Public Disclosure Authorized

FOR OFFICIAL USE ONLY

Report No: PAD3316

Public Disclosure Authorized

INTERNATIONAL DEVELOPMENT ASSOCIATION

PROJECT APPRAISAL DOCUMENT

ON A
PROPOSED GRANT

IN THE AMOUNT OF SDR22.9 MILLION

Public Disclosure Authorized

(US$31.7 MILLION EQUIVALENT)

TO THE

REPUBLIC OF TAJIKISTAN

FOR A

RURAL ELECTRIFICATION PROJECT

June 18, 2019

Public Disclosure Authorized

Energy & Extractives Global Practice

Europe And Central Asia Region

This document has a restricted distribution and may be used by recipients only in the performance of
their official duties. Its contents may not otherwise be disclosed without World Bank authorization.
 CURRENCY EQUIVALENTS

(Exchange Rate Effective April 30, 2019)

Currency Unit = Tajik Somoni

US$1 = TJS9.4393
US$1 = SDR0.7216

FISCAL YEAR
January 1 - December 31

Regional Vice President: Cyril E Muller

Country Director: Lilia Burunciuc
Senior Global Practice Director: Riccardo Puliti
Practice Manager: Sameer Shukla
Task Team Leader(s): Artur Kochnakyan, Takhmina Mukhamedova
 ABBREVIATIONS AND ACRONYMS

AKFED Aga Khan Fund for Economic Development

ASTER Advanced Spaceborne Thermal Emission and Reflection Radiometer
BDU Business Development Unit
BESS Battery Energy Storage System
BT Barqi Tojik
CAPS Central Asia Power System
CASA Central Asia South Asia
CHP Combined Heat and Power Plant
CPF Country Partnership Framework
CRI Corporate Results Indicator
DA Designated Account
DABS Da Afghanistan Breshna Sherkat
DCC Development Coordination Council
DFIL Disbursement and Financial Information Letter
DH District Heating
DRR Disaster Risk Reduction
DTM Digital Terrain Model
EA Environmental Assessment
EBITDA Earnings Before Interest, Taxes, and Depreciation
ECA Europe and Central Asia
EE Energy Efficiency
EIRR Economic Internal Rate of Return
E&S Environmental and Social
ESIA Environmental and Social Impact Assessment
ESMF Environmental and Social Management Framework
ESMP Environmental and Social Management Plan
ESPMU Energy Sector Project Management Unit
ESRS Environmental and Social Review Summary
ESS Environmental and Social Standard
EU European Union
FCV Fragility, Conflict and Violence
FM Financial Management
FIRR Financial Internal Rate of Return
GAP Gender Action Plan
Gcal Gigacalories
FY Fiscal Year
GBAO Gorno-Badakhshan Autonomous Oblast
GDP Gross Domestic Product
GAP Gender Action Plan
GHG Greenhouse Gas
HFO Heavy Fuel Oil
HH Household
HPP Hydropower Plant
GDP Gross Domestic Product
GoT Government of Tajikistan
GRM Grievance Redress Mechanism
GRS Grievance Redress Service (WB)
GWh Giga-watt hour
IA Implementing Agency
IDA International Development Association
IE Independent Evaluation
IFR Interim Financial Report
IPF Investment Project Financing
IPP Independent Power Producer
IPSAS International Public Sector Accounting Standards
ISP Implementation Support Plan
KfW Kreditanstalt für Wiederaufbau
Km Kilometer
kV Kilovolt
kW Kilowatt
kWh Kilowatt hour
LCOH Levelized Cost of Heating
masl Meters above sea level
M&E Monitoring and Evaluation
MIS Management Information System
MOF Ministry of Finance
MW Mega-watt
NASA National Aeronautical and Space Administration
NBT National Bank of Tajikistan
NEET Not being in Employment, Education, or Training
NGO Non-governmental Organization
NPV Net Present Value
ODA Official Development Assistance
OHL Overhead Line
O&M Operations and Maintenance
OP Operational Policy (WB)
PDO Project Development Objective
PEC Pamir Energy Company
POM Project Operations Manual
PPA Power Purchase Agreement
PPSD Project Procurement Strategy for Development
PMC Project Management Consultant
PDSI Project Design, Supply, and Install
RE Renewable Energy
REDP Rural Economy Development Project
REP Rural Electrification Project
RFB Request for Bids
RMR Risk Mitigation Regime
ROR Run-of-River
RSP Resilience Strengthening Program
RPF Resettlement Policy Framework
SAR Spaceborne Synthetic Aperture Radar
SECO State Secretariat for Economic Affairs
SE PMUES State Enterprise Project Management Unit for the Energy Sector
SERSP Socio-Economic Resilience Strengthening Program
SOE State Owned Enterprise
TALCO Tajikistan Aluminum Company
TJS Tajik Somoni
TSA Target Social Assistance
USAID United States Agency for International Development
VAT Value Added Tax
The World Bank
Rural Electrification Project (P170132)

TABLE OF CONTENTS

DATASHEET ........................................................................................................................... 1
I. STRATEGIC CONTEXT ...................................................................................................... 8
A. Country Context............................................................................................................................... 8
B. Sectoral and Institutional Context ................................................................................................. 10
II. PROJECT DESCRIPTION.................................................................................................. 15
A. Project Development Objective..................................................................................................... 15
B. Project Components ...................................................................................................................... 16
C. Project Beneficiaries ...................................................................................................................... 19
D. Results Chain ................................................................................................................................. 19
E. Rationale for Bank Involvement and Role of Partners................................................................... 20
F. Lessons Learned and Reflected in the Project Design ................................................................... 22
III. IMPLEMENTATION ARRANGEMENTS ............................................................................ 23
A. Institutional and Implementation Arrangements.......................................................................... 23
B. Results Monitoring and Evaluation Arrangements........................................................................ 25
C. Sustainability .................................................................................................................................. 25
IV. PROJECT APPRAISAL SUMMARY ................................................................................... 26
A. Technical, Economic and Financial Analysis .............................................................................. 26
B. Fiduciary .................................................................................................................................... 31
C. Legal Operational Policies ......................................................................................................... 32
V. GRIEVANCE REDRESS SERVICES ..................................................................................... 37
VI. KEY RISKS ..................................................................................................................... 38
VII. RESULTS FRAMEWORK AND MONITORING ................................................................... 40
ANNEX 1: Implementation Arrangements and Support Plan .......................................... 46
ANNEX 2: Detailed Project Description .......................................................................... 49
ANNEX 3: Financial Management, Disbursements, and Procurement ............................. 63
ANNEX 4: Economic and Financial Analyses ................................................................... 69
ANNEX 5: Operational Policy 7.50 with Respect to Sebzor HPP and Small Hydros ........... 90
 The World Bank
Rural Electrification Project (P170132)

DATASHEET

BASIC INFORMATION
BASIC_INFO_TABLE
Country Project Name

Tajikistan Rural Electrification Project

Project ID Financing Instrument Environmental and Social Risk Classification

Investment Project
P170132 Substantial
Financing

Financing & Implementation Modalities

[ ] Multiphase Programmatic Approach (MPA) [ ] Contingent Emergency Response Component (CERC)
[ ] Series of Projects (SOP) [ ] Fragile State(s)

[ ] Disbursement-linked Indicators (DLIs) [ ] Small State(s)

[ ] Financial Intermediaries (FI) [✓] Fragile within a non-fragile Country
[ ] Project-Based Guarantee [ ] Conflict

[ ] Deferred Drawdown [ ] Responding to Natural or Man-made Disaster

[ ] Alternate Procurement Arrangements (APA)

Expected Approval Date Expected Closing Date

20-Jun-2019 31-Dec-2025

Bank/IFC Collaboration

No

Proposed Development Objective(s)

The project development objective is to provide electricity access to target settlements in GBAO and Khatlon regions
of Tajikistan.

Components

Component Name Cost (US$, millions)

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 The World Bank
Rural Electrification Project (P170132)

Component 1: Provision of electricity access to target settlements in GBAO region 25.2

Component 2: Provision of electricity access to target settlements in Khatlon region 6.5

Organizations

Borrower: Republic of Tajikistan

Implementing Agency: Pamir Energy Company

Barqi Tojik

PROJECT FINANCING DATA (US$, Millions)

SUMMARY -NewFin1

Total Project Cost 31.70

Total Financing 31.70
of which IBRD/IDA 31.70

Financing Gap 0.00

DETAILS -NewFinEnh1

World Bank Group Financing

International Development Association (IDA) 31.70

IDA Grant 31.70

IDA Resources (in US$, Millions)

Credit Amount Grant Amount Guarantee Amount Total Amount

Transitional Support 31.70 0.00 0.00 31.70

Total 31.70 0.00 0.00 31.70

Expected Disbursements (in US$, Millions)

WB Fiscal Year 2020 2021 2022 2023 2024 2025 2026

Annual 2.00 3.00 4.00 6.00 6.00 6.00 4.70

Cumulative 2.00 5.00 9.00 15.00 21.00 27.00 31.70

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 The World Bank
Rural Electrification Project (P170132)

INSTITUTIONAL DATA

Practice Area (Lead) Contributing Practice Areas

Energy & Extractives

Climate Change and Disaster Screening

This operation has been screened for short and long-term climate change and disaster risks

Gender Tag

Does the project plan to undertake any of the following?

a. Analysis to identify Project-relevant gaps between males and females, especially in light of Yes
country gaps identified through SCD and CPF

b. Specific action(s) to address the gender gaps identified in (a) and/or to improve women or Yes
men's empowerment

c. Include Indicators in results framework to monitor outcomes from actions identified in (b) Yes

SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT)

Risk Category Rating

1. Political and Governance ⚫ High

2. Macroeconomic ⚫ Substantial

3. Sector Strategies and Policies ⚫ Substantial

4. Technical Design of Project or Program ⚫ Substantial

5. Institutional Capacity for Implementation and Sustainability ⚫ Substantial

6. Fiduciary ⚫ Substantial

7. Environment and Social ⚫ Substantial

8. Stakeholders ⚫ Moderate

9. Other

10. Overall ⚫ Substantial

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 The World Bank
Rural Electrification Project (P170132)

COMPLIANCE

Policy
Does the project depart from the CPF in content or in other significant respects?
[ ] Yes [✓] No

Does the project require any waivers of Bank policies?

[ ] Yes [✓] No

Environmental and Social Standards Relevance Given its Context at the Time of Appraisal

E & S Standards Relevance

Assessment and Management of Environmental and Social Risks and Impacts Relevant

Stakeholder Engagement and Information Disclosure Relevant

Labor and Working Conditions Relevant

Resource Efficiency and Pollution Prevention and Management Relevant

Community Health and Safety Relevant

Land Acquisition, Restrictions on Land Use and Involuntary Resettlement Relevant

Biodiversity Conservation and Sustainable Management of Living Natural Relevant

Resources
Indigenous Peoples/Sub-Saharan African Historically Underserved Traditional Not Currently Relevant
Local Communities
Cultural Heritage Relevant

Financial Intermediaries Not Currently Relevant

NOTE: For further information regarding the World Bank’s due diligence assessment of the Project’s potential
environmental and social risks and impacts, please refer to the Project’s Appraisal Environmental and Social Review
Summary (ESRS).

Legal Covenants
Name Recurrent Due Date Frequency
Debt Service Coverage of PEC X Continuous
Description of Covenant

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Rural Electrification Project (P170132)

Except as the Association shall otherwise agree, the Project Implementing Entity shall, commencing not later than the
Effective Date, not incur any long-term debt unless a reasonable forecast of its revenues and expenditures shows
that its estimated net revenues for each fiscal year during the term of the debt to be incurred shall be equal to at
least 1.2 times the estimated long-term debt service requirements in such year on all debt of the Project Implementing
Entity, including the debt to be incurred.

Name Recurrent Due Date Frequency

Debt Service Coverage of BT X Continuous
Description of Covenant
Except as the Association shall otherwise agree, the Project Implementing Entity shall, commencing not later than the
Effective Date, not incur any short-term or long-term debt unless a reasonable forecast of its revenues and
expenditures shows that its estimated net revenues for each fiscal year during the term of the debt to be incurred
shall be equal to at least the estimated debt service requirements in such year on all debt of the Project Implementing
Entity, including the debt to be incurred.
Source of Fund Name Type
IDA BT Subsidiary Agreement Effectiveness
Description of Condition
The BT Subsidiary Agreement has been entered into by the parties thereto in form and substance satisfactory to the
Association.

Source of Fund Name Type

IDA PEC Subsidiary Agreement Effectiveness
Description of Condition
The PEC Subsidiary Agreement has been entered into by the parties thereto in form and substance satisfactory to the
Association.
Source of Fund Name Type
IDA Project Operational Manuals Effectiveness
Description of Condition
The Project Operational Manuals have been adopted by the Project Implementing Entities in a form and substance
satisfactory to the Association.
Source of Fund Name Type
IDA ESPMU Agreement Disbursement
Description of Condition
ESPMU Agreement has been entered into by the parties thereto in form and substance satisfactory to the
Association.
TASK TEAM

Bank Staff
Name Role Specialization Unit

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Rural Electrification Project (P170132)

Team Leader(ADM
Artur Kochnakyan Overal task management GEE03
Responsible)
Takhmina Mukhamedova Team Leader Overall operational GEE03
Almudena Mateos Merino Team Member Renewable energy GEE03
Procurement Specialist (ADM
Dilshod Karimova Procurement GGOPC
Responsible)
Ahmed Merzouk Procurement Specialist Procurement GGOPC
Financial Management
Niso Bazidova Financial management GGOEE
Specialist (ADM Responsible)
Financial Management
Garik Sergeyan Financial management GGOEE
Specialist
Environmental Specialist(ADM
Javaid Afzal Environmental GENEC
Responsible)
Ruxandra Costache Counsel Legal LEGOP
Jasna Mestnik Finance Officer Disbursements WFACS
Eric Ranjeva Finance Officer Disbursements WFACS
Ma Dessirie Kalinski Finance Analyst Disbursements WFACS
Social Specialist(ADM
Suryanarayana Satish Social GSU03
Responsible)
Renewable energy and energy
Rhedon Begolli Team Member GEE03
efficiency
Pierre Audinet Peer Reviewer Technical GEE08
Dana Rysankova Peer Reviewer Technical GEEDR
Dung Kim Le Team Member Operational support GEE03
Emil Zalinyan Team Member Financial analysis GEE03
Hiwote Tadesse Team Member Operational GEE03
Katsuyuki Fukui Team Member Power engineering GEE03
Sr. Social Development
Audrey Sacks Gender GSU03
Specialist

Extended Team
Name Title Organization Location

Kubanychbek Turdubaev Power engineering consultant The World Bank Kyrgyz Republic
Power system planning
Javier Inon The World Bank United States
consultant

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Rural Electrification Project (P170132)

Marta Elena Molares-

Legal consultant The World Bank United States
Halberg
Iftikhar Khalili Hydropower consultant The World Bank Pakistan
Daniele Battaglia Geology consultant The World Bank Italy
Federico Ciampitti Hydromechnical consultant The World Bank Italy
Ezgi Canoplat Social development consultant The World Bank United States
Savri Kurbanbekova Social development consultant The World Bank Tajikistan
Malika Babadzhanova Environmental consultant The World Bank Tajikistan

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 The World Bank
Rural Electrification Project (P170132)

I. STRATEGIC CONTEXT

A. Country Context

1. Real GDP growth rate increased to 7.3 percent in 2018, up from the 6 percent in the immediate
aftermath of the post‐2014 resource price shock, but economic conditions are volatile. The increase in
growth was supported by the traditional drivers: remittance‐driven consumption and public investments.
The somoni‐denominated value of remittances from, principally, Russia have fluctuated between one‐
quarter and one‐half of GDP, following international oil price fluctuations and the Russian business cycle.
Fiscal revenues, reliant on import‐related value‐added tax (VAT) have fluctuated accordingly, affecting public
expenditures and deficits. Following the commodity price shock in 2014, and subsequent stagnation of the
Russian economy, Tajikistan went through a cumulative 45 percent decline of both remittances and imports,
which has been partially reversed, as of 2017, by rising energy prices. Total investment rates are low, given
investment needs at around 21–22 percent of GDP, due to very low rates of private investment (at about 4
percent of GDP). In terms of sectoral contributions to growth, construction, food processing, metallurgy, and
energy sectors were the primary drivers of industrial growth.
2. The combination of prudent monetary policy and lower imported food prices have resulted is
subsiding inflationary pressures. Relatively stable exchange rates from prudent monetary policy and the
availability of food imports from Uzbekistan since the re‐opening of bilateral borders has led to a decline in
the consumer price inflation from 7.3 percent in 2017 to 3.9 percent in 2018. Specifically, with food
accounting for more than 55 percent of the consumption basket, the dampening effects from food inflation
offset increased water and electricity tariffs and the secondary effects from rising global oil prices. The
National Bank of Tajikistan (NBT) has maintained its focus on absorbing excess liquidity from the market.
3. The authorities have taken steps to reverse the counter‐cyclical fiscal expansion during 2016–17 and
restore macro‐fiscal stability. The fiscal deficit is estimated to have fallen to 5.0 percent of 2018 GDP, from
9.8 percent in 2016 and 6.9 percent of GDP in 2017. Fiscal consolidation was limited by the authorities’
decision to launch Rogun Hydropower Plant’s (HPP) first turbine by November 2018. The accelerated
investment profile of the power plant, accompanied with a 15‐percent increase in expenditures on public‐
sector wages, pensions, and other social transfers, drove the fiscal deficit up to an estimated 4.9 percent of
GDP by the first three quarters of 2018. These were offset by spending cuts and payment delays in other
budget lines in other recurrent and capital expenditures, through which the Government managed to reduce
public spending by 5.6 percent of GDP during 2016–18. The approved State Budget for 2019 envisages the
continuation of the fiscal consolidation path launched in 2018.
4. Tax and expenditure reforms are needed to support social expenditures in a sustainable manner as
well as for private sector development. In the face of continued fiscal stress, it will be necessary to broaden
the tax base to accompany expenditure rationalization measures if Tajikistan is to increase resources to its
targeted social assistance program. The latter program is expected to be rolled out nationwide in 2019 and
will be critical in protecting the poor from the impacts of anticipated tariff increases and economic shocks.
The tax system and administration will need to be rationalized to support private sector development.
5. Natural disasters and climate change threaten Tajikistan’s economic and social development. 1 The

1 World Bank, Reducing Multi-Hazard Risks Across Tajikistan: Protecting Communities Through Quality Infrastructure
(Washington, DC: World Bank, 2017).

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country’s varied geological, climatologic, and topographic features exacerbate its vulnerability and make it
highly susceptible to many natural hazards, including earthquakes, floods, landslides, and avalanches. From
1992 to 2016 natural disasters affected 7 million people in Tajikistan—more than 80 percent of the total
population—and caused economic losses worth US$1.8 billion.2 In response to these risks, the Government
of Tajikistan is gradually moving from disaster response to risk mitigation and has taken steps to mainstream
disaster risk mitigation into development planning, including the adoption of the Sendai Framework for
Disaster Risk Reduction in 2015. Projected increases in temperatures could result in an increase in the
frequency or intensity of heat waves. Increased heat, together with higher evaporation, could lead to
increased drought with subsequent loss of crops and pastures and the expansion of desert areas. Extreme
high temperatures will also cause glaciers to melt, which could lead to flooding in some areas and shortage
of fresh water in other areas. The increase in intensity of precipitation will aggravate mudflow, landslides and
avalanches.
6. Tajikistan has the highest proportion of youth to adults among all post-Soviet republics and a high
percentage of female headed-households. Official 2018 figures show that the proportion of the population
under 30 years old is 63 percent of the country’ total population, with the age group 15-29 years constituting
29 percent of the total.3 According to the 2016 Labor Force Survey, among youth in Tajikistan aged 15–24,
29.3 percent, or 435,621, are not in employment, education or training (NEET).4 it is noteworthy that 49.3
percent of young Tajik women aged 15-24 are NEET, compared to 7.2 percent of the same age cohort of
men.5 The country’s NEET population aged 15-24 is 88.4 percent female and 11.6 male. Approximately one
in six young Tajik men and one in 10 young women aged 20-24 were found to be too discouraged to look for
work. The highest concentration of NEETs is in Dushanbe at 40.4 percent, followed by DRS at 36.1 percent,
and GBAO at 30.4 percent.6
7. A critical source of resilience against the described risks in Tajikistan is the strength of local
institutions, including community organizations such as mahalla committees. Other sources of resilience
are (a) strong popular interest in stability based on the collective memory of the severe costs of the civil war
of the 1990s, and (b) labor migration, which – despite inherent risks to social cohesion – is also a driver of
positive change entailing a range of significant economic benefits such as remittances transfers, skill
development and changing gender roles. Many migrants in Russia have expressed a desire to help the Tajik
economy through skills-transfer programs and appear to be ready to contribute, and the absence of men
because of labor migration has also created opportunities for women to take on leadership positions in rural
areas and to play an increasingly important role in rural economies.

2 In 2003 heavy periods of rainfall destroyed 185 km of forest roads and 50,000 planting stocks of forest nurseries, 9,000 fruit
and forest trees were damaged with almost 70 percent of the total yield lost.
3 Statistical Agency under the President of the Republic of Tajikistan, Annual Population Data, January 1, 2018.

[Link]
4 Statistical Agency under the President of the Republic of Tajikistan, Labor Force Survey (Washington, DC: World Bank, 2016).
5 Statistical Agency under the President of the Republic of Tajikistan, Labor Force Survey (Washington, DC: World Bank, 2016).
6 Statistical Agency under the President of the Republic of Tajikistan, Situation in the Labor Market in the Republic of Tajikistan.

(Dushanbe: Statistical Agency under the President of the Republic of Tajikistan, 2017).

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B. Sectoral and Institutional Context

Power Sector Context

8. The power sector is comprised of the vertically integrated energy company, Barqi Tojik (BT), three
independent power producers (IPPs), and a concession in Gorno-Badakhshan Autonomous Oblast (GBAO)
combining power generation and distribution. BT is fully owned by the Government. It owns and operates
most of the electricity generating plants and is also responsible for electricity transmission, dispatch, and
distribution services to around 8 million people in all regions of the country except for GBAO. Two of the IPPs
– 670 MW Sangtuda-1 and 220 MW Sangtuda-2 hydropower plants – were constructed with investments
from Russian and Iranian state-owned companies, and supply electricity to BT under 21-year and 12.5-year
power purchase agreements (PPAs) respectively. The third IPP – 3,600 MW 100 percent state-owned Rogun
HPP – is under construction. The first unit has been commissioned on November 16, 2018. Pamir Energy
Company (PEC) generates and supplies electricity to about 227,000 people in GBAO under a 25-year
concession agreement.
9. BT generates and supplies electricity to about 8 million people in its service area. The total installed
generation capacity of BT is 5,226 MW and HPPs account for 89 percent. The 3,000 MW Nurek HPP, with a
seasonal reservoir, is the largest generating plant in operation. The bulk of thermal energy-based generation
comes from the new 400 MW coal-fired Dushanbe-2 combined heat and power plant (CHP), which was
completed in 2016. The thermal power plants are operated in winter season7 to supply electricity and heat
given: (a) high winter electricity demand, which accounts for 60 percent of annual demand, and (b) limited
generation by HPPs due to hydrology conditions. BT also operates about 50 MW of available capacity (from
200 MW of installed) at the old and inefficient Dushanbe-1 CHP, which is run on heavy fuel oil (HFO) or natural
gas imported from Uzbekistan.
10. With commissioning of the 400 MW Dushanbe-2 CHP in 2016, the Government managed to
significantly reduce the winter electricity shortages. In winter season, the Dushanbe-2 CHP has been
generating about 1 billion kWh of electricity during heating season and supplying 345,000 Gigacalories (Gcal)
of heat for the district heating (DH) system of Dushanbe, which covers about 30 percent of the city.
Moreover, the first unit of Rogun HPP will be supplying around 200 million kWh of electricity during winter
months. The additional electricity from Dushanbe-2 and Rogun HPP as well as the revival of DH helped to
eliminate the un-met electricity demand. However, the reliability of electricity supply has not been improving
due to increasing frequency of equipment failures on electricity transmission and distribution (T&D)
networks.
11. The frequency of equipment failures on T&D networks has been increasing due to under-spending on
operations and maintenance (O&M) of T&D assets. Since 2014, BT has been struggling to finance the
required O&M expenditures due to severe cash shortage driven by the continued deterioration of the
financial situation of the company. The steep decline across key financial and operational indicators was the
result of numerous years of below cost-recovery tariffs; expensive short-term commercial borrowing; low
and inconsistent levels of collections for billed electricity; excessive energy losses; and some other factors. In
2017, the average annual daily duration of electricity supply to customers on the BT grid was 22 hours.
12. In order to rectify this situation, the Government adopted the US$1.5 billion Program for Financial

7 November – March.

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Recovery of BT for 2019-2025, which details the key financial and operating measures that need to be
implemented to eliminate the cash deficit8 by 2025. The Bank may be supporting the implementation of some
activities in the Government Program through Program-for-Result operation under preparation.
13. PEC generates and supplies electricity to about 227,000 people9 in GBAO under a 25-year concession
agreement. PEC is a special purpose company, which is owned 70 percent by the Aga Khan Fund for Economic
Development (AKFED) and 30 percent by the International Finance Corporation (IFC). It operates GBAO’s
power generation and distribution under a 25-year concession agreement, which was signed on May 24,
2002 (and expires in 2026), by the Government of Tajikistan and PEC. The company constructed,
rehabilitated, and currently operates 11 medium and small HPPs, which account for 91 percent of the supply
to consumers. Five percent of the demand of PEC customers is met with electricity supply from BT.
14. PEC is currently able to ensure reliable and adequate electricity supply to grid-connected consumers
in GBAO. PEC has a total installed generation capacity of 44.1 MW comprised of 11 medium and small HPPs.
In 2018, the total electricity demand in GBAO was estimated at 202 GWh per year, including an estimated 20
GWh of unmet electricity demand from consumers without access. The supply reliability has significantly
improved since the construction and rehabilitation of new small HPPs. PEC has been able to ensure an
average of 23-hour electricity supply to its grid-connected consumers.
15. The electricity demand in Tajikistan is highly seasonal, with a winter peak driven by reliance on
electricity-based heating. BT and PEC have been struggling to fully meet this winter electricity demand given
reliance on hydro and unfavorable hydrology conditions in winter. On the other hand, there has been
significant electricity surplus in the summer given the abundant hydropower resource and much lower
demand compared to heating (winter) months. The district heating service is available only to parts of
Dushanbe from the recently-commissioned 400 MW Dushanbe-2 CHP. DH does not reach all consumers in
Dushanbe due to the dilapidation of the heat transmission and distribution network, which is gradually being
rehabilitated with the resources of Dushanbe Municipality. There is no DH in other urban or rural areas of
the country, including GBAO and Khatlon.
16. Challenge #1: Ensuring adequate and reliable electricity access to grid-connected consumers in GBAO.
The electricity demand in GBAO for grid-connected consumers has been growing at an average annual rate
of 3 percent since 2002. Additionally, new settlements are planned to be connected to the grid (detailed in
subsequent sections of the document). To meet the demand, PEC constructed several small HPPs and
expanded the grid to bring electricity service to around 227,000 people. Within the described context of
fragility, it is important to ensure that grid-connected customers receive adequate electricity supply.
Therefore, PEC will need to construct new generation capacity to meet the increase of electricity demand.
The least-cost analysis conducted by PEC identified the 11 MW Sebzor HPP, with estimated annual electricity
generation of 74.5 million kWh (28 percent of current supply by PEC) and construction cost10 of US$33.7
million, as the least economic cost option for meeting the projected domestic demand until 2040 and the
export demand from Badakhshan province of Afghanistan. See Annex 2 for details.
17. PEC, with support from an international consulting firm, carried out detailed feasibility study and
geotechnical site investigation works for Sebzor HPP. There are some additional site investigation works that
need to be carried before the detailed design and the bidding documents for supply of equipment and civil

8 Difference between the cash revenues and main accrual-based costs, which include cost of energy from IPPs, O&M costs, debt
service, and taxes.
9 Different from number of electricity service customers.
10 Base capital cost + 10 percent physical and price contingency + cost of project management consultant.

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works can be finalized, and the project construction can be tendered.

