77. ADB’s approach in the following matters will be applicable to most or
all of the energy sector.
Private sector participation: ADB will strongly encourage private sector
participation in energy sector operations in its DMCs by helping
create the enabling environment, prepare projects suitable for such
participation (including public-private partnerships), and select sponsors
through ICB, and if necessary, to catalyze other financing sources
by providing direct assistance to the sponsors. To facilitate such participation,
ADB will help increase the depth of domestic capital markets
and improve the availability of long-term finance for private
sector investments.
Sector restructuring: ADB will help its DMCs restructure the energy
subsectors (oil, coal, gas, and power) by unbundling existing entities
and establishing competition where possible. The assistance will help
DMCs in formulating energy sector policies and enacting related laws.
Support will also be extended for capacity building to successfully
implement restructuring plans for the subsectors, and later for regulation
and oversight. Attention will also be given to initiating a suitable
consultation process and safeguarding the interests of small consumers.
For the duration that public enterprises continue to operate after
restructuring, ADB will support reforms that improve their governance
and efficiency, make their operations commercially sustainable, and
help establish industry standards. If requested, ADB will assist in the
privatization of such enterprises.
Social development: The social impact of projects and programs
proposed for ADB assistance will continue to be analyzed, and recommended
measures will be incorporated in design according to the
relevant ADB guidelines. In line with the poverty reduction goal, particular
emphasis will be given to analyzing the impacts of energy
projects on poverty reduction.
Subsidies: ADB will encourage its DMCs to withdraw subsidies in production
and use of all energy products. However, recognizing the need
of the poor and the possible recessionary impact of price increases,
transparent and well-directed subsidies will be considered, when
appropriate, over the short and medium term.
Governance: ADB will prepare and implement energy projects with
due emphasis on accountability, participation, predictability, and
transparency, which are identified as the basic elements of good
governance.
Internet and information technology: Online computers and microprocessors
are widely used in the energy sector for operations and
control. DMCs will be encouraged to use the Internet for bringing
greater transparency during the implementation of policy reforms and
projects. Use of business-to-business software applications will be
promoted to reduce transaction costs. ADB will also assist in improving
the quality of consumer services by the expansion of information
technology to allow online metering and billing. Under the power sector
restructuring programs, ADB will assist in developing computer
software for system operations and power exchange to ensure the
integrity of power supply and efficient bulk electricity trade.
Environmental protection: ADB will help its DMCs address regional
acid rain problems. ADB will also assist interventions in the energy
sector that increase the sustainable use of cleaner forms of energy
and that support the Kyoto Protocol mechanisms for GHG abatement
within the overall framework of the UNFCCC. Assistance will also be
provided to DMCs to address environmental issues related to the
existing use of fuels and reduce poverty through environmental protection.
All adverse environmental impacts of energy projects will be
mitigated to meet relevant national and international standards.
Efficiency improvement: ADB will assist its DMCs in the design and
implementation of measures to improve the efficiency of energy supply
and use. This will include assistance for reducing technical and
nontechnical power losses.
Energy conservation: ADB will assist its DMCs in the design and implementation
of measures for energy conservation and demandside
management.
Cofinancing: To help meet the large capital requirements in the energy
sector of its DMCs, ADB will continue to catalyze additional funds from
other sources through official and commercial cofinancing, grants,
and export credit operations. During project identification and preparation,
ADB will seek opportunities to coordinate its activities with those
of other multilateral and bilateral agencies assisting the energy sector.
Further, to enable DMCs to borrow additional funds with longer tenures
for ADB-assisted projects (where necessary, from financial markets),
ADB will extend partial risk guarantee (covering political risks)
in private sector energy projects, and partial credit guarantee (covering
both commercial and political risks) in the public sector. For
renewable energy projects, ADB will seek GEF funds, where possible.
Capacity building and information systems: Capacity building will be
supported in DMCs for activities in line with energy sector policy. ADB
will also support the preparation and sharing of reliable database and
information systems that lead to informed decision making.
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