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Background of CMERF

Challenge

All countries in the region are still developing their institutional frameworks for electricity regulation, policy formulation, utility management and shareholder oversight.

Development of more efficient sourcing and use of energy both, domestically and regionally, is also hampered by weak economic incentive structures.

These difficulties are indicated by the following:

• huge commercial losses of most power companies
• uneconomically low electricity and feedstock tariffs
• limited transparency and accountability at utilities
• high energy intensities of member economies

The resulting financial deterioration of the power utilities in most CMERF countries has stifled investment in the construction, maintenance, and rehabilitation of electricity infrastructure. It has also created tensions between trading entities (within and across borders) due to payment arrears for imported electricity and fuel.

Resolution of these difficulties is very challenging due to the cold climates and the large numbers of poor consumers that might not be able to afford vital power services when tariffs are raised.

Priority Areas

CMERF will focus on helping its member regulators improve economic incentives in their power sectors. Members have highlighted the following areas as urgent:

• improvement of transparency, accountability and financial discipline at power companies
• development of tariff structures that permit cost recovery, electricity conservation incentives and affordability
• structural reforms to facilitate transparency and introduction of competition
• attracting private investment

Strategy

Member countries have diverse experiences and have undertaken different approaches to solving common sector problems. The potential to learn from each others successes and failures is therefore substantial. Each country has also received substantial assistance from donors and development institutions to address these issues, and the benefits from sharing the knowledge gleaned from these studies regionally, is substantial.

CMERF therefore acts as a regional focal point on regulatory issues, facilitating:

• joint investigation of common problems through conduct of relevant studies
• knowledge exchange through meetings and conferences
• knowledge dissemination through publication of studies and meeting outputs, regular contribution in the CAREC newsletter, and web publication
• donor coordination through presentation of country-specific technical assistance findings at CMERF meetings

Organization

CMERF is governed by a body of principal and alternate member regulators from whom the chairperson is selected. ADB will continue to provide technical, financial, and secretariat support to CMERF through RETA 6267 [ PDF ].

Institutional Linkage

At the operational level, CMERF outputs will be reported to the Energy Sector Coordinating Committee of the CAREC Program. At the administrative level, its secretariat reports to the Energy Division of ADB's East and Central Asia Department, and coordinates with the CAREC Unit in the same Department.

Timeline

A series of events and initiatives have led to the establishment of CMERF in 2005. These events and initiatives were supported by the Asian Development Bank and the Public Private Infrastructure Advisory Facility*.

*The ADB website provides links to external websites that are not under its control. ADB is not responsible for the content of these sites.