18. Sebzor HPP will generate significant social and economic benefits for both Tajikistan and Afghanistan. It
will create improved opportunities for economic activities, improve the quality of public services, and
generate additional revenues for PEC from exports of electricity further strengthening the financial standing
of PEC and, thus, ensuring long-term reliable electricity supply in GBAO. The same benefits would accrue to
conflict-affected areas of Afghanistan given that bordering communities currently do not have access to
electricity. About 47,000 customers (370,000 people) in Badakhshan province of Afghanistan are expected
to directly benefit from exports of electricity from Sebzor HPP. Details are presented in Annex 2.
19. Investments in power transmission will be required to connect the power plant to the network and to
further increase the reliability and capacity of the power transmission network. Specifically, connection of
Sebzor HPP to the power network of GBAO would require construction of 18 km overhead power
transmission line (OHL) from Sebzor HPP to Khorog substation with an estimated cost of US$2 million and
the 110 kV substations at Pamir, Khorog and Sebzor HPPs with an estimated cost of US$2.4 million. Reliability
of electricity supply in GBAO would also critically depend upon completion of a 110 kV OHL from Khorog
substation to Qozideh substation, which is located near the border with Badakhshan province of Afghanistan.
About ten km of the line has already been constructed by PEC and there is a need to complete the remaining
63 km. The total cost of the investment is estimated at US$8 million.
20. The total cost of electricity transmission and distribution investments on the Afghan side to bring
electricity service to 370,000 people are estimated at about US$100 million. The Government of Afghanistan
plans to request development partners to support those investments.
21. Challenge #2: 43,126 people (0.5 percent of population) in GBAO and Khatlon regions do not have
access to electricity service. In parts of Khatlon, bordering Afghanistan, there are 74 settlements with total
population of 31,460 without access to electricity. Those settlements could not be connected to the grid due
to severe financial difficulties of BT. Specifically, BT collects in cash only 18 percent11 of its total required
revenues due to below cost-recovery tariffs and other inefficiencies. This cash shortage does not allow to
fully finance the required connection expenditures.
22. In GBAO, 61 settlements with total population of 11,666 are not connected to electricity service. Those
settlements are in remote mountainous areas in the region, which is also the service area of PEC, where
access has historically been a challenge. Most of the settlements are scattered over a vast territory in the
eastern part of GBAO, while a few of the settlements are in the western part, close to existing PEC grid. Before
Tajikistan’s independence, those areas were primarily supplied with diesel-based portable generator sets.
This approach became prohibitively expensive given the increase in unit costs of diesel-based electricity
generation once the generous fuel subsidies provided under the Soviet Union disappeared.
23. Access to affordable and sustainable heating is a challenge in GBAO, where electricity is the main
source of heating. Climate conditions in the Murghab and Rushan regions of GBAO are particularly more
challenging than other parts of the country due to higher number of heating months and lower average
temperatures -6 оС, which considerably affect the heating needs. In addition, due to the remoteness of these
locations, there are very limited energy supply options. Currently, solid fuels, which are transported from
various parts of the country, are used for heating purposes. Therefore, the solid fuel-based heating is
expensive due to high transportation costs.

11 Corporate Financial Model of BT. Part of the Government Program for Financial Recovery of BT in 2019-2025.

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24. The grid-connected consumers have been relying on electric heating as it is the least-cost option and
will remain so in the short to medium-term. Once target settlements in GBAO are electrified, it is expected
that most households will switch to electric appliances for space heating. Specifically, based on the
assessment of technically feasible heating options, electric heaters, individual oil-based radiators and
electrical boilers have the lowest levelized cost of heating (LCOH)12 for most of the districts in GBAO. Most of
the households that will be switching to electric heating will likely be using individual oil-based electric
heaters. This was also observed by PEC in previous electrification projects in other parts of GBAO. While the
current heating and cooking practices using the dung and teresken mixture will remain the lowest cost option
by a small margin, electric options will be more favorable in the Murghab district due to the depleting
teresken and other environmental and social aspects.
25. Currently, the lifeline tariff structure in GBAO provides for subsidized tariffs during winter, which allows
households to use electric heating. The winter tariff (November-March) for consumption of up to 360
kWh/month is less than US$0.0048/kWh, which is five times lower than the tariff during other months.
Currently, this subsidized tariff mechanism is funded by the interest differential between the original 6
percent on the SDR7.9 million IDA credit (under the Subsidiary Agreement between PEC and MOF) and the
revised 1.25 percent was to be paid into an escrow account by PEC, as envisaged by the Concession
Agreement, over the period 2012-2020.
26. After the Concession Agreement expires, the Target Social Assistance (TSA) Program will be used for
mitigating the social impacts of any tariff increases that may take place. Further cross-subsidization may not
be viable because it will require a significant increase in tariffs of commercial and other consumers, which
may not be feasible.
27. The affordability of heating is less of an issue in Khatlon region. In Khatlon region, the winter weather
conditions are significantly milder compared to GBAO, with average winter temperatures of about 3 оС.
Currently, the households rely on coal and firewood, and it is expected that those heating options will
continue to prevail in the short to medium-term given their cost-competitiveness compared to electricity. In
Khatlon, the residents have larger access to firewood and the cost of coal is lower than in GBAO. It is expected
that electricity will be primarily used for general household needs and only partially be used for heating given
that other sources of heating are more cost-competitive.
28. Most of the residential and public buildings in GBAO are not energy-efficient, which is an impediment
for long-term reliable and affordable heating in the region. The walk-through audits of a sample of public
buildings and residential houses that were conducted by PEC during project preparation suggest that major
EE retrofits would be required to make the buildings energy-efficient. Specifically, the typical residential
house requires insulation of walls, the floor, and the roof given that the buildings use clay brick walls, wooden
beams for the roof, and no insulation on the floor. In addition, some of the buildings have damages in the
walls or the roof. The same issues apply to the sample of audited public facilities, kindergartens and hospitals,
where walls and roofs lack insulation, and the windows are not energy efficient.
29. The development partners’ programs are structured to address the identified key challenges. Several
development partners – KfW, EU, SECO, USAID, and the World Bank – have structured their projects and
programs to help the Government address the identified challenges. Specifically, a financing envelope of
about US$85.8 million has been designed with participation of the following partners (the details are

12LCOH = Discounted cost of the unit of heating (kWh equivalent) considering the capital cost and variable O&M expenses of a
heating technology over its useful economic lifetime.

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presented in Table 3 of Section E).

• US$31.7 million from the Bank to finance electrification of settlements in GBAO and Khatlon regions.
This would also include some awareness raising for EE; development of mechanisms to promote use
of energy-efficient appliances; and pilot retrofits of public facilities to demonstrate the sizeable energy
savings that can be realized.
• US$22.513 million and US$19.1 million EU and KfW respectively for construction of Sebzor HPP.
• US$9.5 million from SECO for construction of 18 km overhead transmission line to connect Sebzor HPP
to the network through Khorog substation; energy efficiency; disaster risk management and resiliency
in power system of GBAO.
• US$3 million from USAID for technical assistance in integrated electricity access planning and
preparation/implementation of capital investment projects for off-grid solutions; operation and
maintenance of non-hydro renewable energy (RE) projects; and support to PEC in accessing
commercial financing.
Relevance to Higher Level Objectives
30. Benefitting from top-up IDA financing for Tajikistan under the IDA-18’s Risk Mitigation Regime (RMR),
the proposed Project would contribute to Focus Area 1 (Human Capital and Resilience) of the World Bank
Group Country Partnership Framework (CPF) for the Republic of Tajikistan for the period of FY2019–23. An
RMR allocation in the amount of US$98.7 million will finance activities under a preventative approach, the
Resilience Strengthening Program (RSP), that will address risks associated with fragility, conflict and violence
(FCV) that constrain development progress in Tajikistan. At the same time, the proposed Project will also
contribute to the CPF Focus Area 3 (Enabling Private-Sector Growth and Creating Markets), from the sector-
specific perspective.
31. The RSP targets challenges, and reinforces sources of resilience, for the most-at-risk social groups—
women and youth—from different angles. Through the RSP, RMR resources have been allocated to the
most-at-risk geographic areas, notably the southern regions of GBAO and those of Khatlon that border
Afghanistan. The RSP will create complementarities along three thematic clusters of interventions: (i) support
the creation of economic opportunities for vulnerable groups at the market-facing end of the agriculture
value chain and in commerce and export-related services; (ii) social and economic empowerment of at-risk-
groups, including training, awareness building, and dialogue at the community-level and between
communities and local government; and (iii) investments in demand-based, local service infrastructure,
including social services and on-and off-grid electricity supply and energy investments for the electrification
of previously unconnected communities in the Afghanistan–Tajikistan border areas of GBAO and Khatlon.
The RSP will be operationalized through three complementary investment lending operations, namely: (a)
the proposed Project covering activity cluster (iii); (b) the proposed Socio-Economic Resilience Strengthening
Project (SERSP) covering activity clusters (ii) and (iii); and (c) the proposed Rural Economy Development
Project (REDP) to predominantly cover activity cluster (i).
32. All three RSP projects contribute to the World Bank Group’s Twin Goals, specifically the goal to
eradicate poverty, through efforts to address income poverty (under REDP) and nonmonetary factors that
contribute to poverty, such as lack of social infrastructure, livelihoods, and basic life skills (under SERSP), and

13 At US$/EUR closing exchange rate on May 1, 2019. 1EUR1 = US$1.121. FX Rate Net. [Link]

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lack of reliable access to electricity (under REP). The three projects include interventions targeted to address
gender gaps and include opportunities for civic engagement.
33. The proposed Project is complementary to both SERSP and REDP. Communities that will benefit from
electrification under the Project will be able to access complementary investments, such as electric water
pumps and electric heating for kindergartens under SERSP Component 1 to improve the overall quality of
services in targeted areas. Under Component 2, SERSP will provide basic start-up support to youth
beneficiaries and help connect them with value chains and opportunities offered by REDP.
34. The RSP is consistent with the Government’s strategies on preventing violent extremism. In 2011,
Tajikistan adopted the Regional Joint Action Plan for the Implementation of the United Nations Global
Counter-Terrorism Strategy in Central Asia. In November 2016, it enacted the National Strategy of the
Republic of Tajikistan on Preventing Extremism and Terrorism for 2016–2020. To implement the strategy, a
list of 13 priority objectives were identified, including: (i) eliminating socio-economic conditions conducive
to radicalization and violent extremism that lead to terrorism; (ii) preventing extremism and radicalization
among adolescents and youth; (iii) decreasing the vulnerability of women to extremist propaganda and
ensuring their full participation in the development and implementation of policies to this end; (iv) facilitating
the participation of civil society and the private sector in countering extremism and terrorism; and
(v) reinforcing international and regional cooperation. Progress toward operationalizing this strategy has
been achieved through the contributions of multiple ministries and government agencies. Signature activities
under the 2017 “Year of Youth” umbrella, which aimed at combatting violent extremism, included measures
to promote civic and economic participation, cultural and social inclusion, and empowerment of youth. The
2018 Dushanbe Declaration emphasized the importance of regional and international coordination and
cooperation and the need to address and prevent the root causes of grievances and conflict, which could
lead to violent extremism, radicalization and terrorism, particularly among youth, and in close cooperation
with civil society.
35. The proposed Project is also consistent with the National Development Strategy for 2016-2030, which
prioritizes energy sector development as one of the strategic goals. The Government’s energy sector
development strategic goal focuses on providing reliable, adequate, and affordable electricity in a socially,
economically, and environmentally sustainable manner. Thus, the Project would contribute to the provision
of electricity supply in an economically and environmentally sustainable manner considering the focus on
construction of renewable energy (RE) based generation capacity and connection of consumers to BT
network, where 95 percent of electricity is generated and supplied by HPPs with almost no emissions.
36. In line with corporate mandates, the Project contributes to the World Bank Group’s (WBG)
commitments to support and scale up climate action and increase the climate-related share of
development financing. The Project will help to address gender challenges around voice and agency,
employment, and access to services. Citizen engagement will be promoted at various stages of Project
implementation, including mechanisms to take into account the feedback from key stakeholders in Project
related matters.

II. PROJECT DESCRIPTION

A. Project Development Objective

PDO Statement
37. The project development objectives is to provide electricity access to target settlements in GBAO and

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Khatlon regions of Tajikistan.

PDO Level Indicators

38. The achievement of the PDO will be measured using the following indicators:
• Result Indicator 1 (CRI): People provided with new or improved electricity service (Number);
• Result Indicator 2 (Custom): Average annual daily duration of electricity supply for target settlements
in GBAO connected to micro-grids (hours).
B. Project Components
39. The project is structured around two components, with subcomponents, as follows:
40. Component 1: Provision of electricity access to target settlements in GBAO region (US$25.2 million
IDA grant). This component will have the following sub-components.
41. Sub-component 1.1: Construction of micro-grids, and connection of consumers to micro-grids and
centralized distribution network of PEC (US$23.8 million IDA grant). This sub-component will finance the
provision of electricity supply to 61 settlements in GBAO region with a total population of about 11,666. The
investments will cover: (a) construction of electricity generation infrastructure, which will include micro-grids
comprised of Solar PV, small hydro, wind, and battery energy storage systems (BESS); (b) distribution
infrastructure, including expansion of 10 and 0.4 kV distribution lines and distribution transformers; and (c)
connections and internal wiring for households to alleviate consumer affordability barriers, which will be
agreed through consultative processes with project beneficiaries.
42. The proposed RE based micro-grids will allow target settlements to have an average of 14 hours of
electricity service per day for six years after the commissioning of micro-grids. Further increase to 24-hour
supply would require significant additional investments in power generation capacity, which currently cannot
be secured. PEC plans to build additional generation capacity, using external financing, to add new capacity
to meet the additional electricity demand of those consumers.
43. The identification of the least-cost electrification solution for each settlement was based on the
geospatial analysis with detailed evaluation of hourly demand profiles of consumers, potential of RE
resources, and the capital and O&M costs of relevant technologies. For RE based micro-grid solutions, the
exact locations will be determined at the detailed design stage, during the early phases of project
implementation.
44. Provision of electricity access is expected to generate significant social and economic benefits in the
form of expanded opportunities for economic activities, improved healthcare and social services, etc.
Moreover, all target communities are considered fragile given their socio-economic conditions; therefore,
electricity access would significantly reduce the fragility risks in this region.
45. Sub-component 1.2: Project implementation support to PEC, technical assistance for additional
geological site investigation works for Sebzor HPP, and promotion of energy efficiency (US$1.4 million IDA
grant). This will include financing of: (a) Project Management Consultant (PMC) costs to support PEC with
preparation of bidding documents for procurement of goods and works required for micro-grids and
connection of settlements to PEC’s distribution network; carrying of tenders for procurement of contractors
to construct the micro-grids and connect the settlements to the distribution grid; supervision of construction
works for micro-grids; and compliance with environmental and social requirements; (b) geological site

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investigation works for Sebzor HPP, including geological mapping, Spaceborne Synthetic Aperture Radar
(SAR) Interferometry Analysis, horizontal and vertical core recovery boreholes, exploratory trenches, seismic
refraction survey, testing of physical and mechanical properties of soils and rock samples (the details are
presented in Annex 2); (c) awareness raising program to promote the use of cleaner and efficient electric
appliances as well as to educate the local communities about the benefits of energy efficiency renovation in
buildings (i.e. building envelope insulation, EE windows, etc.); (d) technical assistance to PEC for the
development of a financing mechanisms to support the local communities to purchase efficient appliances;
(e) piloting EE measures in selected public buildings, especially elementary schools, boarding schools and
health centers in order to demonstrate the cost-efficiency benefits of EE investments, as well as improved
comfort and well-being of building occupants; (f) monitoring and evaluation costs related to efficiency of
citizen engagement and addressing gender gaps under the Project; and (g) incremental operating costs of
PEC.
Mitigation Co-benefits and Adaptation to Climate Change
46. The Project will help implement measures to address mitigation and adaptation priorities. Climate
action priorities include: (a) promotion, development and diversification of renewable energy sources, and
(b) the integration of climate resilience and adaptation measures into the planning and development of
power sector.
47. Construction of 100 percent renewable energy-based electricity generation infrastructure under
Component 1, which will include micro-grids comprised of solar PV, small hydro, wind, and BESS as well as
associated distribution infrastructure, will increase RE-based generation and integrate new RE generation
capacity into the grid. This component is thus eligible for counting mitigation co-benefits under Category 1.1
and 1.3 of the MDB Joint Methodology of Climate Finance. Specifically, in the absence of the project, target
settlements that currently do not have access to electricity would continue to rely on coal, firewood, and
local shrubs for their heating and cooking needs. Therefore, the Project would help to reduce CO2 emissions
from those solid fuels. This benefit of avoided increase in CO2 emissions was valued based on the low range
of the social cost of carbon from the World Bank’s Guidance Note on Shadow Price of Carbon in Economic
Analysis (Nov. 12, 2017). It is estimated that electrification interventions in GBAO under the Project will lead
to reduction in emissions of about 30,338 tons equivalent of carbon dioxide (tCO2e)14 vs. the baseline during
the economic life of the Project.
48. In addition to the direct climate co-benefits resulting from electrification of targets settlements in GBAO,
this Component will also indirectly contribute to the mitigation co-benefits derived from the construction of
the 11 MW Sebzor HPP. It is estimated that this HPP will reduce emissions by 1.42 million tCO2e/year during
its assumed lifetime of 35 years, which is equal to the useful economic life of electro-mechanical equipment.15
Therefore, this component will help Tajikistan achieve its NDC target for CO2 reduction.
49. Component 1 of the Project will also help to address the climate vulnerability risk due to expected
increase in the frequency of extreme winds, floods, landslides, and mudflows. The climate vulnerability risk
would be mitigated by designing the micro-grids and distribution infrastructure in a way to withstand the
observed maximum winds in the specific locations. Additionally, the vulnerability of micro-grid infrastructure

14 This estimate only takes into consideration the emission reductions from the avoided use of coal consumed by households for
cooking and heating purposes. It has been assumed that coal consumption will be reduced by 30 percent because households
will still continue relying on coal for heating (Khatlon) and cooking purposes (both Khatlon and GBAO).
15 Given that the Project will only finance additional geological site investigations for Sebzor HPP, this benefit has not been

valued in the economic analysis of the Project.

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to landslides will be mitigated during the detailed design stage. Specifically, the locations of specific RE based
generation plants (e.g. solar PV and wind) would be finalized considering the sample-based geological tests
to evaluate the properties of the soil and rocks. The incremental cost of implementing these adaptation
measures is about US$0.3 million and is included in the cost of Component 1.
50. Component 2: Provision of electricity access to target settlements in Khatlon region (US$6.5 million
IDA grant). This component will have the following sub-components.
51. Sub-component 2.1: Connection of target settlements to the centralized distribution network of BT
(US$6 million IDA grant). This sub-component will finance connection to the electricity distribution network
of 74 settlements, bordering Afghanistan, in the Khatlon region. The total population of the target
settlements is about 31,460 people. The investments will cover the cost of distribution infrastructure,
including construction of 35/10/0.4 kV distribution lines, installation of additional distribution transformers
in existing substations, and connection of households and public facilities. For all target settlements, access
to energy services will be ensured by connecting the settlements to BT’s centralized network because this is
the least economic cost solution considering the proximity of the target settlements to the power distribution
network. Most of the settlements are located within 0.5-2 km range from the distribution system.
52. Sub-component 2.2: Project implementation support to BT (US$0.5 million IDA grant). This sub-
component will finance the cost of: (a) PMC to help BT with preparation of bidding documents for works to
connect target settlements to its distribution grid; carrying out of tenders for procurement of contractors to
connect the settlements to the distribution grid of BT; technical supervision of grid-connection activities; and
compliance with environmental and social requirement; and (b) monitoring and evaluation costs related to
measuring availability of electricity service, efficiency of citizen engagement and addressing gender gaps
under the Project.
Adaptation to Climate Change
53. Although no additional generation capacity will be built under Component 2 of the project, the
investments in distribution infrastructure, which include installation of additional transformers in existing
substations, are expected to contribute to a reduction of technical losses in the existing system, thus
contributing to the efficiency of electricity distribution and resulting in climate co-benefits. In addition, the
expansion of the distribution system will be planned to withstand climate-related hazards such as flooding
and snow cover, which are prevalent in some of the target areas in Khatlon. The incremental cost of
implementing these adaptation measures is about US$0.2 million.

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Project Financing
54. The total Project cost is US$31.7 million. It will be financed with a US$31.7 million IDA grant from the
RMR Window.
Table 1: Financing sources
Project cost (US$ IDA Financing (US$ IDA Financing as
Project Components
million) million) % of Total
Component 1. Provision of Electricity Access to 25.2 25.2 100%
Target Settlements in GBAO Region

Component 2. Provision of Electricity Access to 6.5 6.5 100%

Target Settlements in Khatlon Region

Total Project Costs 31.7 31.7 100%

Total Financing Required 31.7 31.7 100%

C. Project Beneficiaries
55. The proposed Project is expected to generate benefits for residents of target settlements in GBAO and
Khatlon regions of the country:
a. 31,460 people in 74 settlements in Khatlon’s poorest regions along the border with Afghanistan. The
provision of electricity service in these rural areas will replace their consumption of diesel, coal, as
well as other non-conventional energy sources (local shrubs, dung) used for lighting, cooking and
heating.
b. 11,666 people in 61 settlements in GBAO. The residents of those settlements will benefit from an
average of 14 hours of electricity supply during a day, which will help to improve their comfort level,
increase accessibility of services that they were deprived of due to lack of electricity (e.g. television,
radio, internet, telephone services).
56. Additionally, provision of electricity services can have a profound impact on those communities through
improved public services and the creation of a growth-enabling environment and economic opportunities,
which will be supported through the two complementary operations, SERSP and REDP. Based on experience
and on direct communication with the target households, new economic activities are expected to include
processing and preserving food (e.g. milk, meat, fish) and other animal products (e.g. leather, wool); opening
of local convenience stores and other businesses (e.g. barbers, welders, carpenters); and developing
infrastructure for tourism (e.g. guest houses), especially in GBAO.
D. Results Chain

57. The challenges that the Project intends to address, Project components, outputs, intermediary and long-
term outcomes are summarized in the Figure 1.

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Figure 1. Results Chain.

Activities Outputs Outcomes

• RE micro-grids built • 35 settlements connected to

11,666 people in GBAO provided
• Distribution grid of PEC micro-grids
with new electricity service
expanded to new • 26 settlements connected to PEC
settlements distribution grid

Distribution grid of BT expanded 74 settlements connected to BT 31,460 people in Khatlon

to new settlements distribution grid provided with new electricity
service

E. Rationale for Bank Involvement and Role of Partners

58. The Bank is well-suited to support the Government’s preparation of Sebzor HPP project because it has
a competitive advantage in preparation of HPP projects both globally and in Tajikistan. The deep technical
expertise as well as application of rigorous E&S standards allowed to prepare and successfully implement
various HPP projects of different sizes. Moreover, the Bank has profound knowledge and experience of
exceptional worth in the case of Tajikistan’s hydropower sector, which includes: (a) support in preparation
and implementation of the on-going 3,000 MW Nurek Hydropower Rehabilitation Project; and (b)
comprehensive technical-economic assessment studies for Rogun HPP Project.
59. The Bank has an established track record in electrification projects, primarily in Africa and South East
Asia. The project design has drawn the experience and lessons learnt from these projects, including the
importance of institutional strengthening for sustainability of investments. Moreover, the Bank is well
positioned to help the client develop and implement non-hydro based RE projects, including battery storage
systems, which are relatively new, but could potentially generate significant knowledge spill-over and other
non-tangible benefits for the client.
60. Role of partners. The Project is part of the larger power sector development interventions by
development partners, which are supporting other investments essential for long-term reliability of
electricity supply in GBAO and broader regional benefits in Afghanistan. The proposed interventions by all
development partners are well-coordinated and planned in a way to allow PEC to effectively implement
them. The specific agreements reached by development partners on their specific roles were confirmed in

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the joint letter to the Government, dated February 25, 2019, and signed by KfW, EU, SECO, USAID, and the
Bank.
61. The proposed Project will leverage US$62 million of financing. The Bank is supporting the preparatory
work for several main activities, including additional technical studies required for Sebzor HPP and other
technical work. Preliminary agreements were reached with development partners to finance Sebzor HPP, the
power transmission line to connect the Sebzor HPP to the power network, and several other important
investment and activities. The leveraging effect will be augmented further with planned construction of
transmission line in Badakhshan province of Afghanistan (to connect to Qozideh substation in Tajikistan) and
the electricity distribution infrastructure required to supply the households. The total cost of those
investments is estimated at US$100 million and the Government of Afghanistan plans to request
development partners’ support.
Table 2: Planned Operations to Improve Energy Supply Reliability in GBAO and Expand Regional Trade.16
Project Project Cost17 World KfW EU SECO USAID
(US$ millions) Bank
Construction of Sebzor HPP 41.6 - 19.1 22.5 - -
Construction of an 18 km OHL to connect 9.518 - - - 9.5 -
Sebzor HPP to the network through Khorog
substation; energy efficiency; disaster risk
management and resiliency in power
system of GBAO
Construction of 63 km Khorog-Qozideh 8.0 No financing secured yet
OHL to Afghan border
Electricity service provision for target 31.7 31.7 - - - -
settlements in GBAO and Khatlon
Technical assistance in integrated 3.0 - - - - 3.0
electricity access planning and
preparation/implementation of capital
investment projects for off-grid solutions;
operation and maintenance of non-hydro
RE projects; and support to PEC in
accessing commercial financing.
Total 93.8 31.7 19.1 22.5 9.5 3.0

62. Regular donor coordination meetings were held during Project preparation and will continue to happen
during implementation on a bi-monthly basis or more often as needs arise. The Working Group of the
Development Coordination Council (DCC), which has proven to be an effective mechanism, will be used as
the platform for such coordination. The DCC is comprised of representatives of Asian Development Bank
(ADB), Aga Khan Development Network, European Union (EU), European Bank for Reconstruction and
Development (EBRD), European Investment Bank (EIB), Islamic Development Bank (IsDB), KfW, United
Nations Development Program (UNDP), United States Agency for International Development (USAID), and
World Bank, is a coordination platform, which enables all development partners of the Government to better

16 Sebzor HPP, 18 km OHL, and the 63 km OHL are considered Associated Facilities to the Project and the implementation of the
ESS for these Associated Facilities will be included as part of the Bank’s regular implementation review.
17 Includes Project Management Consultant Costs.
18 Closing US$/EUR rate on May 1, 2019: 1EUR1 = US$1.121. FX Rate Net. [Link]

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coordinate their efforts in helping the Government address the power sector challenges.
F. Lessons Learned and Reflected in the Project Design
63. The project draws extensively upon the lessons of previous Bank engagement in the power sector of
Tajikistan and other similar projects supported by the World Bank.
a. Comprehensive and detailed preparatory work is essential for success of HPP projects. Successful
implementation of HPP projects requires robust geo-technical preparatory work to minimize the risks
related to structural integrity of civil works to be constructed and achievement by HPP of design
performance.
b. New technologies, such as battery energy storage systems (BESS), are becoming increasingly cost-
competitive in combination with Solar PV and/or Wind to improve reliability of electricity supply.
The recent advances and cost reductions in solar PV and BESS have led to a surge in solar PV and RE
based micro-grids in several countries around the world, especially in remote locations where diesel
supply is logistically challenging and prohibitively expensive. In the case of GBAO, the remoteness of
the target settlements adds an additional barrier to the availability and cost of diesel, while the high
altitude (above 3,500 masl) reduces the efficiency of the combustion process as much as 50 percent.
These factors make the combination of PV and battery micro-grids an even more attractive
opportunity to provide electricity access.
c. Micro-grids should be deployed where they are the least-cost electrification method. They are
mostly suited for villages that: (a) are relatively remote and therefore unlikely to be served by the
national grid; (b) are relatively densely populated; and (c) have expected loads that justify the micro-
grid investments as opposed to deploying individual household systems. This usually requires a
certain size (for example, 100 households plus) and sufficient existing or potential business and
institutional loads.19 In the case of GBAO, the high heating loads (both for HH and public buildings)
and the absence of viable alternatives for heating (and cooking), make the use of micro-grids the only
feasible solution even in smaller communities. Micro-grid potential should ideally be confirmed
through detailed feasibility studies. Although micro-grids are typically applied in remote locations,
sometimes they can be used as a temporary solution (pre-electrification) in areas where the grid may
eventually arrive. In that case, the micro-grids should apply technical standards that would allow
future interconnection with the main grid.20 For GBAO, a geospatial analysis has been carried out to
identify the least-cost electrification solutions to meet the projected load for the next 20 years and
detailed feasibility studies to size and design the specific solutions for each settlements will be carried
out in the first few months of project implementation.
d. Generation capacity for micro-grids should be extended in small increments to minimize costs. It is
preferable to add generation capacity to RE based micro-grids sufficient for meeting the electricity
demand for about 5-7 years. There may be reductions in cost of the RE technologies used in micro-
grids, which the energy companies will not be able to capitalize on if significant investments are made
upfront.
e. Strengthening of implementing entity capacity in O&M for off-grid innovative technology-based
energy supply solutions is essential for long-term sustainability of investments. The experience of
the Bank in various power sub-sectors (electricity generation, transmission, and distribution) clearly

19 Kenya Off-Grid Solar Access Project for Underserved Communities (KOSAP), Project Appraisal Document. July 2017.
20 Ibid.

