35996 Annual Report 2002 Energy Sector Management Assistance Programme Copyright 2003 The International Bank for Reconstruction and Development. The World Bank Group ESMAP 1818 H Street N.W., Washington, D.C. 20433 USA The findings, interpretations and conclusions expressed in this report are entirely those of the authors and should not be attributed in any manner to the World Bank Group, to its affiliated organizations, or to members of its Board of Executive Directors or the countries they represent. The World Bank Group does not guarantee the accuracy of the data included in this publication and accepts no responsibility whatsoever for any consequence of their use. The boundaries, colors, denominations and other information shown on any map in this volume do not imply on the part of the World Bank Group any judgment on the legal status of any territory or the endorsement or acceptance of such boundaries. The material in this publication is copyrighted. Requests for permission to reproduce portions of it should be sent to the Office of the Publisher to the address in the copyright notice above. The World Bank Group and ESMAP encourage dissemination of their work and will normally give permission promptly and, when production is for noncommercial purposes, without asking a fee. To obtain copies of this report you may write directly to ESMAP at the address shown on the back of this report or by sending an electronic message to esmap@worldbank.org. Photo Credits Photographs used in this report are part of the World Bank Group Photo Library and its sources. However, photographs on pages 36 and 38 are the property of Eleodoro Mayorga-Alba. Designed by Original design by Mitchell&Company Graphic Design. This version has been typeset by Circle Graphics. Editorial support The Grammarians Inc., Marjorie K. Araya and Kazim Saeed. Map Design The World Bank Group Cartography Section designed the ESMAP in the World Map. Production and Printing Marjorie K. Araya and Chroma Graphics, Inc. Energy Sector Management Assistance Programme A C C E S S E N E R G Y P O V E R T Y · E N V I R O N M E N T · M A R K E T ESMAP 2002 HIGHLIGHTS 114 ongoing projects in more than 40 countries 29 projects launched, 30 projects carried to completion and 25 reports published Two Calls for Proposals launched and new fast track window was introduced ESMAP's website revamped Donors' contribution to the Programme totaled US$7.8 million Record pledges obtained for calendar year 2003 for US$7.3 million New Donor: The United Nations Foundation (UNF) Delivery of nearly twenty workshops, seminars and conferences around the globe, as part of ESMAP's knowledge dissemination strategy ESMAP played a key role in the development of the Global Village Energy Partnership (GVEP), which was officially launched at the World Summit on Sustainable Development in Johannesburg Annual Report 2002 TABLE OF CONTENTS TABLE OF CONTENTS Energy Sector Management Assistance Programme TABLE OF CONTENTS ESMAP 2002 Highlights Mission Statement iii Foreword v Acknowledgements vii List of Abbreviations and Acronyms ix Donors and Members of the Consultative Group, xiii Technical Advisory Group and ESMAP Team in 2002 ESMAP in the World 2002 Map xiv 1 Energy and the MDGS Implementing ESMAP's 2002-2004 Business Plan: Focus on Results and Impacts 1 Implementing Partnerships 3 Further Challenges 3 2 Portfolio Overview ESMAP Portfolio at a Glance as of December 31, 2002 7 Evolution of ESMAP Portfolio (1998-2002) 8 Portfolio Profile 10 Seed Funding and Fast Track Window 10 Closing of Projects 11 ESMAP Portfolio Highlights and Impacts 3 Increasing Access to Modern Energy for Poverty Reduction 13 Improving Energy and Environment 21 Developing Sustainable Energy Markets 35 ESMAP Knowledge Dissemination 45 4 Governance and Management 5 The Consultative Group 49 The Technical Advisory Group (TAG) 49 Improvements in ESMAP Systems and Business Processes 50 Financial Review 6 Donor Contributions 53 New Donors 53 Core and Thematic Funding 53 Project-Specific Funding 55 Expenditures 55 Funding for New Projects and Cash Balance 56 Annex 1 Summary Proceedings of the Joint Donors' Meeting for Trust Funded Energy Programs Managed 59 by the World Bank, ESMAP/ASTAE/AFFREI/RPTES, April 29, 2002, Copenhagen, Denmark Annex 2 Activities Launched, Completed and Ongoing in 2002 67 Annex 3 Reports Published in 2002 75 Annual Report 2002 Boxes Box 3.1 ESMAP Bolivia Country Program and National Biomass Program 15 Box 3.2 Honduras Solar-Net Village Program 16 Box 3.3 Rural Electrification in the Developing World: Lessons from Successful Programs 19 Box 3.4 The Global Village Energy Partnership (GVEP) 20/21 Box 3.5 International Experiences with Promoting Household Petroleum Fuels 23/24 Box 3.6 Going Unleaded in Vietnam 27 Box 3.7 The Clean Air Initiative in Sub-Saharan African Cities 28/29 Box 3.8 South Asia Urban Air Quality Management 30 Box 3.9 Air Pollution and Acid Rain Control in China 31 Box 3.10 Applying Energy Efficiency Measures To Improve Commercial Viability of Water Supply Concessions in Small and Medium Sized Municipalities of Brazil 32 Box 3.11 Improving Energy Efficiency in the Industrial Zone in Morocco 34 Box 3.12 Making Petroleum Revenue Work for the Poor 40 Box 3.13 Electricity Reform and Access in Africa 42 Figures Figure 2.1 ESMAP Portfolio at a Glance: Breakdown by Thematic Area 7 Figure 2.2 ESMAP Portfolio at a Glance: Breakdown by Geographic Area 7 Figure 2.3 ESMAP Portfolio at a Glance: Breakdown by Strategic Area 7 Figure 2.4 ESMAP Portfolio at a Glance: Number of Projects by Thematic Area 7 Figure 2.5 ESMAP Portfolio at a Glance: Number of Projects by Geographic Area 7 Figure 2.6 ESMAP Portfolio at a Glance: Number of Projects by Strategic Area 7 Figure 2.7 Evolution of ESMAP Portfolio: By Strategic Area 1998-2002 by Number of Projects 8 Figure 2.8 Evolution of ESMAP Portfolio: By Strategic Area by Value of ESMAP Funding 8 Figure 2.9 Evolution of ESMAP Portfolio: Regional Distribution of Portfolio 1998-2002: By Number of Projects 9 Figure 2.10 Evolution of ESMAP Portfolio: Regional Distribution of Portfolio 1998-2002: By Value of ESMAP Funding 9 Figure 4.1 Workshops Held Under ESMAP Activities in 2002 47 Figure 6.1 ESMAP Receipts 2000-2002 55 Tables Table 2.1 Portfolio During Calendar Year 2002 10 Table 6.1 ESMAP Receipts 2000-2002 54 Table 6.2 Core/Thematic ESMAP Donor Contributions, 2000-2002 55 Table 6.3 Receipts by Type of Funding in 2002 56 Table 6.4 ESMAP Expenditures 2000-2002 56 Energy Sector Management Assistance Programme ESMAP promotes the role of energy in poverty reduction and economic growth in an environmentally responsible man- ner. Its work applies to low-income, emerging, and transition economies and contributes to the achievement of inter- nationally agreed development goals. ESMAP strives to expand the global knowledge base for addressing energy issues. Annual Report 2002 MISSION STATEMENT 1 MISSION STATEMENT Energy Sector Management Assistance Programme Energy Sector Management Assistance Programme The Energy Sector Management Assistance Programme The Energy Sector Management Assistance Programme (ESMAP) is a global technical assistance programme sponsored by a group of donors, including The World Bank and the United Nations Development Programme (UNDP), and managed by The World Bank. ESMAP provides policy advice and other technical as- sistance to governments, public institutions, and private businesses. It focuses on three strategic areas: the development of energy markets; the promotion of envi- ronmentally sustainable energy production and uses; and increased access to reliable, efficient and affordable energy services by un-served or underserved populations. ESMAP concentrates on energy related issues not yet mainstreamed in the operations of bilateral or multilateral development institutions, and on private sector energy issues. ESMAP is a global knowledge partnership that involves local and international public institutions, NGOs, and businesses in the formulation and implementation of knowledge activities. Through studies, pilot projects, and training, ESMAP strives to expand the global knowledge base for addressing energy issues to the benefit of develop- ing and transition economies. Annual Report 2002 iii FOREWORD FOREWORD Energy Sector Management Assistance Programme The Energy Sector Management Assistance Programme (ESMAP) through its work has responded to the calls of those in need of modern energy services to aid in the achievement of internationally agreed Millennium Development Goals (MDGs). How ESMAP contributes to the delivery of modern energy services and the provision of access to energy to those un-served and under- served continued to be the main focus of the Programme in 2002. As pointed out by President Wolfenshon,1 "...the critical element in reaching the MDGs is knowledge--global and local...The World Bank as a whole has two faces--we are a lending Bank and a Knowledge Bank..." ESMAP has answered the needs of many through innovative ways of sharing the capital of knowl- edge stock it generates. ESMAP functions as a global partnership bringing together many stakeholders to achieve poverty reduction through the provision of modern energy services to the poor. I invite you to learn about ESMAP's achievements in the year 2002. Dominique Lallement ESMAP Programme Manager 1 2002 World Bank Institute Annual Report. http://www-wds.worldbank.org/servlet/WDS_IBank_Servlet?pcont=details&eid=000094946_02101704183071 Annual Report 2002 v ACKNOWLEDGEMENTS ACKNOWLEDGEMENTS Energy Sector Management Assistance Programme Many professionals of the World Bank Group including staff from ESMAP and its task managers wrote this report. There are many within the Bank Group and outside who have contributed time and substance. They include Kulsum Ahmed, Marjorie K. Araya, Amarquaye Armar, Varadarajan Atur, Yewande Awe, Douglas Barnes, Alvaro Covarru- bias, Philippe Durand, Charles Feinstein, Gerald Foley, Katharine Gratwick, Sarath Guttikunda, Ede Jorge Ijjasz-Vasquez, Todd Johnson, Masami Kojima, Dominique Lallement, Kseniya Lvovsky, Eleodoro Mayorga-Alba, Anke Meyer, Josefina Regino-Suarez, Kilian Reiche, Chantal Reliquet, Kazim Saeed, Anjali Shanker, Robert Taylor, Ernesto Terrado, Grace Yeneza, and Xiaodong Wang. Annual Report 2002 vii LIST OF ABBREVIATIONS AND ACRONYMS 1 LIST OF ABBREVIATIONS AND ACRONYMS Energy Sector Management Assistance Programme AFRREI Africa Rural and Renewable Energy Initiative ADB Asian Development Bank AFR Sub-Saharan Africa Region AFREPEN African Energy Policy Research Network ALGAS Asia Least-cost Greenhouse Gas Abatement Strategy ALRI Acute Lower Respiratory Infection AP Andhra Pradesh (India) ARPEL Asistencia Recíproca Petrolera Empresarial Latinoamericana ASTAE Asia Alternative Energy Program BNPP Bank-Netherlands Partnership Program CAI-SSA Clean Air Initiative in Sub-Saharan Africa CEE Central and Eastern Europe CG Consultative Group CIDOB Confederation of Indigenous Peoples of Bolivia CIDA Canadian International Development Agency CNG Compressed Natural Gas COICA Coordinadora de Organizaciones Indígenas de la Cuenca Amazónica CONFENIAE Confederation for Indigenous Peoples of the Amazonian Region CPTS Centro de Promoción de Tecnologías Sostenibles CRESP China Renewable Energy Scale-up Program DANIDA Danish International Development Assistance DFI Development Finance Institution DFID Department for International Development, UK E7 Organization of nine leading electric utilities from G7 countries EAP East Asia and Pacific Region ECA Europe and Central Asia Region EDF European Development Fund EER Energy and Environment Review ENDA Environment and Development Action EPE Energy, Population and Environment Program ESCO Energy Supply Company ESMAP Energy Sector Management Assistance Programme ETFP Energy Trust Funded Programs FFEM Fonds Français pour l'Environnement Mondial FREE Romanian Energy Efficiency Fund FSU Former Soviet Union FUNDA-PRO La Fundación para la Producción GDP Gross Domestic Product GEF Global Environment Facility GVEP Global Village Energy Partnership IADB Inter-American Development Bank IAP Indoor Air Pollution ICT Information and Communication Technologies IFC International Finance Corporation ILO International Labour Organization IPCT Indigenous Peoples' Communical Territories IPEICA International Petroleum Industry Conservation