CENTRAL ASIA ENERGY-WATER DEVELOPMENT PROGRAM CAEWDP ANNUAL REPORT 2016 © 2017 The World Bank 1818 H Street NW, Washington, DC 20433 Telephone: +1 (202) 473-1000 Internet: www.worldbank.org The 2016 CAEWDP Team Christina Leb, CAEWDP Program Manager Husam Mohamed Beides, Energy Development Pillar Lead Nagaraja Rao Harshadeep, Energy-Water Linkages Pillar Lead Pieter Waalewijn, Water Productivity Pillar Lead Abena Akuffo-Akoto, Partnership Specialist Stella-Monica N. Mpande, Copy Editor ACKNOWLEDGMENTS CAEWDP is a regional knowledge and technical assistance partnership administered by the World Bank and funded by Switzerland, the United Kingdom, the European Commission, and the United States of America. The report benefitted from inputs from the teams in the Sustainable Development Network Vice Presidency (Kathrin Hofer, Takhmina Mukhamedova, Samuel Kwesi Ewuah Oguah, Yuriy Myroshnychenko, Daryl Fields, Yadviga Viktorivna Semikolenova, Julia Komagaeva, Philippe Ambrosi, Pier Francesco Mantovani, IJsbrand Harko de Jong, and Amal Talbi). Led by Christina Leb who provided oversight and guidance, the CAEWDP team drafted, coordinated production of the report and provided technical review. Editorial review was provided by Meriem Gray (Communications Officer) and the Europe and Central Asia External Communications team. Valuable comments were provided by Michael Haney, Sascha Djumena and Sameer Shukla. DISCLAIMER This work is a product of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of the World Bank, its Board of Executive Directors or the governments they represent. 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CENTRAL ASIA ENERGY-WATER DEVELOPMENT PROGRAM CAEWDP ANNUAL REPORT 2016 CAEWDP | Annual Report 2016 1 CONTENTS ACRONYMS AND ABBREVIATIONS...................................................................................................................... 2 EXECUTIVE SUMMARY....................................................................................................................................... 5 1. ENERGY AND WATER RESOURCES DEVELOPMENT IN CENTRAL ASIA............................................................ 11 1.1 THE CHALLENGE................................................................................................................................... 12 1.2 THE CAEWDP APPROACH....................................................................................................................... 14 2. PORTFOLIO AND PROGRAM ACTIVITY SUMMARY ......................................................................................... 15 2.1 PORTFOLIO SUMMARY........................................................................................................................... 16 2.2 ENERGY DEVELOPMENT......................................................................................................................... 16 2.3 ENERGY-WATER LINKAGES..................................................................................................................... 18 2.4 WATER PRODUCTIVITY PILLAR................................................................................................................ 19 3. TRUST FUND MANAGEMENT AND FINANCIAL OVERVIEW............................................................................... 21 3.1 PROGRAM ADMINISTRATION ................................................................................................................. 22 3.2 DONOR ENGAGEMENT .......................................................................................................................... 22 3.3 COMMUNICATIONS & OUTREACH ........................................................................................................... 22 3.4 FINANCIAL OVERVIEW............................................................................................................................ 23 LOOKING FORWARD: CAEWDP 3.0.................................................................................................................... 25 ANNEX I – PROGRAM ACTIVITY DESCRIPTIONS................................................................................................. 29 ENERGY DEVELOPMENT PILLAR.................................................................................................................... 29 ANALYTICAL DEVELOPMENT................................................................................................................ 2 9 INSTITUTIONAL STRENGTHENING......................................................................................................... 31 INVESTMENT PREPARATION................................................................................................................. 33 ENERGY-WATER LINKAGES PILLAR................................................................................................................ 36 ANALYTICAL DEVELOPMENT................................................................................................................. 36 INSTITUTIONAL STRENGTHENING......................................................................................................... 37 INVESTMENT PREPARATION................................................................................................................. 39 WATER PRODUCTIVITY PILLAR...................................................................................................................... 41 ANALYTICAL DEVELOPMENT................................................................................................................. 41 INVESTMENT PREPARATION................................................................................................................. 42 ANNEX II – RESULTS FRAMEWORK, PROGRESS AND RESULTS CHAIN................................................................ 43 RESULTS CHAIN 2016 ................................................................................................................................ 46 2 CAEWDP | Annual Report 2016 ACRONYMS AND ABBREVIATIONS ADB Asia Development Bank ASBmm Aral Sea Basin Management Model ASBP-3 Third Aral Sea Basin Plan AralDIF Aral Sea Basin Dynamic Information Framework BEAM Basin Economic Allocation Model BT Barki Tajik CA Central Asia CAEWDP Central Asia Energy-Water Development Program CAMP4CA Climate Adaptation & Mitigation Program for Central Asia CAMP4ASB Climate Adaptation and Mitigation Program for the Aral Sea Basin CAMP4ASB SOP Climate Adaptation and Mitigation Program for the Aral Sea Basin Series of Projects CAREC Central Asia Regional Economic Cooperation CASA-1000 1000 Electricity Transmission and Trade Project for Central Asia and South Asia CAsKADe Central Asia Knowledge Alliance for Development CA-WARM Central Asia Water Resources Management CDKN Climate and Development Knowledge Network CER Center for Economic Research (Uzbekistan) CHP Combined Heat & Power CMU Country Management Unit CoP Community of Practice CPF Country Partnership Framework CSOs Civil Society Organizations C4D Collaboration for Development DAC Donor Advisory Committee DCC Energy Donor Coordination Committee DFID UK Department for International Development DG DEVCO Directorate-General for International Cooperation & Development DH District Heating EAP Energy Action Plan EC European Commission ECA Europe and Central Asia EC-IFAS Executive Committee of the International Fund for Saving the Aral Sea ESA European Space Agency ESCC Energy Sector Coordinating Committee ESW Economic Sector Work EU European Union EWP Energy Work Plan GAMS General Algebraic Modeling System GDP Gross Domestic Product GEF Global Environment Facility GIZ German Society for International Cooperation GoK Government of Kazakhstan CAEWDP | Annual Report 2016 3 GoT Government of Tajikistan GP Global Practice GPSURR Social, Urban, Rural and Resilience Global Practice HPP Hydropower Plant ICSD Commission on Sustainable Development ICT Information and Communication Technology ICWC Interstate Commission on Water Coordination IDA International Development Association IGC Intergovernmental Council IMF International Monetary Fund IsDB Islamic Development Bank ITS Information Technology Services IWRM Integrated Water Resources Management JICA Japan International Cooperation Agency JWG Joint Working Group M&E Monitoring and Evaluation MDTF Multi-Donor Trust Fund MOOC Massive Online Open Course MTPP Medium-Term Priority Projects NASA National Aeronautics and Space Administration NOAA National Oceanic and Atmospheric Administration PIU Project Implementation Unit PPA Power Purchase Agreement QER Quality Enhancement Review SDC Swiss Agency for Development and Cooperation SDG Sustainable Development Goals SECO State Secretariat for Economic Affairs (Switzerland) SURR Social, Urban, Rural and Resilience TA Technical Assistance TF Trust Fund ToR Terms of Reference TTL Task Team Leader TWG Central Asia Technical Working Group on Climate Change UNDP United Nations Development Program UNECE United Nations Economic Commission for Europe UNFCCC United Nations Framework Convention on Climate Change UNRCCA United Nations Regional Centre for Preventive Diplomacy for Central Asia USAID United States Agency for International Development USGS United States Geological Survey WB World Bank WPO Web Program Office WSS Water Sanitation and Supply WUA Water User Association EXECUTIVE SUMMARY 6 CAEWDP | Annual Report 2016 This report presents the highlights and progress of the HIGHLIGHTS OF CAEWDP SUPPORTED Central Asia Water and Energy Development Program ACTIVITIES IN 2016 (CAEWDP). The reporting period for this Annual Report is the calendar year from January to December 2016. In 2016, the Central Asia Energy-Water Development Program (CAEWDP) continued to support efforts to deepen THE PROGRAM regional cooperation in energy and water and to advocate sustainable solutions to development challenges in these The Central Asia Energy and Water Development Program sectors that are central to the economies of the Central was initiated in 2009 to support the Central Asia Asian countries. The program continued to strengthen the countries (Kazakhstan, the Kyrgyz Republic, Tajikistan, capacity of regional organizations such as ESCC and EC- Turkmenistan and Uzbekistan) to build energy and water IFAS, as well as of national bodies to convene dialogues security through regional cooperation. CAEWDP aims on transboundary issues (e.g. regional power trade at strengthening the enabling environment through the through the provision of experts, training of technical generation of knowledge (data and diagnostic analyses), professionals, and production of analytical materials). strengthening of institutions (capacity building), dialogue ESCC convened two meetings among representatives processes and investments that promote energy and from the five countries, in which the cost-benefit analysis water security and help realize the benefits of regional of intra-regional power trade was shared and attracted cooperation to advance sustainable development and significant interest for further consideration among the climate resilience, goals that are inherent to energy and technical experts from the five countries. water security. The long-term vision of the program is to catalyze economic growth and livelihood security within CAEWDP continued to play a role in raising awareness Central Asia through regional cooperation and integrated and supporting capacity-building activities to promote energy and water development initiatives. regional water and energy security. In August 2016, as part of the High Level Symposium on SDG 6 and CAEWDP is implemented by the World Bank through a Targets: Ensuring that No One is Left Behind in Access multi-donor trust fund financed by the State Secretariat to Water and Sanitation held in Dushanbe, the program for Economic Affairs of Switzerland (SECO), the organized a roundtable to raise awareness on effectively Department for International Development of the tested methods to increasing water use efficiency. With United Kingdom (DFID), the United States Agency for population growth and climate change, this issue is International Development (USAID) and the European becoming increasingly important as the annual water Commission (EC). availability per person is expected to fall by around 700 m3 over the next fifteen years and the region is expected PROGRAM ACHIEVEMENTS TO DATE to suffer water stress. The support provided under CAEWDP to date has helped The Water Futures Forum & Expo in September 2016 catalyze important regional investments, such as the in Almaty, Kazakhstan brought together over 280 Central Asia Hydromet Modernization Project (CAHMP), policy makers and technical experts from government, the Climate Adaptation and Mitigation for the Aral academia, the private sector, as well as CSOs, Sea Basin Project (CAMP4ASB) and the Central Asia to discuss the latest innovations in information South Asia Electricity Transmission and Trade Project management and water information system design. The (CASA-1000). Analytical work at national level has led participants included the Deputy Ministers of Water to policy reform and institutional strengthening, such from three Central Asia countries including Afghanistan as in Tajikistan’s energy sector, and underpins ongoing and prompted a request further support to rehabilitate water and energy sector reform processes in several and upgrade water information systems to enhance the other countries. Dialogue processes facilitated by regional knowledge and data base. CAEWDP provided opportunities for transparency and open exchange of opinions among beneficiary countries National Cross Sectoral Working groups in Kazakhstan and development partners; furthermore, it built capacity and the Kyrgyz Republic convened two meetings among participating countries to take on the leadership among experts and students, as part of research and role of similar engagements in the future. discussions on regional geo-hazard risks. Two key results were achieved by the joint working groups: (1) an official appeal was sent to the Kyrgyz Republic CAEWDP | Annual Report 2016 7 Government, justifying the need to implement a complex recommendations on how to improve the regulatory set of protection measures that will reduce the risk from environment, make progress with market reforms and mudflows; and based on the recommendations of their attract private investment. The activities provided a national working group, the Government of Kazakhstan platform to engage in dialogue at the national level on: took measures to review the risks to and status of the energy subsidy policies; diversification of the energy Shardarinskaya Dam. mix for integrated power generation and transmission planning, and climate resilience through the development The continued work with Tajikistan and Kyrgyz Republic of coordinated adaptation policies. on addressing winter energy challenges led to the identification of new investment which are currently In addition to the completed grants, ongoing grants under preparation. Further highlights and achievements contribute to both national and regional energy security. that took place in 2016 under the three program pillars These are mainly investment preparation grants. are described below. Activities aim to address national winter energy and heating challenges in the Kyrgyz Republic and Tajikistan ENERGY DEVELOPMENT PILLAR and strengthen regional energy trade through CASA- 1000. Notable achievements in 2016 for ongoing The Central Asian countries are endowed with significant activities included awareness raising on solutions for energy-related natural resources but their distribution is energy savings and the preparation and discussion on highly skewed geographically, with large fossil resources large energy infrastructure projects. in the downstream countries and hydropower generation potential in the upstream countries. There is significant WATER PRODUCTIVITY PILLAR potential for electricity trade within the region, however it is underutilized. Benefits lost to the countries of Central Water availability and use are highly variable among Asia due to limited regional power trade were estimated the countries. The expansive semi-arid steppe receives at about US$6.4 billion during 2010-2014. Central Asia little to no rainfall, while the mountainous areas in the countries’ desire to improve security of energy supply South-East receive plenty. Given low rainfall, particularly through diversification of energy resources including in the downstream countries, rural, urban and industrial scaling up development of renewable wind and solar (in development remains particularly dependent on addition to hydro) resources would also boost motivation adequate water availability from the rivers which connect for improving interregional connectivity and cooperation the countries, in particular the Syr Darya and the Amu in development and harmonization of enabling Darya and their tributaries. environments for deployment of renewables. The Water Productivity Pillar aims to enhance the The objective of the Energy Development Pillar is to productive and efficient use of these shared water promote and analyze high-value energy investments resources in the various water related sectors that focus on energy security, efficiency, trade and though capacity building, institutional strengthening accountability, infrastructure planning and institutional and investment planning. In 2016, one activity was development. The six completed activities focused on completed under this pillar. The study on irrigation improving the performance and building capacity of efficiency in Tajikistan provides analyses of the power markets, climate resilience in the region, and measures and potential investments to improve water renewable energy at the national level. Outcomes from and energy productivity in agriculture. The study was these technical assistance activities contributed to presented to the government stakeholders and received increased awareness about needs for sector reform, positive feedback. It currently rests under consideration improved designs of energy plans, and strengthened with the Government for decision on follow-up action. coordination and collaboration. Investment Preparation outcomes informed the detailed design of the Heat A further study, which is still ongoing, focuses on Supply Improvement Project for Kyrgyz Republic, which improving diagnostics on water supply and services aims at improving the efficiency and reliability of district management systems in Central Asia. Preliminary results heating (DH) and increasing access to the system in suggest Uzbekistan could gain an annual estimate of the Kyrgyz Republic. Analytical work demonstrated the US$200 million by targeting social support through benefits that can be achieved by Central Asian countries separate systems to poor households, while introducing through energy trade; it provided relevant data and cost-based water supply and sanitation tariffs. 