How the ADF Base Allocation Increase is Already Transforming the Pacific
Project Result / Case Study | 30 October 2019
Cyclone Evan in 2012 was one of the worst natural disasters to hit Samoa in recent history. The disaster claimed more than a dozen lives and caused damage of more than $200 million—more than one-quarter of the goods and services the country produced in 2011. In response, the Asian Development Bank (ADB) provided financial assistance to rehabilitate three hydropower plants damaged during the cyclone and constructed three additional small hydropower plants to counter the country’s heavy reliance on diesel generation. The project is now complete, having added 6MW of renewable energy, which is helping to offset Samoa’s 25% diesel generation and avoiding 8,904 tons of CO2 every year. This disaster response project was funded by the Asian Development Fund (ADF) and played a key role in Samoa recovering from the impact of Cyclone Evan.
What is the ADF? The ADF provides grants to ADB’s poorest and most vulnerable countries facing high or moderate debt distress risks. It is replenished every four years by the ADF’s donor countries. In 2018, the base allocation provided to countries was increased from $6 million to $13 million.
As donors assemble in Manila on 5-7 November to discuss the replenishment of a new four-year ADF cycle—known as ADF 13, which will take effect in 2021—it’s timely to look at the impact being felt by the current four-year cycle, ADF 12. Two countries in the Pacific—Nauru and the Solomon Islands—have already committed more than 100% of their remaining ADF 12 grant allocation, including last year’s increase.
In Nauru, ADF funding is contributing $22 million for the Solar Power Development Project, which will provide reliable, affordable, secure, and sustainable solar energy, reducing Nauru’s dependency on diesel and boosting the amount of electricity generated from renewable sources from 3% to 47%. When the project is complete, 100% grid-connected electricity will be delivered to the people of Nauru during daylight hours.
In the Solomon Islands, ADF funding is contributing $12 million to the Tina River Hydropower Project, which is also receiving assistance from the Government of Australia, the Green Climate Fund, the Abu Dhabi Development Fund, the Export-Import Bank of Korea, and the World Bank. The project, situated on the Tina River just outside the capital Honiara, will deliver, clean, reliable, and affordable power and cut the country’s heavy reliance on diesel. On commissioning, the plant will contribute 68% of renewable energy in Honiara’s grid. The project has been developed under a public-private partnership and will be instrumental in the development of private investment in the Solomon Islands and the Pacific.
Three other countries in the Pacific have also committed more than half of their remaining ADF 12 allocations. ADF 12 is funding energy, health, and urban resilience projects in Tonga, water and disaster resilience projects in the Federated States of Micronesia, and energy and fiscal and infrastructure management projects in Tuvalu.
The biggest ADF 12-funded project, however, is taking place in Samoa, where an ADF grant of $62 million has been approved to support the Enhancing Safety, Security, and Sustainability of Apia Port Project. The project is a vital one for Samoa. Like most of the Pacific, the country is geographically isolated from major international markets, making marine connectivity, agricultural exports, and the imports of basic goods critical to the economy. Samoa also has suffered historically from disasters triggered by cyclones and earthquakes. The upgrade and rehabilitation plan includes the reconstruction of the damaged breakwater and the construction of a new customs examination facility. It will also promote environmentally sustainable practices and encourage greater participation of women employees at the Samoa Port Authority.
These are just a few examples of how countries in the Pacific will soon see an impact from their ADF 12 allocations. The continued support of ADF 13 will, therefore, continue to have a significant and long-lasting effect on the economies and people of the Pacific Islands.