Remarks by ADB President Takehiko Nakao at the 6th Meeting of the Asian Solar Energy Forum on 22 November 2013, Tashkent, Uzbekistan (as drafted).
His Excellency President Islam Karimov,
Distinguished officials and delegates, ladies and gentlemen;
On behalf of the Asian Development Bank, the Asia Solar Energy Forum, and all guests, I thank the Government of Uzbekistan for the excellent arrangements made in hosting this event. This is the first time that this prestigious conference is being held in Central Asia.
I am delighted to be in Uzbekistan, a country renowned for its wonderful people, profound history, and rich culture. In 2010, the ADB hosted its 43rd Annual Meeting here in Tashkent. It was at that meeting that Uzbekistan and ADB laid a foundation for strong partnership in solar energy development ̶ a partnership further deepened by this conference.
Before I speak specifically about solar energy, let me briefly discuss Uzbekistan’s economy and the ADB-Uzbekistan development partnership.
I am truly impressed by the progress Uzbekistan has made in the very short period since independence. I congratulate President Karimov and the Government for the hard work they have done to raise the living standards of the Uzbekistan people.
Over the past decade, the growth rates of the Uzbek economy surpassed growth rates of the developed, and many developing, economies in the world. A strong fiscal position with low external debt show the country’s macroeconomic fundamentals are sound. This provides Uzbekistan with a solid platform for making large-scale investments to further raise the living standards. Such investments may include those that enhance and expand the industrial sector, and upgrading of physical and social infrastructure.
In 2012, total investments in Uzbekistan grew more than 14% from the previous year. Foreign investments accounted for more than 22% of total investments. This is a testimony to the success of Uzbekistan’s model of prudent macroeconomic and fiscal management, and the “gradualism” approach to development.
But, like in many other developing countries, particular focus is needed in areas such as higher education, banking and capital markets, information and communication technologies, private sector participation in infrastructure sectors, and better institutional regulatory frameworks to promote private investment. This focus is essential in order for Uzbekistan to continue its transition from a primary resources based economy to a more diversified economy, and from investment-led to productivity-led growth. These changes are necessary to generate employment, support inclusive growth, and successfully transition to higher income status.
I will now turn to ADB’s partnership with Uzbekistan.
ADB is an active development partner of Uzbekistan and supports the country’s efforts in a broad range of areas. Since the start of ADB operations in 1996, loans to Uzbekistan have reached $3.9 billion. Over the past few years, in addition to its sovereign operations, ADB has developed a strong pipeline of private sector operations as well. Uzbekistan has invested greatly in building modern education and healthcare systems. ADB has supported 7 projects and 1 program in these areas, providing $330 million in loans.
An important part of the Government’s development program is creating and upgrading road and railway infrastructure that provides valuable contribution to regional connectivity, trade and transit. ADB has supported these objectives through 10 projects, with loans totaling $1.17 billion.
Uzbekistan’s policies aim at increasing the share of private sector through developing small and medium-sized enterprises, or SMEs. The share of SMEs in GDP has grown to more than 55 percent in 2012, up from 52 percent in 2011, when the new policy was announced. We are pleased that ADB contributed to the expansion of SMEs with 4 SME support projects, for a total of $170 million.
Another important program is the Comprehensive Rural Housing Development Program which, apart from creating housing for people in rural areas, aims at stimulating SMEs in construction, production of building materials, and related services. This program was highly praised by many participants of the international conference held in Tashkent earlier this year. ADB is supporting this innovative program with a $500 million multi-tranche financing facility.
Uzbekistan is building a modern and efficient energy sector to support its ambitious industrial development objectives, meet the increasing demand for energy resulting from rapid economic growth, as well as improve living standards of the population. ADB’s lending to this sector is $650 million, for supporting the modernization of the Talimarjan power station, extension of transmission lines, introduction of smart metering, and development of institutional capacity.
Cooperation between Uzbekistan and ADB has generated benefits beyond Uzbekistan. We can look, for example, to the ADB-supported Central Asia Regional Economic Cooperation, or CAREC initiative. This initiative, in which Uzbekistan is a member, has made considerable progress in planning for connectivity in transportation, energy, and telecommunication networks. Trade flows between the CAREC countries are expected to increase in the years to come. The joint efforts of Uzbekistan and ADB have increased electricity supplies to Afghanistan from Uzbekistan, enabling the residents of Mazar-e-Sharif and Kabul cities to have stable electricity. Cross-border transport links have also been strengthened.
Let me now turn to the main topic of the conference today which is solar energy development.
Conventional natural resources, such as natural gas, oil, and coal, are finite. The process of generating electricity from them also produces undesirable emissions, including greenhouse gases. This leads to the importance of renewable energy, which is clean, and of unlimited potential.
At the 22nd meeting of the World Energy Congress held last month in Daegu, Republic of Korea, ADB released its report “Asian Energy Outlook”. The report forecasts a sharp growth in Asia’s energy consumption, in line with an expected increase in its share of world GDP from 28.3* percent in 2011 to over 44 percent in 2035, based on an annual average growth of 6 percent for the region. Unfortunately, much of this increase in energy production will be based on fossil fuels. As a consequence, Asia’s carbon-dioxide emissions will increase to over 50 percent of global emissions by 2035 ̶ even though per-capita annual consumption at 1.82 tons of oil equivalent will be lower than world average of 2.17 tons.
