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Project Rationale and Linkage to Country/Regional Strategy |
The Kyrgyz Republic power sector is characterized by ageing assets, high commercial losses, below-cost tariffs, and poor performance of sector companies. The project addresses these issues by (i) continuing the phased rehabilitation of the 1,200-megawatt (MW) Toktogul HPP, which is a critical element of the national and regional power supply; (ii) improving asset management of the power sector and the Bishkek Heat Company; (iii) improving operational performance of EPP; and (iv) assisting the government in optimizing system development through the preparation of a 20-year power sector master plan, which includes the preparation of a due diligence study for the rehabilitation of Uch Kurgan HPP. The project complements ongoing sector developments in asset rehabilitation, system loss reduction, tariff policy, and sector governance.
The complete rehabilitation of Toktogul HPP is planned over a three-phase program. The first ongoing phase under ADB financing covers replacement of secondary electrical and mechanical equipment, which was identified as the top priority. The current project constitutes the second phase, and will rehabilitate two of the four turbine and generator units. The third phase, which is included in ADB's country operations business plan for processing in 2016, will rehabilitate the two remaining turbine and generator units. The third phase will also carry out repairs to civil structures as may be identified by an ongoing dam safety assessment study being financed by ADB. Each phase is a standalone project that is independent of future phases.
Ongoing ADB and donor projects are assisting the government address (i) loss reduction by establishment of an independent electricity settlement center and installation of wholesale and retail meters; (ii) policy reform through establishment of an independent regulator, introduction of a cost-recovery tariff, and implementation of an information program to inform the public of the need for tariff increases; (iii) sector-wide asset rehabilitation; and (iv) commercial strengthening of sector companies through improved governance and business processes.
The government has identified development of the energy sector as a major component of its development plan. The government's strategy is to (i) improve sector financial performance and corporate management, (ii) increase energy security by development of domestic resources, (iii) expand regional power exports, and (iv) phase in cost-recovery tariffs by 2017. This is consistent with the country partnership strategy of the Asian Development Bank (ADB), and is included in ADB's country operations business plan for Kyrgyz Republic for 2014 to 2016.
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