponent A (ii): Rehabilitation of Pamir I Hydro Plant Infrastructure. This subcomponent

comprised the civil works for the repairs/rehabilitation of tunnels, penstock and surge tank and related

works and installation/repairs of Units 3 and 4 in the power plant, supply of cement and steel and supply

of equipment for the installation of Units 3 and 4.

Component B: Rehabilitation of Khorogh, Pamir I (Units 1 and 2), Vanj and Namangut Hydro

Plants.

Rehabilitation works of Pamir I, Units 1 and 2 included general overhaul, new turbine governors,

upgrading of control and protection system;

Khorog, included complete replacement of the turbine governing systems on all units,

upgrading/replacement of broken instrumentation and monitoring devices, supply of 5 new

turbine runners, redesign and replacement of turbine bearings and shafts, general through

overhaul of turbines, generators and intake valves, upgrading/replacement of control and

monitoring instrumentation, generating unit switchgear;

Re-Metering Program in Khorog provided over 6,000 sets of meters, which dramatically reduced

losses in Khorog from as high as 60% to about 14%.

Vanj, included complete replacement of the control and protection system, complete replacement

of the turbine governing system, supply of 2 new turbine runners, upgrading/replacement of

broken instrumentation and monitoring devices, general thorough overhaul of turbines and

generators, generating unit switchgear; and

Namangut, included complete replacement of the turbine governing systems on both units,

upgrading/replacement of broken instrumentation and monitoring devices, supply of 2 new

turbine runners, redesign and replacement of the turbine bearings and shafts, general thorough

overhaul of turbines, generators and intake valves, and generating unit switchgear.

Page 33: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

21

Component C: Rehabilitation of 35 kV Pamir-Khorog-Andarbak Transmission Line and 35 kV

substations.

Supply of equipment and spare parts for:

Erection of a new 35 kV line between the Pamir I power station and the substation in Khorog;

Rehabilitation of the 35 kV line between Khorog and Rushan;

General rehabilitation of critical sections of other 35 kV and 10 kV lines within the main grid

area.

Component D: Technical Assistance.

Subcomponent D (i): Computerization, office equipment training. This component, financed by

the co-financiers, included supply/installation of computerized systems, office equipment and training

expenses.

Subcomponent D (ii): Consulting Services. This component was financed by PEC and IFC and

covered the consulting services for project engineering, including procurement services as well as for

the operation and management of the utility for a period of four years each to support project

implementation and operations respectively.

SECO (Switzerland) financed a tariff protection program for vulnerable consumers, which protected the

consumers against the necessary tariff increases.

Additional Financing Components:

In order to restore Pamir I to its design capacity following the flooding accident, the following items

were procured under the Additional Financing:

New excitation systems for all 4 units;

Small unit panel for all 4 units;

Spare relay, sensor and indicator for excitation, protection and control for Units 1, 2, & 4;

Compressor 140 liter per minutes/ 250-330 bar (complete set);

Drainage pumps;

Floating pumps with motor boat;

Mobile loader for removing sediments;

Mechanical spare parts for units, 1, 3, and 4, including turbine runner;

Plant control and dispatcher room upgrade, including CCTV cameras and circuits;

HF radio communication for Yashilkul and HPP1, VHF radio communication for HPP1, CR, SB,

PH

Installation of protection shelter on the tunnel intake; (this procurement was cancelled as the

current design was not effective and further study was required)

Repair old turbine runner and wicket gate;

Consultant services to develop specifications for system protection and control.

Page 34: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

22

The only items that could not be procured before the Closing Date were electrical spare parts for Units

1,3, 4, and the installation of a protection shelter on the tunnel intake (which was cancelled because the

current design was not effective). It was agreed that the electrical equipment (estimated at US$440,000)

would be procured using PEC‟s CapEx funds, with tender documents to be issued in mid-2011, delivery

of equipment planned for late 2011/early 2012, and installation during 2012.

The successful implementation of the components significantly improved the reliability and quantity of

supply of electricity in the Gorno Badakshan Autonomous Oblast (GBAO) region. Electricity sales

increased from 135,000 MWh/year in 2002 to 163,215 MWh/year in 2010, about 82 percent of the end

project target due to lower than anticipated demand. Before the Project, most consumers received only 3

hours/day of electricity in winter; in 2010 over 70 percent of consumers received uninterrupted power

supply, with the remaining consumers receiving from 8-16 hours/day of electricity in winter. Minimum

service standards to consumers (maximum duration of outages, voltage fluctuations, frequency)

improved significantly and reached or exceeded the end of project targets. Collection rates improved

from 40% in 2002 to almost 100% in 2010. Technical and commercial losses were reduced from 39%

in 2006 to 19.9% in 2010. PEC‟s management improved over the course of the project, developing

better community relations, establishing a customer service unit, improving billing and initiating an

individual metering program.

Page 35: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

23

Annex 3. Economic and Financial Analysis

Detailed economic and financial analysis of the project was carried out at the appraisal stage to

estimate the economic and financial efficiency and impact of the project. The economic costs and

benefits of the project were calculated exclusive of taxes and subsidies and the assessment of the

financial costs and benefits was done inclusive of taxes. The projection of financial performance of

Pamir Energy Company was done at appraisal stage for 2002-2012.

Key assumptions: The economic and financial analysis of the project relies on the following key

assumptions:

Power plant availability: The generation capacity availability estimates used for completion stage

economic and financial appraisal of the project are in line with the appraisal stage assumptions. The

forecast of the gross power generation used in the economic and financial analysis assumes 95%

availability of generation capacity in 2011-2023. Specifically, the hydropower plants rehabilitated

under the project have an average availability of around 97%. However, there are a number of

smaller hydropower plants that were not included in the project and have lower availability.

Electricity demand: Electricity demand is estimated to be at 147,173 MWh. This figure is

calculated based on actual electricity consumption data from 2010 and is adjusted to reflect the

average of 2-hour daily outages in winter of 2010. The above data is used as the baseline to calculate

the forecast electricity demand in 2011 – 2023. The average annual growth rate of electricity demand

is assumed to be 4%.5

Transmission/distribution losses: The technical losses were assumed to reduce to 10% of net

supply.

Minimum cash balance: 30 days of operating costs on a cash basis

Debt service projections: The projections for debt service requirements take into account the

agreed terms and conditions of the Financial Restructuring Plan agreed between the project

financiers, the Government and the company.

Table 1: Key assumption of economic and financial appraisal

Expected average annual TSom/US$ exchange rate

in 2011-2023 4.5

Incremental O&M 1.5% Annual system deterioration w/o project 10% Average estimated annual growth rate of electricity

sales in 2011-2023 4%

5 Income elasticity of electricity demand is assumed at 0.8. Real GDP is taken as the proxy for income and is

assumed to grow at an average annual rate of 5%. Tariffs are assumed unchanged.

Page 36: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

24

Estimated marginal willingness-to-pay for electricity USc 3.25/kWh6

Assessment period 20 years VAT rate 20% Discount rate 10%

Economic analysis: Cost-benefit analysis was conducted to assess the economic impact of the

project. The cost-benefit analysis was conducted by comparing “with project” and “without project”

incremental costs and benefits. Assumptions were made as to how long the power system would

operate if no investments were made. The appraisal stage economic analysis was conducted for three

scenarios, assuming that the system would deteriorate at an annual rate of 5%, 10% and 20%. The

10% deterioration (i.e. the system will continue to function on a declining basis for another 10 years)

was selected as the base-case scenario.

