Uzbekistan: Northwest Region Power Transmission Line Project

Sovereign Project | 47296-001

Summary

The project aims to (i) improve power transmission network capacity and reliability in the northwest region of the country, the Karakalpakstan and Khorezm regions; (ii) reduce transmission losses; and (iii) improve the operational efficiency of the power sector. The project components include (a) the construction of a 220 kilovolt (kV) single-circuit overhead transmission line approximately 364 kilometers (km) in length, (b) the expansion, rehabilitation and construction of 3 substations, and (c) institutional development, capacity building and project management.

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Project Name Northwest Region Power Transmission Line Project
Project Number 47296-001
Country Uzbekistan
Project Status Proposed
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan: Northwest Region Power Transmission Line Project
Ordinary capital resources US$ 150.00 million
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Sector / Subsector

Energy - Electricity transmission and distribution

Gender Equity and Mainstreaming No gender elements
Description The project aims to (i) improve power transmission network capacity and reliability in the northwest region of the country, the Karakalpakstan and Khorezm regions; (ii) reduce transmission losses; and (iii) improve the operational efficiency of the power sector. The project components include (a) the construction of a 220 kilovolt (kV) single-circuit overhead transmission line approximately 364 kilometers (km) in length, (b) the expansion, rehabilitation and construction of 3 substations, and (c) institutional development, capacity building and project management.
Project Rationale and Linkage to Country/Regional Strategy

Uzbekistan is one of the fastest-growing economies in Central Asia, aspiring to become an upper-middle-income country by 2020. The economy has sustained a high growth rate averaging at 8% for 2010 -2014. Generally, stable macroeconomic conditions and robust growth are set to continue as Uzbekistan aims for a highly developed and diversified industrial and export base. The Karakalpakstan and Khorezm regions, inhabited by 3.3 million people (or 12% of the total population) and located in the western part of Uzbekistan, will continue to attract large scale industrial investment projects. Reliable power supply is critical to support industrial development in these regions. These regions expect power demand to grow at 3%, double the expected medium-term national average rate of 1.5%.

The country has ample primary energy resources. The total installed capacity for power generation in the country is about 13,500 megawatts (MW) including thermal power 86% and hydropower 14%. In 2014, the country generated about 54,400 gigawatt-hours (GWh) of electric power, of which it exported 1,400 GWh or 2.6%. Uzbekistan''s power transmission system consists of 1,850 km of 500 kV lines, 6,200 km of 220 kV lines, and 15,300 km of 110 kV lines. The government owns and manages the energy sector in Uzbekistan. The Joint Stock Company-Uzbekenergo, a vertically integrated and publicly owned monopoly (in charge of electricity generation, transmission, and distribution), operates under the supervision and regulation of the Cabinet of Ministers. The sector is corporatized with separate business units, and further commercialization of Uzbekenergo is planned.

Uzbekistan''s development priorities stress structural change and greater productivity. Energy efficiency is a key part of the energy sector strategy. The government adopted policy and legal frameworks with clear goals to reduce energy intensity and losses; and action plans covering investments and institutional change. In March 2015, the government approved a 5-year rolling Program of Measures to Promote Structural Reforms, Modernization and Diversification of Production in 2015- 2019. The program aims to ensure adequate and reliable power system; and improved management, operations, and performance of utilities based on commercial principles. To improve energy efficiency, one combined-cycle gas turbine (CCGT) unit was commissioned in Navoi thermal power plant (TPP) and four more combined-cycle gas turbine units are under preparation with confirmed funding from Asian Development Bank (ADB) for replacement of old and inefficient gas-fired steam turbine generation units. A loss-reduction program was initiated by adopting advanced meters to increase collections and reduce losses. The electricity tariffs have been steadily raised since 2004 to ensure financial sustainability. Financial transparency has improved since Uzbekenergo, with the assistance of ADB, adopted external audits based on the International Standards of Auditing starting from Fiscal Year (FY) 2011.