8 CAEWDP | Annual Report 2016 ENERGY-WATER LINKAGES PILLAR facilitating meetings on topics of regional concern. A number of these activities are aimed at strengthening How well the countries in the region manage their institutional capacities and preparing the investment resources endowments will play a large role in environment for investments in water information determining their capacity to achieve water and energy systems that would provide the backbone for integrated, security. Over the next few decades, projected changes cross-sectoral management of the region’s water in demographics and wealth, coupled with a changing resources. climate and more uncertain water endowments, will put Central Asia’s water-intensive economy at risk. Yet, PROGRAM ADMINISTRATION AND the region has the potential to benefit from its strong DISBURSEMENTS comparative advantage given its energy and water resources driving agriculture, power generation and The multi-donor trust fund which provides the financial industrial and mining operations. The requirements for resources for the program was extended by one more year, realizing all these benefits are twofold: there needs to until December 2017, to enable the completion of key be a focus on establishing functioning energy and water program activities and for the preparation of a new funding sectors at the national level; and coordination among phase that would support the program beyond 2017. the riparian states to be strengthened to address the energy-food-water nexus and to identify strategies that CAEWDP disbursements increased significantly in maximize benefits to individual countries while reducing 2016 compared with 2015. In 2016, CAEWDP Multi- the risks and negative consequences to all. Donor Trust Fund (MDTF) supported 41 grants that totaled US$10.3 million—an increase from 41 grants The Energy-Water Linkages Pilar aims to improve the that totaled US$8.9million in 2015. An additional understanding of these linkages between energy and US$1.4 million was allocated to existing grants. Based water at national and regional level and to explore the on the allocations, the approved activities undertook future impact of regional climate change. The focus disbursements in 2016, leading to cumulative of the four grants which were completed in 2016 was disbursements of US$8.9 million. These disbursements capacity building to increase the awareness of new tools represent 86 percent of total allocations—an increase and technologies, access to knowledge and knowledge from 69 percent in 2015 that was largely due to exchange to facilitate dialogue. Completed activities the maturation of the activities that began in 2014, included the Capacity Strengthening for Integrated accelerated pace and entered the completion phase. Water Resource Management (IWRM) Modeling which Among program pillars, Energy-Water Linkages accounted developed a model curriculum to train on modeling for about 45 percent of program grants, while Energy activities. The Central Asia Water and Energy Portal Development accounted for 32 percent. The remaining contributed to making publicly available data accessible grants funded Water Productivity (9 percent) and through user-friendly apps that can be retrieved from Strategic Program Management, which includes outreach anywhere, simply on a hand-held device. The legal and dissemination activities and preparation of the next analysis of the transboundary water management financing phase (14 percent). frameworks in Central Asia and the study on institutional options for water development in the upper Amu The CAEWDP team underwent a leadership transition at Darya basin provided the background information that the end of 2015 and at the end of 2016. Christina Leb informed riparian discussions on complex cross-border formally assumed the role of Program Manager from investments. acting Program Manager, Ijsbrand de Jong, leading a core team of three Pillar Leads and a Partnership Specialist. The ongoing grant activities in the Energy-Water Linkages The new Pillar Leads are Husam Beides (Energy), pillar are contributing to regional knowledge, information Nagaraja Rao Harshadeep (Energy-Water Linkages) and and political collaborations. Activities range from Pieter Waalewijn (Water). dialogue, knowledge networks, computer modeling, and CAEWDP | Annual Report 2016 9 LOOKING FORWARD CAEWDP will continue to provide support at the national and regional level to promote energy and water security in Central Asia. Moving forward, CAEWDP will shift from establishing conditions for cooperation to strengthening confidence and institutional frameworks to facilitate the realization of the benefits of cooperation. This would be accomplished through: (i) greater focus on investments to strengthen energy and water security at the regional level, while (ii) building capacity for decision support and dialogue from the national to the regional level. Efforts are underway to establish and shape a third funding phase of CAEWDP . Strong support exists for the continuation of the CAEWDP approach which will also build on lessons learned. The concept for the third funding phase was presented to the Donor Advisory Committee (DAC) for consultation in December 2016 and is in the process of being finalized and refined with the feedback received from the development partners. It is planned that the third funding phase will be operational end 2017 or early 2018. ENERGY AND WATER Chapter RESOURCES DEVELOPMENT IN CENTRAL ASIA 1 12 CAEWDP | Annual Report 2016 1.1 THE CHALLENGE as well to financing operation and maintenance costs. Decision-making on resource allocation and management CAEWDP operates across five Central Asian countries needs to be based on detailed, reliable and agreed data with a total population of 64.5 million. These countries sets; however, data collection, management and sharing are at various stages of development. They comprise systems have deteriorated and are not fully reliable. It two International Development Association (IDA1)-only requires some coordination among the riparian states and recipients (the Kyrgyz Republic and Tajikistan), one blend their agreement on the effective sharing of energy and lower middle-income country (Uzbekistan) and two upper water resources to address the energy-food-water nexus, middle-income countries (Kazakhstan and Turkmenistan). as well as to identify strategies that maximize benefits to At the same time, these countries are endowed with a individual countries, while reducing the risks and negative wealth of energy and water resources. Similar to the consequences to all. Existing regional institutions respective development paths, resource distribution can play a useful role in harnessing the regions’ and across countries is highly uneven. Water availability countries’ comparative resource advantages. While and use are highly variable among the countries with institutional capacity and cost recovery are comparatively the three semi-arid downstream countries dependent weak, the region has the potential to benefit from its on the water generated in their mountainous upstream strong comparative advantage, given its energy and neighbors. The countries rely heavily on a mix of fossil water resources driving the region’s agriculture, power fuel and hydropower resources, which are also unevenly generation and industrial and mining operations. The distributed among them, with major implications for intra- changing regional political environment may offer new regional coordination and cooperation. opportunities for engagement. The countries of Central Asia share water and energy Trade between Central Asian countries has grown resource interdependencies and hence, rely on in recent years and some countries in, and around cooperation to address joint challenges. Many canal the region maintain efforts to increase economic systems and reservoirs straddle the national borders2; integration, including through the Eurasian Economic at the same time, some infrastructure assets that used Union and through the Central Asian Regional Economic to serve regional needs during Soviet times are now Cooperation (CAREC). Changing circumstances in the located in, and managed by one country among six. The relations between countries may pave the way for new national borders established after independence pose opportunities. Subtle shifts in entrenched positions significant challenges to optimizing asset operations, (including on transboundary water issues, data and TABLE 1 — KEY COUNTRY INDICATORS(1) Surface area Population Population GDP GDP GDP GNI per Growth (annual) growth growth capita(2) 2009-2014 2015 (km2 in 000s) (million) (%) ($ billions) (%) (%) (US$) Kazakhstan 2,724.9 17.5 1.5 184.4 6.0 1.2 11,580 The Kyrgyz 199.9 5.9 2.1 6.6 4.2 3.5 1,170 Republic Tajikistan 142.5 8.4 2.2 7.9 6.5 6.0 1,240 Turkmenistan 488.1 5.3 1.5 37.3 11.3 6.5 7,510 Uzbekistan 447.4 31.3 1.7 66.7 8.2 8.0 2,150 (1) All data are from the 2016 World Bank Development Indicators (2) GNI per capita is based on World Bank Atlas (2015) 1 The International Development Association (IDA) is the part of the World Bank that helps the world’s poorest countries. 2 For example, the irrigation systems in the fertile Ferghana Valley crisscross the national borders of the Kyrgyz Republic, Uzbekistan and Tajikistan. The Tuyamuyun reservoir which is the last large reservoir on the Amu Darya able to regulate flows, is located in Turkmenistan while its dam is on Uzbek territory. Farkhad dam is located in Tajikistan, while its hydropower station lies in Uzbekistan. Similarly, many large pumping stations that supply the irrigation areas in Uzbekistan lie on Turkmen territory. CAEWDP | Annual Report 2016 13 information accessibility) signal potential willingness • In Uzbekistan, Shavakat Mirziyoyev was elected to focus on future opportunities rather than on the President in December 2016, after the passing of difficulties of the past. New opportunities for regional former President Karimov. Mirziyoyev’s presidency cooperation are evident through: an increased interest of is characterized by an approach of regional re- neighboring countries—particularly China—to open new engagement with the country’s Central Asia trade corridors, as well as an ongoing political transition neighbors. in Uzbekistan. There is a noticeable trend of increasing neighborly in engagement among the countries. • 2016 also marked the year of preparing the inclusion Tajikistan and Uzbekistan re-engaged in bilateral dialogue of India and Pakistan to the SCO. The two countries in 2016 resulting in the opening of commercial air became full members during the Astana Summit in travel between the two countries for the first time in 25 June 2107. Whereas new partners suggest benefits years.3 Turkmenistan, which has assumed chairmanship of a larger Eurasian partnership, it remains to be of EC-IFAS, has equally strengthened its commitment seen if such growth will strengthen or weaken the to regional dialogue on integrated water and energy organization and its functionality.4 management with other countries in the region. Though there are successes in the transition process of Some key events in 2016 affected the region’s political the countries, the countries remain vulnerable to external and economic environment: shocks. Climate change is expected to negatively impact water availability, leading to stress in the economy and • Parliamentary elections were held in Kazakhstan society at large; it is expected to increase pressure on in March 2016, five months before the term of the regional hydrological systems. The five Central Asian lower house, the Mazhilis, would have expired. The countries are among the most vulnerable to climate economic crises caused by low oil prices was one of change in comparison to other regions. Average annual the reasons cited for early elections. temperatures across the region have increased since the mid-20th century by 0.5°C in the south to 1.6°C in the • In May, heavy rains caused floods and mudflows north; impacts noticeably range from melting glaciers affecting thousands of people in Tajikistan and in upland areas to droughts and floods in the lowlands. causing damage to bridges, roads, and other Glaciers have lost one-third of their volume since the infrastructure. 1900s in upland areas and weather-related disasters are estimated to cause economic losses from 0.4 to 1.3 • Changes to the land code of Kazakhstan that make percent of GDP per annum for Tajikistan, Turkmenistan, unused land available for purchase by Kazakh and the Kyrgyz Republic. In 2016, for instance, the citizens or joint ventures or for rent by foreigners for Kyrgyz Republic sustained approximately US$1.1 million up to 25 years via land auctions went into effect on in damages, due to mudflows in the southern region. July 1, 2016. Building resilience to the mounting impacts of climate • President Emomali Rahmon of Tajikistan officially change is a priority for poverty reduction and shared launched the construction of Rogun Dam in late prosperity in Central Asia. All Central Asian client October 2016. countries (except Uzbekistan) have Intended Nationally Determined Contributions (INDC), which were developed • In the fall, Turkmenistan assumed chairmanship of in accordance with decisions of the Conference of EC-IFAS, taking over from Uzbekistan. the Parties (COP) to the UN Framework Convention on Climate Change (UNFCCC), and presented for signature • In a constitutional referendum held in December, the during COP 21. The INDCs became effective and Kyrgyz electorate voted in favor of increased powers progress was monitored towards targets in 2016. for the government. 3 “Tajikistan-Uzbekistan relations discussed in Tashkent” Read more: https://news.tj/en/news/tajikistan/politics/20170206/236352 4 http://carnegieendowment.org/2016/06/23/shanghai-cooperation-organization-central-asia-and-united-states-pub-63907 14 CAEWDP | Annual Report 2016 1.2 THE CAEWDP APPROACH 2. Energy-Water Linkages: This pillar seeks to improve the understanding of the interconnections between CAEWDP aims to build energy and water security at energy and water at the national and regional levels the national level, enhance cooperation and promote by: exploring the future impact of climate change; integrated energy and water initiatives at the regional facilitating regional dialogue regarding cooperative level. The Government of Switzerland and the World management of water and energy, and strengthening Bank established CAEWDP as a trust fund in 2010. the information base; and DFID, the EC and USAID eventually joined the program as contributing development partners. The program 3. Water Productivity: This pillar addresses supports the Central Asian countries (Kazakhstan, infrastructure and management opportunities to the Kyrgyz Republic, Tajikistan, Turkmenistan, and increase the productivity and efficiency of water use Uzbekistan) and the World Bank’s twin goals in reducing in both agriculture and energy sectors. poverty and ensuring shared prosperity through long-term economic growth and sustainability. Each of the program pillars aims to engage in activities based on three key outcomes. These are: (i) Analytical Development (Technical Assistance), or the upgrade of the knowledge foundation and establishment of The countries need to overcome sound energy-water diagnostics and analytical tools; (ii) the constraints of their landlocked Institutional Strengthening, or the shaping of strategies situation and take advantage of their and strengthening of national and regional institutions “Central” Asian location to integrate and dialogue, and (iii) Investment Preparation, or the with the global economy. Regional identification of priority infrastructure investments. interconnectedness based on strong All three outcomes are closely intertwined. Analytical national sectors and institutions will be development provides the technical foundations and one way to achieve continued economic “know-how”; institutional strengthening builds the growth and livelihood security. capacity of agents, whereas investment preparation helps to identify investment options. The combination of these three outcomes provides a comprehensive pathway to promote regional cooperation. CAEWDP’s long-term goals are to eliminate winter energy shortages, enhance water productivity and increase electricity trade within and outside the region. Hence, the program is structured around three pillars to reflect these goals. CAEWDP’s role in strengthening regional cooperation and leveraging the energy-water nexus is particularly significant, given the geographic and institutional complexities of Central Asia’s energy and water linkages. The three pillars of the program are: 1. Energy Development: This pillar supports policy and investment decisions for the highest value mix of energy resources at the regional levels—both within Central Asia and at the broader regional level. It promotes and studies high-value energy investments that focus on energy security, energy efficiency, trade and accountability, infrastructure planning and institutional development. Additional activities also promote better coordination among the development partners working in this region; PORTFOLIO AND PROGRAM Chapter ACTIVITY SUMMARY 2 16 CAEWDP | Annual Report 2016 2.1 PORTFOLIO SUMMARY goals of achieving regional energy and water security and regional cooperation. More comprehensive project CAEWDP contributes to the World Bank’s portfolio descriptions and updates, as provided by Task Team in Water, Energy, and the ECA region through direct Leaders (TTLs), are included in Annex I. contributions to advisory services and analytical activities. Over the course of the calendar year 2016, 2.2 ENERGY DEVELOPMENT the number of completed grants was the same as that in 2015, with a significant decrease in ongoing grants for Many of the current energy challenges relate to the the first time in the program’s history. Figure 2 indicates region’s Soviet legacy, compounded by the different that CAEWDP included three new grants, 10 completed development objectives of the individual states as they activities and 12 ongoing grants in 2016. move forward. The current generation capacity of the Kyrgyz Republic and Tajikistan is linked to the agreed During 2016 the Energy Development pillar constituted regime of summer water releases to downstream the majority of ongoing grants. In 2016 equal funding irrigation. The winter energy shortages are estimated was provided to the Energy-Water Linkages and Energy around 25 percent, yet the summer power capacity Development pillars, with no new allocated to the Water surplus (driven by the releases for irrigation) is left Productivity pillar. The Energy Development pillar accounted unused with high levels of spillage at hydroelectric for a slight majority of all program grants (41 percent). plants. With aging infrastructure, weak institutional capacity and low productivity arising from subsidy Of the three program outcomes, investment preparation policies and suboptimal tariff structures, these received the greatest funding allocation during 2016. hydropower facilities and the national electricity sectors Analytical Development constituted 16 percent of the total are inefficient and do not reach their economic potential. program allocation, Institutional Strengthening, 23 percent Reforms are needed to increase institutional capacity for and Investment Preparation, 53 percent. A summary of better planning, management and energy use efficiency. the 2016 portfolio of program grants is provided in the next section for each of the three pillars. In addition to the CAEWDP’s Energy Development pillar aims to analyze summary of each grant, the next section also presents and support high-value investments focused on winter each of their contributions to the broader program energy security, energy efficiency, enhancing trade and FIGURE 1 — NUMBER OF CAEWDP GRANT ACTIVITIES (2013-16) 25 20 15 10 5 0 2013 2014 2015 2016 New Completed Ongoing CAEWDP | Annual Report 2016 17 accountability, infrastructure planning and institutional Analytical Development: development. 