central asia energy-water development...

ANNUAL REPORT

2016

CENTRAL ASIA ENERGY-WATERDEVELOPMENT PROGRAM

CAEWDP

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© 2017 The World Bank

1818 H Street NW, Washington, DC 20433

Telephone: +1 (202) 473-1000

Internet: www.worldbank.org

The 2016 CAEWDP Team

Christina Leb, CAEWDP Program Manager

Husam Mohamed Beides, Energy Development Pillar Lead

Nagaraja Rao Harshadeep, Energy-Water Linkages Pillar Lead

Pieter Waalewijn, Water Productivity Pillar Lead

Abena Akuffo-Akoto, Partnership Specialist

Stella-Monica N. Mpande, Copy Editor

ACKNOWLEDGMENTS

CAEWDP is a regional knowledge and technical assistance partnership administered by the World Bank and funded by Switzerland, the United Kingdom,

the European Commission, and the United States of America.

The report benefitted from inputs from the teams in the Sustainable Development Network Vice Presidency (Kathrin Hofer, Takhmina Mukhamedova,

Samuel Kwesi Ewuah Oguah, Yuriy Myroshnychenko, Daryl Fields, Yadviga Viktorivna Semikolenova, Julia Komagaeva, Philippe Ambrosi, Pier Francesco

Mantovani, IJsbrand Harko de Jong, and Amal Talbi). Led by Christina Leb who provided oversight and guidance, the CAEWDP team drafted, coordinated

production of the report and provided technical review. Editorial review was provided by Meriem Gray (Communications Officer) and the Europe and

Central Asia External Communications team. Valuable comments were provided by Michael Haney, Sascha Djumena and Sameer Shukla.

DISCLAIMER

This work is a product of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not

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acceptance of such boundaries.

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CENTRAL ASIA ENERGY-WATERDEVELOPMENT PROGRAM

ANNUAL REPORT

2016

CAEWDP

1CAEWDP | Annual Report 2016

CONTENTS

ACRONYMS AND ABBREVIATIONS ..................................................................................................................... 2

EXECUTIVE SUMMARY ...................................................................................................................................... 5

1. ENERGY AND WATER RESOURCES DEVELOPMENT IN CENTRAL ASIA ........................................................... 11 1.1 THE CHALLENGE .................................................................................................................................. 12 1.2 THE CAEWDP APPROACH ...................................................................................................................... 14

2. PORTFOLIO AND PROGRAM ACTIVITY SUMMARY ........................................................................................ 15 2.1 PORTFOLIO SUMMARY .......................................................................................................................... 16 2.2 ENERGY DEVELOPMENT ........................................................................................................................ 16 2.3 ENERGY-WATER LINKAGES .................................................................................................................... 18 2.4 WATER PRODUCTIVITY PILLAR ............................................................................................................... 19

3. TRUST FUND MANAGEMENT AND FINANCIAL OVERVIEW .............................................................................. 21 3.1 PROGRAM ADMINISTRATION ................................................................................................................. 22 3.2 DONOR ENGAGEMENT ......................................................................................................................... 22 3.3 COMMUNICATIONS & OUTREACH .......................................................................................................... 22 3.4 FINANCIAL OVERVIEW ........................................................................................................................... 23

LOOKING FORWARD: CAEWDP 3.0 ................................................................................................................... 25

ANNEX I – PROGRAM ACTIVITY DESCRIPTIONS ................................................................................................ 29 ENERGY DEVELOPMENT PILLAR ................................................................................................................... 29 ANALYTICAL DEVELOPMENT ............................................................................................................... 2 9 INSTITUTIONAL STRENGTHENING ........................................................................................................ 31 INVESTMENT PREPARATION ................................................................................................................ 33 ENERGY-WATER LINKAGES PILLAR ............................................................................................................... 36 ANALYTICAL DEVELOPMENT ................................................................................................................ 36 INSTITUTIONAL STRENGTHENING ........................................................................................................ 37 INVESTMENT PREPARATION ................................................................................................................ 39 WATER PRODUCTIVITY PILLAR ..................................................................................................................... 41 ANALYTICAL DEVELOPMENT ................................................................................................................ 41 INVESTMENT PREPARATION ................................................................................................................ 42

ANNEX II – RESULTS FRAMEWORK, PROGRESS AND RESULTS CHAIN ............................................................... 43 RESULTS CHAIN 2016 ............................................................................................................................... 46

CAEWDP | Annual Report 20162

ACRONYMS AND ABBREVIATIONS

ADB Asia Development BankASBmm Aral Sea Basin Management ModelASBP-3 Third Aral Sea Basin PlanAralDIF Aral Sea Basin Dynamic Information Framework BEAM Basin Economic Allocation ModelBT Barki TajikCA Central AsiaCAEWDP Central Asia Energy-Water Development ProgramCAMP4CA Climate Adaptation & Mitigation Program for Central AsiaCAMP4ASB Climate Adaptation and Mitigation Program for the Aral Sea BasinCAMP4ASB SOP Climate Adaptation and Mitigation Program for the Aral Sea Basin Series of ProjectsCAREC Central Asia Regional Economic CooperationCASA-1000 1000 Electricity Transmission and Trade Project for Central Asia and South AsiaCAsKADe Central Asia Knowledge Alliance for DevelopmentCA-WARM Central Asia Water Resources ManagementCDKN Climate and Development Knowledge NetworkCER Center for Economic Research (Uzbekistan)CHP Combined Heat & PowerCMU Country Management UnitCoP Community of PracticeCPF Country Partnership FrameworkCSOs Civil Society OrganizationsC4D Collaboration for DevelopmentDAC Donor Advisory CommitteeDCC Energy Donor Coordination CommitteeDFID UK Department for International Development DG DEVCO Directorate-General for International Cooperation & DevelopmentDH District HeatingEAP Energy Action PlanEC European CommissionECA Europe and Central AsiaEC-IFAS Executive Committee of the International Fund for Saving the Aral SeaESA European Space AgencyESCC Energy Sector Coordinating CommitteeESW Economic Sector WorkEU European UnionEWP Energy Work PlanGAMS General Algebraic Modeling SystemGDP Gross Domestic ProductGEF Global Environment FacilityGIZ German Society for International CooperationGoK Government of Kazakhstan


GoT Government of TajikistanGP Global PracticeGPSURR Social, Urban, Rural and Resilience Global PracticeHPP Hydropower PlantICSD Commission on Sustainable DevelopmentICT Information and Communication TechnologyICWC Interstate Commission on Water CoordinationIDA International Development AssociationIGC Intergovernmental CouncilIMF International Monetary FundIsDB Islamic Development BankITS Information Technology ServicesIWRM Integrated Water Resources ManagementJICA Japan International Cooperation AgencyJWG Joint Working GroupM&E Monitoring and EvaluationMDTF Multi-Donor Trust FundMOOC Massive Online Open CourseMTPP Medium-Term Priority ProjectsNASA National Aeronautics and Space AdministrationNOAA National Oceanic and Atmospheric AdministrationPIU Project Implementation UnitPPA Power Purchase AgreementQER Quality Enhancement ReviewSDC Swiss Agency for Development and CooperationSDG Sustainable Development GoalsSECO State Secretariat for Economic Affairs (Switzerland)SURR Social, Urban, Rural and ResilienceTA Technical AssistanceTF Trust FundToR Terms of ReferenceTTL Task Team LeaderTWG Central Asia Technical Working Group on Climate ChangeUNDP United Nations Development ProgramUNECE United Nations Economic Commission for EuropeUNFCCC United Nations Framework Convention on Climate ChangeUNRCCA United Nations Regional Centre for Preventive Diplomacy for Central AsiaUSAID United States Agency for International DevelopmentUSGS United States Geological SurveyWB World BankWPO Web Program OfficeWSS Water Sanitation and SupplyWUA Water User Association

EXECUTIVE SUMMARY


This report presents the highlights and progress of the Central Asia Water and Energy Development Program (CAEWDP). The reporting period for this Annual Report is the calendar year from January to December 2016.

THE PROGRAM

The Central Asia Energy and Water Development Program was initiated in 2009 to support the Central Asia countries (Kazakhstan, the Kyrgyz Republic, Tajikistan, Turkmenistan and Uzbekistan) to build energy and water security through regional cooperation. CAEWDP aims at strengthening the enabling environment through the generation of knowledge (data and diagnostic analyses), strengthening of institutions (capacity building), dialogue processes and investments that promote energy and water security and help realize the benefits of regional cooperation to advance sustainable development and climate resilience, goals that are inherent to energy and water security. The long-term vision of the program is to catalyze economic growth and livelihood security within Central Asia through regional cooperation and integrated energy and water development initiatives.

CAEWDP is implemented by the World Bank through a multi-donor trust fund financed by the State Secretariat for Economic Affairs of Switzerland (SECO), the Department for International Development of the United Kingdom (DFID), the United States Agency for International Development (USAID) and the European Commission (EC).

PROGRAM ACHIEVEMENTS TO DATE

The support provided under CAEWDP to date has helped catalyze important regional investments, such as the Central Asia Hydromet Modernization Project (CAHMP), the Climate Adaptation and Mitigation for the Aral Sea Basin Project (CAMP4ASB) and the Central Asia South Asia Electricity Transmission and Trade Project (CASA-1000). Analytical work at national level has led to policy reform and institutional strengthening, such as in Tajikistan’s energy sector, and underpins ongoing water and energy sector reform processes in several other countries. Dialogue processes facilitated by CAEWDP provided opportunities for transparency and open exchange of opinions among beneficiary countries and development partners; furthermore, it built capacity among participating countries to take on the leadership role of similar engagements in the future.

HIGHLIGHTS OF CAEWDP SUPPORTED ACTIVITIES IN 2016

In 2016, the Central Asia Energy-Water Development Program (CAEWDP) continued to support efforts to deepen regional cooperation in energy and water and to advocate sustainable solutions to development challenges in these sectors that are central to the economies of the Central Asian countries. The program continued to strengthen the capacity of regional organizations such as ESCC and EC-IFAS, as well as of national bodies to convene dialogues on transboundary issues (e.g. regional power trade through the provision of experts, training of technical professionals, and production of analytical materials). ESCC convened two meetings among representatives from the five countries, in which the cost-benefit analysis of intra-regional power trade was shared and attracted significant interest for further consideration among the technical experts from the five countries.

CAEWDP continued to play a role in raising awareness and supporting capacity-building activities to promote regional water and energy security. In August 2016, as part of the High Level Symposium on SDG 6 and Targets: Ensuring that No One is Left Behind in Access to Water and Sanitation held in Dushanbe, the program organized a roundtable to raise awareness on effectively tested methods to increasing water use efficiency. With population growth and climate change, this issue is becoming increasingly important as the annual water availability per person is expected to fall by around 700 m3 over the next fifteen years and the region is expected to suffer water stress.

The Water Futures Forum & Expo in September 2016 in Almaty, Kazakhstan brought together over 280 policy makers and technical experts from government, academia, the private sector, as well as CSOs, to discuss the latest innovations in information management and water information system design. The participants included the Deputy Ministers of Water from three Central Asia countries including Afghanistan and prompted a request further support to rehabilitate and upgrade water information systems to enhance the regional knowledge and data base.

National Cross Sectoral Working groups in Kazakhstan and the Kyrgyz Republic convened two meetings among experts and students, as part of research and discussions on regional geo-hazard risks. Two key results were achieved by the joint working groups: (1) an official appeal was sent to the Kyrgyz Republic


Government, justifying the need to implement a complex set of protection measures that will reduce the risk from mudflows; and based on the recommendations of their national working group, the Government of Kazakhstan took measures to review the risks to and status of the Shardarinskaya Dam.

The continued work with Tajikistan and Kyrgyz Republic on addressing winter energy challenges led to the identification of new investment which are currently under preparation. Further highlights and achievements that took place in 2016 under the three program pillars are described below.

ENERGY DEVELOPMENT PILLAR

The Central Asian countries are endowed with significant energy-related natural resources but their distribution is highly skewed geographically, with large fossil resources in the downstream countries and hydropower generation potential in the upstream countries. There is significant potential for electricity trade within the region, however it is underutilized. Benefits lost to the countries of Central Asia due to limited regional power trade were estimated at about US$6.4 billion during 2010-2014. Central Asia countries’ desire to improve security of energy supply through diversification of energy resources including scaling up development of renewable wind and solar (in addition to hydro) resources would also boost motivation for improving interregional connectivity and cooperation in development and harmonization of enabling environments for deployment of renewables.

The objective of the Energy Development Pillar is to promote and analyze high-value energy investments that focus on energy security, efficiency, trade and accountability, infrastructure planning and institutional development. The six completed activities focused on improving the performance and building capacity of power markets, climate resilience in the region, and renewable energy at the national level. Outcomes from these technical assistance activities contributed to increased awareness about needs for sector reform, improved designs of energy plans, and strengthened coordination and collaboration. Investment Preparation outcomes informed the detailed design of the Heat Supply Improvement Project for Kyrgyz Republic, which aims at improving the efficiency and reliability of district heating (DH) and increasing access to the system in the Kyrgyz Republic. Analytical work demonstrated the benefits that can be achieved by Central Asian countries through energy trade; it provided relevant data and

recommendations on how to improve the regulatory environment, make progress with market reforms and attract private investment. The activities provided a platform to engage in dialogue at the national level on: energy subsidy policies; diversification of the energy mix for integrated power generation and transmission planning, and climate resilience through the development of coordinated adaptation policies.

In addition to the completed grants, ongoing grants contribute to both national and regional energy security. These are mainly investment preparation grants. Activities aim to address national winter energy and heating challenges in the Kyrgyz Republic and Tajikistan and strengthen regional energy trade through CASA-1000. Notable achievements in 2016 for ongoing activities included awareness raising on solutions for energy savings and the preparation and discussion on large energy infrastructure projects.

WATER PRODUCTIVITY PILLAR

Water availability and use are highly variable among the countries. The expansive semi-arid steppe receives little to no rainfall, while the mountainous areas in the South-East receive plenty. Given low rainfall, particularly in the downstream countries, rural, urban and industrial development remains particularly dependent on adequate water availability from the rivers which connect the countries, in particular the Syr Darya and the Amu Darya and their tributaries.

The Water Productivity Pillar aims to enhance the productive and efficient use of these shared water resources in the various water related sectors though capacity building, institutional strengthening and investment planning. In 2016, one activity was completed under this pillar. The study on irrigation efficiency in Tajikistan provides analyses of the measures and potential investments to improve water and energy productivity in agriculture. The study was presented to the government stakeholders and received positive feedback. It currently rests under consideration with the Government for decision on follow-up action.

A further study, which is still ongoing, focuses on improving diagnostics on water supply and services management systems in Central Asia. Preliminary results suggest Uzbekistan could gain an annual estimate of US$200 million by targeting social support through separate systems to poor households, while introducing cost-based water supply and sanitation tariffs.


