PSIA Energy Tajikistan, research funded by UNDP Bureau for Europe and CIS UNDP presentation - Lilit Melikyan and Hasmik Ghukassyan, Almaty, 13 April 2011

1. Lilit Melikyan and Hasmik Ghukassyan
Almaty
13 April 2011
1

2. 100 97%
98
59%
96
35% 38%
94
92
90
2006 2007 2008 2009 2010 2007 2008 2009 2010
Changes in apparent electricity Annual household
consumption* (2007 = 100) electricity inflation rates
* Generation minus exports. Source: State Statistical Agency. 2

3. 1 million: An estimate of the number of
people who spend much of the winter
without electricity, heat
10%: Although nearly three quarters of the
population lives in rural areas, they only
account for 10% of electricity consumption
$2.2 billion: The financing gap associated
with Tajikistan’s programme for building
large hydropower plants, new electricity
transmission infrastructure

4. Vertically integrated state monopoly
Hydropower dominates generation
assets
Collections: From 54% (2004) to 72%
(2009)
Technical and commercial losses: From
19% (2004) to 14% (2009)
Household tariffs:
◦ Cross-subsidized by other users
◦ Committed to raise them

5. A public-private partnership in Gorno Badakhshan
◦ 25 year concession
◦ Shareholders: IFC and Aga Khan Development Foundation
Service: More than 90% of 29,000 households receive
electricity from Pamir Energy
Difficult start but strong progress
◦ Average supply per day: 23.5 hours
◦ Losses: down to 20% (from 39%)
Tariffs:
◦ More rapid growth than at Barqi Tojik
◦ Lifeline scheme funded by SECO (around $5million)
expiring end of 2011
Subsidy scheme: for up to 200 kWh per month in
winter and 50 kWh per month in summer, the
consumers pay 0.25 ¢/kWh
Source: Pamir Energy Information note
5

6. 2007 2009
72%
62%
53%
47%
17%
National poverty Extreme poverty 4 or more children
rate rate
Source: State Statistical Agency
6

7. 2007 2009 Average monthly
household 477 2007
99% electricity
consumption 2009
98% (kWh)
419
97%
390
96%
364
357
95%
327
94%
93%
Share of
households
using
electricity
Source: State Statistical Agency 7

8. 2007 2009
44%
40%
Half the population heats
with wood and dung . . .
32% With implications for
26% health, deforestation
17%
13% 12% 12%
10%
4%
Wood Electricity Dung Coal Other
Source: State Statistical Agency 8

9. Income-poverty elasticity estimate in 2010-
2012 PRSP suggests that higher GDP growth
could lift 120,000 people out of poverty
One megawatt of additional installed capacity
in small hydropower plants creates 40 “green
jobs” (UNDP-Tajikistan)
In other countries, extensive use of diesel
generators has been found to reduce GDP by
up to 40%

10. International affordability benchmarks
(share of household expenditures devoted to energy spending)
Electricity Heat Water
World Bank 10-15% 3-5%
WHO 10%
UNECE 15%
UK gov’t 10% 3%
US gov’t 6% 2.5%
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11. 40% Average Average
55%
Poorest quintile Poorest quintile
34%
32%
26% 38%
35%
32%
National Dushanbe Rural Other urban
Share of household expenditures devoted to energy, 2009 data, maximal values.
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Source: State Statistical Agency.