2016 program grants—both ongoing and completed—reflected those objectives. • The Energy Vulnerability to Climate Change grant helped beneficiary countries in Central Asia to During 2016, six grant activities were completed in understand climate change-induced energy sector the Energy Development pillar portfolio. Completed vulnerabilities by conducting national workshops, projects included two analytical development grants, strengthening bilateral engagements and developing two investment preparation grants and two institutional coordinated adaptation policies to build resilience. strengthening grants. The six completed grants sought to improve the performance and building capacity of power • The Kazakhstan Renewable Energy Integration in markets, regional climate resilience and renewable Power Market and System provided a comprehensive energy at the national level, illustrated below: in-depth sector assessment. The recommendations provided the Government of Kazakhstan (GoK) with Institutional Strengthening: data on how to improve the regulatory environment, make progress with market reforms and attract • Enhancing Regional Power Trade in Central Asia private investments. demonstrated the unrealized benefits for Central Asian countries ranging from US$1.5 to US$6.4 billion and Outcomes from these technical assistance activities recommended short, medium and long-term steps to contributed to increased sector awareness, improved implement efficient power trade. The results of the designs of energy plans, as well as strengthened study were presented at two Central Asia Regional coordination and collaboration. The Kyrgyz Republic Economic Cooperation Program–Energy Sector Heating Efficiency Improvement grant led to the Coordinating Committee (ESCC) meetings in 2016 and development of an implementation plan recommending delivered to four Central Asian governments to increase reform measures to improve the efficiency and reliability their awareness and stimulate public dialogue. of the district heating (DH) system in Bishkek and mitigate the winter energy shortages. The proposed investment • Uzbekistan Planning Study for Power Sector increased plan was agreed upon, and adopted by the district heating the institutional capacity in the Governments company and the Government. It informed the design of of Uzbekistan (GoU) and Uzbekenergo (UE) for a new IDA-financed investment lending operation in the integrated power generation and transmission sector and served as the basis from which to coordinate planning with a diverse energy mix. investments with other development partners investing in the DH sector in Bishkek. Investment Preparation: The tool used for the power system planning in • The Kyrgyz Republic Heating Efficiency Improvement Uzbekistan was later transferred to the client. This grant provided technical assistance support to inform enabled Uzbekenergo to evaluate the impact of the detailed design of the resulting investment lending policy choices and electricity imports on system operation. The grant recommendations outlined clear costs. Continued references to the tool demonstrate priority investments on how to improve the efficiency a deepened understanding of underlying issues in and reliability of district heating (DH), which—as technology choice for power system expansion and implemented—would help to reduce the need for strengthened institutional capacity at Uzbekenergo, the electric back-up heating and potentially connect holding company that oversees the energy sector for additional customers to the Bishkek DH system. integrated power generation and transmission planning. • Uzbekistan: Impact of Energy Subsidies–Way The ongoing grant activities in the Energy Development Forward provided a diagnostic analysis of the energy pillar are contributing to both the national and regional subsidies and an initial social impact assessment energy security and are comprised primarily of of the current energy service delivery conditions in investment preparation grants. Activities range from Uzbekistan. This permitted the Bank to engage the addressing local winter energy and heating challenges in GoU in dialogue on the consistency of existing energy upstream countries (the Kyrgyz Republic and Tajikistan) policies in alignment with the country’s development to regional energy trade initiatives, such as CASA-1000, objectives. and support to other regional platforms such as the 18 CAEWDP | Annual Report 2016 CAREC ESCC. The grants also promote better integration Legal Analysis of the Transboundary Water Management of climate change concerns and responsibilities. The Frameworks in Central Asia study grant provided an engagement with CAREC ESCC has sparked interest overview of the legal frameworks and institutions that among the group to expand the geographic scope of the were charged with managing transboundary water Study on Regional Power Trade in Central Asia to include resources. This served to increase the legal acumen of other neighboring countries and sub-regions. As political regional practitioners. The Exploration of Technical and support for intra-regional energy cooperation continues institutional Options for Water Resources Development to grow, the CAREC ESCC remains a useful platform to in the Vakhsh Cascade study grant analyzed the benefits facilitate more meaningful dialogue on these issues. of cooperation within, and outside the region, as global good practice examples. The Central Asia Water and 2.3 ENERGY-WATER LINKAGES Energy Portal grant sought to improve public domain data and scale up access to strengthen evidence-based In Central Asia, the sectors most at risk from climate dialogue on transboundary waters among beneficiaries. change are agriculture, energy, and water resources. This would be accomplished by laying the knowledge Climate change challenges and increasing water foundation for the implementation of regional projects in scarcity highlight the interconnectedness between these integrated water resource management. various sectors. In agriculture, which is critical for the largely rural livelihoods in the region, cropping system Additionally, one institutional strengthening grant was productivity (including in both rainfed and irrigated completed, which strengthened knowledge foundations systems) is sensitive to variations in: rainfall; hydrologic among key stakeholders. The regional Capacity flows modulated by snow accumulation and melt; Strengthening for the IWRM Modeling grant provided system storage, as well as evapotranspiration. Energy decision support by raising awareness of new modeling systems are sensitive to hydrologic changes (e.g., in the technologies among expert practitioners in integrated case of hydropower), demand changes (e.g., in warmer water resource management workshops and through areas in summer), the impact of extreme events on model trainings. transmission systems, as well as mitigation actions (e.g., in the case of fossil fuels). Key areas to address The ongoing grants in the Energy-Water Linkages pillar climate vulnerability include: clean energy and energy are contributing to regional dialogue, information sharing efficiency; strengthening disaster-risk management, as and national collaborations. Most ongoing grants are well as improving water and other natural resources associated with investment preparation. Three of the four management. ongoing grants are focused on investment preparation. Grants range from knowledge networks and data CAEWDP’s Energy-Water Linkages pillar seeks to improve access to facilitating meetings on regional climate and the understanding of the connections between energy transboundary water concerns. Many of the grant activities and water at the national and regional levels, through are aimed at preparing the investment environment for exploring the future impact of climate change, facilitating regional projects and increasing capacities on complex regional dialogue, and strengthening the information regional issues related to energy and water security. The base. 2016 program grants—both ongoing and Central Asia Water Resources Management (CA-WARM) completed—reflected those objectives. The completed Phase-I Project, Technical Assistance for Developing Water grants focused on decision support and capacity building Information Systems in Central Asia, Central Asia Water, to increase awareness of new tools and technologies, and Climate Adaptation and Mitigation Program for Aral and promote knowledge exchange to facilitate dialogue. Sea Basin Series of Projects II grants were investment- The ongoing grants contribute towards accumulated focused and implementation slowed down in 2016, as regional knowledge, information and political more national ownership was sought. collaborations. Most ongoing grants are associated with investment preparations. • While grant activities slowed down in September 2016, the Technical Assistance for Developing During 2016, four grants were completed in the Energy- Water Information Systems in Central Asia grant Water Linkages pillar portfolio. Completed grants supported the Water Futures Forum & Expo in Almaty, included one analytical development grant and three Kazakhstan. Over 280 policy and technical experts institutional strengthening grants. from government, academia, the private sector, Three analytical grants were recently completed. The as well as CSOs, participated in this international CAEWDP | Annual Report 2016 19 event. Specialists from all five Central Asia countries 2.4 WATER PRODUCTIVITY PILLAR attended and presented papers at the Central Asia Water Future Knowledge Forum and Exposition to Regional water challenges relate chiefly to the availability learn about innovations in information management. and efficiency of use. Population and economic growth Additionally, Vice Ministers of water from three are increasing stress on the region’s natural resources.5 Central Asia countries plus Afghanistan participated Even though 55 to 94 percent of the population are and lessons for the CA-WARM project were identified. served with an improved water source for household use, water supply and sanitation (WSS) systems are generally • Climate Adaptation and Mitigation Program for Aral characterized by aging, poorly maintained assets. While Sea Basin Series of Projects II grant held a meeting the water uses with the largest added value is that for of CAMP4ASB Regional and National Coordination industry, mining, and urban WSS, local shortages in Agencies in Almaty, Kazakhstan on January 26-27, urban water supply and industry occur due to within- 2016, with the objectives of: (i) reviewing steps country water allocation decisions—namely those of and timeline towards Program effectiveness; (ii) irrigation. Unfortunately, the diversion of water to irrigate strengthening implementation readiness, and (iii) the vast agricultural fields in the region has contributed continuing regional experience sharing on climate to severe environmental and health problems in the action and knowledge management. Aral Sea basin. Furthermore, the high costs of pumped irrigation result in the costly maintenance of rural • The Central Asia Knowledge Network grant—although livelihoods, as public support for irrigation places a high not focused on investment preparation—contributed cost on national budgets. This reinforces the need to to CA-WARM and knowledge products. Some notable identify solutions for increasing irrigation efficiency and 2016 outputs included the e-journal, mobile apps, water productivity across the region. and several workshops that brought experts and professions together. The grant also supported a There is a strong need for countries in the region to workshop in June 2016 in Almaty, Kazakhstan to manage their water endowments efficiently, as this plays discuss and highlight the results of the Knowledge a large role in determining their capacity to achieve Networks and Communities of Practice for Water- water and energy security. If current water management Energy and Climate Change Management Program. policies persist, water scarcity could lead to a significant slowdown in economic performance. Figure 16 compares Outcomes of this pillar include access to regional and likely future economic growth under “business-as-usual” global water-energy related data in a user-friendly way water management policies (lower bounds) to potential through the Central Asia Knowledge Portal; institutional growth (upper bounds), based on the assumption of a strengthening and strengthening of technical dialogue, more efficient use of water in the economy (reallocation which in the case of the Kyrgyz and Kazakh national of 25 percent of water consumed to more productive working groups on geo-hazard risks led to direct uses, such as industry). While the model is not intended government action. The Water Futures Forum & Expo to provide forecasts of GDP growth decades into the prompted a formal government request for support future, the large difference in projected growth under the to install technical innovations and for rehabilitation two policy scenarios is indicative of the importance that and upgrade of national information systems. The water policies will have in the coming decades, including preparation work which has been carried out under for the energy sector. Of all the world’s regions, future CA-WaRM to identify national investment requirements water consumption patterns have the greatest impact on to modernize water information systems, will be economic growth in Central Asia, ranging from negative carried forward into the next funding phase to pursue growth in the “business as usual” scenario to positive investments in this area. Data availability is the sine growth, if water is used more efficiently. qua non for effective water resources management with cross-sectoral benefits in the region. 5 If the Central Asian population continues to grow by 1.5 percent annually, the region will become water stressed by 2050, water short in 2080 and water scarce within 100 years Commonly used thresholds for water stress, water shortage and water scarcity are 1,700, 1,000 and 500 m3 per person per year, respectively. These measures are limited in that they do not reflect the efficiency of use of water. 6 Water Global Practice, “High and Dry: Climate Change, Water and the Economy”, The World Bank Group, 2016 20 CAEWDP | Annual Report 2016 FIGURE 2 — CLIMATE-RELATED IMPACTS ON GDP IN 2050 (RANGES OF IMPACTS DETERMINED BY POLICIES) 15 11.5 10 Range of variation in GDP (%) 5 3.32 1.46 0.38 0.09 0.0 -0.01 -0.82 0 -0.02 -0.02 -0.49 -1.98 -6.02 -5 -7.08 -7.05 -10 -10.72 -11.7 -15 -14.0 North Western Middle Sahel Central Central East Southeast World America Europe East Africa Asia Asia Asia Note: The figure shows the range that climate changes effects on water will have on GDP for selected regions. It incorporates effects from different policy scenarios (business-as-usual policies and policies that encourage better water allocation). The CAEWDP Water Productivity pillar seeks to An outcome from the activity completed under this pillar address these challenges through support to increase in 2016, is the increased awareness of the client country productivity and the efficiency of water use in the water about the water and energy-related costs of agriculture and energy sectors. 