ENERGY-WATER LINKAGES PILLAR

How well the countries in the region manage their resources endowments will play a large role in determining their capacity to achieve water and energy security. Over the next few decades, projected changes in demographics and wealth, coupled with a changing climate and more uncertain water endowments, will put Central Asia’s water-intensive economy at risk. Yet, the region has the potential to benefit from its strong comparative advantage given its energy and water resources driving agriculture, power generation and industrial and mining operations. The requirements for realizing all these benefits are twofold: there needs to be a focus on establishing functioning energy and water sectors at the national level; and coordination among the riparian states to be strengthened to address the energy-food-water nexus and to identify strategies that maximize benefits to individual countries while reducing the risks and negative consequences to all.

The Energy-Water Linkages Pilar aims to improve the understanding of these linkages between energy and water at national and regional level and to explore the future impact of regional climate change. The focus of the four grants which were completed in 2016 was capacity building to increase the awareness of new tools and technologies, access to knowledge and knowledge exchange to facilitate dialogue. Completed activities included the Capacity Strengthening for Integrated Water Resource Management (IWRM) Modeling which developed a model curriculum to train on modeling activities. The Central Asia Water and Energy Portal contributed to making publicly available data accessible through user-friendly apps that can be retrieved from anywhere, simply on a hand-held device. The legal analysis of the transboundary water management frameworks in Central Asia and the study on institutional options for water development in the upper Amu Darya basin provided the background information that informed riparian discussions on complex cross-border investments.

The ongoing grant activities in the Energy-Water Linkages pillar are contributing to regional knowledge, information and political collaborations. Activities range from dialogue, knowledge networks, computer modeling, and

facilitating meetings on topics of regional concern. A number of these activities are aimed at strengthening institutional capacities and preparing the investment environment for investments in water information systems that would provide the backbone for integrated, cross-sectoral management of the region’s water resources.

PROGRAM ADMINISTRATION AND DISBURSEMENTS

The multi-donor trust fund which provides the financial resources for the program was extended by one more year, until December 2017, to enable the completion of key program activities and for the preparation of a new funding phase that would support the program beyond 2017.

CAEWDP disbursements increased significantly in 2016 compared with 2015. In 2016, CAEWDP Multi-Donor Trust Fund (MDTF) supported 41 grants that totaled US$10.3 million—an increase from 41 grants that totaled US$8.9million in 2015. An additional US$1.4 million was allocated to existing grants. Based on the allocations, the approved activities undertook disbursements in 2016, leading to cumulative disbursements of US$8.9 million. These disbursements represent 86 percent of total allocations—an increase from 69 percent in 2015 that was largely due to the maturation of the activities that began in 2014, accelerated pace and entered the completion phase. Among program pillars, Energy-Water Linkages accounted for about 45 percent of program grants, while Energy Development accounted for 32 percent. The remaining grants funded Water Productivity (9 percent) and Strategic Program Management, which includes outreach and dissemination activities and preparation of the next financing phase (14 percent).

The CAEWDP team underwent a leadership transition at the end of 2015 and at the end of 2016. Christina Leb formally assumed the role of Program Manager from acting Program Manager, Ijsbrand de Jong, leading a core team of three Pillar Leads and a Partnership Specialist. The new Pillar Leads are Husam Beides (Energy), Nagaraja Rao Harshadeep (Energy-Water Linkages) and Pieter Waalewijn (Water).


LOOKING FORWARD

CAEWDP will continue to provide support at the national and regional level to promote energy and water security in Central Asia. Moving forward, CAEWDP will shift from establishing conditions for cooperation to strengthening confidence and institutional frameworks to facilitate the realization of the benefits of cooperation. This would be accomplished through: (i) greater focus on investments to strengthen energy and water security at the regional level, while (ii) building capacity for decision support and dialogue from the national to the regional level.

Efforts are underway to establish and shape a third funding phase of CAEWDP. Strong support exists for the continuation of the CAEWDP approach which will also build on lessons learned. The concept for the third funding phase was presented to the Donor Advisory Committee (DAC) for consultation in December 2016 and is in the process of being finalized and refined with the feedback received from the development partners. It is planned that the third funding phase will be operational end 2017 or early 2018.

ENERGY AND WATER RESOURCES DEVELOPMENT IN CENTRAL ASIA 1

Chapter


1.1 THE CHALLENGE

CAEWDP operates across five Central Asian countries with a total population of 64.5 million. These countries are at various stages of development. They comprise two International Development Association (IDA1)-only recipients (the Kyrgyz Republic and Tajikistan), one blend lower middle-income country (Uzbekistan) and two upper middle-income countries (Kazakhstan and Turkmenistan). At the same time, these countries are endowed with a wealth of energy and water resources. Similar to the respective development paths, resource distribution across countries is highly uneven. Water availability and use are highly variable among the countries with the three semi-arid downstream countries dependent on the water generated in their mountainous upstream neighbors. The countries rely heavily on a mix of fossil fuel and hydropower resources, which are also unevenly distributed among them, with major implications for intra-regional coordination and cooperation.

The countries of Central Asia share water and energy resource interdependencies and hence, rely on cooperation to address joint challenges. Many canal systems and reservoirs straddle the national borders2; at the same time, some infrastructure assets that used to serve regional needs during Soviet times are now located in, and managed by one country among six. The national borders established after independence pose significant challenges to optimizing asset operations,

1 The International Development Association (IDA) is the part of the World Bank that helps the world’s poorest countries.2 For example, the irrigation systems in the fertile Ferghana Valley crisscross the national borders of the Kyrgyz Republic, Uzbekistan and Tajikistan.

The Tuyamuyun reservoir which is the last large reservoir on the Amu Darya able to regulate flows, is located in Turkmenistan while its dam is on Uzbek territory. Farkhad dam is located in Tajikistan, while its hydropower station lies in Uzbekistan. Similarly, many large pumping stations that supply the irrigation areas in Uzbekistan lie on Turkmen territory.

as well to financing operation and maintenance costs. Decision-making on resource allocation and management needs to be based on detailed, reliable and agreed data sets; however, data collection, management and sharing systems have deteriorated and are not fully reliable. It requires some coordination among the riparian states and their agreement on the effective sharing of energy and water resources to address the energy-food-water nexus, as well as to identify strategies that maximize benefits to individual countries, while reducing the risks and negative consequences to all. Existing regional institutions can play a useful role in harnessing the regions’ and countries’ comparative resource advantages. While institutional capacity and cost recovery are comparatively weak, the region has the potential to benefit from its strong comparative advantage, given its energy and water resources driving the region’s agriculture, power generation and industrial and mining operations. The changing regional political environment may offer new opportunities for engagement.

Trade between Central Asian countries has grown in recent years and some countries in, and around the region maintain efforts to increase economic integration, including through the Eurasian Economic Union and through the Central Asian Regional Economic Cooperation (CAREC). Changing circumstances in the relations between countries may pave the way for new opportunities. Subtle shifts in entrenched positions (including on transboundary water issues, data and

TABLE 1 — KEY COUNTRY INDICATORS(1)Surface area Population Population

Growth (annual)GDP GDP

growth 2009-2014

GDP growth2015

GNI percapita(2)

(km2 in 000s) (million) (%) ($ billions) (%) (%) (US$)

Kazakhstan 2,724.9 17.5 1.5 184.4 6.0 1.2 11,580

The Kyrgyz Republic

199.9 5.9 2.1 6.6 4.2 3.5 1,170

Tajikistan 142.5 8.4 2.2 7.9 6.5 6.0 1,240

Turkmenistan 488.1 5.3 1.5 37.3 11.3 6.5 7,510

Uzbekistan 447.4 31.3 1.7 66.7 8.2 8.0 2,150

(1) All data are from the 2016 World Bank Development Indicators (2) GNI per capita is based on World Bank Atlas (2015)


information accessibility) signal potential willingness to focus on future opportunities rather than on the difficulties of the past. New opportunities for regional cooperation are evident through: an increased interest of neighboring countries—particularly China—to open new trade corridors, as well as an ongoing political transition in Uzbekistan. There is a noticeable trend of increasing neighborly in engagement among the countries. Tajikistan and Uzbekistan re-engaged in bilateral dialogue in 2016 resulting in the opening of commercial air travel between the two countries for the first time in 25 years.3 Turkmenistan, which has assumed chairmanship of EC-IFAS, has equally strengthened its commitment to regional dialogue on integrated water and energy management with other countries in the region.

Some key events in 2016 affected the region’s political and economic environment:

• Parliamentary elections were held in Kazakhstan in March 2016, five months before the term of the lower house, the Mazhilis, would have expired. The economic crises caused by low oil prices was one of the reasons cited for early elections.

• In May, heavy rains caused floods and mudflows affecting thousands of people in Tajikistan and causing damage to bridges, roads, and other infrastructure.

• Changes to the land code of Kazakhstan that make unused land available for purchase by Kazakh citizens or joint ventures or for rent by foreigners for up to 25 years via land auctions went into effect on July 1, 2016.

• President Emomali Rahmon of Tajikistan officially launched the construction of Rogun Dam in late October 2016.

• In the fall, Turkmenistan assumed chairmanship of EC-IFAS, taking over from Uzbekistan.

• In a constitutional referendum held in December, the Kyrgyz electorate voted in favor of increased powers for the government.

3 “Tajikistan-Uzbekistan relations discussed in Tashkent” Read more: https://news.tj/en/news/tajikistan/politics/20170206/2363524 http://carnegieendowment.org/2016/06/23/shanghai-cooperation-organization-central-asia-and-united-states-pub-63907

• In Uzbekistan, Shavakat Mirziyoyev was elected President in December 2016, after the passing of former President Karimov. Mirziyoyev’s presidency is characterized by an approach of regional re-engagement with the country’s Central Asia neighbors.

• 2016 also marked the year of preparing the inclusion of India and Pakistan to the SCO. The two countries became full members during the Astana Summit in June 2107. Whereas new partners suggest benefits of a larger Eurasian partnership, it remains to be seen if such growth will strengthen or weaken the organization and its functionality.4

Though there are successes in the transition process of the countries, the countries remain vulnerable to external shocks. Climate change is expected to negatively impact water availability, leading to stress in the economy and society at large; it is expected to increase pressure on regional hydrological systems. The five Central Asian countries are among the most vulnerable to climate change in comparison to other regions. Average annual temperatures across the region have increased since the mid-20th century by 0.5°C in the south to 1.6°C in the north; impacts noticeably range from melting glaciers in upland areas to droughts and floods in the lowlands. Glaciers have lost one-third of their volume since the 1900s in upland areas and weather-related disasters are estimated to cause economic losses from 0.4 to 1.3 percent of GDP per annum for Tajikistan, Turkmenistan, and the Kyrgyz Republic. In 2016, for instance, the Kyrgyz Republic sustained approximately US$1.1 million in damages, due to mudflows in the southern region.

Building resilience to the mounting impacts of climate change is a priority for poverty reduction and shared prosperity in Central Asia. All Central Asian client countries (except Uzbekistan) have Intended Nationally Determined Contributions (INDC), which were developed in accordance with decisions of the Conference of the Parties (COP) to the UN Framework Convention on Climate Change (UNFCCC), and presented for signature during COP 21. The INDCs became effective and progress was monitored towards targets in 2016.

https://news.tj/en/news/tajikistan/politics/20170206/236352

http://carnegieendowment.org/2016/06/23/shanghai-cooperation-organization-central-asia-and-united-states-pub-63907


1.2 THE CAEWDP APPROACH

CAEWDP aims to build energy and water security at the national level, enhance cooperation and promote integrated energy and water initiatives at the regional level. The Government of Switzerland and the World Bank established CAEWDP as a trust fund in 2010. DFID, the EC and USAID eventually joined the program as contributing development partners. The program supports the Central Asian countries (Kazakhstan, the Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan) and the World Bank’s twin goals in reducing poverty and ensuring shared prosperity through long-term economic growth and sustainability.

CAEWDP’s long-term goals are to eliminate winter energy shortages, enhance water productivity and increase electricity trade within and outside the region. Hence, the program is structured around three pillars to reflect these goals. CAEWDP’s role in strengthening regional cooperation and leveraging the energy-water nexus is particularly significant, given the geographic and institutional complexities of Central Asia’s energy and water linkages. The three pillars of the program are:

1. Energy Development: This pillar supports policy and investment decisions for the highest value mix of energy resources at the regional levels—both within Central Asia and at the broader regional level. It promotes and studies high-value energy investments that focus on energy security, energy efficiency, trade and accountability, infrastructure planning and institutional development. Additional activities also promote better coordination among the development partners working in this region;

2. Energy-Water Linkages: This pillar seeks to improve the understanding of the interconnections between energy and water at the national and regional levels by: exploring the future impact of climate change; facilitating regional dialogue regarding cooperative management of water and energy, and strengthening the information base; and

3. Water Productivity: This pillar addresses infrastructure and management opportunities to increase the productivity and efficiency of water use in both agriculture and energy sectors.

Each of the program pillars aims to engage in activities based on three key outcomes. These are: (i) Analytical Development (Technical Assistance), or the upgrade of the knowledge foundation and establishment of sound energy-water diagnostics and analytical tools; (ii) Institutional Strengthening, or the shaping of strategies and strengthening of national and regional institutions and dialogue, and (iii) Investment Preparation, or the identification of priority infrastructure investments. All three outcomes are closely intertwined. Analytical development provides the technical foundations and “know-how”; institutional strengthening builds the capacity of agents, whereas investment preparation helps to identify investment options. The combination of these three outcomes provides a comprehensive pathway to promote regional cooperation.

The countries need to overcome the constraints of their landlocked situation and take advantage of their “Central” Asian location to integrate with the global economy. Regional interconnectedness based on strong national sectors and institutions will be one way to achieve continued economic growth and livelihood security.

PORTFOLIO AND PROGRAM ACTIVITY SUMMARY 2

Chapter


2.1 PORTFOLIO SUMMARY

CAEWDP contributes to the World Bank’s portfolio in Water, Energy, and the ECA region through direct contributions to advisory services and analytical activities. Over the course of the calendar year 2016, the number of completed grants was the same as that in 2015, with a significant decrease in ongoing grants for the first time in the program’s history. Figure 2 indicates that CAEWDP included three new grants, 10 completed activities and 12 ongoing grants in 2016.

During 2016 the Energy Development pillar constituted the majority of ongoing grants. In 2016 equal funding was provided to the Energy-Water Linkages and Energy Development pillars, with no new allocated to the Water Productivity pillar. The Energy Development pillar accounted for a slight majority of all program grants (41 percent).