Association IZDIHAR Association des Opérateurs Economiques de la Zone Industrielle de Sidi Bernoussi Zenata KfW Kreditanstalt für Wiederaufbau (German Development Bank) Annual Report 2002 ix KITE Kumasi Institute of Technology and Environment kW Kilowatt kWh Kilowatt-hour LCR Latin America and the Caribbean Region LG Leaded Gasoline LPG Liquefied Petroleum Gas M&T Monitoring and Targeting MDGs Millennium Development Goals MNA Middle East and North Africa Region NBP National Biomass Program NEPAD New Economic Partnership for Africa NFFO Non-Fossil Fuel Obligation NGOs Non-Governmental Organizations NOVACON Novo Conceito em Servico Publico NREL National Renewable Energy Laboratory (United States of America) NTF-PSI Norwegian Trust Fund for Private Sector and Infrastructure ODA Office of Development Assistance OED Operations Evaluation Department, The World Bank OLADE Organización Latinoamerica de Energía PERZA Proyecto de Electrificación Rural en Zonas Aisladas (Off-Grid Rural Electrification Project) PV Photovoltaic REACH Renewable Energy, Energy Efficiency and Climate Change REAP Renewable Energy Action Plan RIC Rural Information Center RPTES Regional Program for the Traditional Energy Sector SAR South Asia Region SANEATINS A joint Venture Water Utility for the state of Tocatins in Brazil SHS Solar Home System SMEs Small Medium Enterprises TAG Technical Advisory Group of ESMAP TCA Two Control Zone TFESSD Trust Fund for Environmentally and Socially Sustainable Development ULG Unleaded Gasoline UN United Nations UNF United Nations Foundation UNDP United Nations Development Programme UNEP United Nations Environment Programme US United States of America USAID United States Agency for International Development WBG The World Bank Group WEHAB Water, Energy, Health, Agriculture, and Biodiversity WHO World Health Organization WSSD World Summit on Sustainable Development x Energy Sector Management Assistance Programme Annual Report 2002 xi 2002 DONORS AND MEMBERS OF THE CONSULTATIVE GROUP, TECHNICAL ADVISORY GROUP, AND ESMAP TEAM IN 2002 CONSULTATIVE GROUP CHAIR OF THE CONSULTATIVE GROUP BELGIUM Nemat Talat Shafik2 General Administration for Development Jamal Saghir Cooperation MEMBERS AT LARGE OF CANADA THE CONSULTATIVE GROUP Canadian International Development Agency Rufino Bomasang, Philippines Ketane Sithole, Botswana DENMARK Ministry of Foreign Affairs TECHNICAL ADVISORY GROUP Alfredo Mirkin FINLAND Andrew Barnett Ministry of Foreign Affairs Jan Moen Jyoti Parikh3 FRANCE Youba Sokona Ministry of Foreign Affairs ESMAP MANAGEMENT AND GERMANY ADMINISTRATIVE TEAM Bundesministerium für Wirtschaftliche Dominique Lallement, ESMAP Manager Zusammenarbeit und Entwicklung Marjorie K. Araya Maureen Cuffley NORWAY Laurent Durix Royal Ministry of Foreign Affairs Nyra Guice Katharine Gratwick SWEDEN Ghislaine Kieffer Swedish International Development Cooperation Josefina Regino-Suarez Agency Kazim Saeed Xiaodong Wang4 SWITZERLAND State Secretariat for Economic Affairs REPRESENTATIVES FROM CO-SPONSORING ORGANIZATIONS THE NETHERLANDS Susan McDade (UNDP) Ministry of Foreign Affairs, Climate, Energy and Minoru Takada (UNDP) Environment Technology Division (DML/KM) Jamal Saghir (The World Bank Group) UNITED KINGDOM Department for International Development UNITED NATIONS FOUNDATION 2 CO-SPONSORING ORGANIZATIONS Ms. Shafik delegated responsibility for chairing the Consultative Group meetings to Mr. Jamal Saghir, Chair, Energy and Mining Sector Board, Director, Energy and Water Department, The World Bank Group. THE WORLD BANK GROUP 3 Professor Parikh joined the TAG as of December 2002. 4 Ms. Wang joined ESMAP in September 2002 as Energy Specialist. During the same period, UNITED NATIONS DEVELOPMENT PROGRAMME Mr. Charles Feinstein transferred to the Latin America and the Caribbean Region. Annual Report 2002 xiii 2002 ESMAP Donors ESMAP IN THE WORLD Canada UN Development Programme (U New York City United Nations Foundation (UNF) Washington, D.C. The World Bank Group (WBG) Washington, D.C. Mexico GuatemalaBelize Jamaica Haiti Honduras El SalvadorNicaragua (part of East Asia and the Pacific Region) Costa RicaPanama R.B. de Guyana Venezuela Suriname Colombia Ecuador Kiribati Latin America and the Caribbean Peru Brazil Samoa New Projects Bolivia Tonga Ongoing Projects Fiji Completed Projects Paraguay Uruguay Chile Argentina Global Projects New Ongoing Completed Energy Sector Management Assistance Programme New Projects Ongoing Projects Completed Projects IBRD 32795 NOVEMBER 2003 Europe and Central Asia New Projects Ongoing Projects Completed Projects Middle East and Finland Sweden Norway North Africa Estonia Russian Latvia Russian Federation (0) New Projects Denmark Fed. Lithuania United Germany Poland Belarus (0) Ongoing Projects Kingdom Belgium See inset Ukraine (0) Completed Projects France Moldova Kazakhstan Mongolia Switzerland Romania NDP) Bulgaria Georgia Azerbaijan Uzbekistan Kyrgyz Armenia Turkmenistan Rep. Turkey Tajikistan East Asia and the Rep.of Syrian China Korea Tunisia Lebanon A.R. Pacific Islamic Rep. Afghanistan Morocco Iraq of Iran Jordan (0) New Projects Algeria Pakistan Nepal Bhutan Arab Rep. Ongoing Projects of Egypt Bangladesh (0) Completed Projects India Myanmar Lao Mauritania P.D.R. Cape Verde Mali Niger Chad Eritrea Rep. of Yemen Thailand Vietnam Senegal Sudan The Gambia Burkina Cambodia Philippines Guinea-BissauGuinea Faso Djibouti Benin Nigeria Federated States of Marshall Ghana Côte Ethiopia Sri Micronesia Islands Sierra Leone d'Ivoire Central African Lanka Liberia Republic Cameroon Malaysia Palau Togo Somalia Equatorial Guinea Maldives Uganda Kenya São Tomé and Príncipe Congo Kiribati Gabon Rwanda Dem.Rep.of Seychelles Burundi Congo Solomon Tanzania Papua New Guinea Comoros Indonesia Islands Timor-Leste Angola Malawi Zambia South Asia Vanuatu Fiji ZimbabweMozambique (0) New Projects Madagascar Mauritius Namibia Botswana Ongoing Projects (0) Completed Projects Swaziland Poland South Africa Lesotho Czech Republic Ukraine Slovak Republic Sub-Saharan Africa Hungary Slovenia New Projects Croatia Romania Bosnia and Ongoing Projects Serbia Herzegovina& Mont. Completed Projects Bulgaria Albania FYR Macedonia This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. Annual Report 2002 xv ENERGY AND THE MDGS 1 ENERGY AND THE MDGS Energy Sector Management Assistance Programme The year 2002 was quite extraordinary for ESMAP most of the priority issues had already been in- as well as for all stakeholders involved in energy tegrated into its 2002-2004 Business Plan, which in developing countries. The preparations for the was approved by the donors early on in the year World Summit on Sustainable Development trig- and which is anchored on three strategic axes: gered a lively debate on how to achieve the Mil- energy services for poverty reduction; develop- lennium Development Goals (MDGs) and on the ment of energy markets, including improvements role of energy for economic growth, poverty re- in the governance of the sector's policy-making duction, and sustainable development. New think- and implementation stakeholders; and environ- ing emerged on the key role for partnerships as a mental sustainability of energy services, both at means to catalyze efforts and knowledge toward the global and at the local level. These themes the same goal. Public accountability for results were echoed in many documents for, and discus- was raised to the forefront of the discussions. A sions at, the Summit, including the WEHAB (Wa- call for strengthened commitment on implementa- ter, Energy, Health, Agriculture and Biodiversity) tion and impact was reiterated. While energy had paper of the United Nations agencies. largely been overshadowed by global environment issues since the Rio Summit, energy surfaced as Energy-poverty reduction one of the most significant subjects of discussion at the Johannesburg Summit. Energy services Access to modern energy services is increasingly made a comeback as a key priority on the develop- mentioned in public debates and discourse as a ment agenda and as an essential input for achiev- main component of poverty reduction strategies, ing economic growth and poverty reduction. at par with income growth and employment, and such basic services as health, education, and po- The World Summit unexpectedly took a domi- table water. During the World Summit, sanitation nant place in the activities of ESMAP in 2002. was recognized also as a basic need and targets This was in a certain way a tribute to the pro- were established among the Millennium Devel- gram that offered both the intellectual frame- opment Goals. Energy was not picked up specifi- work and the coordination mechanisms to ad- cally as a Millennium Development Goal, but its dress the energy issues that became more and significance was definitely recognized. Further- more prominently discussed during the Summit more, the definition of "modern energy services" preparations and at the Summit itself. In particu- was actively debated and it was fully recognized lar, the work that ESMAP had already initiated in that mechanical energy, of the type provided by 2001 to define the concept and implementation such solutions as the multi-functional platforms of the Global Village Energy Partnership inspired designed in Mali under a UNDP program, offered a number of development partners to identify it considerable benefits to the poorest. as a potential Type II initiative which could be officially launched at the Summit. This was no The analytical work that ESMAP continued to small accomplishment. To proceed with imple- carry out during the year on understanding the mentation and start delivering the first products linkages between energy and poverty reduction within six weeks of the Summit was an even strengthened the basis for integrating energy greater challenge--a challenge that was met. into poverty reduction strategies. As agreed at the 2002 ESMAP Consultative Group meeting, IMPLEMENTING ESMAP'S 2002-2004 this work was pro-actively disseminated in the BUSINESS PLAN: FOCUS ON RESULTS first of a series of energy-poverty-reduction AND IMPACTS workshops that took place in late 2002 and early 2003 in which thirteen African countries In many ways, the issues discussed around the participated. Strong messages came out of these Summit confirmed the relevance of ESMAP: workshops. First, energy needs to be addressed Annual Report 2002 1 more prominently in the national poverty re- understanding among stakeholders of the need duction strategies. Second, unless demand for for, or the impact of, "sector reforms." Payment energy services is better understood from the discipline, or increases in the tariff for energy perspective of the various sectors (agriculture, services, are still often misconstrued as having a SMEs, education, and health, for example) and necessarily negative impact on the poor, without stakeholders (households, communities, enter- recognition that better financial flows to energy prises), it will be difficult to develop responsive companies (small or large) also mean better ser- and viable supply options. Third, the link be- vice and expansion of service, including in rural tween energy and economic growth through the areas. A good example was achieved in Zimba- application of energy services to productive uses bwe. In order to clarify the debate, ESMAP initi- is key for success: unless household productivity ated empirical studies that should help determine and incomes are increased, it will be difficult for the impact of reform. How to create the condi- people to purchase energy services to improve tions for re-stimulating investors' interest in their own quality of life. Therefore, it will be dif- energy in developing countries, how to support ficult to develop the financial viability of energy the operators already active in the sector, how to services. In this sense, energy can be described assist governments in designing adequate incen- as the hidden multiplier to achieving the Millen- tives (including how to finance subsidies), are all nium Development Goals. questions that ESMAP proposes to pursue until there is evidence that investments are increas- Energy Markets ing, domestic financial resources are tapped, and energy services are increasingly available. A par- Another key to the potential success of scaling up ticular effort to train national financial interme- energy