At completion, the economic and financial analysis was updated to incorporate the actual level of

investments, power generation and sales, tariffs, losses and collections for the period of project

implementation and revisions in forecasts. The economic analysis confirmed the positive impact of

the project with the substantial increase in the supply of electricity to consumers.

The main economic costs are the capital investments and the incremental operation and maintenance

(O&M) costs.

The main economic benefit of the project was the incremental electricity supplied to consumers as a

result of power system investments. Specifically, improvements to the power system eliminated the

black-outs that the customers were experiencing. This was driven by: (a) improved availability of

hydropower plants, (b) reduced technical and commercial losses in the distribution and transmission

networks and (c) reduced number of outages. The economic benefit of incremental electricity supply

was valued at customers‟ estimated marginal willingness to pay (WTP) for electricity.

Under the base-case scenario for system deterioration, the appraisal stage economic analysis yielded

an NPV of US$ 17.6 million and an EIRR of 19%. The completion stage economic analysis of the

project yielded an NPV of US$ 3.9 million and an EIRR of 12.2% (see Table 1). Reduction of

economic efficiency of the project is primarily due to the 19% investment cost over-run as a result of

the catastrophic accident in 2007 and 2003-2010 electricity sales below the levels projected at

appraisal, partly as a result of the impact of the global economic recession. Specifically, the total

actual project costs were around US$ 31.4 million, compared to the originally planned US$ 26.4.

Additionally, the actual electricity sales in 2003-2010 were 35-40% lower than projected at appraisal.

Financial analysis: Cost-benefit analysis was conducted to assess the financial impact of the project.

The main financial benefit of the project is the incremental financial revenue that accrues to Pamir

Energy Company due to incremental supply of electricity and higher tariffs. The financial benefits

from incremental supply of electricity were estimated at the weighted average end-user tariffs. The

6 In the absence of unmet demand, the current tariff might be considered as an economically justified proxy for

the customers‟ willingness to pay for electricity.

Page 37: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

25

main financial costs of this sub-component are the capital investment costs and incremental O&M

costs

The appraisal stage project company level financial analysis estimated the FIRR at 9.8%. The

completion stage financial viability analysis of investments from the perspective of Pamir Energy

Company was conducted for the base case scenario for system deterioration and yielded an NPV of

US$ (2.3) million and an FIRR of 8.9% (see Table 2). The reason for estimated post-completion

financial un-viability of investments are the higher actual investment costs and downward revision

of electricity demand projections given that GBAO region currently has 24-hour/day power supply.

Financial performance of Pamir Energy Company: Overall, the company‟s financial

performance was poor from 2006-2008 with improvement in 2009 due to: (a) 80% increase of

average electricity tariff in 2006-2009; (b) increased power sales driven by improvements of key

generation, transmission and distribution assets; (c) higher collection rates for electricity; (d) the

implementation of the company‟s Financial Restructuring Plan agreed in June 2008; and (e) the

prospects of continued electricity exports to Afghanistan. Export share is currently about 0.55%;

however, this is a very dynamic market, and PEC expects that the volume of electricity export will

increase significantly over the medium-term. The company‟s operating income and cash flow

became positive in 2009. The company‟s ability to meet its short-term and long-term financial

obligations improved. Specifically, in 2009, the company‟s highly liquid assets at hand were

sufficient to pay for 14% of short-term liabilities, whereas in 2006, the company could pay only 5%.

In 2009, the company‟s cash at hand was sufficient to pay 6% of interest due and principal

repayments on outstanding debt. Nonetheless, softer onlending terms and continued subsidy

payments would enable PEC to continue to invest in and maintain the GBAO power system.

In 2008, the Government of Tajikistan, IDA, IFC and AKFED agreed on the terms of Financial

Restructuring of the company. According to the restructuring plan, the accrued interest expenses on

the IDA credit were deferred till 2011 and the company committed to pay those in a 15-year period.

The IFC and the company agreed to convert the IFC loan into a quasi-equity classified as non-

interest bearing and unsecured IFC loan. Additionally, all of the interest due and unpaid was

cancelled. Moreover, the subordinated debt owed to AKFED was converted into a non-interest

bearing and unsecured loan with no fixed redemption date. Projections of the company‟s financial

performance for 2010-2015 are presented in the Tables 3, 4 and 5.

Page 38: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

26

Table 1: Project economic appraisal at completion

Actual Forecast

2003 2004 2005 2006 2007 2008 2009 2010 2015 2018 2023

COSTS

Economic costs of investments US$ 5,000,000 6,015,307 7,319,182 3,442,636 64,013 1,333,731 1,548,928 1,545,880

Incremental O&M costs US$ 75,000 165,230 275,017 326,657 327,617 347,623 370,857 394,045 396,454 396,454 396,454

Total economic costs US$ 5,075,000 6,180,536 7,594,199 3,769,293 391,630 1,681,354 1,919,785 1,939,925 396,454 396,454 396,454

BENEFITS

Annual energy supply w/o project MWh 107,508 96,757 86,006 75,255 64,505 53,754 43,003 32,252 0 0 0

Annual energy supply w/ project MWh 112,914 95,606 111,490 111,561 114,413 140,671 144,920 144,113 172,172 193,670 235,629

Estimated aggregated annual

demand MWh 147,173 147,173 147,173 147,173 147,173 147,173 147,173 147,173 172,172 193,670 235,629

Estimated unmet annual demand w/o

project MWh 39,665 50,416 61,167 71,918 82,668 93,419 104,170 114,921 172,172 193,670 235,629

Estimated unmet demand w/ project MWh 34,259 51,567 35,683 35,612 32,760 6,502 2,253 3,060 0 0 0

Reduction in unmet demand

5,406 -1,151 25,484 36,306 49,908 86,917 101,917 111,861 172,172 193,670 235,629

Economic value of reduction in unmet demand US$ 175,705 -37,405 828,225 1,179,932 1,622,022 2,824,807 3,312,300 3,635,472 5,595,577 6,294,263

7,657,933

Net economic benefits US$

-

4,899,295

-

6,217,941

-

6,765,974

-

2,589,360 1,230,393 1,143,454 1,392,515 1,695,547 5,199,123 5,897,809

7,261,48

0

NPV US$ 3,909,898

EIRR

12.2%

Page 39: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

27

Table 2: Project financial appraisal at completion

Actual Forecast

2003 2004 2005 2006 2007 2008 2009 2010 2015 2018 2023

COSTS

Financial costs of investments US$ 6,000,000 7,218,368 8,783,018 4,131,163 76,815 1,600,477 1,858,714 1,855,056

Incremental O&M costs US$ 90,000 198,276 330,021 391,988 393,140 417,148 445,028 472,854 475,744 475,744 475,744

Total financial costs US$ 6,090,000 7,416,644 9,113,039 4,523,151 469,955 2,017,625 2,303,742 2,327,910 475,744 475,744 475,744

BENEFITS

Annual energy sales w/o project MWh 107,508 96,757 86,006 75,255 64,505 53,754 43,003 32,252 0 0 0

