98805 CENTRAL ASIA ENERGY WATER DEVELOPMENT PROGRAM Working FOR Energy AND Water Security PROGRESS REPORT 2013 CENTR AL A SIA ENERGY WATER DE VELOPMENT PROGR AM Working FOR Energy AND Water Security PROGRESS REPORT 2013  iiiiii Executive Summary T his Annual Report describes the Central which contain complex hydrological characteris- Asia Energy Water Development tics and are increasingly vulnerable to the effects Program (CAEWDP)1 activities, accom- of climate change. Upstream countries, generally plishments and management for the endowed with rich water sources, typically give pri- period of January 1st to December 31st, 20132. ority to hydropower energy generation in winter to supply domestic and industrial users (however win- ter energy deficits still remain), while downstream countries are particularly reliant on summer flows CAEWDP Objectives for agricultural and other purposes. The regional CAEWDP was formally established as a trust fund uneven distribution of water is compounded by a in 2010 by the Government of Switzerland and the highly fragmented institutional system and difficulty World Bank. The Program supports the Central Asian in attaining consensus over resource management. countries’3 and the World Bank twin goals to reduce In turn, this has led to significant losses in economic poverty and ensure shared prosperity through welfare, periods of water shortages and related ten- long-term economic growth and sustainability. By sions, as well as continuous environmental degrada- balancing donor support with national and regional tion. Hence, addressing energy and water linkages is objectives, CAEWDP is able to enhance coopera- a critical component in achieving regional security tion and promotion of integrated energy and water and stability, as well as promoting economic growth development initiatives at the regional as well as and shared prosperity. national levels. The Program activities address chal- lenges of energy development, water productivity, and energy-water linkages by supporting diagnostics Summary of CAEWDP’s 2013 and analysis, preparing investments, and strengthen- ing national and regional institutions. Activities & Accomplishments A 2013 CAEWDP roadmap and work plan was agreed with national government and international Regional Context donor stakeholders. The Program’s 2013 contribu- tions are categorized into Energy, Water and the CAEWDP’s role is particularly important given the Energy-Water linkages, and outlined below. geographical and institutional complexities of the Central Asian energy-water linkages. Surface water ENERGY AND DEVELOPMENT resources are concentrated in two major rivers—the Central Asia relies heavily on fossil fuel resources and Syr Darya and Amu Darya—which are key drivers of is the most energy-inefficient region globally.4 Energy regional economic growth and development, but shortages are common for domestic, commercial 1 Alsoreferred to as ‘The Program’. 2 Theinformation in this report is current as of December 31, 2013; however, the document was publicly circulated in 2014. 3 Central Asian countries refer to Afghanistan, Kazakhstan, Kyrgyz Republic, Tajikistan, Turkmenistan and Uzbekistan. iv WORKING FOR ENERGY AND WATER SECURITY  |  PROGRESS REPORT 2013 and industrial users and emerging national aspira- Analyses addressing costs of operations and tions and competition among stakeholders have maintenance in the irrigation sector in Tajikistan; reduced incentives for a cooperative regional Studies assessing factors influencing local irriga- approach to address such energy deficits. tion water management practices in Uzbekistan; CAEWDP’s Energy Development Pillar seeks to Studies promoting consumer engagement and ensure energy security, efficiency, and economic evidence-based research for equitable access to growth across the region by stimulating trade in water supply and sanitation services in Uzbekistan. power supplies, identifying alternative sources, plan- ning strategic infrastructure development, promot- THE ENERGY-WATER LINKAGES ing institutional improvements and encouraging A major legacy of the Soviet era in Central Asia was investments. The Program is putting substantial the energy-water linkages, whereby upstream energy effort into establishing the foundation for sustain- generation from hydropower resources was holisti- able energy sectors in upstream countries, and pro- cally coordinated with the water needs of down- moting dialogue and intra- and inter-regional trade stream countries. Since independence, this has not in electricity both within Central Asia and between been the case, and has created tensions over water Central Asia and South Asia. Specifically in 2013, and energy use. These tensions are being com- CAEWDP facilitated: pounded by an increasing frequency of extreme cli- mate conditions. As such, regional water and energy ◗◗ Increased national energy sector dialogue in security necessitates a platform for an analysis and Tajikistan to reduce winter energy shortages evidence-based dialogue on potential investments and improve the performance of the national with transboundary implications. power monopoly; CAEWDP’s Energy-Water Linkages Pillar seeks ◗◗ Assessments of heating and energy efficiency, to improve understanding of the interconnections particularly in the urban building sector in the between water and energy at national and regional Kyrgyz Republic and Tajikistan; and levels by providing transparent, reliable and accessible ◗◗ Exploration of electricity supply and demand data focused on decision support, riparian dialogue alternatives for Tajikistan’s winter energy deficit. and climate change. It also provides support to the ◗◗ Continued facilitation of regional dialogue on other pillars. Specifically in 2013, CAEWDP facilitated: energy sector cooperation, co-chairing the Energy Sector Coordinating Committee with ◗◗ Economic sector analysis on climate change the ADB. in Central Asia (including modelling of glacial melting on future water and energy availability); ◗◗ A regional study on reducing climate vulner- WATER RESOURCES FOR DEVELOPMENT ability and moving towards resilient energy and Despite various studies confirming that integrated water development; regional management of water resources would be ◗◗ Riparian information sharing and consultation the optimal solution for all countries, recent trends on the assessment studies for the proposed in water resources management have followed those Rogun Hydropower project in Tajikistan, aimed described for energy resources, becoming managed at a productive, evidenced-based dialogue on more nationalistically. the proposed project; CAEWDP’s Water Productivity Pillar seeks to ◗◗ Development of a roadmap for the strengthen- address strategic infrastructure and management ing of analysis for regional integrated water opportunities to increase the productivity and effi- resources management, developed among ciency of water use in the agriculture and the energy water specialists from all five countries of sectors. Specifically in 2013, CAEWDP facilitated: Central Asia, and Afghanistan. Investigations into irrigation efficiency in Tajikistan, to help guide national investment preparations; 4 World Energy Council Energy Efficiency Policies Report 2013. EXECUTIVE SUMMARY v FIGURE 1: Development Partner Pledged vs Funds Received Strategic Role, Partnerships and Finances 6,000,000.00 CAEWDP’s 2013 activities and accomplishments illustrate its comprehensive and strategic approach 4,000,000.00 for facilitating and leveraging action on the major energy and water challenges in Central Asia. This 2,000,000.00 approach has proven adaptable enough to integrate work on new sectors (e.g. water supply and sanita- 0.00 tion) whilst also balancing national and regional DFID SECO EC agendas (e.g. specific focus on Tajikistan sustain- Pledged Amount able energy development with synergistic benefits (USD) for other countries in the region). Feedback from stakeholders on CAEWDP’s critical facilitating and (US$1.2 million) (as at December 2013). In terms of leveraging roles has been positive. The risks to the growth, Program activities have increased more than Program are regularly monitored, as is the ongo- four-fold between the first contribution in 2011 and ing validity of the objectives, results framework and program structure. CAEWDP’s approach has also garnered sup- FIGURE 2: Disbursements by Pillar per year port from an increasing number of development partnerships and collaborations, which have been 500 instrumental in leveraging knowledge and resources 404 400 Thousands for results achieved to date. Notably, in December 2012, the European Commission (EC) joined the 300 225 United Kingdom’s Department for International 200 Development (DFID) and the Swiss State Secretariat 100 102 116 for Economic Affairs (SECO) in expanding the multi- 0 0 0 0 19 0 donor trust fund (MDTF), consolidating partner Energy Energy-Water Water support and leading to a significant scaling of Development Linkages Productivity contributions. Furthermore, at the November 2013 Donors Advisory Committee meeting, discussions 2011 2012 2013 focused on extending the MDTF to January 2017 to enable full implementation of strategic activities. the end of 2013. The following graph As such, the MDTF is in active discussions with pro- spective donors such as the United States, Japan and Russia. In terms of current finances, cumulative con- Beyond 2013 tributions to CAEWDP came from DFID (US$3.6 Looking forward, CAEWDP offers a transforma- million), SECO (seed pledge of US$1 million), and tional vision for Central Asia that will help countries the EC (US$0.7 million), totaling US$ 5.3 million as prosper through more sustainable management of at December 2013. The graph below depicts the shared energy and water resources. CAEWDP will pledged amount in USD per development partner solicit additional support from current and prospec- versus the funds received as at December 2013. tive donors, strengthen partnerships and expand its Funds contributed by development partners