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suggests that extensive and regular training of key operational staff of power utilities to be
responsible for assets is the key to sustainability. In this particular case, given that PEC is new to solar
PV, wind, and BESS technologies, the Project will ensure that suppliers and installation contractors
provide required capacity-building and training to PEC technical staff.
f. Sufficient budget for project implementation support is critical for electrification projects. The
Bank’s experience with electrification projects suggests that technical supervision of such projects
can be time-intensive and would require significant consultant input. Settlements to be electrified
are typically scattered around large geographical territory, and, occasionally, are in difficult-to-access
areas similar to GBAO. Therefore, the proposed Project would allocate around 6 percent of total
estimated capital cost to implementation support consultancy.

III. IMPLEMENTATION ARRANGEMENTS

A. Institutional and Implementation Arrangements

64. The Project will have two implementing entities – PEC and BT. PEC will be responsible for implementing
the electrification of settlements in GBAO region (Component 1), while BT will be responsible for
implementation of electrification of target settlements in Khatlon region (Component 2).
Pamir Energy Company
65. PEC has experience in implementation of Bank-financed projects and has a strong technical in-house
team. In 2003-2005, the company successfully completed rehabilitation of major power plants in GBAO such
as Pamir I HPP (28MW) and Khorog HPP (9MW). In 2007, PEC implemented a successful metering program
in GBAO as part of the Bank-financed Energy Loss Reduction Project. In 2008, under the Additional Financing
for Energy Loss Reduction Project, PEC also implemented emergency rehabilitation of Pamir I HPP after
flooding damaged the plant.
66. Component 1 of the Project will be implemented by PEC’s Business Development Unit (BDU), which is
staffed by 15 people, including engineers as well as procurement, financial and monitoring and evaluation
experts. The BDU has significant experience in implementation of donor-financed projects, including
construction of the 1.5 MW Tajikistan HPP (KfW) and the 450 kW Khatfat HPP (USAID, Agha Khan
Foundation), Technical Loss Reduction Project (SECO), and Cross-Border Energy in Shugnan District Project
(USAID, Agha Khan Foundation, the Government of Norway and the Government of Germany through
Pakistan Afghanistan Tajikistan Regional Integration Program Foundation) as well as construction of Tekharv
(400 kW) and Andarbak HPPs in Vanj district and Savnob HPP (59 kW) in Rushan district through its own
financing. The BDU will be supported by the Unit in charge of human resources (HR), currently responsible
for safety, environmental and social issues, as well as by the Disaster Risk Reduction team.
Barqi Tojik
67. BT will be responsible for implementation of Component 2 of the Project. The State Unitary Enterprise
“Energy Sector Project Management Unit (ESPMU)21 will support BT to carry out the Project activities,

21 Through a government decree in 2006, the PMU was administratively separated from Barqi Tojik and renamed State Project
Management Unit (PMU) for Power Rehabilitation Projects in Tajikistan. This Energy Sector PMU reports to the President of
Tajikistan, the Ministries of Finance, and Economy and Investment, the Chairperson of Barqi Tojik, and the State Statistical
Agency of Tajikistan.

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including procurement, FM, technical supervision, and M&E. To that end, BT will enter into Implementation
Agreement with ESPMU. This approach was used in several other projects financed by development partners,
including the World Bank (IDA), Asian Development Bank, European Investment Bank, and others.22 It
operates under the control of the Government of Tajikistan. It is presently staffed by about 80 people trained
in all aspects of PMU operations, including accounting, tax, and technical disciplines as well as safeguards
specialists (environmental and social). ESPMU has handled projects totaling more than US$3 billion and
managed IDA-supported projects with BT as the executing agency; it has demonstrated its efficiency in
financial management (FM), procurement, and recordkeeping. BT executing agency staff are involved in
decision making and, in any training, provided by equipment suppliers and engineering, procurement, and
construction contractors.
Figure 2: Funds Flow and Legal Agreements.

Source: Bank team.

68. An institutional capacity assessment of ESPMU was conducted for the CASA-1000 project and it was
recently reassessed during preparation of the CASA-1000 CSP project. Given its track record, the ESPMU will
manage all aspects of the electrification of target settlements in Khatlon, ensuring overall compliance with
the provisions of the POM. This will include ensuring effective procurement of supply and installation
services, supporting the development of subproject technical design and tender packages and
implementation (safeguards, community engagement, procurement, construction, supervision, handover),
as well as performing all fiduciary tasks and all necessary coordination of institutional support with oblasts
and districts, and consolidated reporting and project management tasks outlined in the Project Operational

22ESPMU has been responsible for implementation of the ongoing CASA-1000 project (World Bank, EBRD, IsDB, EIB and USAID),
Wholesale Metering and Transmission Reinforcement Project (ADB), Rehabilitation of Electricity Transmission and Distribution
Facilities in Khatlon and Dushanbe Regions (ADB), Rehabilitation of Golovnaya HPP (ADB), and several other projects financed by
ADB, EXIM Bank of China, IsDB and KfW.

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Manual (POM). The implementation modality for the citizen engagement aspects of the Project will be
developed prior to effectiveness and included in an approved POM. A subsidiary agreement will be signed
between the Ministry of Finance (MOF) and BT prior to effectiveness.
69. The Supervisory Board of BT is the main management body and is responsible for operational, financial,
and other strategic issues. The Supervisory Board is chaired by the Prime Minister and includes the Minister
of Energy and Water Resources, MOF, Minister of Economic Development and Trade, Minister of Justice,
Chairman of the State Committee on Investments and State Property Management, and the Chairman of BT.
B. Results Monitoring and Evaluation Arrangements
70. Monitoring of project implementation progress and results indicators, as well as progress toward
achievement of the PDO will be the responsibility of BT and PEC. For Component 1, PEC will be responsible
for providing updates on the number of people receiving new electricity service and intermediate results
indicators related to GBAO. For Component 2, BT will provide data on the number of people receiving
electricity service and other intermediate results indicators related to Khatlon region.
71. BT and PEC will prepare and submit quarterly project semi-annual progress reports to the World Bank
in conjunction with the World Bank’s implementation support review no later than 45 days after the end of
the period covered by such report. They will also provide data on relevant gender indicators. The technical
data will be collected by both implementing entities with the use of internal remote monitoring systems and
inputs from implementation support consultants to be hired for assisting with technical supervision of
construction works and other activities related to the Project. The semi-annual reports will include details on
the implementation of the associated facilities, namely the Sebzor HPP, the 18 km Sebzor-Khorog OHL, and
the 63 km Khorog-Qozideh OHL.
72. The Results Framework (RF) and Monitoring section includes annual intermediate targets for project
indicators. The Bank will conduct implementation support reviews at least on a semi-annual basis during
implementation to assess the Project’s performance. In addition, an Implementation Completion and Results
report evaluating the overall performance of the Project will be prepared and submitted by the Recipient
and the Bank no later than six months after project closing.
C. Sustainability
73. The sustainability of the investments will be secured through the following:
• Robust analysis to determine technically viable and economically least-cost solutions for
electrification. Electrification solutions have been identified based on a comprehensive geospatial
plan and detailed inventory of non-connected settlements in the target regions, including number of
households, total population, estimated load and projected demand increase; solar, wind and hydro
resource data; and data on costs of the different technology options. In addition, the quality
standards to be set in the tendering documents for the stand-alone systems and micro-grid systems
will be based on international best practice. Finally, strict standards will also be established for
operation and maintenance of the systems, both for BT and PEC and their subcontractors.
• Inclusion of the project investment costs and adequate level of O&M costs in the end-user tariffs
for PEC and BT. In case of PEC, the electricity tariff methodology allows to fully reflect in the cost of
supply the incremental O&M costs associated with maintenance of assets. Currently, the tariffs are
not at full cost-recovery levels because of subsidy provided to consumers (in the form of lower tariff
up until 360 kWh of monthly consumption) by PEC, which it is not able to recover its subsidy

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reimbursement from MOF as per their earlier agreement. However, this is not expected to impact
the sufficiency and timeliness of O&M expenditures given that, historically, sufficient budget has
been allocated and PEC does not have a cash shortage. It is noteworthy that PEC tariffs have been
regularly adjusted to account for changes in the cost of electricity service, including depreciation of
TJS vs US$, which is essential from the perspective of sustainable debt service.23 Currently, BT tariffs
are about 83 percent of that necessary for cost-recovery. To ensure that tariffs are increased to the
level necessary for cost-recovery, and that BT does not have a cash deficit, the government plans
annual tariff increases until 2025. These increases will be implemented under the Program for
Financial Recovery of BT for 2019-2025. The successful implementation of this Government Program
would ensure that BT has adequate financial resources to carry out timely O&M for new investments
under this Project.

IV. PROJECT APPRAISAL SUMMARY

A. Technical, Economic and Financial Analysis

Technical Analysis
74. Identification of Additional Site Investigation Needs for Sebzor HPP. The additional site investigation
needs were identified based on the detailed review of the Feasibility Study for the plant; Final Report for
Geological Explorations; and PEC’s consultant’s proposal for additional site investigation. Overall, the
documents were found to be of adequate quality covering the key technical, hydrology, topographical,
economic, and financial aspects. During preparation the Bank team made several recommendations to PEC
to prepare additional notes with details regarding several geo-technical aspects of the Project, which were
found to be adequate. The independent review of the documents made available by PEC and other additional
clarifications enable to establish the scope of the additional site investigation works that would be required
before the detailed design of the power plant can be finalized. The scope of the works has already been
agreed with PEC and is contained in Annex 2.
75. Analyses of options for provision of electricity service to target settlements in GBAO and Khatlon. The
analysis of potential supply options for target settlements was carried out considering the technical feasibility
of potential solutions and the principle of economic cost minimization following the principles of least
economic cost planning (LCP). The approach used for LCP was rigorous and followed the industry-accepted
approach of minimization of total capital and O&M costs of electricity supply to meet the projected electricity
demand given the constraints (e.g. cost of un-served energy). All input data was found to be robust and
corroborated. Specifically, the cost data for generation technologies was obtained from reputable
international consulting firms and suppliers in projects at comparable locations and adjusted for logistical
challenges. The capacity factors, which are one of the most important inputs into such technical analysis, for
solar PV and wind generation technologies was derived based on the hourly irradiation and wind speed data
observed during a Typical Meteorological Year (TMY). The generation profiles for HPPs were based on
observed generation from existing HPPs constructed on rivers where new HPP projects are planned. This is
due to unavailability of data on historical water flows of main rivers.
76. Technical solutions and costs for connecting target settlements to centralized distribution networks.
The preliminary designs for grid connections of target settlements in both GBAO and Khatlon were developed

23For the purposes of this Project, the cost of electricity service refers to cash requirement. It is estimated as the total cash
required to fully pay for the cost of purchased energy, O&M, debt service, and taxes.

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considering the technical standards and regulations applicable to such connections (in terms of maximum
load and voltage). The estimated costs are based on the actual costs of such works under similar contracts
signed by PEC and BT in 2015-2017 with adjustments for terrain specificities and changes in the cost of
materials.
Economic and Financial Analysis of the Project
77. This section summarizes the key results from economic and financial analyses of the project as well as
assessment and projection of financial standing of PEC and BT. The details are presented in Annex 4.
Economic Analysis
78. The economic analysis of the Project included: (a) least-cost justification for proposed electrification
solutions; and (b) evaluation of incremental costs and benefits of identified electrification solutions, which
included both components of the Project covering off-grid electrification solutions and connection of target
settlements to the distribution networks of PEC and BT.
79. Least-Cost Justification for Options to Meet Projected Electricity Demand. The Project to be evaluated
was recommended from various project sizes and configurations that were assessed through detailed least-
cost planning (LCP) analysis to identify electrification solutions for target settlements in PEC and BT service
areas. First, the electricity demand was projected for target settlements using the historical data on
consumption of similar settlements that are connected to electricity service. Second, the list of technically
feasible technologies24 was identified to meet the projected electricity demand in target settlements. Third,
optimization was carried out to determine the combination of technologies to minimize the economic cost
of electricity supply to target settlements.
80. Economic Costs. The economic costs include the Project construction cost, implementation consultant
cost, and incremental O&M costs required for the new micro-grids and grid-connections of settlements,
including household-level wiring. The construction costs include the expected Project Design, Supply, and
Installation (PDSI) costs of the micro-grids and grid-connections. The Project construction costs were forecast
according to the years in which they are expected to be incurred during the construction period. The Project
O&M costs include incremental O&M over the expected working life of the project facilities, which is assumed
to be 20 years – the period for useful economic life of BESS, which is the shortest among all other equipment
to be installed under the Project. The economic analysis was conducted exclusive of the taxes and duties.
81. Economic Benefits. The main economic benefits of the Project are: (a) the economic value of electricity
service for target settlements; and (b) reduction of CO2 emissions from switching to electricity-based heating
and partial switching to electricity-based cooking.
82. The economic value of electricity to be consumed by target settlements was estimated at the
willingness-to-pay (WTP), which was assumed to equal US$0.08. The WTP for electricity was estimated based
on the demand function showing how the quantity of electricity demanded by the consumer varies with the
price of electricity faced by the consumer.
83. The reduction of CO2 emissions was valued based on the partial displacement of coal in Khatlon and
GBAO by electricity for cooking and heating needs. Once target settlements have access to electricity, they
are likely to switch to electricity-based heating based on the historical evidence from PEC when it was
connecting new households to the its grid. As mentioned earlier, this switch takes place because in the short
to medium-term electricity remains least cost option for heating considering the current lifeline tariff

24 Interconnection with the grid; small hydro; solar PV; wind; and BESS.

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structure in place in GBAO. Thus, the analysis conservatively assumes that coal consumption will reduce by
around 30 percent considering that coal may still be used for cooking in GBAO as well as heating and cooking
in Khatlon.
84. The social cost of carbon, used to evaluate the benefits from reduction in GHG emissions, is based on
the low range from the World Bank’s Guidance Note on Shadow Price of Carbon in Economic Analysis (Nov.
12, 2017). The Project will lead to 30,338 tCO2e reduction in emissions vs. the baseline during economic life
of the Project. Therefore, the Project will generate climate mitigation co-benefits and, thus, support
Tajikistan in fulfilling their NDC commitments to UNFCCC Paris Agreement.
85. Results: The economic analysis of the Project yielded an economic Net Present Value (NPV) of US$4.0
million and Economic Internal Rate of Return (EIRR) of 7.1 percent exclusive of the social cost of avoided CO2
emission and an economic NPV of US$4.7 million and EIRR of 7.5 percent inclusive of the social cost of
avoided CO2 emissions. The discount rate for economic analysis was assumed to be 5.3 percent consistent
with the World Bank guidelines.25 It was estimated as the difference between long-term real per capita GDP
growth26 multiplied by two.
86. Sensitivity Analysis: Sensitivity analysis was conducted to assess the robustness of the estimated Project
economic returns to changes in the main evaluation variables. The Project viability is sensitive to the
estimated WTP.
Table 3: Economic: Results of Sensitivity Analysis.
Economic analysis NPV (million US$) EIRR (%)
Base-case exclusive of social cost of carbon 4.0 7.1
a. 20 percent higher construction cost 1.1 5.8
b. 20 percent lower-than-projected WTP for electricity (2.4) 4.1
c. Combination of (a) and (b) (5.2) 3.0
Base-case inclusive of social cost of carbon 4.7 7.5
a. 20 percent higher construction cost 1.9 6.1
b. 20 percent lower-than-projected WTP for electricity (1.7) 4.5
c. Combination of (a) and (b) (4.5) 3.3%
Source: Estimated based on data from Least-Cost Planning.

Rationale for public sector provisioning/financing

87. The public financing of the proposed project is justified for the following reasons.
a. Currently, BT is not able to borrow long-term commercial resources given its financial distress. The
key activities to make BT financial sustainable and capable of accessing commercial financing would
be carried out under the Government’s Program for Financial Recovery of BT for 2019-2025. This
operation will help to increase the customer base of BT and, thus, increase of the net operating
revenues equal to difference between additional revenues from newly-connected customers and the
cost of supplying those customers, which is primarily comprised of the fixed network O&M. Thus, the
proposed Project would contribute to long-term financial viability of BT and is MFD-enabling.
b. Currently, PEC would not be able to attract commercial resources to finance construction of Sebzor
HPP and other grid-connected or off-grid RE solutions given the large size of those investments

25 Guidance on the Discounting Costs and Benefits in Economic Analysis of World Bank Projects, World Bank, May 9, 2016.
26 Real GDP projections: World Economic Outlook, Oct. 2018, IMF; Population growth forecast: UN Population Survey, Oct. 2019.

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compared to its balance sheet. PEC is in adequate financial standing and with some additional
revenues, would be prepared to start borrowing commercially. This project is MFD-enabling for PEC
given that additional export revenues would strengthen the balance sheet of PEC and reduce the
risks for commercial lenders. It should also be noted that commercial financing for new investments
may realistically be considered after the banking sector distress in Tajikistan is overcome. Otherwise,
the lending rates would remain prohibitively high and maturities too short for such capital
investment projects.
Value added of the Bank's support
88. The Bank has an established track record with similar electrification projects, primarily in Africa and
South East Asia. The project will draw on the experience and lessons learnt from these projects, including the
importance of institutional strengthening for sustainability of investments.
89. Moreover, the Bank is well positioned to help the client develop and implement non-hydro based RE
projects, including battery storage systems, which are relatively new, but could potentially generate
significant knowledge spill-over and other non-tangible benefits for the client.
Financial Analysis of PEC
90. PEC’s financial performance in 2014-2018 has been adequate. Revenues from sales of electricity grew
by an average of 17 percent annually over the period of 2014-2018, despite the relatively flat consumption.
This was driven by Tajik somoni’s steep depreciation against US$ via US$ indexed tariffs. Dollar tariffs serve
as a hedge against foreign currency risks associated with purchases of imported equipment and materials
required for operating and maintenance costs. Operating costs increased in proportion to the Somoni
revenues causing the operating profit margin to remain in the range of 16-20 percent throughout the period.
The liquidity of PEC in 2016, as measured by the current ratio, was 1.25, and cash balances equaled 55 percent
of PEC’s current liabilities. Though the Company has been highly leveraged with its short-term and long-term
liabilities being at around 100 percent of its assets, it has been current on all its liabilities. Debt-to-EBITDA
ratio was 2.94 in 2016 (4.39 in 2014).
91. PEC is projected to remain in adequate financial standing in 2019-2025. The profitability of PEC will
vary in the range of 20-27 percent during 2020-2025. It is projected the total debt will reduce to less than 30
percent of its total assets by 2025, and debt-to-EBITDA ratio will improve to 1.21. The ratio of current assets
to current liabilities will improve and be at healthy 3.88 without receivables from MOF (6.15 with the
receivables from MOF).
92. Financial Covenant for PEC. The analysis of the financial performance of PEC suggests that no specific
covenants are required except for the covenants on debt service coverage ratio, which would require PEC to
continue exercising prudent borrowing practice to maintain the long-term indebtedness at reasonable level.
Thus, except as the Bank shall otherwise agree, PEC shall, commencing not later than the Effective Date, not
incur any short-term or long-term debt unless a reasonable forecast of its revenues and expenditures shows
that its estimated net revenues for each fiscal year during the term of the debt to be incurred shall be equal
to at least 1.2 times the estimated debt service requirements in such year on all debt of the PEC, including
the debt to be incurred.
93. Use of profits derived from the use of grant funds. PEC is obliged to use the corresponding profits from
investments financed by the grant under this Project for the new capital expenditures to supply electricity to
consumers in GBAO and related operating expenses. The mechanism for determining benefits and/or losses
from investments financed by the grant funds under this Project will be provided in the POM.

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Financial Analysis of BT
94. The financial condition of BT deteriorated in the period from 2013 to 2017 due to: (a) unsustainable
and increasing debt levels and surging local currency denominated debt service costs driven by large
depreciation of TJS; (b) low cash collections; and (c) below cost recovery end-user electricity tariffs.
95. As of the end-2017, BT’s total liabilities exceeded its total assets. Operating losses persisted in the period
of 2013-2017 leading to complete erosion of equity in 2015. Accumulated losses of the BT reached TJS10,732
million (US$1,217 million), out of which TJS 5,437 million were losses from domestic currency depreciation.
Over the observed period, Tajik somoni lost about half of its value against US$, which explained about 70
percent of the total increase of BT’s financial debt.
96. As of the end-2017, total liabilities of BT stood at TJS20,663 million (US$2,343 million), about 61 percent
of which were borrowings from IFIs. The ability to sustain those loans was considerably impaired by absence
of corresponding revenue allowance in the tariffs and under-collection of receivables. BT failed to make both
principal and interest payments on them. By the end of 2017, it had already accrued TJS2,197 million (US$250
million) of interest payable and incurred penalties on overdue loans in total amount of TJS2,657 million
(US$301 million). In addition, BT has TJS1,618 million (US$183 million) very expensive dollar denominated
commercial debt from a local bank, which costs the company about TJS372 million (US$42 million) per annum
in interest expense.
97. In 2017, BT earned TJS2,113 million (US$239 million) from sales of electricity. The Company supplied
13,549 GWh of electricity to domestic consumers and exported 1,410 GWh to Afghanistan and Kyrgyz
Republic. As of the end-2017, the collection rate for billed electricity was still below the industry average, at
around 84.1 percent. The Company had 94 days receivables outstanding.
98. End-user electricity tariffs remain below the cost-recovery levels, which do not allow the company to
finance even the required recurrent expenditures. The expected average end-user tariff for 2017 is estimated
at 20 percent of cost-recovery level. The cost-recovery tariff was assessed following the cash needs approach.
This was done through assessment of the amount of cash revenue that BT requires to fully finance the
recognized recurrent expenses (accrual-based items in the financial statements), which include the O&M
costs, administrative costs, capital repairs from own funds, pension liabilities, debt service, and taxes. It also
assumes gradual repayment of accrued liabilities (i.e. interest payables, overdue loans and payables to
Sangtuda-1 and Sangtuda-2 HPPs for purchased electricity) over an eight-year period starting 2018. It should
be noted that concept of cash-based cost of service is different from the concept of economically efficient
cost of supply and does not take into account the return on invested capital and investments required to
meet the long-run forecast electricity demand.
99. Financial standing of BT is projected to gradually improve due to implementation of the Program for
Financial Recovery. The Program for Financial Recovery of BT for 2019-202527 assumes several important
financial and operational measures aimed at increasing the cash revenues from sales and reduction of costs.
Those measures include: increase of end-user tariffs; revision of subsidiary agreements between MOF and
BT to align with the terms of original financing as provided to the Republic of Tajikistan; roll-out of Advanced

27 Approved by the Government on April 15, 2019.

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Electricity Metering Infrastructure (AMI) to improve metering and billing; efficient working capital
management; and introduction of sound corporate governance principles.
100. Implementation of the Government Program will allow BT to generate more cash from operations.
EBITDA margin will increase to 55 percent by 2025, and the liquidity will improve.28 Revision of subsidiary
agreements will reduce the debt service costs of BT and free up additional cash for repayment of its overdue
liabilities. BT is expected to gradually repay its current and overdue financial liabilities using incremental
operating cash flows from financial recovery measures. It is estimated that by 2024, BT will have fully repaid
its overdue debt (principal plus interest) to MOF, overdue payables to Sangtuda-1 and Sangtuda-2 and local
commercial debt. Thus, by the end of 2025 the debt-to-assets ratio will have come down to 0.95, net debt
(i.e. total financial debt net of cash balance) will stand at 4 time of earnings before interest, tax and
depreciation (EBITDA),29 and operating cash flow will be more than 2 times its debt service requirements
(DSCR). Details are presented in Annex 4.
101. Financial Covenant for BT. The Project Agreement with BT would require that, except as the Association
shall otherwise agree, BT, commencing not later than the Effective Date, not incur any short-term or long-
term debt unless a reasonable forecast of its revenues and expenditures shows that its estimated net
revenues for each fiscal year during the term of the debt to be incurred shall be equal to at least the estimated
debt service requirements in such year on all debt of BT, including the debt to be incurred
B. Fiduciary
Financial Management
102. The overall FM residual risk rating of the project is assessed as substantial. BT through the ESPMU and
PEC through its Business Development Unit (BDU)/Project Implementation Department, will be responsible
for financial management function under the project. Overall, FM arrangements at both implementing
agencies are adequate to implement the project and meet the minimum requirements of the Bank’s Policy
and Directive on Investment Project Financing. However, the following actions will need to be in place before
the project implementation, within 30 days after project effectiveness: (i) FM/accounting staff, acceptable
to the Bank, shall be hired to support the Chief Accountant in both IAs on daily basis; and (ii) the accounting
system in both IAs shall be updated and have inbuilt controls to ensure data security, integrity and reliability,
and the functionality of automatic generation of IFRs. Additionally, by project effectiveness, the FM sections
of the POM, acceptable to the Bank, shall be developed and approved.
103. With regard to the FM Covenants to be included in the Disbursement and Financial Information Letter
(DFIL), the following should be noted: (i) interim unaudited financial reports (IFRs) formats have been agreed
with the BT ESPMU and PEC and will be submitted to the Bank within 45 days after the end of the calendar
quarter; and (ii) the project’s and entity’s annual audited financial statements (under PEC only as audit of
BT’s annual financial statements is already a requirement under Nurek Hydropower Rehabilitation Project)
are to be submitted to the Bank within 6 months after the end of the audit period. An audit will be carried
out by independent auditors acceptable to the Bank (funded out of the project); the terms of reference will
be pre-agreed with the Bank. Two separate designated accounts (DAs) will be opened in a commercial bank/
financial institution acceptable to the World Bank. Details with respect to disbursements will be included in
the Disbursement and Financial Information Letter.

28 The ratio of current assets to current liabilities, inclusive and exclusive of penalties on overdue loans will be 0.63 and 1.19
respectively.
29 A proxy for operating cash flow.

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Procurement
104. Procurement under the project will be governed by the World Bank’s Procurement Regulations for IPF
Borrowers (July 2016, revised November 2017 and August 2018) (Procurement Regulations), and will also be
subject to the Bank’s Anti-Corruption Guidelines (dated July 2016). The Project Procurement Strategy for
Development (PPSD) has been prepared by BT and PEC with the support of the Bank team. Based on PPSD,
the optimal procurement approaches have been determined and Procurement Plan for the first 18 months
of the project implementation has been prepared (see Annex 3).
105. The Implementing agencies have experience in the procurement and execution of contracts for goods,
civil works and consulting services specific to the energy sector over the past years. However, both entities
have no experience with new World Bank procurement procedures; have limited contract monitoring and
management skills as this function was mainly assigned to the external consultants; and the existing capacity
may not be sufficient to handle the increasing volume of procurement activities in the multiple projects
implemented in parallel. This constitutes a capacity risk for the project implementation that will need to be
timely and adequately addressed particularly through training of BT, ESPMU and PEC staff on the WB
procurement Policy and Regulations as well as the Standard Procurement Documents. The World Bank would
support further strengthening of BT, ESPMU, and PEC contract management capacity.
106. The overall procurement risk under the project is currently assessed as Substantial. The key issues and
risks concerning procurement include: (i) insufficient bidder interest due to operational context, small value
of contracts and bids to be offered based on new technology solutions; (ii) evaluated prices of bids exceeding
the estimate and cost overrun; (iii) procurement and implementation delays; and (iv) overall high public
procurement risk environment.
107. Given the above risks and based on the lessons learned from previous projects, the following measures
are proposed to strengthen implementation capacity and ensure effective project implementation:
• Outreach to potential bidders and pre-bid conferences will be organized to seek feedback on key
proposed economic/financial and other technical qualification requirements under the key packages;
• Careful procurement planning and optimization of the packages;
• Advance preparation of bidding documents, including the construction design;
• Start-up and intensive procurement trainings for staff of participating agencies;
• Preparation of Project Operational Manual with a detailed description of procurement processes;
• Involvement of an experienced PMC in the review of the design and implementation activities;
• Putting in place an efficient contract management system.
. C. Legal Operational Policies
Triggered?
Projects on International Waterways OP 7.50 Yes
Projects in Disputed Areas OP 7.60 No
.