2016 program activities—both and about the areas where significant efficiency gains ongoing and completed—reflected those objectives. can be made. The assessment of irrigation systems and In 2016, an investment preparation grant focusing on current methods in Tajikistan provided an analysis of the irrigation efficiency in Tajikistan was completed and a measures and investments that can be made to improve regional assessment of Water Supply and Sanitation irrigation efficiency. One of the identified constraints to (WSS) systems was completed and finalized for improving efficiency in Tajikistan was the extreme sand publication in 2017. The ongoing grant in the Water wear of pumps and problems with poor electric power Productivity pillar is focused on improving information quality, or periodic outages. With increased efficiency, and diagnostics on water management systems water can be freed up for additional uses and to satisfy in Central Asia. Some preliminary results suggest new demands. This study proves useful for the ongoing Uzbekistan could gain an annual estimate of US$200 water and energy sector reforms, as ongoing World Bank million by targeting social support through separate projects like PAMP-II, ZIRRMP and Nurek Rehabilitation systems to poor households, while introducing cost- institutionalize newly-acquired knowledge in their based water supply and sanitation tariffs. The grant operations. includes a diagnostic of the status and challenges of water supply and sanitation across Central Asia to outline policy priorities for improved services. TRUST FUND MANAGEMENT AND FINANCIAL OVERVIEW Chapter 3 22 CAEWDP | Annual Report 2016 3.1 PROGRAM ADMINISTRATION 3.3 COMMUNICATIONS & OUTREACH The end of 2016 saw the completion of the CAEWDP In 2016, CAEWDP scaled up implementation of the personnel changes. The CAEWDP team underwent a Communication and Outreach Strategy. The strategy was leadership transition at the end of 2015, as well as at updated at the December 2016 DAC meeting to support the end of 2016. Christina Leb formally assumed the program delivery and boost impact-focused outreach role of Program Manager from acting Program Manager, activities. With the extension, the team also provided Ijsbrand de Jong, leading a core team of three Pillar a draft Communications and Engagement Strategy, Leads and a Partnership Specialist. A new Practice Action Plan, and Implementation Roadmap for FY16- Manager for Water Global Practice was also brought 18 to guide the program outreach and dissemination on board as well as several support functions such activities until its conclusion. The purpose of the as short-term assistance for communications and Communication Outreach and Dissemination activity operations for the Program. In 2016, the core team is to strengthen knowledge sharing and increase key continued to provide support in project formulation, internal and external stakeholders’ understanding of implementation, monitoring and evaluation (M&E), CAEWDP through a strategic communications framework. as well as in facilitating the undertaking of various This support is provided through two components: knowledge sharing activities for grants in Central Asia. knowledge management and communications. In August 2016, the team hosted a Thematic Session 3.2 DONOR ENGAGEMENT on Increasing Water Use Efficiency at the High-Level Symposium on Sustainable Development Goal 6 and Donor engagement and commitments remained high Targets: Ensuring that No One is Left Behind in Access during 2016. Table 3 provides a financial overview of to Water and Sanitation in Dushanbe. The Symposium donor engagement and commitments. More than US$11 was attended by representatives of more than 90 million had been received as donor contributions by the countries. The session discussed the challenges, as close of 2016. Further information on program finances well as a number of solutions to effectively implement is outlined in Section 5.4. Sustainable Development Goal (SDG) 6.4, which aims to substantially: increase water-use efficiency across all 2016 was a notable year for donor engagement, as the sectors; ensure withdrawals and supply of freshwater to program prepared for the next phase of CAEWDP with address water scarcity, as well as reduce the number of multiple consultations on the concept note proposal. people suffering from water scarcity. There were two consultations. One Partner Consultation, held in Washington, DC in March 2016, focused on the The team also produced a series of publications and next phase of the program, whereas another Partner updates to the website. Three short films were produced, Consultation, held in Almaty in December 2016, demonstrating the impacts and results of the program reviewed and discussed the Concept note in-depth. All as of June 2016. The program sponsored a workshop in of the current partners agreed to a no-cost extension June 2016 in Almaty, Kazakhstan to discuss the results until December 2017. The team presented the proposed of the Knowledge Networks and Communities of Practice future activities in the three thematic pillars to the for Water-Energy and Climate Change Management partners and discussed the strategic path forward that Program. In September 2016, the Water Futures Forum & would allow the program to remain both expansive, yet Expo took place in Almaty, Kazakhstan. Over 200 policy focused to clearly demonstrate continued results and and technical experts from the government, academic impacts. CAEWDP participated in, and presented at, and private sectors, as well as CSOs, participated in this several partner and collaborator events during 2016. international event. CAEWDP organized a booth display ­ CONTRIBUTIONS & COMMITMENTS TABLE 2 — Total contributions received Total allocation of funds to Total disbursements (US$) Funding available (US$) (US$) grants (US$) 11,095,062 10,665,756 8,873,113 208,532 Sourced from program internal financial records, as of 31st December 2016 CAEWDP | Annual Report 2016 23 and brief presentation. The Expo was an opportunity The program disbursement rate increased during 2016. for the team to present CAEWDP to the region. Several Total disbursements in 2016 represented 86 percent reports have now been finalized and added to the of total allocations—up from 69 percent in 2015. This CAEWDP website7: increase in disbursements was primarily due to many of the activities that were delayed in 2015, having entered • Enhancing Regional Power Trade in Central Asia; the implementation and completion phase. • Exploratory Assessment of Factors that Influence Quality of Local Irrigation Water Governance in Uzbekistan; Cumulative program disbursements continued to • The Costs of Irrigation Efficiency in Tajikistan, and increase at a quicker rate in 2016 than that in 2015 • Central Asia Energy-Water Development Program (Figure 4). 2016 rapidly expanded a trend of significant Annual Progress Report 2015 annual program disbursements triggered in 2015, outpacing those of previous years (Figure 5). 3.4 FINANCIAL OVERVIEW FIGURE 4 — CUMULATIVE PROGRAM A cumulative total of US$10.7 million was allocated DISBURSEMENTS (US$ MILLION, to CAEWDP activities by the end of 2016. Among program pillars, Energy-Water Linkages accounts for 2012-2016) about 45 percent of program grant financing, while 10 Energy Development accounts for 32 percent. The 8.873 remaining grant funding was for Water Productivity (9 8 percent) and strategic program management, which includes dissemination and outreach activities, as well 6 US$ million as the preparation of the next funding phase. Overall 5.357 expenditures (disbursements plus commitment) were 87 3.925 percent of CAEWDP Grants—up from 82 percent last year. 4 The proportions of allocations are outlined in Figure 3. 2 0.327 0.539 FIGURE 3 — PROPORTION OF TOTAL 0 2012 2013 2014 2015 2016 PROGRAM ALLOCATION PER PILLAR 2016 (%) FIGURE 5 — ANNUAL PROGRAM DISBURSEMENTS (US$ MILLIONS, 14% 2012-16, EXCLUDING PROGRAM MANAGEMENT COSTS) 3.5 9% 3.0 45% 2.5 US$ million 2.0 32% 1.5 1.0 0.5 Program Management Energy Development Pillar 0.0 Water Productivity Pillar Energy-Water Pillar 2012 2013 2014 2015 2016 7 http://www.worldbank.org/en/region/eca/brief/caewdp LOOKING FORWARD: CAEWDP 3.0 26 CAEWDP | Annual Report 2016 While CAEWDP demonstrated that successes can be • Solutions that address national issues, related to achieved, political commitment to cooperation remains energy and water use efficiency (e.g. solutions for tentative, highly sensitive to events and beholden to the winter energy crisis and increasing irrigation perceptions of national security interest. Experience, efficiency), will benefit regional cooperation, as so far, has shown that the process will not be fast, nor political windows of opportunity open. will it follow a straight line; temporary setbacks are common. It will be important to continue to engage in • Training activities and knowledge sharing at all an incremental manner on a national scale to continue levels (policy-making, technical and administrative) the strengthening of national institutional capacities raise comfort levels and strengthen the ability of and sector performance, while at the same time keeping stakeholders to better manage energy and water regional cooperation on the political dialogue agenda resources, lead to greater awareness of the regional to create an enabling environment for national priorities inter-dependence, as well as the need to apply an and regional priorities to eventually converge. This is a incremental approach to addressing competition over long-term process, which requires continued commitment these resources. from development partners. • Coordination of the wide range of development The mid-term review of CAEWDP commissioned in partners supporting identical and similar objectives 2015 was finalized in 2016. The mid-term review was in the region will multiply the impact of the conducted to consider progress being made and course activities of each individual organization, by avoiding correction if necessary. The review team assessed the duplication and taking advantage of complementarity. current program implementation, results framework and Given the legacies and challenges of integration the originating project trust fund. The program review8 and cooperation on water and energy issues in confirmed that over a relatively short period, CAEWDP this region, close coordination of partners is even achieved important results and remains a valuable more important than in other regions (e.g., while vehicle to support energy and water security in the cooperation on international rivers is a universal region. The review further confirmed that the linkages challenge, a number of basins in Africa, Europe of water and energy remain critical for regional stability, and Latin America are committed to sustained indicating a need for dedicated long-term engagement. institutional cooperation, resulting in the significant Such pursuit of regional cooperation would need to be deepening of institutional integration and the accompanied with a focus on achieving national energy widening of issue areas covered by cooperation). and water security to maintain beneficiary country buy-in. The program structure, composed of its three pillars, The following changes will, therefore, be adapted for the proved relevant. Whereas the current practice has next funding phase of CAEWDP (CAEWDP 3.0): been to invite participants from Afghanistan to some of the dialogue and capacity building events, it was • The program development objective will shift greater recommended that Afghanistan be formally included as emphasis from water productivity to water security, a beneficiary country. In addition, the following lessons reinforcing the need “to strengthen the enabling learned from the engagement, to date, have been environment to promote energy and water security at considered for the CAEWDP 3.0 design: the regional level and in the beneficiary countries”; • Successful facilitation of regional cooperation on energy • Afghanistan, a key riparian country in the Aral Sea and transboundary water resources management basin, will join Kazakhstan, the Kyrgyz Republic, requires sustained and continued engagement, as well Tajikistan, Turkmenistan and Uzbekistan as a as a dedicated presence on-the-ground to facilitate beneficiary country; dialogue; temporary setbacks are not uncommon. • The pillar structure and content will be adjusted with an increased focus on facilitating energy and water security as the guiding principles of the entire program; 8 “The Central Asia Energy Water Development Program: A report on the Independent Evaluation of the First Phase of the Program”, The World Bank, 2015 - The program review was carried out by an independent consultant and administered by a Task Team leader who had never been involved in the CAEWDP program. CAEWDP | Annual Report 2016 27 FIGURE 6 — CAEWDP PILLAR AND COMPONENT STRUCTURE CAEWDP 3.0 Energy Security Pillar: Energy Linkages Water Regional & National Energy Security Security Generations/Transmission/Trade/Use Data and Diagnostic Analyses Water Security Pillar: Regional & National Water Use; National IWRM Institutions, Capacity and Dialogue Linkage Pillar: Regional Dialogue & Water Resources Supporting Investments Cooperation; Regional & National Energy-Water Linkages Program management • national activities will have an important role as implemented through activities that fall under four cross- building blocks to link regions and to achieve energy cutting components9: (1) Data and Diagnostic Analysis; and water security at the regional level; (2) Institutions, Capacity and Dialogue; (3) Supporting Investments, and (4) Program Management. • increased emphasis will be put on capacity building for, and within, institutions and on dialogue to The program will support national, as well as cross-border catalyze investments, and efforts, to strengthen energy and water security. National activities, such as institutional strengthening and efficiency • enhanced presence in the region of the CAEWDP improvements, contribute to, and present fundamental Program Manager and World Bank team to facilitate building blocks to achieve energy and water security, regional dialogue and initiatives. sustainable development and climate resilience at the regional level. Although the overall objective and long-term The objective will be achieved through a program that is goals are clear, the opportunities to move forward on built on three pillars: (i) Energy Security Pillar: supporting the regional level will ebb and flow and CAEWDP 3.0 will policy and investment activities at national, bi/multi-lateral maintain the flexibility to respond to changing insights and and regional levels to improve the security and economic shifting political priorities and opportunities. The program efficiencies of energy supply; (ii) Water Security Pillar: will maintain and further strengthen the linkages with the supporting activities related to water use aspects at the country-based projects and programs, as well as seek national, bi/multi-lateral and regional levels, as well as synergies between these and the regional initiatives to for national integrated water resources management leverage the World Bank’s comparative advantage for the and development (IWRM) to achieve water security, implementation of this program. and (iii) Energy and Water Linkages Pillar: supporting activities related to the intersection of energy and water A central focus of CAEWDP 3.0 will be to continue to (water-energy nexus) at the national, bi/multi-lateral and work with development partners to: deepen efforts to regional levels; performing IWRM activities that link two establish the parameters for cooperation at the technical or more countries, including those related to climate and institutional levels; strengthen available data change, as well as facilitating regional and cross-border bases and their acceptance by all countries; harmonize dialogue processes. The program is structured in a sectoral policies and regulations to facilitate cross- matrix framework in which the three thematic pillars are border connectivity and trade, as well as to facilitate 9 Some activities may touch on more than one component e.g. diagnostic analysis that supports identification of investments. 28 CAEWDP | Annual Report 2016 dialogue. CAEWDP 3.0 will implement activities that The World Bank provides regional-level assistance as have proven successful in creating platforms for dialogue regional programs offer substantial potential for better and information exchange, such as the Central Asia development results at the national level. It has a long Knowledge Network, as well as scale-up analytical work history in development efforts to save the Aral Sea and that shows clear potential to inform policy reform and in financing technical assistance and investments in investments. Additional emphasis will be placed on irrigation, water supply and sanitation, as well as energy strengthening the sectoral capabilities at the national level and electricity trade investments at national and regional as building blocks to facilitate cross-border engagement levels. The World Bank also has a strong program in and regional cooperation in the future. Capacity-building Afghanistan and is thus, well positioned to facilitate activities will be implemented at the national and regional efforts to strengthen Afghanistan’s links to its northern levels and will also be used to create opportunities for neighbors. The World Bank’s engagement with national technical experts from the various beneficiary countries to governments as a trusted, international and neutral collaborate with each other, gain trust and exchange their development agency provides the relationships required knowledge across borders. to initiate new opportunities for cross-border dialogue and investments. To capitalize on the World Bank’s comparative advantage, it is important that CAEWDP remains closely linked to the World Bank’s operational portfolio and will continue to coordinate with investments and activities of development partners in the region. CAEWDP | Annual Report 2016 29 ANNEX I – PROGRAM ACTIVITY DESCRIPTIONS ENERGY DEVELOPMENT PILLAR Activity Title Uzbekistan Planning Study for Power Sector ANALYTICAL DEVELOPMENT Activity Status Completed Activity Title CAEWDP Grant Amount Kazakhstan Renewable Energy Integration US$29,047 in Power Market and System Task Team Leader Activity Status Samuel K. Oguah Completed CAEWDP Grant Amount The objective of this grant was to build institutional US$165,743 capacity in Government of Uzbekistan (GoU) and Task Team Leader Uzbekenergo (UE)—the holding company that oversees Mirlan Aldayarov the energy sector for integrated power generation and transmission planning, while incorporating policy goals The development objectives of this grant were to: to diversify the energy mix in Uzbekistan. There is a (i) support the Government of Kazakhstan (GoK) in gap in the capacity for planning in Uzbekistan. Closing developing a vision for effective legal, institutional, and the gap requires persistent effort to train staff and regulatory structure for the wholesale power market, to provide the necessary tools for planning at various taking into account Kazakhstan’s specificities and levels of the power supply chain and in various units. the need of integrating hydro and renewable energy This study addressed some of the issues around power sources, and (ii) share lessons from Kazakhstan’s system planning in Uzbekistan—especially in the area considerable competitive power market experience with of generation planning—and raised awareness on other other Central Asian countries. These lessons aimed to issues in the power system that require closer attention. facilitate regional electricity trade through their potential participation in Kazakhstan’s market and/or the market One intermediate output was produced: The tool used for design replication in these countries. the analysis was transferred to the client. The tool was deliberately simplified with an excel interface to increase Overall implementation of this grant activity was rated as the likelihood of sustained use. Six staff were trained to satisfactory. Three intermediate outputs were produced: use the tool, which enabled UE to evaluate the impact of The grant supported the Kazakhstan Power Market policy choices (i.e. RE targets), and increased electricity Study. The study developed recommendations, focusing imports on system costs. In addition, the following on adjustments to the electricity market rules and the recommendations were provided: power system requirements to enable integration of renewable sources of energy. Specifically, the report: • A mix of policy interventions will be required to analyzes the current state of the electricity market, diversify the current generation mix: For example, power system and renewable energy systems; identifies combining higher gas prices with renewable energy the main shortcomings and challenges they face, as well and energy efficiency targets can help diversify the as provides recommendations on a longer-term vision energy mix. of the market structure and on the required changes in the current regulatory system. The report was finalized • Gas pricing is important to diversify fuel mix: At the in January 2016 and presented at a workshop in Astana, current low gas prices, most other options are not Kazakhstan in April 2016. competitive. Increasing gas prices to match export prices of US$241/ tcm is a way to diversify the energy mix and reduce the financial burden of energy supply on the government. 