in activities to meet countries’ demands. the MDTF represent approximately 51 percent of Program management over the next few months the total US$10.3 million pledged over four years will be dominated by the Call for Funds, exten- (up to 2015). Grants from the MDTF chiefly com- sion of the Multi-Donor Trust Fund, and formal- prised Energy-Water Linkages Pillar activities (US$2.4 izing the Program’s internal processes. This must million) and Energy Development Pillar activities all be achieved in the context of a fragile political vi WORKING FOR ENERGY AND WATER SECURITY  |  PROGRESS REPORT 2013 economy, where tensions around energy and water energy scarcity, and on easing market constraints issues remain at the forefront of national concerns. to regional energy trade within Central Asia. Over the next two years, CAEWDP is expected To support the program in achieving these ends, to: CAEWDP intends to develop a communications I. complete the preparation of the Central Asia strategy and work plan to support program delivery, South Asia 1000 (CASA 1000) regional energy more strongly promote the energy-water linkages exchange project (noting Uzbekistan’s formal and boost impact-focused outreach activities. To objection), ensure the program can sustain and implement the strategy, it is recommended that a dedicated com- consolidate support for a set of investment II. munications officer be added to the existing core projects for irrigation efficiency and water sup- team over this period. ply rehabilitation (following completion of the In the longer term, CAEWDP will continue to World Bank’s Central Asia Water Management bring attention to the crucial infrastructure needs to Study), solve regional development challenges. In so doing, complete an assessment of the impacts of III. different modalities may be needed to mobilize glacial melting on regional hydrology to inform more funding, strengthen partnerships and engage a climate resilience program at a joint work- in longer-term activities for greater impacts. The shop with the United Nations Regional Centre CAEWDP team has begun addressing this challenge, for Preventive Diplomacy for Central Asia with a focus on exploring regional projects and initial (UNRCCA) in the fall of 2014, discussions on an associated investment facility. implementing agreed initiatives to strengthen IV. analysis and the knowledge platform for water resources management; and conclude the riparian consultations on the V. Assessment Studies for the proposed Rogun Hydropower Project. With regard to policy, CAEWDP will focus on a systematic approach to managing the social impacts of water and Contents EXECUTIVE SUMMARY.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii I.  ENERGY AND WATER SECURITY: A REGIONAL APPROACH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Water. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Climate Change. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Addressing the Linkages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Building Regional Energy and Water Security. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 The Road Ahead. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 II.  ENERGY AND DEVELOPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Challenges and Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Achieving Results through Information and Dialogue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Power Supply Options Study for Tajikistan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Heating and Energy Efficiency Assessment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 III.  WATER RESOURCES FOR DEVELOPMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Water Productivity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Study on Water Use and Improvement in Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Irrigation Strategy in Tajikistan.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Strengthening Irrigation Efficiency Social Impact Analysis of Water Supply and Sanitation Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 IV.  THE ENERGY-WATER LINKAGES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Energy-Water Linkages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Europe and Central Asia Deep Dive Technical Assistance Central Asia Climate Change Knowledge Forum.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Central Asia Energy-Water Riparian Dialogue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Central Asia Energy Sector Coordinating Committee 2009–2013.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 viii WORKING FOR ENERGY AND WATER SECURITY  |  PROGRESS REPORT 2013 CAEWDP—Energy Water Modeling/Decision Support System Phase I. . . . . . . . . . . . . . . . . . . . . . . . . . . 23 V.  TRUST FUND MANAGEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Program Administration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Outreach and Communications Current Funding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Donor Commitments and Contributions Received. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Allocations for CAEWDP Activities Disbursements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Available Funds and Funding Target. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28  11 I.  Energy and Water Security: A Regional Approach C entral Asia is well endowed with WATER significant natural resources in water The demand for water for energy and other uses and energy. Water, as a shared resource, presents the region with significant challenges. ties the countries together and provides Allocating water among different uses and users much of the region’s energy. The Amu Darya River requires evaluating, choices and tradeoffs as well as begins in the Pamir Mountains in Tajikistan and flows opportunities and synergies. Of particular concern is 1,500 miles. The Syr Darya River begins in the Tien agriculture’s demand for irrigation water during the Shan Mountains in the Kyrgyz Republic, and flows summer growing season. Furthermore, poor irriga- 1,380 miles. Fed by glacier melt, the two rivers flow tion systems are exacerbating the problems; almost through Uzbekistan, Kazakhstan, and Turkmenistan 50 percent of irrigated lands are affected by sali- and drain into the Aral Sea. nization and waterlogging. In addition, generating hydropower in upstream countries to address energy ENERGY deficits in the winter can compromise the availability The Kyrgyz Republic and Tajikistan, as the upstream of irrigation water and contribute to regional water countries of the Amu Darya and Syr Darya river basins, use conflicts. enjoy noteworthy hydropower potential. Thermal resources are concentrated in the downstream coun- CLIMATE CHANGE tries of Uzbekistan, Turkmenistan and Kazakhstan. Climate change is expected to increase pressures Hydropower can provide energy security and system on Central Asia’s water and energy resources, with stability and reservoirs, through annual and year- overall reductions in volume and continuing changes over-year management, and ancillary services such as over time. In the near term, increasing glacial melt power frequency regulation and reserve capacity. could lead to greater flows and flooding, but, as In addition, Kazakhstan has substantial reserves the glaciers disappear, long-term reductions will of oil, gas and coal. Uzbekistan and Turkmenistan dominate. Upstream regions will experience more have gas reserves and some oil. If fully exploited, precipitation, but rising temperatures and reduced these resources would exceed the domestic demand precipitation in the downstream regions will contrib- of each country and could provide key development ute to the disappearance of the Southern Aral Sea. opportunities through expanded exports. A well-functioning, interconnected energy sys- ADDRESSING THE LINKAGES tem could enable the region to manage across dif- Given this abundance of natural resources and the fering cost and demand patterns, fuel mixes, and risk threat posed by climate change, the need to address profiles, with cost and reliability benefits, as well as the energy and water agenda in a comprehensive potential positive environmental impacts. However, way is as great as ever for the region’s stability and the distribution of these energy resources is highly growth. Shortages of winter heat and power are skewed across the region and within each country. common realities for two million households. Overall, opposite page photo credit: Laurent Debroux 2 WORKING FOR ENERGY AND WATER SECURITY  |  PROGRESS REPORT 2013 the benefits of around $1.5 billion in economic Building Regional Energy and productivity are foregone from a 90 percent reduc- tion in power transfer in the region since 1990 and Water Security one percent loss in gross domestic product (GDP) The Central Asia Energy-Water Development is caused every year by weather-related disasters in Program (CAEWDP) was designed to support the Tajikistan and Kyrgyz Republic. And yet, Central Asia long-term effort to build energy and water security still lacks the systems, institutions, and infrastruc- for the region through informed analysis and dia- ture to manage joint energy and water resources logue on energy-water management. By establishing which are needed to prevent further deterioration in sound energy-water diagnostics and analytical tools, regional cooperation, and increases in winter energy identifying high priority infrastructure investments, shortages and summer water, with possible conse- and strengthening regional institutions, the Program’s quences for long-term regional development. Other long-term goals are to eliminate winter energy challenges to energy and water sustainability include: shortages, enhance water productivity, and increase ◗◗ Weak financial and commercial principles to electricity trade within and outside the region. finance energy trades. Under each area, the Program focuses on three ◗◗ Dependence on high water-consuming crops. outcomes: (i) institutional