D. Environmental and Social

108. The social and environmental risks are both rated as Substantial. On the social front, the project is expected
to result in positive impacts due to increasing the number of people with access to power resulting in enhanced

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employment and livelihood opportunities. However, a variety of risks are evident, most of which are rather
contextual and external to the project. But these will have a bearing on the project as it manifests in risks related
to security and safety. Apart from this, involuntary resettlement compounds the situation. On securing lands, the
implementation of the RPF and RAPs will need to be monitored closely to ensure full compliance with the standard
in the remote areas being targeted by the project. Reaching out to remote and poorer households will depend
upon the provision of appropriate technologies and out reach capacity of the client which currently is quite
inadequate. The project environmental risk is rated Substantial because of the greenfield nature of the associated
facilities planned for Component 1 - the Sebzor HPP and the related transmission lines; and Component 2's large
number of rural electrification activities in remote and potentially fragile areas. The limited capacity of the
implementing agencies in the understanding and application of the Bank's ESF and relevant Standards was also
considered. During preparation and implementation, planned activities in and around protected areas such as the
Tajik National Park (UNESCO World Heritage Site) and other critical habitats or cultural landmarks will be carefully
reviewed. BT and PEC will ensure qualified Environmental and Social specialists are assigned to Project
implementation at all times. BT and PEC’s quarterly reports to the Bank will include a section detailing the on-
going implementation of each of the relevant ESSs – these reports will include details on the implementation of
the associated facilities, namely the Sebzor HPP, the 18 km Sebzor-Khorog OHL, and the 63 km Khorog-Qozideh
OHL. The Bank will conduct semi-annual implementation review missions that will include field visits to active and
completed construction sites under Components 1 and 2, including the associated facilities.
109. Following the request from the Minister of Energy and Water Resources (letter No. 17-862, dated April 18,
2019), the notifications to riparian countries – Uzbekistan, Afghanistan, and Turkmenistan – related to the Sebzor
HPP project was sent by the Bank. No responses were received from Uzbekistan and Afghanistan by the deadlines
specified in the respective notification letters. Turkmenistan responded by objecting to the construction of Sebzor
HPP stating that the issue will need to be resolved within the framework of international law. The salient features
of Sebzor HPP and the description of the impacts of this power plant on the water flows of Shokhdara river, which
is triburary of Amu Darya considered a transboundary river, are presented in the Annex 5.
110. Social impacts. The Project will not lead to tariff increases because the resources are provided as grants. This
means that PEC and BT will not be obliged to request tariff increases to recover the cost of the capital investments.
Nevertheless, it should be noted that there is an adequate social protection system in place for electricity
consumers in GBAO until 2027. All newly-connected households receiving electricity service will also be subject to
the prevailing PEC tariff structure. This means that they will benefit from the winter subsidy scheme in the form
of a reduced block tariff during the coldest months (December-February) and pay TJS0.259 TJS/kWh (2.75
USc/kWh) during the rest of the year. The customer subsidy mechanism based on consumption blocks was
reformed in 2014, with the support of grant funding from the Swiss government. The revised tariff structure based
on consumption blocks provided a subsidy to households consuming less than 360 kWh, as a so-called lifeline
tariff.
111. To finance the customer subsidy mechanism, the interest differential between the original 6 percent on IDA
credit (under the subsidiary agreement with MOF) and the original rate of 0.75 percent was to be paid into an
escrow account by PEC, as envisaged by the Concession Agreement, over the period of 2012-2020. The proceeds
were to be used to cover the subsidy costs from 2014 till the end of the concession period, which would then be
reimbursed by the MOF. Subsequently, the impacts from any potential electricity tariff increases will be mitigated
through TSA Program of the Government.

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Table 4: PEC Electricity Tariff Structure for Residential Consumers.

Period Electricity price blocks Dirham/kWh US$/kWh
0 – 190 kWh/month 0.88 0.097
Private houses / From November to 191 – 220 kWh/month 2.65 0.291
residential March 221 – 360 kWh/month 4.41 0.485
consumers >361 kWh/month 25.90 2.75
From April to October 0 – ∞ kWh/month 25.90 2.75
Source: PEC.

112. Vulnerable customers in Khatlon would receive compensation through the TSA program. It should be noted
that the level of compensation since the 2016 tariff increases has not be sufficient to mitigate the impacts of tariff
increases. Additional fiscal allocation to TSA Program may come from the following sources:

(a) Savings in debt service costs under sovereign-guaranteed loans and credits. Currently, BT pays only
negligible amount of debt service to MOF under subsidiary agreements, which were used to on-lend the
international financiers’ resources to BT. With improvement in financial standing of BT, it will be able to
make timely payments, which will free up some resources at the state budget.
(b) Increased tax revenues from BT given larger revenues due to tariff increases.
134. The Bank is working with Government counterparts on alternative mitigation measures similar to PEC – a
block tariff structure, which would allow to protect the socially vulnerable customers without creating additional
fiscal costs for the Government. The roll-out of such tariff structure would be feasible as BT makes progress with
introduction of improved metering and billing systems in all regions. There are planned activities, supported by
various development partners, to roll out advanced metering and billing systems to cover the main cities, which
account for around 60 percent of the total electricity consumption in the country.
..
E. Climate and Disaster Risk Screening

113. The project has been screened for climate and disaster risks using the Bank’s online screening tool at
[Link] Major climate risks and natural hazards that are likely to affect the
country’s sustainability include extreme weather events (including high temperatures, dust storms, avalanches,
heavy rainfall, hail), negative effects for freshwater resources through changes in precipitation frequency and
melting of glaciers, negative changes to natural resources, which include changes to climatic patterns, increased
drought and changes in habitat as well as an increase in earthquakes. A major part of Tajikistan is vulnerable to
floods and mudflow hazards, which occur frequently across the country. National actions on climate change are
reflected in the “National Action Plan for Climate Change Mitigation”, Tajikistan’s Second National Communication
to the United Nations Framework Convention on Climate Change and recent study conducted by GERES30 on
“Climate Vulnerability and Capacity Assessment”.
114. The project addresses one of the country’s priority sectors for climate change mitigation, namely energy.
Based on the climate and disaster risk screening conducted for the project, the following hazards are classified as
High Risk for regions of Tajikistan targeted by the Project: (i) floods expected to occur at least once in the next 10
years, especially in the GBAO region; and (ii) a potentially damaging earthquake with a 20 percent probability to
occur in the next 50 years. To mitigate the risks posed by floods and earthquakes, the Project planning decisions,

30 Groupe Energies Renouvelables, Environnement et Solidarités.

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design, and construction methods will take into account the level of river flood and earthquake hazard in the
specific locations, especially for the power generation and grid infrastructure. For physical structures, such as off-
grid generation plants and distribution grid equipment, checks for seismic resilience will form part of standard
approval processes, but effective oversight will be required to ensure that materials conform to the specifications,
and that construction is properly supervised. The risk of floods and their damage to energy generation and
distribution infrastructure will also need to be mitigated through protective infrastructure, as appropriate, and
further assessment by flood risk experts depending on the level of hazard present in specific geographical
locations. Those mitigation measures were included in the capital costs of solar PV, small hydro, and wind power
plants (to be combined in micro-grids) and the power distribution infrastructure to connect the target households.
F. Citizen Engagement
115. The engagement of the local population and other civil society stakeholders (civil society, media, mahallas,
community-based organizations, and the general public) is essential to the success of the Project – to ensure
smooth collaboration between project staff and local communities and to enhance project outcomes. Both PEC
and ESPMU will establish or expand community engagement units responsible for establishing an effective
interface with target communities. They will be staffed with facilitators accustomed to working with communities.
At the outset, a number of information and awareness-raising events will be held to communicate key project
information. This will be followed by several citizen engagement activities implemented regularly throughout the
project.
116. Specifically, (i) in Year 1, community consultations will be held in each village to engage communities in the
needs-based decision-making over project solutions (e.g. needs and preferences regarding technologies); (ii) open
information and feedback desks will be established in each municipality during year 1 in order to provide citizens
with an immediately accessible venue to obtain information on the project, provide feedback, or raise concerns;
(iii) user perception surveys will focus on obtaining qualitative feedback from target areas on the level of
satisfaction with electricity improvements in the electricity in households, public facilities and at the village level.
These will be carried out twice during the Project’s lifecycle – at mid-term and closing. After the mid-term survey
the Project will disseminate the results to target communities and on the project websites and explain the steps
taken to address community feedback; and (iv) a consolidated grievance redress mechanism (GRM) and log will
be maintained by PEC and BT. The GRM will be open to feedback on any project-related issues, the appropriate
responsibilities of community liaison officers, contractors, supervision consultants, and respective departments
of PEC and BT will be assigned to record, process, and provide meaningful responses and/or resolution to feedback
received. Lastly, (v) starting in year 1, an annual report card will be rolled out in all participating communities to
obtain feedback on the effectiveness of the (above) project information and citizen engagement activities – this
will include an opportunity for communities to discuss how engagement processes might be improved.
117. To build the capacity of communities involved in the project, community awareness-raising workshops will
be organized by PEC and BT in collaboration with experts and/or local NGOs. The focus of these workshops will be
demand-led – communities can propose the focus of the workshops (e.g. energy efficiency, energy pricing) and
an annual action plan of events will be formulated with a nominated community group (e.g. youth leaders)
mobilized for this purpose. These citizen engagement activities are included in the Stakeholder Engagement Plan
(SEP) and will be described in detail in the Project Operational Manuals, prior to effectiveness. To the extent
possible, the citizen engagement approaches will follow those developed for the CASA-1000 Community Support
Project, also implemented by ESPMU. A number of gender-disaggregated beneficiary feedback indicators are
included in the results framework, including a measure on the effectiveness of citizen engagement.

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G. Gender
118. A gender gap analysis was carried out during project preparation to identify the main areas that could be
supported under the Project’s Gender Action Plan (GAP). The project will contribute to closing some of the gender
gaps identified in the gender analysis with particular emphasis in bolstering electrification with livelihoods training
to close the gender gap in labor participation. The GAP includes the following actions:
a. Improve access to electricity for female-headed households in target communities and facilitate their
access to on-grid or off-grid electricity connections in the form of micro-grids and household level supply
sources. The number of female-headed households in Tajikistan has increased as higher numbers of Tajik
men migrate to Russia for work. According to the 2017 Demographic and Health Survey (DHS), 20 percent
of households in Tajikistan are headed by women. Many female-headed households rely on remittances
as the only source of income. Approximately one in three migrants’ wives find themselves left alone as
their migrant husbands abandon their families at home and start a new life and new families.31 Due to a
lack of access to modern energy sources and affordability issues, reliance on solid fuels such as wood has
negative consequences for women. According to the 2017 DHS, 23 percent of rural households use solid
fuels for cooking. Reliance on solid fuels particularly impact women’s time-poverty, health and physical
well-being. In Tajikistan women and children are responsible for collecting, preparing, and storing
alternative fuels, which could contribute to women’s time poverty and women and girls experience the
physical strain of fuel collection.32 Women and girls disproportionately bear the health burdens associated
with reliance on traditional fuels. However, according to 2017 DHS, in most rural households where there
is higher reliance on solid fuels, 86 percent of households cook in a separate building with solid fuels and
5 percent cook outdoors, which could limit exposure to hazardous air pollutants. In addition to respiratory
issues, women also face risks of injury such as burns due to use of solid fuels for various purposes including
heating and cooking. The Project will use an intermediate results indicator to monitor the percentage of
female-headed households who receive electricity connections (baseline of 0 and target of 100 percent).
The baseline value is zero as the project is targeting settlements that lack electricity connections and
target is 100 percent. While the baseline and target values are the same for male-headed households,
this particular intervention is likely to dramatically improve the lives of female-headed households given
the consequences of reliance on solid fuels for their physical health, time-poverty, health and well-being.
b. Enhance women’s income generating opportunities and their participation in the energy sector through
livelihoods training. The provision of an electricity connection to female-headed households will reduce
the time they spend collecting solid fuels, thus increasing their availability for income-generating
opportunities, and will increase the scope of possible income-generating opportunities given the new
electricity connections. To take advantage of these opportunities, the task team will be seeking project
resources and requesting Energy Sector Management Assistance Program (ESMAP) resources for the
following activities to: (i) conduct a gender assessment on women’s energy needs impacts of lack of access
to electricity connections on their ability to engage in economic activities, their productivity, and income
levels, and livelihood opportunities that could derive from electrification and (ii) hire NGOs to provide
women with tailored livelihoods training aiming to increase the use of new electricity connections for
productive purposes drawing on the findings of the assessment. These trainings will also aim to improve
women’s productivity and income levels through supporting women to enhance the quality of their

31 IOM, 2009.”Abandoned wives of Tajik labor migrants: IOM Study on the socio-economic characteristics of abandoned wives of Tajik
labor migrants and their survival capabilities.”
32 Tajikistan Demographic and Health Survey 2017.

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products, improve their business skills to run their enterprise, and market their products or services
successfully. Through these actions, the Project seeks to address the large and widening gender gap in
paid employment.33 By age 25, 70 percent of women have become inactive, meaning they are doing
unpaid work at home, compared with 20 percent of men who become inactive at that age. Over 43
percent of Tajik women engage in unpaid home-based work, yard work, and caregiving compared with
only 9 percent of men.34 The percentage of households headed by women is growing—often driven by
labor migration.35 Women cope by taking on traditionally male-led responsibilities, including household
maintenance and budgeting and the tending of fields and animals, on top of their traditional roles as
caregivers to children and the elderly. These additional duties limit their participation in educational and
income-earning activities outside the home. The Project will use intermediate results indicators to
monitor the percentage of women who completed the livelihoods training who have engaged in income-
generating activities as a result of the training (baseline of 0 and target of 20 percent). Further, to increase
the impact of livelihoods training, the Project will connect all graduates of the trainings to the grant
opportunities offered by REDP and additional training and livelihoods opportunities (i.e., livelihoods tools
and equipment) offered by SERSP. REDP will offer grants through a grant competition and SERSP will offer
livelihoods tools and equipment to youth who complete bootcamps, training and business proposals that
an evaluation committee deems as viable.
c. Improve gender equality in implementing energy companies, PEC and BT. The Project will finance a review
the HR policies of PEC and BT to determine if these policies could be implemented in a more gender-
inclusive manner. The project will work with the energy companies to explore opportunities to provide
career development workshops and trainings to women employees of these companies and to raise
awareness of the managerial staff about addressing unconscious gender biases. Furthermore, the overall
policies and strategies will be reviewed and revised so as to address the needs of women in energy,
specifically those in rural areas.
d. The Project implementing entities will reach out to women and ensure their participation in the
consultation and stakeholder engagement processes. The Project will ensure that women’s feedback and
concerns are reflected in the decision- making process for the provision of on-grid and off-grid energy
solutions (i.e. installation, operation, maintenance, etc.) provided that security standards and other
financial and technical criteria are met.
e. The Project will use gender-sensitive communication and consumer awareness-raising activities targeting
women, such as meeting with women’s groups, using media channels typically used by women, and
tailoring messages in ways that will be accessible for women. In addition, communication and outreach
activities will also be conducted in places and at times that are convenient for women.

V. GRIEVANCE REDRESS SERVICES

119. Communities and individuals who believe that they are adversely affected by a World Bank (WB) supported
project may submit complaints to existing project-level grievance redress mechanisms or the WB’s Grievance
Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed in order to address
project-related concerns. Project affected communities and individuals may submit their complaint to the WB’s

33 Women’s labor force participation declined from 46 to 27 percent between 2003 and 2013. The participation rate among men is 63
percent, according to World Bank, Tajikistan Systematic Country Diagnostic (Washington, DC: World Bank, 2018).
34 Statistical Agency under the President of the Republic of Tajikistan, Labor Force Survey (2016).
35 Asian Development Bank, Gender Assessment (2016).

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independent Inspection Panel which determines whether harm occurred, or could occur, as a result of WB non-
compliance with its policies and procedures. Complaints may be submitted at any time after concerns have been
brought directly to the World Bank's attention, and Bank Management has been given an opportunity to respond.
For information on how to submit complaints to the World Bank’s corporate Grievance Redress Service (GRS),
please visit [Link]
service. For information on how to submit complaints to the World Bank Inspection Panel, please visit
[Link]

VI. KEY RISKS

.

120. The overall risk of the Project is rated as Substantial considering the individual risk ratings discussed below.
121. Political and Governance Risk is High given that accountability and transparency issues, and weak civil
society oversight, may affect the project. Tajikistan's anti-corruption framework, which includes the Law of the
Republic of Tajikistan on Combating Corruption (2008), Anti-Corruption Strategy in the Republic of Tajikistan 2013-
2020 (2013), and the Code of Ethics for Civil Servants (2004), will help mitigate governance risks. To increase
demand for accountability, the Country Partnership Framework (CPF) for FY2019-23 aims to engage civil society
in all aspects of the Bank's portfolio, enabling Civil Society Organizations (CSOs) to gain experience in preparing,
implementing and monitoring government programs. The project will provide further mitigation through due
diligence on the cost estimates (review by international consultants of the cost estimates from the feasibility
study) and a robust procurement process.
122. Macroeconomic Risk is Substantial given Tajikistan’s high vulnerability to external and domestic shocks, low
policy buffers, and weak macroeconomic and fiscal frameworks. Those risks may impact the timely
implementation of the project due to their direct or indirect impacts on the implementing entities – BT and PEC.
The macroeconomic risk to the project would be partially mitigated through improved overall macroeconomic
condition driven by acceleration in economic growth and slight improvement in the balance of payments, which
reduces the downward pressure on local currency (Tajik Somoni, TJS) with direct implications for financial standing
of BT, which has all of its long-term debts denominated in foreign exchange (FX). Additionally, the implementation
of the new electricity tariff methodology for BT would help to ensure that FX fluctuation related costs are passed
through to end-user tariffs. It should also be noted that the economic growth has accelerated since 2016, the
macroeconomic and external balances have slightly improved, and the Government is in advanced discussions
with IMF for a 3-year program, which would help to ensure that overall macroeconomic and fiscal policies are
prudent. The impact of macroeconomic risks on PEC is very limited given that end-user tariffs in GBAO are fixed
in US$ and adjusted annually to reflect any deprecation/appreciation of TJS.
123. Sector Strategies and Policy Risk is Substantial given inadequacy and year-to-year variability of BT revenues
due to non-predictable tariff increases, possible further devaluation of TJS that reduces the cash available to
service foreign currency denominated debt, and variability of collection rates for electricity. This may impact the
financial sustainability of the Project and BT’s overall operations. This risk will be mitigated through
implementation of the Government Program for Financial Recovery of BT for 2019-2025 (dated April 15, 2019).
The Government Program, among other things, will be introducing new electricity tariff methodology, which
would allow for inclusion of justified O&M costs into the tariff. The Government has demonstrated its
commitment to financial recovery of BT by enacting three tariff increases since 2017. Additionally, ADB is
preparing a policy-based lending operation with delivery by the end of 2019, which would specify critical power
sector measures as prior actions. The 3-year IMF program has some actions related to energy sector, such as

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adoption of new tariff methodology.

124. Technical Design of Project Risk is Substantial given lack of familiarity of PEC with Solar PV, Wind, and BESS
technologies. The technical design related risks will be mitigated by ensuring that experienced PMC, to be hired
by PEC, provides the required advice and support to PEC in reviewing and deciding on technical designs to be
submitted by its contractors.
125. Institutional Capacity for Implementation Risk is Substantial given lack of resources at BT to ensure
thorough technical supervision of Project activities. Therefore, BT has designated project implementation groups
that have gained experience in implementation of complex IFI funded projects (e.g. Nurek, CASA-1000), and the
Project would rely on those team to implement this project. Moreover, PMC under the Project would help BT and
PEC to conduct technical supervision of the project and will help resolve technical issues.
126. Fiduciary Risk is Substantial because both the FM and Procurement Risks are Substantial. The FM risk is
Substantial due BT’s lack of appropriate policies and procedures for recognition of revenues and receivables for
electricity sales and some other issues identified by the auditor of FY2017 financial statements. The FM capacity
risks will be mitigated by activities envisaged under Government Program for Financial Recovery of BT for 2019-
2025, which includes number of activities to further strengthen financial management and internal audit capacity
of BT. The Procurement Risk is Substantial given lack of experience at PEC with procurement of off-grid RE based
electrification solutions.
127. The Environmental and Social Risk is Substantial since BT/ESPMU and PEC have no experience in
implementation of investment operations as per requirements of new Environmental and Social Framework (ESF),
and limited prior experience in implementing land acquisition as per requirements of the World Bank. The risk
would be mitigated through development of appropriate safeguards documents, their incorporation into the
bidding documents for construction works, diligent implementation by the client, and active stakeholder
engagement.

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VII. RESULTS FRAMEWORK AND MONITORING

Results Framework
COUNTRY: Tajikistan
Rural Electrification Project
Project Development Objectives(s)

The project development objective is to provide electricity access to target settlements in GBAO and Khatlon regions of Tajikistan.

Project Development Objective Indicators

Indicator Name Measure Baseline End Target
People provided with new or improved electricity service Number 0 43,126
People provided with access to electricity under the project by household connections
Number 0 43,126
(grid or off-grid).
Average annual daily duration of electricity supply to target settlements in GBAO connected
Hours 0 14
to micro-grids

Intermediate Results Indicators by Components

Component 1: Provision of electricity access to target settlements in GBAO region

Number of settlements electrified in GBAO Number 0 61
Number of micro-grids constructed in GBAO Number 0 35
Number of household connections completed in GBAO Number 0 2,401
Generation capacity of energy constructed or rehabilitated MW 0 7.36
Hydropower generation capacity constructed under the project MW 0 0.76
Renewable energy generation capacity (other than hydropower) constructed under the
MW 0 6.6
project
Geological site investigation works for Sebzor HPP completed Yes/No No Yes

Financing mechanisms developed to promote up-take of energy efficient appliances in Yes/No No Yes

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Indicator Name Measure Baseline End Target

GBAO
At least one energy efficiency retrofit of a public facility completed Yes/No No Yes
Percentage of citizens in GBAO who believe that the Project has established effective
Percentage 0 40%
engagement processes
Percentage of grievances recorded by the Project in GBAO and resolved within one-month
Percentage 0 100%
period
Percentage of female-headed households in GBAO connected to electricity service Percentage 0 100%
Percentage of women who engage in income-generating activities in GBAO due to Project
Percentage 0 20%
interventions
Completion of review of HR policies of PEC for gender-inclusivity Text No Yes
Component 2: Provision of electricity access to target settlements in Khatlon region
Number of settlements electrified in Khatlon Number 0 74
Number of household connections completed in Khatlon Number 0 4,840
Percentage of citizens in Khatlon who believe that the Project has established effective
Percentage 0 40%
engagement processes
Percentage of grievances recorded by the Project in Khatlon and resolved within one-
Percentage 0 100%
month period
Percentage of female-headed households in Khatlon connected to electricity service Percentage 0 100%
Percentage of women who engage in income-generating activities in Khatlon due to
Percentage 0 20%
Project interventions
Completion of review of HR policies of BT for gender-inclusivity Text No Yes

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Monitoring & Evaluation Plan: PDO Indicators

Methodology for Responsibility for Data
Indicator Name Definition/Description Frequency Datasource
Data Collection Collection
This indicator will measure Implementation PEC and BT semi-
People provided with new or improved
the progress with provision of Semi-annual support consultant annual progress PEC and BT
electricity service
access to target settlements reports reports to the Bank

This indicator will measure

Average annual daily duration of electricity the progress with availability PEC semi-annual
Technical reports
supply to target settlements in GBAO of electricity service to target Semi-annual progress reports to PEC
from PEC
connected to micro-grids settlements connected to the Bank
micro-grids
Monitoring & Evaluation Plan: Intermediate Results Indicators
Methodology for Responsibility for Data
Indicator Name Definition/Description Frequency Datasource
Data Collection Collection
Component 1: Provision of electricity access to target settlements in GBAO region
This indicatorwill measure the Implementation PEC semi-annual
Number of settlements electrified in GBAO progress with electrification of Semi-annual support consultant progress reports to PEC
target settlements in GBAO reports the Bank
This indicator will measure the
progress with construction of Implementation PEC semi-annual
Number of micro-grids constructed in GBAO micro-grids required for Semi-annual support consultant progress reports to PEC
electrification of target reports the Bank
settlements in GBAO
This indicator will measure the
Implementation PEC semi-annual
Number of household connections progress with connection of
Semi-annual support consultant progress reports to PEC
completed in GBAO households to micro-grids and
reports the Bank
centralized networks in GBAO
This indicator will measure the
Implementation PEC semi-annual
Generation capacity of energy constructed progress with construction of
Semi-annual support consultant progress reports to PEC
or rehabilitated new electricity generation
reports the Bank
capacity to serve the target

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settlements

This indicator will measure the

progress with completion of
PEC semi-annual
Geological site investigation works for specific geological site Technical reports of
Semi-annual progress reports to PEC
Sebzor HPP completed investigation works required PEC consultants
the Bank
for finalization of detailed
design for Sebzor HPP
This indicator will measure the
Financing mechanisms developed to PEC semi-annual
progress with establishment of Technical reports of
promote up-take of energy efficient Semi-annual progress reports to PEC
mechanisms for promotion of PEC consultant
appliances in GBAO the Bank
EE
This indicator will measure the PEC semi-annual
At least one energy efficiency retrofit of a Technical reports of
progress with improvement of Semi-annual progress reports to PEC
public facility completed PEC contractor
EE in public facilities the Bank
This indicator will monitor of Annual PEC and BT semi- Survey PEC
Percentage of citizens in GBAO who believe
citizen engagement activities in annual Project
that the Project has established effective
GBAO progress reports to
engagement processes
the Bank
Percentage of grievances recorded by the This indicator will monitor Quarterly GRM reports of PEC GRM reports of PEC PEC
Project in GBAO and resolved within one- efficiency of GRM for Project and BT
month period activities in GBAO
This indicator will measure the
progress with connection of
PEC to submit
Percentage of female-headed households in female-headed households to
Annual Surveys respective survey PEC
GBAO connected to electricity service micro-grids in GBAO and
results to the Bank
centralized distribution
networks in GBAO
This indicator will measure the Annual Surveys PEC to submit PEC
efficiency of training programs survey results to the
Percentage of women who engage in to improve livelihoods of Bank
income-generating activities in GBAO due to women. The target was chosen
Project interventions based on: (a) discussions with
the client; and (b) feasibility
given that this Project is not

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transferring assets to female-

headed households for
income-generating activities.
This indicator will measure
Completion of review of HR policies of PEC progress with review of PEC HR Report of the PEC report to the
Annual PEC
for gender-inclusivity policies to ensure they ensure consultant Bank
inclusivity of women.
Component 2: Provision of electricity access to target settlements in Khatlon region
This indicator will measure the Implementation BT semi-annual
Number of settlements electrified in Khatlon progress with electrification of Semi-annual support consultant progress reports to BT
target settlements in Khatlon reports the Bank
This indicator will measure the
Implementation BT semi-annual
Number of household connections progress with connection of
Semi-annual support consultant progress reports to BT
completed in Khatlon households to centralized
reports the Bank
network in Khatlon
Percentage of citizens in Khatlon who BT semi-annual
This indicator will monitor of
believe that the Project has established Annual Project progress Survey BT
citizen engagement activities
effective engagement processes reports to the Bank
Percentage of grievances recorded by the This indicator will monitor
Project in Khatlon and resolved within one- efficiency of GRM under the Quarterly GRM reports of BT GRM reports of BT BT
month period Project
This indicator will measure the
progress with connection of BT to submit
Percentage of female-headed households in
female-headed households to Annual Surveys respective survey BT
Khatlon connected to electricity service
centralized distribution results to the Bank
network in Khatlon
This indicator will measure the
efficiency of training programs
to improve livelihoods of
Percentage of women who engage in
women. The target was chosen BT to submit survey
income-generating activities in Khatlon due Annual Surveys BT
based on: (a) discussions with results to the Bank
to Project interventions
the client; and (b) feasibility
given that this Project is not
transferring assets to female-

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headed households for

income-generating activities.
This indicator will measure
Completion of review of HR policies of BT for progress with review of BT HR Report of the BT report to the
Annual BT
gender-inclusivity policies to ensure they ensure consultant Bank
inclusivity of women.