Of the three program outcomes, investment preparation received the greatest funding allocation during 2016. Analytical Development constituted 16 percent of the total program allocation, Institutional Strengthening, 23 percent and Investment Preparation, 53 percent. A summary of the 2016 portfolio of program grants is provided in the next section for each of the three pillars. In addition to the summary of each grant, the next section also presents each of their contributions to the broader program

goals of achieving regional energy and water security and regional cooperation. More comprehensive project descriptions and updates, as provided by Task Team Leaders (TTLs), are included in Annex I.

2.2 ENERGY DEVELOPMENT

Many of the current energy challenges relate to the region’s Soviet legacy, compounded by the different development objectives of the individual states as they move forward. The current generation capacity of the Kyrgyz Republic and Tajikistan is linked to the agreed regime of summer water releases to downstream irrigation. The winter energy shortages are estimated around 25 percent, yet the summer power capacity surplus (driven by the releases for irrigation) is left unused with high levels of spillage at hydroelectric plants. With aging infrastructure, weak institutional capacity and low productivity arising from subsidy policies and suboptimal tariff structures, these hydropower facilities and the national electricity sectors are inefficient and do not reach their economic potential. Reforms are needed to increase institutional capacity for better planning, management and energy use efficiency.

CAEWDP’s Energy Development pillar aims to analyze and support high-value investments focused on winter energy security, energy efficiency, enhancing trade and

FIGURE 1 — NUMBER OF CAEWDP GRANT ACTIVITIES (2013-16)

0

5

10

15

20

25

OngoingCompleted New

2016201520142013


accountability, infrastructure planning and institutional development. 2016 program grants—both ongoing and completed—reflected those objectives.

During 2016, six grant activities were completed in the Energy Development pillar portfolio. Completed projects included two analytical development grants, two investment preparation grants and two institutional strengthening grants. The six completed grants sought to improve the performance and building capacity of power markets, regional climate resilience and renewable energy at the national level, illustrated below:

Institutional Strengthening:

• Enhancing Regional Power Trade in Central Asia demonstrated the unrealized benefits for Central Asian countries ranging from US$1.5 to US$6.4 billion and recommended short, medium and long-term steps to implement efficient power trade. The results of the study were presented at two Central Asia Regional Economic Cooperation Program–Energy Sector Coordinating Committee (ESCC) meetings in 2016 and delivered to four Central Asian governments to increase their awareness and stimulate public dialogue.

• Uzbekistan Planning Study for Power Sector increased the institutional capacity in the Governments of Uzbekistan (GoU) and Uzbekenergo (UE) for integrated power generation and transmission planning with a diverse energy mix.

Investment Preparation:

• The Kyrgyz Republic Heating Efficiency Improvement grant provided technical assistance support to inform the detailed design of the resulting investment lending operation. The grant recommendations outlined clear priority investments on how to improve the efficiency and reliability of district heating (DH), which—as implemented—would help to reduce the need for electric back-up heating and potentially connect additional customers to the Bishkek DH system.

• Uzbekistan: Impact of Energy Subsidies–Way Forward provided a diagnostic analysis of the energy subsidies and an initial social impact assessment of the current energy service delivery conditions in Uzbekistan. This permitted the Bank to engage the GoU in dialogue on the consistency of existing energy policies in alignment with the country’s development objectives.

Analytical Development:

• The Energy Vulnerability to Climate Change grant helped beneficiary countries in Central Asia to understand climate change-induced energy sector vulnerabilities by conducting national workshops, strengthening bilateral engagements and developing coordinated adaptation policies to build resilience.

• The Kazakhstan Renewable Energy Integration in Power Market and System provided a comprehensive in-depth sector assessment. The recommendations provided the Government of Kazakhstan (GoK) with data on how to improve the regulatory environment, make progress with market reforms and attract private investments.

Outcomes from these technical assistance activities contributed to increased sector awareness, improved designs of energy plans, as well as strengthened coordination and collaboration. The Kyrgyz Republic Heating Efficiency Improvement grant led to the development of an implementation plan recommending reform measures to improve the efficiency and reliability of the district heating (DH) system in Bishkek and mitigate the winter energy shortages. The proposed investment plan was agreed upon, and adopted by the district heating company and the Government. It informed the design of a new IDA-financed investment lending operation in the sector and served as the basis from which to coordinate investments with other development partners investing in the DH sector in Bishkek.

The tool used for the power system planning in Uzbekistan was later transferred to the client. This enabled Uzbekenergo to evaluate the impact of policy choices and electricity imports on system costs. Continued references to the tool demonstrate a deepened understanding of underlying issues in technology choice for power system expansion and strengthened institutional capacity at Uzbekenergo, the holding company that oversees the energy sector for integrated power generation and transmission planning.

The ongoing grant activities in the Energy Development pillar are contributing to both the national and regional energy security and are comprised primarily of investment preparation grants. Activities range from addressing local winter energy and heating challenges in upstream countries (the Kyrgyz Republic and Tajikistan) to regional energy trade initiatives, such as CASA-1000, and support to other regional platforms such as the


CAREC ESCC. The grants also promote better integration of climate change concerns and responsibilities. The engagement with CAREC ESCC has sparked interest among the group to expand the geographic scope of the Study on Regional Power Trade in Central Asia to include other neighboring countries and sub-regions. As political support for intra-regional energy cooperation continues to grow, the CAREC ESCC remains a useful platform to facilitate more meaningful dialogue on these issues.

2.3 ENERGY-WATER LINKAGES

In Central Asia, the sectors most at risk from climate change are agriculture, energy, and water resources. Climate change challenges and increasing water scarcity highlight the interconnectedness between these various sectors. In agriculture, which is critical for the largely rural livelihoods in the region, cropping system productivity (including in both rainfed and irrigated systems) is sensitive to variations in: rainfall; hydrologic flows modulated by snow accumulation and melt; system storage, as well as evapotranspiration. Energy systems are sensitive to hydrologic changes (e.g., in the case of hydropower), demand changes (e.g., in warmer areas in summer), the impact of extreme events on transmission systems, as well as mitigation actions (e.g., in the case of fossil fuels). Key areas to address climate vulnerability include: clean energy and energy efficiency; strengthening disaster-risk management, as well as improving water and other natural resources management.

CAEWDP’s Energy-Water Linkages pillar seeks to improve the understanding of the connections between energy and water at the national and regional levels, through exploring the future impact of climate change, facilitating regional dialogue, and strengthening the information base. 2016 program grants—both ongoing and completed—reflected those objectives. The completed grants focused on decision support and capacity building to increase awareness of new tools and technologies, and promote knowledge exchange to facilitate dialogue. The ongoing grants contribute towards accumulated regional knowledge, information and political collaborations. Most ongoing grants are associated with investment preparations.

During 2016, four grants were completed in the Energy-Water Linkages pillar portfolio. Completed grants included one analytical development grant and three institutional strengthening grants.Three analytical grants were recently completed. The

Legal Analysis of the Transboundary Water Management Frameworks in Central Asia study grant provided an overview of the legal frameworks and institutions that were charged with managing transboundary water resources. This served to increase the legal acumen of regional practitioners. The Exploration of Technical and institutional Options for Water Resources Development in the Vakhsh Cascade study grant analyzed the benefits of cooperation within, and outside the region, as global good practice examples. The Central Asia Water and Energy Portal grant sought to improve public domain data and scale up access to strengthen evidence-based dialogue on transboundary waters among beneficiaries. This would be accomplished by laying the knowledge foundation for the implementation of regional projects in integrated water resource management.

Additionally, one institutional strengthening grant was completed, which strengthened knowledge foundations among key stakeholders. The regional Capacity Strengthening for the IWRM Modeling grant provided decision support by raising awareness of new modeling technologies among expert practitioners in integrated water resource management workshops and through model trainings.

The ongoing grants in the Energy-Water Linkages pillar are contributing to regional dialogue, information sharing and national collaborations. Most ongoing grants are associated with investment preparation. Three of the four ongoing grants are focused on investment preparation. Grants range from knowledge networks and data access to facilitating meetings on regional climate and transboundary water concerns. Many of the grant activities are aimed at preparing the investment environment for regional projects and increasing capacities on complex regional issues related to energy and water security. The Central Asia Water Resources Management (CA-WARM) Phase-I Project, Technical Assistance for Developing Water Information Systems in Central Asia, Central Asia Water, and Climate Adaptation and Mitigation Program for Aral Sea Basin Series of Projects II grants were investment-focused and implementation slowed down in 2016, as more national ownership was sought.

• While grant activities slowed down in September 2016, the Technical Assistance for Developing Water Information Systems in Central Asia grant supported the Water Futures Forum & Expo in Almaty, Kazakhstan. Over 280 policy and technical experts from government, academia, the private sector, as well as CSOs, participated in this international


event. Specialists from all five Central Asia countries attended and presented papers at the Central Asia Water Future Knowledge Forum and Exposition to learn about innovations in information management. Additionally, Vice Ministers of water from three Central Asia countries plus Afghanistan participated and lessons for the CA-WARM project were identified.

• Climate Adaptation and Mitigation Program for Aral Sea Basin Series of Projects II grant held a meeting of CAMP4ASB Regional and National Coordination Agencies in Almaty, Kazakhstan on January 26-27, 2016, with the objectives of: (i) reviewing steps and timeline towards Program effectiveness; (ii) strengthening implementation readiness, and (iii) continuing regional experience sharing on climate action and knowledge management.

• The Central Asia Knowledge Network grant—although not focused on investment preparation—contributed to CA-WARM and knowledge products. Some notable 2016 outputs included the e-journal, mobile apps, and several workshops that brought experts and professions together. The grant also supported a workshop in June 2016 in Almaty, Kazakhstan to discuss and highlight the results of the Knowledge Networks and Communities of Practice for Water-Energy and Climate Change Management Program.

Outcomes of this pillar include access to regional and global water-energy related data in a user-friendly way through the Central Asia Knowledge Portal; institutional strengthening and strengthening of technical dialogue, which in the case of the Kyrgyz and Kazakh national working groups on geo-hazard risks led to direct government action. The Water Futures Forum & Expo prompted a formal government request for support to install technical innovations and for rehabilitation and upgrade of national information systems. The preparation work which has been carried out under CA-WaRM to identify national investment requirements to modernize water information systems, will be carried forward into the next funding phase to pursue investments in this area. Data availability is the sine qua non for effective water resources management with cross-sectoral benefits in the region.

5 If the Central Asian population continues to grow by 1.5 percent annually, the region will become water stressed by 2050, water short in 2080 and water scarce within 100 years Commonly used thresholds for water stress, water shortage and water scarcity are 1,700, 1,000 and 500 m3 per person per year, respectively. These measures are limited in that they do not reflect the efficiency of use of water.

6 Water Global Practice, “High and Dry: Climate Change, Water and the Economy”, The World Bank Group, 2016

2.4 WATER PRODUCTIVITY PILLAR

Regional water challenges relate chiefly to the availability and efficiency of use. Population and economic growth are increasing stress on the region’s natural resources.5 Even though 55 to 94 percent of the population are served with an improved water source for household use, water supply and sanitation (WSS) systems are generally characterized by aging, poorly maintained assets. While the water uses with the largest added value is that for industry, mining, and urban WSS, local shortages in urban water supply and industry occur due to within-country water allocation decisions—namely those of irrigation. Unfortunately, the diversion of water to irrigate the vast agricultural fields in the region has contributed to severe environmental and health problems in the Aral Sea basin. Furthermore, the high costs of pumped irrigation result in the costly maintenance of rural livelihoods, as public support for irrigation places a high cost on national budgets. This reinforces the need to identify solutions for increasing irrigation efficiency and water productivity across the region.

There is a strong need for countries in the region to manage their water endowments efficiently, as this plays a large role in determining their capacity to achieve water and energy security. If current water management policies persist, water scarcity could lead to a significant slowdown in economic performance. Figure 16 compares likely future economic growth under “business-as-usual” water management policies (lower bounds) to potential growth (upper bounds), based on the assumption of a more efficient use of water in the economy (reallocation of 25 percent of water consumed to more productive uses, such as industry). While the model is not intended to provide forecasts of GDP growth decades into the future, the large difference in projected growth under the two policy scenarios is indicative of the importance that water policies will have in the coming decades, including for the energy sector. Of all the world’s regions, future water consumption patterns have the greatest impact on economic growth in Central Asia, ranging from negative growth in the “business as usual” scenario to positive growth, if water is used more efficiently.


The CAEWDP Water Productivity pillar seeks to address these challenges through support to increase productivity and the efficiency of water use in the water and energy sectors. 2016 program activities—both ongoing and completed—reflected those objectives. In 2016, an investment preparation grant focusing on irrigation efficiency in Tajikistan was completed and a regional assessment of Water Supply and Sanitation (WSS) systems was completed and finalized for publication in 2017. The ongoing grant in the Water Productivity pillar is focused on improving information and diagnostics on water management systems in Central Asia. Some preliminary results suggest Uzbekistan could gain an annual estimate of US$200 million by targeting social support through separate systems to poor households, while introducing cost-based water supply and sanitation tariffs. The grant includes a diagnostic of the status and challenges of water supply and sanitation across Central Asia to outline policy priorities for improved services.

An outcome from the activity completed under this pillar in 2016, is the increased awareness of the client country about the water and energy-related costs of agriculture and about the areas where significant efficiency gains can be made. The assessment of irrigation systems and current methods in Tajikistan provided an analysis of the measures and investments that can be made to improve irrigation efficiency. One of the identified constraints to improving efficiency in Tajikistan was the extreme sand wear of pumps and problems with poor electric power quality, or periodic outages. With increased efficiency, water can be freed up for additional uses and to satisfy new demands. This study proves useful for the ongoing water and energy sector reforms, as ongoing World Bank projects like PAMP-II, ZIRRMP and Nurek Rehabilitation institutionalize newly-acquired knowledge in their operations.

FIGURE 2 — CLIMATE-RELATED IMPACTS ON GDP IN 2050 (RANGES OF IMPACTS DETERMINED BY POLICIES)

-15

-10

-5

0

5

10

15

WorldSoutheastAsia

EastAsia

CentralAsia

CentralAfrica

SahelMiddleEast

WesternEurope

NorthAmerica

Ran

ge o

f va

riatio

n in

GD

P (%

)

0.0

-0.02 -0.02

-0.01

-6.02

-14.0

-0.82

-11.7

-7.08 -7.05

3.32

1.46

-1.98

0.38 0.09

-0.49

11.5

-10.72

Note: The figure shows the range that climate changes effects on water will have on GDP for selected regions. It incorporates effects from different policy scenarios (business-as-usual policies and policies that encourage better water allocation).

TRUST FUND MANAGEMENTAND FINANCIAL OVERVIEW

3Chapter


3.1 PROGRAM ADMINISTRATION

The end of 2016 saw the completion of the CAEWDP personnel changes. The CAEWDP team underwent a leadership transition at the end of 2015, as well as at the end of 2016. Christina Leb formally assumed the role of Program Manager from acting Program Manager, Ijsbrand de Jong, leading a core team of three Pillar Leads and a Partnership Specialist. A new Practice Manager for Water Global Practice was also brought on board as well as several support functions such as short-term assistance for communications and operations for the Program. In 2016, the core team continued to provide support in project formulation, implementation, monitoring and evaluation (M&E), as well as in facilitating the undertaking of various knowledge sharing activities for grants in Central Asia.