Annual energy sales w/ project MWh 112,914 95,606 111,490 111,561 114,413 140,671 144,920 144,113 172,172 193,670 235,629

Estimated aggregated annual demand MWh 147,173 147,173 147,173 147,173 147,173 147,173 147,173 147,173 172,172 193,670 235,629

Estimated unmet annual demand w/o

project MWh 39,665 50,416 61,167 71,918 82,668 93,419 104,170 114,921 172,172 193,670 235,629

Estimated unmet demand w/ project MWh 34,259 51,567 35,683 35,612 32,760 6,502 2,253 3,060 0 0 0

Reduction in unmet demand

5,406 -1,151 25,484 36,306 49,908 86,917 101,917 111,861 172,172 193,670 235,629

Financial value of increased sales US$ 45,954 -11,668 333,150 591,999 898,850 2,447,935 2,945,399 3,635,472 5,595,577 6,294,263 7,657,933

Net financial benefits US$

-

6,044,046

-

7,428,312

-

8,779,889

-

3,931,152 428,894 430,310 641,657 1,307,562 5,119,832 5,818,518 7,182,189

NPV US$

-

2,303,532

FIRR

8.9%

Page 40: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

28

Table 3: PEC balance sheet for 2006-2015

Actual Forecast

‘000 TSJ 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

ASSETS

Non-current assets 57,252 55,749 67,943 66,924 67,593 68,269 68,952 69,641 70,338 71,041

Current assets 4,211 7,799 10,694 14,235 17,623 21,412 24,951 26,782 28,771 30,804

Cash and cash equivalents 2,757 5,519 5,965 6,389 9,165 12,234 14,793 15,023 16,315 17,415

Trade accounts receivables, net 872 658 1,477 3,035 3,200 3,400 3,600 3,800 3,900 4,100

Other current assets 232 759 1,076 3,078 3,458 3,800 4,500 5,800 6,200 6,800

Inventory 350 863 2,176 1,733 1,800 1,978 2,058 2,159 2,356 2,489

Total assets 61,463 63,548 78,637 81,159 85,216 89,682 93,903 96,424 99,108 101,845

LIABILITIES AND EQUITY

Non-current liabilities 55,468 50,986 38,351 51,003 51,456 53,514 55,655 57,881 60,196 62,604

Long-term financing 55,468 50,986 38,351 51,003 51,456 53,514 55,655 57,881 60,196 62,604

Current liabilities 6,491 20,120 13,308 12,115 15,370 17,378 19,018 18,827 18,666 18,418

Current portion of long-term loans 4,264 13,639 10,824 10,187 11,075 11,623 12,088 12,571 13,074 13,597

Accounts payable 1,836 2,400 2,039 1,788 2,009 2,256 2,358 2,245 2,159 2,000

Other current liabilities 391 4,081 445 140 2,286 3,499 4,572 4,011 3,433 2,821

Equity (496) (7,558) 26,978 18,041 18,391 18,790 19,231 19,715 20,245 20,823

Share capital 35,919 35,919 35,919 35,919 35,919 35,919 35,919 35,919 35,919 35,919

Additional paid-in capital 163 163 163 163 163 163 163 163 163 163

Retained earnings (36,578) (43,640) (40,344) (49,281) (48,931) (48,532) (48,091) (47,607) (47,077) (46,499)

Quasi capital - - 31,240 31,240 31,240 31,240 31,240 31,240 31,240 31,240

Total equity and liabilities 61,463 63,548 78,637 81,159 85,216 89,682 93,903 96,424 99,108 101,845

Page 41: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

29

Table 4: PEC Income statement for 2006-2015

Actual Forecast

‘000 TJS 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Sales forecast (MWh)

144,113 147,173 153,060 159,182 165,550 172,172

Tariff forecast (TJS/kWh)

0.142 0.146 0.146 0.146 0.146 0.146

Revenue 6,301 7,884 12,676 18,254 20,509 21,524 22,385 23,280 24,212 25,180

Cost of sales (5,440) (6,007) (9,499) (9,304) (10,453) (10,971) (11,410) (11,866) (12,341) (12,834)

Gross profit 861 1,877 3,177 8,950 10,055 10,553 10,975 11,414 11,871 12,346

Selling expenses (1,635) (1,110) (732) (2,018) (2,256) (2,368) (2,462) (2,561) (2,663) (2,770)

General and admin expenses (5,302) (4,094) (5,861) (6,859) (6,973) (7,318) (7,611) (7,915) (8,232) (8,561)

Impairment loss on PPE (11,151) (2,083) - - - - - - - -

Impairment loss on accounts receivables

and other current assets (287) (184) - - -

Carbon credit income - 1,258 - - - - - - - -

Insurance compensation for impairment

loss - 2,083 - - - - - - - -

Other income 23 24 696 154 173 182 189 196 204 212

Operating income (17,491) (2,229) (2,720) 227 1,000 1,049 1,091 1,135 1,180 1,227

Foreign exchange gain/(loss) (3,569) (571) 160 (8,546) - - - - -

Gain from restructured debt - - 3,135 - - - - - - -

Financing costs (4,077) (4,262) (393) (618) (650) (650) (650) (650) (650) (650)

Profit before tax (25,137) (7,062) 182 (8,937) 350 399 441 485 530 577

Net profit for the year (25,137) (7,062) 182 (8,937) 350 399 441 485 530 577

Page 42: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

30

Table 5: PEC cash flow statement for 2006-2015

Actual Forecast

‘000 TJS 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

OPERATING ACTIVITIES

Net profit (25,137) (7,062) 182 (8,937) 350 399 441 485 530 577

Operating profit before changes in

working capital and provisions (2,643) (848) 2,925 6,257 5,977 6,083 6,182 6,283 6,386 6,492

Working capital changes

(Increase)/decrease in trade and other

receivables (296) 214 (819) (1,558) (165) (200) (200) (200) (100) (200)

(Increase)/decrease in inventories 140 (513) (1,313) 443 (67) (178) (80) (101) (197) (133)

(Increase)/decrease in other current

assets 72 (527) (1,516) (2,002) (380) (342) (700) (1,300) (400) (600)

Increase/(decrease) in accounts payable (1,655) 564 (361) (251) 221 247 102 (113) (86) (159)

Interest /commitment fee paid (2,655) (289) (292) (569) (650) (650) (650) (650) (650) (650)

Net cash flow from operating

activities (7,037) (157) (3,945) 1,683 4,996 4,985 4,677 3,940 4,999 4,885

INVESTING ACTIVITIES

Purchase of PPE (1,349) (4,514) - - (2,500) (2,200) (1,100) (800) (800) (800)

Prepayment for non-current assets - - (2,352) (1,546)

Disposal of PPE 80 - - - - - - - - -

Capital expenditure for operating right - - (2,046) (3,007) (500) (500) (500) (500) (500) (500)

Purchase of intangible assets (99) (32) - - (20) (16) (18) (10) (8) (85)

Cash flow from investing activities (1,368) (4,546) (4,398) (4,553) (3,020) (2,716) (1,618) (1,310) (1,308) (1,385)