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ANNEX 1: Implementation Arrangements and Support Plan

COUNTRY: Tajikistan
Rural Electrification Project

Strategy and Approach for Implementation Support

1. This Implementation Support Plan (ISP) for the Tajikistan Rural Electrification Project describes how the
Bank will assist the client in achieving the PDO of the project. In particular, the ISP places emphasis on
accomplishing the following objectives: (a) providing necessary technical advice to the client and bringing
international experience and good practices to promote successful implementation; (b) ensuring that Project
investments meet World Bank technical standards; (c) oversight and capacity building support for the
implementing entities, especially PEC as it will be responsible for the deployment of innovative off-grid
electrification solutions; and (d) ensuring that the required fiduciary, social, and environmental safeguards are
put in place and implemented according to the Legal Agreement and other project documents.
2. The project will be implemented over a period of six years. The ISP also includes support to the
implementing agencies prior to project effectiveness, to advance in project design activities.
3. Technical implementation support. Experienced energy specialists and engineers will be engaged in the
provision of technical supervision support during project implementation. Specialists will cover the following
areas of expertise: hydropower, geology, power distribution, renewable energy and off-grid electrification, and
energy efficiency. This group of experts will be closely engaged with the implementing agencies and provide
oversight over the additional site investigation works for Sebzor HPP, review of detailed settlement-level
feasibility studies for electrification investments, the review of procurement documents for selection of
contractors to connect the target settlements to the grid and construct micro-grid. Finally, energy efficiency
and communication experts will advise PEC in the design of awareness raising campaigns, the design of
financing schemes for efficient appliances, and the design and implementation of EE pilots. Technical
implementation support missions will be carried out three times a year during the first 18 months of project
implementation, followed by semi-annual missions. The project team will also carry out site visits to electrified
communities in Khatlon and GBAO during implementation.
4. FM implementation support. As part of its project implementation support and supervision missions, the
Bank will conduct risk-based financial management implementation support and supervisions within a year
from the Project effectiveness, and then at appropriate intervals. During the Project implementation, the Bank
will supervise the Project’s financial management arrangements in the following ways: (a) review the Project’s
semi-annual IFRs as well as the entities’ and the Project’s annual audited financial statements and auditor’s
management letters and remedial actions recommended in the auditor’s management letters; and (b) during
the Bank’s on-site missions, review the following key areas: (i) project accounting and internal control systems;
(ii) budgeting and financial planning arrangements; (iii) disbursement arrangements and financial flows,
including counterpart funds, as applicable; and (iv) any incidences of corrupt practices involving project
resources. As required, a Bank-accredited Financial Management Specialist will participate in the
implementation support and supervision process.
5. Procurement implementation support. Implementation support activities are proposed based on the
project procurement risks identified and include: providing procurement trainings for staff of participating
agencies; prior/post review of procurement documents and providing timely feedback to the IAs; providing

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detailed guidance on the Procurement Regulations; review of the POM including detailed chapter on
procurement; support IAs in preparation of a conference for potential bidders; monitoring procurement and
contract management processes through STEP.
6. Environmental and social. The Bank’s environmental and social specialists will provide support to PEC and
BT to ensure smooth implementation of the Project activities in consistency with the applicable Environmental
and Social Standards of the Bank. Regular site visits will be carried out to monitor the compliance of the
contractors with good construction practices and other requirements to be specified in site-specific EMPs.
Additionally, the social specialists will be reviewing the consistency of land acquisition with the requirements
of the RPF and RAPs to be prepared for construction of micro-grids and connection of power distribution lines
to connect the settlements to power distribution networks of PEC and BT, The Bank task team will provide
guidance in, and review, key environmental and social monitoring documents, such as ESMPs, RAPs, RAP
Completion Reports, and quarterly progress reports and support PEC and BT in meeting its commitments set
out in ESCP. The task team will also regularly engage with the other development partners regarding the
performance of BT and PEC and their contractors during construction of Associated Facilities to this Project,
namely the Sebzor HPP, the 18 km Sebzor-Khorog OHL, and the 63 km Khorog-Qozideh OHL.
Implementation Support Plan and Resource Requirements
7. The proposed implementation support requirements are described in Tables 1.1 and 1.2. Completion of
additional site investigation works for Sebzor HPP and the design and implementation of innovative off-grid
electrification solutions (e.g. solar hybrid micro-grids) by PEC will require substantial level of implementation
support. Technical specialists and consultants of the Bank will provide implementation support.
Table 1: Annex 1: Implementation Support Requirements.
Resource
Time Focus Skills Needed Partner Role
Estimate
Pre-effectiveness • Finalizing additional site • Geology, hydropower US$300,000 -
and first 18 investigation works for engineer, and
months of Sebzor; hydromechanical
implementation • Detailed design and engineer;
feasibility studies for • Micro-grids, solar PV,
electrification solutions; wind, small hydro,
• Preparation of tender and BESS specialists;
documents for electrification • Procurement;
solutions; • Environmental and
• Review of the E&S Social;
requirements in • Energy economist;
procurement documents and • Financial analyst;
overall implementation of • FM.
E&S requirements;
• Review of economic
justification of electrification
sub-project designs;
• Update of the financial
standing of PEC; Review of
audit reports and support to
address recommendations
from the audits.

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18-72 months of • Monitoring the • Power engineer; US$200,000/year -

implementation implementation of grid • Micro-grid specialist,
expansion for connection of solar PV, wind, small
new settlements; hydro, and BESS
• Monitoring the construction specialists;
of micro-grid sub-projects; • Environmental and
• Monitoring implementation Social;
of E&S requirements; and • Procurement;
monitoring implementation • FM.
of gender action plan.

Table 2: Annex 1: Skills Mix Required

Skills Needed Number of Staff Number of Trips Comments
Weeks
Team leaders 60 12 Headquarter (HQ) and Country Office
(CO) based
Off-grid electrification specialist 20 12 HQ based
Solar PV and BESS specialist 15 3 International consultant
Wind power specialist 10 3 International consultant
Hydropower engineer 10 6 International consultant
Geologist 4 2 International consultant
Hydromechanical specialist 3 2 International consultant
Power engineer 25 6 HQ based
Energy economist 3 1 HQ based
Financial analyst 6 4 HQ based
Environmental specialist 6 6 HQ based
Social specialist 6 6 HQ based
Procurement specialist 20 - Country office based
FM specialist 6 - Country office based

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ANNEX 2: Detailed Project Description

COUNTRY: Tajikistan
Rural Electrification Project

1. The proposed project is structured around two components, with sub-components, as follows:
2. Component 1: Provision of electricity access to target settlements in GBAO (US$25.2 million IDA grant).
This component will have the following sub-components.
3. Sub-component 1.1: Construction of micro-grids, and connection of consumers to micro-grids and
centralized distribution network of PEC (US$23.7 million IDA grant). This component will finance provision of
electricity supply to 61 settlements in GBAO region with total population of about 11,666. The investments will
cover: (a) construction of electricity generation infrastructure, which will include micro-grids comprised of Solar
PV, small hydro, wind, and BESS, and construction of electricity distribution infrastructure, including
construction of 10/0.4 kV distribution lines and distribution transformers, to supply electricity from RE projects
to consumers, including internal wiring for households; and (b) construction of 35/10/0.4 kV distribution lines
and substation level upgrades to connect some of the target settlements, which are close to the network;
including internal wiring for households in order to alleviate consumer affordability barriers.
4. Rationale for electrification. The electrification of the communities is priority given the significant social
and economic costs of the lack of access to clean, safe, and affordable energy sources. A baseline assessment
of the impact of lack of electricity on the socio-economic conditions of populations in Vanj and Rushan36
districts of GBAO (bordering Afghanistan) found that people use battery-powered flashlights, candles and
kerosene/diesel flashlight to meet their lighting needs. As for cooking and heating, households rely heavily on
firewood. Collection of firewood is the major task that all household members are engaged throughout the
year both in warm and cold seasons, with men being responsible, although women and children are also
engaged. Collection of firewood is a time-consuming activity (6-7 hours per day) preventing adults from
engaging in other productive activities and children from attending school. It is also a detrimental work that
has a significant impact on health and. As the major source of firewood are the mountains, people must walk
long distances to the source and climb, as well as carry the fuelwood on their back, which causes exhaustion
and pain and, in some cases, serious injuries and even death from falls while climbing. In addition, people
reported health issues linked to constant exposure from indoor smoke released from burning biomass and solid
fuels, including lung problems, headaches, loss of vision, as well as digestive system problems due to
consumption of half cooked food. The environment has also been severely affected as firewood scarcity has
led to deforestation and desertification, whereby all fruit trees have been cut and massive usage of eurotia, a
local shrub, has led to soil erosion.
5. In addition to collecting firewood, the local population Vanj and Rushan districts also buys firewood for
heating and cooking purposes. The expenditures incurred are very large, with residents spending on overage
TJS898 (US$96) and a maximum of TJS3,000 (US$320) on purchasing this type of fuel in the winter months. The
households surveyed reported that more than half of their total household income was spent on purchasing
firewood, coal, gas and diesel. In addition, lack of power also hinders the activities of local entrepreneurs such
as blacksmiths, carpenters, shop and canteen owners, etc. and make conditions in schools too harsh for

36Baseline Assessment of the Impact of Lack of Electricity on the Socio-Economic Conditions of Populations in Badakhshan Province
of Afghanistan and Badakhshan Tajikistan. Aga Khan Foundation, 2017.

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children to attend, especially during the cold winter months.

6. The situation in Vanj and Rushan can be extrapolated to the other GBAO districts. However, in the
mountainous district of Murghab, with an average elevation of 3,500 meters above sea level (masl), the
conditions faced by the population are even more severe as the winters are longer and colder (temperatures
can reach -40°C) and the sources of energy supply are scarcer. For space heating, water heating and cooking,
all households and public buildings are currently using solid fuels, primarily coal. Due to the high altitude, low
oxygen levels reduce the efficiency of solid fuel combustion requiring longer cooking times and more
combustible fuel for heating and cooking compared to lower altitude settlements.
7. Technical approach to determine optimal combination of generation technologies to electrify the target
communities. Identification of the least-cost electricity supply technologies for each settlement was carried
out through geospatial analysis with detailed evaluation of hourly demand profiles of consumers, potential of
RE resources, and the capital and O&M costs of technologies. The analysis concluded that electricity demand
in target settlements can be met with combination of solar PV, wind, small hydro, and BESS technologies as
well as grid-extension solutions. The diesel-based generation was not evaluated to be part of the least-cost
solutions because: (a) unit cost of energy from diesel was relatively high given almost 45 percent loss of power
output due to high elevation – the target settlements are located 3,500 meters above sea level, and social cost
of carbon; and (b) there are significant logistical challenges involved in ensuring the required amount of diesel
in target settlements. For RE based micro-grid solutions, the exact locations will be determined at the detailed
design stage by the contractor to be responsible for design, supply, and installation of micro-grids. Those
contractors will also be responsible for construction of electricity distribution infrastructure, including
construction of 10/0.4 kV distribution lines and distribution transformers, to connect the households in those
35 settlements to micro-grids, including household level wiring to alleviate affordability constraints. The
economically least cost options for meeting electricity demand in 35 of the target settlements are presented
in the following table.
Table 1: Annex 2: Least Cost Options for Electrifying Target Settlements.
Investment
No. Settlement Hydro (kW) Wind (kW) PV (kW) BESS (kW)
(million US$)
1 Rangkul 3.25 0 797 480 480
2 Alichur 2.99 0 680 561 336
3 Tokhtamish 1.41 0 0 770 503
4 Chorsun 0.04 0 9 5 5
5 Gushun 0.05 17 0 0 0
6 Yodged 0.83 275 0 0 0
7 Bashkumbez 1.30 0 302 232 162
8 Bulunkul 0.67 0 169 93 84
9 Chichikde 0.41 0 87 87 47
10 Chushteppa 0.08 0 19 16 9
11 Gulbazqul 0.02 0 0 12 8
12 Jagigir 0.12 0 26 24 17
13 Karakul 1.91 0 323 533 337
14 Kishto 0.05 0 11 10 6
15 Kizilorum 0.12 0 28 22 13

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Investment
No. Settlement Hydro (kW) Wind (kW) PV (kW) BESS (kW)
(million US$)
16 Koshogil 0.08 0 18 14 9
17 Mamadzoir 0.14 0 33 25 18
18 Okbeik 0.18 0 42 29 22
19 Oqtal 0.10 0 20 21 13
20 Qaraturuq 0.29 0 67 52 34
21 Shatput 0.23 0 0 124 82
22 Shaymoq 1.85 0 397 380 262
23 Subashi 0.16 0 35 33 22
24 Bodomdara 0.01 0 2 1 1
25 Achirkh 0.11 35 0 0 1
26 Bizhravd 0.03 9 0 0 1
27 Darjomch 0.66 220 0 0 0
28 Devlokh 0.05 15 0 0 0
29 Dzhizev 0.07 23 0 0 0
30 Midenchid 0.04 12 0 0 1
31 Ravmed 0.30 101 0 0 4
32 Ravsharv 0.02 8 0 0 0
33 Vranchan 0.06 0 0 34 24
34 Zarchiv 0.02 0 0 12 9
35 Pshikharv 0.14 45 0 0 1
Total 17.76 760 3,065 3,570 2,511
Source: Geospatial and least-cost planning analysis based on data from PEC and international cost benchmarks.

8. The remaining 26 settlements will be connected to power distribution network given that this would be
economically least-cost option and they are located in the western part of GBAO in relatively close proximity
to existing network. The estimated cost of those connections is about US$6 million. PEC prepared detailed cost
estimate for each settlement, which includes the cost of materials, conductors, transformers and other
equipment, internal household-level wiring, meters, and works. The costs are reasonable and commensurate
with the costs of recently completed similar distribution expansion/household-connection projects
implemented by PEC.
Table 2: Annex 2: Settlements to be Connected to PEC Centralized Grid.
No. Settlement
1 Ubag
2 Zaych
3 Dursher
4 Poi Mazor
5 Vavani Bolo
6 Vavani Poyon
7 Sumgat
8 Langar
9 Khekhik
10 Dorzh

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11 Barchidev
12 Nisur
13 Roshorv
14 Yapshor
15 Rukhch
16 Khidjez-2
17 Dasht
18 Chadud
19 Ravivd
20 Razukh
21 Roznver
22 Zurzmoi dasht
23 Dashti shtam
24 Nimos
25 Otjatga
26 Shirgin

9. Sub-component 1.2: Project implementation support to PEC, technical assistance for additional
geological site investigation works for Sebzor HPP, and promotion of energy efficiency (US$1.4 million IDA
grant. This will include financing of:
a. PMC costs to support PEC with preparation of bidding documents for procurement of goods and works
required for micro-grids and connection of settlements to PEC distribution network; carrying of tenders
for procurement of contractors to construct the micro-grids and connect the settlements to the
distribution grid; supervision of construction works for micro-grids; and compliance with
environmental and social requirements.
b. Geological site investigation studies for Sebzor HPP. These additional studies will need to be completed
as inputs to detailed design and ensure that proposed technical solutions take into account the risks
from natural disasters such as land-slides, rock fall, debris flow, and avalanches. The key site
investigation studies will include:
- Geological-geomorphological study with remote sensed data. A detailed geological-
geomorphological map (1:5’000) of the project area extending from the river level up to the
mountain crest should be compiled by a qualified geomorphologist. The study should be focused on
the detection of slope instabilities and completed through photointerpretation of available Digital
Terrain Models (DTM) – FS survey, High Mountain Asia by National Aeronautics and Space
Administration (NASA), Advanced Spaceborne Thermal Emission and Reflection Radiometer
(ASTER), orthophotos and satellite images and field surveys. This will help to identify the risk
associated to landslides, rock fall, debris flow and avalanches along the alignment of GRP pipe.
- Spaceborne Synthetic Aperture Radar (SAR) Interferometry Analysis. SAR systems offer a relatively
fast and low cost mean to detect on going land deformations over large areas, even in remote
locations such has the Shakhdara Valley. Differential SAR interferometry is a consolidated technique
for the mapping of ground displacements, which makes use of two or more SAR images acquired
from slightly different orbit configurations and at different times to exploit the phase difference of
the signals. For evaluating the stability condition of the Chagev and other minor landslides it is
recommended to contract a qualified remote sensing company and proceed in two-phase analysis:

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Phase 1: Selection of about 10 radar scenes captured in the last 10-15 year with different time
frames before and after events that could have caused ground deformation such as earthquakes
and exceptional rain and snowfall. The images will be used to calculate differential SAR
interferograms (DInSAR) from which it would be possible to detect the existence, position and
extension of unstable areas. In case there is evidence of critical conditions for the project it is
recommended to proceed with phase 2.
Phase 2: Interferometric Point Target (IPTA) analysis on a large number of radar scenes (up to 100)
in order to retrieve a map of the spatial distribution of the average rate of movement in the satellite
line-of-sight direction and time series of the displacement. InSAR Interferometry results should be
verified on field by the geomorphologist in charge of the geological survey and the verified landslide
integrated into the geological maps. No standard is available for InSAR analysis and its execution
should be discussed with the contracted company, in any case a reference paper on Landslide
detection in Nepal is given in Annex 2.
- Detailed geological mapping. This will be a field activity that will define the types of soils and rocks
along the project area and it must be extended up to the mountain top in order to verify the results
of the geological-geomorphological study. It requires the absence of snow on the ground, therefore
it can be completed only in summer-fall months.
- Vertical and inclined core recovery boreholes with in-situ test. Boreholes are needed to define the
ground stratigraphy at the final position of the main structures. They will be also used for the
execution of in situ test such as Standard Penetration Test and the retrieval of soil and rock samples
for laboratory testing. At selected location piezometric pipes could be installed for groundwater
monitoring.
- Exploratory trenches with in-situ test. Exploratory trenches should be excavated along the pipeline
alignment in order to evaluate the ground condition and estimate the boulder occurrence. They will
also be used to retrieve representative samples of coarse soils to be tested at the laboratory.
- Pumping Test. Pumping or Lefranc test should be conducted within boreholes at the weir and the
power house in order to define the ground permeability and the amount of water that could flow
within the excavations.
- Seismic refraction surveys. Seismic refraction profiles with at least 24 channels seismograph and 5-
10 meters of spacing should be executed at the desander, power house and surge arrangement to
verify the variation of soil strength with depth and the position of the soil/bedrock contact.
- Laboratory tests of soil and rock samples. Soil samples will be examined at the laboratory to define
the soil type by classification test. Undisturbed samples of fine deposits should also be tested for
shear strength and deformability. Rock samples will be tested to define the uniaxial compressive
strength.
c. Promotion of EE. This would include: (a) awareness raising program to promote the use of cleaner and
efficient electric appliances as well as to educate the local communities about the benefits of energy
efficiency renovation in buildings (i.e. building envelope insulation, EE windows, etc.); (b) technical
assistance to PEC for the development of a financing mechanisms to support the local communities to
purchase efficient appliances; and (c) piloting EE measures in selected public buildings, especially
elementary schools, boarding schools and health centers in order to demonstrate the cost-efficiency
benefits of EE investments as well as improved comfort and well-being of building occupants.

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d. Monitoring and evaluation costs related to efficiency of citizen engagement and addressing gender gaps
under the Project; and
e. Incremental operating costs of PEC.

Box 1: Profile and Benefits of Sebzor HPP

Sebzor HPP will be located in the south-western part of GBAO. The HPP will allow to ensure sufficient electricity supply
to meet the projected electricity demand in GBAO until 2035 and also enable to export surplus generation to the
neighboring Afghanistan. Specifically, the project is expected to generate 74 million kWh of energy per year, with 60
percent to be consumed domestically in GBAO by existing consumers already connected to the network and the new
consumers to be connected under this Project. The exports to Afghanistan will take place under long-term PPA signed
with Afghanistan power utility – Da Afghanistan Breshna Sherkat (DABS).
The feasibility study, which was commissioned by PEC, confirmed that the HPP is technical feasible and economically
viable. Sebzor will be a run-of-the-river HPP with a 2.8 km glass-reinforced plastic (GRP) pipeline culminating in two 220
m penstocks feeding into a powerhouse with three generating units. Electricity from Sebzor HPP will be supplied to the
network via an 18 km 110 kV line connected to PEC’s grid. The Sebzor HPP site is situated on an elevation of about
2,500 masl, and the project sites (intake, waterways, powerhouse, etc.) are relatively easy to access, mostly via existing
roads. The other key structures of this HPP will include the construction of: (a) weir, (b) water intake structure; (c) sand
trap; (d) surge arrangements; (e) power house; and (f) electric works.
Afghanistan is interested in increasing electricity imports from PEC to supply its border regions, and the Government
plans to request ADB to finance the electricity transmission line to connect to Tajikistan network so that energy from
Sebzor HPP can be received, and also finance distribution investments at the level of communities. The required
investments are expected to be implemented by a new project company that will operate the Badakhshan network in
Afghanistan under 30-year Concession Agreement. The total cost of those investments is estimated at US$100 million.
The discussion of securing EUR40 million is in advanced stage among the Government of Afghanistan, European
Commission (EC) and the Aga Khan Development Network (AKDN), and the funds are expected to be approved in early
2020. The Government of Afghanistan also plans to request ADB to support those investments.
The HPP will generate significant social and economic benefits for both Tajikistan and Afghanistan. It creates improved
opportunities for economic activities, improve the quality of public services, and generate additional revenues for PEC
from exports of electricity, which will improve the financial viability of PEC, thus contributing to ensuring long-term
reliable electricity supply. The same benefits would accrue to conflict-affected areas of Afghanistan given that
bordering communities currently do not have access to electricity. About 47,000 customers (370,000 people) in
Badakshan province of Afghanistan are expected to directly benefit from exports of electricity from Sebzor HPP in the
medium to long-term.

10. Component 2: Provision of electricity access to target settlements in Khatlon (US$6.5 million IDA grant).
This component will have the following sub-components.
11. Sub-component 2.1: Connection of target settlements to the centralized distribution network of BT
(US$6 million IDA grant). This sub-component will finance connection of 74 settlements, bordering
Afghanistan, in the Khatlon region to the electricity distribution network. The total population of the target
settlements is about 12,200 people. The investments will cover the cost of distribution infrastructure, including
construction of 35/10/0.4 kV distribution lines, installation of additional distribution transformers; as well as
connections for households and public facilities (e.g. hospitals, schools, kindergartens) to the metering point.
For all target settlements, access to energy services will be ensured by connecting the settlements to BT’s
centralized network because this is the least economic cost solution considering the proximity of the target

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settlements to the power distribution network. Most of the settlements are located within 0.5-2 km range from
the distribution system.
12. Sub-component 2.2: Project implementation support to BT (US$0.5 million IDA grant). This sub-
component will finance; (a) PMC costs to support BT with preparation of bidding documents for procurement
of goods and works required for connection of settlements to BT distribution network; carrying of tenders for
procurement of contractors to connect the settlements to the distribution grid; supervision of construction
works for connection works; and compliance with environmental and social requirements; and (b) services
required for M&E.

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Table 2: Annex 2: Conceptual Design Parameters and Estimated Cost of Connections of Target Settlements in Khatlon Region.

Construction of OHL -10(6) kV Installation of PTS -10(6)/0,4 kV Construction of OHL -0,4 kV TOTAL:

Name of Cost
Name of of
№ settlemen Cost of
jamoats37 Pow Conduc constr
t Length, constructi Aggregate Unit cost Cost in Lengt Aggregate
Conductor type er, ea tor uction USD
km on of 1 cost, US$ in US$ US$ h, km cost, US$
kVA type of 1
km, US$
km,
US$

Shamsiddin Shohin District

АС- 21,80
1 Gring Langardara 1.4 АC-70/11 19,820.7 27,749.0 160 1 2,074.1 2,074.1 1.1 23,983.0 53,806.1
50/8 2.7
АС- 21,80
2 Kavluj Dashtijum 4.0 АC-70/11 19,820.7 79,282.8 160 1 2,074.1 2,074.1 3.0 65,408.1 146,765.0
50/8 2.7
АС- 21,80
3 Diyho Dashtijum 4.5 АC-70/11 19,820.7 89,193.2 160 1 2,074.1 2,074.1 3.0 65,408.1 156,675.4
50/8 2.7
АС- 21,80
4 Rokhi Nav Dashtijum 2.5 АC-70/11 19,820.7 49,551.8 160 1 2,074.1 2,074.1 1.2 26,163.2 77,789.1
50/8 2.7
АС- 21,80
5 Qumrogh Dashtijum 6.0 АC-70/11 19,820.7 118,924.2 160 1 2,074.1 2,074.1 1.7 37,064.6 158,062.9
50/8 2.7
Shahristo АС- 21,80
6 Dashtijum 4.0 АC-70/11 19,820.7 79,282.8 160 1 2,074.1 2,074.1 2.0 43,605.4 124,962.3
n 50/8 2.7
Kulako, АС- 21,80
7 Langardara 1.7 АC-70/11 19,820.7 33,695.2 160 1 2,074.1 2,074.1 2.0 43,605.4 79,374.7
Khambel 50/8 2.7
АС- 21,80
8 Urgli Sarichashma 1.0 АC-70/11 19,820.7 19,820.7 160 1 2,074.1 2,074.1 2.5 54,506.8 76,401.6
50/8 2.7
АС- 21,80
9 Korgaron Sarichashma 3.0 АC-70/11 19,820.7 59,462.1 160 1 2,074.1 2,074.1 0.4 8,721.1 70,257.3
50/8 2.7
АС- 21,80
10 Safebod 1.8 АC-70/11 19,820.7 35,677.3 160 1 2,074.1 2,074.1 0.5 10,901.4 48,652.7
50/8 2.7
АС- 21,80
11 Sheli Bolo 2.0 АC-70/11 19,820.7 39,641.4 160 1 2,074.1 2,074.1 0.3 6,540.8 48,256.3
50/8 2.7

37 Third-level administrative divisions similar to communities.

Page 56 of 91
 The World Bank
Rural Electrification Project (P170132)

Construction of OHL -10(6) kV Installation of PTS -10(6)/0,4 kV Construction of OHL -0,4 kV TOTAL:

Name of Cost
Name of of
№ settlemen Cost of
jamoats37 Pow Conduc constr
t Length, constructi Aggregate Unit cost Cost in Lengt Aggregate
Conductor type er, ea tor uction USD
km on of 1 cost, US$ in US$ US$ h, km cost, US$
kVA type of 1
km, US$
km,
US$
Bogi АС- 21,80
12 Dashtijum 1.0 АC-70/11 19,820.7 19,820.7 160 1 2,074.1 2,074.1 0.5 10,901.4 32,796.2
Mullo 50/8 2.7
АС- 21,80
13 Sarireg Dashtijum 1.0 АC-70/11 19,820.7 19,820.7 160 1 2,074.1 2,074.1 0.7 15,261.9 37,156.7
50/8 2.7
Khami АС- 21,80
14 Langardara 3.0 АC-70/11 19,820.7 59,462.1 160 1 2,074.1 2,074.1 1.8 39,244.9 100,781.1
Maglab 50/8 2.7
Kalandoro АС- 21,80
15 Langardara 3.0 АC-70/11 19,820.7 59,462.1 160 1 2,074.1 2,074.1 2.5 54,506.8 116,043.0
n 50/8 2.7
АС- 21,80
16 Darelon Sarichashma 1.5 АC-70/11 19,820.7 29,731.1 160 1 2,074.1 2,074.1 1.4 30,523.8 62,328.9
50/8 2.7
АС- 21,80
17 Zrang 5.0 АC-70/11 19,820.7 99,103.5 160 1 2,074.1 2,074.1 0.3 6,540.8 107,718.4
50/8 2.7
АС- 21,80
18 Irgailuq Shurobod 2.5 АC-70/11 19,820.7 49,551.8 160 1 2,074.1 2,074.1 2.7 58,867.3 110,493.1
50/8 2.7
АС- 21,80
19 Cheptura 3.0 АC-70/11 19,820.7 59,462.1 160 1 2,074.1 2,074.1 0.5 10,901.4 72,437.6
50/8 2.7
Kuhdoma АС- 21,80
20 Shurobod 2.0 АC-70/11 19,820.7 39,641.4 630 1 4,774.2 4,774.2 7.0 152,618.9 197,034.5
n 50/8 2.7
АС- 21,80
21 Rogien Shurobod 2.3 АC-70/11 19,820.7 45,587.6 400 2 3,182.8 6,365.6 7.5 163,520.3 215,473.5
50/8 2.7
АС- 21,80
22 Faizobod Shurobod 1.5 АC-70/11 19,820.7 29,731.1 630 1 4,774.2 4,774.2 5.2 113,374.0 147,879.3
50/8 2.7
Hairkoron АС- 21,80
23 Shurobod 2.2 АC-70/11 19,820.7 43,605.5 630 1 4,774.2 4,774.2 4.5 98,112.2 146,491.9
-2 50/8 2.7
Hairkoron АС- 21,80
24 Shurobod 1.2 АC-70/11 19,820.7 23,784.8 400 1 3,182.8 3,182.8 3.5 76,309.5 103,277.1
-3 50/8 2.7
АС- 21,80
25 Javonon Shurobod 1.7 АC-70/11 19,820.7 33,695.2 630 1 4,774.2 4,774.2 5.3 115,554.3 154,023.7
50/8 2.7