3.2 DONOR ENGAGEMENT

Donor engagement and commitments remained high during 2016. Table 3 provides a financial overview of donor engagement and commitments. More than US$11 million had been received as donor contributions by the close of 2016. Further information on program finances is outlined in Section 5.4.

2016 was a notable year for donor engagement, as the program prepared for the next phase of CAEWDP with multiple consultations on the concept note proposal. There were two consultations. One Partner Consultation, held in Washington, DC in March 2016, focused on the next phase of the program, whereas another Partner Consultation, held in Almaty in December 2016, reviewed and discussed the Concept note in-depth. All of the current partners agreed to a no-cost extension until December 2017. The team presented the proposed future activities in the three thematic pillars to the partners and discussed the strategic path forward that would allow the program to remain both expansive, yet focused to clearly demonstrate continued results and impacts. CAEWDP participated in, and presented at, several partner and collaborator events during 2016.

3.3 COMMUNICATIONS & OUTREACH

In 2016, CAEWDP scaled up implementation of the Communication and Outreach Strategy. The strategy was updated at the December 2016 DAC meeting to support program delivery and boost impact-focused outreach activities. With the extension, the team also provided a draft Communications and Engagement Strategy, Action Plan, and Implementation Roadmap for FY16-18 to guide the program outreach and dissemination activities until its conclusion. The purpose of the Communication Outreach and Dissemination activity is to strengthen knowledge sharing and increase key internal and external stakeholders’ understanding of CAEWDP through a strategic communications framework. This support is provided through two components: knowledge management and communications. In August 2016, the team hosted a Thematic Session on Increasing Water Use Efficiency at the High-Level Symposium on Sustainable Development Goal 6 and Targets: Ensuring that No One is Left Behind in Access to Water and Sanitation in Dushanbe. The Symposium was attended by representatives of more than 90 countries. The session discussed the challenges, as well as a number of solutions to effectively implement Sustainable Development Goal (SDG) 6.4, which aims to substantially: increase water-use efficiency across all sectors; ensure withdrawals and supply of freshwater to address water scarcity, as well as reduce the number of people suffering from water scarcity.

The team also produced a series of publications and updates to the website. Three short films were produced, demonstrating the impacts and results of the program as of June 2016. The program sponsored a workshop in June 2016 in Almaty, Kazakhstan to discuss the results of the Knowledge Networks and Communities of Practice for Water-Energy and Climate Change Management Program. In September 2016, the Water Futures Forum & Expo took place in Almaty, Kazakhstan. Over 200 policy and technical experts from the government, academic and private sectors, as well as CSOs, participated in this international event. CAEWDP organized a booth display

TABLE 2 — CONTRIBUTIONS & COMMITMENTSTotal contributions received

(US$)Total allocation of funds to

grants (US$)Total disbursements (US$) Funding available (US$)

11,095,062 10,665,756 8,873,113 208,532

Sourced from program internal financial records, as of 31st December 2016


and brief presentation. The Expo was an opportunity for the team to present CAEWDP to the region. Several reports have now been finalized and added to the CAEWDP website7:

• Enhancing Regional Power Trade in Central Asia;• Exploratory Assessment of Factors that Influence Quality

of Local Irrigation Water Governance in Uzbekistan;• The Costs of Irrigation Efficiency in Tajikistan, and• Central Asia Energy-Water Development Program

Annual Progress Report 2015

3.4 FINANCIAL OVERVIEW

A cumulative total of US$10.7 million was allocated to CAEWDP activities by the end of 2016. Among program pillars, Energy-Water Linkages accounts for about 45 percent of program grant financing, while Energy Development accounts for 32 percent. The remaining grant funding was for Water Productivity (9 percent) and strategic program management, which includes dissemination and outreach activities, as well as the preparation of the next funding phase. Overall expenditures (disbursements plus commitment) were 87 percent of CAEWDP Grants—up from 82 percent last year. The proportions of allocations are outlined in Figure 3.

FIGURE 3 — PROPORTION OF TOTAL PROGRAM ALLOCATION PER PILLAR 2016 (%)

7 http://www.worldbank.org/en/region/eca/brief/caewdp

The program disbursement rate increased during 2016. Total disbursements in 2016 represented 86 percent of total allocations—up from 69 percent in 2015. This increase in disbursements was primarily due to many of the activities that were delayed in 2015, having entered the implementation and completion phase.

Cumulative program disbursements continued to increase at a quicker rate in 2016 than that in 2015 (Figure 4). 2016 rapidly expanded a trend of significant annual program disbursements triggered in 2015, outpacing those of previous years (Figure 5).

FIGURE 4 — CUMULATIVE PROGRAM DISBURSEMENTS (US$ MILLION, 2012-2016)

FIGURE 5 — ANNUAL PROGRAM DISBURSEMENTS (US$ MILLIONS, 2012-16, EXCLUDING PROGRAM MANAGEMENT COSTS)

Energy-Water Pillar

Energy Development Pillar

Water Productivity Pillar

Program Management

14%

9%

32%

45%

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

20162015201420132012

US

$ m

illio

nU

S$ m

illio

n

0

2

4

6

8

10

20162015201420132012

0.327 0.539

3.925

5.357

8.873

http://www.worldbank.org/en/region/eca/brief/caewdp

LOOKING FORWARD: CAEWDP 3.0


While CAEWDP demonstrated that successes can be achieved, political commitment to cooperation remains tentative, highly sensitive to events and beholden to perceptions of national security interest. Experience, so far, has shown that the process will not be fast, nor will it follow a straight line; temporary setbacks are common. It will be important to continue to engage in an incremental manner on a national scale to continue the strengthening of national institutional capacities and sector performance, while at the same time keeping regional cooperation on the political dialogue agenda to create an enabling environment for national priorities and regional priorities to eventually converge. This is a long-term process, which requires continued commitment from development partners.

The mid-term review of CAEWDP commissioned in 2015 was finalized in 2016. The mid-term review was conducted to consider progress being made and course correction if necessary. The review team assessed the current program implementation, results framework and the originating project trust fund. The program review8 confirmed that over a relatively short period, CAEWDP achieved important results and remains a valuable vehicle to support energy and water security in the region. The review further confirmed that the linkages of water and energy remain critical for regional stability, indicating a need for dedicated long-term engagement. Such pursuit of regional cooperation would need to be accompanied with a focus on achieving national energy and water security to maintain beneficiary country buy-in. The program structure, composed of its three pillars, proved relevant. Whereas the current practice has been to invite participants from Afghanistan to some of the dialogue and capacity building events, it was recommended that Afghanistan be formally included as a beneficiary country. In addition, the following lessons learned from the engagement, to date, have been considered for the CAEWDP 3.0 design:

• Successful facilitation of regional cooperation on energy and transboundary water resources management requires sustained and continued engagement, as well as a dedicated presence on-the-ground to facilitate dialogue; temporary setbacks are not uncommon.

8 “The Central Asia Energy Water Development Program: A report on the Independent Evaluation of the First Phase of the Program”, The World Bank, 2015 - The program review was carried out by an independent consultant and administered by a Task Team leader who had never been involved in the CAEWDP program.

• Solutions that address national issues, related to energy and water use efficiency (e.g. solutions for the winter energy crisis and increasing irrigation efficiency), will benefit regional cooperation, as political windows of opportunity open.

• Training activities and knowledge sharing at all levels (policy-making, technical and administrative) raise comfort levels and strengthen the ability of stakeholders to better manage energy and water resources, lead to greater awareness of the regional inter-dependence, as well as the need to apply an incremental approach to addressing competition over these resources.

• Coordination of the wide range of development partners supporting identical and similar objectives in the region will multiply the impact of the activities of each individual organization, by avoiding duplication and taking advantage of complementarity. Given the legacies and challenges of integration and cooperation on water and energy issues in this region, close coordination of partners is even more important than in other regions (e.g., while cooperation on international rivers is a universal challenge, a number of basins in Africa, Europe and Latin America are committed to sustained institutional cooperation, resulting in the significant deepening of institutional integration and the widening of issue areas covered by cooperation).

The following changes will, therefore, be adapted for the next funding phase of CAEWDP (CAEWDP 3.0):

• The program development objective will shift greater emphasis from water productivity to water security, reinforcing the need “to strengthen the enabling environment to promote energy and water security at the regional level and in the beneficiary countries”;

• Afghanistan, a key riparian country in the Aral Sea basin, will join Kazakhstan, the Kyrgyz Republic, Tajikistan, Turkmenistan and Uzbekistan as a beneficiary country;

• The pillar structure and content will be adjusted with an increased focus on facilitating energy and water security as the guiding principles of the entire program;


FIGURE 6 — CAEWDP PILLAR AND COMPONENT STRUCTURE

Energy Security

Linkages WaterSecurity

• national activities will have an important role as building blocks to link regions and to achieve energy and water security at the regional level;

• increased emphasis will be put on capacity building for, and within, institutions and on dialogue to catalyze investments, and

• enhanced presence in the region of the CAEWDP Program Manager and World Bank team to facilitate regional dialogue and initiatives.

The objective will be achieved through a program that is built on three pillars: (i) Energy Security Pillar: supporting policy and investment activities at national, bi/multi-lateral and regional levels to improve the security and economic efficiencies of energy supply; (ii) Water Security Pillar: supporting activities related to water use aspects at the national, bi/multi-lateral and regional levels, as well as for national integrated water resources management and development (IWRM) to achieve water security, and (iii) Energy and Water Linkages Pillar: supporting activities related to the intersection of energy and water (water-energy nexus) at the national, bi/multi-lateral and regional levels; performing IWRM activities that link two or more countries, including those related to climate change, as well as facilitating regional and cross-border dialogue processes. The program is structured in a matrix framework in which the three thematic pillars are

9 Some activities may touch on more than one component e.g. diagnostic analysis that supports identification of investments.

implemented through activities that fall under four cross-cutting components9: (1) Data and Diagnostic Analysis; (2) Institutions, Capacity and Dialogue; (3) Supporting Investments, and (4) Program Management.

The program will support national, as well as cross-border efforts, to strengthen energy and water security. National activities, such as institutional strengthening and efficiency improvements, contribute to, and present fundamental building blocks to achieve energy and water security, sustainable development and climate resilience at the regional level. Although the overall objective and long-term goals are clear, the opportunities to move forward on the regional level will ebb and flow and CAEWDP 3.0 will maintain the flexibility to respond to changing insights and shifting political priorities and opportunities. The program will maintain and further strengthen the linkages with the country-based projects and programs, as well as seek synergies between these and the regional initiatives to leverage the World Bank’s comparative advantage for the implementation of this program.

A central focus of CAEWDP 3.0 will be to continue to work with development partners to: deepen efforts to establish the parameters for cooperation at the technical and institutional levels; strengthen available data bases and their acceptance by all countries; harmonize sectoral policies and regulations to facilitate cross-border connectivity and trade, as well as to facilitate

Energy Security Pillar:Regional & National Energy Generations/Transmission/Trade/Use

Water Security Pillar:Regional & National Water Use;National IWRM

Linkage Pillar:Regional Dialogue & Water Resources Cooperation; Regional & National Energy-Water Linkages

CAEWDP 3.0

Program management

Data and Diagnostic Analyses

Institutions, Capacity and Dialogue

Supporting Investments


dialogue. CAEWDP 3.0 will implement activities that have proven successful in creating platforms for dialogue and information exchange, such as the Central Asia Knowledge Network, as well as scale-up analytical work that shows clear potential to inform policy reform and investments. Additional emphasis will be placed on strengthening the sectoral capabilities at the national level as building blocks to facilitate cross-border engagement and regional cooperation in the future. Capacity-building activities will be implemented at the national and regional levels and will also be used to create opportunities for technical experts from the various beneficiary countries to collaborate with each other, gain trust and exchange their knowledge across borders.

The World Bank provides regional-level assistance as regional programs offer substantial potential for better development results at the national level. It has a long history in development efforts to save the Aral Sea and in financing technical assistance and investments in irrigation, water supply and sanitation, as well as energy and electricity trade investments at national and regional levels. The World Bank also has a strong program in Afghanistan and is thus, well positioned to facilitate efforts to strengthen Afghanistan’s links to its northern neighbors. The World Bank’s engagement with national governments as a trusted, international and neutral development agency provides the relationships required to initiate new opportunities for cross-border dialogue and investments. To capitalize on the World Bank’s comparative advantage, it is important that CAEWDP remains closely linked to the World Bank’s operational portfolio and will continue to coordinate with investments and activities of development partners in the region.


ANNEX I – PROGRAM ACTIVITY DESCRIPTIONS

ENERGY DEVELOPMENT PILLAR

ANALYTICAL DEVELOPMENT

Activity TitleKazakhstan Renewable Energy Integration in Power Market and System

Activity StatusCompleted

CAEWDP Grant AmountUS$165,743

Task Team LeaderMirlan Aldayarov

The development objectives of this grant were to: (i) support the Government of Kazakhstan (GoK) in developing a vision for effective legal, institutional, and regulatory structure for the wholesale power market, taking into account Kazakhstan’s specificities and the need of integrating hydro and renewable energy sources, and (ii) share lessons from Kazakhstan’s considerable competitive power market experience with other Central Asian countries. These lessons aimed to facilitate regional electricity trade through their potential participation in Kazakhstan’s market and/or the market design replication in these countries.

Overall implementation of this grant activity was rated as satisfactory. Three intermediate outputs were produced: The grant supported the Kazakhstan Power Market Study. The study developed recommendations, focusing on adjustments to the electricity market rules and the power system requirements to enable integration of renewable sources of energy. Specifically, the report: analyzes the current state of the electricity market, power system and renewable energy systems; identifies the main shortcomings and challenges they face, as well as provides recommendations on a longer-term vision of the market structure and on the required changes in the current regulatory system. The report was finalized in January 2016 and presented at a workshop in Astana, Kazakhstan in April 2016.

Activity TitleUzbekistan Planning Study for Power Sector



Task Team LeaderSamuel K. Oguah

The objective of this grant was to build institutional capacity in Government of Uzbekistan (GoU) and Uzbekenergo (UE)—the holding company that oversees the energy sector for integrated power generation and transmission planning, while incorporating policy goals to diversify the energy mix in Uzbekistan. There is a gap in the capacity for planning in Uzbekistan. Closing the gap requires persistent effort to train staff and to provide the necessary tools for planning at various levels of the power supply chain and in various units. This study addressed some of the issues around power system planning in Uzbekistan—especially in the area of generation planning—and raised awareness on other issues in the power system that require closer attention.