The key challenges in the sector are deteriorating infrastructure and unreliable power supply. The existing Takhiatash TPP is the only power station located in the northwest region. ADB has approved a loan to finance construction of two CCGT units (230- 280 MW each) in Takhiatash TPP for replacement of old and inefficient gas-fired steam turbine generation units. However, the existing power transmission network has limited capacities to transmit additional power because of inadequate investments in the past. The power transmission system was designed during the Soviet era with the objective to leverage the diversified energy and water resources in the region. The resulting location of the substations and the line routings did not take into consideration the countries'' geographical borders, as these were irrelevant at that time. The existing transmission line from Takhiatash to Navoi passes through Turkmenistan. Although the transmission assets belong to Uzbekistan, the difficulty to maintain them causes frequent and prolonged outages which bring down production rate, and hamper socioeconomic development leading to people''s dissatisfaction. Due to the transmission capacity limitation the excess production of TPP can hardly be evacuated and the Takhiatash TPP must accommodate its production to the highly variable local demand, which leads to a technical wear and aging of generation blocks and makes the operation of the power plant economically inefficient.

In addition, most of the transmission facilities are aging which now require rehabilitation and modernization. The Khorezm substation commissioned in 1969 is now more than 40 years old. The poor condition of these assets leads to a higher risk of system outages, poor energy services, higher maintenance costs, and increased transmission losses. A strong transmission system is therefore essential to the provision of an efficient, reliable, and flexible infrastructure that meets the ever growing demand of electricity consumers.

The project fits within the ADB's Country Partnership Strategy for Uzbekistan, which includes focus on energy efficiency and reliable power supply. It is also consistent with ADB''s Strategy 2020 and ADB''s Energy Policy (2009). The project is included in the draft Country Operations Business Plan: Uzbekistan 2015 -2017.

Impact Adequate and reliable power supply in Uzbekistan by 2023 (Program of Measures to Promote Structural Reforms, Modernization and Diversification of Production in 2015-2019, the Government of Uzbekistan, 2015)
Outcome An expanded and modernized high-voltage transmission grid in Khorezm and Karakalpakstan regions.
Outputs

220 kV transmission line between Takhiatash Thermal Power Plant -Khorezm Substation -Ellikkala Substation commissioned.

Substations rehabilitated and new switching station constructed

Support for institutional development and capacity building

Geographical Location Korezm,Karakalpastan
Safeguard Categories
Environment B
Involuntary Resettlement B
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects PPTA will prepare initial environmental examination following ADB s Safeguard Policy Statement (SPS) (2009).
Involuntary Resettlement PPTA will prepare land acquisition and resettlement plan following ADB s Safeguard Policy Statement (SPS) (2009).
Indigenous Peoples In the project area, there is no community or group that maintains any particular culture and language.
Stakeholder Communication, Participation, and Consultation
During Project Design Stakeholders' consultations through community meetings, discussions and interviews will be conducted to share information about the proposed project and to get views from stakeholders on their expectations.
During Project Implementation tbd -- Consultation and Participation Plan to be prepared during PPTA
Business Opportunities
Consulting Services A supervision consulting firm will be recruited using quality- and cost-based selection method, with a 90:10 ratio for quality and cost, and following ADB's Guidelines on the Use of Consultants (2013, as amended from time to time) to help the executing agency implement the project.
Procurement ADB loan proceeds will be used to finance procurement of equipment and materials. International competitive bidding method will be used to procure the goods following ADB's Procurement Guidelines (2013, as amended from time to time).
Responsible ADB Officer Tianhua Luo
Responsible ADB Department Central and West Asia Department
Responsible ADB Division Energy Division, CWRD
Executing Agencies
UzbekEnergoMr. Zafarjon Kamolov, PMU Managernorthwest220@uzbekenergo.uz6 Istiklol Street Tashkent, 100000, Uzbekistan
Timetable
Concept Clearance 05 Feb 2014
Fact Finding 16 Mar 2015 to 31 Mar 2015
MRM 14 Jul 2015
Approval 22 Sep 2015
Last Review Mission -
Last PDS Update 30 Mar 2015

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