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 The World Bank
Rural Electrification Project (P170132)

Construction of OHL -10(6) kV Installation of PTS -10(6)/0,4 kV Construction of OHL -0,4 kV TOTAL:

Name of Cost
Name of of
№ settlemen Cost of
jamoats37 Pow Conduc constr
t Length, constructi Aggregate Unit cost Cost in Lengt Aggregate
Conductor type er, ea tor uction USD
km on of 1 cost, US$ in US$ US$ h, km cost, US$
kVA type of 1
km, US$
km,
US$
Kurbonov АС- 21,80
26 Shurobod 1.2 АC-70/11 19,820.7 23,784.8 630 1 4,774.2 4,774.2 6.0 130,816.2 159,375.2
Turk 50/8 2.7
АС- 21,80
27 Kaftar Dogiston 1.7 АC-70/11 19,820.7 33,695.2 400 1 3,182.8 3,182.8 3.7 80,670.0 117,548.0
50/8 2.7
АС- 21,80
28 Karbalo Dogiston 1.8 АC-70/11 19,820.7 35,677.3 630 1 4,774.2 4,774.2 5.2 113,374.0 153,825.5
50/8 2.7
29 Zu Shurobod

30 Navobod Shurobod

TOTAL: 67.5 1,337,897.3 29 80,784.3 76.0 1,657,005.2 3,075,686.8

Pharkhor district

Mavzei АС- 21,80

1 Gulshan 3.5 АC-70/11 19,820.7 69,372.5 250 2 2,488.7 4,977.4 2.7 58,867.3 133,217.1
Urtabuz 50/8 2.7
АС- 21,80
2 Surkhob Galaba 1.5 АC-70/11 19,820.7 29,731.1 400 1 3,182.8 3,182.8 1.8 39,244.9 72,158.7
50/8 2.7
АС- 21,80
3 Kizil-Su Galaba 1.6 АC-70/11 19,820.7 31,713.1 250 1 2,488.7 2,488.7 1.6 34,884.3 69,086.1
50/8 2.7
АС- 21,80
4 Laman [Link] 1.7 АC-70/11 19,820.7 33,695.2 400 1 3,182.8 3,182.8 2.7 58,867.3 95,745.3
50/8 2.7
Mavzei АС- 21,80
5 Pharkhor 2.0 АC-70/11 19,820.7 39,641.4 400 1 3,182.8 3,182.8 2.6 56,687.0 99,511.2
Urtabuz 50/8 2.7
АС- 21,80
6 Alovuddin Pharkhor 0.65 АC-70/11 19,820.7 12,883.5 400 1 3,182.8 3,182.8 2.6 56,687.0 72,753.3
50/8 2.7
АС- 21,80
7 Archa Dehkonarik 0.7 АC-70/11 19,820.7 13,874.5 400 1 3,182.8 3,182.8 1.8 39,244.9 56,302.2
50/8 2.7

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 The World Bank
Rural Electrification Project (P170132)

Construction of OHL -10(6) kV Installation of PTS -10(6)/0,4 kV Construction of OHL -0,4 kV TOTAL:

Name of Cost
Name of of
№ settlemen Cost of
jamoats37 Pow Conduc constr
t Length, constructi Aggregate Unit cost Cost in Lengt Aggregate
Conductor type er, ea tor uction USD
km on of 1 cost, US$ in US$ US$ h, km cost, US$
kVA type of 1
km, US$
km,
US$
Nekmanza АС- 21,80
8 Gairat 1.6 АC-70/11 19,820.7 31,713.1 250 1 2,488.7 2,488.7 2.4 52,326.5 86,528.3
r 50/8 2.7
АС- 21,80
9 Istiqlol Zafar 1.4 АC-70/11 19,820.7 27,749.0 400 1 3,182.8 3,182.8 1.7 37,064.6 67,996.4
50/8 2.7
АС- 21,80
10 Pingoni Dehkonarik 1.8 АC-70/11 19,820.7 35,677.3 400 1 3,182.8 3,182.8 2.6 56,687.0 95,547.1
50/8 2.7
АС- 21,80
11 Zoli Zar Dehkonarik 0.65 АC-70/11 19,820.7 12,883.5 160 1 2,074.1 2,074.1 1.3 28,343.5 43,301.1
50/8 2.7
Davlatobo АС- 21,80
12 Gulshan 2.0 АC-70/11 19,820.7 39,641.4 400 2 3,182.8 6,365.6 5.5 119,914.9 165,921.9
d 50/8 2.7
АС- 21,80
13 Tojikiston Gairat 1.0 АC-70/11 19,820.7 19,820.7 630 1 4,774.2 4,774.2 2.25 49,056.1 73,651.0
50/8 2.7
АС- 21,80
14 Sakhovat Zafar 2.0 АC-70/11 19,820.7 39,641.4 630 1 4,774.2 4,774.2 2.5 54,506.8 98,922.4
50/8 2.7
АС- 21,80
15 Tojikiston Gairat 0.5 АC-70/11 19,820.7 9,910.4 250 2 2,488.7 4,977.4 2.5 54,506.8 69,394.5
50/8 2.7
АС- 21,80
16 Frunze Gairat 0.25 АC-70/11 19,820.7 4,955.2 630 1 4,774.2 4,774.2 2.7 58,867.3 68,596.7
50/8 2.7
Kukhande АС- 21,80
17 Vatan 0.4 АC-70/11 19,820.7 7,928.3 400 1 3,182.8 3,182.8 1.6 34,884.3 45,995.4
r 50/8 2.7
АС- 21,80
18 Kazok Vatan 0.5 АC-70/11 19,820.7 9,910.4 400 1 3,182.8 3,182.8 1.5 32,704.1 45,797.2
50/8 2.7
Bahoristo АС- 21,80
19 Vatan 1.2 АC-70/11 19,820.7 23,784.8 250 1 2,488.7 2,488.7 1.5 32,704.1 58,977.6
n 50/8 2.7
АС- 21,80
20 Lolazor Vatan 0.7 АC-70/11 19,820.7 13,874.5 400 1 3,182.8 3,182.8 0.6 13,081.6 30,138.9
50/8 2.7
АС- 21,80
21 Puchkok Darkad 1.0 АC-70/11 19,820.7 19,820.7 400 1 3,182.8 3,182.8 0.6 13,081.6 36,085.1
50/8 2.7

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 The World Bank
Rural Electrification Project (P170132)

Construction of OHL -10(6) kV Installation of PTS -10(6)/0,4 kV Construction of OHL -0,4 kV TOTAL:

Name of Cost
Name of of
№ settlemen Cost of
jamoats37 Pow Conduc constr
t Length, constructi Aggregate Unit cost Cost in Lengt Aggregate
Conductor type er, ea tor uction USD
km on of 1 cost, US$ in US$ US$ h, km cost, US$
kVA type of 1
km, US$
km,
US$

TOTAL: 26.7 528,221.7 24 75,194.00 45.05 982,211.6 1,585,627.3

Khamadony District

АС- 21,80
1 Margob Kahramon 0.7 АC-70/11 19,820.7 13,874.5 250 4 2,488.7 9,954.8 2.6 56,687.0 80,516.3
50/8 2.7
АС- 21,80
2 Zafarobod Panchob 0.7 АC-70/11 19,820.7 13,874.5 250 1 2,488.7 2,488.7 1.2 26,163.2 42,526.4
50/8 2.7
АС- 21,80
3 Mehvar Chubek 0.6 АC-70/11 19,820.7 11,892.4 400 1 3,182.8 3,182.8 1.65 35,974.5 51,049.7
50/8 2.7
Mehnatob АС- 21,80
4 Mehnatobod 0.3 АC-70/11 19,820.7 5,946.2 160 1 2,074.1 2,074.1 1.2 26,163.2 34,183.6
od 50/8 2.7
Tagi АС- 21,80
5 Kahramon 0.9 АC-70/11 19,820.7 17,838.6 160 2 2,074.1 4,148.2 1.9 41,425.1 63,412.0
Namak 50/8 2.7
АС- 21,80
6 S. Gadoi-1 Panchrud 1.1 АC-70/11 19,820.7 21,802.8 400 1 3,182.8 3,182.8 1.9 41,425.1 66,410.7
50/8 2.7
АС- 21,80
7 Guliston Kahramon 0.3 АC-70/11 19,820.7 5,946.2 160 1 2,074.1 2,074.1 1.0 21,802.7 29,823.0
50/8 2.7
Darai АС- 21,80
8 Kahramon 0.6 АC-70/11 19,820.7 11,892.4 630 1 4,774.2 4,774.2 1.0 21,802.7 38,469.3
Kaloth 50/8 2.7
АС- 21,80
9 Sarkokul Chubek 1.5 АC-70/11 19,820.7 29,731.1 160 1 2,074.1 2,074.1 1.2 26,163.2 57,968.4
50/8 2.7
АС- 21,80
10 Sairob Panchob 0.3 АC-70/11 19,820.7 5,946.2 250 1 2,488.7 2,488.7 0.9 19,622.4 28,057.3
50/8 2.7
АС- 21,80
11 Tokiston Panchob 1.5 АC-70/11 19,820.7 29,731.1 400 3 3,182.8 9,548.4 6.2 135,176.7 174,456.2
50/8 2.7

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 The World Bank
Rural Electrification Project (P170132)

Construction of OHL -10(6) kV Installation of PTS -10(6)/0,4 kV Construction of OHL -0,4 kV TOTAL:

Name of Cost
Name of of
№ settlemen Cost of
jamoats37 Pow Conduc constr
t Length, constructi Aggregate Unit cost Cost in Lengt Aggregate
Conductor type er, ea tor uction USD
km on of 1 cost, US$ in US$ US$ h, km cost, US$
kVA type of 1
km, US$
km,
US$
АС- 21,80
12 S. Gadoi-2 Panchrud 0.4 АC-70/11 19,820.7 7,928.3 250 1 2,488.7 2,488.7 1.0 21,802.7 32,219.7
50/8 2.7
Darai АС- 21,80
13 Kahramon 0.7 АC-70/11 19,820.7 13,874.5 160 1 2,074.1 2,074.1 0.4 8,721.1 24,669.7
Kalotnazdi 50/8 2.7
АС- 21,80
14 Pushkin Kahramon 1.2 АC-70/11 19,820.7 23,784.8 400 2 3,182.8 6,365.6 2.1 45,785.7 75,936.1
50/8 2.7
Guliston АС- 21,80
15 Mehnatobod 0.7 АC-70/11 19,820.7 13,874.5 400 1 3,182.8 3,182.8 1.2 26,163.2 43,220.5
Shurtang 50/8 2.7
Furudgoh АС- 21,80
16 0.2 АC-70/11 19,820.7 3,964.1 250 1 2,488.7 2,488.7 1.0 21,802.7 28,255.5
Shahrak 50/8 2.7
Tursunzod АС- 21,80
17 (stadium) 0.3 АC-70/11 19,820.7 5,946.2 400 1 3,182.8 3,182.8 1.2 26,163.2 35,292.3
a Shahrak 50/8 2.7
АС- 21,80
18 Orieno Chubek 0.5 АC-70/11 19,820.7 9,910.4 630 1 4,774.2 4,774.2 1.9 41,425.1 56,109.7
50/8 2.7
АС- 21,80
19 Navobod Mehnatobod 1.0 АC-70/11 19,820.7 19,820.7 400 2 3,182.8 6,365.6 1.2 26,163.2 52,349.5
50/8 2.7
Navobod- АС- 21,80
20 Mehnatobod 0.7 АC-70/11 19,820.7 13,874.5 400 2 3,182.8 6,365.6 1.1 23,983.0 44,223.1
Gulobod 50/8 2.7
Hayoti АС- 21,80
21 Chubek 0.4 АC-70/11 19,820.7 7,928.3 400 1 3,182.8 3,182.8 1.7 37,064.6 48,175.7
nav 50/8 2.7
АС- 21,80
22 Nazdi Turdiev 0.9 АC-70/11 19,820.7 17,838.6 400 3 3,182.8 9,548.4 2.1 45,785.7 73,172.7
50/8 2.7
АС- 21,80
23 Surkhob Dashtigulo 1.9 АC-70/11 19,820.7 37,659.3 630 1 4,774.2 4,774.2 2.6 56,687.0 99,120.6
50/8 2.7

TOTAL: 17.4 344,880.2 34.0 100,784.4 38.3 833,953.3 1,279,617.9

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 The World Bank
Rural Electrification Project (P170132)

Construction of OHL -10(6) kV Installation of PTS -10(6)/0,4 kV Construction of OHL -0,4 kV TOTAL:

Name of Cost
Name of of
№ settlemen Cost of
jamoats37 Pow Conduc constr
t Length, constructi Aggregate Unit cost Cost in Lengt Aggregate
Conductor type er, ea tor uction USD
km on of 1 cost, US$ in US$ US$ h, km cost, US$
kVA type of 1
km, US$
km,
US$

TOTAL for Settlements in Khatlon Province

TOTAL: 111.6 2,210,999.1 87.0 256,762.7 159.3 3,473,170.1 5,940,931.9

Page 62 of 91
The World Bank
Rural Electrification Project (P170132)

ANNEX 3: Financial Management, Disbursements, and Procurement

COUNTRY: Tajikistan
Rural Electrification Project

Financial Management
1. The FM arrangements of BT ESPMU and PEC were reviewed as part of financial management
assessment for the project and have been assessed as acceptable for the project’s implementation. The
project FM assessment undertaken in April 2019 confirmed that: (i) the FM/accounting staff at both IAs
has experience in the Bank-financed projects; (ii) the internal control and filing systems in place are overall
adequate; (iii) results from the latest annual audit of the Bank-financed projects implemented by BT
ESPMU and PEC were satisfactory, and (iv) the IFRs on the Bank-financed projects were mostly received
on time and in general found to be acceptable to the Bank. Nevertheless, the following action plan, was
agreed with the BT and PEC, and will need to be implemented to incorporate additional financial
management requirements for the proposed project. The agreed plan consists of capacity building actions
that have to be in place before project implementation starts. The overall FM risk for the proposed project
is Substantial. The actions in the following table are not legal covenants.
Action Responsibility Deadline
Hire additional FM/accounting staff, acceptable to Within 30 days after
BT ESPMU/PEC
the Bank, to manage the increased workload. project effectiveness
Develop the FM part of Project Operational Manual By effectiveness
(POM), acceptable to the Bank, to reflect the FM BT ESPMU/PEC
arrangements and controls under the Project.
Finalize the upgrade of the existing accounting Within 30 days after
BT ESPMU/PEC
system. project effectiveness

2. Under the project, the BT ESPMU and PEC will be responsible for the preparation of the annual
budget and consolidating annual project budgets based on procurement plans. Both Agencies are capable
to prepare relevant budgets. The final plans and budgets are approved by the PEC and BT. The annual
budget is based on the procurement plan, which is regularly updated by the procurement specialist. All
changes in procurement plan are reviewed and agreed in advance with the Bank, and only then the
changes are incorporated in the annual budget. It was agreed that for the project needs, additional
FM/accounting staff, acceptable to the Bank, will be hired to support the Chief Accountant in both IAs on
daily basis (within 30 days after project effectiveness).
3. For financial reporting purposes, the BT and PEC will use cash basis IPSAS (for the project reporting)
and IFRS (for the entity reporting). The accounting policies and procedures are documented in the
accounting policy manuals of BT and PEC. The accounting at BT ESPMU is automated, using 1C and
accounting software. PEC is using Iscala EPR modules which includes General Leger, Account Payable,
Inventory, Cash and Bank Book. For Payroll, PEC is using 1C software. The software has the capability to
produce interim financial reports in accordance with formats to be agreed with the Bank. All transactions
recorded on a cash basis of accounting and the supporting documentation will be maintained in files for
ready access by auditors and during implementation support missions of the World Bank. The systems
have been used for the previous Bank-financed projects and will be upgraded to meet the requirements

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The World Bank
Rural Electrification Project (P170132)

for accounting and reporting and needs to be completed before the project implementation (within 30
days after project effectiveness).
4. BT ESPMU and PEC has overall adequate internal control system in place for implementation of the
project, including adequate segregation of duties among the FM/accounting staff. There is also audit
committee reported to the PEC’s Board of Directors. The internal control function at BT will be further
strengthened under the Government Program for Financial Recovery of BT. Thus, for the needs of this
project, it was agreed that by project effectiveness, the FM Manual that is part of POM will be developed
and approved and will reflect the FM arrangements and controls under the project.
5. Project management-oriented Interim Un-audited Financial Reports (IFRs) will be used for the project
monitoring and supervision. The format of the IFRs has been confirmed during assessment and includes:
(i) Project Sources and Uses of Funds, (ii) Uses of Funds by Project Activity, (iii) Designated Account
Statements, (iv) A Statement of the Financial Position, and (v) SOE Withdrawal Schedule. These financial
reports will be submitted to the World Bank within 45 days of the end of each quarter, with the first
reports under the proposed Project being submitted after the end of the first quarter of initial
disbursement.
6. BT’s current auditing arrangements are satisfactory to the Bank (there are no pending audits of the
Entity and projects implemented by BT, and no major issues have arisen in the latest audit of the project
implemented by BT), the PEC’s audit report for Recipient’s FY2017 was not yet finalized, it’s under the
review of PEC’s Board of Directors and shareholders approval. The audit of the entity (PEC) and the project
will be conducted: (i) by independent private auditors acceptable to the Bank, on terms of reference (TOR)
acceptable to the Bank, and (ii) according to the International Standards on Auditing (ISA) issued by the
International Auditing and Assurance Standards Board of the International Federation of Accountants
(IFAC).
7. The annual audits of the entity (PEC) and the project financial statements will be provided to the
Bank within six months since the end of each fiscal year; and for the project also at the project closing. If
the period from the date of effectiveness of the grant to the end of the Recipient’s fiscal year is no more
than six months, the first audit report may cover financial statements for the period from effectiveness to
the end of the second fiscal year. The Recipient has agreed to disclose the audit reports for the project
and the entity (PEC) within one month of their receipt from the auditors and acceptance by the Bank, by
posting the reports on its official web site. Following the Bank's formal receipt of these reports from the
Recipient, the Bank will make them publicly available according to World Bank Policy on Access to
Information. The cost of the audit will be financed from the proceeds of the project.
8. BT ESPMU and PEC will establish two separate Designated Accounts (DAs), in USD, specifically for
this Project, in the commercial bank/financial institution, which is acceptable to the bank. The Project’s
DA will be managed by the BT and PEC. The SOE based disbursement method will be applied for the
Project.
Disbursements
9. Project funds will flow from the Bank, either: (i) via the DA to be maintained in the CB/financial
institution, which will be replenished on the basis of SOEs or full documentation; or (ii) on the basis of
direct payment withdrawal applications and/or special commitments, received from the BT/PEC.
Withdrawal applications documenting funds utilized from the DA will be sent to the Bank at least every
three months. The following disbursement methods may be used under the Project: Reimbursement,

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The World Bank
Rural Electrification Project (P170132)

Direct payment and Special Commitment. The DA’s ceiling is proposed to be established at US$1,000,000
for PEC and US$300,000 for BT as reflected in the Disbursement and Financial Information Letter (DFIL).
Detailed instructions on withdrawal of loan proceeds are provided in the DFIL.
10. Project funds would be transferred electronically to a Transit Account opened at the same
commercial bank/financial institution for immediate payments in local currency, based on expenditures
already incurred or immediately to be incurred. All payment orders would be approved by the BT
Chairman/PEC General Director, or their designate, and the Finance and Corporate Services Director/Chief
Accountant after being verified by the FM specialist.
11. Payments in foreign currency would be made either from the Designated Accounts or directly from
the Grant Account as Direct Payment depending on the threshold for such payments, as would be
determined in the DFIL. Withdrawal applications for Direct Payments would be electronically submitted
to the MOF where they will be reviewed and signed by person authorized to sign withdrawal applications
on behalf of the Recipient.
Procurement
12. The procurement arrangements under the Project will be governed by the New Procurement
Framework for IPF Regulations for Borrowers (dated July 2016, revised August 2018). The procurement
processes will be carried out through the Systematic Tracking of Exchanges in Procurement (STEP) online
platform. The Project will be implemented in accordance with the agreed procedures as outlined in
Regulations for Borrowers, Procurement Plan and Project Procurement Strategy for Development (PPSD),
which describes all major procurement-related aspects. GSE prepared a draft Project Procurement
Strategy for Development (PPSD), which contains among others, brief description of the project;
procurement approach for key goods and works contracts, and consultancy services; market analyses for
proposed goods, works, and consulting services; assessment of procurement risks and mitigation
measures; stakeholder analyses procurement schedule; and draft procurement plan. It also contains
robust market analysis, operational context, client assessment, social aspects, and procurement risk
analysis.
13. Procurement Capacity. The procurement risk is assessed as Substantial. PEC and BT ESPMU have no
experience in application of the Bank’s New Procurement Framework. Nevertheless, the Implementing
agencies have experience in the procurement and execution of contracts for goods, civil works and
consulting services specific to the energy sector over the past years. However, both entities have no
experience with new World Bank procurement procedures; have limited contract monitoring and
management skills as this function was mainly assigned to the external consultants; and the existing
capacity may not be sufficient to handle the increasing volume of procurement activities in the multiple
projects implemented in parallel. This constitutes a capacity risk for the project implementation that will
need to be timely and adequately addressed particularly through training of BT ESPMU and PEC staff on
the WB procurement Policy and Regulations as well as the Standard Procurement Documents. The World
Bank would closely support BT contract management capacity.
14. Main procurement packages and procurement arrangements. The largest packages under the Project
are:
a. Construction of micro-grids based on RE technologies (US$17.8). Two options are currently
under consideration: (a) plant design, supply, and install (PSDI) contract using Request for Bids (RFB)
without prequalification; and (b) design and supply contract combined with separate civil works

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contract. The final decision whether to combine design, supply, and installation under single
responsibility contract covering all of the settlements will be made after bidder conference to be
held in September 2019 and considering the feedback and potential interest from bidders.
b. Connection of target settlements to PEC distribution network (US$6 million). This will be carried
out through separate design and supply and civil works contracts. The contract is quite small and will
not attract EPC contractors.
c. Connection of target settlements to BT distribution network (US$6 million). This will be carried
out through PSDI contract using RFB without prequalification.
15. The use of RFB is justified because: (a) the installation of micro-grids is fairly standardized type of
works; therefore, single-stage bidding is warranted and there is no need for bidders to offer customized
solutions; and (c) there is no need to introduce criteria for quality in the evaluation. It would be sufficient
if bidders meet the specified minimum technical criteria and comply with economic/financial qualification
criteria.
16. SWOT analysis carried out for BT and PEC with respect to the proposed project and related
procurement approach and is summarized in the table below.
Table 1: Annex 3: Summary of SWOT Analyses for Procurement Approach.
Strengths Weaknesses
• Relevant project implementation experience with • Relatively slow decision/approval/coordination
projects of similar nature. process and internal procedures due to multiple
• Project director (expatriate) and technical staff stakeholders involved.
(expatriate and local) permanently based in PEC • Work load for procurement staff and
project site. management will increase due to multiple
• Project divided into lots will ensure that the project is projects implemented in parallel.
completed on time and is of the required quality. • Potential disruption in the supply chain of
potential bidders due to logistical challenges of
the country.
Opportunities Threats
• Increased competition among existing and new • Limited competition due to remoteness of the
players entering the Tajik market in view of the project area.
ongoing construction of Rogun HPP. • The project has been financed from various
• Introduction of new technologies in hydropower development partners, which may delay the
sector. project due to non-commitment by any one
• Intensifying of local market (supply, transportation, development partner.
works, services). • Potential disruption in the supply chain of
• Lower maintenance costs during the operational potential bidders due to logistical challenges of
phase. the country.
• The project financing through grants will ensure the • Perceived insecurity due to proximity to sensitive
financial sustainability of PEC international borders.

17. Market analysis. PEC has not implemented large-scale development of micro-grids based on solar
PV, wind, and BESS. Moreover, BESS are a new technology for Tajikistan with no track record of procuring
such systems. The potential bidders for design, supply, and installation of off-grid RE were identified
considering the interest from such companies in other Central Asian countries – primarily Kazakhstan and
Uzbekistan. The market analysis identified 15 companies, which are likely to participate in the tender for

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construction of micro-grids. The value of the contract for micro-grid solutions is estimated at US$18.7
million and may attract EPC contractors active in the region.
18. Both PEC and BT have experience with hiring contractors for repair and replacement of electricity
distribution infrastructure in the rural areas. Based on the experience from previous similar projects,
tenders attracted primarily domestic companies given relatively low values of contracts for such works.
The average value of the contracts typically does not exceed US$0.3 million. Therefore, it does not
generate interest from large international companies specializing in such works. Even if multiple lots are
included in one procurement package, the total size would still be low given: (a) limited budget of BT
available for such rehabilitation and upgrade works given its dire financial condition; and (b) small size of
the distribution network in GBAO. The market analysis identified about 13 local companies that may carry
out such works.
19. Based on PPSD, the optimal procurement approaches have been determined and Procurement Plan
for the first 18 months of the project implementation has been prepared.
Table 2: Annex 3: Draft Procurement Plan.
Contract title, Estimated Bank Procurement Selection Evaluation Dates/Start
Description and cost (US$) oversight approach methods: method: or
Category Completion
Design, supply, and Substantially
installation of micro- Request for Bid responsive Start -Jun.
Prior International
grids in GBAO, - (RFB) with post and lowest 2020
review / Open
Procurement of Works qualification evaluated
cost
Connection of target
Substantially
settlements to the
responsive Start -Jan.
distribution network and Post Internationall RFB with post
- and lowest 2020
consumer-level wiring in review / Open qualification
evaluated
GBAO
cost
Procurement of Works
Connection of target
Substantially
settlements to the
responsive Start -Jan.
distribution network and Post International RFB with post
- and lowest 2020
consumer-level wiring in review / Open qualification
evaluated
BT
cost
Procurement of Works
Piloting of energy Substantially
efficiency in public responsive Start -Jan.
Post National / RFB with post
facilities; Procurement - and lowest 2020
review Open qualification
of works evaluated
cost
International
Prior Start – Jun.
PMC for PEC - /National / QCBS
review 2019
Open
Geological- Post International Start – Jun.
- FBS
geomorphological study review / Open 2019
Spaceborne Synthetic Post International Least-Cost Start – Jun.
-
Aperture Radar (SAR) review / Open Selection 2019

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Interferometry Analysis
International
Horizontal and vertical Post Start – Jun.
- /National / RFQ
core recovery boreholes review 2019
Open
Seismic refraction Post International Start – Sep.
- FBS
survey review /Open 2019
Testing of physical and International
Post Start – Nov.
mechanical properties of - /National/Op FBS
review 2019
soils and rock samples en
Development of
International
financing mechanisms Post Start – Sep.
- /National/Op QCBS
for energy efficiency and review 2019
en
awareness-raising
International
Prior Start- Jun.
PMC for BT - /National / QCBS
review 2019
Open
Incremental operating
- SOE
costs of PEC

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ANNEX 4: Economic and Financial Analyses

COUNTRY: Tajikistan
Rural Electrification Project

Economic Analysis of the Project

1. The economic analysis of the Project included: (a) least-cost justification for proposed electrification
solutions; and (b) evaluation of incremental costs and benefits of identified electrification solutions, which
included both components of the Project covering off-grid electrification solutions and connection of
target settlements to the distribution networks of PEC and BT.
2. Least-Cost Justification for Options to Meet Projected Electricity Demand: The Project to be
evaluated was recommended from various project sizes and configurations that were assessed through
detailed least-cost planning (LCP) analysis to identify electrification solutions for target settlements in PEC
and BT service areas. First, the electricity demand was projected for target settlements using the historical
data on consumption of similar settlements that are connected to electricity service. Second, the list of
technically feasible technologies was identified to meet the projected electricity demand in target
settlements. Third, optimization was carried out to determine the combination of technologies to
minimize the economic cost of electricity supply to target settlements.
3. The method used to estimate power supply options for each community in the project area consists
of calculating the least cost arrangement of technologies that can supply the demand for electric power
given their current power consumption profiles, the future growth estimates and the availability of each
resource in the area under examination.
4. The least cost solution was found by creating a model for each community that describes the
available technologies, the available resources in each place, the cost and characteristics of each
technology and as mentioned above, the consumption profiles. The model calculated the least cost option
to meet the demand, by installing enough capacity in the planning horizon, 20 years, such that most of
the needs are met. If the demand was not met, there was a penalty of US$80/MWh that the model used
to gauge whether it was worthwhile to install one more unit of generation. The model was run in World
Bank Energy Modeling Team implementation called EPM, which runs on the General Algebraic Modeling
System (GAMS), a high-level modeling system for mathematical programming and optimization. The
model used a mixed-integer programing algorithm to find the optimal allocation of resources given the
discrete nature of some of the plant’s capacities.
5. The year was divided in months and several representative days per month were selected to
calculate the supply/demand balance in each of the hours in those days. The calculation was extrapolated
to all the hours in a month. The selection of the representative days was done by analyzing the available
generation capacity for each technology in each location.
6. There were 61 communities analyzed, each one with a consumption profile and demand growth
estimate, and depending on their location, data that was provided from surveys. The analysis suggested
that grid-connection was economically justified for 26 communities and off-grid electrification options
should be pursued for remaining 35 communities.
7. Regarding the generation options, the list of available generation technologies is listed in the Table