FINANCING ACTIVITIES

Loan from IDA through Government 1765 264 344 1,713 800 800 - - - -

Advance received from insurance - 7,173 8,463 - - - - - - -

Repayments of loans

0 0 (500) (2,400) (2,400) (2,400)

Cash flow from financing activities 3,293 7,437 8,807 1,713 800 800 (500) (2,400) (2,400) (2,400)

Net increase/(decrease) in cash and

cash equivalents (5,112) 2,734 464 (1,157) 2,776 3,069 2,559 230 1,291 1,100

Page 43: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

31

Actual Forecast

‘000 TJS 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Exchange rate effects 208 28 (18) 1,581 - - - - - -

Cash and cash equivalents at the

beginning of the year 7,661 2,757 5,519 5,965 6,389 9,165 12,234 14,793 15,023 16,315

Cash and cash equivalents at the end of

the year 2,757 5,519 5,965 6,389 9,165 12,234 14,793 15,023 16,315 17,415

Page 44: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

32

Annex 4. Bank Lending and Implementation Support/Supervision Processes

(a) Task Team members

Names Title Unit Responsibility/

Specialty

Lending

Raghuveer Sharma TTL, Lead Financial Analyst ECSSD

Anil Markandya Principal Economist

Rene Mendonca Senior Power Engineer

Nikolay Nikolov Operations Officer ECSSD

Benedicta Oliveros-Miranda Procurement ECSPS

Migara Jayawardena Sr. Infrastructure Specialist EASIN

Ahmed Jehani Lead Counsel LEGEN

Junko Funahashi Sr. Counsel LEGEN

Hannah Koilpillai Sr. Finance Officer CTRFC

Surekha Jaddoo Operations Analyst ECSSD

Yukari Tsuchiya Program Assistant ECSSD

Denis Clarke Chief Investment Officer IFC

Paul Nickson Principal Power Engineer IFC

Yukiyo Ikeda Investment Officer IFC

Richard English Senior Environmental Specialist IFC

Patricia Jungreis Sulser Principal Counsel IFC

Yeages Cowan Counsel IFC

Olim Khomidov Investment Officer IFC

Teresa De Leon Team Assistant IFC

Lourdes Dela Cruz Team Assistant IFC

Supervision/ICR

Raghuveer Sharma Lead Financial Specialist SASDE TTL

Imtiaz Hizkil Sr. Power Engineer ECSS2 TTL

Sodyk Khaitov Consultant ECSS2

Nikolay Petrov Nikolov Sr. Energy Specialist AFTEG

Mirlan Aldayarov Energy Specialist ECSS2

Christopher L. Rytel Consultant SASDE

Jann Masterson Operations Officer ECSS2

Wolfort Pohl Sr. Environmental Specialist ECSS3

Shod Nazarov Financial Management Analyst ECS03

Yuling Zhou Sr. Procurement Specialist ECS02

Benedicta T. Oliveros Procurement Analyst ECS02

John Otieno Ogallo Sr. Financial Management

Specialist ECS03

Hannah M. Koilpillai Sr. Finance Officer CTRFC

Takhmina Mukhamedova Operations Analyst ECSS6

Yukari Tsuchiya Temporary ECSS2

Page 45: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

33

(b) Staff Time and Cost

Stage of Project Cycle

Staff Time and Cost (Bank Budget Only)

No. of staff weeks USD Thousands (including

travel and consultant costs)

Lending

FY02 42 161.37

FY03 0.00

FY04 0.00

FY05 0.00

FY06 0.00

FY07 7.11 (AF)

FY08 66.67 (AF)

Total: 42 235.15

Supervision/ICR

FY02 0.00

FY03 47 189.54

FY04 36 129.63

FY05 27 148.05

FY06 14 105.82

FY07 33 202.55

FY08 31 191.60

FY09 115.56

FY10 138.91

FY11 92.08

Total: 188 1313.74

Page 46: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

34

Annex 5. Beneficiary Survey Results

Not applicable

Page 47: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

35

Annex 6. Stakeholder Workshop Report and Results

Not Applicable

Page 48: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

36

Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR

English translation of Letter from Ministry of Energy and Industry

Unofficial Translation

REPUBLIC OF TAJIKISTAN

MINISTRY OF ENERGY AND INDUSTRY REPUBLIC OF TAJIKISTAN

Rudaki, 22 Tel : (810992 -37) 221-69-97/221-88-89

Fax: (810992-37) 221-82-81 E-mail: [email protected]

To: World Bank Country Office

Dushanbe

Republic of Tajikistan

From: Mr. A. Sulaimonov

Deputy Minister

Ministry of Energy and Industry

Dushanbe

Republic of Tajikistan

Ref. No. 16/1676 June 24, 2011

The Ministry of Energy and Industry of the Republic of Tajikistan presents its

compliments to the World Bank Country Office in Tajikistan and would like to express

its gratitude for the continued and timely support rendered by the Bank to ensure further

development of the country‟s energy sector.

The Pamir Private Energy Project (Pamir Energy Company), designed by the IFC,

AKFED, with the assistance of the IDA and the Government of Switzerland through

SECO, is considered to be one of the unique energy projects in the Republic of Tajikistan,

which is implemented in cooperation with the private sector and is aimed at restructuring

of the sector and further improvement of services provided to the population. It is good

that over the last few years the Pamir Energy Company has made a significant progress in

improving the power supply for the population of Gorno-Badakhshan Autonomous

Oblast (GBAO).

The Government of the Republic of Tajikistan attaches great importance to energy

sector development in mountainous regions of the country. The World Bank‟s financial

assistance in the amount of US$10 million allocated for the implementation of the first

public-private partnership project - the Pamir Energy Company and the subsequent

US$2,5 million appropriated right after the destructive collapse and emergency situation

at Pamir-1 hydropower plant was a vitally important step taken by the Bank to help the

population of GBAO to successfully go through many hardships of that difficult period.

Page 49: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

37

The Ministry of Energy and Industry of the Republic of Tajikistan acting in the

capacity of the authorized representative of the Government of the Republic of Tajikistan

in the Concession Agreement between the Republic of Tajikistan and Pamir Energy

Company, which was signed by the parties on May 24, 2002, conducts a regular and

systematic monitoring of the progress on the fulfillment of commitments under this

agreement.

Official commissions comprising representatives of various republican ministries

and committees visited the power facilities of the Company more than once in order to

get a clear picture of the situation and check on the implementation status of the

following tasks: fulfillment of the Environmental Management Plan, maximum normal

(average) tariff maintenance, maintaining minimum standard of services rendered to

individual consumers, energy loss reduction in transmission and distribution networks,

improving reliability and sustainability of the entire system. It is gratifying to know that

the aforementioned commissions have always noted positive changes in the operating

activities of Pamir Energy.

It is worth mentioning that the Company has fully met its investment

commitments with respect to completion of Pamir-1 HPP and other important energy

facilities. The construction of Pamir-1 HPP was completed in 2005 as it was planned

earlier, and the ceremony of launching the project was attended by the President of the

Republic of Tajikistan Mr. Emomali Rakhmon personally.

As a result of the Company‟s activity the overall power generation increased by

30%. Owing to the financial assistance provided by the World Bank, the Company

managed to install new electronic counters for all electricity consumers in Khorog city,

which consumes more than a half of the energy volume generated in GBAO. Moreover,

overall energy losses, which previously amounted to 60%, were substantially reduced in

the networks thereby helping significantly improve the electricity supply of Khorog and

other mountainous regions connected to the GBAO power grid.