services for income growth and poverty diaries in energy service financing (in particular, reduction is the continued demand for market de- investment and working capital for enterprises, velopment and reform in many cases, as well as and consumer credit) seems to be needed to cap- securing increased public and private sector finan- ture the liquidities available in domestic markets. cial flows. The year 2002 was marked by major up- ESMAP's potential activities in this area will be heavals in the energy markets, which strengthened coordinated with the Global Village Energy Part- the call for more assistance in this area from such nership and the Prototype Carbon Fund, which programs as ESMAP. The crisis in Argentina, which have similar concerns. had a major impact on energy and other compa- nies, was only one of the factors contributing to the Energy-Environment continued decline in foreign private investments in the sector in developing countries. And yet, it is The pressure to continue addressing global fully recognized that unless the financial flows warming and other global environmental issues, and know-how transfers to developing countries of which the exploitation and use of energy re- are considerably increased, achieving the needed sources is a major contributor, was highlighted scaling up of energy services will be extremely during the World Summit. At the same time, difficult. How to create the legal and regulatory however, there was a strong recognition that lo- framework for successful investments, how to build cal environmental issues are equally important, up effective public-private partnerships, are issues as they affect people's lives more immediately. that ESMAP has continued to work on, in particu- The call to create a level playing field for renew- lar through the transfer of knowledge and experi- ables and to take advantage of local renewable ence from successful countries. resources for developing additional services was reiterated. While the debate on targets was cap- The debates in Johannesburg highlighted that turing the attention of many negotiators, imple- much still needs to be done to build a common menters debated how to increase the develop- 2 Energy Sector Management Assistance Programme ment and use of renewable resources and clean Bringing such a partnership (which presently energy, including in countries well-endowed includes 150 members) to operation is quite a with fossil fuel resources. Again, as the debate challenge and an experience in "learning by do- also focused on the situation and needs of the ing." The impact of the partnership is already poorest, full legitimacy was offered to more seen in half of the countries that participated in innovative programs that attempt to reduce energy-poverty reduction workshops where the indoor air pollution, train the poor in urban partnership was featured as a potential resource areas in the use of cleaner fuel products, and to implement energy-poverty reduction action develop local bio-fuels. Furthermore, the need plans. In particular, it is empowering national to associate communities and multiple organi- governments and providing the opportunity for zations with the development of clean energy a greater array of stakeholders to coordinate their solutions was seen as an imperative. This de- activities, and for new actors to be mobilized: bate confirmed the direction proposed in the NGOs; organizations such as the African Energy ESMAP business plan, to scale up its activities Policy Research Network (AFREPREN), Environ- on indoor air pollution and other clean energy ment and Development Action (ENDA) and Ku- solutions. masi Institute of Technology and Environment (KITE) in Africa; and the Gandhi Institute in In- IMPLEMENTING PARTNERSHIPS dia, as well as private sector entrepreneurs such as RAPS Consulting Ltd. of South Africa. The preparations for the World Summit on Sus- tainable Development crystallized the idea that The value of such a partnership will neverthe- to get better and faster results, development less be fully tested when the trend in energy partners needed to strengthen their coopera- services delivery is increasing, and when the tion and create synergy among their respective lives of households and communities are indeed resources and talents. In that context, the Global impacted positively from having those services. Village Energy Partnership was identified early This will take time, effort, and continued com- on as one of the potential Type II Initiatives mitment. which could indeed be launched at the World Summit and would lead to a ten year program FURTHER CHALLENGES to more than double the availability of energy services for sustainable development. The frontier of the energy agenda is constantly evolving given the dynamics of the global eco- ESMAP had been working on the development nomic scene. However, certain emerging issues of the concept since the Village Power 2000 identified in the ESMAP business plan are be- Conference that it co-sponsored with NREL, coming more pressing. There is a need, for ex- UNDP, USAID, and the World Bank Group, as ample, to respond to the urbanization challenge it was requested to take on the interim Techni- that may lead to a significant transfer of the en- cal Secretariat responsibilities. Working with ergy poor from rural to peri-urban/urban areas: a steering committee of about 15 partners what role will energy play to prevent the risk of from all over the world and representing the impoverishment of the migrating populations? governments of developing and industrialized countries, NGOs, private sector, and multilat- Issues may also vary depending on the region. In eral organizations, the final concept for the Africa, for example, such strategic issues as the partnership was defined. The potential services integration of energy markets to rationalize in- from the partnership were identified through vestments, and the development of hydropower broad-based consultations, and delivery of the and other renewable resources, which will be services has been initiated. considered in the framework of NEPAD, may also Annual Report 2002 3 require additional support from ESMAP. Other issues, such as the role of mechanical energy to offset the decline in labor force due to the AIDS epidemic, or the role of affordable transport-en- ergy to build the synergy between enclaved rural areas and cities, will need special attention. The support, which ESMAP is to provide to update the World Bank operational strategy in Africa, would help identify and prioritize such issues. Finally, it is essential that new ways be found to leverage the intellectual capital available in developing countries to develop energy services: universities and research organizations should increasingly contribute to policy formulation, and potential entrepreneurial capacities can be channeled to create new energy enterprises and financial institutions and services. 4 Energy Sector Management Assistance Programme Annual Report 2002 5 PORTFOLIO OVERVIEW 2 PORTFOLIO OVERVIEW Energy Sector Management Assistance Programme ESMAP PORTFOLIO AT A GLANCE AS OF DECEMBER 31, 2002 Figure 2.1 Breakdown by Thematic Area Figure 2.4 Number of Projects (as a % US$ Value) by Thematic Area 19.4% 19.8% 21.8% 31.3% 9.0% 12.8% Rural & Peri-urban 31.3% Rural & Peri-urban 21.8% Sector Reform 19.4% 11.7% 8.4% Sector Reform 19.8% Energy Efficiency 12.8% Energy Efficiency 11.7% 23.1% Environment 23.1% Environment 25.2% 25.2% 3.4% International Trade 7.1% International Trade 4.1% 7.1% 4.1% 3.0% Other 3.0% Other 8.4% Renewables 3.4% Renewables 9.0% Figure 2.2 Breakdown by Geographic Area Figure 2.5 Number of Projects (as a % US$ Value) by Geographic Area 13.4% 15.3% 8.7% Middle East and Middle East and North Africa 2.4% North Africa 1.8% 17.5% 22.5% 11.7% South Asia 6.3% South Asia 8.1% 21.4% Africa 17.5% Africa 22.5% 6.3% East Asia and Pacific 13.4% East Asia and Pacific 15.3% Eastern Europe and 8.1% 18.9% Eastern Europe and Central Asia 8.7% Central Asia 11.7% 2.4% 30.2% Global 21.4% Global 18.9% 1.8% 21.5% Latin America and Latin America and Caribbean 30.2% Caribbean 21.5% Figure 2.3 Breakdown by Strategic Area Figure 2.6 Number of Projects (as a % US$ Value) by Strategic Area 5.2% 31.5% 9.0% 45.0% 22.8% 28.8% Market 45.0% Market 31.5% 30.8% Other 5.2% Other 9.0% 27.0% Access 22.8% Access 28.8% Environment 27.0% Environment 30.8% Annual Report 2002 7 EVOLUTION OF ESMAP PORTFOLIO (1998-2002) Figure 2.7 Evolution of Portfolio by Strategic Area 1998-2002 By Number of Projects5 120 100 80 Other Environment 60 Market Access 40 Projects of 20 Number 0 End 1998 End 1999 End 2000 End 2001 End 2002 90 Projects 107 Projects 116 Projects 114 Projects 110 Projects Figure 2.8 Evolution of Portfolio by Strategic Area 1998-2002 By Value of ESMAP Funding 30 25 20 Other Environment 15 Market Access Dollars 10 US of 5 Millions 0 End 1998 End 1999 End 2000 End 2001 End 2002 Total Value: Total Value: Total Value: Total Value: Total Value: $21.7m $27.7m $28m $26.3m $28.3m 5 Number of projects for 2000 and 2001 corrected from last Annual Report 8 Energy Sector Management Assistance Programme EVOLUTION OF ESMAP PORTFOLIO (1998-2002) (continued) Figure 2.9 Regional Distribution of Portfolio 1998-2002 By Number of Projects6 120 100 80 Latin America & Caribbean Middle East & North Africa 60 Europe & Central Asia South Asia 40 East Asia & Pacific Projects of Africa 20 Global Number 0 End 1998 End 1999 End 2000 End 2001 End 2002 90 Projects 107 Projects 116 Projects 114 Projects 110 Projects Figure 2.10 Regional Distribution of Portfolio 1998-2002 By Value of ESMAP Funding 30 25 20 Middle East & North Africa Latin America & Caribbean 15 Europe & Central Asia South Asia Dollars 10 East Asia & Pacific US of Africa 5 Global Millions 0 End 1998 End 1999 End 2000 End 2001 End 2002 Total Value: Total Value: Total Value: Total Value: Total Value: $21.7m $27.7m $28m $26.3m $28.3m 6 Number of projects for 2000 and 2001 corrected from last Annual Report Annual Report 2002 9 During 2002, the ESMAP portfolio grew by dollar The new business lines from ESMAP's Business value but not by number. The value of the port- Plan 2002-2004 that gained momentum dur- folio rose from US$26.3million at year-end 2001 ing 2002 were the Global Village Energy Part- to US$28.3million at the end of 2002, as 30 new nership with eight activities and six activities projects worth more than US$3.1million were each for the Indoor Air Pollution, Gender and launched. Thirty projects worth US$4.8million Energy, and Energy-Poverty Linkages business left the portfolio as they were brought to finan- lines. In terms of strategic focus, ESMAP con- cial closure during 2002. The tail of the portfolio centrated on increasing its access/energy-pov- (completed projects yet to be closed) was reduced erty work. This sub-portfolio saw a 30 percent from its value at the end of 2001. rise from US$5.7million at the end of 2001 to US$7.4million in 2002. The energy market Portfolio Profile development sub-portfolio remained constant around the US$13million mark during 2002 as The distributional graphs show that, in terms of this portfolio is being redefined away from basic number of active projects, the Africa portfolio sector reform work and toward the development has grown from a fifth of the ESMAP portfolio of new ESMAP business lines such as Strength- at the end of 2001 to a quarter of the portfolio at ening Reform, Impact of Reform on the Poor, and year-end 2002--despite the closure of nine Africa Governance and Revenue Distribution. projects during 2002. This is the result of active outreach and follow-up by the ESMAP team with Seed Funding and Fast Track Window the Africa energy team of the World Bank. The key operational objective was to ensure that Africa To respond to proponents' demand for just- task managers were able to adapt and complete in-time funding, ESMAP formally launched a their ESMAP proposals as recommended by the "fast track window" in its October 2002 Call for ESMAP Review Panel, which has been a reason Proposals. For proposals of up to US$50,000, for delay in the past. Some of the newly approved ESMAP promised proponents that a decision Africa projects from the October 2002 Call for and funding (for approved projects) would be Proposals entered the ESMAP portfolio in early made available within two to four weeks on