One intermediate output was produced: The tool used for the analysis was transferred to the client. The tool was deliberately simplified with an excel interface to increase the likelihood of sustained use. Six staff were trained to use the tool, which enabled UE to evaluate the impact of policy choices (i.e. RE targets), and increased electricity imports on system costs. In addition, the following recommendations were provided:

• A mix of policy interventions will be required to diversify the current generation mix: For example, combining higher gas prices with renewable energy and energy efficiency targets can help diversify the energy mix.

• Gas pricing is important to diversify fuel mix: At the current low gas prices, most other options are not competitive. Increasing gas prices to match export prices of US$241/ tcm is a way to diversify the energy mix and reduce the financial burden of energy supply on the government.


• Build rapidly and pay attention to tariffs: A robust capacity plan to render the system self-sufficient and highly reliable would rapidly require US$16.6 billion in new investment, of which half of this sum would be required in the next ten years. Average system costs—and hence tariffs—will increase from 3.1 c/kWh in 2016 to between 3.8 cents/kWh and 5.9 cents/kWh in 2030 in real terms—indicating the need for a continuous steady increase in electricity tariffs.

• RE and EE measures are attractive and need to be supported by policy: An RE target of 15 percent requires 55 percent higher capex, but the difference in system costs (which includes fuel costs) is under 3 percent. EE measures can be used to reduce the capex requirements.

• Old plants should be retired sooner: On the supply side, keeping old inefficient gas-fired units in service, as per the current retirement plan, will cost US$1.9bn (undiscounted) over the planning horizon even with low gas prices of US$53 – US$104 / tcm

The grant outcome was rated highly satisfactory. Continued references to the training and tool demonstrate a deepened understanding of underlying issues in technology choice for power system expansion. The approach is being replicated in a follow-up study to better understand the dispatch of power plants in the country. Again, a GAMS model with an Excel front-end will be used, staff will be trained and the model transferred to UE.

Overall implementation of this grant was rated as highly satisfactory. Six members from Uzbekenergo and the Ministry of Economic Planning were in Washington, DC for a workshop on power system planning from April 25-29 2016. The workshop introduced participants to the principles of power system planning. With participants from various departments, discussions often brought out different perspectives (for example, the need for short term planning, which is important to dispatchers and long-term planning which is the prerogative of the Planning units). Results of the planning exercise were discussed extensively. Results of the analysis were broadly in line with the government’s ambitions of increasing installed capacity and diversifying the supply mix from gas. Participants spent 1.5 days using the model developed for the planning exercise. The model has an Excel interface, which runs GAMS in the background. It has since been transferred to the client. Through practical exercises, trainees explored concepts of unserved energy,

load duration curves and utilization factors. Specific topics covered included: classical least cost planning and an introduction to modern planning tools; planning challenges for intermittent renewables including data requirements; load forecasting techniques, and an introduction to GAMS. Discussions during the training initiated a study tour in Italy where participants visited the Transmission System Operator to learn how dispatchers operated the interconnected system. In coordination with other countries, the tour allowed participants to visit various utilities, including: a typical base-load generating plant to understand how the increased penetration of renewable energy was affecting system operation; a solar farm to understand integration requirements, and a distribution company that has distributed generation.

Activity TitleUzbekistan: Impact of Energy Subsidies - Way Forward



Task Team LeaderYadviga Viktorivna Semikolenova

The development objective of this grant was to: support the Government of Uzbekistan in: (i) assessing the fiscal, economic and social impact of energy subsidies in the gas, electricity and heat sectors, and (ii) designing policy options for socially responsible energy subsidy reform. The grant funded Phase 1 of the Uzbekistan subsidies work which was multi-phased and funded by other grants. The development objective was achieved, resulting in better informed dialogue on energy subsidy reforms in Uzbekistan. The activity had seven outputs of which the grant contributed towards Output 1:

(1) Assessment of fiscal impact of energy subsidies in the gas, electricity and heat sectors; assessment of the GHG impacts of energy subsidies in the gas, electricity and heat sectors;

(2) Mapping of stakeholders and their incentives for energy reform;

(3) Sector tariff analysis for gas, electricity and heating;

(4) Metering and consumption based billing;


(5) Assessment of the distributional impact of subsidies;

(6) Training to the Statistics Committee on computing the impact of energy subsidies based on the household survey, and

(7) Gender-differentiated assessment of consumer experiences with energy service delivery and payment, attitudes to reform, including tariff adjustments and adoption of measures to use energy more efficiently.

Overall implementation of this grant was rated as moderately satisfactory. The grant contributed to two outputs: the assessment of fiscal impact of energy subsidies in the gas, electricity and heat sectors, as well as the assessment of the GHG impacts of energy subsidies in the gas, electricity and heat sectors. The presentation of the diagnostic analysis was completed at a workshop in November 2015 with stakeholders and the project steering committee. The preliminary scope for Phase 2 of the activity was identified with the follow-up roundtable, held in December 2016.

Next Steps. A high-level workshop will take place once the recommendations of Phase 1 are updated and agreement is reached with the Government by the end of FY17.

INSTITUTIONAL STRENGTHENING

Activity TitleCentral Asia Regional Economic Program (CAREC Engagement)10

Activity StatusPhase I: Completed; Phase II: Ongoing

CAEWDP Grant AmountUS$427, 314

Task Team LeaderHusam Mohamed Beides, Daryl Fields

The CAREC ESCC—co-chaired by the ADB and the World Bank—is a key regional platform to engage Central Asian countries in energy issues. The ESCC oversees implementation of an energy action plan and specific analytical and capacity-building initiatives through its committee and subcommittee meetings. It provides a unique platform to convene energy experts and decision-makers of CAREC countries to discuss and explore options to strengthen regional trade and is instrumental in implementing CAREC’s energy strategy.

10. This activity description represents two successive grants: the first from 2010 to 2013 and the second from 2013 to 2016, worth US$57,314 and US$370,000, respectively. There was an increase of US$150,000 in the second grant from 2015.

The development objectives of this grant are to: (i) enhance energy sector dialogue among Central Asian countries, and (ii) ensure the coordination of donor assistance to the energy sector in Central Asian countries through participation in the Energy Sector Coordinating Committee (ESCC) meetings, senior officials’ meetings and ministerial conferences of CAREC.

At the end of 2016, the development objective for this grant was largely achieved. The grant has continued to enhance cooperation and dialogue on power sector issues among Central Asian countries. The World Bank team has actively participated in the two meetings for the Central Asia Regional Economic Cooperation (CAREC) Energy Sector Coordinating Committee (ESCC), held in April 2016 and October 2016, respectively, in Islamabad, Pakistan. The meeting held in April 2016 hosted the Regional Power Trade presentation on the methodology, final results, and recommendations of the study. The study estimated that through inaction, the region lost nearly US$1.5 billion in benefits if fuel savings at historic energy prices were considered. When the economic value of avoiding unserved power demand is added to the lost benefits, the amount increases to an estimated US$5.2 billion at historic energy prices and nearly US$6.4 billion at market energy prices. During the October 2016 ESCC meeting, WB representatives participated in the CAREC Inter-Ministerial Meeting held during the same week and attended the CAREC Energy Investment Forum held on the sideline of the Inter-Ministerial Meeting.

Next steps. CAREC countries have expressed interest in expanding the geographic scope of the Study on Regional Power Trade in Central Asia to include other neighboring sub regions like South and East Asia. There are internal discussions regarding the feasibility of such a study progressing. As political support for intra-regional energy cooperation continues to grow in the region, the CAREC ESCC meetings provide an opportunity to facilitate more meaningful dialogue on constructive approaches to enhance regional cooperation.


Activity TitleEnhancing Regional Power Trade in Central Asia



Task Team LeaderYuriy Myroshnychenko

This grant aimed to explore options for, and facilitate discussions on power trade and cooperation between Central Asian countries, with the goal of increasing efficiency of their respective power systems, enhancing reliability and security of electricity supply, reducing power shortages and avoiding GHG emissions. The activity included two stages: (i) a review of the available

analytical materials on Central Asia power trade that led to the preparation of a note/presentation on possible power trade and cooperation options, based on the recent and planned developments of the power systems of the Central Asian countries, and (ii) discussion of the note/ presentation through bilateral meetings with power sector stakeholders of the Central Asian countries to identify a list of priority measures that were economically attractive and politically acceptable.

Overall implementation of this grant activity was rated as moderately satisfactory. Two intermediate outputs were produced: (i) a report Enhancing Regional Power Trade in Central Asia on underutilized benefits, and (ii) consultations with Central Asian countries to identify common areas of interests for regional power trade.

SHORT-TERM STEPS:

• Develop inter-governmental and stakeholder agreement on the potential benefits and the nature and objectives of the system to be adopted;

• Define the type of transactions or market to be developed (e.g. bilateral contracts, spot markets, etc.) and well as principles for a fair methodology for settlements and compensation of schedule deviations;

• Identify the role of central trading and dispatch institutions (such as CDC Energia);• Improve regional control systems, communications, and acquire appropriate software;• Identify and adopt necessary pan-regional technical and commercial documents (e.g., grid codes,

metering codes, settlement rules), and• Define a scheme for mutual support during emergency operations.

MEDIUM-TERM STEPS:

• Improve system supervision and control software;• Improve commercial metering, and• Adopt a system for coordinated system planning, especially insofar as high voltage grid

development is concerned.

LONG-TERM STEPS:

• Implement necessary technological changes and improvements, and• Move forward with regional grid development and power system projects.


The outputs of the grant provide an analytical basis for informed decision-making for future energy programs and action plans. The outputs also demonstrated regional and national implications of current national policies in financial and economic terms. One of the significant findings of the report was that regional electricity trade would have benefited the region with an additional US$1.3 billion for the five-year period it covers, should unserved power demand have been included in estimates at historic energy prices. The findings confirmed that efficient trade significantly benefits the region and that each country could also benefit from increased trade with its Central Asian neighbors. The report on underutilized benefits from Central Asian regional power trade could serve as a decision-making and analytical tool for the Central Asian governments, development partners, researchers and general public. The recommendations present a roadmap with the list of short-, medium-, and long-term actions to be implemented by the countries to benefit from enhanced power trade.

The grant activities fully achieved one of the outcomes related to improved knowledge exchange; however, the second outcome related to cooperation was not achieved. The lesson learned through the implementation of the grant was the need for high-level political support, commitment and significant time when engaging on regional power trade dialogue. While energy efficiency and energy security are crucial in the context of deteriorating power generation plans, rapid demand growth, high inefficiency and intensive consumption, the dialogue cannot progress with a bottom-up approach. In the absence of high-level political support from the concerned countries, it is challenging to obtain national power sector data that would be required for modeling regional power trade, given the confidentiality of some data. In view of the challenges in collecting sufficient and reliable data on national power systems, applying sophisticated modeling tools may not be justified; instead, simplified approaches could be applied for modeling regional power trade scenarios.

Next Steps. No follow-up activities are planned at this time. The program will continue at the technical level, focusing on benefits from bilateral trade and feasible next steps through the ESCC.

INVESTMENT PREPARATION

Activity TitleThe Kyrgyz Republic: Heating Efficiency Improvement

Activity StatusOngoing


Task Team LeaderKathrin Hofer

This grant aims to address the challenge of providing reliable and affordable heating supply to the Kyrgyz Republic. Reliable and affordable heating supply is critical for the well-being of the population and for sustaining economic activities in the Kyrgyz Republic during the cold winter months. Yet, achieving this objective remains a daunting challenge because of low operational efficiency of the heating infrastructure, low tariffs, lack of metering and norm-based billing practices, decreasing availability and affordability of imported gas, unreliable heating supply and increasing reliance on electric heating. The government recognizes the importance of addressing the above-mentioned key challenges and has initiated several steps to improve the efficiency and reliability of heating supply. Improving the efficiency and reliability of the District Heating (DH) network would support the government’s long-term strategy in the heating sector, complement the ongoing investments to modernize a combined heat and power (CHP) plant, and also support a strategic shift from meeting heating demand through electricity. Overall, these objectives would provide more reliable and efficient DH and ultimately, manage the perennial winter energy shortages.

This grant aims at developing a detailed investment and implementation plan, as well as recommending reform measures to improve the efficiency and reliability of the district heating (DH) system in Bishkek. The activity will include the following main components: Component A - Scoping of priority investments to improve the efficiency and reliability of the DH system in Bishkek, including: (i) building-level heat metering; (ii) a transition to consumption-based billing; (iii) a replacement/re-insulation of transmission/distribution pipelines, and (iv) an installation of variable speed pumps/


drives; Component B - Policy reforms supporting the implementation of identified priority investments and the transition towards consumption-based billing. In addition, activities may also include targeted dissemination and outreach activities. During 2016, the proposed investment plan was agreed upon, and adopted by the district heating company and the Government. It informed the design of a new IDA-financed investment lending operation in the sector and served as the basis from which to coordinate investments with other development partners investing in the DH sector in Bishkek. A stakeholder roundtable was conducted, the output disseminated and a follow-up engagement dialogue was held to ensure implementation of the main recommendations, as part of a new investment lending operation. With additional funding of US$20,000 provided by CAEWDP, a complementary analysis was launched and conducted to better assess the heating situation for households without access to DH, including its impact on the winter energy shortages the country continues to face. The funds for the technical assistance program are complemented by other trust fund resources, which supported, inter alia, a study tour to DH companies in Finland and Poland to foster knowledge exchange and learning on improving the operational and financial performance of DH companies. As part of the study tour, specific focus areas included information and exchange on the proposed priority investment and reform areas.

Activity TitleTajikistan Winter Energy Program



Task Team LeaderTakhmina Mukhamedova

The objective of this grant is to support pre-investment studies to enhance winter energy security in Tajikistan. Tajikistan has been facing severe winter energy shortages that badly affected rural households, which account for 70 percent of the country’s population that is deprived of formal heating support in severe winters. The grant will cover two areas: (i) efficient stoves and heating solutions, with a focus on rural areas, and (ii) the preparation of the Nurek Hydro Power Plant (HPP) rehabilitation.

This grant targets both a demand-side and supply-side outcome to mitigate winter energy shortages: (i) Efficient stoves and heating policy options initiated to promote efficient stoves for stable and predictable winter power supply in Tajikistan, and (ii) Nurek HPP Rehabilitation Program that would increase the capacity of the Nurek HPP, enhance dam safety designs and prepare for investments.