strengthening, (ii) analyti- ◗◗ Lack of investment in energy and irrigation cal foundations, and (iii) investment preparation. The technologies, resulting in energy generation Program supports efforts by the countries to take deficits and land degradation. advantage of their natural resources while respecting ◗◗ Strong economic growth, which has increased national priorities and safeguarding regional stability. energy demand. It fosters dialogue across borders in order to reap PILLARS, OUTCOMES, AND RESULTS Three Pillars Three Outcomes The Program is based on three Pillars: 1. Energy Development to promote highest value energy investments Energy Development Investment Preparation and management. This includes Support policy and investments Expanded water and energy infrastructure planning, winter decisions for the highest value infrastructure investments, mix of resources with early results energy security, energy trade, energy accountability, and institutional development. Energy-Water Linkages Regional Institutions Improve understanding of linkages Strong physical, intellectual and 2. Water Productivity to enhance between water and energy and management hubs for regional facilitate regional dialogue cooperation and dialogue the productivity and efficiency of water use in the agricultural and energy sectors. This includes Water Productivity Diagnostics and Analysis capacity strengthening, the Increase productivity and Better identify the costs, e ciency of water use in benefits, opportunities and Third Aral Sea Basin Management both agriculture and risks of cooperation to Program, national action plans for energy sectors national interests water productivity, and rehabilitation of infrastructure. 3. Energy-Water Linkages to strengthen the analytical tools for integrated water resources management and improve the understanding of linkages between water and energy at the national and regional levels. This includes energy-water modeling, regional hydrometeorology, climate vulnerability, and energy-water dialogue. ENERGY AND WATER SECURITY: A REGIONAL APPROACH  3 the benefits of regional coordination and coopera- Kyrgyz Republic) to strengthen the stability and tion. Priorities include addressing severe shortages predictability of power supplies. of energy in upstream countries and reducing the ◗◗ At least two investment decisions on national vulnerability to hydrological variability in down- level water or energy projects including a stream countries. clear understanding of their transboundary To achieve these outcomes, the Program devel- implications. oped a comprehensive Results Framework, with ◗◗ A multi donor trust fund (MTDF) to coordinate four overall objectives: Program activities. ◗◗ Sustainable institutions for improved water ◗◗ At least three investment or policy options dialogue across Central Asian stakeholders. (two of which are targeted at Tajikistan and the ACHIEVEMENTS CAEWDP combines nationally focused initiatives with first time in July 2012. The workshop established regional implications and national benefits. At the a new paradigm for regional and national knowl- national level, the Program has completed an assess- edge management, with consensus on greater ment of the energy crisis in Tajikistan that yielded consultation and national perspectives, adoption an action plan and catalyzed commitment of the of state-of-the-art public domain remote sensing development community. The Program also identified data and analytics, and rebuilding of the cadre of climate risks and adaptation options for Uzbekistan sector specialists across the countries. At the end in the agriculture and energy sectors. This has stimu- of 2013, the Program finalized a comprehensive lated comparable studies in the four other countries’ Roadmap to support the new paradigm, to be national energy sectors as well as a perspective on operationalized through a multi-donor work pro- regional cooperation. gram for 2013–2015. The Program’s activities complement the Bank’s ɪɪ Regional Forum on climate change policy. lending portfolio of over 30 investments projects Consistent with its global concern and the build- and two development policy operations, such as a ing on the energy studies, the Bank hosted the first transboundary irrigation project in Uzbekistan and regional Forum on climate change policy in June Turkmenistan, a second project to restore a portion of 2013. Forum participants confirmed their desire to the Aral Sea in Kazakhstan, and a joint venture with the accelerate climate change adaptation and regional Swiss Agency for Development and Cooperation (SDC) cooperation, and to repeat the Forum as a vehicle to upgrade the water management data system in the for knowledge exchange and dialogue. Kyrgyz Republic. Additionally, the Program regularly convenes repre- ɪɪ Riparian consultations on the Rogun sentatives from the Central Asian countries for dialogue Hydropower Assessment Studies. The con- on pressing regional issues, supplementing the ongoing sultations are ensuring transparency and quality, investment projects on CASA 1000 and the Regional while facilitating exchange of information among Hydrometeorology Modernization Project. These stakeholders. These consultations, which repre- efforts have resulted in several regional initiatives taking sent a significant advance in meeting interna- place for the first time, such as the following: tional standards in Central Asia, have benefitted from input from governments, civil society orga- ɪɪ Regional consultations and diagnostics on nizations and diplomatic communities in the five energy-water analysis. Extensive consulta- Central Asian countries. It is setting the stage for a tions culminated in the six-country workshop on productive, evidenced-based dialogue on the strengthening tools and data for adaptive water proposed project. resources management, which took place for the 4 WORKING FOR ENERGY AND WATER SECURITY  |  PROGRESS REPORT 2013 side, the focus will be on a systematic approach to The Road Ahead managing the social impacts of water and energy In 2013, the Program added new activities to achieve scarcity, and easing the market constraints to energy savings in Tajikistan and the Kyrgyz Republic, regional energy trade within Central Asia. to develop a regional level pilot program on climate In the long term, the Program will bring greater resilience, and to build a comprehensive, long- opportunities to handle bigger challenges as crucial term regional program on energy-water knowledge infrastructure needs to solve development chal- management. In the next two years, the Program lenges are identified and evaluated. In so doing, is expected to complete the preparation of the different modalities may be needed to mobilize CASA 1000 project, consolidate support for a set more funding, strengthen partnerships and engage of investment projects for irrigation efficiency and in longer-term activities for more impacts. The team water supply rehabilitation, and conclude the ripar- has begun addressing this challenge, with a focus on ian consultations on the Assessment Studies for the exploring regional projects and initial discussions for proposed Rogun Hydropower Project. On the policy an associated investment facility. ENERGY AND WATER SECURITY: A REGIONAL APPROACH  5  7 II.  Energy and Development such as hospitals, schools, and government offices, Challenges and Benefits W can improve the quality of their services. ith fossil fuels as the prime source The Energy Development Pillar seeks to ensure of energy production, Central Asia energy security, efficiency and economic growth remains the most energy-ineffi- across the region by stimulating trade in power sup- cient region in the world in terms plies, identifying alternatives, ensuring infrastructure of both production and consumption. Yet, energy planning, promoting institutional development and demand in the region is expected to rise by 2030. To encouraging investments. The Program is putting ensure continued provision of basic services to the substantial effort in promoting dialogue on intra and public and industry, the Central Asian governments inter-regional trade in electricity within Central Asia need to understand the inherent vulnerabilities in and between Central Asia and South Asia. their energy sectors and the benefits of access to energy. The region’s people, industries and agricultural Activities producers are subject to a number challenges and vulnerabilities. Climate change will increase pressure The 2013 CAEWDP activities of the Energy on the region’s natural resources, increasing the Development Pillar are described below. frequency of extreme events, such as floods and drought. Energy shortages increase costs and reduce ACHIEVING RESULTS THROUGH INFORMATION the ability of households, industry and govern- AND DIALOGUE ment to conduct their affairs. Emerging national Tajikistan Energy Sector Dialogue: Support to aspirations and competition among stakeholders Tajikistan in reducing winter energy shortages have reduced incentives for a cooperative regional and improving performance of the national approach. Demographic change and economic power monopoly growth will increase demand for energy over time. Barki Tajik (BT), Tajikistan’s national integrated power If the region’s governments can address these company, operates the Nurek Hydroelectric Power challenges, the benefits to greater access to energy Plant, the largest station in Central Asia with an will be felt by all their citizens. Access to energy installed generation capacity of 3 gigawatts (GW), can help eradicate poverty, reduce infant mortal- producing over 75 percent of Tajikistan’s electricity. ity, improve health and education, reduce gender Barki Tajik is a multipurpose company comprising inequality, improve environmental sustainability several functions including power generation and and, in the end, accelerate economic growth and irrigation supply for Uzbekistan and Turkmenistan. prosperity. Families can light and heat their homes The company struggles to provide quality