a 2003 and were not included in the 2002 tally. rolling basis (depending on the kind of funding to be offered). This feature was available earlier Among the strategic areas, the access portfolio grew significantly with 13 new projects (nearly Table 2.1 Portfolio During Calendar Year 2002 half of the 29 new projects launched in 2002) primarily focused on increasing access by the Number poor to modern energy services. Five of these Ongoing projects on 114 projects are focused on increasing access in January 1, 2002 Sub-Saharan Africa. (see annex 2 for projects Completed projects yet to be 26 launched in 2002). closed, as of January 1, 2002 New projects launched 29 The Latin America and the Caribbean Region during 2002 (LCR) activities accounted for around 30 per- Projects closed during 2002 (30) cent of the ESMAP portfolio over the 1999-2001 Projects withdrawn during 2002 (1) business plan period. These activities remained Completed projects yet to be (28) at their traditional strength in 2002 as the Latin closed, as of December 31, 2002 America and the Caribbean Region energy team continued its use of ESMAP's funding and intel- Portfolio as of 110 lectual resources. December 31, 2002 10 Energy Sector Management Assistance Programme but needed some marketing to increase its vis- ibility among task managers. The offering was well received, with 13 out of the 49 proposals in October 2002 falling under this category. Nine of these proposals were approved during 2002. In addition, ESMAP retained the seed fund- ing window, which deals with activities up to US$15,000 at any time on the basis of a short write-up and consultation with the ESMAP team, to develop project ideas that require preliminary work, such as consultations with clients or lit- erature research. In 2002, ESMAP approved eight seed funding requests. Closing of projects The portfolio review presented in ESMAP's An- nual Report 2000-2001 discussed difficulties in bringing final financial closure (in the World Bank financial systems) to ESMAP projects that had al- ready completed all budgeted activities. This led to a rise in the tail of the portfolio caused by an imbalance between launched projects and project closings: with 20 and 27 new projects launched in 2000 and 2001, respectively, only 11 and 3 projects were brought to financial closure during these years, respectively (cancelled projects are not included in these numbers). To avoid presenting a distorted picture of the size and value of the port- folio due to this administrative difficulty, ESMAP began to carry these activities in a category called "Projects to be closed." These activities were no longer considered part of the active portfolio. At the end of 2001, this category had 26 projects as reported in the 2000-2001 annual report. Twenty-nine new projects were launched during 2002. But ESMAP was able to restore balance in the portfolio's turnover during 2002 by closing completed activities more efficiently than has been possible in the past. Yet the project closings have not fully caught up with the new projects entering the portfolio as 28 activities remained in the "Projects to be closed" category at the end of 2002 (see table 2.1). The ESMAP team is con- tinuing its efforts to increase project closings. Annual Report 2002 11 ESMAP PORTFOLIO HIGHLIGHTS AND IMPACTS 3 ESMAP PORTFOLIO HIGHLIGHTS AND IMPACTS Energy Sector Management Assistance Programme The ESMAP Business Plan for 2002-2004 · Identifying successful factors and lessons reiterates ESMAP's continued support in three learned from grid electrification. main strategic areas: · Launching the Global Village Energy Partner- ship (GVEP). · Increasing access to modern energy for poverty reduction; Pilot Activities and National Programs · Improving Energy and the Environment; and to Demonstrate Innovative Institutional · Developing sustainable energy markets. and Financing Delivery Mechanisms This section provides an update on ESMAP's A key success factor for scaling up rural energy activities in 2002 in each of these areas in terms access is to demonstrate replicable and sustain- of development status, achievements, lessons able institutional and financing mechanisms to learned and follow-up activities. deliver rural energy services. In 2002, ESMAP continued to support pilot activities and na- INCREASING ACCESS TO MODERN tional programs to demonstrate innovative in- ENERGY FOR POVERTY REDUCTION stitutional and financing delivery mechanisms. The Bolivia Country Program and National At the World Summit on Sustainable Develop- Biomass Program were nearly completed. They ment (WSSD) held in Johannesburg in August- demonstrated three innovative business deliv- September 2002, energy issues, particularly access ery models, and established a Biomass Fund to energy, were one of the critical elements of the as well as a sustainable institution to promote negotiations and outcomes. Increasing access to energy efficiency. The results have been incor- modern energy services is essential to achieve the porated into the design of the World Bank loan Millennium Development Goals (MDGs). Increased project (Decentralized Energy, Information, and access to energy can enhance agricultural produc- Communication Technology for Rural Transfor- tivity, make possible provision of clean drinking mation Project) currently in preparation. The water and refrigeration for vaccines, light schools Technical Assistance to Proposed Expansion of and health clinics, provide for income-generating Solar-Net Village Program in Honduras project opportunities, and protect the environment. aims to demonstrate a sustainable community management mechanism that links energy ser- ESMAP's overall strategy on energy poverty vices with Information and Communications reduction focuses on finding solutions to scale Technologies (ICT) and education applications. up energy access efforts, increasing the link be- The Philippines Village Power Fund and Incuba- tween energy services and the MDG of poverty tor for Renewable Energy Enterprises project is reduction, and analyzing the impact of sector setting up an innovative village power fund and reform on the poor. linking community-based energy services with productive use applications in two barangays. Specifically, during 2002, ESMAP provided The Bangladesh Women Micro-Enterprise Model pragmatic intellectual leadership in the follow- is expanding to Phase II and this experience is ing four broad areas: being replicated in Ghana. · Supporting pilot activities and comprehensive Bolivia is one of the targeted countries to which national programs to demonstrate innovative ESMAP provided substantial funding to develop institutional and financing delivery mechanisms. national programs. Previous ESMAP support · Providing technical assistance to improve the helped the government develop sector reform policy and regulatory framework for rural elec- strategies that have been successfully adopted trification and renewable energy. by the government. The second phase ESMAP Annual Report 2002 13 interventions provided technical assistance, in- The Energy Efficiency component established a stitutional building, and pilot activities in the sustainable institution for promoting energy ef- areas of rural electrification, biomass energy, ficiency--the Centro de Promoción de Tecnologías and energy efficiency, which are not part of the Sostenibles (CPTS), which is fully operational with sector reform process (see box 3.1). the support of the National Chamber of Industry and additional funding from DANIDA. The Bolivia Country Program supported rural en- ergy and energy efficiency activities. The Rural The National Biomass Program established a Energy component demonstrated three business US$1 million revolving Biomass Fund, with delivery models: 1) the rural electrification fund contributions of US$800,000 from the Dutch model, which encourages existing private distri- government and US$200,000 from La Fundación bution companies to supply electricity to rural para la Producción (FUNDA-PRO), a private non- areas by grid extension; 2) the solar home system profit organization that manages the Biomass (SHS) model where local firms deliver SHSs on a Fund. The Fund will supply funding to local fee-for-service basis to rural consumers and the industries using biomass as a principal source of local firms are affiliated with multinational SHS energy. Local industries are eligible for funding manufacturers; and 3) the NGO model where the based on goals of reducing biomass consump- local NGOs assist in setting up mutually agreeable tion and improving environmental impacts. Each community-based systems for billing and col- project must cost no more than US$100,000. The lection in areas where the private sector cannot industry will contribute no less than 5 percent reach. These delivery models provided key inputs of the project cost toward project financing. The and lessons learned to the rural electrification Fund is in operation with 52 projects approved project currently under preparation by the World and 99 projects in the pipeline. This project also Bank Group (US$20 million) and Kreditanstalt demonstrated pilot projects in seven enterprises für Wiederaufbau (7 million Euros). This project that achieved substantial energy savings--20 also developed building codes and standards, and percent reduction in energy consumption with designed passive solar heating for rural schools. an annual savings of US$200,000 and an 18- 14 Energy Sector Management Assistance Programme Box 3.1 ESMAP Bolivia Country Program and National Biomass Program Rural activities play a major role in the Bolivian economic growth process. These activities require the provision of basic rural infrastructure in which the supply of sustainable energy is crucial and hinges in large part on effective private participation within a sound legal and regulatory environment. The Bolivia Country Program intended to help the government achieve its policy objectives in the field of rural energy and energy efficiency and develop capacity to implement, monitor, evaluate and adjust rural policies and projects. The Program supported technical assistance, institutional building, and pilot activities regarding Rural Energy (RE) and Energy Efficiency (EE). The RE component accomplished the following: It explored options for sustainable mechanisms to deliver electricity to rural areas by either extending the distribution grids by existing concessionaires, or using private suppliers and dealers to supply solar home systems (SHSs) to commercially attractive areas, or supplying electricity services to very remote, isolated communities through NGOs. The RE component identified demand and supply options, and market potential and barriers, and implemented market development measures concerning demonstration projects such as water pumping for rural farms, photovoltaic- powered (PV-powered) video equipment for rural learning centers, and passive solar energy for heating rural schools in the highlands. A Rural Energy Fund was designed to help finance electrification projects sponsored by private concessionaires. Finally, the RE component strengthened the capacity of government, at central and local levels, to carry out rural energy and energy efficiency activities. The Energy Efficiency (EE) component executed energy efficiency pilot projects; supported mechanisms to promote and implement EE measures, including an energy efficiency center located within the National Chamber of Industry and several consulting companies that could evolve toward Energy Service Companies; studied electricity demand-side management; and studied co-generation of electricity by various enterprises. The National Biomass Program aimed to help the Government of Bolivia achieve its policy objectives in the field of biomass as an energy source by financing the institutional development of and technical assistance to the National Biomass Program (NBP) initiated by the government in 1997. The program also aimed to develop the Energy Secretariat's capacity to implement, monitor, evaluate, and adjust biomass policies and projects. Although the latter objective was only partially achieved, the NBP supported the establishment of a Biomass Fund within a reputable financial institution (FUNDA-PRO) to help private entrepreneurs finance energy efficiency and substitution projects in