Azerbaijan : Power Distribution Development Investment Program

Sovereign Project | 42401-012

Project Details

  • Project Officer
    Luo, Tianhua
    Central and West Asia Department
    Request for information
  • Country/Economy
    Azerbaijan
  • Modality
  • Sector
    • Energy
Project Name
Power Distribution Development Investment Program
Project Number
42401-012
Country / Economy
  • Azerbaijan
Project Status
Closed
Project Type / Modality of Assistance
  • Technical Assistance
Source of Funding / Amount
TA 7253-AZE: Power Distribution Development Investment Program
Source Amount
Technical Assistance Special Fund US$ 1.00 million
Strategic Agendas
  • Environmentally sustainable growth
Drivers of Change
  • Knowledge solutions
Sector / Subsector
  • Energy / Electricity transmission and distribution

Gender
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

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.

Contact

Responsible ADB Officer
Luo, Tianhua
Responsible ADB Department
Central and West Asia Department
Responsible ADB Division
Energy Division, CWRD
Executing Agencies
Azerenergy Joint Stock Company

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

Funding

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 31 Dec 2012
Financing Plan/TA Utilization
ADB Cofinancing Counterpart Total
Gov Beneficiaries Project Sponsor Others
1,000,000.00 0.00 200,000.00 0.00 0.00 0.00 1,200,000.00
Cumulative Disbursements
Date Amount
17 Jun 2022 945,604.76

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 Access to Information Policy (AIP) 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.

Title Document Type Document Date
Power Distribution Development Investment Program Initial Poverty and Social Analysis Mar 2009

Safeguard Documents See also: Safeguards
Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

None currently available.


Evaluation Documents See also: Independent Evaluation

None currently available.


Related Publications

None currently available.


The Access to Information Policy (AIP) 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.

Tenders

No tenders for this project were found.

Contracts Awarded

No contracts awarded for this project were found

Procurement Plan

None currently available.