Though today the project is successfully operating, however the implementation

process went with difficulties. The Pamir-1 HPP failure in February 2007 was one of the

serious obstacles faced by the project.

The Government of the Republic of Tajikistan, the Ministry of Energy and

Industry of the Republic of Tajikistan in cooperation with other project participants,

including the World Bank managed to raise funds required for speedy rehabilitation of

the main station, which helped ensure stable electricity supply (in the normal mode) in

winter season.

Since the initial estimates were rather optimistic, i.e. the volume of sales was

expected to be much higher whereas the losses and expenditures were supposed to be

smaller, then during the fifth year of the Company‟s operation Pamir Energy has already

been totally enmeshed by financial difficulties. In this regard, in 2008 the Government of

the Republic of Tajikistan, World Bank, IFC and AKFED implemented financial

Page 50: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

38

restructuring of the Company. Due to this restructuring the Government of the Republic

of Tajikistan agreed to grant a respite for the interest rate on the IDA sub-credit from 6%

to 1,25% interest per annum till the end of 2011. At the same time the World Bank

allocated additional financing in the amount of US$2,5 million to be spent for

rehabilitation of Pamir-1 HPP after its failure in 2007.

Thanks to efficient management of World Bank-funded projects linked with

execution of rehabilitation works Pamir Energy succeeded to ensure timely completion of

works and significant saving of allocated resources.

It is evident that the Company‟s experience is very successful and noteworthy;

therefore the Government of the Republic of Tajikistan is planning to use this experience

extensively to facilitate further development of the power-supply system of the country.

Despite some improvements in the operational activity of the Company, its

financial indicators leave much to be desired. Today the Pamir Energy‟s capability to

fulfill its sub-credit commitments before the IDA is a matter of deep concern. In this

connection the Government Commission has visited the Pamir Energy Company in the

beginning of June 2011 in order to check on the performance of the Company. The

parties are planning to reconsider the interest rate on the IDA sub-credit during the third

quarter of 2011.

The Ministry of Energy and Industry of the Republic of Tajikistan avails itself of

this opportunity to express its thankfulness to the World Bank and really hopes that the

Bank will continue supporting this and similar initiatives of the Republic of Tajikistan

implemented in energy sector of the country.

With best regards,

A. Suleymanov

Deputy Minister of Industry

Ministry of Energy

Republic of Tajikistan

Page 51: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

39

Pamir Energy ICR

1. Key Factors Affecting Implementation and Outcomes (a) Project Preparation

Project started in December 2002 and completed in December 2010

(b) Implementation Stage:

Project consisted of two stage: 2002-2008 ($10 million initial funding) and 2009-2010 ($2.5 million

additional funding). Procurement plans for both stages were implemented.

2. Monitoring and Evaluation The monitoring and evaluation process of the project was efficient and gave a valuable experience

and knowledge to PEC personnel working with the project.

PEC was constantly updating WB on the procurement and implementation process and the reports

were evaluated by WB specialists.

Several times, WB missions were arranged to PEC for the monitoring and evaluation of the progress

of the project. WB gave good recommendations which were implemented or used to improve the

efficiency of the project.

WB was informed on each procurement process and implementation stage, and WB evaluated and

responded on them.

The results from the monitoring and evaluation is that

PEC delivers uninterrupted power supply in its main grid

manages the water flow from Lake Yashilkul

resolved the issues with sediments and frazil ice

improved the reliability of the electro-mechanical parts of the plant

improved the security of the plant (CCTV cameras)

and made possible to have surplus of energy even in peak hours of winter season.

3. (a) Transition arrangements for the project's future operation.

Pamir I power plant rehabilitation completed successfully. Pamir I works on its full capacity and

covers the demand of the area. Moreover, there are surplus of energy, which means that PEC can put

one or two units for capital repair at the same time, without affecting the reliable energy supply.

Today, Pamir I is a sustainable station. PEC carries out several projects annually at Pamir I to

improve the safety and reliability of the plant further. Budgets necessary for the plant are allocated in

full manner annually. Staff is trained and is going through intensive capacity building programs

every year.

The performance indicators of the projects similar to the project carried out by PEC through IDA

funding could be several:

- Operational impact (efficiency, maintenance periods, etc)

- Financial impact (revenue, expenses, etc)

- Economic impact (economic activities, workshops, communication and technologies,

employment, etc)

- Social impact (community pressure, gender equality, in-house emission, education, health,

etc)

- Environmental impact (clean energy, deforestation, etc).

Page 52: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

40

The indicators should be analyzed through the years, based on household level, regional level, and

other levels such as export, employment and etc.

II. Outcomes (a) Achievement of Project Development Objectives

The objectives of the project were to improve the energy supply in GBAO region, suffering from the

deterioration of the whole network and small generating capacities. That covered the rehabilitation

of the Pamir I power plant (the biggest plant of Pamir Energy), increase of its capacity, resolve the

issue with water flow management, remove the issue with frazil ice and sediments, and deliver more

energy to the end consumers.

The objectives of the project were reached. Pamir I rehabilitation completed in 2010, with the

commission of the last unit of the plant in January 2011. Today, Pamir I can reach the full capacity

and Pamir Energy has up to 4MW of surplus of energy in peak hours in winter. In remaining 17-18

hours of winter days, PEC has surplus up to 10MW.

A dam was built at Yashilkul Lake which improved the energy supply from Pamir I and Khorog

power plants (cascades of plants). In 2010, anti-filtration measures were taken at Yashilkul dam

which allowed economizing more than 20 million m3 of water at the Lake. That means that in case

the winter would last more than usual, PEC would have enough water to deliver reliable the energy

to its consumers.

Dredging pump was procured in 2010, which solved the issue with sediments at Pamir I

sedimentation basin. PEC does not have to stop the plant once in 2 years for the whole month to

clean the sediments. The machine can clean it anytime, without suspension of the plant.

Two ice blocking systems were built which solved the issue with frazil ice getting into the basin and

further to turbine. This issue brought many problems to PEC, including the lower water flow from

the basin and damage to the turbines and bearings.

(b) Overarching Themes, Other Outcomes and Impacts

Reliable energy supply resulted in the change in the whole economic life of the region. Previously,

shops used to work only in summer time, and the small productions worked in summer as well, as no

energy was available. Today, all shops work all year rounds, people are more busy with the

commercial business all the year. Rationing would sound strange for the consumers in the main grid,

as they are used to have energy all year round, and they appreciate the efforts of Pamir Energy and

all partners.

The impact on environment was significant. In the end of 1990s, 70% of the forests and trees were

cut in GBAO. Due to the lack of energy in the region, people were using woods for heating and

cooking.

Today, with better energy provision to all regions (main grid receives uninterrupted supply all year

round), the forests are recovering.

The clean energy provided by Pamir Energy replaced the pollution resulted from burning woods and

coals (only few people afforded it and it was scarce).

Page 53: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

41

(c) Poverty Impacts, Gender Aspects, and Social Development

According to the studies in 2007, hydro energy is the cheapest option for cooking and heating in

GBAO, compared to wood, coal, diesel and other sources. Thus, the energy had a positive impact on

the poverty reduction. People pay less for clean energy and can spend the difference on other house

holding needs.