During 2016, significant progress was achieved towards both outcomes:

• Heating stoves. The implementation of the activity is on schedule. Both qualitative and quantitative phases of the stove market assessment have been completed. The findings of the market assessment informed the design of the efficient heating stoves prototypes that were developed during May-June 2016. The December 2015 stove tests revealed that on average, fuel efficiency of popular stoves installed in Tajik homes was about 30 percent, as compared to modern stoves, which run 40 percent or more efficiently. The outcomes of the market assessment and the stove prototypes were presented to the Government, development partners and other stakeholders during July and August 2016. These activities laid a foundation for a pilot program, aimed at testing newly-developed efficient heating stoves prototypes in residential and public buildings in selected areas of the Republic of Tajikistan, during the heating season of 2016/2017 winter. The pilot program is currently ongoing and the results of the program will be presented to the Government, development partners and stakeholders by the end of March-early April 2017.

• Nurek HPP Rehabilitation component is completed. The additional studies and investigations for the Nurek HPP Rehabilitation project have been completed. The grant allowed for the engagement of experts in the areas of electro-mechanical rehabilitation, geotechnical investigations, sedimentation and strategic advisory support to the Government in relation to design of the project. These advisors also supported a few additional studies that were found to be necessary. There is largely agreement with the Government regarding the design and implementation of the investment project. The Project will be submitted for World Bank Board Approval on April 28, 2017.


Next Steps. The grant activities on efficient heating stoves have been extended until August 31, 2017 and US$50,000 were added to the grant amount. This will allow for the scaling up of implementation, based on information collected from the efficient heating stoves prototypes pilot program. Additionally, the institutional framework, including stove standards/regulations, quality assurance mechanisms and related components will be developed.

Activity TitleCASA – 1000 Advisory support for countries (RE): The Kyrgyz Republic & Tajikistan- Advisory Support for the Regional Trade Initiatives Project


CAEWDP Grant AmountUS$1,000,000

Task Team LeaderHusam Mohamed Beides

The development objective of this grant is to facilitate the preparation of the CASA-1000 project and other possible regional energy trade initiatives for the Kyrgyz Republic. The proposed grant will achieve its objective through the implementation of the following two components: Component 1- Technical Assistance to support the Government and the working groups to advance the CASA-1000 groundwork by financing the technical, commercial, legal, environmental and social and other necessary expertise for the country advisors, as well as to support other inter- and intra-regional initiatives by financing relevant assessments, studies, consultation with stakeholders and public outreach; Component 2 - Covering operating costs for delegates from the Kyrgyz Republic to facilitate the dialogue and development of regional trade initiatives and incremental operating expenses for the project implementing unit (PIU).

In 2016, the grant resulted in strengthened capacity of the Government of the Kyrgyz Republic and Tajikistan to negotiate commercial and legal agreements under CASA-1000, resulting in several concluded subsidiary agreements that were necessary with the required extensions of the loan agreements. The bidding and

evaluation of several procurement packages, including the most critical Supply & Install of High Voltage DC Converter Stations at Tajikistan, Afghanistan and Pakistan were concluded in November 2016. The grant further resulted in Kyrgyz and Tajikistan representatives attending several meetings of the Intergovernmental Council (IGC) and CASA-1000 Joint Working Group (JWG). Both activity grants have been increased in duration and the Tajikistan grant budget has also been increased. An increase from US$300,000 to US$500,000 has been approved for Tajikistan and the activity timeframes for the Kyrgyz Republic and Tajikistan have been extended from 6/30/2016 to 10/28/2017.

Activity TitleEnergy Vulnerability to Climate Change



Task Team LeaderDaryl Fields

The overall objective of this grant is to help beneficiary countries in Central Asia understand climate change-induced energy sector vulnerabilities and build resilience through the development of coordinated adaptation policies. The project consolidates a vulnerability assessment of the impacts, risks and the adaptive capacity of the energy sector. The assessment will help guide decision-makers on options for current and future investments, management of power generation and transmission, and increase better understanding of cross-sectorial implications. The grant will lead to two outcomes: (i) equipping the Government of Tajikistan with latest projections on climate change, its impacts on the energy sector of Tajikistan and adaptation measures, as well as (ii) fostering regional dialogue of energy sector adaptation to climate change facilitated.

There was a delay in finalizing this grant in 2016, due to changes in team composition. The grant is expected to be finalized in 2017, during which the outcomes will also be disseminated.


ENERGY-WATER LINKAGES PILLAR


Activity TitleCentral Asia Water and Energy Portal



Task Team LeaderNagaraja Rao Harshadeep

Portals can offer access to databases of information related to water and energy; however, there was no such resource available at the regional scale. A fundamental impediment to regional integration, related to energy and water in the Central Asia region, was the lack of accessible knowledge base to visualize and analyze the region in an integrated manner. As a result, there was limited quality and access to public-domain information at the reginal level, albeit several attempts to access portals/ databases. The development objective of this grant was to improve public-domain online access to water and energy-related spatial information. Key intermediate outcomes targeted included:

• Improved awareness on Central Asia Water and Energy spatial context for development and cooperation

• Knowledge products to promote access to, and the use of such public domain data in Central Asia

Overall implementation of this grant was rated as satisfactory. Three intermediate outcomes were produced: (i) Spatial Agent mobile app; (ii) Central Asia Water and Energy Web Portal, and (iii) improved access to, and the use of the Central Asia web portal and mobile App. This activity has helped strengthen the availability of the evidence base for water sector diagnostics, as well as of data to support analyses of water resources, as well as a dialogue on investments, policies and the need for regional cooperation.11

11 The Spatial Agent App can be downloaded from http://apps.worldbank.org. The app is downloadable from the AppStore; Android Google Playstore or from: https://play.google.com/store/apps/details?id=org.worldbank.

spatialagent&hl=en ; Web version prototype: http://www.appsolutelydigital.com/SpatialAgent/ A demonstration video (showing an early version of this tool in a GIS Conference Plenary (before an audience of 16,000 people) can be viewed at

the following link (see the last ten minutes of the video): ttp://video.esri.com/watch/3660/ open-access-with-arcgis-open-dataz

Activity TitleLegal Analysis of the Trans-Boundary Water Management Frameworks in Central Asia



Task Team LeaderVictor Bundi Mosoti

The objective of this grant was to contribute to a better understanding of the legal instruments regulating the use of the Amu Darya and Syr Darya Rivers. Different riparian countries have expressed their views on the interpretation and application of legal instruments regulating the use of the Amu Darya and Syr Darya Rivers. This activity was created to provide a legal analysis of the regulatory framework for trans-boundary water management, including the rights and obligations of each riparian under the relevant instrument (e.g. the 1995 Nukus Declaration, the 1987 Protocol 566).

This grant was completed in 2016. The report was finalized and a summary brief is under development for public dissemination. The report provides a detailed analysis of the various legal instruments and of the “boundary conditions,” including their basis in the legal instruments that were previously analyzed. The report has enhanced understanding of the regulatory frameworks for trans-boundary water management of Central Asia with emphasis on their nature, legal standing, level of compliance and regional perceptions. The report was particularly useful in the contexts of the Syr Darya Control and North Aral Sea Project and the Ferghana Valley II project in the context of understanding national concerns about the potential adverse effects of the projects on the shared water resources.

The key lessons learned are that: (i) transboundary water management in Central Asia is subject to an interlocking regime of legal and institutional requirements, and (ii) if multilateral/ international actors seek partnership roles in the management of water resources in the region, then they must understand the function of these legal and institutional requirements, as well as their limitations and challenges.

http://apps.worldbank.org

https://play.google.com/store/apps/details?id=org.worldbank.spatialagent&hl=en

https://play.google.com/store/apps/details?id=org.worldbank.spatialagent&hl=en

http://www.appsolutelydigital.com/SpatialAgent

http://video.esri.com/watch


INSTITUTIONAL STRENGTHENING

Activity TitleCapacity Strengthening for IWRM Modeling




The development objective of this grant activity was to strengthen knowledge and modeling skills, leading to a more effective base on which to identify modeling architecture options and priorities for integrated water resources modeling in Central Asia. This grant was demand-driven, based on messages conveyed during the national dialogues of the six countries at the July 2012 IWRM Forum. It demonstrated that the region preferred to build/ adapt their own models, rather than accept already-made models from external sources.

The grant aimed to achieve outcomes of strengthened capacity and increased knowledge, awareness and confidence around IWRM modelling. The grant contributed towards fostering a more conducive environment that facilitated transparent dialogue across the six countries, mitigating one of the recognized risks to trans-boundary water cooperation: capacity and knowledge gaps. This activity fostered knowledge and skill expansion, training and studies—which closed gaps in capacity and knowledge—and supported the development of new skills.

The grant contained three components, which were satisfactorily completed in 2016. The first component—national consultations—was supported by seed-funding from CAEWDP and responded to a basin-wide fact finding on tools for IWRM (2009-2010). National consultations took place in Afghanistan, Kazakhstan, the Kyrgyz Republic and Tajikistan throughout 2011. The consultations focused on integrated water management priorities through a national lens. The second component—capacity strengthening— sought to strengthen capacity for water resources modeling, analyze technical knowledge building and foster exchanges. The purpose of capacity strengthening was to increase the awareness and understanding of the skills that would be critical for the water resources modeling of emerging technology, as well as of the most recent regional models developed for the Basin. Three separate activities were completed under this component:

• Training on BasinIT, an interactive training tool for basin planning;

• Convening of a Model Advisory Group to share modeling knowledge, prioritize capacity strengthening needs and approaches, and guide development of a longer-term training curriculum, and

• Model Capacity Building workshop with a range of senior and junior water specialists, which also served as a pilot for a longer-term training curriculum and refinement of curriculum for Model Capacity Building.

Each activity also helped broaden and strengthen communities of practices in water resources management by inviting all six countries of the Aral Sea Basin to each event, with the longer-term goals of supporting riparian dialogue and coordinated decision-making.

In 2016, the third and final component was completed, which built on the first two components of training and national consultations with the Water Futures Forum & Expo. In September 2016, the Water Futures Forum & Expo in Almaty, Kazakhstan hosted over 200 policy and technical experts from government, academia, the private sector, and CSOs, including regional and international speakers. Topics of discussion featured: established and evolving modern approaches and tools for IWRM; observation systems; remote sensing; decision-support modeling; capacity building, as well as regional institutions and partnerships. The Expo encouraged participants to explore progress on water management in Central Asia, showcased global good practices on modernization of water management information systems and exhibited state-of the art water technologies from international land regional good practice (to consolidate progress and envision future investments in water resources modeling and analysis).

Activity TitleCentral Asia Knowledge Network



Task Team LeaderJulia Komagaeva

The development objective of this grant activity is to foster cooperation and knowledge exchange among local and regional institutions and practitioners in the areas of water resource management, energy and climate change


in the Central Asia region. The grant aims to establish a regional network of knowledge institutions and communities of practice (CoPs) of technical specialists.

The World Bank Institute (WBI) and CAEWDP jointly developed this comprehensive integrated knowledge and capacity building program. The Knowledge Network (KN) provides advice to its members through different forms of knowledge sharing, exchange of experience, collaboration and outreach. The Network equips national knowledge institutions with cutting-edge curricula, knowledge and skills to build the capacity of Government officials and other professionals in water, energy, agriculture and climate change-related issues.

In 2016, the grant made satisfactory progress towards achieving its objective, based on the following activities: • The umbrella Knowledge network platform on the

C4D platform has been actively used by three Communities of Practice: (i) Knowledge Institutions Community of Practice (CoP), consisting of knowledge institutions from five Central Asian countries, as part of the Masters (MA) students competition run in cooperation with CAREC; (ii) Kazakhstan Cross - Sectorial Working group on water resource management issues, and (iii) Kyrgyz Cross- Sectorial Working group on geo-hazard risks, as part of research and discussions of most urgent geo-hazard risks in the region and elaboration of the cross sectorial recommendations to the governments of Kazakhstan and the Kyrgyz Republic .

• As a result of the joint work of the groups, the Government of Kazakhstan took measures to review the Shardarinskaya dam and an official appeal was sent to the Government of the Kyrgyz Republic, justifying the need to implement a complex of mudflow protection measures that can reduce the mudflow activity risk in the Kyrgyz Republic.

• Additionally, through cooperation with Kazakh German

University, the Cross-Sectorial Working groups attracted Central Asian knowledge institutions to the substantive discussions and involved students in the practical group work in Bishkek.

In addition, four important knowledge and exchange events were hosted:

• As part of the support to CoPs development and sustainability of the Academic Knowledge CoP, the project team partnered with Kazakh German University in operationalization of the e-Journal on Integrated Water Resource Management (IWRM), which serves as a platform for accumulation of the regional knowledge and expertise on water and energy issues. The e-journal consolidates academics and practitioners from five Central Asian countries and Afghanistan.

• Expert support was also provided to GKU’s workshop on Sep 30 - Oct 1, 2016 that focused on the promotion and operationalization of E-Journal on IWRM and arranged for participation of two international experts at the event.

• Part of the support to the operationalization of the Kyrgyz Cross- Sectorial Working group featured a three-day regional workshop, ‘Geohazard risks in International Water Resource Management,’ which was held in Bishkek on December 19-21, 2016. The Kazakh-German University and National Kyrgyz Cross-Sectorial Working Group led the preparations and delivery of the workshop, which brought together 75 participants, including practitioners and experts in the area of water resource management, governmental officials, academia and students from the Kyrgyz Republic, Kazakhstan, and Tajikistan to discuss important issues of geo-hazard risks in the Kyrgyz Republic. The discussion resulted in the identification of the next tasks for the Cross-sectoral working group of the Kyrgyz Republic, which included an elaboration of required amendments for the database on disaster risks in the Kyrgyz Republic and a preparation of the appeal to the government, containing recommendations on launching unified open database and its components. As part of the coordination effort, the Kazakh-German University also prepared and published the information brochures of universities in the Kyrgyz Republic, covering water and energy issues.


• The Central Asia Knowledge Network and Communities of Practice for Water-Energy and Climate Change Management: Presentation of Results took place in Almaty, Kazakhstan on June 16, 2016, which brought together international and regional organizations and CAEWDP donors. The World Bank and its regional partners under the program—Central Asia Regional Center of Hydrology, Regional Environmental Center for Central Asia, and Kazakh-German University—presented results that were achieved under the Central Asia Knowledge Network within the last 3 years.


Activity TitleCentral Asia Water Resources Management (CA-WARM) Phase-I Project



Task Team LeaderNagaraja Rao Harshadeep

This grant aims to support the preparation of the Central Asia Water Resources Management Project - Phase I, of which the overall objective is to improve national and regional accessibility, reliability and analytical capacity to use water resources information for improved water resources planning, monitoring, and management. Specifically, the grant supports the preparation and appraisal of the proposed Central Asia Water Resources Management (CA-WARM) Phase I Project. The grant also supports the dialogue with the five national technical working groups, the regional technical working group, the Regional Steering Committee, as well as the Interstate Commission on Water Coordination (ICWC), its agencies and EC-IFAS.