12. 63% Share of Official
household survey data
spending
devoted to imply that
59% food (2009)
food +
energy
56% expenditures
absorb 100%
(or more) of
many
household
National Poor Non-poor
budgets
Source: State Statistical Agency 12

13. Simulation of impact of raising household
electricity tariffs from $0.019 kWh (at present)
to $0.034/kWh
Assumptions:
◦ No reduction in volume of electricity consumed
◦ No change in other energy prices, quantities
◦ No change in real household incomes
Results: share of poor household expenditures
devoted to:
◦ Electricity could rise up to 8%
◦ Energy overall could rise up to 56%
Implications:
◦ Even more pressures on household budgets
◦ Can social policy mitigate this impact?
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14. 27% Only 0.5% of
23% GDP devoted to
20% social protection
18%
in 2009
12%
Household
electricity and
gas subsidies
are included
Only half of this
share is received
by poorest
households
(1st, 2nd
quartiles)
Poverty rate only
reduced by 0.3%14

15. Share of electricity expenditures in total household expenditures, by poverty
Our simulation level, under different tariff scenarios
indicates that a Average Baseline Scenario Scenario Scenario 3
lifeline would lift monthly 2009 1 2011 2 Cost recovery
more people out electricity 7.5 tariff at Cost level (13.1
of severe poverty consum-
consum- dirham 9.9 recovery dirham/kWh)
dirham/kWh)
than other social ption per kWh dirham level with lifeline
assistance policies (kWh) per kWh 13.1 (100 kWh at
dirham 1.0313
◦ This is consistent
with other research per kWh dirham/kWh)
dirham/kWh)
results for small
countries with high All 357 2.0% 2.7% 3.6% 2.6%
poverty and households
connection rates
Poor 332 2.8% 3.9% 5.3% 3.7%
Under scenario 3
the extreme Very poor 339 3.6% 5.2% 7.2% 5.1%
poverty rate would
fall by 5% (from Not poor 373 1.7% 2.2% 2.9% 2.1%
20.2% 19.1%)
Assumptions:
a) household electricity consumption remains unchanged;
b) households consume the same amount of electricity under different tariffs;
c) household incomes remain unchanged; and
d) lifeline limits are applied to all households.
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16. Indicator composition of Tajikistan’s proxy
World Bank/EC- means testing pilot
led reform: Characteristic Used for urban Used for rural
◦ Proxy-means households households
testing Household size * *
Gas oven *
◦ Improved Generator *
management Electric radiator * *
Refrigerator *
Two-year pilot Satellite dish * *
Khatlon oblast Car or truck * *
(until 12/2012) Computer
Household head’s employment sector
*
*
Annual Household Head’s Education *
allocations will Housing Roof Material
Num of Children under 15
ber
*
*
*
*
be 400 somoni Oblast * *
($91), paid out No of disabled of 1st category and
disabled children in the household1
*
quarterly Total Number of Variables 11 9
through Amonat Source: Robert van Leeuwen (Team leader), EU/ Mott M
November 2010.
acDonald , “Presentation of the PM system in Tajikistan” ,
T
bank 16

17. Other social assistance measures
Transitional scheme?
Connection subsidies (gas and
Combine: electricity)
◦ The present system
◦ A lifeline tariff regime Subsidies or vouchers to
◦ Some categorical targeting encourage the use of clean
A recent ADB study finds fuels (e.g., LPG)
that many features of Subsidies for energy efficient
Tajikistan’s existing household appliances,
assistance programme insulation, and other energy-
could be combined with saving technologies—possibly
such a scheme, thereby via vouchers—could be
facilitating its introduction considered
Potentially assistance with
firewood harvesting
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18. Enabling legislation/regulations need to be
adopted for:
◦ The 2010 Renewable Energy law
◦ Energy efficiency legislation
National Heating strategy .
◦ Resolve uncertainties regarding”
Extent of rehabilitation or expansion of the central
heating system
Other alternatives:
Centralized: (electricity, piped gas)
Decentralized (LPG)
Financing for energy efficiency, decentralized
renewables:
◦ UNDP-proposed trust fund
◦ Credit lines through local banks to fund renewables
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19. Improve energy poverty component of
living standard survey data
Conduct willingness-to-pay surveys
regarding possible tariff increases
Use computable general
equilibrium, macroeconomic models
(e.g., PAMS) to more fully model the
impact of tariff, other policy changes.
Apply social cost benefit analysis
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20. Thank you....
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