Women spent more time with cooking and heating. Today, using electricity devices, they are able to

devote more time for family, for education of the children, for other works at house, or work for

public or commercial sector.

The in-house emission issue was resolved completely. People don‟t use diesel lamps for lighting, or

wood for heating. Risks of sicknesses from the in-house emission, especially for children/babies,

was either removed completely, or minimized significantly.

(d) Institutional Change/Strengthening (particularly with reference to impacts on longer-term

capacity and institutional development):

The energy provision made possible for Government and donors to provide schools with computers

and other technologies. Today, every school in GBAO had at least one computer and more children

and youth are comfortable using the technologies, including printers and scanners.

Health facilities and hospitals can fulfill their duties, not depending on rationing of electricity as they

used to be in the 1990s. Impact is significant. Some hospitals in regions received new medical

technology from donors and use them every day for medical check of the patients.

(e) Unintended Outcomes and Impacts (positive and negative):

Back in 2006, if you would tell people that PEC will export energy to Afghanistan in 2008, they

would not understand you, simply because the rationing was in GBAO itself. However, the project

allowed to have energy all year round, and it is already the third year that PEC is providing energy to

Afghanistan all year round, now for more than 1000 households.

The project financed by WB is one of the main components that today PEC is becoming a

benchmarking company for Central Asia and other countries. The experience of PEC now is

appreciated in other countries, and PEC is now providing some consulting services to Afghanistan,

Uganda, and Kyrgyzstan.

III. Rationale for Rating of Risk to Development Outcome Several factors have affected the satisfactory implementation and outcomes in the program

supported by WB.

Risks Rating at

that point Comment

Technical Expertise (e.g.

Experience of the

engineers and key

personnel)

Low The implementation of the project directly related to the experience of the

engineers and according measures were taken to improve that (e.g.

trainings outside and inside Tajikistan, consultants reports‟ analysis)

Page 54: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

42

Risks Rating at

that point Comment

Implementation risk Low Pamir Energy went through different types of management and systems

restructured (rehabilitation, new high quality leadership, relation with

government, etc).

Sustainability of

investments

Moderate AKFED has supported the drafting of a comprehensive PEC business plan

for 2010 - 2014. PEC will not need additional investments after 2014 to

be sustainable.

Reputational Risk Low The project focuses not only on the improvement of electricity supply in

the Pamir region but also on the improvement of the energy supply in

neighbour Afghanistan. Moreover, with continuing PEC operational

improvements, the project is becoming a model for the rest of the country

and region.

Political Risk Moderate Changes in policy and legal framework may adversely affect the project.

Key elements of the framework is regulated in the Concession Agreement.

PEC‟s continuing high levels of service provision provide local political

support.

Political Stability Low AKFED‟s deep roots in the region limit this risk to a large extent;

proximity of boarder to Afghanistan: same ethnic group is living on both

sides, friendly relations. PEC‟s energy provision to Afghanistan also

creates goodwill between the two sides, and PEC will continue expanding

this program.

Support in financial

difficulties

Moderate WB and Government of Tajikistan provided high support in the

sustainability of the company, and the financial restructuring outcomes are

the strong evidence for that.

Capacity building

programs

Low It was required for improving quality have taken longer than earlier

anticipated

IV. Assessment of Bank and Borrower Performance Bank

(a) Quality at Entry

Bank performance is rated as satisfactory. The task team‟s consistent engagement and

responsiveness is acknowledged by Government of Tajikistan and Pamir Energy. The Bank has

maintained intensive dialogue with Government officials and Pamir Energy shareholders outside the

energy sector, including finance and planning, which has helped to address many managerial issues

within the context of the overall development and financing framework. At the operational level,

consistent engagement has enabled effective review of progress and discussion on areas needing

acceleration. Effective coordination has enabled better alignment between available technical

expertise and resources and with the needs of the project.

(b) Quality of Supervision

The quality of the supervision was satisfactory. That allowed to have efficient management,

planning, budgeting and implementation of the project components.

Borrower (a) Government Performance:

Borrower performance is rated as satisfactory at all levels. At the Government level, the good

progress and satisfactory achievement of objectives has been based on strong political championship,

alignment of vision and strategy among the key Ministries. The Ministers‟ (Ministry of Finance,

Page 55: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

43

Ministry of Energy and Industry, Ministry of Economic Development and Trade) keen interest and

monthly reviews of implementation progress have helped keep the project on track.

(b) Implementing Agency or Agencies Performance:

Implementing Agency (IA) performance is rated as satisfactory. The good progress and satisfactory

achievement of objectives has been based on intensive monitoring and oversight by the dedicated

operational teams. IA project management team constantly monitored the progress, addressed the

bottlenecks, and provided overall guidance on the efficiency of the project components. The IA

intensive monitoring and analysis has ensured that the project momentum is maintained, especially

in timely implementation and delivery of inputs, and that decisions are based on information and

analysis. The planned capacity building program enabled the project team to further improve their

performance.

V. Lessons Learned

It will be good to draw Lessons under the following categories:

Important factors for the success of a project:

1. Management

Given the difficult environment in which the PamirEnergy project placed, the goals set for the

project, and the limited resources available, high quality management was always a pre-requisite for

success. The initial plan included the extensive use of consultants to initially manage the project

implementation and advise local management going forward. The existing General Director was

seen as a key player in the future of the company, and the sponsors planned on retaining him, while

supporting him and the senior management team with training and close board supervision.

Tragically, early in the project, the General Director died in a car accident, and it was not apparent

who could succeed him from the management team. The sponsors therefore attempted to utilize

foreign managers. Identifying a qualified candidate who was qualified, prepared to live and work in

Khorog, and capable of managing the utility and politics proved extremely difficult, and the

company had a total of 4 General Directors in the initial 4 years. Following the accident in 2007, on

the departure of the General Director at the time, AKFED identified a resident of GBAO, who has

served as the company‟s General Director since.

The challenges the PamirEnergy project faced are hard in themselves to describe. To turn around a

historically loss making utility, operated and accepted as a social good, in the poorest region of the

poorest country of the former Soviet Union, in an isolated region of an isolated country, raising

tariffs, increasing collections, and implementing construction projects at extremely high altitudes,

while trying to maintain budgets, build human resources and deliver financial results. More

attention should have been paid to the management of the company and to supporting development

of local staff. Change in human resources has been, and continues to be, a top challenge of the

company.

Identifying a qualified local manager has proven to be among the keys to the company‟s success in

recent years. The ability to deal with the local community, understand the nuances of local politics,

while at the same time recognizing what is possible and leading organizational change are all only

really possible with a native of the environment in which one works. It is the sponsors‟ full intention

to continue to develop local human resources in the management team, in order to accelerate

Page 56: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

44

company change, spread the management burden, and ensure long term viability and growth for the

company.

2. Collections

The electricity in GBAO was always subsidized and people conceived energy as a gift. When Pamir

Energy was established and tariffs increased, people still kept the attitude from old years,

contributing to higher and higher debts and not willing to pay. Beside the issue of “willingness to

pay”, the issue was also with collectors who did not have motivation to make efforts to collect the

bills or finds thefts. All these led to high losses and thefts, resulting in limited power supply in

Khorog and no power supply in regions.

