Azerbaijan: Power Distribution Development Investment Program

Sovereign Project | 42401-012

Summary

Azerbaijan has established a power sector capable of providing essential power supply service to all domestic consumers and the network was integrated with neighboring countries. However, an extended period of under-investment and limited maintenance has resulted in significant deterioration in the quality of the sector?s infrastructure, mainly reflects on unreliable and inadequate power supply and high losses of the transmission and distribution networks.

Latest Project Documents


Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

The Public Communications Policy (PCP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.

The Accountability Mechanism provides a forum where people adversely affected by ADB-assisted projects can voice and seek solutions to their problems and report alleged noncompliance of ADB's operational policies and procedures.

In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

Project Name Power Distribution Development Investment Program
Project Number 42401-012
Country Azerbaijan
Project Status Closed
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 7253-AZE: Power Distribution Development Investment Program
Technical Assistance Special Fund US$ 1.00 million
Strategic Agendas Inclusive economic growth
Drivers of Change
Sector / Subsector Energy - Electricity transmission and distribution
Gender Equity and Mainstreaming No gender elements
Description
Project Rationale and Linkage to Country/Regional Strategy

Azerbaijan has established a power sector capable of providing essential power supply service to all domestic consumers and the network was integrated with neighboring countries. However, an extended period of under-investment and limited maintenance has resulted in significant deterioration in the quality of the sector?s infrastructure, mainly reflects on unreliable and inadequate power supply and high losses of the transmission and distribution networks.

In order to establish a sustainable and financially viable power sector, the Government will need to address a number of key challenges: (i) develop a power sector road map and optimized development master plan, and identify the sector development priorities and policies; (ii) increase investment in the infrastructure and secure adequate funding; (iii) improve financial performance and governance of power utility, including transparency and accountability through institutional restructuring, commercialization and private sector participation; and (iv) improve legislative and regulatory framework with market principles and establish financial discipline.

The State Program on the Development of the Fuel and Energy Sector of the Republic of Azerbaijan (2005?2015) sets out the Government's investment program. The power sector will require an estimated investment of $3.8 billion during 2005?2015 for the construction of new generation plants and modernization of existing generation facilities, and strengthening of the power transmission grid. With the increase of Government budget and financing resources secured from other donors, adequate investment in the power generation and transmission subsectors are envisaged. However, the distribution sector has suffered from deterioration of facilities and outdated technology, resulting to excessive losses, frequent breakdowns during peak demand months, and poor quality of service.

Azerenergy Joint Stock Company (Azerenergy), the state-owned enterprise responsible for power sector development and operation in Azerbaijan, requested ADB to support the power sector development, particularly on the enhancement and rehabilitation of power distribution networks. Azerenergy has requested ADB to provide a multitranche financing modality (MFF) in the amount of up to $500 million for Power Distribution Development Investment Program (the Program).

ADB?s Country Strategy and Program Update 2006 for Azerbaijan indicates that ADB will address areas of the energy sector where other development partners are not active and that are consistent with ADB's environmental assessment. The proposed Program intends to enhance and upgrade the distribution networks' cover of about 40 administration districts under Azerenergy's managed power system, to improve reliability of power supply, reduce distribution losses, enhance energy efficiency, and improve Azerenergy's financial performance.

Impact The proposed ADB multitrance financing facility for power sector development investment program will contribute to economic development in Azerbaijan through improved power sector operation. The investment program will focus on: (i) promoting pilot small hydropower development in the remote and underdeveloped rural region to supplement energy balance; (ii) strengthening transmission and distribution network to improve power supply reliability, reduce transmission and distribution losses, and enhance energy efficiency; and (iii) policy support, institutional restucturing and capacity building.
Project Outcome
Description of Outcome The outcome of the PPTA is to set out a financing framework agreement and an investment program that is economically, financially, and technically feasible, and socially and environmentally acceptable.
Progress Toward Outcome
Implementation Progress
Description of Project Outputs The expected output of the PPTA will be (i) a power sector roadmap and investment program, (ii) Azerenergy's restructuring and business plan, (iii) program design and financing agreed by the Government and ADB, and (iv) the completion of the feasibility study and due diligence assessment.
Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location Azerbaijan
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design Extensive consultations with the Government and close coordination with stakeholders will be held to ensure better preparation of the sector roadmap and suitable investment program. To ensure compliance with ADB's safeguard policies for the environment and involuntary resettlement, field surveys will be undertaken.
During Project Implementation Field investigations, surveys and stakeholder consultations with central and local governments, NGOs, the private sector, consumers including vulnerable groups and major development partners in the power sector, is being conducted.
Business Opportunities
Consulting Services A total of 40 person-months consulting services (20 international and 20 national) will be required including Team Leader/ Power System Planning Specialist, Hydropower Development Specialist, Distribution and Loss Reduction Specialist, Economist, Financial Analysis and Financial Management Specialist, Environmental Specialist, Resettlement and Social Analysis Specialist. Key activities to be undertaken under the PPTA cover the following major areas: (i) sector performance assessment and development of a sector development roadmap and investment program; (ii) assessment of Azerenergy institutional capacity and development of a restructuring and business plan; (iii) project technical design; (iv) economic and financial evaluations; and (v) compliiance with the national and ADB's safeguard policies. A consulting firm or consortium of firms will be engaged by ADB under its Guidelines on the Use of Consultants and its Borrowers (2007, as amended from time to time). A simplified technical proposal format and quality- and cost-based selection method (80:20 ratio) will be used.
Responsible ADB Officer Tianhua Luo
Responsible ADB Department Central and West Asia Department
Responsible ADB Division Energy Division, CWRD
Executing Agencies
Azerenergy Joint Stock CompanyIslam Rafibeyliirafibeyli@mail.ru10, Ac. Abdulkerim Alizade Street Baku, AZ 1005, Azerbaijan
Timetable
Concept Clearance 29 Oct 2008
Fact Finding 24 Oct 2008 to 28 Oct 2008
MRM -
Approval 20 Mar 2009
Last Review Mission -
PDS Creation Date 19 Nov 2008
Last PDS Update 31 Aug 2011

TA 7253-AZE

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
20 Mar 2009 02 Apr 2009 02 Apr 2009 31 Mar 2010 30 Sep 2012 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
1,000,000.00 0.00 200,000.00 0.00 0.00 0.00 1,200,000.00 20 Mar 2009 945,604.76
Title Document Type Document Date
Power Distribution Development Investment Program Initial Poverty and Social Analysis Mar 2009

Safeguard Documents

See also: Safeguards

No documents found.

Evaluation Documents

See also: Independent Evaluation

No documents found.


The Public Communications Policy (PCP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.

Requests for information may also be directed to the InfoUnit.