30 CAEWDP | Annual Report 2016 • Build rapidly and pay attention to tariffs: A robust load duration curves and utilization factors. Specific capacity plan to render the system self-sufficient and topics covered included: classical least cost planning highly reliable would rapidly require US$16.6 billion and an introduction to modern planning tools; planning in new investment, of which half of this sum would be challenges for intermittent renewables including data required in the next ten years. Average system costs— requirements; load forecasting techniques, and an and hence tariffs—will increase from 3.1 c/kWh in introduction to GAMS. Discussions during the training 2016 to between 3.8 cents/kWh and 5.9 cents/ initiated a study tour in Italy where participants visited the kWh in 2030 in real terms—indicating the need for a Transmission System Operator to learn how dispatchers continuous steady increase in electricity tariffs. operated the interconnected system. In coordination with other countries, the tour allowed participants to visit • RE and EE measures are attractive and need to various utilities, including: a typical base-load generating be supported by policy: An RE target of 15 percent plant to understand how the increased penetration of requires 55 percent higher capex, but the difference renewable energy was affecting system operation; a in system costs (which includes fuel costs) is under solar farm to understand integration requirements, and a 3 percent. EE measures can be used to reduce the distribution company that has distributed generation. capex requirements. Activity Title • Old plants should be retired sooner: On the supply Uzbekistan: Impact of Energy Subsidies - Way side, keeping old inefficient gas-fired units in service, Forward as per the current retirement plan, will cost US$1.9bn Activity Status (undiscounted) over the planning horizon even with low Completed gas prices of US$53 – US$104 / tcm CAEWDP Grant Amount US$49,850 The grant outcome was rated highly satisfactory. Task Team Leader Continued references to the training and tool demonstrate Yadviga Viktorivna Semikolenova a deepened understanding of underlying issues in technology choice for power system expansion. The The development objective of this grant was to: support approach is being replicated in a follow-up study to better the Government of Uzbekistan in: (i) assessing the fiscal, understand the dispatch of power plants in the country. economic and social impact of energy subsidies in the Again, a GAMS model with an Excel front-end will be used, gas, electricity and heat sectors, and (ii) designing policy staff will be trained and the model transferred to UE. options for socially responsible energy subsidy reform. The grant funded Phase 1 of the Uzbekistan subsidies Overall implementation of this grant was rated as highly work which was multi-phased and funded by other grants. satisfactory. Six members from Uzbekenergo and the Ministry of Economic Planning were in Washington, DC The development objective was achieved, resulting in for a workshop on power system planning from April 25- better informed dialogue on energy subsidy reforms in 29 2016. The workshop introduced participants to the Uzbekistan. The activity had seven outputs of which the principles of power system planning. With participants grant contributed towards Output 1: from various departments, discussions often brought out different perspectives (for example, the need for short (1) Assessment of fiscal impact of energy subsidies in term planning, which is important to dispatchers and the gas, electricity and heat sectors; assessment of the long-term planning which is the prerogative of the Planning GHG impacts of energy subsidies in the gas, electricity units). Results of the planning exercise were discussed and heat sectors; extensively. Results of the analysis were broadly in line with the government’s ambitions of increasing installed (2) Mapping of stakeholders and their incentives for capacity and diversifying the supply mix from gas. energy reform; Participants spent 1.5 days using the model developed for the planning exercise. The model has an Excel (3) Sector tariff analysis for gas, electricity and heating; interface, which runs GAMS in the background. It has since been transferred to the client. Through practical (4) Metering and consumption based billing; exercises, trainees explored concepts of unserved energy, CAEWDP | Annual Report 2016 31 (5) Assessment of the distributional impact of subsidies; The development objectives of this grant are to: (i) enhance energy sector dialogue among Central Asian (6) Training to the Statistics Committee on computing countries, and (ii) ensure the coordination of donor the impact of energy subsidies based on the household assistance to the energy sector in Central Asian countries survey, and through participation in the Energy Sector Coordinating Committee (ESCC) meetings, senior officials’ meetings (7) Gender-differentiated assessment of consumer and ministerial conferences of CAREC. experiences with energy service delivery and payment, attitudes to reform, including tariff adjustments and At the end of 2016, the development objective for this adoption of measures to use energy more efficiently. grant was largely achieved. The grant has continued to enhance cooperation and dialogue on power sector Overall implementation of this grant was rated as issues among Central Asian countries. The World Bank moderately satisfactory. The grant contributed to two team has actively participated in the two meetings outputs: the assessment of fiscal impact of energy for the Central Asia Regional Economic Cooperation subsidies in the gas, electricity and heat sectors, as (CAREC) Energy Sector Coordinating Committee (ESCC), well as the assessment of the GHG impacts of energy held in April 2016 and October 2016, respectively, in subsidies in the gas, electricity and heat sectors. The Islamabad, Pakistan. The meeting held in April 2016 presentation of the diagnostic analysis was completed hosted the Regional Power Trade presentation on the at a workshop in November 2015 with stakeholders and methodology, final results, and recommendations of the project steering committee. The preliminary scope the study. The study estimated that through inaction, for Phase 2 of the activity was identified with the follow- the region lost nearly US$1.5 billion in benefits if fuel up roundtable, held in December 2016. savings at historic energy prices were considered. When the economic value of avoiding unserved power demand Next Steps. A high-level workshop will take place once the is added to the lost benefits, the amount increases to an recommendations of Phase 1 are updated and agreement estimated US$5.2 billion at historic energy prices and is reached with the Government by the end of FY17. nearly US$6.4 billion at market energy prices. During the October 2016 ESCC meeting, WB representatives INSTITUTIONAL STRENGTHENING participated in the CAREC Inter-Ministerial Meeting held during the same week and attended the CAREC Energy Activity Title Investment Forum held on the sideline of the Inter- Central Asia Regional Economic Program Ministerial Meeting. (CAREC Engagement)10 Activity Status Next steps. CAREC countries have expressed interest Phase I: Completed; Phase II: Ongoing in expanding the geographic scope of the Study on CAEWDP Grant Amount Regional Power Trade in Central Asia to include other US$427, 314 neighboring sub regions like South and East Asia. There Task Team Leader are internal discussions regarding the feasibility of such Husam Mohamed Beides, Daryl Fields a study progressing. As political support for intra-regional energy cooperation continues to grow in the region, The CAREC ESCC—co-chaired by the ADB and the World the CAREC ESCC meetings provide an opportunity to Bank—is a key regional platform to engage Central facilitate more meaningful dialogue on constructive Asian countries in energy issues. The ESCC oversees approaches to enhance regional cooperation. implementation of an energy action plan and specific analytical and capacity-building initiatives through its committee and subcommittee meetings. It provides a unique platform to convene energy experts and decision- makers of CAREC countries to discuss and explore options to strengthen regional trade and is instrumental in implementing CAREC’s energy strategy. 10. This activity description represents two successive grants: the first from 2010 to 2013 and the second from 2013 to 2016, worth US$57,314 and US$370,000, respectively. There was an increase of US$150,000 in the second grant from 2015. 32 CAEWDP | Annual Report 2016 Activity Title analytical materials on Central Asia power trade that led Enhancing Regional Power Trade in Central Asia to the preparation of a note/presentation on possible Activity Status power trade and cooperation options, based on the Completed recent and planned developments of the power systems CAEWDP Grant Amount of the Central Asian countries, and (ii) discussion of the US$193,875 note/ presentation through bilateral meetings with power Task Team Leader sector stakeholders of the Central Asian countries to Yuriy Myroshnychenko identify a list of priority measures that were economically attractive and politically acceptable. This grant aimed to explore options for, and facilitate discussions on power trade and cooperation between Overall implementation of this grant activity was rated Central Asian countries, with the goal of increasing as moderately satisfactory. Two intermediate outputs efficiency of their respective power systems, enhancing were produced: (i) a report Enhancing Regional Power reliability and security of electricity supply, reducing Trade in Central Asia on underutilized benefits, and (ii) power shortages and avoiding GHG emissions. The consultations with Central Asian countries to identify activity included two stages: (i) a review of the available common areas of interests for regional power trade. SHORT-TERM STEPS: • Develop inter-governmental and stakeholder agreement on the potential benefits and the nature and objectives of the system to be adopted; • Define the type of transactions or market to be developed (e.g. bilateral contracts, spot markets, etc.) and well as principles for a fair methodology for settlements and compensation of schedule deviations; • Identify the role of central trading and dispatch institutions (such as CDC Energia); • Improve regional control systems, communications, and acquire appropriate software; • Identify and adopt necessary pan-regional technical and commercial documents (e.g., grid codes, metering codes, settlement rules), and • Define a scheme for mutual support during emergency operations. MEDIUM-TERM STEPS: • Improve system supervision and control software; • Improve commercial metering, and • Adopt a system for coordinated system planning, especially insofar as high voltage grid development is concerned. LONG-TERM STEPS: • Implement necessary technological changes and improvements, and • Move forward with regional grid development and power system projects. CAEWDP | Annual Report 2016 33 The outputs of the grant provide an analytical basis for INVESTMENT PREPARATION informed decision-making for future energy programs and action plans. The outputs also demonstrated regional Activity Title and national implications of current national policies The Kyrgyz Republic: Heating Efficiency Improvement in financial and economic terms. One of the significant Activity Status findings of the report was that regional electricity trade Ongoing would have benefited the region with an additional US$1.3 CAEWDP Grant Amount billion for the five-year period it covers, should unserved US$160,000 power demand have been included in estimates at historic Task Team Leader energy prices. The findings confirmed that efficient trade Kathrin Hofer significantly benefits the region and that each country could also benefit from increased trade with its Central This grant aims to address the challenge of providing Asian neighbors. The report on underutilized benefits reliable and affordable heating supply to the Kyrgyz from Central Asian regional power trade could serve as a Republic. Reliable and affordable heating supply is decision-making and analytical tool for the Central Asian critical for the well-being of the population and for governments, development partners, researchers and sustaining economic activities in the Kyrgyz Republic general public. The recommendations present a roadmap during the cold winter months. Yet, achieving this with the list of short-, medium-, and long-term actions objective remains a daunting challenge because of to be implemented by the countries to benefit from low operational efficiency of the heating infrastructure, enhanced power trade. low tariffs, lack of metering and norm-based billing practices, decreasing availability and affordability of The grant activities fully achieved one of the outcomes imported gas, unreliable heating supply and increasing related to improved knowledge exchange; however, the reliance on electric heating. The government recognizes second outcome related to cooperation was not achieved. the importance of addressing the above-mentioned key The lesson learned through the implementation of challenges and has initiated several steps to improve the grant was the need for high-level political support, the efficiency and reliability of heating supply. Improving commitment and significant time when engaging on the efficiency and reliability of the District Heating (DH) regional power trade dialogue. While energy efficiency network would support the government’s long-term and energy security are crucial in the context of strategy in the heating sector, complement the ongoing deteriorating power generation plans, rapid demand investments to modernize a combined heat and power growth, high inefficiency and intensive consumption, the (CHP) plant, and also support a strategic shift from dialogue cannot progress with a bottom-up approach. meeting heating demand through electricity. Overall, In the absence of high-level political support from the these objectives would provide more reliable and concerned countries, it is challenging to obtain national efficient DH and ultimately, manage the perennial winter power sector data that would be required for modeling energy shortages. regional power trade, given the confidentiality of some data. In view of the challenges in collecting sufficient This grant aims at developing a detailed investment and and reliable data on national power systems, applying implementation plan, as well as recommending reform sophisticated modeling tools may not be justified; measures to improve the efficiency and reliability of the instead, simplified approaches could be applied for district heating (DH) system in Bishkek. The activity will modeling regional power trade scenarios. include the following main components: Component A - Scoping of priority investments to improve the Next Steps. No follow-up activities are planned at this efficiency and reliability of the DH system in Bishkek, time. The program will continue at the technical level, including: (i) building-level heat metering; (ii) a transition focusing on benefits from bilateral trade and feasible to consumption-based billing; (iii) a replacement/ next steps through the ESCC. re-insulation of transmission/distribution pipelines, and (iv) an installation of variable speed pumps/ 34 CAEWDP | Annual Report 2016 drives; Component B - Policy reforms supporting the This grant targets both a demand-side and supply-side implementation of identified priority investments and the outcome to mitigate winter energy shortages: (i) Efficient transition towards consumption-based billing. In addition, stoves and heating policy options initiated to promote activities may also include targeted dissemination and efficient stoves for stable and predictable winter power outreach activities. supply in Tajikistan, and (ii) Nurek HPP Rehabilitation Program that would increase the capacity of the Nurek During 2016, the proposed investment plan was HPP, enhance dam safety designs and prepare for agreed upon, and adopted by the district heating investments. company and the Government. It informed the design of a new IDA-financed investment lending operation During 2016, significant progress was achieved towards in the sector and served as the basis from which to both outcomes: coordinate investments with other development partners investing in the DH sector in Bishkek. A stakeholder • Heating stoves. The implementation of the activity roundtable was conducted, the output disseminated is on schedule. Both qualitative and quantitative and a follow-up engagement dialogue was held to phases of the stove market assessment have been ensure implementation of the main recommendations, completed. The findings of the market assessment as part of a new investment lending operation. With informed the design of the efficient heating stoves additional funding of US$20,000 provided by CAEWDP , prototypes that were developed during May-June a complementary analysis was launched and conducted 2016. The December 2015 stove tests revealed that to better assess the heating situation for households on average, fuel efficiency of popular stoves installed without access to DH, including its impact on the in Tajik homes was about 30 percent, as compared winter energy shortages the country continues to face. to modern stoves, which run 40 percent or more The funds for the technical assistance program are efficiently. The outcomes of the market assessment complemented by other trust fund resources, which and the stove prototypes were presented to the supported, inter alia, a study tour to DH companies Government, development partners and other in Finland and Poland to foster knowledge exchange stakeholders during July and August 2016. These and learning on improving the operational and financial activities laid a foundation for a pilot program, aimed performance of DH companies. As part of the study tour, at testing newly-developed efficient heating stoves specific focus areas included information and exchange prototypes in residential and public buildings in on the proposed priority investment and reform areas. selected areas of the Republic of Tajikistan, during the heating season of 2016/2017 winter. The pilot Activity Title program is currently ongoing and the results of Tajikistan Winter Energy Program the program will be presented to the Government, Activity Status development partners and stakeholders by the end of Ongoing March-early April 2017. CAEWDP Grant Amount US$650,000 • Nurek HPP Rehabilitation component is completed. Task Team Leader The additional studies and investigations for Takhmina Mukhamedova the Nurek HPP Rehabilitation project have been completed. The grant allowed for the engagement The objective of this grant is to support pre-investment of experts