The preparation has enabled all the countries to express interest in the project. At a regional-level, the work has enabled support for a new regional working group (RWG) that convened for the first time, as well as for the preparation of a higher-level regional steering committee. Discussions identified possible typologies of activities that will be supported by the project, as well as consolidated demand for learning about global good practices that are currently financed by other sponsors. Given the substantial technical interest, the project is also supporting a technical needs assessment at the national and regional levels, where an institutional

primer is being developed. A data primer and model primer have also been drafted.

Preparation of CA-WARM Phase I project has slowed down. There remain issues with the complex geopolitical cooperation situation in the region that delay progress. Issues of minimal participation from some countries and reduced interest in GEF financing are currently under discussion, given their potential to impact the phasing of countries or accessibility to finance. The risk of securing adequate financing (especially grant financing from regional IDA and bilateral donors) and the anticipated difficulty in securing countries’ participation suggest potential delays in processing and a loss of momentum. The project financing structure is currently being reviewed for adjustment to these realities.

Activity TitleTechnical Assistance for Developing Water Information Systems in Central Asia




The objective of this grant is to provide analytical foundations for the ‘CA-WaRM’ project, which aims to strengthen water information management systems to increase accessibility, reliability and the analytical capacity to generate and use water resources information in Central Asia. The recommendations will provide scoping needs, gaps, preparedness and consequent action plans for technical and capacity investments as input to the design of CA-WARM Phase-I Project, while improving linkages with other relevant national-level and regional-level activities. The gap analysis will build on existing water resource information systems and identify incremental investments that are needed to establish a regionally compatible water resources information system for Central Asia, guided by international good practice.

The grant comprises three components: national action plans (“roadmaps”); regional assessment, and global review of good practices. The national action plans cover all countries in Central Asia. The regional approach would be designed to knit and complement country-level approaches to establish a regional water resource information system that is open, coherent and easy to maintain. The global review takes advantage of World Bank lessons from other regions.


Implementation of the grant was slowed down in 2016 by the delay in preparation of the CA-WaRM project, which has been affected by the financial situation of Central Asia countries, as well as by the lack of regional IDA funds. This delay has downgraded the grant implementation rating to “moderately satisfactory” during this period. As a result, the approach to preparing CA-WaRM is currently under revision, with a focus on a smaller number of countries. It is worth noting that the outputs of the grant will have value beyond preparation of the CA-WaRM project, as illustrated by the Tajikistan national water information framework scoping study and design.

A significant portion of the national scoping activities in 2016 have been implemented in Tajikistan through an existing project, the Second Public Employment Project for Sustainable Agriculture and Water Resources (PAMP II)). The scoping study has been completed and a framework for a comprehensive National Water Information System (WIS) has been designed. In order to complete this design, comprehensive assessments of data collection, reporting, analysis, and use framework of 11 relevant stakeholder agencies were conducted. The WIS design incorporates several major information and communication technologies (i.e., database management, geographic information and wide area telecommunication systems). Four basin WIS applications were prepared for implementation with detailed design and financial plans that addressed water resource management and main irrigation system management. A draft program has been completed in the Kyrgyz Republic and final stocktaking is ongoing in Uzbekistan and Kazakhstan. Draft programs for Uzbekistan and Kazakhstan are expected to be completed in 2017, followed by a final dissemination to counterparts.

Progress on regional assessment. This second task expands national activities to the regional level, exploring capacity-building and technology investments, as well as institutional needs to facilitate cross- border information management. Building on the design accepted in 2016, a regional working group was formed from appointments of both regional and national institutions. The composition represents an innovation in Central Asia where regional knowledge and management activities were historically managed by the regional institutions. The approach to balancing regional and national perspectives is intended to strengthen national perspectives and build trust between national and regional organizations in the face of poor institutional cohesion, uneven capacity and legacy issues from previous efforts on water information management

systems. The first Regional Working Group meeting agreed on the Group’s mandate and constitution; initiated a list of potential regional investments; agreed on eligibility criteria for investments, and on an approach to regional implementation (a highly sensitive issue). In a confidential survey, all participants rated the meeting as “good” or “excellent”. The participatory and balanced approach was particularly appreciated through the brainstorming sessions and sharing of experiences. Ninety percent of the group felt: (i) their voice was heard, and (ii) the meeting was practical and produced substantive results. The main concerns centered on the very limited participation and absence of some Central Asian countries.

The Global Review of Good Practices has completed a technical note on good practices and converting materials into an e-book platform is in progress. With support from the Korean Green Growth Fund, the Central Asia Water Future Knowledge Forum and Exposition showcased achievements in analytical tools for water resources management and cutting-edge technologies from leading suppliers. The Forum and Expo convened over 285 participants from all five countries of Central Asia plus Afghanistan and the global community of water information professionals, service providers and innovators to explore global good practice in water information management systems. Specialists from all five Central Asia countries attended the event and presented papers. Vice Ministers of water from three Central Asia countries plus Afghanistan participated and lessons for the CA-WARM project were identified.

Activity TitleClimate Adaptation and Mitigation Program for Aral Sea Basin Series of Projects II



Task Team LeaderPhilippe Ambrosi

The objective of this grant is to sustain momentum in the regional dialogue and collaboration initiated around the Climate Adaptation and Mitigation Program for Aral Sea Basin (CAMP4ASB). CAMP4ASB seeks to improve national and regional resilience to climate change with an initial focus on agriculture, land, and water management. Specifically, the grant will support: (i) the finalization of Kazakhstan’s participation in CAMP4ASB (financed via the CAMP4ASB SoP II project), and (ii) regional dialogue


among Central Asian stakeholders to facilitate the CAMP4ASB’s implementation readiness, outreach to the development community, and preparation of the next phases of CAMP4ASB (including participation of the Kyrgyz Republic and Turkmenistan). The grant provides a platform for ongoing dialogue and information exchange on climate change among Central Asian countries.

Over the reporting period, there was moderately unsatisfactory progress towards the grant objective of sustaining momentum for regional dialogue and collaboration around the Climate Adaptation and Mitigation Program for Aral Sea Basin (CAMPASB). There was little progress on the two grant indicators towards their targets: (i) project supporting Kazakhstan’s participation in CAMP4ASB presented to the WB Board, and (ii) US$5 million mobilized from Development Partners.

The grant comprises two components: Kazakhstan project (CAMP4ASB SoP II) and resource mobilization. The Kazakhstan project assisted the Government counterpart in: completing studies and assessments for the prioritization of oblasts; scoping eligible climate investments, and defining climate grant investment scheme. The resource mobilization component has financed one regional workshop for Central Asian stakeholders, attended by Government representatives and technical experts with line ministries/agencies overseeing climate-sensitive sectors, regional institutions, and development partners. A meeting of CAMP4ASB Regional and National Coordination Agencies was held in Almaty (Kazakhstan) on January 26-27, 2016, with the objectives of: (i) reviewing steps and timeline towards Program effectiveness; (ii) strengthening implementation readiness, and (iii) continuing regional experience sharing on climate action and knowledge management.

• Kazakhstan project (CAMP4ASB SoP II): Following changes in its leadership team, the Ministry of Energy of the Republic of Kazakhstan requested substantial changes in late CY 2016 to the design of the project supporting Kazakhstan’s participation in the CAMP4ASB Program. In particular, these changes would focus the project only on Kazakhstan, removing the links with the regional dialogue and collaboration under the CAMP4ASB Program. The team is currently approaching another potential implementing agency in Kazakhstan (Ministry of Agriculture), which has expressed interest in the past for CAMP4ASB-

supported activities. A mission to Astana, Kazakhstan is scheduled in late January/early February 2017 to confirm the interest of the Ministry of Agriculture and adjust the scope of the project (including, putting a larger emphasis on water monitoring and information systems). The impact on CAMP4ASB SoP II is further delayed, as the World Bank Board approval is now expected in November 2017.

• Resource mobilization: Development Partners continue to be interested in the CAMP4ASB Program and prior to explicitly expressing their support (i.e., beyond financing related activities, in support of similar goals and objectives, with same national/regional implementing agencies), are awaiting the program’s first results. The Program became effective August 4, 2016 and regional activities and national activities in Tajikistan have started. Particular efforts will be required over the remaining period of the grant to reach out to Development Partners, communicate current results, and explore synergies and willingness for co-financing.

WATER PRODUCTIVITY PILLAR


Activity TitleAnalysis of Water Supply and Sewerage Services in Central Asia



Task Team LeaderrPier Mantovani

The objective of this grant activity is to provide a diagnostic of the current status and challenges of WSS in four key Central Asian countries—Kazakhstan, the Kyrgyz Republic, Tajikistan and Turkmenistan—and to outline policy priorities towards improved access, quality, efficiency and sustainability of WSS services. This will be achieved by analyzing multiple dimensions of WSS sector development, in part based on primary data collection across countries sharing common sector legacies from the Soviet era. The study will inform the prioritization by governments of WSS sector reform and investment needs.


The importance of this study is highlighted by the dire WSS situation across the four countries. It is estimated that only 40 to 58 percent of households have access to piped water, inefficient water supply services and experience 40 percent water losses on average. Sewage services also remain undeveloped outside the main urban centers. This situation is rooted in incomplete reforms towards decentralization and the financial autonomy of service provision since independence. Correcting this situation calls for country-wide water demand management programs—based on extensive prioritized water supply infrastructure rehabilitations—coupled with modernization of sector policies, capacities and water usage incentives.

This grant aims to provide recommendations on how to strengthen WSS demand management and efficiency programs in each of the four countries. This will be achieved by potentially fostering relevant regional cooperation and capacity-building initiatives, along with country-specific policy and investment programs for utility modernization, loss reduction, energy efficiency, technology, etc. The expected outcomes of the grant include:

• Improving sector knowledge and outlining possible strategic policy reforms to better inform governments’ and donors’ policy/strategy, and

• Participation and engagement of stakeholders in the final activity workshop scheduled for September 2015.

Grant objectives are mostly achieved. The grant objectives are mostly achieved and the final output, the study, is being finalized. The finalization of the study was impacted by the delay in data collection earlier on. Dissemination is planned to take place during a regional workshop in summer 2017.


Activity TitlePromoting Irrigation Efficiency



Task Team LeaderIjsbrand Harko de Jong

The overall development objective of this grant was to assist the five Central Asian countries in improving irrigation efficiency by conducting thematic studies at the national level, strengthening capacities and institutions, and preparing National Action Plans for improving irrigation efficiency. The grant raised awareness among national stakeholders about the importance of irrigation efficiency and its costs to the national economy, as well as the opportunities to improve this. While originally intended as a regional activity, the activity was subsequently implemented at the national level in Tajikistan, as regional collaboration on the topic did not materialize during the study period. Nevertheless, it provides good perspectives on future assessments at regional scale if this materializes in the future.

The grant supported a study in Tajikistan to assess the costs, causes and solutions of and for irrigation inefficiency. The activity generated interest both within and outside Tajikistan. The study produced the methodology for determining the costs of irrigation inefficiency at the level of the Tajikistan national economy and the methodology for planning irrigation efficiency investments. The final report was published in 2016 and disseminated. The study has prompted interest in Tajikistan to better understand the cost of water and energy intensity. The study was effective in quantifying the cost of irrigation inefficiency due to expensive pumping; and associated policy dimensions on irrigation and energy subsidies. The findings of the analysis provide pathways and incentives for more rational and efficient use of energy and water resources, especially in the context of CASA-1000.


ANNEX II – RESULTS FRAMEWORK, PROGRESS AND RESULTS CHAIN

This annex contains:

• Summary of the progress against outcome indicators

• Depiction of CAEWDP Results Framework (goal and outcome level) outlining the planned and achieved program goal and development outcomes by 2016, and

• Results chain describing the program outputs as of end of 2016.

Results indicators were rated as being either achieved (3 out of 5), or partially achieved (2 out of 5) by the close of 2016 (Table 3). The three indicators included: (i) investment / policy options to strengthen stability and predictability of power supply; (ii) investment

decisions on national level water/ energy projects that integrated transboundary implications, and (iii) program activities being coordinated and supported through a multi-donor trust fund have been achieved. The indicators supported: (i) the existence of institutional and analytical frameworks for improved water dialogue, and (ii) understanding of regional water productivity being reflected in national plans, policies or investments have been partially achieved. To address the first partially achieved objective, a report on the legal analysis of transboundary water management frameworks was produced. To address the second partially achieved indicator, CAEWDP supported analytical outputs, although it would require additional time for countries to fully institutionalize those lessons into national or regional policies and plans.

TABLE 3 — CAEWDP RESULTS FRAMEWORK (TRUNCATED VERSION)GOAL Indicator

Regional cooperation catalyzes long-term economic growth and livelihood security in Central Asia and provides a catalyst for continued economic growth and increased income.

Indicator: Regional organizations and national bodies have the capacity to support trans-boundary dialogue on regional cooperation.

DEVELOPMENT OBJECTIVE Indicator

Strengthened mutually beneficial regional cooperation enhances energy security and water security.

Three investment or policy options initiated to strengthen stability and predictability of power supply, with at least two options targeted to the Kyrgyz Republic and Tajikistan.

At least two investment decisions on national level water or energy projects include a clear understanding of their trans-boundary implications.

Program activities are coordinated and donor supported through a multi-donor trust fund.

Institutional and analytical frameworks for improved water dialogue across Central Asia stakeholders exist.

Understanding of regional water productivity is reflected in national plans, policies or investments of at least two countries.

Achieved Partially achieved Initiated No Progress Revision required


TABLE 4 — CAEWDP RESULTS FRAMEWORK (TOP TWO TIERS)PROJECT TITLE Central Asia Energy Water Development Program (CAEWDP)

GOAL (Impact) Indicator Baseline 2010/11

Milestone 1 Milestone 2 Outcome 2016

Regional cooperation catalyzes long-term economic growth and livelihood security to Central Asia and provides a catalyst for continued economic growth and increased income

Regional organizations and national bodies have capacity to support transboundary dialogue on regional cooperation.

Disparate national level investments and fragmented regional cooperation

Agreement on collaboration with key regional institutions, supported by Heads of State

Skills and tools in place to facilitate regional dialogue for cooperation.

CAREC ESCC has supported inter/intra-regional power trade and included topic in EWP 2016-2020. EC-IFAS has held several transboundary dialogue events on water and water management.

Source: Existing institutions mandates and activities.

DEVELOPMENTOBJECTIVE(Outcome)

Indicator Baseline 2010/11

Milestone 1 Milestone 2 Outcome 2016 Risks

At least three investment or policy options (two of which targeted at Tajikistan & the Kyrgyz Republic) initiated to strengthen stability and predictability of power supplies

TAJ & KYRG have winter energy deficit.

Needs Assessment completed identifying priority activities

Winter energy coordination plans in place.

There have been four investments targeted at TJ & KYRG initiated to strengthen stability and predictability of power supplies improving the situation from 2009/10.