service to in winter. Businesses can invest in new technologies its customers as it faces the challenges of shortages and improve their productivity. Public institutions, of power to meet winter needs, unsustainable tariffs, opposite page photo credit: Laurent Debroux 8 WORKING FOR ENERGY AND WATER SECURITY  |  PROGRESS REPORT 2013 consumer debt, theft, and the inability to main- The World Bank collaborated with the Asian tain properly the system due to shortage of funds. Development Bank (ADB) and the European Bank Transparency, accountability and governance in for Reconstruction and Development (EBRD) in the energy sector are other major areas of concern its support for Barki Tajik’s financial management for the public, the government and development reforms. This strong partnership among such key partners. development partners was recognized in 2013 by Transparency of operations through financial the Electricity Governance Initiative (EGI) in an management is basic for improved accountability article titled “Tajikistan Makes Progress: Barki Tajik is and governance. To enhance transparency and Partnering with Civil Society to Improve Service for accountability, the World Bank supported the inter- Consumers.” The article credited the World Bank’s national audit of Barki Tajik’s financial statements work on governance reform with producing tangible and the implementation of a Financial Management and observable changes in transparency and con- Improvement Program (FMIP) under the Tajikistan sumer engagement.5 Energy Loss Reduction Project. Regular meetings of the Energy Sector Donor This support will help the company further Coordination Committee help stakeholders agree implement International Financial Reporting on priorities and division of assistance, as well as Standards (IFRS) and address the issues that pre- coordinate investments and analytical work. vented the auditor from issuing an opinion for the company’s 2011 and 2012 financial statements. The POWER SUPPLY OPTIONS STUDY audit for 2013 should show progress, compared to FOR TAJIKISTAN the previous two years. Electricity Supply and Demand Alternatives for The Bank approved the activity in 2013. Out Tajikistan’s Winter Energy Crisis of four supported components, progress was made Approximately 70 percent of the Tajik people suffer under the first component, Support to Barki Tajik from extended shortages of electricity during the on Financial Management. A consultant visited the winter. These shortages, estimated at about 2,700 offices of Barki Tajik, reviewed financial manage- gigawatt hours (GWh), or about a quarter of winter ment documents and practices and delivered the electricity demand, impose economic losses esti- following: mated at over US$200 million per year, or 3 percent of GDP. In addition to the financial costs of inad- ◗◗ Recommendation of priority financial equate electricity, the Tajik people suffer the social management areas. costs, including indoor air pollution from burning ◗◗ Comments on the draft accounting policy. wood and coal in homes and health impacts from ◗◗ Comments on draft terms of reference for extreme winters. Tajikistan’s electricity shortages Barki Tajik’s evaluation of accounts payable and are caused by a combination of insufficient winter receivable. hydropower output when river flows are low and ◗◗ Draft Terms of Reference for (i) the develop- demand for heat is high. ment and introduction of the unified system The Power Supply Options Study assisted the of documentation and documentation flow government of Tajikistan in identifying ways to over- and (ii) the development and introduction of a come the current electricity shortages and establish revenue accounting system. a sound basis for meeting the growing demand. The These contributions will support Barki Tajik’s study focused on the investments and policy reforms efforts to improve its financial management; how- needed between now and 2020 to strengthen the ever, given the time it takes to implement financial financial, technical, and institutional capacity of the management improvements and obtain results, the Tajik power sector and prepare the government expected improvements are unlikely to be achieved to undertake a major expansion of power supply before the end of 2014. capacity. The study explored a range of supply and demand alternatives (e.g., thermal, run-of-river 5 Sorina Seeley on Tuesday, June 18, 2013, Electricity Governance Initiative. (http://electricitygovernance.wri.org/news/2013/06/tajikistan-makes-progress-barki-tojik-partnering-civil-society-improve-service-consume-0). ENERGY AND DEVELOPMENT  9 hydro, other renewables, energy efficiency, demand government decree to direct TALCO to acceler- management). ate implementation of energy efficiency measures, The study developed an action plan to reduce which would provide immediate benefits by addi- winter power deficits by 2016 through a combi- tional power supply to other consumers in winters nation of (i) ambitious energy efficiency plans to from the energy efficiency savings. Government also reduce uneconomic power usage, (ii) new dual-fired accelerated the work on setting up a new 100 MW thermal power supply to complement the existing CHP plant to meet the winter demand. hydropower supply during winter, and (iii) increased energy imports to leverage surplus electricity supply HEATING AND ENERGY EFFICIENCY in neighboring countries. The study excluded from ASSESSMENT the action plan the construction of large hydropower Support for the Urban Building Sector in the plants with storage because of their complexity Kyrgyz Republic and Tajikistan and the inevitable delays in their implementation. The reliability and service quality of heat and elec- However, the study’s recommendations are relevant tricity supply in the Kyrgyz Republic and Tajikistan and its proposed actions are of highest urgency in the are deteriorating and are not able to meet the higher next four to five years to address the country’s winter demand during the cold winter months. Due to low energy crisis and establish a base for long term electricity tariffs and unavailable or unreliable heat energy security. The recommended actions were: supply, the population is increasingly relying on electricity for heating, which results in overloaded ◗◗ Address the industrial sector and buildings and power networks and increases the number of power scale up the loss reduction program with ambi- outages. These shortages have severe repercussions tious energy efficiency improvements. on the living and working conditions of the popu- ◗◗ Switch the maintenance schedule of the coun- lation and economic activities of local industries. try’s aluminum company, TALCO, from summer Identifying viable heating options and related energy to winter and implement financially attractive efficiency measures in urban buildings could help investments to reduce its energy consumption. the two countries to meet their heating needs and ◗◗ Increase electricity prices to encourage residen- address winter power shortages. tial customers to ration their use of energy and The Program conducted a diagnostic analysis implement an improved targeted social safety of the heating and building sectors in the Kyrgyz net and a related energy efficiency program. Republic and Tajikistan to identify the main issues ◗◗ Revitalize regional power trade to provide challenging improvements in the reliability and substantial and affordable relief during winter efficiency of heating supply and demand in resi- energy shortages. dential buildings and public facilities (e.g. schools, ◗◗ Invest in dual-fired thermal power supply to kindergartens, hospitals). In addition, based on complement hydropower during winter. detailed assessments in two representative cities for The study generated several follow-on activities: each country, the assessment identified a long list of (i) An Energy Sector Dialogue, in which the World measures that could help to improve the reliability Bank convened various development partners in a and efficiency of the existing heating systems and dialogue on energy policy issues with the gov- reduce heat losses. The assessments analyzed the ernment of Tajikistan, (ii) A Heating Assessment heating supply and demand structures to identify a in Tajikistan and the Kyrgyz Republic to identify mix of measures that would help the two countries opportunities to offload heating needs from the improve the reliability of heating supply during overstretched electric power system, and (iii) An winter months. Overview of Energy Vulnerability, including a closer To that end, the assessment included: look at the potential impact of tariff increases on ◗◗ An overview of the urban areas. vulnerable groups. The study has subsequently been ◗◗ A detailed analysis of two representative cities used in long term least-cost planning assessments for each country. and technical assistance to strengthen regional ◗◗ An assessment of viable heating options for the energy trade. The study was catalytic in getting a four target cities. 10 WORKING FOR ENERGY AND WATER SECURITY  |  PROGRESS REPORT 2013 ◗◗ Specific investment options and policy recom- ◗◗ Analysis of the heating and building structures mendations to implement selected heating and in both countries to identify the key issues chal- energy efficiency measures. lenging improvements on the demand side and supply side; To ensure ownership and commitment by the ◗◗ Assessment of the heating and building situ- counterparts and to inform stakeholders and seek ation in two representatives cities for both their feedback on progress achieved, the assessment countries, including (i) energy audits in public is also accompanied by roundtables. and residential buildings, (ii) inspections of In 2013, the assessment achieved the following: heating facilities, (iii) detailed data collection ◗◗ Stakeholder roundtables in the Kyrgyz Republic and analysis, (iv) heat demand forecasts, and and Tajikistan to launch the activity, get (v) identification of key issues that need to be stakeholder feedback, and ensure that final addressed to improve the current situation. recommendations will be in line with govern- ◗◗ Identification of a long list of measures that ment priorities. could help to improve the reliability of the heat- ing supply and reduce heat losses in buildings.  