small and micro rural industries. The Biomass Fund is active and is currently financing numerous rural industrial activities. The NBP also showed that diesel fuel subsidies hinder the economics of small-scale biomass-based power generation.Some lessons from these two programs can be highlighted: · The efficiency and outcomes of both programs would have been further enhanced had they focused earlier on activities with the best prospects for replicability and sustainability. · Involvement and support of private and local players should be actively pursued. · Subsidies for polluting fuels should be reduced or removed to provide better chances for substitution of cleaner energy sources. · Application of new technologies to increase efficiency in productive processes of small scale rural industries, together with adequate promotion and training activities, can create local value, improve competitiveness, consolidate rural markets, and create employment opportunities. · There is a need to include technology and management of natural resources in the rural areas in the curricula of universities. Contributed by Alvaro J. Covarrubias and Philippe Durand. Annual Report 2002 15 month payback period. One important lesson The project, however, should target recovery of learned from both projects is that ESMAP proj- the operation and maintenance (O&M) costs. ects should focus strongly on one or two major Second, the low density of the rural popula- activities likely to have successful outcomes. tion prevented development of a critical mass of demand, making ICT applications and business The Honduras Solar-Net Village Program (see opportunities difficult. box 3.2) is one of the first attempts to set up a model for low-cost ICT applications in remote The Philippines Village Power Fund project ad- rural areas. It is setting up two pilot projects--a opted a participatory approach to identify the solar PV-powered and a grid-connected ICT sys- needs of the communities and prepare feasibil- tem--linked with computers for education and ity studies with locally based NGOs to ensure possibly local business development. The project community ownership and institutional sus- closely involved local communities that formed tainability. The two pilot micro-hydro projects, a community company to maintain the systems, in Binosawan, Rapu Rapu, and Bagong Bayan, with training provided from the project. Two im- Palawan, are demonstrating a credit model that portant lessons were learned from this project. provides partial loans to local NGOs. The pilot First, given the low ability to pay in local com- projects also intend to set up ice-making plants munities, it is not realistic to expect 100 percent linked with the micro-hydro systems, to generate cost recovery of both capital and operating costs. revenues for the local communities to pay back Box 3.2 Honduras Solar-Net Village Program Under its Aldeas Solares program, the Government of Honduras plans to establish about 100 telecenters nationwide and has obtained a loan of US$8.5 million from the Inter-American Development Bank (IADB) for this purpose. About a third of the telecenters would be small rural information centers (RICs) or mini telecenters, located mostly in remote, unelectrified areas. The purpose of the RICs would be to provide basic information and telecommunications (ICT) services, such as internet-based educational services for youth and business development services for rural micro-enterprises. There is little experience worldwide with the establishment and operation of RICs, which often need to be powered with stand-alone photovoltaic systems. A recent demonstration RIC in Honduras used internet connection via satellite, an approach that is too expensive to replicate. An ESMAP-financed technical assistance activity aims to test less expensive ways to obtain access to internet and other ICT services. In partnership with the International Telecommunications Union (ITU), a UN agency, the idea is to use inexpensive packet radio links between existing urban telecenters and solar-powered RICs in villages up to 100 km away to bring internet and other ICT services (for example, telephony via internet) to the villages. The U.S. Sandia Laboratories is contributing experts to assist in the design of the solar power systems. Aside from the technical objective, the main purpose is to gather information on actual usage of the RICs and their operating costs over a pilot period of six months in two villages, Las Trojes and Montaña Grande. This would help determine, as a policy tool, the level of subsidy needed to provide the services to remote, unelectrified villages. The IADB project will use the ESMAP activity's outputs to develop the final design of its RIC component. Contributed by Ernesto Terrado. 16 Energy Sector Management Assistance Programme the loans. This is one of the first attempts in the a sound regulatory framework for off-grid elec- Philippines to test financing mechanisms for trification, including setting tariffs, service qual- community-based energy projects. In addition, ity standards, and technical standards. It assists this project is preparing to set up the Village regulators in these countries in enforcement and Power Fund to scale up these pilot efforts. This supervision of off-grid rural energy policies, and approach has high replication potential, particu- in formulating detailed legislation from national larly with the national government's ambitious energy or electrification laws. In Argentina and goal to electrify all barangays by 2006. The gov- Bolivia, the project worked with local regulators ernment agencies have already shown great in- and drafted off-grid regulatory frameworks. In terest in developing productive use applications Brazil and Nicaragua, the project completed the from rural energy services, and the Asian Devel- analytical work, and the draft regulatory frame- opment Bank (ADB) is planning to fund project work is under way. This project also promotes preparation for energy and productive uses. This cross-exchange of information and experience ESMAP project has leveraged co-funding from among legislators in these countries. The results UNDP, the Philippines Departments of Energy of the project are intended to be incorporated and Agriculture to support the pilot projects. into national legislation in these countries and are feeding into the design of the World Bank The important lessons learned from this project rural electrification projects. are: 1) a consultative approach takes time during project development; 2) the need for capacity The Policy & Strategy for the Promotion of Renew- building is greater than expected; and 3) accom- able Energy Resources in Nicaragua project focuses modating funding from multiple donors is not on national energy policies for grid-connected easy, as each donor has its own requirements. and mini-grid renewable energy resources. It will assist the government in developing an overall Policy and Regulatory Framework of Rural national renewable energy policy, which includes: Electrification and Renewable Energy 1) increasing the share of wind power under new grid operational rules that require preferential dis- A successful rural electrification and renewable patch for intermittent renewables, provided it can energy program require a sound policy and regu- be shown that grid stability and economics are not latory framework to be in place, which usually is significantly harmed; and 2) public-private risk- a key success factor for scaling up rural energy sharing mechanisms for developing geothermal re- services. In 2002, ESMAP continued to support a sources. This project, together with other rural and series of projects that assist national policy mak- renewable energy projects in Nicaragua supported ers and regulators in developing and improving by ESMAP (including the Nicaragua Workshop on national rural electrification and renewable en- Private-Sector Led Mechanisms for Rural Energy ergy strategies and policies including off-grid, Service Delivery, Regulatory Issues of Off-Grid mini-grid, and grid-connected systems. In the Energy Services Delivery as Part of National Rural Latin America region (Argentina, Bolivia, Brazil, Electrification Strategies, and Lessons on Off-grid Mexico, and Nicaragua), the results of these proj- Electricity, Business Development Services, and ects have been or will be incorporated in national Micro-credit in Nicaragua), provided a solid foun- government programs or new World Bank rural dation for the design of the World Bank-Global electrification loan projects under preparation. Environment Facility (GEF) Nicaragua Rural Elec- trification Project currently under appraisal. The Regulatory Issues of Off-grid Energy Services Delivery as Part of National Rural Electrification The Mexico Technical Assistance for Long-term Strategies project in Argentina, Bolivia, Brazil, Program for Renewable Energy Development proj- and Nicaragua helps these countries put in place ect provides technical assistance to the national Annual Report 2002 17 government on policies and strategies for large- studies to examine the success factors and les- scale promotion of renewable energy in the sons learned on best practices of grid extension country. It recommended that the UK's success- in eight countries--Bangladesh, Chile, China, ful Non-Fossil Fuel Obligation (NFFO) model be Costa Rica, Mexico, Philippines, Thailand, and adapted and replicated in Mexico. It plans to carry Tunisia, (see box 3.3). This project demonstrated out a comparative analysis of the economic costs that rural electrification, though challenging, of renewable energy and existing utility options can be successful in developing countries if well such as grid upgrading, and natural gas combined planned, carefully targeted, and efficiently imple- cycle. Because of the projected increase in prices mented. Each of these countries follows different of imported oil and gas, renewable energy may models and structures. They shared, however, become a competitive energy choice. The project a few common principles that make their rural will also assist the government in developing an electrification programs a success. The case stud- energy portfolio diversification scenario. ESMAP ies in Chile also documented the success story of support laid the groundwork for a US$70 million rural electrification after power sector deregula- World Bank-GEF Large-scale Mexico Renewable tion through setting up a rural electrification re- Energy Development Project under preparation. volving fund. These findings have already been applied to rural electrification programs in other The Brazil Rural Electrification project held a countries. The World Bank lending projects Rural successful stakeholder workshop, and produced a Electrification and Renewable Energy Develop- draft rural electrification strategy for both off-grid ment in Bangladesh and Rural Energy Project in and grid-extension systems. With the changes in Vietnam have incorporated many lessons from government, the new Brazilian Minister of Mines the results of this ESMAP study. The analysis and Energy is showing strong support for rural of these experiences also demonstrated that to electrification, and is particularly interested in scale up rural energy access, both grid-extension moving from strategy to action with the imple- and off-grid alternatives have important roles to mentation of a rural electrification program in the play, and rural electrification programs should state of Piaui. Under the ESMAP project, the rural include both options. electrification strategy is being revised to reflect the needs and visions of the new government. The Global Village Energy Partnership The result of this project will be incorporated in the World Bank Group rural electrification project The Global Village Energy Partnership (GVEP) is under preparation in Brazil. One important les- a flagship activity of ESMAP. It was introduced son learned from this project is that waiting for as one of ESMAP's most important new business government changes to take effect and consult- lines in Business Plan 2002-2004. The Partner- ing with the new government can achieve more ship was successfully launched at the World profound impacts on the ground. Linking ESMAP Summit on Sustainable Development in 2002, projects with government policies and World