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below. Photovoltaic, wind and hydro power plants are among the possible alternatives for each
community. There is an option of storing power generated during low consumption periods and excess
generation. For example, the advantage of accumulating diurnal photovoltaic generation enables the
evening consumption in the community. In case of the hydro power projects, as this technology is site
specific, the characteristics for each project is independently listed below. A generic potential power
generator using diesel is considered as an alternative when possible. Data for these projects has been
obtained from the country institutions participating in the analysis.
Table 1: Annex 4: Generation Technologies.
Type Community Region Capacity Technology Capex FOMperMW VOM Life
MW $/MW $/MW/year Year
Hydro ROR Gushun Darvaz 0.017 Water 3.42 20,000 - 40
Hydro ROR Yoged Darvaz 0.275 Water 3.00 20,000 - 40
Hydro ROR Devlokh Rushan 0.015 Water 3.97 20,000 - 40
Hydro ROR Dzhizev Rushan 0.023 Water 3.56 20,000 - 40
Hydro ROR Ravmed Rushan 0.101 Water 4.40 20,000 - 40
Hydro ROR Bizhravd Rushan 0.009 Water 5.77 20,000 - 40
Hydro ROR Midenchid Rushan 0.012 Water 4.42 20,000 - 40
Hydro ROR Achirkh Rushan 0.035 Water 12.26 20,000 - 40
Hydro ROR Darjomch Rushan 0.220 Water 3.80 20,000 - 40
Hydro ROR Ravsharv Rushan 0.008 Water 3.70 20,000 - 40
Hydro ROR Pshikharv Vanj 0.045 Water 3.84 20,000 - 40
Wind - Wind 3.47 30,000 - 30
PV - Solar 1.94 13,000 - 30
Storage - Battery 0.35 18,000 0.001 20

8. The hydro power plants were assumed to generate at a level proportional to the water flow in the
river, and it has a characteristic seasonal variation. In each season, the hydro generators produced at an
average capacity factor in each month. Table 2 below show the monthly maximum capacity based on
river flow data.
9. The profiles of Solar PV and Wind are location-specific and were taken from historical observations
for a typical meteorological year. With the information of how these resources change over the year on
an hourly basis, generation profiles were built on MW basis to describe the resource availability. An
example of these generators availability over the year is shown in Table 3.
10. The periodicity of different resources, determines the selection of a month as a modeling time unit.
A cluster analysis is used to determine the seven representative days that summarize that month’s
resource availability given the wind and solar resources availability within a month.
11. General economic and system performance statistics were calculated to describe the solution for
each community, summarized mainly by the capital expenses and the amount of resulting unserved
demand.
Table 2: Annex 4: Monthly maximum available capacity percentage based on river discharge for each
hydro project in nearest community.
Community 1 2 3 4 5 6 7 8 9 10 11 12
Gushun 3.6 3.6 4.6 18.8 49.4 100.0 84.2 28.6 14.8 7.2 4.9 3.9
Yoged 3.6 3.6 4.6 18.7 49.2 100.0 84.0 33.8 14.8 7.2 4.9 3.9

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Community 1 2 3 4 5 6 7 8 9 10 11 12
Pshikharv 10.3 9.5 8.7 11.1 28.1 53.0 100.0 84.5 47.1 20.6 12.6 10.3
Devlokh 11.4 10.9 12.2 14.7 26.5 47.9 100.0 88.2 56.3 22.7 15.6 13.4
Dzhizev 11.5 10.9 12.2 14.7 26.5 47.9 100.0 88.3 56.2 22.8 15.5 13.4
Ravmed 11.4 10.9 12.2 14.7 26.5 48.0 100.0 88.1 56.4 22.7 13.8 13.4
Bizhravd 11.4 10.9 12.2 14.7 26.5 48.0 100.0 88.3 56.3 22.7 15.6 13.5
Midenchid 11.4 11.0 12.2 14.8 26.6 48.0 100.0 88.5 56.4 22.7 15.6 13.5
Achirkh 3.3 3.1 6.1 10.0 27.8 61.1 100.0 77.8 55.6 33.3 11.1 4.4
Darjomch 9.9 8.3 10.5 16.6 44.2 66.3 100.0 71.8 49.7 27.6 17.1 13.9
Ravsharv 7.3 5.5 8.2 10.9 22.7 81.8 100.0 90.9 45.5 18.2 10.0 8.2

Table 3: Annex 4: Annual wind and solar distribution of maximum availability in Rangkul (example).
Resource /
1 2 3 4 5 6 7 8 9 10 11 12
Month #
Solar 31% 22% 82% 79% 100% 76% 88% 79% 86% 82% 54% 42%
Wind 76% 76% 59% 63% 79% 48% 73% 83% 57% 78% 87% 67%

Analysis of Incremental Economic Costs and Benefits of the Project

12. Economic Costs. The economic costs include the Project construction cost, implementation
consultant cost, and incremental O&M costs required for the new micro-grids and grid-connections of
settlements, including household-level wiring. The construction costs include the expected Project
Design, Supply, and Installation (PDSI) costs of the micro-grids and grid-connections. The Project
construction costs were forecast according to the years in which they are expected to be incurred during
the construction period. The Project O&M costs include incremental O&M over the expected working life
of the project facilities, which is assumed to be 20 years – the period for useful economic life of BESS,
which is the shortest among all other equipment to be installed under the Project. The economic analysis
was conducted exclusive of the taxes and duties.
13. Economic Benefits. The main economic benefits of the Project are: (a) the economic value of
electricity service for target settlements; and (b) reduction of CO2 emissions from switching to electricity-
based heating and partial switching to electricity-based cooking.
14. The economic value of electricity to be consumed by target settlements was estimated at WTP, which
was assumed to equal US$0.08.38 The WTP for electricity was estimated based on the demand function
showing how the quantity of electricity demanded by the consumer varies with the price of electricity
faced by the consumer. At one end of this function, a consumer is expected to be willing to pay a high
price for consuming a little amount of electricity because the consumer will apply this quantity to the uses
that have highest value to the consumer. The total amount of electricity that the consumer demands is
set by the point at which the demand function reaches the actual price paid for electricity, which is the
point on the demand function at which the WTP drops to the level of the electricity price.
15. The reduction of CO2 emissions was valued based on the partial displacement of coal in Khatlon and
GBAO by electricity for cooking and heating needs. Once target settlements have access to electricity,
they are likely to switch to electricity-based heating based on the historical evidence from PEC when it
was connecting new households to the its grid. As mentioned earlier, this switch takes place because in

38 “Tajikistan’s Winter Energy Crisis: Electricity Supply and Demand Alternatives,” The World Bank, 2013.

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the short to medium-term electricity remains least cost option for heating considering the current lifeline
tariff structure in place in GBAO. In Khatlon, there will not likely be a complete shift to electricity-based
heating given that tariffs for residential consumers will be higher. Thus, the analysis conservatively
assumes that coal consumption will reduce by around 30 percent.
16. The social cost of carbon, used to evaluate the benefits from reduction in GHG emissions, is based
on the low range from the World Bank’s Guidance Note on Shadow Price of Carbon in Economic Analysis
(Nov. 12, 2017). The Project will lead to 30,338 tCO2e reduction in emissions vs. the baseline during
economic life of the Project. Therefore, the Project will generate climate mitigation co-benefits and, thus,
support Tajikistan in fulfilling their NDC commitments to UNFCCC Paris Agreement.
17. Results: The economic analysis of the Project yielded an economic Net Present Value (NPV) of US$4.0
million and Economic Internal Rate of Return (EIRR) of 7.1 percent exclusive of the social cost of avoided
CO2 emission and an economic NPV of US$4.7 million and EIRR of 7.5 percent inclusive of the social cost
of avoided CO2 emissions. The discount rate for economic analysis was assumed to be 5.3 percent
consistent with the World Bank guidelines.39 It was estimated as the difference between long-term real
per capita GDP growth40 multiplied by two.
18. Sensitivity Analysis: Sensitivity analysis was conducted to assess the robustness of the estimated
Project economic returns to changes in the main evaluation variables. The Project viability is sensitive to
the estimated WTP.
Table 4: Annex 4: Economic: Results of Sensitivity Analysis.
Economic analysis NPV (million US$) EIRR (%)
Base-case exclusive of social cost of carbon 4.0 7.1
a. 20 percent higher construction cost 1.1 5.8
b. 20 percent lower-than-projected WTP for electricity (2.4) 4.1
c. Combination of (a) and (b) (5.2) 3.0
Base-case inclusive of social cost of carbon 4.7 7.5
d. 20 percent higher construction cost 1.9 6.1
e. 20 percent lower-than-projected WTP for electricity (1.7) 4.5
f. Combination of (a) and (b) (4.5) 3.3%
Source: Estimated based on data from Least-Cost Planning.

Financial Analysis of PEC

19. Revenues from sales of electricity grew by an average of 17 percent annually over the period of
2014-2018, despite the relatively flat consumption. This was driven by Tajik somoni’s steep depreciation
against US$ via US$ indexed tariffs. Dollar tariffs serve as a natural hedge against foreign currency risks
associated with electricity purchases from Barqi Tojik and its financing costs. Operating costs increased in
proportion to the Somoni revenues causing the operating profit margin to remain in the range of 16-20
percent throughout the period.

39Guidance on the Discounting Costs and Benefits in Economic Analysis of World Bank Projects, World Bank, May 9, 2016.
40Real GDP projections: World Economic Outlook, Oct. 2018, IMF; Population growth forecast: UN Population Survey, Oct.
2019.

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Firgure 1. Revenues vs. US$/TJS Figure 2. Historical and Projected

exchange rate. Profitability.
60 10
100%
8 80%
Sales (in millions)

40
6

US$/TJS
60%

4 40%
20
2 20%

0 - 0%

2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2014 2015 2016 2017 2018
Total sales in US$
Gross margin
Total sales in TJ somoni EBIT margin adj. for unusual items
Source: Based on audited financial statements of PEC for 2014-2018.

20. In 2014, a support mechanism was put in place to subsidize the electric heating cost during the
winter months from November to March for low-income households in GBAO. Block tariffs have been
introduced to support residential consumers consuming up to 360 kWh. Specifically, customers in the first
block (0-190 kWh) are subsidized at the rate of 2.65 US cents/kWh, customers in the second block (191-
220kWh) are subsidized at the rate of 2.45 US cents/kWh, and customers in the third block (221-360KWh)
- at the rate of 2.25 US cents/kWh. Consumption above 360kWh receives no support. In 2018, 72 percent
of the residential customers in GBAO benefitted from the support scheme.
21. To support the subsidy mechanism, the interest differential between 6% and 1.25 percent on PEC’s
IDA credit would be paid into an escrow account by PEC, as envisaged by the Concession Agreement, over
the period of 2012-2020 and used to cover the subsidy costs till the end of the concession period, which
would then be reimbursed by the MOF. However, PE has not received any reimbursement since 2013 and
accumulated US$1.86 million of receivables from the Government as of the end of 2018.
22. Continuously accumulating dues from the MOF have reduced the receivables turnover from 82 days
of sales in 2014 to an estimated 152 days41 in 2018. In 2016, the receivables from MOF accounted for 40
percent of PEC’s gross receivables. Slower payments for electricity and lower collections have also
contributed to deterioration of working capital turnover. Specifically, the Khorog Water Supply Company
has been very slow with its payment for the monthly electricity bills, which has increased the receivables
to TJS2.05 million. The average collection rate from commercial and budgetary organizations was 91.46
percent and 85.56 percent respectively.
23. The liquidity of PEC in 2016, as measured by the current ratio, was 1.25, and cash balances equaled
55 percent of PEC’s current liabilities. Though the Company has been highly leveraged with its short-term
and long-term liabilities being at around 100 percent of its assets, it has been current on all its liabilities.
Debt-to-EBITDA ratio was 2.94 in 2016 (4.39 in 2014).

41 Bank team estimate.

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Forecast of Pamir Energy’s financial performance

24. The profitability of Pamir Energy will vary in the range of 20-27 percent and will stabilize at 20 percent
by 2026. The total debt is projected to reduce to less 30 percent of its total assets by 2026, and debt-to-
EBITDA ratio will improve to 1.21. The ratio of current assets to current liabilities will improve and be at
healthy 3.88 without receivables from MOF (6.15 with the receivables from MOF).
25. Projection of Pamir Energy financial performance was carried out for the period of 2017-2026 based
on the following assumptions:
• Electricity demand by PEC’s customers would grow by 2 percent annually except for 2023, when
Sebzor HPP is commissioned. Commissioning of Sebzor HPP will cause the consumption to grow
by 9 percent or 18 GWh in 2025;
• Annual generation of 11 MW Sebzor HPP is estimated to be 74.5 GWh;
• End-user tariffs and export tariffs will remain at the level of 2018;
• PE will continue subsidizing the winter consumption at the same rates;
• Operating expenses, except for power purchase costs and depreciation/amortization expenses,
would grow in proportion to sales at constant percentage of sales revenues;
• Electricity purchase costs were estimated using the US dollar denominated purchase tariffs and
purchase amounts of 2018 for the entire projection period;
• Financing costs were projected based on the respective repayment schedules of its liabilities;
• Receivables turnover were assumed not to change, and the inventory and payables turnover were
assumed equal to about 60 days of direct plus T&D costs of the Company;
• Disbursements for new capital investments and associated incremental O&M costs were assumed
as follows:

Table 5: Annex 4: Capital Cost Disbursement Assumptions.

US$ million 2021 2022 2023 2024 2025
Off-grid RE and connection to the grid 4.00 7.00 8.00 5.00 0.70
Sebzor HPP and 18 km evacuation line 8.00 12.00 16.00 - -
110 kV Khorog-Qozideh line - 2.00 4.00 2.00 -
Total CAPEX 12.00 21.00 28.00 7.00 0.70
O&M @ 1.5% of CAPEX 0.015 0.32 0.42 0.10 0.01
Financial Analysis of BT
26. The financial condition of BT deteriorated in the period from 2013 to 2017 due to: (a) unsustainable
and increasing debt levels and surging local currency denominated debt service costs driven by large
depreciation of TJS; (b) low cash collections; and (c) below cost recovery end-user electricity tariffs.
27. As of the end-2017, BT’s total liabilities exceeded its total assets. Operating losses persisted in the
period of 2013-2017 leading to complete erosion of equity in 2015. Accumulated losses of the BT reached
TJS10,732 million (US$1,217 million), out of which TJS 5,437 million were losses from domestic currency
depreciation. Over the observed period, Tajik somoni lost about half of its value against US$, which
explained about 70 percent of the total increase of the Company’s financial debt to MOF and Orienbank.

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Figure 3: Annex 4: Dynamics of BT’s Financial Liabilities vs. USD/TJS exchange rate.

16,000 10.00
14,000
9.00
12,000
Million TJS

8.00
10,000

USD/TJS
8,000 7.00
6,000
6.00
4,000
5.00
2,000
- 4.00
2013 2014 2015 2016 2017

Total debt (in TJS) Total debt (in USD) USD/TJS (end-of-period)

Source: Corporate Financial Model of BT.

28. As of the end-2017, total liabilities of BT stood at TJS20,663 million (US$2,343 million), about 61
percent of which were borrowings from IFIs. The ability to sustain those loans was considerably impaired
by absence of corresponding revenue allowance in the tariffs and under-collection of receivables. BT failed
to make both principal and interest payments on them. By the end of 2017, it had already accrued
TJS2,197 million (US$250 million) of interest payable and incurred penalties on overdue loans in total
amount of TJS2,657 million (US$301 million). In addition, BT has TJS1,618 million (US$183 million) very
expensive dollar denominated commercial debt from a local bank, which costs the company about TJS372
million (US$42 million) per annum in interest expense.
29. The situation with payables, which account for about 10 percent of its total liabilities, also
deteriorated. In particular, payables for electricity purchases from IPPs, Sangtuda-1 and Sangtuda-2 HPPs,
rose to TJS1,855 million (US$201 million). BT struggles to make payments to those IPPs in timely manner
because the cost of electricity from those IPPs is higher than the end-user electricity tariff and those IPPs
primarily supply electricity during the months of April-October (surplus energy season) when the other
lower cost HPPs, owned by BT, can generated at significantly lower cost and spill water given low summer
demand and lack of export opportunities.
30. In 2017 total current liabilities of TJS9,869 million (US$1,119 million) accounted for 48 percent of
total liabilities. Current assets were only 15% of that amount. This represented a significant reduction in
the liquidity, as measured by the ratio of current assets to current liabilities, which was at 0.39 in 2013.
31. Nonetheless, the relatively stable operating costs before depreciation during the period of 2013-
2015 and 14 percent average annual growth of sales revenue, driven by end-user tariff increases, lead to
substantial improvement of EBITDA margin (18 percent in 2017 vs. 2 percent in 2013) and net debt42-to-
EBITDA ratio of the company (222 times EBITDA in 2013 vs. 50 times EBITDA in 2017).

42 Net debt = total liabilities – cash and cash equivalents.

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Figure 4: Annex 4: EBITDA Margin and Net Debt/EBITDA Margin.

Source: Corporate Financial Model of BT.

32. The steady increase in the operating profit of BT was interrupted by about 60 percent increase in
cost of electricity purchase in 2016. This was caused by 26 percent increase in the real cost of purchase of
electricity, though the impact of somoni depreciation accounted for 73 percent of total change in
electricity purchase cost between 2013 and 2017.
Figure 5: Annex 4: EBITDA Margin and Net Debt/EBITDA Margin.
300

200 100
TJS million

100 28
108
15 4
73 4 74 1
-
2015 2016 2017
Additional purchase in the current year
FX rate impact on the current year's purchase amount

Source: Corporate Financial Model of BT.

33. In 2017, BT earned TJS2,113 million (US$239 million) from sales of electricity. The Company supplied
13,549 GWh of electricity to domestic consumers and exported 1,410 GWh to Afghanistan and Kyrgyz
Republic.
34. As of the end-2017, the collection rate for billed electricity was still below the industry average, at
around 84.1 percent. The Company had 94 days receivables outstanding. The aluminum producer, TALCO,
is the largest debtor to BT with its total debt of TJS399 million (US$45 million).
Table 6: Annex 4: Bill Collection Rates by Customer Categories in 2017.
Customer category Bill collection rate
Industry, excl. TALCO 94.9
TALCO 96.8
Budgetary organizations, housing and 83.7%

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Customer category Bill collection rate

communal enterprises and electric transport
Pumps and pumping stations 61.4%
Residential consumers 76.9%
Average 84.1%
Source: BT.

35. End-user electricity tariffs remain below the cost-recovery levels, which do not allow the company
to finance even the required recurrent expenditures. The expected average end-user tariff for 2017 is
estimated at 20 percent of cost-recovery level. The cost-recovery tariff was assessed following the cash
needs approach. This was done through assessment of the amount of cash revenue that BT requires to
fully finance the recognized recurrent expenses (accrual-based items in the financial statements), which
include the O&M costs, administrative costs, capital repairs from own funds, pension liabilities, debt
service, and taxes. It also assumes gradual repayment of accrued liabilities (i.e. interest payables, overdue
loans and payables to Sangtuda-1 and Sangtuda-2 HPPs for purchased electricity) over an eight-year
period starting 2018. It should be noted that concept of cash-based cost of service is different from the
concept of economically efficient cost of supply and does not take into account the return on invested
capital and investments required to meet the long-run forecast electricity demand.
Table 7: Annex 4: Cost-recovery Tariff Projections.
In TJS million 2018 2019 2020 2021 2022 2023 2024 2025
Cash cost of sales 1,474 1,617 1,738 1,869 2,079 2,236 2,405 2,587
Cost of purchased electricity 922 997 1,082 1,175 1,275 1,385 1,503 1,632
Materials 293 348 370 394 489 520 553 588
Salary and related expenses 108 115 122 129 137 145 153 163
Taxes 44 44 44 44 44 44 44 44
Other 106 113 120 127 134 142 151 160
Cash selling expenses 358 376 395 415 437 460 484 510
Cash admin expenses 94 99 104 109 114 120 126 133
Finance costs 2,598 2,425 2,359 2,270 2,266 1,853 1,874 1,898
Current interest on MOF loans 440 398 278 226 244 231 200 170
Current interest on Orienbank loans 398 329 256 177 92 - - -
Current period principal repayment on 584 488 578 581 603 669 695 721
MOF loans
Current period principal repayment on 346 358 371 386 401 - - -
Orienbank loans
Repayment of overdue interest on MOF 293 304 315 327 340 353 366 380
loans
Retirement of delinquent MOF loan 301 312 324 336 349 363 376 391
principal
Retirement of overdue payables to 236 236 236 236 236 236 236 236
Sangtuda-1,2
Profit - - - - - - - -
Required revenue 4,524 4,517 4,595 4,663 4,900 4,678 4,901 5,146
Cost recovery end-user tariff (diram/kWh) 38.97 38.53 38.81 39.09 40.53 38.31 39.72 41.25
Source: Corporate Financial Model of BT.

36. Forecast of Financial Performance of BT. Financial performance of BT was forecast for two

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scenarios. The BAU Scenario is the scenario without implementation of the Government program for
Financial Recovery of BT. The Financial Recovery Scenario is based on the agreed-upon targets to be
achieved by BT as reflected in the Action Plan for Financial Recovery, including increase of end-user
average tariff, improvements in collection rates, and other efficiency improvements. The key assumptions
for each of the forecast scenarios are presented below.
Projected Financial Performance of BT: BAU Scenario
37. The projections of financial performance of BT were made on assumptions that:
(a) End-user electricity tariffs will remain flat starting from 2019 onward; the actual tariff increase
of about 15 percent in 2018 has already been factored into the model.
(b) Bill collection rate will remain at 85 percent over an eight-year period.
(c) Technical losses will stay at their current level.
(d) Domestic supply of electricity will increase by 1 percent during the projection period.
(e) Exports to Afghanistan and Pakistan are forecast to increase by 2,800 GWh starting from 2022,
when cross-border transmission facilities with Afghanistan and Pakistan under CASA-1000
project become operational.
(f) Electricity will be sold to Afghanistan and Pakistan at marginal prices of USc5.11/kWh and
USc5.16/kWh respectively
(g) The following volumes and tariffs for exports to Uzbekistan:
Table 8: Annex 4: Export Volume and Tariff Assumptions.
2019 2020 2021 2022 2023 2024 2025
Volume (GWh) 2,000 2,000 2,500 3,000 3,200 3,200 3,200
Tariff (USc/kWh) 0.020 0.025 0.026 0.027 0.028 0.028 0.028
Source: BT.

(h) BT will purchase 2,600 GWh of electricity from Sangtuda-1 and Sangtuda-2.
(i) Prices of electricity purchased from Sangtuda-1 and Sangtuda-2 will growth at annual rate of 4
percent and 5 percent respectively.
(j) The exchange rate of Tajik somoni against US dollar will change by the differential between Tajik
and US inflation rate in accordance with PPP approach.
(k) The BT will not accumulate new penalties on overdue loans.
38. In BAU Scenario, BT will continue to struggle with insufficient liquid assets to meet its current
liabilities. In 2025 the ratio of current assets to current liabilities is estimated to be 0.26. Low collection
ratio will lead to further build-up of overdue receivables, which may exceed 300 days of sales by 2025.
This will result in continued non-payment to electricity suppliers and to the MOF on its long-term liabilities
at least till the start of exports to Afghanistan and Pakistan under CASA-1000. Total debt of BT, including
payables to Sangtuda-1 and Sangtuda-2 as well, will reach TJS29,104 million (US$2,383 million) or 140
percent of its assets. Losses from the foreign exchange rate changes will eat up any operating profit; total
cumulative loss over the eight-year forecast period is estimated to be TJS8,539 million (US$835 million),
and the cash deficit will widen to TJS16,393 million by 2025 from TJS10,433 million in 2017.

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Projected Financial Performance of BT: Financial Recovery Scenario

39. Under this scenario, the projections of financial performance of BT were made on assumptions that:
(a) End-user electricity tariffs will increase by 15 percent annually during 2019-2021 and 8%
thereafter.
(b) Bill collection rate will remain at 85 percent over the period 2018-2020 and start increasing to
reach 95 percent by 2025.
(c) Technical losses will reduce by 0.50 percentage point annually.
(d) Overdue receivables will be recovered.
(e) All grants on-lent by the MOF to BT on credit terms will be converted to grants in 2019.
(f) In 2020, half of subsidiary agreements of BT with MOF will be revised to mirror the terms of
borrowing by MOF from IFI, and the other half will be revised in 2021.
(g) Domestic supply of electricity will increase by 1 percent during the projection period
(h) Exports to Afghanistan and Pakistan are forecast to increase by 2,800 GWh starting from 2022,
when cross-border transmission facilities with Afghanistan and Pakistan under CASA-1000
project become operational.
(i) Electricity will be sold to Afghanistan and Pakistan at marginal prices of USc5.11/kWh and
USc5.16/kWh respectively.
(j) The following volumes and tariffs for exports to Uzbekistan:
Table 9: Annex 4: Export Volume and Tariff Assumptions.
2019 2020 2021 2022 2023 2024 2025
Volume (GWh) 2,000 2,000 2,500 3,000 3,200 3,200 3,200
Tariff (USc/kWh) 0.020 0.025 0.026 0.027 0.028 0.028 0.028
Source: BT.

(k) BT will purchase 2,600GWh of electricity from Sangtuda-1 and Sangtuda-2.

(l) Prices of electricity purchased from Sangtuda-1 and Sangtuda-2 will growth at annual rate of 4
percent and 5 percent respectively.
(m) The exchange rate of Tajik somoni against US dollar will change by the differential between Tajik
and US inflation rate in accordance with PPP approach.
(n) The BT will not accumulate new penalties on overdue loans.
40. Increase of end-user tariffs, gradual improvement of collection rates, more efficient working capital
management and reduction of technical losses will help BT generate more cash from operations. EBITDA
margin will increase to 55 percent by 2025, and the liquidity will improve.43 Revision of on-lending term
of the MOF will reduce the debt service costs of the BT and free up additional cash for repayment of its
overdue liabilities. Commencement of electricity exports under CASA-1000 project will also significantly
contribute to improvement of financial standing of BT starting from 2022. The exports will increase from

43The ratio of current assets to current liabilities, inclusive and exclusive of penalties on overdue loans will be 0.63 and 1.19
respectively.

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current level of 1,421 GWh to more than 5,900 GWh per year, including the existing exports to
Afghanistan. Specifically, exports under CASA-1000 project are expected to generate additional US$145
million of income per year. BT will gradually repay its current and overdue financial liabilities using
incremental operating cash flows from financial recovery measures. It is estimated that by 2024 BT will
have fully repaid its overdue debt (principal plus interest) to MOF, overdue payables to Sangtuda-1 and
Sangtuda-2 and debt to Orienbank. As a result, by the end of 2025 the debt-to-assets ratio will have come
down to 0.95, net debt (i.e. total financial debt net of cash balance) will stand at 4 time of earnings before
interest, tax and depreciation (EBITDA),44 and operating cash flow will be more than 2 times its debt
service requirements (DSCR).
Table 10: Annex 4: Projected Financial Ratios under Financial Recovery Scenario.
2019 2020 2021 2022 2023 2024 2025
Gross margin 40% 45% 49% 60% 60% 60% 61%
EBITDA margin 34% 40% 45% 56% 57% 57% 56%
Current ratio 0.15 0.19 0.18 0.22 0.30 0.49 1.21
Debt-to-assets 1.43 1.30 1.28 1.19 1.08 0.95 0.81
DSCR 0.10 0.14 0.24 0.44 0.57 0.83 1.34
Source: Corporate Financial Model of BT.