13 13 III.  Water Resources for Development implemented under this area of focus in the latter Water Productivity W half of 2013. hile previous studies have indi- cated that proper management and efficient use of water resources Activities in the region would benefit all countries in the region, since the collapse of the The 2013 CAEWDP activities of the Water Soviet Union, the water management policies Productivity Pillar are described below. pursued by the various governments have become more nationalistic with increasing inefficiency. STUDY ON WATER USE AND IMPROVEMENT The Amu Darya and Syr Darya, which once had a IN EFFICIENCY combined flow equal to that of the Nile, are Promoting Irrigation Efficiency in Central Asia slowly shrinking. Beginning in 2011, the activity supported a study in The Water Productivity Pillar seeks to iden- Tajikistan to improve understanding of the causes of tify and promote infrastructure and management inefficient water use and to identify opportunities to opportunities to increase the productivity and effi- improve efficiency. Similar studies will be conducted ciency of water use in the agriculture and the energy in the other Central Asian countries, and a regional sectors. The ways in which the Program envisions workshop will be organized to share findings, learn effecting change in this area is through: from experience, and define national and regional irrigation efficiency programs. The study provided a ◗◗ Identifying infrastructure and management number of important findings: opportunities to increase agricultural water productivity. ◗◗ Irrigated areas are currently under-supplied. ◗◗ Preparing national action plans for increasing Improving irrigation efficiency will therefore not agricultural water productivity lead to reduced abstractions or reduced pump- ◗◗ Including an understanding of regional water ing costs. Rather, improving efficiency will lead productivity reflected in the national plans, to better irrigation and higher crop yields policies, and investments. ◗◗ One of the most important sources of ineffi- ◗◗ Strengthening the capacity of the International ciency is pump outages as a result of unreliable Fund for Saving the Aral Sea (IFAS) and improv- electricity and excessive wear because of high ing communication between national agricul- silt loads tural water specialists. ◗◗ Efforts to transfer management responsibility to water users associations first need to ensure a This ambitious plan began in 2011 with imple- reliable supply of water to the command area. mentation of the “Promoting Irrigation Efficiency in Central Asia” activity. Three more activities were 14 WORKING FOR ENERGY AND WATER SECURITY  |  PROGRESS REPORT 2013 The implementation of the study included to help the government of Tajikistan to identify and extensive consultations with the donor community prioritize further analytical work and investments. in Tajikistan. Discussions with European Commission The first mission in 2013 collected available data on representatives and Swiss Agency for Development the sector. A second mission will prepare and discuss and Cooperation (SDC) focused on water sector an outline of the strategy, and will also conduct an reforms, which are currently under discussion, and irrigation public expenditure review in early 2014. how these can contribute to more efficient use of The team is working in close consultation with stake- irrigation water. The final report identifies constraints holders, including the government of Tajikistan, and and opportunities for improving irrigation efficiency the donor community, to identify priorities for future in Tajikistan. Discussions are underway to roll out investments in irrigation. similar activities in Kazakhstan and Uzbekistan. Findings will be used in the design of future Bank- STRENGTHENING IRRIGATION EFFICIENCY financed investment programs. Assessment of Factors Influencing Good Quality Local Water Management Practices IRRIGATION STRATEGY IN TAJIKISTAN The objective of this study is to contribute to better Addressing costs of operations and maintenance irrigation water management in Central Asia by (i) and their recovery identifying factors and innovative practices that posi- The irrigation strategy responds to the recent tively affect performance of local irrigation water reforms in Tajikistan’s water sector, to address some management institutions, (ii) preparing an associated of the weaknesses, including the costs of opera- diagnostic tool that will help design program inter- tions and maintenance and their recovery. It aims ventions for ongoing or future irrigation operations, photo credit: World Bank WATER RESOURCES FOR DEVELOPMENT  15 and (iii) facilitating exchange of good practice expe- towards high value crops. It is hoped that through riences and knowledge of what works among rel- case study research, the technical assistance will evant stakeholders across the region. The approach identify incentives behind these good practices and taken to address the challenges posed by weak will also look at issues such as information flows, distribution and management of irrigation water was accountability and the potential for introducing to conduct systematic, in-depth case study research Information and Communications Technology (ICT) of water users associations, applying primarily tools. The work will inform the design of a diagnostic qualitative research methods. The team, in partner- tool that enables assessment of the quality of cur- ship with the Uzbekistan Ministry of Agriculture and rent water management institutions and the extent Water Resources, and with representatives of the to which internal and external factors and incen- International Water Management Institute (IWMI) in tives for good functioning of local water manage- Tashkent and the Swiss Development Cooperation in ment are present. Options for facilitating transfer of Tashkent began defining the scope for the activi- knowledge on good practices to other water users ties, which will be extrapolated and modified for association and irrigation water management bodies the Kyrgyz Republic and Tajikistan in 2015. Thus far, will be explored. analysis has focused on identifying good local water management practices (in terms of efficiency) across SOCIAL IMPACT ANALYSIS OF WATER SUPPLY a range of land use types. Key research questions AND SANITATION SERVICES revolve around a series of hypotheses. These include Promote the engagement of consumers and the the following: use of evidence for equitable access to water supply and sanitation services ◗◗ Incentives for better water management at the The objective of this activity is to promote the local level are linked to incentives for raising engagement of consumers and the use of evidence crop production. in developing policies and plans for equitable access ◗◗ Water users associations in Uzbekistan are primarily accountable to the Hokimiyat6 and the public irrigation administrative system, and serve as an extended branch of the state. ◗◗ Dekhan farmers, whose kitchen garden produc- tion provides an important contribution to the agricultural economy, are struggling to meet their irrigation and drainage needs in spite of their rights to water through their membership in a water users association. Reasons include their limited political cloud and low priority given to their needs by the Hokimiyat and the public irrigation administrative system. ◗◗ To reach cost recovery for the water users associations’ operations, the payments of the irrigation feed need to be better linked to actual water flows and consumption of water. As of December 2013, the foundations for field research had been laid. The team is paying special attention to innovations that respond to emerg- ing trends, such as land privatization and the shift photo credit: Laurent Debroux 6 The Hokimiyat is an organ of executive power in Uzbekistan which exists at each level of the state administrative division—provincial, city, and district. The hokim, the highest authority in the hokimiyat, is appointed by the senior executive branch and approved by the relevant body of representative power. Provincial leaders and the mayor of the national capital of Tashkent city (both termed hokim) are appointed by the president of the republic and approved by the Oliy Majlis, the Supreme Parliament, and the senior legislative authority. 