with the goal of increasing availability and im- Bank operations leads to better results, although proving use of modern energy services for eco- this process takes more time. nomic growth and poverty reduction, in rural, peri-urban, and urban areas (see box 3.4). Successful Factors and Lessons Learned for Grid Electrification The Partnership was launched to address sev- eral key issues: 1) stagnation or slow progress Providing modern energy services to the two bil- in making modern energy services available to lion people worldwide without access is a chal- a larger proportion of un-served low income lenging task. ESMAP supported a series of case populations; 2) continued low access to modern 18 Energy Sector Management Assistance Programme Box 3.3 Rural Electrification in the Developing World: Lessons from Successful Programs The pace of rural electrification in much of the developing world is painfully slow. In many African and South Asian countries, it is not even keeping up with rural population growth. Well-publicized reports on the problems of some programs have also led to increasing wariness about rural electrification among energy policy makers. The highly subsidized Indian program, for example, has drained the resources of many of the state power companies, with highly damaging effects on their overall performance and quality of service. Rural electrification programs can undoubtedly face major obstacles. The low population densities in rural areas result in high capital and operating costs for electricity companies. Consumers are often poor--their electricity consumption is low and they cannot afford to purchase significant electricity services. Politicians interfere with the orderly planning and running of programs, insisting on favored constituents being connected first, and preventing the disconnection of people not paying their bills. Local communities and individual farmers may cause difficulties over rights-of-way for the construction and maintenance of electricity lines. In spite of these problems, many countries have been quietly and successfully providing electricity to rural areas. In Thailand, over 80 percent of rural people have a supply. In Costa Rica, cooperatives and the government electricity utility provide electricity to almost 95 percent of the rural population. In Tunisia, 90 percent of rural households already have a supply. Some of the main reasons for the success of these programs stems from several important factors: · Effective institutions deal specifically with the problems involved in rural electrification. · Prices are kept high enough to make rural distribution companies financially sustainable. · Subsidies encourage rather than discourage the development of the distribution business. · Local people are involved with the electricity business and perceive it to be both fair and responsive to their needs. Contributed by Douglas Barnes and Gerald Foley. energy services in developing countries to meet barriers, insufficient enterprises, lack of informa- the needs of the population in terms of quality tion and lesson sharing, inadequate financing, of life, access to more and better health care, and and a lack of accountability for results. education, and in terms of energy for productive activities and investments by households and en- To date, the 130 partners that have registered terprises; 3) energy needed to achieve the Millen- include: nium Development Goals and to foster economic growth; and 4) individual efforts did not succeed · Governments from developing and industrial- due to weak political commitments and market ized countries; Annual Report 2002 19 Box 3.4 The Global Village Energy Partnership (GVEP) GVEP provides five types of services: · Action plans that include goals for service delivery, policy framework, demand assessment and priorities, supply and investment options. · Capacity Development for entrepreneurs, financial institutions, consumer groups, and technicians. · Funding Facilitation including registry of funding sources, training for financial intermediaries, and pre-investment facilities. · Knowledge exchange encompassing models of actions plans, projects, and financial mechanisms; lessons learned; toolkits; web site, radio and TV programs; paper information dissemination; a network of trained and knowledgeable individuals; and a help/advisory desk. · Results and impact monitoring including public accountability for results, and assessment development impact. GVEP is expected to achieve the following outcomes within ten years: · Large numbers of national and community-based programs, fewer barriers to entry. · A greater number of energy service enterprises in developing countries. · Greater availability of a wide range of technical options for energy provision. · At least 400 million more people served with modern energy. · Higher incomes to purchase energy services. · 50,000 communities equipped with schools, dispensaries, and telecommunications services, and more effective education, health, communications and transport services. · Greater flow of energy investments toward low-income areas and customers. GVEP proposes to achieve its goal through the following structures: · Action plans devised through multi-stakeholder workshops, at the request of stakeholders. · Programs and projects implemented by Partner organizations and states. · Resources, guidance and supervision provided by the Technical Secretariat, currently managed by ESMAP. · The Board of Directors, elected by the Partners for two-year terms, provides oversight and strategic guidance to both the Technical Secretariat and the Partnership as a whole. GVEP has made substantial progress to date, facilitated by the GVEP Technical Secretariat: · The Partnership was officially launched at WSSD with over 150 participants including ministers from Germany, Guatemala, The Netherlands, Pakistan, and South Africa. · As of February 2003, 130 organizations committed to the GVEP Statement of Principles, which outlines the goals and services of the Partnership. 20 Energy Sector Management Assistance Programme · Partner organizations represent the private sector (for example, BP Solar, RAPS Consulting Ltd. of South Africa, ORMAT International), NGOs (Organization of American States, KITE of Ghana, Energy and Environmental Concerns for Zambia, TERI of India), and bilateral and multilateral institutions (CIDA, DfiD, UNDP, UNEP USAID, and others). · The governance structure for the Partnership was finalized and the first Partnership Board elected by the Partners. (World Bank was not represented except through Ex-Officio coordinator of the Technical Secretariat). · A three-year work plan was developed and circulated to donors, with input from focus groups, and preliminary funding commitments were made. · Four monthly newsletters were published, with input from Partners, and collaboration with existing Village Power updates. · A demonstration web site was completed, with second phase development commencing by March 2003. · In partnership with ESMAP and the World Bank Africa Region Energy Unit, two multi- country/multi-sector/multi-stakeholder energy-poverty workshops took place in Addis Ababa, Ethiopia in October 2002, and in Dakar, Senegal, in February 2003. The 13 participating countries prepared preliminary energy-poverty reduction action plans aimed at enriching the poverty reduction strategic documents and identifying energy interventions to achieve the MDGs. Follow-up is planned for national-level activities, as requested by Burkina Faso, Mali, Mauritania, Senegal, Tanzania, Uganda and Zambia, to support the development of investment programs. · A Pre-Investment Facility workshop is planned for April 2003; a South-Asia Practitioners Workshop is planned for May 2003; and a Regional Energy-Poverty Workshop is planned for Latin America and the Caribbean in June 2003. · Partner governments are preparing increases in investment in energy services, with support from private sector partners, such as the European Development Fund (EDF) through its access program, and NGOs such as Fundación Solar and Fondo Indígena to reach the 15 percent of the Guatemala rural population presently un-served, UNDP, the World Bank, and others. Contributed by Katharine Gratwick. · Communities, local user groups, NGOs; IMPROVING ENERGY · Enterprises (service providers, manufacturers, AND ENVIRONMENT and consultants); · Private financial intermediaries; and Environmental sustainability is one of the Mil- · Bilateral and multilateral development and lennium Development Goals, with the objective financial institutions including UNDP and the of halting the unsustainable exploitation of World Bank Group with a portfolio of activi- natural resources. Ten years after the Rio Earth ties, investments and battery of technical as- Summit, world leaders gathered again in Johan- sistance and financial instruments. nesburg in August and September 2002 to dis- Annual Report 2002 21 cuss environment and poverty reduction issues 2002-2004. ESMAP's overall objective is to ad- at the World Summit on Sustainable Develop- dress the energy and environment nexus at the ment (WSSD). On the energy and environment local, regional, and global levels as related to en- agenda at WSSD, renewable energy and energy ergy production, transportation, and consump- efficiency were among the high priorities in dis- tion. This is to be achieved through assessing cussions and commitments. environmental health impacts, identifying sound mitigation options, and providing policy advice. These priorities reaffirmed the justification for Specifically during 2002, ESMAP provided prag- ESMAP's Second Strategic Pillar: Energy and matic leadership in the following three broad Environment Sustainability. Following the areas: World Bank Group's Environmental Strategy for the Energy Sector, "Fuel for Thought," published · Addressing indoor air pollution; in 2000, the Bank completed two new strategy · Improving urban air quality; and papers in 2001, "Making Sustainable Commit- · Increasing energy efficiency. ments, an Environment Strategy for the World Bank," which makes the case for accelerating in- Indoor Air Pollution tegration of environmental objectives through- out the Bank's development assistance efforts, Indoor air pollution is one of the most serious and "Energy Business Renewal Strategy," which health issues, especially for women, and children highlighted environmental sustainability as one under 5 years old, due to the use of traditional of its four pillars. biomass fuels in open fires in poorly venti- lated areas. It is estimated that up to 2.5 million In 2002, ESMAP and the Energy & Mining Sector women and children die prematurely every year Board of the World Bank co-sponsored an "En- from respiratory diseases caused by indoor air ergy and Environment" report, which looked at pollution, and that indoor air pollution is one what has been achieved since "Fuel for Thought" of the largest contributors to the global burden and recommended a forward agenda for the of disease in developing countries. ESMAP has Bank. The report concluded that the Bank's pro- developed a strong portfolio of activities on en- cesses and outputs are well on course. Some of ergy-related indoor air pollution. The primary the upstream work has influenced the Country objectives of these activities follow: Assistance Strategies (CASs), created and dis- seminated knowledge, and built capacity. The · To help build knowledge through empirical bulk of the Bank's upstream work continues evidence. to be financed through Bank-donor programs, · To educate decision makers and national stake- such as ESMAP. These upstream activities have holders. provided a solid platform from which invest- · To identify viable options to mitigate indoor ment activities have been launched. In the air pollution. Bank lending portfolio, the number of energy · To stimulate investment programs and activi- projects with environmental objectives has sub- ties in this area. stantially increased. Looking forward, the report recommends that the Bank's agenda focus on This work is a key link in the effort to establish the the tradeoffs between poverty and environment contribution of energy to the achievement of the particularly in the case of indoor and urban air Millennium Development Goals, particularly the pollution. Goals to reduce maternal and child