Kyrgyz Republic: Toktogul Rehabilitation Project Phase 2

Sovereign Project | 46348-001

Summary

Toktogul HPP is the largest and most important power plant in the Kyrgyz Republic, with installed capacity of 1,200 megawatts (four turbine-generator units each with installed capacity of 300 megawatt) and located along the Naryn River in the Jalal-Abad province. Naryn cascade accounts for 97% of the hydro capacity and 78% of the total installed power generation capacity in the country. Toktogul HPP is the region's only multi-year storage capacity. Producing 50% of the average electricity output, the power plant plays a critical role as a domestic power source and as a power exporter and provider of frequency regulator services to the Central Asian power system (CAPS). CAPS comprises the synchronously interconnected systems of Kazakhstan, the Kyrgyz Republic, and Uzbekistan. Tajikistan, previously connected to CAPS, is currently operating on an island mode.

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Project Name Toktogul Rehabilitation Project Phase 2
Project Number 46348-001
Country Kyrgyz Republic
Project Status Approved
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 8434-KGZ: Toktogul Rehabilitation Project Phase 2
Technical Assistance Special Fund US$ 700,000.00
Strategic Agendas Inclusive economic growth
Regional integration
Drivers of Change
Sector / Subsector Energy - Energy efficiency and conservation - Energy sector development and institutional reform - Large hydropower generation
Gender Equity and Mainstreaming No gender elements
Description

Toktogul HPP is the largest and most important power plant in the Kyrgyz Republic, with installed capacity of 1,200 megawatts (four turbine-generator units each with installed capacity of 300 megawatt) and located along the Naryn River in the Jalal-Abad province. Naryn cascade accounts for 97% of the hydro capacity and 78% of the total installed power generation capacity in the country. Toktogul HPP is the region's only multi-year storage capacity. Producing 50% of the average electricity output, the power plant plays a critical role as a domestic power source and as a power exporter and provider of frequency regulator services to the Central Asian power system (CAPS). CAPS comprises the synchronously interconnected systems of Kazakhstan, the Kyrgyz Republic, and Uzbekistan. Tajikistan, previously connected to CAPS, is currently operating on an island mode.

Open Joint Stock Company (OJSC) Electric Power Plants (EPP), the state-owned generation company, wishes to implement the complete rehabilitation of the Toktogul HPP as recommended by the PPTA Study of Hydropower Plants on Naryn Cascade (PPTA Study for Phase 1). Toktogul HPP has been in service since 1975 with no significant rehabilitation or modernization work having been undertaken. Critical equipment is failing, resulting in availability dropping to 80%. It is considered that availability rates will continue to drop in the absence of rehabilitation. Phase 1 has been initiated covering critical secondary mechanical and electrical equipment that are becoming unreliable and unsafe to operate. The implementation consultant has been fielded. The contract award is expected by early 2014.

In 2001, the state-owned utility was unbundled into one generation, one transmission, four electricity distribution companies, and one district heating company. This unbundled sector structure remains in effect today. Various privatization initiatives have been conducted with insignificant success following a negative social reaction. No new privatization initiatives of existing assets are planned in the medium term. Government policy is for new generation assets to be developed largely by the private sector while existing government-owned assets are rehabilitated by sovereign borrowing.

The government has identified development of the energy sector as a major component of its development plan. The project is aligned with the government's and ADB's strategy to (i) focus on reliable power supply, (ii) improve sector financial and corporate management, (iii) increase energy security, and (iv) expand regional power exports. Both phase 2 and phase 3 projects will be included in ADB's country operation business plan 2014-2016. Phase 3 is programmed for 2016.

Project Rationale and Linkage to Country/Regional Strategy The proposed Toktogul Rehabilitation Project Phase 2 aims to (i) further rehabilitate Toktogul hydroelectric power plant (HPP) by replacing two turbine-generator units and associated auxiliary systems, and (ii) conduct financial audit and corporate governance review of the power sector companies. The project is Phase 2 of the Toktogul rehabilitation program that will completely rehabilitate the powerhouse equipment of the power plant over a 3-phase development. Phase 1 (Loan 2869/Grant 0294 Power Sector Rehabilitation Project) covers rehabilitation of secondary mechanical and electrical equipment and is currently under implementation. The final Phase 3 will cover the remaining two turbine-generator units and civil structure repairs. The project preparatory technical assistance (PPTA) will conduct detailed due diligence for both Phases 2 and 3. The project will improve both domestic and regional power sector performance by ensuring stable and increased electricity generation from Toktogul HPP and improve the power sector governance and financial management.
Impact
Project Outcome
Description of Outcome
Progress Toward Outcome
Implementation Progress
Description of Project Outputs
Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design Rehabilitation of the Toktogul HPP will require public consultation for those residing near the project site to be carried out by the PPTA consultants in accordance with ADB's Social Safeguard Policy to factor in all land acquisition, resettlement and environmental considerations into projects design.
During Project Implementation Consultation with the Ministry of Energy and Industry, OJSC EPP, and local residents will be held in determining the possible technical, financial, social and environmental implications of replacing two turbine-generator units and associated auxiliary systems in Toktogul hydroelectric power plant (HPP).
Business Opportunities
Consulting Services

Single-source selection method is used in recruiting Fichtner Gmbh & Co. KG of Germany (Fichtner) for consulting services with a total of 10 positions comprising of international (17 person-months) and national (18 persons-months) experts. As the consultant for Phase 1 PPTA and Project Implementation Consultant for Loan 2869-KGZ (Power Sector Rehabilitation Project), single-source selection is considered as the most appropriate approach for this assignment based on the following: (i) PPTA for Phase 1 included an assessment of future phases of the overall program. PPTA for Phases 2 is a natural continuation of Phase 1 PPTA work already carried out by Fichtner; (ii) Fichtner is currently working as Phase 1 project implementation consultant wherein scheduling and scoping of Phases 2 and 3 need to be coordinated with Phase 1 work to ensure no overlap of contractors working on site and no scope under/overlap, on which a single consultant should prepare the overall program; and (iii) the government has requested that the Project be expedited and that advance contracting is undertaken.

The Consultant was mobilized in January 2014. An Inception Report was submitted in March 2014. Draft Technical Report was submitted in mid-September 2014. With the completion of due diligence reports for the ensuing ADB financing (Loan 3212/Grant 0419-KGZ), a Draft Final Report was submitted in mid-March 2015.

Responsible ADB Officer Sohail Hasnie
Responsible ADB Department Central and West Asia Department
Responsible ADB Division Energy Division, CWRD
Executing Agencies
OJSC Electric Power PlantsSalaidin Avazov, General Director326 Jibek Jolu Prospect, Bishkek Kyrgyz Republic
Timetable
Concept Clearance -
Fact Finding -
MRM -
Approval 19 Aug 2013
Last Review Mission -
Last PDS Update 30 Mar 2015

TA 8434-KGZ

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
19 Aug 2013 06 Sep 2013 06 Sep 2013 30 Nov 2014 30 Nov 2015 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
700,000.00 0.00 50,000.00 0.00 0.00 0.00 750,000.00 19 Aug 2013 461,025.62

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