16 WORKING FOR ENERGY AND WATER SECURITY  |  PROGRESS REPORT 2013 to water supply and sanitation (WSS) services. The development needs. Beyond financing and capacity activity is a complement to the Water Supply and limitations, poor institutional governance and social Sanitation (WSS) Regional Strategy Study. At the end accountability also contribute to sector underperfor- of December 2013, the activity collected key data mance. Sanitation needs are seen as a lesser priority from the urban areas, small towns and rural areas than water supply solutions. Current planning and and across wealth groups on the following topics: policy making in the WSS sector in Central Asian countries cannot rely on evidence of customer ◗◗ Consumption patterns capturing water and needs and priorities, since systematic analysis of sanitation availability and quality, water needs these issues is weak or nonexistent. Furthermore, and usage and nature and quality of services consumers’ voices—especially those of women—are provided by utilities. missing from policy discussions. ◗◗ Costs and coping strategies capturing expendi- This activity consists of technical assistance and ture and costs incurred for WSS services, non- involves applying the Poverty and Social Impact monetary impacts of poor service on health, Assessment (PSIA) methodology to assess the earnings opportunities, livelihood among oth- following: ers and coping strategies. ◗◗ Households’ expectations of utility services and ◗◗ Impacts of current weak WSS services and the improvements and willingness to pay for WSS costs of policy inaction for different population service improvements, tariff price increases, subgroups, including by gender. behavioral change and demand management ◗◗ Consumer perceptions around WSS access, options. This exercise also explored improve- quality, tariff structure, and affordability. ments households would like to see and condi- ◗◗ Stakeholder views and positions on service tions under which households would accept modernization needs and reform options. tariff increases. The PSIA is expected to add substantial value Access to adequate WSS services in Central Asia to the design process of WSS sector strategies is low, especially in rural areas, and the region is not by making consumer voices and needs heard by on track to meet the Millennium Development Goals policy-makers. The scope of the proposed work has (MDGs). In urban areas, underpriced water services been discussed with the national body for com- mean water utilities are severely under-funded munal services (Uzkummunizmat), the Ministry and under-resourced. Tariff policies are “frozen in of the Economy, the Ministry of Finance and SDC. time” and generally do not reflect cost-recovery Collaboration with the Institute for Social Research and investment needs. Tariff regulation practices, (ISR) and the Institute for Forecasting and Macro- coupled with weak participatory and accountabil- economic Research (IFMR) in terms of organizing ity mechanisms, perpetuate extremely low WSS PSIA training for policy researchers is being explored. tariffs disconnected from cost-recovery and sector Work is scheduled to begin in early 2014.  19 19 IV.  The Energy-Water Linkages such as power frequency regulation and reserve Energy-Water Linkages A capacity. significant legacy of the Soviet era in The Energy-Water Linkages Pillar seeks to Central Asia was the creation of an improve the understanding of linkages between energy-water linkages, whereby the water and energy at the national and regional levels generation of electricity from hydro- by focusing on three interconnected areas: power in upstream countries was inexorably linked ◗◗ Decision support: Attend to the basics of data, to the water needs of the downstream countries. analysis and knowledge sharing. This system operated in the context of a common ◗◗ Riparian dialogue: Facilitate transboundary con- management system and shared energy arrange- sultations based on evidence and analysis. ments through regional energy grids and networks. ◗◗ Climate change: Guide long-term issues that However, this system ended with the dissolution of will shape energy and water issues. the Soviet Union and the overnight emergence of international borders. The rise of national aspirations The vision for effecting change in the region is and development needs, the emergence of new to provide transparent reliable accessible data for and distinctive political cultures, as well as the drive dialogue, which will lay the foundations for all the for energy and water self-sufficiency has led to the other Pillars, both water productivity and energy breakdown of regional water and energy mecha- development. nisms inherited from Soviet times. These difficulties have promoted an increasingly inward looking rather than regional or transboundary perspective. Activities Although tensions over water allocation are at the forefront of regional concern, there is increas- The 2013 CAEWDP activities of the Energy-Water ing worry over the increased frequency of extreme Linkages Pillar are described below. conditions and debilitating risks from floods, greater volatility from releases, and recurring drought, (i.e. EUROPE AND CENTRAL ASIA DEEP DIVE most recently the drought of 2008 and the summer TECHNICAL ASSISTANCE floods in 2010). As such, regional water and energy Leveraging Turn Down the Heat III Economic security necessitates a platform for a region-wide Sector Work for Europe and Central Asia dialogue on potential investments with transbound- The impacts of climate change in Central Asia, such ary implications, while still considering sovereign as decreasing water availability, heat waves, and interests. Water management, especially in the face more frequent floods and droughts, are already of climate change, also links back to energy security being felt; and countries are taking actions through a and system stability through the annual and longer- variety of national strategies, policies, and programs. term management of reservoirs for ancillary services However, the issue does not yet receive adequate 20 WORKING FOR ENERGY AND WATER SECURITY  |  PROGRESS REPORT 2013 priority given the level of awareness (e.g., low social capacity development, (iii) creating public demand demand and costs of inaction are not well known for climate actions, and (iv) facilitating the identifi- nor publicized), knowledge (e.g., lack of detailed cation of additional project and analytical work to assessment of sectoral impacts), and capacity gaps be carried out to inform the region’s pipeline and (e.g., training in climate-smart options) for designing country strategy design. cross-sectoral policies and programs. Because the activity began late in 2013, most of The objective of the Europe and Central Asia the activity completed by December 2013 was Deep Dive Technical Assistance (ECA Deep Dive TA) preparatory. This included preparations and is to help initiate and strengthen an evidence-based discussions to identify options for climate-resilient dialogue on climate action among key stakehold- low-emissions development that is cost-effective ers, leveraging the latest scientific analysis provided and robust in terms of long-term uncertainties on at sub-regional levels by the Turn Down the Heat climate and development scenarios. The activ- III (TDH III) report. While the main focus of TDH III ity selected six sectors: water resources, energy, will be on delivering a scientific diagnostic, draw- agriculture, forestry, transport and health. A strategy ing on the latest literature, the ECA Deep Dive TA note included assessing the costs of inaction in will contribute background region-specific review, Central Asia and outlined possible opportunities and disseminate scientific findings from TDH III, and sup- priorities going forward (e.g., further analytical work port institutional capacity building in the Western on climate impacts or on institutional constraints Balkans, Central Asia and Russia. The ECA Deep Dive and other barriers to the uptake of climate-smart TA will catalyze policy and operational dialogue on options). This complements TDH III by building a climate change by (i) improving understanding of stronger narrative on action to promote resilience climate vulnerabilities, (ii) supporting institutional in the region. photo credit: Manon Pascale Cassara THE ENERGY-WATER LINKAGES  21 CENTRAL ASIA CLIMATE CHANGE Asia to work collegially across borders and KNOWLEDGE FORUM sectors and provide advice and champion Reducing vulnerability and moving towards climate-smart solutions at the national and climate-resilient development regional levels. Given their significant exposure to the impacts ◗◗ Forum 2013 completed the preparation of of climate change and low adaptive capacity, the the profiles summarizing the climate and Central Asian countries are among the most vulner- development challenges in major sectors for able nations in the world. In response, the countries each country. Forum 2013 also completed the are focusing on reducing vulnerability and moving activity map of Development Partners. Final towards climate-resilient development. However, drafts were handed over to government coun- the issue is not yet receiving adequate priority terparts and Development Partners for review because of the gaps in knowledge and capacity and comments.7 to design cross-sectoral policies and programs at the national and regional levels. As climate change CENTRAL ASIA ENERGY-WATER risks extend beyond national borders, due in part RIPARIAN DIALOGUE to the regional connectivity of the land and water Assessment Studies for the proposed Rogun systems, concerted regional action will help in the Hydropower Project in Tajikistan design and implementation of an effective and Proposed during the Soviet era, the Rogun scaled-up response. Hydropower project on the Amu Darya in Tajikistan The Central Asia Climate Knowledge Forum aims would be the highest dam in the world. However, to raise awareness on climate risks and the costs of because the Amu Darya provides more than half of inaction by (i) fostering knowledge and experience the available water to Uzbekistan and Turkmenistan, sharing on climate-smart options, (ii) building skills the unknown but potential risks for these down- on tools and approaches for climate action, and stream countries are causing regional tensions. At (iii) encouraging dialogue and collaboration among the same time, Tajikistan is experiencing significant the Central Asian countries and other stakeholders lighting and heating deficits during the winter. active in the region (such as Development Partners). There are no institutions or established practices It builds on the success of the inaugural Central Asia to complete assessment studies in full transparency Climate Knowledge Forum, held in June 2013 in and with ongoing engagement of key stakeholders; Almaty, Kazakhstan. The Forum concluded with a nor are there any examples of how best to conduct demand for greater collaboration for effective and transboundary consultations in the region. The scaled-up action and for establishing a platform challenge is reflected in one downstream country’s to continue regional dialogue on climate change. skepticism and reluctance to engage in multi-lateral The 2014 Forum, to be held in Almaty, Kazakhstan information exchange. in May 2014, will feature some of the analytical Since 2008, the Central Asia Energy-Water work conducted under the Program and discuss the Riparian Dialogue has engaged the governments of building blocks of a proposed Regional Program for the Aral Sea Basin (Central Asia and Afghanistan), Resilience. The Grant Funding Request was approved civil societies, and diplomatic and development in mid-November 2013; activities focused on agencies in a program to share information and preparatory work, including outreach to countries shape the assessment studies of the proposed Rogun (and other regional stakeholders). Two important Hydropower project. The consultation process is milestones were achieved: unique and innovative for Central Asia and has ◗◗ The governments submitted nominations for vastly increased the transparency and scrutiny of the cross-sectoral specialists to establish the Central studies in a highly charged political environment. It Asia Technical Working Group on Climate demonstrates alternative, good practice approaches Change (TWG). The TWG will help mobilize a to energy-water dialogue. durable network of experts from across Central 7 Finalprofiles will be available at: http://www.worldbank.org/en/events/2014/04/08/second-central-asia-climate-knowledge-forum-moving-towards-regional-climate-resilience. 