mortality. Energy and environment is also an essential ESMAP is supporting indoor air pollution proj- component in the ESMAP Business Plan for ects in five countries--China, Guatemala, India, 22 Energy Sector Management Assistance Programme Mongolia, and Nicaragua. These projects: 1) as- The recommendations from the project India sessed health impacts of indoor air pollution; Household Energy, Air Pollution and Health 2) evaluated the barriers and best practice of ESMAP report 261/02 (see ESMAP Annual Re- improved stove programs, and promoted innova- port 2000-2001) have been included in India's tive designs and a wide knowledge dissemination tenth Five-Year Plan. Its outputs are now the of improved stoves; and 3) examined liquid and basis of the Bank's dialogue with the Govern- gas fuel alternatives such as LPG, kerosene, and ment of India about possible projects involving natural gas. In addition, they have already sub- improved cook-stoves and health outcomes. This stantially enhanced awareness among local key project spawned another activity at the request stakeholders, and influenced the health profes- of the Government of India, Access of the Poor sionals in the Bank and client countries. The to Cleaner Household Fuels, to examine the im- completed Mongolia Improved Coal Heating Stove pact of kerosene and LPG subsidies on household Project has led to a GEF medium sized project. fuel use patterns, especially among the poor (see ESMAP held a brown bag lunch event to dissemi- box 3.5). This project concluded that the LPG nate the results of these five projects and promote subsidy and the universal kerosene price sub- exchange of experience and lessons learned. sidy have few social benefits and did not reach Box 3.5 International Experiences with Promoting Household Petroleum Fuels Worldwide, a number of countries have (or have historically had, such as Mexico) zero or negative taxes on kerosene and other fuels such as diesel and LPG, particularly in oil-producing countries. Countries that subsidize LPG include Côte d'Ivoire, Ecuador, India, Senegal, and Venezuela. LPG subsidies, however, typically benefit middle class and higher income families, and hence are not pro-poor. Some efforts have been made to make LPG subsidies more pro- poor. For example, Côte d'Ivoire and Senegal specifically target their subsidies at smaller cylinders to make each refill more affordable--6 kg and smaller cylinders as opposed to the most common size of 12.5 kg. However, despite the subsidy (about 25 percent as of December 1999), consumers in Côte d'Ivoire have not switched from 12.5 kg to 6 kg cylinders, and less than 10 percent of kerosene was sold in the subsidized 6 kg bottles in 1999. In Senegal, 2.75 kg and 6 kg cylinders are heavily cross-subsidized by larger size cylinders, and LPG has become the principal cooking fuel for many urban households. However, the urban poor, despite the subsidy, find LPG expensive and tend to use charcoal, which is cheaper and can be purchased on a daily basis. Furthermore, the government of Senegal is now in the process of phasing out its LPG subsidy entirely because of its high fiscal cost. In Peru, kerosene was heavily subsidized from the 1950s until 1991, when the subsidy was withdrawn. During this period, kerosene became the cooking fuel of choice among many households. Subsidized kerosene was not rationed. A substantial amount was diverted to the auto diesel sector and smuggled out of the country. Similar to India, the petroleum product subsidies amounted to billions of dollars in Peru by the late 1980s. Today, significant private sector participation and the increased availability of gas make LPG available at competitive prices in large and medium-sized cities, making LPG the preferred fuel of choice. (continued) Annual Report 2002 23 Box 3.5 International Experiences with Promoting Household Petroleum Fuels (Continued) Worldwide experience shows that it is extremely difficult to use subsidies to induce the poor to switch to petroleum products for cooking. The task is made virtually impossible if free biomass is available. Only when biomass becomes a commodity traded for cash, typically in urban and peri-urban areas, do the poor begin to consider alternative fuel options. Even so, the poor find fuels that can be purchased on a daily basis, such as kerosene or charcoal, more affordable than LPG, which can be purchased only one cylinder at a time. Add to this the higher start-up cost of LPG and its higher price relative to kerosene or charcoal, and LPG becomes out of reach for the poor. Kerosene merits special consideration because the poor primarily use it for lighting. In the absence of a reliable and affordable source of electricity, making kerosene available and affordable to poor non-electrified households becomes important. Health impacts of the various fuel options need to be taken into account when making decisions on subsidies. Where biomass is plentiful, even relatively high-income families continue to use biomass, as found in rural India, Guatemala and Mexico. An important question is whether a policy that will achieve partial switching or reduced wood consumption is effective for mitigating the health impact of indoor air pollution. There is no epidemiological evidence to support or refute the health benefit of partial fuel switching. This is an area that needs further investigation. Contributed by Kseniya Lvovsky, Masami Kojima and the World Bank Oil and Gas Group. the poor. There is a strong case for phasing out indoor PM10 levels to less than 200µg/m3. Prop- these subsidies. It is unlikely that a sustainable erly designed and maintained improved stoves government policy can be found to induce ru- (cocinas o estufas mejoradas) reduce exposure to ral households to increase substantially the use indoor air pollution--notably to fine particulate of kerosene and LPG for cooking. However, the matter--and represent a viable means of mitigat- urban poor appear to be a more promising group ing the health impacts of indoor air pollution for for targeted subsidies. The report also found that persons in the lower income quintiles who can- in addition to income and relative fuel prices, not afford liquid or gaseous fuels. About 15 per- fuel supply security is another important consid- cent of households, which rely entirely on fuel eration in household fuel choices. Multiple fuel wood, have received improved stoves from vari- use by households is observed worldwide. ous programs. However, further work is required to ascertain and quantify the health benefits of The Guatemala Indoor Air Pollution (IAP) study using improved stoves. Regarding the use of assessed the health impacts of cooking stoves LPG, this study confirmed the conclusions from and examined the mitigation options of im- the India study--LPG adoption is a viable option proved stoves and LPG as a fuel substitute. Upper only for upper income households in rural areas. bound estimates of child morbidity and mortal- From the point of view of government policy ity indicate that approximately 20,000 cases of intervention, LPG use requires that issues of user acute lower respiratory infection (ALRI), and safety and adequate cylinder management be ad- 2,300 deaths from ALRI, among children under dressed. The main findings of the Guatemala IAP the age of 5 in the Guatemalan highlands would study are that: 1) adequate quality control and be eliminated if high levels of indoor air pol- proper maintenance are key factors to ensure the lution were reduced--in particular reduction of effectiveness of improved stoves in mitigating 24 Energy Sector Management Assistance Programme health impacts of IAP; and 2) indoor air pollu- implement local initiatives that would enable tion should be addressed through the country's rural communities to develop cost-effective and poverty reduction policies. The government is affordable household energy interventions (im- now engaged with the World Bank Group, NGOs, proved stoves, better ventilation, cleaner fuels) and others in including a component on indoor that meet community needs and would induce air pollution in a future Bank lending project in behavioral changes for exposure reduction to the Health sector in LCR. The government has IAP. This study is one of the pilot efforts to con- also started to develop a multi-sector integrated duct quantified and consistent exposure assess- energy policy to include health and ecological ment of improved stoves under controlled condi- aspects of all energy use and production; the tions, and the results will provide solid scientific Ministries of Health and Environment are asso- evidence on health impacts of improved stoves. ciated with the preparation process. In addition, ESMAP supported a session on the The Nicaragua project is intended to conduct a problems of indoor air pollution in developing pilot program to commercialize improved cook- countries at the international Indoor Air 2002 ing stoves, and to monitor the health impacts of meeting. The session was useful in drawing at- improved stoves. A market survey was conduct- tention to the fundamental health and global ed and local small and medium-sized enterprises burden of disease issues associated with indoor have been trained in stove manufacturing. The air pollution in developing countries (in con- project trained a local NGO as the marketing fa- trast with the focus in industrialized countries cilitator to widely disseminate improved cooking on issues such as "sick building" syndrome). It stoves. These stoves have already been tested for also provided a forum for discussing the policy health impacts. The lesson learned in this project challenges of addressing indoor air pollution in is that one of the major barriers to marketing developing countries. improved stoves is their high initial cost (in the range of US$30-$60), since consumers usually Urban Air Quality build traditional stoves themselves and are not accustomed to paying for them. For comparison Like indoor air pollution, urban air pollution purposes, improved stoves cost in the range of also has significant negative health impacts on US$3 to $40 in India, US$35 to $60 in Mongolia, urban residents. Epidemiological studies have US$40 to $60 in China, and around US$80 to confirmed a direct association between fine par- $150 in Guatemala (due to a monopoly supply ticulates, one of the worst ambient air pollutants, from a heavily-subsidized government program). and mortality. Again, the poor are most vulner- Other factors that prevent wide dissemination of able in this case. Evidence shows that there improved stoves include stove quality, consum- is a direct link between urban air quality and ers' behavior, and cooking needs. national income levels. In industrialized coun- tries, urban air quality has been significantly The sum of these experiences has informed the improved over the past four decades due to im- design of a recently launched ESMAP activity, proved technologies and more stringent regula- Sustainable and Efficient Energy Use to Alleviate tions. In the developing world, however, urban Indoor Air Pollution in Poor Rural China. This air pollution remains a huge problem. The World project will conduct detailed exposure assess- Bank estimated that the economic cost of urban ments to measure the health impacts before and air pollution in China, for example, contributed after introduction of improved coal and biomass to about 5 percent of GDP in terms of premature stoves for cooking and heating in four Chinese death, morbidity, chronic bronchitis, and restricted provinces--Inner Mongolia, Gansu, Guizhou, activity days. ESMAP's strategy in Urban Air Qual- and Shaanxi. The project will also design and ity focuses on the worst ambient air pollutants-- Annual Report 2002 25 fine particulates, lead, sulfur, and nitrogen ox- planning, and policy issues related to reduction ides, particularly in the transport sector. ESMAP of air pollution from the transport sector, and activities: 1) provide technical and policy ad- introduced international best practices. These vice to national and municipal governments; 2) Briefing Notes received wide recognition and build local capacities in integrated air pollution requests from other regions. ESMAP also sup- management; and 3) disseminate knowledge on ports a project on Source Apportionment of Fine urban air pollution