PSIA Energy Tajikistan, research funded by UNDP Bureau for Europe and CIS
UNDP presentation - Lilit Melikyan and Hasmik Ghukassyan, Almaty, 13 April 2011
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Energy sector in Tajikistan - Poverty and Social Impact Assessment (PSIA)
3. 1 million: An estimate of the number of
people who spend much of the winter
without electricity, heat
10%: Although nearly three quarters of the
population lives in rural areas, they only
account for 10% of electricity consumption
$2.2 billion: The financing gap associated
with Tajikistan’s programme for building
large hydropower plants, new electricity
transmission infrastructure
4. Vertically integrated state monopoly
Hydropower dominates generation
assets
Collections: From 54% (2004) to 72%
(2009)
Technical and commercial losses: From
19% (2004) to 14% (2009)
Household tariffs:
◦ Cross-subsidized by other users
◦ Committed to raise them
5. A public-private partnership in Gorno Badakhshan
◦ 25 year concession
◦ Shareholders: IFC and Aga Khan Development Foundation
Service: More than 90% of 29,000 households receive
electricity from Pamir Energy
Difficult start but strong progress
◦ Average supply per day: 23.5 hours
◦ Losses: down to 20% (from 39%)
Tariffs:
◦ More rapid growth than at Barqi Tojik
◦ Lifeline scheme funded by SECO (around $5million)
expiring end of 2011
Subsidy scheme: for up to 200 kWh per month in
winter and 50 kWh per month in summer, the
consumers pay 0.25 ¢/kWh
Source: Pamir Energy Information note
5
6. 2007 2009
72%
62%
53%
47%
17%
National poverty Extreme poverty 4 or more children
rate rate
Source: State Statistical Agency
6
7. 2007 2009 Average monthly
household 477 2007
99% electricity
consumption 2009
98% (kWh)
419
97%
390
96%
364
357
95%
327
94%
93%
Share of
households
using
electricity
Source: State Statistical Agency 7
8. 2007 2009
44%
40%
Half the population heats
with wood and dung . . .
32% With implications for
26% health, deforestation
17%
13% 12% 12%
10%
4%
Wood Electricity Dung Coal Other
Source: State Statistical Agency 8
9. Income-poverty elasticity estimate in 2010-
2012 PRSP suggests that higher GDP growth
could lift 120,000 people out of poverty
One megawatt of additional installed capacity
in small hydropower plants creates 40 “green
jobs” (UNDP-Tajikistan)
In other countries, extensive use of diesel
generators has been found to reduce GDP by
up to 40%
10. International affordability benchmarks
(share of household expenditures devoted to energy spending)
Electricity Heat Water
World Bank 10-15% 3-5%
WHO 10%
UNECE 15%
UK gov’t 10% 3%
US gov’t 6% 2.5%
10
11. 40% Average Average
55%
Poorest quintile Poorest quintile
34%
32%
26% 38%
35%
32%
National Dushanbe Rural Other urban
Share of household expenditures devoted to energy, 2009 data, maximal values.
11
Source: State Statistical Agency.
12. 63% Share of Official
household survey data
spending
devoted to imply that
59% food (2009)
food +
energy
56% expenditures
absorb 100%
(or more) of
many
household
National Poor Non-poor
budgets
Source: State Statistical Agency 12
13. Simulation of impact of raising household
electricity tariffs from $0.019 kWh (at present)
to $0.034/kWh
Assumptions:
◦ No reduction in volume of electricity consumed
◦ No change in other energy prices, quantities
◦ No change in real household incomes
Results: share of poor household expenditures
devoted to:
◦ Electricity could rise up to 8%
◦ Energy overall could rise up to 56%
Implications:
◦ Even more pressures on household budgets
◦ Can social policy mitigate this impact?
13
14. 27% Only 0.5% of
23% GDP devoted to
20% social protection
18%
in 2009
12%
Household
electricity and
gas subsidies
are included
Only half of this
share is received
by poorest
households
(1st, 2nd
quartiles)
Poverty rate only
reduced by 0.3%14
15. Share of electricity expenditures in total household expenditures, by poverty
Our simulation level, under different tariff scenarios
indicates that a Average Baseline Scenario Scenario Scenario 3
lifeline would lift monthly 2009 1 2011 2 Cost recovery
more people out electricity 7.5 tariff at Cost level (13.1
of severe poverty consum-
consum- dirham 9.9 recovery dirham/kWh)
dirham/kWh)
than other social ption per kWh dirham level with lifeline
assistance policies (kWh) per kWh 13.1 (100 kWh at
dirham 1.0313
◦ This is consistent
with other research per kWh dirham/kWh)
dirham/kWh)
results for small
countries with high All 357 2.0% 2.7% 3.6% 2.6%
poverty and households
connection rates
Poor 332 2.8% 3.9% 5.3% 3.7%
Under scenario 3
the extreme Very poor 339 3.6% 5.2% 7.2% 5.1%
poverty rate would
fall by 5% (from Not poor 373 1.7% 2.2% 2.9% 2.1%
20.2% 19.1%)
Assumptions:
a) household electricity consumption remains unchanged;
b) households consume the same amount of electricity under different tariffs;
c) household incomes remain unchanged; and
d) lifeline limits are applied to all households.
15
16. Indicator composition of Tajikistan’s proxy
World Bank/EC- means testing pilot
led reform: Characteristic Used for urban Used for rural
◦ Proxy-means households households
testing Household size * *
Gas oven *
◦ Improved Generator *
management Electric radiator * *
Refrigerator *
Two-year pilot Satellite dish * *
Khatlon oblast Car or truck * *
(until 12/2012) Computer
Household head’s employment sector
*
*
Annual Household Head’s Education *
allocations will Housing Roof Material
Num of Children under 15
ber
*
*
*
*
be 400 somoni Oblast * *
($91), paid out No of disabled of 1st category and
disabled children in the household1
*
quarterly Total Number of Variables 11 9
through Amonat Source: Robert van Leeuwen (Team leader), EU/ Mott M
November 2010.
acDonald , “Presentation of the PM system in Tajikistan” ,
T
bank 16
17. Other social assistance measures
Transitional scheme?
Connection subsidies (gas and
Combine: electricity)
◦ The present system
◦ A lifeline tariff regime Subsidies or vouchers to
◦ Some categorical targeting encourage the use of clean
A recent ADB study finds fuels (e.g., LPG)
that many features of Subsidies for energy efficient
Tajikistan’s existing household appliances,
assistance programme insulation, and other energy-
could be combined with saving technologies—possibly
such a scheme, thereby via vouchers—could be
facilitating its introduction considered
Potentially assistance with
firewood harvesting
17
18. Enabling legislation/regulations need to be
adopted for:
◦ The 2010 Renewable Energy law
◦ Energy efficiency legislation
National Heating strategy .
◦ Resolve uncertainties regarding”
Extent of rehabilitation or expansion of the central
heating system
Other alternatives:
Centralized: (electricity, piped gas)
Decentralized (LPG)
Financing for energy efficiency, decentralized
renewables:
◦ UNDP-proposed trust fund
◦ Credit lines through local banks to fund renewables
18
19. Improve energy poverty component of
living standard survey data
Conduct willingness-to-pay surveys
regarding possible tariff increases
Use computable general
equilibrium, macroeconomic models
(e.g., PAMS) to more fully model the
impact of tariff, other policy changes.
Apply social cost benefit analysis
19