22 WORKING FOR ENERGY AND WATER SECURITY  |  PROGRESS REPORT 2013 In response to the countries’ concerns over Stakeholders learned that the salt wedge, with speci- the objectivity and rigor of the assessment studies, fied management measures, poses no risk to dam the dialogue process applies international good safety. The assessment of existing works identified practice in consultation on transboundary projects. several required actions to ensure ongoing reliability Beginning with the Terms of Reference in 2008, four and safety. Further consultations on the draft final additional consultation periods since 2011 have cov- Techno-Economic Assessment Study and the draft ered technical, social, and environmental aspects of final Environmental and Social Impact Assessment the proposed project. At each key step in the studies, are expected in 2014. stakeholders are provided with information on the study findings, comments are invited, and face-to- CENTRAL ASIA ENERGY SECTOR COORDINATING face consultation are held across all six countries. COMMITTEE 2009–2013 The studies’ Bank-funded International Panels of Regional Institutional Capacity Development Experts attend all consultations and are responsible The uneven distribution of natural resources and for translating comments into formal recommenda- inadequate infrastructure mean that most Central tions to the government of Tajikistan. These com- Asian countries face winter energy shortages. These ments are tracked through the process. shortages are expected to worsen in the coming The results of the dialogue are measured in years as demand grows and aging infrastructure the terms of engagement, transparency, impacts needs to be replaced. The challenges in promoting on the studies, and political tensions. Stakeholders regional energy coordination are reflected in the have repeatedly expressed appreciation for the breakdown of grid services and power transfer by process; previous sources of information were the some 90 percent since the early 1990s. This decline country governments themselves based on out- is the result of persistent and, in some cases, grow- dated information and political interpretations. ing energy shortages in almost all the Central Asian A large community of stakeholders (over 60 civil countries, coupled with an increased concern for society organizations, all six riparian governments, national energy self-sufficiency. Aging transmis- and over 40 members of the development and sion infrastructure and grid services and tensions diplomatic communities) are better informed of between countries related to managing power flows the studies (purpose, content, and timing) and are and overdraws add to the challenge. Finally, internal more knowledgeable about the potential benefits, tariffs and price signals undermine strong economic impacts, and risks of the proposed project. All coun- signals for a regional energy market. try governments have engaged, although Uzbekistan Regional energy cooperation provides a vital has only occasionally done so through exchange opportunity for integration of energy markets to of letters. All information has been provided to the overcome the impact of uneven distribution of Government of Uzbekistan and the World Bank has energy and water resources, optimize existing energy ensured ongoing bilateral discussions through the interrelationships, and develop least-cost solutions to process. The World Bank and the Panels of Experts energy constraints. The economic benefits become have reviewed and responded to all comments, all available by taking advantage of different energy of which are publicly available.8 Specific topics raised types (thermal, hydropower) with different services by stakeholders were incorporated into the study, and cost structures and different demand profiles. in particular related to dam safety and downstream The Energy Sector Coordinating Committee flow impacts, and several project design aspects (ESCC) is a core forum in Central Asia, where were changed. the countries can discuss and explore options to The team convened two consultations in strengthen energy cooperation in the region. It is 2013. In February, the team discussed geology and unique because it not only brings together the five hydrology, as well as a comparison of different Central Asian countries, but also engages key poten- project alternatives and explanation of the model- tial energy partners, such as Afghanistan, Pakistan, ing of water management. In October, the team Mongolia, China, and Azerbaijan. Such dialogue and presented the first two of four draft final reports, information exchange related to possible benefits addressing the key salt wedge (geologic) concern is critical to addressing the obstacles to coopera- and an assessment of the quality of existing works. tion. The ESCC continues to be guided by CAREC’s THE ENERGY-WATER LINKAGES  23 Strategy for Regional Cooperation in the Energy Sector and agreed work programs. The activity was focused on supporting interna- tional dialogue on regional investment, analysis and policy reform in Central Asia. The ESCC, co-chaired with the ADB, provides a critical forum to convene Central Asian energy experts, seek guidance on pri- orities, and share CAEWDP outputs. While the scope of the Program extends beyond the ESCC mandate, ESCC activities are synchronized with the Program’s work program. The ESCC followed an agreed work program between 2009 and 2012, which set the foundations for a subsequent 2013-2015 program (covered under a separate CAEWDP-funded activity). The 2009–2012 program achieved the following: ◗◗ Estimation of economic benefits from regional photo credit: World Bank energy coordination (about $1 billion per year) investments in energy trade. Through the ESCC, and identification of priority actions. These these ADB-led investments are being coordi- results were followed up by the USAID-funded nated with the CASA 1000 project, with promise RESET Program9 that focused on technical of lower costs and broader development assistance and capacity building. Dialogue impacts (involving an additional two counties within ESCC led to an extended analysis of compared to CASA 1000 alone). national level incentives and constraints to intra-Central Asia trade as part of the 2013–2015 work program. CAEWDP—ENERGY WATER MODELING/ ◗◗ Dialogue forum for increased trade with South DECISION SUPPORT SYSTEM PHASE I Asia, including the CASA 1000 project to Strengthening Analysis for Integrated Water construct a high voltage transmission line to Resources Management evacuate excess summer power from Tajikistan At present, the knowledge base for an evidenced- and Kyrgyz Republic to Pakistan through based dialogue on water and water-related energy Afghanistan. The ESCC was the only forum in management is fragmented, is not trusted by all which all interested parties (extending beyond parties, and does not assist individual countries the investing countries to other Central Asian in understanding their national situations or the countries) could discuss the project10. Benefits national implications of regional actions and invest- from this investment are estimated at a benefit- ments. As a result, there is poor understanding cost ratio of 1.34 (for a discount rate of 10 per- of possible choices, trade-offs, and benefits. The cent) and an Economic Internal Rate of Return lack of a knowledge platform is exacerbated by (EIRR) of 15.6 percent.11 wide variations in country capacity, access to and ◗◗ ESCC also provides the main forum to discuss familiarity with existing tools. This is in part due to further possible energy integration among the historical focus on such analysis in the Scientific Central Asia and South Asia through explora- Information Centre of the Interstate Committee for tion of a Turkmenistan-Uzbekistan-Tajikistan- Water Coordination (ICWC) located in Tashkent, Afghanistan-Pakistan (TUTAP) series of Uzbekistan. Among the tools needed to understand 9 Regional Energy Security, Efficiency and Trade Program (RESET) was launched in November 2010 to help the six participating countries put in place the enabling conditions that will (i) re-establish economic dispatch in Central Asia; (ii) attract the least-cost investment needed to assure a base-line of energy & water security in each country; and (iii) increase profitable energy trading within the region and open new markets to South Asia and beyond. RESET also interacts and collaborates with other existing international and regional organizations and initiatives that focus on establishing / facilitating a power market or fostering increased cooperation on energy-water issues in Central Asia. 10 In addition, the Program funded early feasibility studies. 