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Financing Heating Sector Improvement Project ADB’s Experience International Conference 20 - 21 October 2005, Baku 20 - 21 October 2005, Baku Ashok Bhargava.

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Presentation on theme: "Financing Heating Sector Improvement Project ADB’s Experience International Conference 20 - 21 October 2005, Baku 20 - 21 October 2005, Baku Ashok Bhargava."— Presentation transcript:

1 Financing Heating Sector Improvement Project ADB’s Experience International Conference 20 - 21 October 2005, Baku 20 - 21 October 2005, Baku Ashok Bhargava East and Central Asia Energy Division Asian Development Bank

2 Heating sector projects - an environmental improvement priority of ADB The 2004 Review of the Asian Development Bank’s Poverty Reduction Strategy listsThe 2004 Review of the Asian Development Bank’s Poverty Reduction Strategy lists Three Pillars: pro-poor sustainable development, social development, and good governance; andThree Pillars: pro-poor sustainable development, social development, and good governance; and Five Thematic Priorities: private sector development, gender, environment, regional cooperation, and capacity developmentFive Thematic Priorities: private sector development, gender, environment, regional cooperation, and capacity development

3 Dysfunctional and inadequate district heating and gas distribution is a priority Impact on poor : is disproportionately high – exposure to more pollutants and risk of accidents; particularly affecting women and childrenImpact on poor : is disproportionately high – exposure to more pollutants and risk of accidents; particularly affecting women and children Environmental impacts : emissions from coal based system causes air pollution and gas based system leads to greenhouse effects.Environmental impacts : emissions from coal based system causes air pollution and gas based system leads to greenhouse effects. Rationale for Heating Sector Projects

4 Financing Heating Sector Projects - An integrated approach by ADB Efficiency Improvement : promote more efficient technology - circulating fluidized bed boilers, Combined Heat and Power plants, consolidation of small in-efficient boilers.Efficiency Improvement : promote more efficient technology - circulating fluidized bed boilers, Combined Heat and Power plants, consolidation of small in-efficient boilers. Energy Conservation: Introduce heating control equipment, 100% metering and consumption based billingEnergy Conservation: Introduce heating control equipment, 100% metering and consumption based billing

5 An integrated approach by ADB ….(ii) 3.Institutional Development: gradual transition from a “welfare” measure to commercial operation based on market principles; improve financial performance of heating companies 4.Reforms: promote pricing and tariff reforms- encourage full cost recovery principles and transparency in tariff formulation, concurrently provide social safety net for vulnerable groups

6 5.Promote Private Sector Participation: Remove key barriers - lack of transparency and low tariffs, institutional uncertainties, public and utility perception of welfare, and transfer operations to private sector through IPO An integrated approach by ADB ….(iii)

7 ADB Heating Sector Assistance Heating is a necessity only in a small number of DMCs - central asian republics; PRC; Mongolia and, Republic of Korea (KOR)Heating is a necessity only in a small number of DMCs - central asian republics; PRC; Mongolia and, Republic of Korea (KOR) ADB lending amounts to about $700 millionADB lending amounts to about $700 million Most of the project have been rated as “successful”, and led to (i) significant efficiency gains; (ii) air quality improvement and, (iii) supported sector reforms. Most of the project have been rated as “successful”, and led to (i) significant efficiency gains; (ii) air quality improvement and, (iii) supported sector reforms.

8 ADB Energy Sector Strategy in Azerbaijan and Heating Energy will be a strategic priority in the program (2006 – 08) and the assistance will aim for balanced regional development through restoration, rehabilitation and modernization of energy infrastructure – power, gas and heating.

9 Heating Sector in Azerbaijan and ADB Assistance Restoration in regional area is a daunting task. ADB with more than 35 years of unique experience and strengths in the Asia Pacific region, and in-depth understanding of the sector can be a partner. ADB’s integrated approach successfully implemented in the region can be tailored to the specific conditions in Azerbaijan.

10 Overview of ADB Assistance … (i) Funds : ADB provides loan and equity investment to its DMCs for their economic and social development. It has provided public sector loans amounting to more than $110 billion across 39 DMCs of the region Technical Assistance Grants : Provides grant for the planning and implementation of development projects and programs, and for advisory services. TA grants of over $2 billion have been provided.

11 Private Sector Development and Finance :Private Sector Development and Finance : creates enabling conditions for private sector participation, promotes public-private partnerships, and provides loans, equity, cofinancing, and guarantees. Private sector operation of more than $4 billion Overview of ADB Assistance … (ii)

12 Thank You For Further Information aterway@adb.org mwestfall@adb.org abhargava@adb.org www.adb.org

13 International Conference International Conference 20 - 21 October 2005, Baku 20 - 21 October 2005, Baku Ashok Bhargava East and Central Asia Energy Division Asian Development Bank Financing Heating Sector Improvement Project ADB’s Experience


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