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p. 10 of 30 BACK | NEXT Introduction Regional Energy Context Energy Policy Issues Structural Reform Background Multilateral Coordination Power Subsector Reforms Hydrocarbon Subsector Reforms Private Sector Role Energy Efficiency Energy Pricing Energy and Environment Rural Energy Development Regional Cooperation and Energy Development Conclusions and Recommendations

Bank Policy Initiatives for the Energy Sector : Energy Policy Issues : Structural Reform

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Multilateral Coordination

13. The World Bank has also identified the above mentioned weaknesses in the developing countries and redefined its role in respect of handling power subsector issues and energy efficiency issues.¹ Neither the Bank nor the World Bank holds a comparative advantage as far as expertise in energy sector operations in the DMCs is concerned, although physical proximity in the case of the Bank does provide a logistical advantage. On the other hand, given its larger number of developing member countries, the World Bank provides centralized support to its operating divisions to study sector restructuring and regulation issues and energy efficiency issues, and the Bank has benefited from some of these studies. There is no division of responsibility between the Bank and the World Bank for specific energy sector activities in the DMCs. The financing of projects in the various subsectors is pursued on the basis of either a geographical division of work or past association in respect of physical development of energy systems, or a functional division of work in respect of institutional development. Careful attention is given by both parties to maintain close coordination, particularly on least-cost energy development planning, institutional restructuring, development of institutional and legal frameworks to promote private sector investment, tariff analysis, environmental considerations, and financing conditionalities.

14. Joint financing by the Bank and the World Bank is considered only in the case of large and complex projects or under very weak institutional circumstances, coupled with high country risk resulting in genuine difficulty of mobilizing commercial sources of financing. Given the Bank’s mandate to finance both public and private sector projects, the Bank has maintained close coordination with the International Finance Corporation also in respect of private sector operations. Joint financing is, again, resorted to in special circumstances as in the case of joint financing with the World Bank for the public sector. A relationship similar to that with the World Bank is being built up by the Bank with the European Bank for Reconstruction and Development in the process of carrying out operations in certain common developing member countries. In view of the importance attached to global environment problems in the region, the Bank has, in principle, endorsed its participation as an executing agency in the Global Environment Facility (GEF).²

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