Pamir Energy started with installation of meters on generation capacities and further down to

transmission and distribution network, including meters for end consumers. Bills became more

correct and people started realizing that bills should be paid.

PEC established the disconnection teams, Customer Service Center and New Billing System to bring

transparency and improve the collection rate and remove the issue of “willingness-to-pay” among

consumers.

PEC introduced a bonus system for Khorog Sales specialists and that gave good results, making the

collection % as of sales more than 100%. PEC is introducing the bonus system in regions to make

the collection better and collect the outstanding debts from previous years. Trade days decreased

from 159 days in 2009 to 99 days in 2010.

Using billing system, PEC shows the history of the last 12 months bills on each monthly bill of the

consumers, so consumers see when and how much they have paid, reconcile the data with their

meters. This improved significantly the collection and the image of the company. Previously, theft

was normal and people were sharing with each other how to steal energy. Today, consumers see the

theft a very bad behavior and sometimes, people calling PEC on the hot line to inform that some

neighbor or person is stealing energy. Collection increased above 100% in 2010, and PEC is

intending to collect not only the whole sales in 2011, but also more outstanding debts from previous

years in 2011.

PEC learned that high quality service and incentive system for sales specialists can improve

everything – sales, collections, image, transparency, and reputation of the company.

3. Ice, Sediments and Water Flow

Ice, sediments and water management were always a big issue for Pamir I, Khorog and Namangut

HPPs. Sediments and ice resulted in deterioration of turbine parts, reduction of available capacity of

the plants (low generation), limited energy supply and rationing for the consumers, and high

expenses for Pamir Energy while cleaning the sedimentation basin once in 2 years (Pamir I) and

replacing and maintaining the units of all affected HPPs. Namangut HPP was stopped every years

for 3-4 months, while in the last 4 years, it was not suspended at all due to the measures taken by

PEC. However, substantial repair and maintenance is required.

PEC General Director and two other key staff visited Sweden to learn how to deal with fragile ice

having similar harsh winter as in Pamir region. PEC implemented several pilot projects and since

Page 57: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

45

2009, the sediments and fragile ice issue is being resolved (in 2009, sediments and fragile ice issue

was minimized and in 2010, the issue was completely resolved for Pamir I and Khorog HPPs).

PEC took anti-filtration measures at Lake Yashilkul guaranteeing the stable water supply to Pamir I

and Khorog HPPs during the winter. In 2010, PEC economized around 20 million m3 of waters in

the lake due to the anti-filtration measures.

Intakes of Khorog HPP, Vanj HPP and Shujand HPP had issues with water flow and water

management. In Khorog, the issue was resolved with the several projects on the channel intake.

Shujand issue was partially resolved. In Vanj HPP, the intake is the most serious issue – there is

always a bulldozer in the intake to enhance the intake constantly.

PEC procured dredging pump which removes the sediments from Pamir I sedimentation basin,

without stoppage of the HPP for the whole month. PEC built two Ice blocking systems to prevent the

ice penetration into the basin and further to the turbines. Fragile ice contains sediments as well, so

the systems resolved partially also the sediments issue.

Better water flow management, measures against frazil ice and sediments improved the reliability of

two main power plants, resulting in more energy supply in the region. Today, PEC has surplus of

4MW in winter peak times, while some 4 years ago, PEC had deficit in even non-peak hours of

winter season.

4. Community Relations

Before, community had a stereotype that energy should be cheap or free. With higher tariffs, some

consumers did not want to pay for the energy they consumed (willingness-to-pay issue). Due to the

lack of meters and high thefts, group metering was introduced which actually worsened the relation

between the community and PEC. Issues with Government started as well. Theft accepted as a

normal, and many people were sharing with each other how to steal the energy easier. PEC

controllers/sales specialists were sometimes beaten by some aggressive consumers when they

required the payment of the bills.

PEC started from visiting the community. People wanted to talk directly with General Director, and

GD visited the community in person to hear them, to talk with them. There were bad words and

threats, but PEC listened to people, agreed on some issues and moved forward. For example, PEC

promised to improve the energy supply and install meters, while consumers will pay for their

outstanding bills and will not steal energy.

PEC started to work with TV stations, radios, newspapers, distribute brochures and meet with

community leaders to improve the PEC reputation and relation with the community. PEC launched

the re-metering program and today, more than 83% of the energy goes through new electronic

meters.

PEC launched Customer Service Center (first in Tajikistan) to respond immediately to consumers

requests. Complains to CSC reduced from 1500/year in 2008 to 150/year in 2010. More than 95% of

the requests to the center are coming with the issue of information or explanation of the bills or

tariffs, not overcharging as it used to be.

Page 58: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

46

PEC launched hot-line to which consumers can call and ask about their issues. Today, many

consumers call to the hot-line and inform on some consumers that steal energy. People think that it is

really bad and shameful to steal energy.

PEC launched social projects to help the community with other issues. For example, the clean water

pipeline in Bogev village of Shugnan, or sponsorship of the chess classes in all Khorog schools, or

sponsoring sportsmen in the regional or international competitions.

Today, PEC has high reputation in the community and is one of the best employers in the region.

Individual approach is required to have efficient resolution for the issues raised among the

consumers, or between company and consumers.

Meters are highly important for the reputation, image and trust to the company among consumers.

Group metering brings dissatisfaction and makes the willingness-to-pay a serious issue.

Dissatisfaction results in the creativity of the consumers in the way they steal energy and share with

others.

Hotline is necessary to listen to consumers requests when they want to ask or share information

confidentially. Customer Service Center is essential when you work with majority of the members of

the community. People should know what they receive, how much they receive and what and how it

should be paid for. Image and reputation of the company, relation between company and consumers

is essential for having proper and prosper business.

Project Design:

Project design process brought a good experience for the company. Pamir Energy gained skills on

working together with WB specialists and prepare projects specification and procurement plans in

accordance with WB policies and rules.

As well, lessons learned how to deal more efficiently with Government agencies, and improve the

relation between all stakeholders.

Implementation:

During the implementation, the hotspots were identified and measures were taken to improve it.

Projects were implemented not only from the technical point of view, but also other aspects/impacts

of the projects were analyzed and were resolved. For example, while building the dam at the Lake

Yashilkul, the environmental issues, fish population and impacts on pasture area were taken into

consideration.

Monitoring:

Several WB missions were arranged to Pamir Energy. The process of reporting, improvement of the

reporting progress and compliance with the WB rules were beneficial for PEC. Constant monitoring

of the project created a benchmark for some reporting, project design and preparation,

implementation and monitoring improvement in the company. PEC made a huge step in efficiency

and cost-effective analysis of the projects.

Procurement:

It is a valuable knowledge in the creation, management and follow-up of the procurement plans,

compliance with rules and policies. The experience of tenders announcement, working with

Page 59: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

47

international suppliers and partners, negotiation with WB on the procurement and “no-objection”

resulted in more efficient management of the projects. PEC uses the lessons learned in all

procurement stages in the company, such as CapEx projects.

Comments on IDA’s ICR

Pamir Energy considers that the ICR should rate Outcome and Implementing Agency Performance

as “Highly Satisfactory”.