in the areas of electro-mechanical studies to enhance winter energy security in Tajikistan. rehabilitation, geotechnical investigations, Tajikistan has been facing severe winter energy sedimentation and strategic advisory support to shortages that badly affected rural households, which the Government in relation to design of the project. account for 70 percent of the country’s population that These advisors also supported a few additional is deprived of formal heating support in severe winters. studies that were found to be necessary. There is The grant will cover two areas: (i) efficient stoves and largely agreement with the Government regarding the heating solutions, with a focus on rural areas, and (ii) design and implementation of the investment project. the preparation of the Nurek Hydro Power Plant (HPP) The Project will be submitted for World Bank Board rehabilitation. Approval on April 28, 2017. CAEWDP | Annual Report 2016 35 Next Steps. The grant activities on efficient heating evaluation of several procurement packages, including stoves have been extended until August 31, 2017 and the most critical Supply & Install of High Voltage DC US$50,000 were added to the grant amount. This will Converter Stations at Tajikistan, Afghanistan and allow for the scaling up of implementation, based on Pakistan were concluded in November 2016. The grant information collected from the efficient heating stoves further resulted in Kyrgyz and Tajikistan representatives prototypes pilot program. Additionally, the institutional attending several meetings of the Intergovernmental framework, including stove standards/regulations, Council (IGC) and CASA-1000 Joint Working Group (JWG). quality assurance mechanisms and related components Both activity grants have been increased in duration and will be developed. the Tajikistan grant budget has also been increased. An increase from US$300,000 to US$500,000 has been Activity Title approved for Tajikistan and the activity timeframes for CASA – 1000 Advisory support for countries (RE): the Kyrgyz Republic and Tajikistan have been extended The Kyrgyz Republic & Tajikistan- Advisory Support from 6/30/2016 to 10/28/2017. for the Regional Trade Initiatives Project Activity Status Activity Title Ongoing Energy Vulnerability to Climate Change CAEWDP Grant Amount Activity Status US$1,000,000 Ongoing Task Team Leader CAEWDP Grant Amount Husam Mohamed Beides US$100,000 Task Team Leader The development objective of this grant is to facilitate the Daryl Fields preparation of the CASA-1000 project and other possible regional energy trade initiatives for the Kyrgyz Republic. The overall objective of this grant is to help beneficiary The proposed grant will achieve its objective through countries in Central Asia understand climate change- the implementation of the following two components: induced energy sector vulnerabilities and build resilience Component 1- Technical Assistance to support the through the development of coordinated adaptation Government and the working groups to advance the policies. The project consolidates a vulnerability CASA-1000 groundwork by financing the technical, assessment of the impacts, risks and the adaptive commercial, legal, environmental and social and other capacity of the energy sector. The assessment will necessary expertise for the country advisors, as well as help guide decision-makers on options for current and to support other inter- and intra-regional initiatives by future investments, management of power generation financing relevant assessments, studies, consultation and transmission, and increase better understanding of with stakeholders and public outreach; Component 2 - cross-sectorial implications. The grant will lead to two Covering operating costs for delegates from the Kyrgyz outcomes: (i) equipping the Government of Tajikistan Republic to facilitate the dialogue and development with latest projections on climate change, its impacts on of regional trade initiatives and incremental operating the energy sector of Tajikistan and adaptation measures, expenses for the project implementing unit (PIU). as well as (ii) fostering regional dialogue of energy sector adaptation to climate change facilitated. In 2016, the grant resulted in strengthened capacity of the Government of the Kyrgyz Republic and Tajikistan There was a delay in finalizing this grant in 2016, due to to negotiate commercial and legal agreements under changes in team composition. The grant is expected to CASA-1000, resulting in several concluded subsidiary be finalized in 2017, during which the outcomes will also agreements that were necessary with the required be disseminated. extensions of the loan agreements. The bidding and 36 CAEWDP | Annual Report 2016 ENERGY-WATER LINKAGES PILLAR Activity Title Legal Analysis of the Trans-Boundary Water ANALYTICAL DEVELOPMENT Management Frameworks in Central Asia Activity Status Activity Title Completed Central Asia Water and Energy Portal CAEWDP Grant Amount Activity Status US$35,644 Completed Task Team Leader CAEWDP Grant Amount Victor Bundi Mosoti US$296,993 Task Team Leader The objective of this grant was to contribute to a better Nagaraja Rao Harshadeep understanding of the legal instruments regulating the use of the Amu Darya and Syr Darya Rivers. Different Portals can offer access to databases of information riparian countries have expressed their views on the related to water and energy; however, there was no such interpretation and application of legal instruments resource available at the regional scale. A fundamental regulating the use of the Amu Darya and Syr Darya impediment to regional integration, related to energy Rivers. This activity was created to provide a legal and water in the Central Asia region, was the lack of analysis of the regulatory framework for trans-boundary accessible knowledge base to visualize and analyze the water management, including the rights and obligations region in an integrated manner. As a result, there was of each riparian under the relevant instrument (e.g. the limited quality and access to public-domain information 1995 Nukus Declaration, the 1987 Protocol 566). at the reginal level, albeit several attempts to access portals/ databases. This grant was completed in 2016. The report was finalized and a summary brief is under development for The development objective of this grant was to improve public dissemination. The report provides a detailed public-domain online access to water and energy-related analysis of the various legal instruments and of the spatial information. Key intermediate outcomes targeted “boundary conditions,” including their basis in the included: legal instruments that were previously analyzed. The report has enhanced understanding of the regulatory • Improved awareness on Central Asia Water and frameworks for trans-boundary water management Energy spatial context for development and of Central Asia with emphasis on their nature, legal cooperation standing, level of compliance and regional perceptions. The report was particularly useful in the contexts of the • Knowledge products to promote access to, and the Syr Darya Control and North Aral Sea Project and the use of such public domain data in Central Asia Ferghana Valley II project in the context of understanding national concerns about the potential adverse effects of Overall implementation of this grant was rated as the projects on the shared water resources. satisfactory. Three intermediate outcomes were produced: (i) Spatial Agent mobile app; (ii) Central The key lessons learned are that: (i) transboundary water Asia Water and Energy Web Portal, and (iii) improved management in Central Asia is subject to an interlocking access to, and the use of the Central Asia web portal regime of legal and institutional requirements, and (ii) and mobile App. This activity has helped strengthen if multilateral/ international actors seek partnership the availability of the evidence base for water sector roles in the management of water resources in the diagnostics, as well as of data to support analyses of region, then they must understand the function of these water resources, as well as a dialogue on investments, legal and institutional requirements, as well as their policies and the need for regional cooperation.11 limitations and challenges. 11 The Spatial Agent App can be downloaded from http://apps.worldbank.org. The app is downloadable from the AppStore; Android Google Playstore or from: https://play.google.com/store/apps/details?id=org.worldbank. spatialagent&hl=en ; Web version prototype: http://www.appsolutelydigital.com/SpatialAgent/   A demonstration video (showing an early version of this tool in a GIS Conference Plenary (before an audience of 16,000 people) can be viewed at the following link (see the last ten minutes of the video):  ttp://video.esri.com/watch/3660/ open-access-with-arcgis-open-dataz CAEWDP | Annual Report 2016 37 INSTITUTIONAL STRENGTHENING • Training on BasinIT, an interactive training tool for basin planning; Activity Title Capacity Strengthening for IWRM Modeling • Convening of a Model Advisory Group to share Activity Status modeling knowledge, prioritize capacity strengthening Completed needs and approaches, and guide development of a CAEWDP Grant Amount longer-term training curriculum, and US$353,384 Task Team Leader • Model Capacity Building workshop with a range of Daryl Fields senior and junior water specialists, which also served as a pilot for a longer-term training curriculum and The development objective of this grant activity was to refinement of curriculum for Model Capacity Building. strengthen knowledge and modeling skills, leading to a more effective base on which to identify modeling Each activity also helped broaden and strengthen architecture options and priorities for integrated water communities of practices in water resources management resources modeling in Central Asia. This grant was by inviting all six countries of the Aral Sea Basin to each demand-driven, based on messages conveyed during the event, with the longer-term goals of supporting riparian national dialogues of the six countries at the July 2012 dialogue and coordinated decision-making. IWRM Forum. It demonstrated that the region preferred to build/ adapt their own models, rather than accept In 2016, the third and final component was completed, already-made models from external sources. which built on the first two components of training and national consultations with the Water Futures Forum The grant aimed to achieve outcomes of strengthened & Expo. In September 2016, the Water Futures Forum capacity and increased knowledge, awareness and & Expo in Almaty, Kazakhstan hosted over 200 policy confidence around IWRM modelling. The grant and technical experts from government, academia, contributed towards fostering a more conducive the private sector, and CSOs, including regional and environment that facilitated transparent dialogue across international speakers. Topics of discussion featured: the six countries, mitigating one of the recognized risks established and evolving modern approaches and to trans-boundary water cooperation: capacity and tools for IWRM; observation systems; remote sensing; knowledge gaps. This activity fostered knowledge and decision-support modeling; capacity building, as well skill expansion, training and studies—which closed as regional institutions and partnerships. The Expo gaps in capacity and knowledge—and supported the encouraged participants to explore progress on water development of new skills. management in Central Asia, showcased global good practices on modernization of water management The grant contained three components, which were information systems and exhibited state-of the art water satisfactorily completed in 2016. The first component— technologies from international land regional good national consultations—was supported by seed-funding practice (to consolidate progress and envision future from CAEWDP and responded to a basin-wide fact investments in water resources modeling and analysis). finding on tools for IWRM (2009-2010). National consultations took place in Afghanistan, Kazakhstan, Activity Title the Kyrgyz Republic and Tajikistan throughout 2011. Central Asia Knowledge Network The consultations focused on integrated water Activity Status management priorities through a national lens. The Ongoing second component—capacity strengthening— sought to CAEWDP Grant Amount strengthen capacity for water resources modeling, analyze US$350,000 technical knowledge building and foster exchanges. The Task Team Leader purpose of capacity strengthening was to increase the Julia Komagaeva awareness and understanding of the skills that would be critical for the water resources modeling of emerging The development objective of this grant activity is to technology, as well as of the most recent regional models foster cooperation and knowledge exchange among local developed for the Basin. Three separate activities were and regional institutions and practitioners in the areas of completed under this component: water resource management, energy and climate change 38 CAEWDP | Annual Report 2016 in the Central Asia region. The grant aims to establish In addition, four important knowledge and exchange a regional network of knowledge institutions and events were hosted: communities of practice (CoPs) of technical specialists. • As part of the support to CoPs development and The World Bank Institute (WBI) and CAEWDP jointly sustainability of the Academic Knowledge CoP , developed this comprehensive integrated knowledge the project team partnered with Kazakh German and capacity building program. The Knowledge Network University in operationalization of the e-Journal on (KN) provides advice to its members through different Integrated Water Resource Management (IWRM), forms of knowledge sharing, exchange of experience, which serves as a platform for accumulation of the collaboration and outreach. The Network equips national regional knowledge and expertise on water and knowledge institutions with cutting-edge curricula, energy issues. The e-journal consolidates academics knowledge and skills to build the capacity of Government and practitioners from five Central Asian countries officials and other professionals in water, energy, and Afghanistan. agriculture and climate change-related issues. • Expert support was also provided to GKU’s In 2016, the grant made satisfactory progress towards workshop on Sep 30 - Oct 1, 2016 that focused on achieving its objective, based on the following activities: the promotion and operationalization of E-Journal on IWRM and arranged for participation of two • The umbrella Knowledge network platform on the international experts at the event. C4D platform has been actively used by three Communities of Practice: (i) Knowledge Institutions • Part of the support to the operationalization of the Community of Practice (CoP), consisting of Kyrgyz Cross- Sectorial Working group featured a knowledge institutions from five Central Asian three-day regional workshop, ‘Geohazard risks in countries, as part of the Masters (MA) students International Water Resource Management,’ which competition run in cooperation with CAREC; (ii) was held in Bishkek on December 19-21, 2016. Kazakhstan Cross - Sectorial Working group on The Kazakh-German University and National Kyrgyz water resource management issues, and (iii) Kyrgyz Cross-Sectorial Working Group led the preparations Cross- Sectorial Working group on geo-hazard risks, and delivery of the workshop, which brought as part of research and discussions of most urgent together 75 participants, including practitioners and geo-hazard risks in the region and elaboration of the experts in the area of water resource management, cross sectorial recommendations to the governments governmental officials, academia and students from of Kazakhstan and the Kyrgyz Republic . the Kyrgyz Republic, Kazakhstan, and Tajikistan to discuss important issues of geo-hazard risks in • As a result of the joint work of the groups, the the Kyrgyz Republic. The discussion resulted in the Government of Kazakhstan took measures to review identification of the next tasks for the Cross-sectoral the Shardarinskaya dam and an official appeal was working group of the Kyrgyz Republic, which included sent to the Government of the Kyrgyz Republic, an elaboration of required amendments for the justifying the need to implement a complex of database on disaster risks in the Kyrgyz Republic mudflow protection measures that can reduce the and a preparation of the appeal to the government, mudflow activity risk in the Kyrgyz Republic. containing recommendations on launching unified open database and its components. As part of the • Additionally, through cooperation with Kazakh German coordination effort, the Kazakh-German University University, the Cross-Sectorial Working groups also prepared and published the information attracted Central Asian knowledge institutions to the brochures of universities in the Kyrgyz Republic, substantive discussions and involved students in the covering water and energy issues. practical group work in Bishkek. CAEWDP | Annual Report 2016 39 • The Central Asia Knowledge Network and primer is being developed. A data primer and model Communities of Practice for Water-Energy and primer have also been drafted. Climate Change Management: Presentation of Results took place in Almaty, Kazakhstan on June Preparation of CA-WARM Phase I project has slowed 16, 2016, which brought together international and down. There remain issues with the complex geopolitical regional organizations and CAEWDP donors. The cooperation situation in the region that delay progress. World Bank and its regional partners under the Issues of minimal participation from some countries and program—Central Asia Regional Center of Hydrology, reduced interest in GEF financing are currently under Regional Environmental Center for Central Asia, and discussion, given their potential to impact the phasing of Kazakh-German University—presented results that countries or accessibility to finance. The risk of securing were achieved under the Central Asia Knowledge adequate financing (especially grant financing from Network within the last 3 years. regional IDA and bilateral donors) and the anticipated difficulty in securing countries’ participation suggest INVESTMENT PREPARATION potential delays in processing and a loss of momentum. The project financing structure is currently being Activity Title reviewed for adjustment to these realities. Central Asia Water Resources Management (CA- WARM) Phase-I Project Activity Title Activity Status Technical Assistance for Developing Water Ongoing Information Systems in Central Asia CAEWDP Grant Amount Activity Status US$377,330 Ongoing Task Team Leader CAEWDP Grant Amount Nagaraja Rao Harshadeep US$499,999 Task Team Leader This grant aims to support the preparation of the Central Daryl Fields Asia Water Resources Management Project - Phase I, of which the overall objective is to improve national and The objective of this grant is to provide analytical regional accessibility, reliability and analytical capacity foundations for the ‘CA-WaRM’ project, which aims to to use water resources information for improved water strengthen water information management systems to resources planning, monitoring, and management. increase accessibility, reliability and the analytical capacity Specifically, the grant supports the preparation and to generate and use water resources information in Central appraisal of the proposed Central Asia Water Resources Asia. The recommendations will provide scoping needs, Management (CA-WARM) Phase I Project. The grant also gaps, preparedness and consequent action plans for supports the dialogue with the five national technical technical and capacity investments as input to the design working groups, the regional technical working group, the of CA-WARM Phase-I Project, while improving linkages with Regional Steering Committee, as well as the Interstate other relevant national-level and regional-level activities. Commission on Water Coordination (ICWC), its agencies The gap analysis will build on existing water resource and EC-IFAS. information systems and identify incremental investments that are needed to establish a regionally compatible water The preparation has enabled all the countries to express resources information system for Central Asia, guided by interest in the project. At a regional-level, the work international good practice. has enabled support for a new regional working group (RWG) that convened for the first time, as well as for The grant comprises three components: national action the preparation of a higher-level regional steering plans (“roadmaps”); regional assessment, and global committee. Discussions identified possible typologies review of good practices. The national action plans cover of activities that will be supported by the project, as well all countries in Central Asia. The regional approach as consolidated demand for learning about global good would be designed to knit and complement country- practices that are currently financed by other sponsors. level approaches to establish a regional water resource Given the substantial technical interest, the project information system that is open, coherent and easy to is also supporting a technical needs assessment at maintain. The global review takes advantage of World the national and regional levels, where an institutional Bank lessons from other regions. 