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Lilit Melikyan and Hasmik Ghukassyan              Almaty           13 April 2011                                       1
100                                                 97% 98                                                             59%...
1 million: An estimate of the number ofpeople who spend much of the winterwithout electricity, heat10%: Although nearly th...
Vertically integrated state monopolyHydropower dominates generationassetsCollections: From 54% (2004) to 72%(2009)Technica...
A public-private partnership in Gorno Badakhshan◦ 25 year concession◦ Shareholders: IFC and Aga Khan Development Foundatio...
2007                     2009                                                             72%                             ...
2007        2009           Average monthly                                         household           477         2007   ...
2007                    2009      44%40%                                                  Half the population heats       ...
Income-poverty elasticity estimate in 2010-2012 PRSP suggests that higher GDP growthcould lift 120,000 people out of pover...
International affordability benchmarks(share of household expenditures devoted to energy spending)                Electric...
40%          Average                     Average                                                                          ...
63%             Share of    Official                                 household    survey data                             ...
Simulation of impact of raising householdelectricity tariffs from $0.019 kWh (at present)to $0.034/kWhAssumptions:◦ No red...
27%                     Only 0.5% of23%                           GDP devoted to            20%               social prote...
Share of electricity expenditures in total household expenditures, by povertyOur simulation                               ...
Indicator composition of Tajikistan’s proxyWorld Bank/EC-                      means testing pilotled reform:        Chara...
Other social assistance measuresTransitional scheme?                                    Connection subsidies (gas and Comb...
Enabling legislation/regulations need to beadopted for:◦ The 2010 Renewable Energy law◦ Energy efficiency legislationNatio...
Improve energy poverty component ofliving standard survey dataConduct willingness-to-pay surveysregarding possible tariff ...
Thank you....                20
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Energy sector in Tajikistan - Poverty and Social Impact Assessment (PSIA)

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

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Energy sector in Tajikistan - Poverty and Social Impact Assessment (PSIA)

  1. 1. Lilit Melikyan and Hasmik Ghukassyan Almaty 13 April 2011 1
  2. 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. 3. 1 million: An estimate of the number ofpeople who spend much of the winterwithout electricity, heat10%: Although nearly three quarters of thepopulation lives in rural areas, they onlyaccount for 10% of electricity consumption$2.2 billion: The financing gap associatedwith Tajikistan’s programme for buildinglarge hydropower plants, new electricitytransmission infrastructure
  4. 4. Vertically integrated state monopolyHydropower dominates generationassetsCollections: From 54% (2004) to 72%(2009)Technical and commercial losses: From19% (2004) to 14% (2009)Household tariffs:◦ Cross-subsidized by other users◦ Committed to raise them
  5. 5. A public-private partnership in Gorno Badakhshan◦ 25 year concession◦ Shareholders: IFC and Aga Khan Development FoundationService: More than 90% of 29,000 households receiveelectricity from Pamir EnergyDifficult 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 2011Subsidy scheme: for up to 200 kWh per month inwinter and 50 kWh per month in summer, theconsumers pay 0.25 ¢/kWh Source: Pamir Energy Information note 5
  6. 6. 2007 2009 72% 62% 53% 47% 17%National poverty Extreme poverty 4 or more children rate rate Source: State Statistical Agency 6
  7. 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 ofhouseholdsusingelectricity Source: State Statistical Agency 7
  8. 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. 9. Income-poverty elasticity estimate in 2010-2012 PRSP suggests that higher GDP growthcould lift 120,000 people out of povertyOne megawatt of additional installed capacityin small hydropower plants creates 40 “greenjobs” (UNDP-Tajikistan)In other countries, extensive use of dieselgenerators has been found to reduce GDP byup to 40%
  10. 10. International affordability benchmarks(share of household expenditures devoted to energy spending) Electricity Heat WaterWorld Bank 10-15% 3-5%WHO 10%UNECE 15%UK gov’t 10% 3%US gov’t 6% 2.5% 10
  11. 11. 40% Average Average 55% Poorest quintile Poorest quintile34% 32% 26% 38% 35% 32%National Dushanbe Rural Other urbanShare of household expenditures devoted to energy, 2009 data, maximal values. 11 Source: State Statistical Agency.
  12. 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 householdNational Poor Non-poor budgets Source: State Statistical Agency 12
  13. 13. Simulation of impact of raising householdelectricity tariffs from $0.019 kWh (at present)to $0.034/kWhAssumptions:◦ No reduction in volume of electricity consumed◦ No change in other energy prices, quantities◦ No change in real household incomesResults: share of poor household expendituresdevoted 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? 13
  14. 14. 27% Only 0.5% of23% 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. 15. Share of electricity expenditures in total household expenditures, by povertyOur simulation level, under different tariff scenariosindicates that a Average Baseline Scenario Scenario Scenario 3lifeline would lift monthly 2009 1 2011 2 Cost recoverymore people out electricity 7.5 tariff at Cost level (13.1of severe poverty consum- consum- dirham 9.9 recovery dirham/kWh) dirham/kWh)than other social ption per kWh dirham level with lifelineassistance 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 3the extreme Very poor 339 3.6% 5.2% 7.2% 5.1%poverty rate wouldfall 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. 15
  16. 16. Indicator composition of Tajikistan’s proxyWorld Bank/EC- means testing pilotled 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 9through Amonat Source: Robert van Leeuwen (Team leader), EU/ Mott M November 2010. acDonald , “Presentation of the PM system in Tajikistan” , Tbank 16
  17. 17. Other social assistance measuresTransitional 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 17
  18. 18. Enabling legislation/regulations need to beadopted for:◦ The 2010 Renewable Energy law◦ Energy efficiency legislationNational 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, decentralizedrenewables:◦ UNDP-proposed trust fund◦ Credit lines through local banks to fund renewables 18
  19. 19. Improve energy poverty component ofliving standard survey dataConduct willingness-to-pay surveysregarding possible tariff increasesUse computable generalequilibrium, macroeconomic models(e.g., PAMS) to more fully model theimpact of tariff, other policy changes.Apply social cost benefit analysis 19
  20. 20. Thank you.... 20

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