Pamir Energy has gained a valuable knowledge from the World Bank team in creation, management

and follow up of the procurement plans, compliance with rules and policies, interacting with the

World Bank on procurement and „no-objection‟, resulting in more efficient management of projects.

The World Bank team has been always receptive and supportive indeed. It took timely and

professional manner by the World Bank to enable Pamir Energy to finalize the project within the

budget and in time. Despite the skepticism, GoT, WB and other stakeholders managed to mobilize

the required resources to put back into operation three out of four units at Pamir I after the

catastrophic flooding in February 2007 in the shortest possible time. The World Bank had also

supported the remetering program in Khorog (over 6,000 sets of the meters with the budget of

US$700,000) that enabled the company dramatically to reduce losses from as high as 60% down to

as less as 14% in Khorog. This project is seen as a key in turning around situation in Khorog.

Through the whole project, the World Bank provided technical advises on specification of the

equipment and identifying solutions for the challenges. The World Bank technical support in

resolving sediments and fragile ice issues at Pamir I were of the high asset. Pamir Energy looks

forward to continued cooperation with and support from the World Bank during the process of the

negotiation with the GoT in regards to IDA loan interest rate.

Page 60: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

48

Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders

I. Comments from Aga Khan Fund for Economic Development (AKFED)

PamirEnergy has been a challenging, but highly rewarding project. The task of

turning a historically subsidized utility in an extremely poor environment, where

energy was perceived as a social good, into an operationally sound and profitable

company in several years was difficult, but the results have exceeded our expectations.

PamirEnergy now provides the best energy supply in the country, and unlike any

other area of Tajikistan, has excess energy even in winter, in spite of it being the

coldest region of the country. Losses are lower, and collections are higher than any

other area in the country, and the company continues to improve on both metrics.

Tariffs were raised gradually, and the company is now in a position to generate small

profits, while continuing to invest approximately $1 million in internally generated

funds into annual, ongoing capital expenditure, in order to ensure high operational

performance in the future, beyond the concession term. With new projects to sell into

Afghanistan being developed, the financial outlook for the company will only

improve. In sum, PEC took from the Government a subsidized, poorly operating and

collapsing utility in the poorest region of the country, and will return to the

Government the best performing, financially successful and completely sustainable

utility. Taking this into consideration, we believe the project cannot be considered

less than highly successful.

Page 61: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

49

Annex 9. List of Supporting Documents

Project Appraisal Document for Tajikistan Pamir Private Power Project, dated May 31, 2002

(Report No. 24068-TJ).

Concession Agreement between Government of the Republic of Tajikistan and Pamir Energy

Company, dated May 24, 2002.

Aide memoires, Back-to-Office Reports, and Implementation Status Reports.

Project Progress Reports.

PEC‟s Implementation Completion Report, May 2011.

Legal Agreements related to the Project

Project Paper, Additional Financing, dated June 23, 2008.

Project Restructuring Paper, dated December 29, 2010.

Pamir Energy Operational Review, Monthly Report, December 2010.

Page 62: Document of The World Bankdocuments.worldbank.org/curated/en/742771468119049265/... · 2016-07-16 · document of the world bank report no: icr00001513 implementation completion and

SSyyrrddaarr''yyaa

SSyyrrddaarr ''yyaa

ZZeerraavvsshhaann

VVaakkhh

sshh

KKaaffiirr

nniiggaann

VVaakkhh

sshh

NurekNurekReserReservoirvoir

PPyyaannddzz hh

KKyyzzyy

llssuu

YYaakkhh

ssuu

PPaannjj

SSuurrkkhhoobb

OObbiikkhhiinnggoouu

VVaannjj

BBaarrttaa

nngg

SShhaakkhhddaarraa

YYaazzgguueelleemm

PPaammiirr

LakeLakeYYashikulashikul

GGuunntt AAlliicchhuurr

MMuurrgghhaabb

LakeLakeSarezSarez

TTaannyymmaass

OzeroOzeroKarakul'Karakul'

KKaaiinnddyy

KKyyzzyyll--SSuuuu

AAkkssuu

Vanj HydroPower Plant

Khorog HydroPower Plant

Namangut HydroPower Plant

Pamir HydroPower Plant

REHABILITATIONOF 35 kV LINE

NEW 35 kV LINE

GORNO-BADAKHSHAN

A.O.

Khodjand

DUSHANBE

Kurgan-TyubeKulyab

Khorog

Murgab

Rangkul'Nurek

Leningradskiy

Pyandzh

Parkhar

Moskovskiy

Dangara

Garavuti

Shaartuz

Yavan

Komsomolabad

Kalaikhum

Ura-Tyube

Shahriostan

Chkolovsk

Taboshar

Konibodom

Tursunzade

Ayni

Pendzhikent

Kalininabad

Vanj

Rushan

Rukhch

Ishkashim

Vrang

CharsemAlichr

Andarob

To Denau

To Osh

To Tashkent

To Tashkent

To Konduz

To Samarqand

To Bukhoro

To Quqon

Syrdar'ya

Syrdar 'ya

Zeravshan

Vakh

sh

Kafir

nigan

Vakh

sh

NurekReservoir

Pyandz h

Kyzy

lsu

Yakh

su

Panj

Surkhob

Obikhingou

Vanj

Barta

ng

Shakhdara

Yazguelem

Pamir

LakeYashikul

Gunt Alichur

Murghab

LakeSarez

Tanymas

OzeroKarakul'

Kaindy

Kyzyl-Suu

Aksu

A F G H A N I S TA N

PA K I S TA N

C H I N A

U Z B E K I S TA N

KAZAKHSTAN

K Y R G Y Z R E P.

U Z B E K I S TA N

68

38

38

40

40

70 72

68 70

72 74

74

TAJIKISTAN

LakeBalkash

AralSea

Cas

pian

Sea

KAZAKHSTAN

UZBEKISTAN

TURKMENISTAN

ISLAMIC REP.OF IRAN CHINA

KYRGYZ REP.

AFGHANISTAN

Dushanbe

PROJECT:

HYDRO POWER PLANTS

REHABILITATION OF 35KV LINE

NEW 35KV LINE*

REHABILITATION OF OTHER 35KV AND 10KV LINES

REGULATING STRUCTURE

EXISTING SUB STATION

SELECTED CITIES

AUTONOMOUS OBLAST CENTERS**

OBLAST CENTERS

NATIONAL CAPITAL

MAIN ROADS

HIGHWAYS

AUTONOMOUS OBLAST BOUNDARIES

OBLAST BOUNDARIES***

INTERNATIONAL BOUNDARIES

ELEVATIONS:(IN METERS)

* Pole-mounted with a narrow corridor requirement, constructed on the present right-of-way of the two existing 35 kV lines.** Area with no oblast-level administrative divisions, where rayons are under direct republic jurisdiction. *** An oblast is named only when its name differs from that of its administrative center.

This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, o r any endorsemen t or a c c e p t a n c e o f s u c h boundaries.

TAJIKISTAN

PAMIR PRIVATE POWER PROJECT

1000

2000

3000

4000

5000

6000

0 25 50 75

0 25 50 75 100 Miles

100 Kilometers

IBRD 31770

FEBRUARY 2002


Recommended