40 CAEWDP | Annual Report 2016 Implementation of the grant was slowed down in 2016 by systems. The first Regional Working Group meeting the delay in preparation of the CA-WaRM project, which agreed on the Group’s mandate and constitution; has been affected by the financial situation of Central Asia initiated a list of potential regional investments; agreed countries, as well as by the lack of regional IDA funds. This on eligibility criteria for investments, and on an approach delay has downgraded the grant implementation rating to to regional implementation (a highly sensitive issue). In “moderately satisfactory” during this period. As a result, a confidential survey, all participants rated the meeting the approach to preparing CA-WaRM is currently under as “good” or “excellent”. The participatory and balanced revision, with a focus on a smaller number of countries. approach was particularly appreciated through the It is worth noting that the outputs of the grant will have brainstorming sessions and sharing of experiences. value beyond preparation of the CA-WaRM project, as Ninety percent of the group felt: (i) their voice was illustrated by the Tajikistan national water information heard, and (ii) the meeting was practical and produced framework scoping study and design. substantive results. The main concerns centered on the very limited participation and absence of some Central A significant portion of the national scoping activities Asian countries. in 2016 have been implemented in Tajikistan through an existing project, the Second Public Employment The Global Review of Good Practices has completed Project for Sustainable Agriculture and Water Resources a technical note on good practices and converting (PAMP II)). The scoping study has been completed materials into an e-book platform is in progress. With and a framework for a comprehensive National Water support from the Korean Green Growth Fund, the Central Information System (WIS) has been designed. In order Asia Water Future Knowledge Forum and Exposition to complete this design, comprehensive assessments of showcased achievements in analytical tools for water data collection, reporting, analysis, and use framework of resources management and cutting-edge technologies 11 relevant stakeholder agencies were conducted. The from leading suppliers. The Forum and Expo convened WIS design incorporates several major information and over 285 participants from all five countries of Central communication technologies (i.e., database management, Asia plus Afghanistan and the global community of geographic information and wide area telecommunication water information professionals, service providers and systems). Four basin WIS applications were prepared for innovators to explore global good practice in water implementation with detailed design and financial plans information management systems. Specialists from that addressed water resource management and main all five Central Asia countries attended the event and irrigation system management. A draft program has been presented papers. Vice Ministers of water from three completed in the Kyrgyz Republic and final stocktaking is Central Asia countries plus Afghanistan participated and ongoing in Uzbekistan and Kazakhstan. Draft programs lessons for the CA-WARM project were identified. for Uzbekistan and Kazakhstan are expected to be completed in 2017, followed by a final dissemination to Activity Title counterparts. Climate Adaptation and Mitigation Program for Aral Sea Basin Series of Projects II Progress on regional assessment. This second task Activity Status expands national activities to the regional level, exploring Ongoing capacity-building and technology investments, as well as CAEWDP Grant Amount institutional needs to facilitate cross- border information US$250,000 management. Building on the design accepted in Task Team Leader 2016, a regional working group was formed from Philippe Ambrosi appointments of both regional and national institutions. The composition represents an innovation in Central The objective of this grant is to sustain momentum in Asia where regional knowledge and management the regional dialogue and collaboration initiated around activities were historically managed by the regional the Climate Adaptation and Mitigation Program for Aral institutions. The approach to balancing regional and Sea Basin (CAMP4ASB). CAMP4ASB seeks to improve national perspectives is intended to strengthen national national and regional resilience to climate change with an perspectives and build trust between national and initial focus on agriculture, land, and water management. regional organizations in the face of poor institutional Specifically, the grant will support: (i) the finalization of cohesion, uneven capacity and legacy issues from Kazakhstan’s participation in CAMP4ASB (financed via previous efforts on water information management the CAMP4ASB SoP II project), and (ii) regional dialogue CAEWDP | Annual Report 2016 41 among Central Asian stakeholders to facilitate the supported activities. A mission to Astana, Kazakhstan CAMP4ASB’s implementation readiness, outreach to the is scheduled in late January/early February 2017 to development community, and preparation of the next confirm the interest of the Ministry of Agriculture and phases of CAMP4ASB (including participation of the adjust the scope of the project (including, putting a Kyrgyz Republic and Turkmenistan). The grant provides a larger emphasis on water monitoring and information platform for ongoing dialogue and information exchange systems). The impact on CAMP4ASB SoP II is further on climate change among Central Asian countries. delayed, as the World Bank Board approval is now expected in November 2017. Over the reporting period, there was moderately unsatisfactory progress towards the grant objective • Resource mobilization: Development Partners of sustaining momentum for regional dialogue and continue to be interested in the CAMP4ASB Program collaboration around the Climate Adaptation and Mitigation and prior to explicitly expressing their support (i.e., Program for Aral Sea Basin (CAMPASB). There was beyond financing related activities, in support of little progress on the two grant indicators towards their similar goals and objectives, with same national/ targets: (i) project supporting Kazakhstan’s participation regional implementing agencies), are awaiting in CAMP4ASB presented to the WB Board, and (ii) US$5 the program’s first results. The Program became million mobilized from Development Partners. effective August 4, 2016 and regional activities and national activities in Tajikistan have started. The grant comprises two components: Kazakhstan Particular efforts will be required over the remaining project (CAMP4ASB SoP II) and resource mobilization. period of the grant to reach out to Development The Kazakhstan project assisted the Government Partners, communicate current results, and explore counterpart in: completing studies and assessments synergies and willingness for co-financing. for the prioritization of oblasts; scoping eligible climate investments, and defining climate grant investment WATER PRODUCTIVITY PILLAR scheme. The resource mobilization component has financed one regional workshop for Central Asian ANALYTICAL DEVELOPMENT stakeholders, attended by Government representatives and technical experts with line ministries/agencies Activity Title overseeing climate-sensitive sectors, regional institutions, Analysis of Water Supply and Sewerage Services in and development partners. A meeting of CAMP4ASB Central Asia Regional and National Coordination Agencies was held Activity Status in Almaty (Kazakhstan) on January 26-27, 2016, with the Ongoing objectives of: (i) reviewing steps and timeline towards CAEWDP Grant Amount Program effectiveness; (ii) strengthening implementation US$270,000 readiness, and (iii) continuing regional experience sharing Task Team Leaderr on climate action and knowledge management. Pier Mantovani • Kazakhstan project (CAMP4ASB SoP II): Following The objective of this grant activity is to provide a diagnostic changes in its leadership team, the Ministry of of the current status and challenges of WSS in four key Energy of the Republic of Kazakhstan requested Central Asian countries—Kazakhstan, the Kyrgyz Republic, substantial changes in late CY 2016 to the design of Tajikistan and Turkmenistan—and to outline policy the project supporting Kazakhstan’s participation in priorities towards improved access, quality, efficiency and the CAMP4ASB Program. In particular, these changes sustainability of WSS services. This will be achieved by would focus the project only on Kazakhstan, removing analyzing multiple dimensions of WSS sector development, the links with the regional dialogue and collaboration in part based on primary data collection across countries under the CAMP4ASB Program. The team is currently sharing common sector legacies from the Soviet era. The approaching another potential implementing agency study will inform the prioritization by governments of WSS in Kazakhstan (Ministry of Agriculture), which has sector reform and investment needs. expressed interest in the past for CAMP4ASB- 42 CAEWDP | Annual Report 2016 The importance of this study is highlighted by the dire INVESTMENT PREPARATION WSS situation across the four countries. It is estimated that only 40 to 58 percent of households have access Activity Title to piped water, inefficient water supply services and Promoting Irrigation Efficiency experience 40 percent water losses on average. Sewage Activity Status services also remain undeveloped outside the main Completed urban centers. This situation is rooted in incomplete CAEWDP Grant Amount reforms towards decentralization and the financial US$202,062 autonomy of service provision since independence. Task Team Leader Correcting this situation calls for country-wide water Ijsbrand Harko de Jong demand management programs—based on extensive prioritized water supply infrastructure rehabilitations— The overall development objective of this grant was coupled with modernization of sector policies, capacities to assist the five Central Asian countries in improving and water usage incentives. irrigation efficiency by conducting thematic studies at the national level, strengthening capacities and institutions, This grant aims to provide recommendations on how to and preparing National Action Plans for improving strengthen WSS demand management and efficiency irrigation efficiency. The grant raised awareness among programs in each of the four countries. This will be achieved national stakeholders about the importance of irrigation by potentially fostering relevant regional cooperation and efficiency and its costs to the national economy, capacity-building initiatives, along with country-specific as well as the opportunities to improve this. While policy and investment programs for utility modernization, originally intended as a regional activity, the activity loss reduction, energy efficiency, technology, etc. The was subsequently implemented at the national level expected outcomes of the grant include: in Tajikistan, as regional collaboration on the topic did not materialize during the study period. Nevertheless, it • Improving sector knowledge and outlining possible provides good perspectives on future assessments at strategic policy reforms to better inform governments’ regional scale if this materializes in the future. and donors’ policy/strategy, and The grant supported a study in Tajikistan to assess • Participation and engagement of stakeholders in the the costs, causes and solutions of and for irrigation final activity workshop scheduled for September 2015. inefficiency. The activity generated interest both within and outside Tajikistan. The study produced the Grant objectives are mostly achieved. The grant methodology for determining the costs of irrigation objectives are mostly achieved and the final output, the inefficiency at the level of the Tajikistan national study, is being finalized. The finalization of the study economy and the methodology for planning irrigation was impacted by the delay in data collection earlier on. efficiency investments. The final report was published Dissemination is planned to take place during a regional in 2016 and disseminated. The study has prompted workshop in summer 2017. interest in Tajikistan to better understand the cost of water and energy intensity. The study was effective in quantifying the cost of irrigation inefficiency due to expensive pumping; and associated policy dimensions on irrigation and energy subsidies. The findings of the analysis provide pathways and incentives for more rational and efficient use of energy and water resources, especially in the context of CASA-1000. CAEWDP | Annual Report 2016 43 ANNEX II – RESULTS FRAMEWORK, PROGRESS AND RESULTS CHAIN This annex contains: decisions on national level water/ energy projects that integrated transboundary implications, and (iii) program • Summary of the progress against outcome indicators activities being coordinated and supported through a multi-donor trust fund have been achieved. The • Depiction of CAEWDP Results Framework (goal and indicators supported: (i) the existence of institutional outcome level) outlining the planned and achieved and analytical frameworks for improved water dialogue, program goal and development outcomes by 2016, and and (ii) understanding of regional water productivity being reflected in national plans, policies or investments have • Results chain describing the program outputs as of been partially achieved. To address the first partially end of 2016. achieved objective, a report on the legal analysis of transboundary water management frameworks was Results indicators were rated as being either achieved produced. To address the second partially achieved (3 out of 5), or partially achieved (2 out of 5) by the indicator, CAEWDP supported analytical outputs, close of 2016 (Table 3). The three indicators included: although it would require additional time for countries (i) investment / policy options to strengthen stability to fully institutionalize those lessons into national or and predictability of power supply; (ii) investment regional policies and plans. TABLE 3 — CAEWDP RESULTS FRAMEWORK (TRUNCATED VERSION) GOAL Indicator Regional cooperation catalyzes long- Indicator: Regional organizations and national bodies have the capacity to term economic growth and livelihood support trans-boundary dialogue on regional cooperation. security in Central Asia and provides a catalyst for continued economic growth and increased income. DEVELOPMENT OBJECTIVE Indicator Strengthened mutually beneficial Three investment or policy options initiated to strengthen stability and regional cooperation enhances energy predictability of power supply, with at least two options targeted to the security and water security. Kyrgyz Republic and Tajikistan. At least two investment decisions on national level water or energy projects include a clear understanding of their trans-boundary implications. Program activities are coordinated and donor supported through a multi- donor trust fund. Institutional and analytical frameworks for improved water dialogue across Central Asia stakeholders exist. Understanding of regional water productivity is reflected in national plans, policies or investments of at least two countries. Achieved Partially achieved Initiated No Progress Revision required 44 CAEWDP | Annual Report 2016 TABLE 4 — CAEWDP RESULTS FRAMEWORK (TOP TWO TIERS) PROJECT TITLE Central Asia Energy Water Development Program (CAEWDP) GOAL (Impact) Indicator Baseline Milestone 1 Milestone 2 Outcome 2016 2010/11 Regional Regional Disparate Agreement on Skills and CAREC ESCC has cooperation organizations and national level collaboration tools in place supported inter/ catalyzes long-term national bodies have investments with key to facilitate intra-regional power economic growth capacity to support and regional regional trade and included and livelihood transboundary fragmented institutions, dialogue for topic in EWP 2016- security to Central dialogue on regional regional supported cooperation. 