Tajikistan: Access to Green Finance Project

Sovereign Project | 45229-001

Summary

The project will leverage Tajikistan's sound microfinance system to provide credit for households and microenterprises for energy efficient and environment-friendly homes.

The grant will comprise project implementation support of $1.2 million and $8.8 million for 5-year, local currency denominated credit lines to selected microfinance institutions (MFIs). The interest rate on the credit lines will be the NBT refinancing rate, reset annually.

An additional technical assistance (TA) grant of $750,000, provided by the Japan Fund for Poverty Reduction (JFPR), will build the capacity of MFIs and the project management unit (PMU) to facilitate efficient green finance intermediation and promote energy efficiency in the country, particularly for rural households and women.

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Project Name Access to Green Finance Project
Project Number 45229-001
Country Tajikistan
Project Status Approved
Project Type / Modality of Assistance Grant
Technical Assistance
Source of Funding / Amount
Grant 0346-TAJ: Access to Green Finance
Asian Development Fund US$ 10.00 million
TA 8394-TAJ: Access to Green Finance
Japan Fund for Poverty Reduction US$ 750,000.00
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change
Sector / Subsector

Finance - Inclusive finance

Gender Equity and Mainstreaming Effective gender mainstreaming
Description

The project will leverage Tajikistan's sound microfinance system to provide credit for households and microenterprises for energy efficient and environment-friendly homes.

The grant will comprise project implementation support of $1.2 million and $8.8 million for 5-year, local currency denominated credit lines to selected microfinance institutions (MFIs). The interest rate on the credit lines will be the NBT refinancing rate, reset annually.

An additional technical assistance (TA) grant of $750,000, provided by the Japan Fund for Poverty Reduction (JFPR), will build the capacity of MFIs and the project management unit (PMU) to facilitate efficient green finance intermediation and promote energy efficiency in the country, particularly for rural households and women.

Project Rationale and Linkage to Country/Regional Strategy The project will address the two key barriers limiting effective demand: lack of affordable financing, and insufficient buyer and lender awareness about SGES. The project will provide loans through selected MFIs to households and micro entrepreneurs to purchase and install affordable SGES. Innovative promotion and delivery mechanisms will be used to help make SGES widely acceptable and affordable to low-income households. The project will improve understanding about SGES by increasing public awareness and by providing TA to MFIs. The MFI support will include capacity building and technical advice to MFIs and their clients from SGES experts and engineers who will complete needs assessments, discuss options with clients, and advise on structuring of SGES loans.
Impact Increased energy efficiency Tajik households
Project Outcome
Description of Outcome Increased access to finance for SGES in Tajikistan
Progress Toward Outcome ongoing
Implementation Progress
Description of Project Outputs

1. Increased outreach by MFIs for green finance, particularly to women borrowers.

2. Increased public awareness of energy efficiency

3. Increased usage of SGES most hellpful to women, such as energy-efficient cooking stoves, heating units, and solar water heaters.

4. Increased private sector participation

Status of Implementation Progress (Outputs, Activities, and Issues)

ongoing

ongoing

ongoing

ongoing

Geographical Location National
Safeguard Categories
Environment FI
Involuntary Resettlement FI-C
Indigenous Peoples FI
Summary of Environmental and Social Aspects
Environmental Aspects MOF will lend $8.8 million to microfinance institutions (MFIs) for energy efficient and environmentally friendly solutions. The MFIs will provide credits (up to $5000) to households and microenterprises for solar home solutions, energy efficient cookstoves and heat exchanger units, home insulation solutions. The project is categorized as FI treated as C.
Involuntary Resettlement The project will leverage Tajikistan's high global horizontal irradiance and sound microfinance system to channel credit delivery to 5,000-7,000 households and microenterprises to meet their demand for energy efficient and environmentally friendly energy solutions (including solar energy solutions) through FIs. Only those subprojects classified as category C for IR under ADB's financial intermediaries' classification will be financed under this project's subloans. Subprojects classified as A or B under ADB's IR classification or those requiring IR clearances under Tajikistan's laws will not be financed under the Project. With the additional energy solution products to be offered by the FIs, the project classification as FI treated as C remains and has no impacts on IR.
Indigenous Peoples The project will leverage Tajikistan's high global horizontal irradiance and sound microfinance system to channel credit delivery to 5,000-7,000 households and microenterprises to meet their demand for energy efficient and environmentally friendly energy solutions (including solar energy solutions) through FIs. Only those subprojects classified as category C for IP under ADB's financial intermediaries' classification will be financed under this project's subloans. Subprojects classified as A or B under ADB's IP classification or those requiring IP clearances under Tajikistan's laws will not be financed under the Project. With the additional energy solution products to be offered by the FIs, the project classification as FI treated as C remains and has no impacts on IP.
Stakeholder Communication, Participation, and Consultation
During Project Design ADB consulted and shared information about the project with banks and microfinance institutions (MFIs), the Association of Microfinance Organizations of Tajikistan (AMFOT), private suppliers of SGES, local governments, the Ministry of Finance (MOF), the Ministry of Energy and Industry (MOEI), the National Bank of Tajikistan (NBT), development partners, and non-government organizations that are active in the areas of microfinance, energy efficiency, and renewable energy (collectively, NGOs). A survey of 560 households was also conducted.
During Project Implementation The project management unit (PMU) established under the MOF have invited expressions of interest for the second batch of MFIs to participate under the project. A total of 16 MFIs have applied. A financial due diligence has been conducted. A due diligence expert was engaged to undertake the integrity due diligence. Based on the outcome of the due diligence exercise, a shortlist of MFIs will be proposed to be jointly agreed by MOF and ADB.
Business Opportunities
Consulting Services All PMU staff have been engaged per Procurement Plan. Three international experts have been engaged (i) Smart Green Energy Solution (SGES) Product and Market Development Specialist, (ii) Microfinance Specialist/Team Leader, SGES Technology Specialist, and (iii) Results-based Monitoring and Evaluation Specialist. The engagement of the Smart Green Energy Solution (SGES) Technology Specialist is being processed and is expected to be recruited in mid April 2015.
Procurement The PMU has acquired 2 vehicles, several office equipment and office furniture during the first 18 months of the project's implementation period using the Shopping procurement method.
Responsible ADB Officer Aliya Mukhamedyarova
Responsible ADB Department Central and West Asia Department
Responsible ADB Division Public Management, Financial Sector and Trade Division, CWRD
Executing Agencies
Ministry of FinanceMINFIN@TOJIKISTON.COM3, Academic Rajabovs,_Dushanbe
Tajikistan
Timetable
Concept Clearance 20 Mar 2013
Fact Finding 18 Feb 2013 to 28 Feb 2013
MRM 12 Apr 2013
Approval 25 Jun 2013
Last Review Mission -
Last PDS Update 25 Mar 2015

Grant 0346-TAJ

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
25 Jun 2013 19 Aug 2013 03 Oct 2013 30 Jun 2019 - -
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 11.12 Cumulative Contract Awards
ADB 10.00 25 Jun 2013 2.19 0.00 22%
Counterpart 1.12 Cumulative Disbursements
Cofinancing 0.00 25 Jun 2013 1.20 0.00 12%

TA 8394-TAJ

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
25 Jun 2013 19 Aug 2013 19 Aug 2013 31 Jul 2018 - -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
0.00 750,000.00 0.00 0.00 0.00 0.00 750,000.00 25 Jun 2013 129,593.58

Safeguard Documents

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