Regional organizations are too weak to be able to convene substantive inter-state dialogue on water-energy

There is no dialogue on water and energy, limited to individual national discussions

Source: Government statistics


DEVELOPMENTOBJECTIVE(Outcome)

Indicator Baseline 2010/11

Milestone 1 Milestone 2 Outcome 2016 Risks

Strengthened mutually beneficial regional cooperation enhances energy security and water security.

At least two investment decisions on national level water or energy projects include clear understanding of their transboundary implications.

Few current investment decisions on water and energy take into account the transboundary implications.

Potential national and regional energy water investments identified

At least two investment projects selected

Two energy investments take into account transboundary implications for effective use of water and energy resources.

Source Government Reports, World Bank country CASs, pipeline of investments

Program activities are coordinated and donor supported through an MDTF (Multi Donor Trust Fund)

Active donors in the region, disparate coordination and inefficient

Draft agreement on Multi-Donor Trust Fund (MDTF) and donor coordination based on consultations

Established MDTF with a minimum of two donors contributing.

Multi-Donor trust Fund fully operational. Program activities are coordinated and donor supported.

Source: Water Sector: DFID, EC, Finland, Germany, Switzerland, UNDP, others.Energy Sector: ADB, Russia, USAID, WB, others.

Sustainable for improved water dialogue across Central Asia stakeholders exists.

No shared institutional and analytical framework exists in the region

Analytical Framework developed with input from technical specialists of all CA states

Analytical framework agreed at technical level between at least two states;Institutional links on analytics between at least three states are in place

There is regular communication between relevant technical institutes in CA states

Source: Communication monitoring reports

47CAEWDP | Annual Report 2016CAEWDP | Annual Report 201646

RESULTS CHAIN 2016

The Results chain below outlines the activities for each of the three program pillars against: (i) planned outputs; (ii) pre-2016 outputs; and (iii) end of 2016 outputs.

TABLE 5 — CAEWDP 2016 RESULTS CHAINActivities Components Planned Outputs (Indicators) Pre 2016 2016

Component I: Energy Development pillar

a) Energy Security in Central Asia Countries: Design and implement measures to alleviate severe winter energy shortages as a base for sustainable energy security

b. Intra-Central Asia trade: Enhance energy trading among CA countries by transition to more efficient, market transactions based on well-designed commercial contracts

c. Connecting CA to Regional Power Markets: Build the foundation for development of a power market linking Central to other regions

1. National energy plans in at least two countries take into consideration inter- and intra-regional energy trade implications

2. Pre-investment analysis completed for two options for stable and predictable winter power supply in Tajikistan & the Kyrgyz Republic

3. National energy generation institutions considered regional implications of national investments

4. Political and financial support increased for transmission

infrastructure planning

5. At least one new investment decision includes inter-/intra-regional implications

6. Strengthened institutional Development (energy trade institutions)

1. National energy plans in Tajikistan and the Kyrgyz Republic took into consideration inter- and intra-regional energy trade implications (Contributes towards Component b).

2. Pre-investment analysis completed for 30+ options for stable and predictable winter power supply in Kazakhstan, Tajikistan & the Kyrgyz Republic (Contributes towards Component a)

3. Bishkek considered regional implications of national investments (Contributes towards Component b)

4. Tajikistan Energy Sector Action Plan for 2015-2017 and CAREC Energy Sector Coordinating Committee (ESCC) Energy Work Plan (2013-2015) supported increased transmission infrastructure planning (Contributes towards Component c)

The Coordination Agreement between Tajikistan and the Kyrgyz Republic Entity was finalized (Contributes towards Component b)

5. One new investment decision, CASA-1000 approved March 2014, included inter regional implications (Contributes towards Component b)

6. Two CAREC Energy Sector Coordination meetings were held, draft of Energy Strategy and Work Plan 2016-2020 was discussed (Contributes towards Component b)

1. Kazakhstan Power Sector: Stuck in Transition: Based on an extensive analysis, detailed interviews, and system modelling, the Note aims to model various sector development scenarios, quantify their costs and benefits, identify key sector challenges, and present recommended policy actions. (Contributes towards Component c)

2. The main objective of the planning exercise is to ensure that peak load and energy demand up to 2030 is met reliably and securely in line with the government’s policies at the most efficient cost. (Contributes towards Component b)

The main rationale for the study is to inform the government’s US$32 billion investment plan in the energy sector which will modernize infrastructure, especially for energy, transport and irrigation, as this is one of the key development priorities for the country. (Contributes towards Component a)

Stove Assessment Report: The report provides details on the tasks to be implemented under the TA component “Efficient stoves and heating solutions”. (Contributes towards Component a)

3. Assistance to Barqi Tajik (BT) on financial management contributed to its implementation of the Financial Management Improvement Program (FMIP) and apply IFRS in the head office and in more than 30 regional branches. (Contributes towards Component b)

4. The main objective of the planning exercise is to ensure that peak load and energy demand up to 2030 is met reliably and securely in line with the government’s policies at the most efficient cost. (Contributes towards Component b)

The main rationale for the study is to inform the government’s US$32 billion investment plan in the energy sector which will modernize infrastructure, especially for energy, transport and irrigation, as this is one of the key development priorities for the country. (Contributes towards Component a)

Stove Assessment Report: The report provides details on the tasks to be implemented under the TA component “Efficient stoves and heating solutions”. (Contributes towards Component a)

5. 21st CAREC Energy Sector Coordinating Committee (ESCC) Meeting (Islamabad, Pakistan: 11-13 April 2016)-Energy sector focal points of CAREC member countries, officials from energy ministries and agencies, and representatives from multilateral development partners discussed

•updates on the deliverables of the Energy Sector Work Plan (EWP) 2016-2020 and•next steps to encourage investments in the energy sector. (Contributes towards Component b)


Activities Components Planned Outputs (Indicators) Pre 2016 2016

Component II: Energy-Water Linkages pillar

a) Decision support: Strengthen the knowledge base and technical capacity to manage water and energy resources at the national level, and support evidence-based dialogue

b) Climate Change: Identify climate change risks and develop adaptation strategies in energy, and agriculture

c) Riparian dialogue: Facilitate dialogue across countries to improve coordinated management and development of shared resources, including nurturing regional institutions (ECSS & EC-IFAS) and communities of practice.

1. Expand data management to enhance energy/water analysis

2. Regional dialogue on at least two priority water & energy issues facilitated by regional and national organizations.

3. Strengthened regional organizations capacity to facilitate regional dialogue

4. Climate change (CC) adaptation implications recognized for both energy and water.

5. Strengthened analytical framework is used to support water/energy dialogue

1. Expanded data management to enhance energy/water analysis:

• Strengthening Analysis for Integrated Water Resources Management: A Technical Workshop (Ashgabat, November 4-5, 2014) (Contributes towards Component a).

• Assessment of the Role of Glaciers in Stream Flow from the Pamir and Tien Shan Mountains (Contributes towards Component b).

• Spatial Agent Application for IPhone and Android. The mobile app was demonstrated at a regional workshop to promote innovation and technology in regional water resource management; three mobile apps are being developed to answer to key information needs of the institutions (Contributes towards Component c).

• Basin IT Workshop (February 2014) (Contributes towards Component c).

2. Regional dialogue on Rogun Assessments Climate Change, and Energy security and trade were facilitated by regional and national organizations.

• Rogun Consultations facilitated by the World Bank (May 2011, November 2012, February 2013, October 2013, and July 2014) (Contributes towards Component c).

• United Nations Regional Centre for Preventive Diplomacy for Central Asia cooperation on a framework agreement for sharing trans-boundary waters (Vienna, March 2014) (Contributes towards Component c)

• Support to the UNRCCA Trans-Boundary Water Cooperation Process convened a meeting in 2015 to discuss issues related to the interpretation and efficient application of key principles of international law in the management of trans-boundary water resources in the Aral Sea Basin (Contributes towards Component c).

• Legal Analysis of the Trans-Boundary Water Management Frameworks in Central Asia A draft report has been produced (Contributes towards Component c)

• Central Asia Knowledge Network Four events on trans-boundary water management were hosted in Central Asia; the umbrella Knowledge Network platform has been established and is being institutionalized (Contributes towards Component c).

• CAREC ESCC Meetings (2012-2014) (Contributes towards Component a)

• 2nd Central Asia Climate Knowledge Forum: Moving towards Regional Climate Resilience (May 2014) (Contributes towards Component c)

1. Capacity Strengthening for IWRM Modeling Final Report and annexes. (Contributes towards Component a)

2. Workshop in June 2016 in Almaty, Kazakhstan to discuss the results of the Knowledge Networks and Communities of Practice for Water-Energy and Climate Change Management Program. (Contributes towards Component c)

3. 4. September 2016, the Water Futures Forum & Expo took

place in Almaty, Kazakhstan. Over 200 policy and technical experts from government, academia, private sector, and CSOs participated at this international event. (Contributes towards Component a)

5. CAMP4ASB Regional Meeting in Almaty (Kazakhstan) June 24-28, 2016. The meeting was to review final steps towards effectiveness for the first phase of CAMP4ASB and overall implementation arrangements in collaboration with representatives from the five Central Asian countries as well as from the Executive Committee of International Fund for Saving the Aral Sea (EC-IFAS) and FAO. (Contributes towards Component b)



3. Strengthened regional organizations capacity to facilitate regional dialogue.

• The World Bank and EC-IFAS have agreed to prepare a US$25-75 million project under the Third Aral Sea Basin Plan (Contributes towards Component c).

• International Panel of Experts to assist Tajikistan in the Rogun Consultations (Contributes towards Component c)

• A regional reconnaissance combined with national consultations facilitated the exchange of information on cutting edge approaches to analysis for IWRM for 231 water resources, irrigation, glacier, groundwater, energy, and environmental national experts (Contributes towards Component a)

• Aral DIF Water modeling increased awareness and knowledge in publically available global data sets (including remote sensing) and modeling platforms as a modern basis of a decision support system for IWRM for 20 technical model and data specialists from all six countries of Central Asia (inclusive of Afghanistan) (Contributes towards Component a)

• Basin IT Workshop over a three-day training module was developed by the World Bank Institute based on Basin IT, a water resources management trade-off analysis training tool, to build capacity for 22 student, young professional participants, and professors from all six countries of Central Asia (inclusive of Afghanistan) (Contributes towards Component a)

4. Climate change (CC) adaptation implications recognized for both energy and water:

• Towards Climate-Smart Solutions for Central Asia Draft (Contributes towards Component b)

• Turn Down the Heat: Confronting the New Climate Normal Report (Launched November 2014) (Contributes towards Component b)

• Capacity Building Workshop for Regional Scientists in Potsdam facilitated by Potsdam Institute for Climate Impact Research (PIK) (Germany, March 2014) (Contributes towards Component a)

• Central Asia Technical Working Group on Climate Change, comprised of government-nominated experts from all Central Asia countries to work collegially on climate-smart solutions across sectors and borders (Contributes towards Component c)

• Energy Vulnerability to Climate Change: a draft report is completed (Contributes towards Component b)

5. Capacity Strengthening for IWRM Modeling National Workshop was held with Turkmenistan specialists on a 1-2 year water program at national and regional scales. A five-day training course with professionals from all six Aral Sea Basin countries (including Afghanistan) as well as representatives of the regional water organization (Contributes towards Component a).



Component III: Water Productivity pillar

a) Dam safety and rehabilitation: improve dam safety and water management at bulk infrastructure facilities

b) Irrigation Efficiency: improve efficiency of irrigation at the national level through prioritization of investments opportunities, strengthening capacities and institutions and introducing new technology

c) Water resources diagnostics: Strengthen data and analysis of water resources as a basis for policy development and investments

d) Water supply sector diagnostics

1. IFAS’ capacity in agricultural water management strengthened, and communication between national agricultural water specialists improved

2. Infrastructure and management opportunities (including investments) for increased agricultural water productivity identified

3. National action plans for increasing agricultural water productivity prepared

4. Understanding of regional water productivity is reflected in national plans, policies and/or investments of at least two countries

5. Understanding of water supply sector priorities is improved

1. IFAS’ capacity in agricultural water management strengthened, and communication between national agricultural water specialists improved.

• Draft Country Report for Uzbekistan “Social Impact Analysis of Water Supply and Sanitation Services in Central Asia” presenting innovations and factors of success of local management of irrigation and drainage water management (Contributes towards Component d)

• Poverty and Social Impact Analysis (PSIA) Diagnostic tool (Contributes towards Component d)

• Central Asia Water Management a series of Policy Discussion Papers on Central Asia Water Resources Management, as well as Country Profiles were produced (Contributes towards Component c).

2. Draft Report “The Costs of Irrigation Inefficiency in Tajikistan” (Contributes towards Component b)

• Strengthening Irrigation Governance produced a diagnostic tool and an assessment that identified key factors and conditions that are associated with good performance of local irrigation canal water management in Uzbekistan (Contributes towards Component b).

• Promoting Irrigation Efficiency, the methodology for planning irrigation efficiency investments was completed and a methodology for determining the costs of irrigation inefficiency at the level of the national economy is in draft. A review of irrigation efficiency in Tajikistan is being finalized (Contributes

towards Component b).

3. Social Impact Analysis of Water Supply and Sanitation Services Report was produced (Contributes towards Component d)

• Analysis of Water Supply and Sewerage Services in Central Asia Draft Reports on policy recommendations for Tajikistan and Uzbekistan are under preparation, with 2 rounds of consultations in each of the four countries on the preliminary diagnostic and the policy recommendations.

1. Exploratory assessment of factors that influence quality of local irrigation water governance in Uzbekistan published. (Contributes towards Component b)

• The Costs of Irrigation Inefficiency in Tajikistan published. (Contributes towards Component b)

• Knowledge Sharing workshops conducted on Social Impact Analysis of Water Supply and Sanitation Services in Central Asia in November 2015 in Washington, DC and February 2016 in Tashkent, Uzbekistan. (Contributes towards Component c)

2. Draft Analysis of Water Supply and Sewerage Services in Central Asia: Challenges and Outlook Policy Options Reports – Tajikistan & Uzbekistan completed. (Contributes towards Component d)

• Session "Increasing Water Use Efficiency" at the High Level Symposium on SDG 6 and Targets: Ensuring that No One is Left Behind in Access to Water and Sanitation in Dushanbe August 2016. (Contributes towards Component d)

The Central Asia Energy-Water Development Program (CAEWDP) is a knowledge and

technical assistance multi-donor trust fund (MDTF) administered by the World Bank.

CAEWDP’s mission is to build energy and water security for the countries of Central

Asia—Kazakhstan, Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan—through

enhanced regional cooperation. Since its inception in 2010, CAEWDP has received

support from bilateral and multilateral donors including the Government of Switzerland’s

State Secretariat for Economic Affairs (SECO), the European Commission (EC), the United

Kingdom’s Department for International Development (DFID), the United States Agency

for International Development (USAID), and the World Bank Group.



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