Central Asian States Create Electricity Regulators' Forum

BISHKEK, KYRGYZ REPUBLIC (6 November 2005) - Seven countries today signed a memorandum of understanding establishing a forum of electricity regulators in the Central Asia region.

Azerbaijan, People's Republic of China, Kazakhstan, Kyrgyz Republic, Mongolia, Tajikistan and Uzbekistan signed the agreement on the sidelines of the Fourth Ministerial Conference on Central Asia Regional Economic Cooperation (CAREC) in Bishkek, Kyrgyz Republic.

The CAREC Members Electricity Regulators Forum (CMERF) is designed to help members capitalize on their shared experiences as they seek to reform their power sectors and work towards closer cooperation in meeting power demand in the region and facilitating power exports.

"This forum will provide an important opportunity to discuss both the challenges and the very significant rewards involved in power sector reform," says Anil Terway, Director of ADB's East and Central Asia Energy Division.

At the conference, ADB also released a study, Power Sectors in CAREC Countries: A Diagnostic Review of Regulatory Approaches and Challenges, which provides an overview of the economic conditions and challenges facing power sector regulators in participating countries.

The study is intended to help CMERF define its agenda and identify future areas for study, discussion and training.

"Most CAREC power sectors face substantial financial difficulties. Achieving credible domestic power sector reform in Central Asia is key to unlocking the massive potential for regional cooperation in energy," says Aashish Mehta, an ADB economist and one of the study's authors.

"This will require strong political commitment, improvements in transparency, structural reforms, and inevitably, some tariff increases. To be feasible, reforms will have to be complemented by effective and well-targeted schemes to alleviate their impact on the poor."

Once domestic reforms have proceeded adequately to permit power trade to develop organically, CMERF is expected to help facilitate harmonization of member countries' electricity regulations to create opportunities to deepen trade and cross border investment, says Mr. Terway.

At its first meeting earlier this year in Beijing, CMERF delegates shared their diverse experiences in dealing with common sector concerns, including corruption and mismanagement at power utilities, the need for tariff increases, regulatory independence, and the potential for pricing of system constraints.

Financial support for the establishment of CMERF was provided by the Public Private Infrastructure Advisory Facility, and ADB. ADB will continue to support CMERF studies and meetings to build capacity at electricity regulatory bodies in member states.

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