2020. EC-IFAS Asia and provides cooperation. cooperation by Heads of has held several a catalyst for State transboundary continued economic dialogue events on growth and water and water increased income management. Source: Existing institutions mandates and activities. DEVELOPMENT Indicator Baseline Milestone 1 Milestone 2 Outcome 2016 Risks OBJECTIVE 2010/11 (Outcome) At least three TAJ & KYRG Needs Winter There have Regional investment or have winter Assessment energy been four organizations policy options energy deficit. completed coordination investments are too weak (two of which identifying plans in targeted at TJ & to be able targeted at priority place. KYRG initiated to convene Tajikistan & activities to strengthen substantive the Kyrgyz stability and inter-state Republic) predictability of dialogue on initiated to power supplies water-energy strengthen improving the stability and situation from There is no predictability 2009/10. dialogue on of power water and supplies energy, limited to individual national discussions Source: Government statistics CAEWDP | Annual Report 2016 45 DEVELOPMENT Indicator Baseline Milestone 1 Milestone 2 Outcome 2016 Risks OBJECTIVE 2010/11 (Outcome) Strengthened At least two Few current Potential At least two Two energy mutually investment investment national investment investments beneficial decisions decisions and regional projects take into regional on national on water energy water selected account cooperation level water and energy investments transboundary enhances energy or energy take into identified implications security and projects account the for effective water security. include clear transboundary use of water understanding implications. and energy of their resources. transboundary implications. Source Government Reports, World Bank country CASs, pipeline of investments Program Active donors Draft Established Multi-Donor activities are in the region, agreement MDTF with a trust Fund fully coordinated disparate on Multi- minimum of operational. and donor coordination Donor Trust two donors Program supported and inefficient Fund (MDTF) contributing. activities are through an and donor coordinated MDTF (Multi coordination and donor Donor Trust based on supported. Fund) consultations , others. Source: Water Sector: DFID, EC, Finland, Germany, Switzerland, UNDP Energy Sector: ADB, Russia, USAID, WB, others. Sustainable No shared Analytical Analytical There is regular for improved institutional Framework framework communication water dialogue and analytical developed agreed at between across framework with input technical relevant Central Asia exists in the from level technical stakeholders region technical between at institutes in CA exists. specialists of least two states all CA states states; Institutional links on analytics between at least three states are in place Source: Communication monitoring reports 46 CAEWDP | Annual Report 2016 CAEWDP | Annual Report 2016 47 RESULTS CHAIN 2016 The Results chain below outlines the activities for each of the three program pillars against: (i) planned outputs; (ii) pre-2016 outputs; and (iii) end of 2016 outputs. TABLE 5 — CAEWDP 2016 RESULTS CHAIN Activities Components Planned Outputs (Indicators) Pre 2016 2016 Component a) Energy Security in Central Asia 1. National energy plans in at least two countries take 1. National energy plans in Tajikistan and the Kyrgyz 1. Kazakhstan Power Sector: Stuck in Transition: Based on an I: Energy Countries: Design and implement into consideration inter- and intra-regional energy trade Republic took into consideration inter- and intra- extensive analysis, detailed interviews, and system modelling, Development measures to alleviate severe winter implications regional energy trade implications (Contributes towards the Note aims to model various sector development scenarios, pillar energy shortages as a base for Component b). quantify their costs and benefits, identify key sector challenges, sustainable energy security 2. Pre-investment analysis completed for two options for stable and present recommended policy actions. (Contributes towards and predictable winter power supply in Tajikistan & the 2. Pre-investment analysis completed for 30+ options Component c) b. Intra-Central Asia trade: Enhance Kyrgyz Republic for stable and predictable winter power supply in energy trading among CA countries Kazakhstan, Tajikistan & the Kyrgyz Republic (Contributes 2. The main objective of the planning exercise is to ensure that by transition to more efficient, market 3. National energy generation institutions considered regional towards Component a) peak load and energy demand up to 2030 is met reliably and transactions based on well-designed implications of national investments securely in line with the government’s policies at the most commercial contracts 3. Bishkek considered regional implications of national efficient cost. (Contributes towards Component b) 4. Political and financial support increased for transmission investments (Contributes towards Component b) c. Connecting CA to Regional Power infrastructure planning The main rationale for the study is to inform the government’s Markets: Build the foundation for 4. Tajikistan Energy Sector Action Plan for 2015-2017 and US$32 billion investment plan in the energy sector which will development of a power market linking 5. At least one new investment decision includes inter-/intra- CAREC Energy Sector Coordinating Committee (ESCC) modernize infrastructure, especially for energy, transport and Central to other regions regional implications Energy Work Plan (2013-2015) supported increased irrigation, as this is one of the key development priorities for transmission infrastructure planning (Contributes the country. (Contributes towards Component a) 6. Strengthened institutional Development (energy trade towards Component c) institutions) Stove Assessment Report: The report provides details on the The Coordination Agreement between Tajikistan and the tasks to be implemented under the TA component “Efficient stoves Kyrgyz Republic Entity was finalized (Contributes towards and heating solutions”. (Contributes towards Component a) Component b) 3. Assistance to Barqi Tajik (BT) on financial management 5. One new investment decision, CASA-1000 approved contributed to its implementation of the Financial Management March 2014, included inter regional implications Improvement Program (FMIP) and apply IFRS in the head office (Contributes towards Component b) and in more than 30 regional branches. (Contributes towards Component b) 6. Two CAREC Energy Sector Coordination meetings were held, draft of Energy Strategy and Work Plan 2016-2020 4. The main objective of the planning exercise is to ensure that was discussed (Contributes towards Component b) peak load and energy demand up to 2030 is met reliably and securely in line with the government’s policies at the most efficient cost. (Contributes towards Component b) The main rationale for the study is to inform the government’s US$32 billion investment plan in the energy sector which will modernize infrastructure, especially for energy, transport and irrigation, as this is one of the key development priorities for the country. (Contributes towards Component a) Stove Assessment Report: The report provides details on the tasks to be implemented under the TA component “Efficient stoves and heating solutions”. (Contributes towards Component a) 5. 21st CAREC Energy Sector Coordinating Committee (ESCC) Meeting (Islamabad, Pakistan: 11-13 April 2016)-Energy sector focal points of CAREC member countries, officials from energy ministries and agencies, and representatives from multilateral development partners discussed •updates on the deliverables of the Energy Sector Work Plan (EWP) 2016-2020 and •next steps to encourage investments in the energy sector. (Contributes towards Component b) 48 CAEWDP | Annual Report 2016 CAEWDP | Annual Report 2016 49 Activities Components Planned Outputs (Indicators) Pre 2016 2016 Component II: a) Decision support: Strengthen the 1. Expand data management to enhance energy/water analysis 1. Expanded data management to enhance energy/water 1. Capacity Strengthening for IWRM Modeling Final Report and Energy-Water knowledge base and technical capacity analysis: annexes. (Contributes towards Component a) Linkages pillar to manage water and energy resources 2. Regional dialogue on at least two priority water & energy at the national level, and support issues facilitated by regional and national organizations. • Strengthening Analysis for Integrated Water 2. Workshop in June 2016 in Almaty, Kazakhstan to discuss evidence-based dialogue Resources Management: A Technical Workshop the results of the Knowledge Networks and Communities of 3. Strengthened regional organizations capacity to facilitate (Ashgabat, November 4-5, 2014) (Contributes Practice for Water-Energy and Climate Change Management b) Climate Change: Identify climate change regional dialogue towards Component a). Program. (Contributes towards Component c) risks and develop adaptation strategies • Assessment of the Role of Glaciers in Stream 3. in energy, and agriculture 4. Climate change (CC) adaptation implications recognized for Flow from the Pamir and Tien Shan Mountains 4. September 2016, the Water Futures Forum & Expo took both energy and water. (Contributes towards Component b). place in Almaty, Kazakhstan. Over 200 policy and technical c) Riparian dialogue: Facilitate dialogue • Spatial Agent Application for IPhone and Android. experts from government, academia, private sector, and CSOs across countries to improve coordinated 5. Strengthened analytical framework is used to support water/ The mobile app was demonstrated at a regional participated at this international event. (Contributes towards management and development of energy dialogue workshop to promote innovation and technology Component a) shared resources, including nurturing in regional water resource management; three regional institutions (ECSS & EC-IFAS) mobile apps are being developed to answer to key 5. CAMP4ASB Regional Meeting in Almaty (Kazakhstan) and communities of practice. information needs of the institutions (Contributes June 24-28, 2016. The meeting was to review final steps towards Component c). towards effectiveness for the first phase of CAMP4ASB and • Basin IT Workshop (February 2014) (Contributes overall implementation arrangements in collaboration with towards Component c). representatives from the five Central Asian countries as well as from the Executive Committee of International Fund for 2. Regional dialogue on Rogun Assessments Climate Saving the Aral Sea (EC-IFAS) and FAO. (Contributes towards Change, and Energy security and trade were facilitated by Component b) regional and national organizations. • Rogun Consultations facilitated by the World Bank (May 2011, November 2012, February 2013, October 2013, and July 2014) (Contributes towards Component c). • United Nations Regional Centre for Preventive Diplomacy for Central Asia cooperation on a framework agreement for sharing trans-boundary waters (Vienna, March 2014) (Contributes towards Component c) • Support to the UNRCCA Trans-Boundary Water Cooperation Process convened a meeting in 2015 to discuss issues related to the interpretation and efficient application of key principles of international law in the management of trans-boundary water resources in the Aral Sea Basin (Contributes towards Component c). • Legal Analysis of the Trans-Boundary Water Management Frameworks in Central Asia A draft report has been produced (Contributes towards Component c) • Central Asia Knowledge Network Four events on trans-boundary water management were hosted in Central Asia; the umbrella Knowledge Network platform has been established and is being institutionalized (Contributes towards Component c). • CAREC ESCC Meetings (2012-2014) (Contributes towards Component a) • 2nd Central Asia Climate Knowledge Forum: Moving towards Regional Climate Resilience (May 2014) (Contributes towards Component c) 50 CAEWDP | Annual Report 2016 CAEWDP | Annual Report 2016 51 Activities Components Planned Outputs (Indicators) Pre 2016 2016 3. Strengthened regional organizations capacity to facilitate regional dialogue. • The World Bank and EC-IFAS have agreed to prepare a US$25-75 million project under the Third Aral Sea Basin Plan (Contributes towards Component c). • International Panel of Experts to assist Tajikistan in the Rogun Consultations (Contributes towards Component c) • A regional reconnaissance combined with national consultations facilitated the exchange of information on cutting edge approaches to analysis for IWRM for 231 water resources, irrigation, glacier, groundwater, energy, and environmental national experts (Contributes towards Component a) • Aral DIF Water modeling increased awareness and knowledge in publically available global data sets (including remote sensing) and modeling platforms as a modern basis of a decision support system for IWRM for 20 technical model and data specialists from all six countries of Central Asia (inclusive of Afghanistan) (Contributes towards Component a) • Basin IT Workshop over a three-day training module was developed by the World Bank Institute based on Basin IT, a water resources management trade- off analysis training tool, to build capacity for 22 student, young professional participants, and professors from all six countries of Central Asia (inclusive of Afghanistan) (Contributes towards Component a) 4. Climate change (CC) adaptation implications recognized for both energy and water: • Towards Climate-Smart Solutions for Central Asia Draft (Contributes towards Component b) • Turn Down the Heat: Confronting the New Climate Normal Report (Launched November 2014) (Contributes towards Component b) • Capacity Building Workshop for Regional Scientists in Potsdam facilitated by Potsdam Institute for Climate Impact Research (PIK) (Germany, March 2014) (Contributes towards Component a) • Central Asia Technical Working Group on Climate Change, comprised of government-nominated experts from all Central Asia countries to work collegially on climate-smart solutions across sectors and borders (Contributes towards Component c) • Energy Vulnerability to Climate Change: a draft report is completed (Contributes towards Component b) 5. Capacity Strengthening for IWRM Modeling National Workshop was held with Turkmenistan specialists on a 1-2 year water program at national and regional scales. A five-day training course with professionals from all six Aral Sea Basin countries (including Afghanistan) as well as representatives of the regional water organization (Contributes towards Component a). 52 CAEWDP | Annual Report 2016 CAEWDP | Annual Report 2016 53 Activities Components Planned Outputs (Indicators) Pre 2016 2016 Component III: a) Dam safety and rehabilitation: improve 1. IFAS’ capacity in agricultural water management 1. IFAS’ capacity in agricultural water management 1. Exploratory assessment of factors that influence quality of Water Productivity dam safety and water management at strengthened, and communication between national strengthened, and communication between national local irrigation water governance in Uzbekistan published. pillar bulk infrastructure facilities agricultural water specialists improved agricultural water specialists improved. (Contributes towards Component b) b) Irrigation Efficiency: improve efficiency • Draft Country Report for Uzbekistan “Social Impact • The Costs of Irrigation Inefficiency in Tajikistan published. of irrigation at the national level 2. Infrastructure and management opportunities Analysis of Water Supply and Sanitation Services (Contributes towards Component b) through prioritization of investments (including investments) for increased agricultural in Central Asia” presenting innovations and factors • Knowledge Sharing workshops conducted on Social Impact opportunities, strengthening capacities water productivity identified of success of local management of irrigation and Analysis of Water Supply and Sanitation Services in Central and institutions and introducing new drainage water management (Contributes towards Asia in November 2015 in Washington, DC and February technology 3. National action plans for increasing agricultural water Component d) 2016 in Tashkent, Uzbekistan. (Contributes towards productivity prepared • Poverty and Social Impact Analysis (PSIA) Diagnostic Component c) c) Water resources diagnostics: Strengthen tool (Contributes towards Component d) data and analysis of water resources • Central Asia Water Management a series of Policy 2. Draft Analysis of Water Supply and Sewerage Services in 4. Understanding of regional water productivity as a basis for policy development and Discussion Papers on Central Asia Water Resources Central Asia: Challenges and Outlook Policy Options Reports investments is reflected in national plans, policies and/or Management, as well as Country Profiles were – Tajikistan & Uzbekistan completed. (Contributes towards investments of at least two countries produced (Contributes towards Component c). Component d) d) Water supply sector diagnostics 5. Understanding of water supply sector priorities is 2. Draft Report “The Costs of Irrigation Inefficiency in • Session "Increasing Water Use Efficiency" at the High Level improved Tajikistan” (Contributes towards Component b) Symposium on SDG 6 and Targets: Ensuring that No One is Left Behind in Access to Water and Sanitation in Dushanbe • Strengthening Irrigation Governance produced a August 2016. (Contributes towards Component d) diagnostic tool and an assessment that identified key factors and conditions that are associated with good performance of local irrigation canal water management in Uzbekistan (Contributes towards Component b). • Promoting Irrigation Efficiency, the methodology for planning irrigation efficiency investments was completed and a methodology for determining the costs of irrigation inefficiency at the level of the national economy is in draft. A review of irrigation efficiency in Tajikistan is being finalized (Contributes towards Component b). 3. Social Impact Analysis of Water Supply and Sanitation Services Report was produced (Contributes towards Component d) • Analysis of Water Supply and Sewerage Services in Central Asia Draft Reports on policy recommendations for Tajikistan and Uzbekistan are under preparation, with 2 rounds of consultations in each of the four countries on the preliminary diagnostic and the policy recommendations. http://www.worldbank.org/en/region/eca/brief/caewdp The Central Asia Energy-Water Development Program (CAEWDP) is a knowledge and technical assistance multi-donor trust fund (MDTF) administered by the World Bank. CAEWDP’s mission is to build energy and water security for the countries of Central Asia—Kazakhstan, Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan—through enhanced regional cooperation. Since its inception in 2010, CAEWDP has received support from bilateral and multilateral donors including the Government of Switzerland’s State Secretariat for Economic Affairs (SECO), the European Commission (EC), the United Kingdom’s Department for International Development (DFID), the United States Agency for International Development (USAID), and the World Bank Group.