The Fifth Assessment Report of the Intergovernmental Panel on Climate Change (or IPCC) estimates that the global temperature could rise by about 4 degrees Celsius by 2100, with serious negative impacts. For Uzbekistan, this would mean lower agriculture production and water availability, and extreme weather patterns such as droughts and floods.
This high carbon development of Asia’s energy sector should be urgently addressed. We must make economic growth less dependent on energy consumption and vigorously pursue technologies to reduce the overall amount of energy needed.
We must then produce this lower level of energy through cleaner means, such as renewable energy resources. Here, I once again wish to congratulate Uzbekistan, and its leadership under President Karimov, for systematically initiating energy efficiency improvement projects as well as solar energy development – one of the first hydrocarbon rich countries to do so.
In 2010, the Government, supported by an ADB loan of $350 million, started implementing the Talimarjan Power Project ̶ an advanced efficiency combined cycle gas turbine power plant. In 2011, ADB provided a $150 million loan for ‘smart’ electricity meters to help the country use its electricity resources more efficiently. And now we stand on the threshold of adding renewable energy to Uzbekistan’s energy mix.
During ADB’s 43rd Annual Meeting held here in Tashkent in 2010, my predecessor Mr. Kuroda, announced the start of ADB’s Asia Solar Energy Initiative. The choice of Tashkent for making this announcement was not coincidental. Uzbekistan has a large land mass, plenty of sunshine, and the highly skilled and educated human resources needed to become a major player in solar energy development in this region. For Uzbekistan, large scale solar energy development can supply clean energy, as well provide high quality jobs, as it seeks to become a technology hub for conducting research, manufacturing, and maintenance, of advanced solar energy systems.
It is with this comprehensive approach in mind that the Government and ADB entered into a multi-track partnership in solar energy development. The first track seeks to identify large-scale, techno-economically feasible, solar power projects. ADB has provided technical assistance for this purpose, and we are pleased to see that Uzbekistan now has identified over 6 sites with a large potential for solar energy capacity.
The first 100 megawatts of this potential will be developed at Samarkhand by Uzbekenergo with ADB’s support. Earlier this week, on the 20th of November, ADB’s Board of Directors approved a loan of $ 110 million from its Asian Development Fund resources to help finance the construction of this facility. This project will be the largest of its kind in Central Asia and one of the largest in the world. My compliments to the experts from Uzbekistan and ADB for their hard work in making this project happen in such a short time.
I understand that the participants of this conference had the opportunity to visit the International Solar Energy Institute’s facilities at Parkent. This afternoon, I will be seeing these facilities myself. ADB provided technical support for establishing the Institute as part of its second track of solar industry development. This second track is to establish an institution that encourages research, and helps develop technical manpower. We hope that the Institute will grow to become a major center for learning in solar technologies. We encourage other development partners, both multilateral and bilateral, public and private sector, to support the Institute.
More broadly, I encourage the governments of other ADB member countries in the region with large solar energy resources, such as Afghanistan, Pakistan, and Turkmenistan, to comprehensively develop their own solar energy potentials. Regional cooperation will enable development of solar energy resources in a cost-effective and comprehensive way, by taking advantage of market pooling, and electricity networks.
Innovative financing and private sector participation are key to rapid and sustainable development of the solar energy sector in Uzbekistan. Bringing in the private sector would help leverage additional capital, and bring in innovative design and construction practices, over a long period. ADB looks forward to assisting Uzbekistan in further developing its enabling environment in this regard.
Since the mid-1990s, when ADB started developing clean energy processes, our motto has been to think globally, but act locally. We must think globally so that we muster all our resources – technological, financial, and human, to fight this battle against climate change. At the same time, we must look to local conditions and local requirements when we apply these global resources, so that the solutions are useful to local communities, and therefore sustainable.
It is with this intention that ADB established the Asian Solar Energy Forum, or ASEF, as part of the Asia Solar Energy Initiative. ASEF, which is now registered as a not-for-profit NGO in Tokyo, promotes South-South cooperation and dialogue. It also provides opportunities for experts from developed countries to share their knowledge and expertise with all developing members, to promote collective learning.
The 6th Meeting of ASEF follows a similar pattern. For the first time ever in Central Asia, ASEF has assembled representatives from several International Financial Institutions, along with delegations from both developed and developing countries. Since 2010, ADB has hosted outreach meetings of the ASEF in Manila, Tokyo, Bangkok, and Jodhpur. These meetings have helped disseminate accurate information regarding solar energy potential in Asia, available technologies, project cost trends, and policies for introducing solar energy development.
Based on discussions in these meetings, Thailand, India, and many other developing countries in Asia have developed right policies and projects. The result is that ADB has catalyzed 2,580 megawatts of solar capacity from 2010 to 2013 as against its target of 3,000 MW under the Asia Solar Energy Initiative – an 86 percent success rate.
Today’s meeting of the Forum is also special for another reason. For the first time, we welcome participation from the Islamic Development Bank and the African Development Bank. We expect Africa to be a major player in solar energy development in the years to come. Some parts of Asia and Africa are well suited for solar energy development and these have similar climatic conditions. This makes Asia’s experience more relevant to Africa than those of Europe and North America. This gives both Asia and Africa a mutually beneficial chance to learn from South-South knowledge sharing.
I once again congratulate the Government of Uzbekistan under the leadership of President Karimov, the Asia Solar Energy Forum, and my own staff at ADB, for organizing this landmark conference. My best wishes for a very productive discussion and knowledge sharing.
* Including Japan but excluding Australia and New Zealand.