44 A proxy for operating cash flow.

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Table 11: Annex 4: Projected Balance Sheet of PEC

Historical Projected
TJS '000 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Current assets
Trade accounts 6,620 9,914 15,267 18,220 23,168 27,246 31,530 36,008 40,670 45,521 50,575 57,133
receivable
Inventory 3,074 2,841 11,984 4,700 4,949 4,868 4,851 4,990 5,529 6,278 7,110 7,942
Other current assets 1,905 2,410 2,508 2,508 2,508 2,508 2,508 2,508 2,508 2,508 2,508 2,508
Cash and cash 6,152 23,230 23,458 21,503 19,553 20,727 23,967 34,108 43,499 50,181 53,937 58,271
equivalents
17,751 38,395 53,217 46,931 50,178 55,349 62,857 77,614 92,206 104,488 114,131 125,853
Non-current assets
Intangible assets 60,106 57,030 59,328 64,019 53,405 44,554 37,172 31,016 25,881 21,597 18,025 15,044
Prepayments for non- 4,807 14,993 15,837 - - - - - - - - -
current assets
64,913 72,023 75,165 64,019 53,405 44,554 37,172 31,016 25,881 21,597 18,025 15,044
Total assets 82,664 110,418 128,382 110,950 103,583 99,903 100,029 108,630 118,087 126,085 132,155 140,897
Current liabilities
Accounts payable 4,577 4,054 11,619 4,700 4,949 4,868 4,851 4,990 5,529 6,278 7,110 7,942
Deferred revenue 3,975 24,916 20,300 9,333 6,499 5,141 5,206 5,278 5,357 5,441 5,533 5,633
Advance from - 16,952 7,362 - - - - - - - - -
insurance
Current portion of 2,110 1,265 1,150 634 694 752 818 890 968 1,053 1,145 1,244
deferred revenue from
below market rate under
IDA Loan Agreement
Advance received 74 5,440 9,948 6,860 3,965 2,548 2,548 2,548 2,548 2,548 2,548 2,548
under Grant Agreements
Advances from 1,791 1,259 1,840 1,840 1,840 1,840 1,840 1,840 1,840 1,840 1,840 1,840
customers
Current portion of long- 8,559 6,034 6,798 10,623 11,202 11,592 7,356 7,641 7,935 8,237 8,550 8,874
term borrowings
Current portion of 3,929 5,174 5,829 6,549 6,849 7,087 7,356 7,641 7,935 8,237 8,550 8,874
principal under IDA loan
Accrued interest 4,630 860 969 4,074 4,353 4,505 - - - - - -
Other current liabilities 1,656 2,650 3,773 3,773 3,773 3,773 3,773 3,773 3,773 3,773 3,773 3,773
18,767 37,654 42,490 28,430 26,423 25,373 21,186 21,683 22,593 23,729 24,966 26,222
Non-current liabilities
Non-current portion of 11,424 9,609 8,732 7,243 6,880 6,367 5,791 5,126 4,355 3,467 2,455 1,304
deferred revenue
Long-term borrowings 50,255 73,578 78,941 78,321 69,520 58,782 52,089 46,842 41,677 36,076 30,042 23,553
IDA loan 47,143 56,911 58,295 61,893 57,876 52,802 47,450 41,651 35,318 28,423 20,953 12,875
IDA grant 6,209 8,177 9,213 8,287 6,066 3,586 928 - - - - -
Accrued interest 10,438 18,940 21,315 16,803 13,600 9,568 9,931 10,317 10,714 11,121 11,543 11,982
Market rate discount (11,524) (8,822) (8,402) (7,243) (6,880) (6,367) (5,791) (5,126) (4,355) (3,467) (2,455) (1,304)
on IDA loan
Market rate discount (2,011) (1,628) (1,480) (1,419) (1,141) (807) (430) - - - - -
on IDA grant
61,679 83,187 87,673 85,564 76,400 65,149 57,880 51,968 46,031 39,543 32,496 24,856
Shareholder equity
Share capital 35,919 35,919 35,919 35,919 35,919 35,919 35,919 35,919 35,919 35,919 35,919 35,919
Quasi capital 31,240 31,240 31,240 31,240 31,240 31,240 31,240 31,240 31,240 31,240 31,240 31,240
Additional paid-in 163 163 163 163 163 163 163 163 163 163 163 163

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Historical Projected
TJS '000 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
capital
Accumulated loss (65,104) (77,747) (69,105) (70,367) (66,564) (57,943) (46,361) (32,345) (17,862) (4,511) 7,369 22,495
2,218 (10,425) (1,783) (3,045) 758 9,379 20,961 34,977 49,460 62,811 74,691 89,817
Total shareholder equity 82,664 110,416 128,380 110,948 103,581 99,901 100,027 108,628 118,085 126,083 132,153 140,895
and liabilities
Source: Corporate Financial Model of PEC.

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Table 12: Annex 4: Projected Income Statement of PEC.

Historical Projected
TJS '000 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Sales of electricity
Residential customers 13,887 16,840 19,854 19,022 21,206 22,464 23,867 25,378 26,972 28,651 30,433 34,952
Commercial organizations 5,364 6,655 8,724 11,066 13,152 13,882 14,697 15,573 16,495 17,464 18,490 20,952
Budgetary organizations 6,572 9,453 12,722 14,005 15,497 16,357 17,317 18,350 19,436 20,578 21,787 24,688
Government grants 2,265 2,103 3,286 3,679 3,931 4,068 4,223 4,386 4,555 4,728 4,908 5,094
Clients in Afghanistan 729 935 1,292 1,317 1,784 1,883 1,993 2,112 2,237 2,369 2,508 3,115
Carbon credit income 740 83 - - - - - - - - - -
Total sales 29,557 36,069 45,878 49,090 55,571 58,655 62,097 65,799 69,696 73,791 78,126 88,802
Direct costs
Amortization (4,751) (5,190) (5,578) (5,915) (5,632) (4,697) (3,917) (3,267) (2,725) (2,273) (1,896) (1,581)
Staff costs and related taxes (2,426) (3,237) (3,916) (4,208) (4,764) (5,028) (5,323) (5,641) (5,975) (6,326) (6,698) (7,613)
Power purchased (1,472) (2,066) (2,600) (1,894) (1,697) (1,756) (1,822) (1,893) (1,966) (2,040) (2,118) (2,198)
Maintenance (1,042) (1,026) (679) (1,285) (1,454) (1,535) (1,625) (2,353) (5,264) (9,242) (13,516) (15,697)
(9,691) (11,519) (12,773) (13,301) (13,546) (13,015) (12,688) (13,153) (15,929) (19,881 (24,228) (27,090)
)
Gross profit 19,866 24,550 33,105 35,789 42,025 45,639 49,410 52,645 53,767 53,910 53,899 61,712
Transmission and distribution
expenses
Staff costs and related (4,739) (6,317) (8,335) (8,919) (10,096) (10,656) (11,282) (11,954) (12,662) (13,406 (14,194) (16,133)
expenses )
Maintenance (1,382) (2,105) (1,335) (2,196) (2,486) (2,624) (2,778) (2,944) (3,118) (3,301) (3,495) (3,973)
Amortization (2,771) (3,027) (3,937) (4,175) (3,975) (3,315) (2,765) (2,306) (1,923) (1,604) (1,338) (1,116)
(8,892) (11,449) (13,607) (15,289) (16,557) (16,595) (16,825) (17,204) (17,704) (18,312 (19,027) (21,222)
)
General and administrative
expenses
Staff costs and related (2,860) (3,815) (5,306) (5,677) (6,427) (6,784) (7,182) (7,610) (8,061) (8,534) (9,036) (10,270)
expenses
Insurance expenses (1,042) (1,210) (1,590) (1,701) (1,926) (2,033) (2,152) (2,280) (2,415) (2,557) (2,708) (3,078)
PR and advertisement (742) (1,094) (803) (1,193) (1,351) (1,426) (1,510) (1,600) (1,694) (1,794) (1,899) (2,159)
Operating leasing (482) (619) (604) (646) (732) (772) (818) (866) (918) (971) (1,029) (1,169)
Amortization (338) (369) (997) (1,057) (1,007) (839) (700) (584) (487) (406) (339) (283)
Bad debts (538) (593) (508) - - - - - - - - -
Communication (210) (530) (511) (547) (619) (653) (692) (733) (776) (822) (870) (989)
Training of staff (520) (451) (611) (654) (740) (781) (827) (876) (928) (983) (1,040) (1,183)
Bank charges (154) (346) (348) (372) (422) (445) (471) (499) (529) (560) (593) (674)
Maintenance of vehicles (275) (319) (23) (305) (345) (365) (386) (409) (433) (459) (486) (552)
Health safety environmental (276) (316) (382) (409) (463) (488) (517) (548) (580) (614) (651) (739)
expenses
Professional services (248) (300) (379) (406) (459) (485) (513) (544) (576) (610) (645) (734)
Business trips (175) (249) (146) (156) (177) (187) (198) (209) (222) (235) (249) (283)
Stationery (114) (94) (114) (122) (138) (146) (154) (163) (173) (183) (194) (221)
Security charges - (75) (319) (341) (386) (408) (432) (458) (485) (513) (543) (617)
Legal fees and fines (42) (54) (87) (93) (105) (111) (118) (125) (132) (140) (148) (168)
Provision for impairment of (254) - - - - - - - - - - -
inventory
Other (394) (308) (104) (111) (126) (133) (141) (149) (158) (167) (177) (201)
(8,664) (10,742) (12,832) (13,792) (15,423) (16,056) (16,809) (17,653) (18,567) (19,549 (20,606) (23,319)
)
Other income

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Historical Projected
TJS '000 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Business interruption income - 4,005 9,466 7,362 - - - - - - - -
- insurance
Income from below market 2,572 2,660 988 - - - - - - - - -
rate Grant
Interest income from bank 135 73 663 - - - - - - - - -
deposits
Other 518 839 907 - - - - - - - - -
3,225 7,577 12,024 7,362 - - - - -
Profit from operations 5,535 9,936 18,690 14,069 10,045 12,988 15,776 17,788 17,496 16,049 14,265 17,170
Foreign exchange gain/(loss)
FX gain from cash and 564 3,456 3,037 - - - - - - - - -
deposits
FX gain from others 22 59 41 - - - - - - - - -
FX loss from loans (7,497) (22,036) (11,199) (12,430) (3,512) (2,465) (2,410) (2,166) (1,898) (1,645) (1,395) (1,123)
FX loss from others (30) (197) (457) (2,668) (1,431) (626) (535) (386) (397) (407) (423) (439)
(6,941) (18,718) (8,578) (15,099) (4,943) (3,091) (2,945) (2,552) (2,295) (2,052) (1,817) (1,562)
Finance cost
Interest on loans (646) (775) (906) (1,018) (960) (884) (805) (719) (640) (561) (476) (383)
Cost of market rate discount (3,984) (3,084) (568) 786 (339) (392) (443) (502) (78) (85) (92) (100)
on loans
(4,630) (3,859) (1,474) (233) (1,298) (1,277) (1,248) (1,221) (718) (646) (568) (483)
(Loss)/profit before tax (6,036) (12,641) 8,638 (1,262) 3,803 8,621 11,582 14,016 14,483 13,351 11,880 15,126
Tax expense - - -
(Loss)/profit after tax (6,036) (12,641) 8,638 (1,262) 3,803 8,621 11,582 14,016 14,483 13,351 11,880 15,126
Source: Corporate Financial Model of PEC.

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Table 13: Annex 4: Projected Cash Flow Statement of PEC

Projected
TJS '000 2017 2018 2019 2020 2021 2022 2023 2024 2025
Cash flow from operating activities
Net income (1,262) 3,803 8,621 11,582 14,016 14,483 13,351 11,880 15,126
Adjustment to NI:
Amortization 11,146 10,613 8,851 7,382 6,157 5,135 4,283 3,573 2,980
Bad debts - - - - - - - - -
Provision for impairment of inventory - - - - - - - - -
Business interruption income - (7,362) - - - - - - - -
insurance
FX gain/(loss) 15,099 4,943 3,091 2,945 2,552 2,295 2,052 1,817 1,562
Income/cost from market rate (786) 339 392 443 502 78 85 92 100
discount
Change in working capital
Inventory 7,284 (249) 81 16 (139) (538) (750) (832) (831)
Trade and other receivables (2,953) (4,948) (4,078) (4,284) (4,478) (4,662) (4,851) (5,054) (6,558)
Trade and other payables (6,919) 249 (81) (16) 139 538 750 832 831
Advance received under Grant (3,088) (2,895) (1,417) - - - - - -
Agreements

Net cash flow from operating activities 11,159 11,856 15,460 18,068 18,748 17,329 14,920 12,308 13,210
Cash flow from investing activities
Acquisition of concession and intangible - - - - - - - - -
assets
Net cash flow from investing activities - - - - - - - - -
Cash flow from financing activities
Repayment of IDA loan (6,551) (6,850) (7,089) (7,357) (7,643) (7,937) (8,239) (8,552) (8,877)
Repayment of IDA grant (2,488) (2,601) (2,692) (2,794) (965) - - - -
Repayment of accrued interest (4,075) (4,354) (4,506) (4,677) - - - - -
Net cash flow from financing activities (13,113) (13,80 (14,286) (14,828) (8,608) (7,937) (8,239) (8,552) (8,877)
6)
Net cash flow (1,955) (1,950) 1,174 3,240 10,140 9,392 6,681 3,757 4,333
Cash balance in the beginning of the 23,458 21,503 19,553 20,727 23,967 34,108 43,499 50,181 53,937
period
Cash balance at the end of the period 21,503 19,553 20,727 23,967 34,108 43,499 50,181 53,937 58,271
Source: Corporate Financial Model of PEC.

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Table 14: Annex 4: Projected Balance Sheet of BT.

In TJS thousand 2018 2019 2020 2021 2022 2023 2024 2025
ASSETS
Non-current assets
PP&E 12,769,418 12,977,325 13,551,540 14,062,813 14,562,023 14,378,609 14,321,170 14,285,225
Intangible assets 510 510 510 510 510 510 510 510
Non-current advances paid 695,546 695,546 695,546 695,546 695,546 695,546 695,546 695,546
Non-current investments 182,401 182,401 182,401 182,401 182,401 182,401 182,401 182,401
Other non-current assets 109 109 109 109 109 109 109 109
Total non-current assets 13,647,984 13,855,891 14,430,106 14,941,379 15,440,589 15,257,175 15,199,736 15,163,791
Current assets
Inventory 694,874 753,299 804,292 865,436 947,556 1,012,792 1,077,869 1,148,906
Trade and other accounts 890,070 1,070,255 1,047,074 794,243 981,096 1,024,757 1,105,279 1,186,592
receivable
Advances paid 109,740 109,740 109,740 109,740 109,740 109,740 109,740 109,740
Tax prepayments 59 59 59 59 59 59 59 59
Cash and cash equivalents 133,523 34,368 29,500 40,418 60,524 58,400 40,742 40,013
Total current assets 1,828,266 1,967,721 1,990,665 1,809,896 2,098,975 2,205,747 2,333,688 2,485,310
TOTAL ASSETS 15,476,250 15,823,612 16,420,770 16,751,276 17,539,564 17,462,922 17,533,424 17,649,101

LIABILITIES AND EQUITY

Equity
Share capital 505,216 505,216 505,216 505,216 505,216 505,216 505,216 505,216
PP&E revaluation reserve 4,218,496 4,218,496 4,218,496 4,218,496 4,218,496 4,218,496 4,218,496 4,218,496
Reserve capital 24,302 24,302 24,302 24,302 24,302 24,302 24,302 24,302
Accumulated deficit (13,185,86 (11,575,823) (9,612,522) (9,496,862) (8,037,939) (6,210,203) (3,958,892) (1,378,977)
1)
TOTAL EQUITY (8,437,847) (6,827,809) (4,864,508) (4,748,848) (3,289,925) (1,462,189) 789,122 3,369,037

Non-current liabilities
Non-current borrowed funds 10,333,305 8,140,892 8,628,844 8,776,181 8,644,080 8,838,675 9,001,314 9,163,362
Deferred income non-current 511,183 732,086 1,337,806 1,658,470 1,796,528 1,926,855 2,044,489 2,151,329
portion
Non-current trade and other 912,149 912,149 912,149 912,149 912,149 912,149 912,149 912,149
payables

Total non-current liabilities 11,756,637 9,785,127 10,878,799 11,346,800 11,352,757 11,677,679 11,957,952 12,226,840

Current liabilities
Trade and other accounts 3,397,223 4,011,159 4,358,388 4,254,079 3,616,162 2,933,332 1,885,471 491,138
payable
Advances received 106,649 106,649 106,649 106,649 106,649 106,649 106,649 106,649
Taxes payable 65,674 65,674 65,674 65,674 65,674 65,674 65,674 65,674
Income tax payable - - - - - - - -
Current borrowed funds 5,792,761 5,887,660 5,738,099 5,589,253 5,550,579 4,004,107 2,590,887 1,252,093
Deferred income current 6,503 6,503 6,503 6,503 6,503 6,503 6,503 6,503
portion
Other payables and accrued 2,788,649 2,788,649 131,166 131,166 131,166 131,166 131,166 131,166
expenses
Total current liabilities 12,157,460 12,866,293 10,406,479 10,153,324 9,476,733 7,247,431 4,786,350 2,053,223

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Rural Electrification Project (P170132)

In TJS thousand 2018 2019 2020 2021 2022 2023 2024 2025

TOTAL LIABILITES 23,914,097 22,651,421 21,285,278 21,500,124 20,829,489 18,925,111 16,744,302 14,280,063

TOTAL EQUITY AND LIABILITIES 15,476,250 15,823,612 16,420,770 16,751,276 17,539,564 17,462,922 17,533,424 17,649,101
Source: Corporate Financial Model of BT.

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Rural Electrification Project (P170132)

Table 15: Annex 4: Projected Income Statement of BT.

In TJS thousand 2018 2019 2020 2021 2022 2023 2024 2025
Revenue
Domestic 2,044,914 2,375,167 2,758,757 3,204,296 3,495,246 3,812,615 4,158,800 4,536,419
Export 512,033 805,796 939,784 1,136,359 2,498,433 2,690,233 2,791,811 2,897,213
Total revenue 2,556,947 3,180,964 3,698,541 4,340,655 5,993,679 6,502,847 6,950,611 7,433,632
Cost of sales
Depreciation of fixed assets (299,426) (305,190) (314,461) (327,328) (339,306) (343,049) (340,194) (339,087)
Cost of purchased electricity (922,117) (997,488) (1,082,331) (1,175,322) (1,274,784) (1,384,772) (1,503,003) (1,631,520)
Materials (292,955) (348,028) (370,384) (406,082) (488,853) (525,327) (558,776) (594,368)
Salary and related expenses (108,192) (114,684) (121,565) (128,858) (136,590) (144,785) (153,473) (162,681)
Taxes (44,000) (44,000) (44,000) (44,000) (44,000) (44,000) (44,000) (44,000)
Other (106,470) (112,858) (119,629) (126,807) (134,415) (142,480) (151,029) (160,091)
Total cost of sales (1,773,160) (1,922,248) (2,052,369) (2,208,397) (2,417,948) (2,584,414) (2,750,475) (2,931,746)
Gross margin 783,787 1,258,716 1,646,171 2,132,259 3,575,731 3,918,434 4,200,136 4,501,886
Selling expenses
Depreciation of fixed assets (197,293) (201,091) (207,200) (215,678) (223,570) (226,036) (224,155) (223,426)
Salary and related expenses (185,327) (196,447) (208,234) (220,728) (233,971) (248,010) (262,890) (278,664)
Inventories (83,191) (88,182) (93,473) (99,082) (105,026) (111,328) (118,008) (125,088)
Service expenses (33,537) (35,550) (37,683) (39,944) (42,340) (44,881) (47,573) (50,428)
Other (55,716) (55,716) (55,716) (55,716) (55,716) (55,716) (55,716) (55,716)
Total selling expense (555,065) (576,986) (602,305) (631,147) (660,624) (685,971) (708,343) (733,322)
G&A expenses
Taxes other than income tax (51,932) (55,047) (58,350) (61,851) (65,562) (69,496) (73,666) (78,086)
Salary and related expenses (20,243) (21,457) (22,745) (24,110) (25,556) (27,089) (28,715) (30,438)
Professional expenses (4,718) (5,001) (5,301) (5,619) (5,956) (6,314) (6,693) (7,094)
Depreciation of fixed assets (8,490) (8,654) (8,917) (9,282) (9,621) (9,727) (9,646) (9,615)
Commission of the bank (258) (258) (258) (258) (258) (258) (258) (258)
Other (16,876) (16,876) (16,876) (16,876) (16,876) (16,876) (16,876) (16,876)
Total G&A expense (102,516) (107,293) (112,447) (117,995) (123,830) (129,760) (135,853) (142,366)
Operating margin 126,206 574,437 931,419 1,383,117 2,791,277 3,102,703 3,355,940 3,626,198
Net loss on foreign (1,040,819) (541,120) (622,790) (664,813) (658,226) (629,774) (562,816) (485,822)
exchange operations
Finance income
Write-off/grant conversion (6,988) 2,627,327 2,653,203 (4,547) (4,679) (139,852) (4,982) (5,171)
of MoF loan
Finance expenses
Interest expense (837,258) (810,026) (705,165) (580,815) (451,449) (232,229) (200,429) (169,784)
Penalties on loans (694,664) - - - - - - -
Total financial expenses (1,531,922) (810,026) (705,165) (580,815) (451,449) (232,229) (200,429) (169,784)
Profit before tax (2,453,523) 1,850,618 2,256,667 132,942 1,676,923 2,100,847 2,587,713 2,965,420
Tax expense - (240,580) (293,367) (17,283) (218,000) (273,110) (336,403) (385,505)
Net income (2,453,523) 1,610,038 1,963,301 115,660 1,458,923 1,827,737 2,251,310 2,579,916
Source: Corporate Financial Model of BT.

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Rural Electrification Project (P170132)

Table 16: Annex 4: Projected Cash Flow Statement of BT.

In TJS thousand 2018 2019 2020 2021 2022 2023 2024 2025
Cash flow from operating activities
Net income (2,453,52 1,610,038 1,963,301 115,660 1,458,923 1,827,737 2,251,310 2,579,916
3)
Adjustments to net income:
Depreciation 505,209 514,935 530,577 552,287 572,497 578,813 573,996 572,128
Net loss from change in FX rate 1,040,819 541,120 622,790 664,813 658,226 629,774 562,816 485,822
Write-off/grant conversion of MOF 6,988 (2,627,32 (2,653,203) 4,547 4,679 139,852 4,982 5,171
loan 7)
Interest expense 837,258 810,026 705,165 580,815 451,449 232,229 200,429 169,784
Change in working capital:
(Increase)/Decrease in receivables (346,017) (180,185) 23,182 252,831 (186,853) (43,661) (80,522) (81,313)
CFO after change in receivables (409,266) 668,606 1,191,811 2,170,952 2,958,921 3,364,744 3,513,011 3,731,508
(Increase)/Decrease in inventory (101,448) (58,425) (50,993) (61,145) (82,120) (65,235) (65,077) (71,037)
CFO after change in inventory (510,713) 610,181 1,140,819 2,109,807 2,876,801 3,299,509 3,447,934 3,660,471
Increase/(Decrease) in payables 1,186,071 542,395 256,511 (211,522) (744,037) (773,879) (1,123,499 (1,440,681
) )
Cash flow from operating activities 675,357 1,152,576 1,397,330 1,898,285 2,132,764 2,525,630 2,324,436 2,219,789

Cash flow from investing activities

Purchase of PP&E and intangible (783,573) (722,841) (1,104,792) (1,063,561) (1,071,706) (395,398) (516,557) (536,183)
assets
Cash flow from investing activities (783,573) (722,841) (1,104,792) (1,063,561) (1,071,706) (395,398) (516,557) (536,183)
Cash flow from financing activities
MOF loans received 783,476 722,762 1,104,626 1,063,408 1,071,555 395,331 516,461 536,084
MOF loans repaid - - - - (641,270) (2,425,784 (2,259,203 (2,157,476
) ) )
Repayment of overdue interest on - (420,335) (931,159) (951,829) (256,294) - - -
MOF loans
Repayment of current interest on (205,513) (640,689) (278,024) (225,834) (244,092) (232,229) (200,429) (169,784)
MOF loans
Orienbank loans received - - - - - - - -
Orienbank loans repaid - - (371,427) (675,236) (901,552) - - -
Repayment of current interest on (397,694) (411,530) (427,141) (354,981) (207,357) - - -
Orienbank loans
Grants received under PforR - 220,903 605,719 320,665 138,058 130,327 117,634 106,840
Cash flow from financing activities 180,270 (528,889) (297,406) (823,806) (1,040,952) (2,132,355 (1,825,537 (1,684,335
) ) )
Net cash flow 72,054 (99,155) (4,868) 10,918 20,106 (2,124) (17,658) (729)
Cash balance in the beginning of the 61,469 133,523 34,368 29,500 40,418 60,524 58,400 40,742
period
Cash balance at the end of the 133,523 34,368 29,500 40,418 60,524 58,400 40,742 40,013
period
Source: Corporate Financial Model of BT.

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The World Bank
Rural Electrification Project (P170132)

ANNEX 5: Operational Policy 7.50 with Respect to Sebzor HPP and Small Hydros

COUNTRY: Tajikistan
Rural Electrification Project

1. The Project finances small hydro investments and studies related to the design of the Sebzor Hydropower
Project (HPP) on the Shokhdara River, which is a tributary of the Amu Darya River. At the request of the Republic
of Tajikistan (letter No. 17-862, dated April 18, 2019), the Bank sent notification letters to the riparian states -
Afghanistan and Uzbekistan on April 25, 2019 and Turkmenistan on May 21, 2019 on behalf of the Republic of
Tajikistan. No responses were received from Afghanistan and Uzbekistan by the deadline of May 24, 2019. On
June 11, 2019 (letter No. 06/184438), the Government of Turkmenistan sent a letter objecting to the construction
of the Sebzor Hydropower Station stating “that this issue should be decided by generally accepted norms of
international law.”
Considerations Concerning the Generally Accepted Norms of International Law
2. There is no treaty between Tajikistan and Turkmenistan which would regulate their relationship and conduct
concerning notification and construction of small hydropower investments. Therefore, customary international
law, also referred to as “generally accepted norms of international law,” applies to the legal relationship between
these two countries.
3. According to customary law, riparian states have to notify other watercourse states in case of risk of
“significant adverse effects.” The notification requirements, according to OP/BP 7.50, go above and beyond what
is required by the customary international law. They are triggered based on any type of water use or risk of
pollution, not applying any threshold of impact. This is based on the Articles of Agreement and the Bank’s
recognition that it shall act in the interests of all its member states. It is for this reason that the riparian countries
of the Amu Darya, including Turkmenistan, were notified of the Project.
4. The use of the waters of international waterways within the territory of a riparian state is guided by the
customary principles of equitable and reasonable utilization and the due diligence obligation not to cause
significant harm to other riparian states. When assessing equitable and reasonable utilization of a watercourse,
the state planning a new measure takes into account the effects of the use on other riparian states and is under
the due diligence obligation to take all appropriate measures to prevent the causing of significant harm on other
watercourse states. According to the International Law Commission, “significant” means that the impact is
detectable and can be established by objective evidence. Factual considerations have to be taken into account to
assess significant harm to other riparian countries.
Technical Considerations and Key Conclusion
5. The small hydro investments and Sebzor HPP will not change the hydrological conditions of tributaries to and
of the Amu Darya river. The 10.5 cubic meters of water per second to be diverted by the low weir (5-meters high)
of the Sebzor HPP will be returned to the Shokhdara river, within the boundaries of Tajikistan, through the
powerhouse tailrace after about 3 kilometers. The Project parameters recommended by the Feasibility Study were
reviewed as part of the draft Environmental and Social Impact Assessment Report (ESIA), which was publicly
disclosed on April 26, 2019. The small hydro investments for micro-grids under sub-component 1.1 will also be
run-of-river and of much smaller scale than Sebzor HPP, with no impact on the downstream riparian states.
6. Therefore, given the nature and location of the proposed Project activities, it is the considered view of the
task team that these proposed investments would not adversely affect the quality or quantity of water flows of

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Rural Electrification Project (P170132)

the Amu Darya river to other riparians or adversely affect other riparians’ possible water use. As there is no impact
on downstream riparian countries from the planned small hydro and Sebzor HPP investments, the activities
financed by the Project comply with generally accepted norms of international law.

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