11 CASA-1000 Project: List of FAQs. June 6, 2011. http://www.casa-1000.org. 24 WORKING FOR ENERGY AND WATER SECURITY  |  PROGRESS REPORT 2013 better the options for integrated water resources Roadmap to strengthen IWRM regional analysis. The management (IWRM) will be a collectively created Roadmap also, for the first time, explicitly identified modern and transparent knowledge base that takes the role of national level roadmaps as a critical base full advantage of existing systems and capacity in the for the regional efforts. The Roadmap identified 12 region, and maximizes the appropriate application key activities to be supported by the World Bank and of emerging technologies and tools. its knowledge partners to promote a new knowledge The Energy-Water Modeling Activity (Phase platform, Including for example, updated opera- I) initially aimed at developing a framework for tions-based modeling (e.g., flood management), an a renewed decision support system that would institutional needs assessment that fully considers be acceptable to and accessible by all Central Asia new tools, and communications opportunities, as countries and institutions. However, it quickly well as a greater role for national IWRM institutions. became clear (through national consultations) that The Roadmap was the cumulative result of a the basic foundations for consultative approach, beginning with experts from such a sophisticated— across Central Asia and followed by National cross- The Forum was the first time and agreed upon—sys- sectoral workshops. Consultations were augmented a cross-sectoral team from tem did not exist. In with various diagnostics and comparative analytics response the activity of models for water management, including the all countries of the Aral Sea focused on establish- development of a state-of-the-art demonstration Basin had convened on a ing a paradigm shift in model public domain data and modeling plat- framework for a regional- the principles for future form. One result was the IWRM Knowledge Forum knowledge manage- “Strengthening Analysis for Integrated and Adaptive level IWRM decision ment, and in engaging Water Resources Management in Central Asia.”12 The support system. each country on an Knowledge Forum brought together delegations of equal footing. Part of the technical specialists from a range of sectors (includ- solution is to strengthen ing water and energy) from six countries to exchange the accessibility and information on cutting edge approaches to analysis deployment of publi- for IWRM, as well as key initiatives in the region. cally available global data sets to augment highly The Roadmap engaged the regional water insti- fragmented and closely held local data on water tution, IFAS, and the energy forum, CAREC’s Energy management. Sector Coordinating Committee, leveraging and The singular achievement in 2013 for this ensuring consistency with other CAEWDP activi- activity was the completion of the Roadmap ties. This activity specifically met results framework for Strengthening Analysis for Integrated Water milestones related to expanding data management Resources Management (IWRM). The Roadmap to enhance energy-water analysis. The activity also reflects a significant outcome; a paradigm shift for contributed to a third indicator related to strength- analysis of IWRM analysis in Central Asia. Through ening IFAS by highlighting the modeling work of the consultation process and knowledge forum, the Executive Committee, although progress was stakeholders stressed the importance of approaching tempered by the delay in transition of the Executive the future challenges of water resources manage- Committee over 2012–2013. Looking forward, the ment in ways that are different from the past, and Roadmap will identify specific actions for institutional stated their intent do so. They concluded with a strengthening to be implemented in the next phase. confirmation of governing principles and the draft 12 Pre-forumconsultations ( June 2012) and the Knowledge Forum ( July 2012) included 64 participants from all six Central Asia countries 20 percent were woman.  27 27 V.  Trust Fund Management OUTREACH AND COMMUNICATIONS Program Administration B Strong and effective communication of results to ecause of CAEWDP’s ongoing effort to the stakeholders of the complex goals and objec- consolidate partnerships and establish tives of the Program is paramount to maintaining activities that will deliver results, 2013 was confidence and to boosting partners’ engagement a very active year. The Program hosted and participation. In line with the Program’s focus on two Donor Advisory Committee (DAC) meetings clear outcomes and results, the Program manage- in 2013. The in-person meeting of November 22 ment team has focused on capturing and communi- provided a platform for reviewing the effectiveness cating results at the regional and national levels. of the Program as well as an opportunity to share Going forward from an existing website, the experiences and good practices. As a result of the Program will develop a communications strat- DAC discussions, the Chair proposed extending the egy and work plan to support program delivery operational period for project implementation to and to boost impact-focused outreach activi- January 1, 2017. ties. Recruitment of a dedicated communications The Program continues to focus on deepen- officer is, therefore, underway, with the objective to ing and expanding the partnership, to include a expanding energy-water outreach through publica- broad base of non-traditional partners. In addition tions and national press coverage, disseminating to strengthening the relationship with traditional results and providing informal contributions at partners like USAID, the Program has strengthened meetings and workshops. partnerships with other organizations like the Japan CAEWDP’s communications strategy will focus International Cooperation Agency ( JICA). For 2014, on reaching out in an open partnership mode, to possible new partnerships with traditional imple- wider parts of the development community, the menting partners are envisaged, such as USAID. private sector, and other national stakeholders, Strengthening human resources has improved donors and agencies, all of whom will be collectively coordination efforts, accelerated activity initiation, responsible for the resources and programmatic and further strengthened cooperation between the partnership in the future. Supporting a wider stake- Program and the World Bank’s internal work plan. holder base is essential for the Program’s sustainabil- The present team is led by a Program Manager and ity in the long run. The focus will be on a reinforced includes one Partnership Specialist (recruited in late visibility of the Program and showcasing of relevance 2013), three Pillar Leaders, and one Administrative and results and strengthening CAEWDP’s presence at Assistant. In 2013, the team continued to provide major events. support to Central Asian activities in project formu- lation, implementation, monitoring and evaluation (M&E), as well as facilitating the undertaking of vari- ous other capacity-building activities. 28 WORKING FOR ENERGY AND WATER SECURITY  |  PROGRESS REPORT 2013 Current Funding The table below presents the CAEWDP’s financial situation as of 31 December 2013, including contributions received, allocated funds, disbursements and funding available. DONOR COMMITMENTS AND CONTRIBUTIONS RECEIVED The funding target for the multi-donor trust fund (MDTF) amounts to US$40 million over ten years. Total funds pledged through a signed legal agreement by Program donors in the MDTF represent close to 26 percent of the total funding target. As of 31 December 2013, the MDTF has received pledges totaling US$10.3 million as per the detail below: DONOR CURRENCY USD DATE CURRENCY AMT PLEDGED AMT RECEIVED AMT RECEIVED UNITED KINGDOM (DFID) 9/22/2011 GBP 940,000 940,000 1,450,420 4/2/2013 GBP 2,330,000 330,000 498,597 12/2/2013 GBP 500,000 821,450 12/19/2013 GBP 500,000 816,850 GBP 3,270,000 2,270,000 3,587,317 SWITZERLAND (SECO) 2/28/2014 USD 3,710,000 3,710,000 3,710,000 USD 3,710,000 3,710,000 3,710,000 EUROPEAN UNION (EC DEVCO) 9/5/2013 EUR 1,000,000 500,000 659,650 EUR 1,000,000 500,000 659,650 TRUST FUND MANAGEMENT  29 ALLOCATIONS FOR CAEWDP ACTIVITIES In 2013, allocations to CAEWDP activities totaled a little over US$4 million. DISBURSEMENTS Based on the allocations detailed above, the approved activities undertook disbursements as agreed in the respective legal agreements and payment calendars, for a total of US$1.18 million in 2013, representing 29 percent of total allocations. 2. Statement of Funds Utili zati on Activity PID Disbursement Assessment of the Role of Glaciers in Stream Flow from the Pamir and Tien Shan Mountains P145760 37,157 CAEWDP Riparian dialogue P128898 209,719 Central Asia Climate Change Knowledge Forum P147435 89,194 Central Asia Energy Sector Coordinating Committee P123803 55,557 Central Asia Energy-Water Modeling P123804 314,750 Central Asia Knowledge Network P147959 - Central Asia Water Management P143874 199,458 ECA Deep Dive: Leveraging Turn Down the Heat III ESW for Europe And Central Asia P148173 8,617 Heating and Energy Efficiency Assessment for the Building Sector of the Kyrgyz Republic and Tajikistan P133058 26,232 Power supply options study (TAJ) P128881 151,880 Promoting Irrigation Efficiency in Central Asia P129682 - Social Impact Analysis of Water Supply and Sanitation Services in Central Asia P147341 12,995 Strengthening Irrigation Governance P147203 32,839 Tajikistan Energy Sector Dialogue P147022 46,688 Total 1,185,085 30 WORKING FOR ENERGY AND WATER SECURITY  |  PROGRESS REPORT 2013 AVAILABLE FUNDS AND FUNDING TARGET Prospects for 2014 and beyond are positive since, as of 31 December 2013, the MDTF had US$6.1 million available for allocation to new activities. This is the difference between funds granted funds received. The SECO contribution is expected early in 2014 allowing for more allocations and new activities to be initiated. While such prospects are good news, there is still a funding gap of US$30 million to reach the US$40 million target.