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Financing Heating Sector Improvement Project ADB’s Experience

Financing Heating Sector Improvement Project ADB’s Experience. International Conference 20 - 21 October 2005, Baku Ashok Bhargava East and Central Asia Energy Division Asian Development Bank. Heating sector projects - an environmental improvement priority of ADB.

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Financing Heating Sector Improvement Project ADB’s Experience

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  1. Financing Heating Sector Improvement Project ADB’s Experience International Conference 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 lists • Three Pillars: pro-poor sustainable development, social development, and good governance; and • Five Thematic Priorities: private sector development, gender, environment, regional cooperation, and capacity development

  3. Rationale for Heating Sector Projects • 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 children • Environmental impacts : emissions from coal based system causes air pollution and gas based system leads to greenhouse effects.

  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. • Energy Conservation: Introduce heating control equipment, 100% metering and consumption based billing

  5. An integrated approach by ADB ….(ii) • Institutional Development: gradual transition from a “welfare” measure to commercial operation based on market principles; improve financial performance of heating companies • 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. An integrated approach by ADB ….(iii) • 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

  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) • ADB 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.

  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 Azerbaijanand 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. Overview of ADB Assistance… (ii) • 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

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

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

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