mitigation options. Particulates in Developing Countries, which is targeted to assist local stakeholders (govern- In 2002, ESMAP activities in this area focused on ments, NGOs, academic/research, private sector) three critical issues facing developing countries: in understanding the sources of fine particulates 1) continuing lead phase-out initiatives, particu- in their localities in order to make more scientific larly in Africa; 2) providing technical assistance and technically sound decisions to limit emis- in abatement strategies to reduce fine particu- sions and exposure. lates and sulfur emissions, particularly in Asia; and 3) facilitating the transfer of knowledge In addition to fine particulates, sulfur emissions across countries and stakeholders, in particular remain a major urban air pollutant in many through its support of the Clean Air Initiative. developing countries, because of both the nega- The Clean Air Initiative intends to build capacity tive health impacts of sulfate oxides found in for urban air quality management between lo- fine particulates and regional acid rain effects. cal environmental and other sector agencies in The Sulfur Emission Mitigation Policies project selected cities and to promote exchange of infor- provided assistance to the national and local mation through networks in four regions. governments in China for efficient sulfur emis- sion control (see box 3.9). This project helped Following the successes of ESMAP projects in municipal governments in shifting their sulfur phasing out leaded gasoline in Asia, Central control policies: 1) from measuring emissions Asia, Latin America and the Caribbean, and only to focusing on exposure and where the Middle East and North Africa regions, ESMAP sources and people are; and 2) from concentrat- Lead Phase-out Initiative in Vietnam achieved ing on end-of-pipe investment measures only to an "overnight" success in switching to unleaded investigating integrated investment options such gasoline (see box 3.6). as introduction of natural gas to substitute for coal burning. The experience and lessons learned from these efforts have led to recent ESMAP interventions The Clean Air Initiative is a partnership between in Africa. The two African projects deal with: the World Bank, city governments, private and 1) the overall improvement of urban air quality, public institutions, development banks and including the phasing out of leaded gasoline (see agencies, ESMAP, and NGOs interested in col- Clean Air Initiative in SSA, in box 3.7); and 2) laborating to improve the understanding of the specific case of lead phase-out in oil import- programs and provide tools to city leaders to ing countries (Ethiopia, Mali, Mauritania, and make the difficult choices involved in addressing Tanzania). air pollution and mitigating its health impacts. The CAI has been successful in raising aware- The South Asia Urban Air Quality Project is ness of urban air quality issues in major cities intended to assist municipal and federal govern- around the world. The CAI established regional ments in developing and accepting a realistic, networks, built partnerships, held workshops, cost-effective, and sustainable air pollution created a website, offered training and distance abatement strategy (see box 3.8). It issued a learning, created and disseminated knowledge, series of Briefing Notes focusing on technical, and provided assistance in cities' action plans. 26 Energy Sector Management Assistance Programme Box 3.6 Going Unleaded in Vietnam On July 1, 2001, Vietnam switched to unleaded gasoline (ULG), thereby reducing the health risk to its citizens by removing a major source of lead pollution in the environment. Vietnam was able to achieve an overnight switch through a combination of factors, including the commitment and leadership of key government agencies and officials. Initial attempts to eliminate leaded gasoline (LG) in Vietnam began with the passage of transport-related environmental regulations in 1995. However, implementation was delayed due to concerns regarding the cost of the switch, and over fears that without significant modifications, many vehicles in Vietnam would be unable to operate on ULG. The ESMAP project helped move the unleaded gasoline agenda forward in Vietnam by providing decision makers with information and a forum for discussion. A "South-South" dialogue held in December 1999 in Hanoi between neighboring countries and Vietnamese stakeholders proved effective in overcoming many of the concerns and misperceptions that officials and citizens in Vietnam had about moving to ULG. By the end of the three-day dialogue, key Vietnamese officials indicated that the new information obtained at the workshop would allow the country to eliminate leaded gasoline much sooner than their original target of 2005. Following the workshop, a partnership of international donors, the government, and the business sector was established to help prepare Vietnam for the switch to unleaded gasoline, including: consensus building among concerned stakeholders in the country; an evaluation of Vietnam's vehicle fleet and of what measures, if any, would need to be taken for older vehicles; an estimation of the financial costs of switching to ULG; and the launching of a public education and awareness program on the benefits and process of switching to ULG. In October 2000, the Prime Minister's office announced that Vietnam would switch to ULG nationwide beginning on July 1, 2001. The Vietnamese experience is noteworthy because while numerous countries have eliminated LG over the past 10 years, few have moved as decisively and as rapidly as Vietnam. Vietnam was well placed to eliminate LG quickly because of the country's lack of significant involvement in petroleum refining and the availability of high-quality ULG on international markets at prices comparable to those of LG. However, the government had to overcome widespread and strongly held perceptions that ULG would harm older vehicles in Vietnam. Vietnam deserves high praise for switching to ULG quickly, and serves as a positive example to other countries on how to eliminate the health and environmental hazards of LG. Contributed by Todd Johnson from "An Overnight Success: Vietnam's Switch to Unleaded Gasoline," ESMAP Report 257/02, August 2002. Energy Efficiency ficiency is a highly cost-effective measure and offers significant opportunities to reduce both In many developing countries, numerous op- urban air pollution and greenhouse gas emis- portunities exist to improve energy efficiency sions. In the meantime, improving energy ef- by 10 to 30 percent (or more) using low-cost, ficiency also contributes to poverty reduction. commercial technologies with a short payback Providing efficient heating services to the urban period on the investment. Promoting energy ef- poor and benefiting the urban poor with the eco- Annual Report 2002 27 Box 3.7 The Clean Air Initiative in Sub-Saharan African Cities The Clean Air Initiative in Sub-Saharan Africa (CAI-SSA) was launched in 1998 as a response to deteriorating air quality in the region, where rapid urbanization has changed the landscape of cities and generated increased traffic, with detrimental effects on the environment and human health. The Initiative focuses on the large cities of Sub-Saharan Africa that have experienced sustained high levels of urban growth over the last decades, accompanied by increased motorization, use of old vehicles, low-quality fuels, and few investments in traffic management. Its overall objective is to reduce urban air pollution and improve the quality of life in African cities, with the phase out of leaded gasoline as a first step toward reaching that goal. The Clean Air Initiative in SSA is designed to accomplish the following: · Raise stakeholder awareness of the dangers of urban air pollution, especially for those at highest risk--children and their mothers, street vendors, and pedestrian commuters--and the implications of vehicle and fuel choices; · Evaluate baseline vehicle emissions measures, air quality, pollution exposure, and pollution effects, and monitor change over time; · Identify the most cost-effective and enforceable measures targeting changes in vehicles, fuels, and traffic management; · Design and monitor the impact of Air Quality Action Plans, including clear, measurable, and enforceable goals for reducing pollutants; · Strengthen local expertise on air pollution and help develop a network of professionals in the field. The CIA-SSA Initiative is part of the World Bank Clean Air Initiative; it is managed by the Bank's Africa Region, and is supported by ESMAP, the Belgium Cooperation, and the Trust Fund for Environmentally and Socially Sustainable Development (TFESSD. It operates in close partnership with African authorities, UNEP, WHO, bilateral environmental agencies, IPEICA, and representatives of the automobile industry. nomic benefits from the energy savings, are only oping heating strategies for low-income coun- two examples in the ESMAP Energy Efficiency tries in Eastern Europe, and recently in China; 2) Portfolio, as described below, to demonstrate reducing energy costs in water utilities in Central the linkage between energy, environment, and Asia, Brazil, and China; 3) developing innova- poverty reduction. In addition, energy efficiency tive financing mechanisms in Romania; 4) dis- technologies can also bring local sustainable seminating knowledge through South-South development benefits, such as reduced need for cross-exchange of experience and lessons; and new power plants and increased product com- 5) engaging the private sector in the industrial petitiveness in the market. park in Morocco. In 2002, ESMAP supported improving energy ef- Developing Heating Strategies for Low-Income ficiency focused on five critical areas: 1) devel- Countries. Heating is a vital energy service in 28 Energy Sector Management Assistance Programme The Clean Air Initiative in Sub-Saharan African Cities (continued) Since its inception, the Clean Air Initiative has implemented case studies on air pollution in various cities (Dakar, Senegal; Ouagadougou, Burkina Faso; Cotonou, Benin; Abidjan, Cote d'Ivoire; and Douala, Cameroon). It has organized regional and national seminars as well as training sessions on air quality management; sponsored the preparation of national action plans to mitigate urban air pollution; produced a number of publications and videos; and helped create a regional network of air pollution experts, Africaclean, now operating throughout sub-Saharan Africa. The phase out of leaded gasoline has become the top priority of the Initiative. In June 2001 the Clean Air Initiative organized a pan-African regional conference in Dakar, Senegal, where 25 countries signed a declaration setting the date of 2005 for the complete elimination of lead from gasoline in SSA. Since then, the Initiative has sponsored and monitored the phase-out process through five sub-regional working groups, focusing on the preparation and implementation of detailed action plans to speed up the process. A specific Initiative, also supported by ESMAP, focuses on the lead phase out in oil-importing countries. More information on the Clean Air Initiative in Sub-Saharan Africa, including the progress report for the period 1998-2002, can be found on the Initiative's Website (www.worldbank.org. cleanair/caiafrica) or on the Initiative's CD-ROM. Contributed by Chantal Reliquet. the countries of Central and Eastern Europe and plans for urban heating--Development of Heat the Former Soviet Union, and an essential com- Strategies for Urban Areas of Low-Income Tran- ponent of national poverty reduction strategies. sition Economies. Following the methodology However, the heating systems in most of these developed in the ESMAP comprehensive report countries are highly inefficient, many house- Increasing the Efficiency of Heating Systems in holds receive inadequate heating services, and Central and Eastern Europe and the Former So- in several poor transition countries low-income viet Union, this project is one of the first efforts households lack access to clean and affordable to apply the balanced approach between district heating. heating and decentralized heating alternatives, and it developed tools to compare heating al- In many countries poor urban households con- ternatives. This project enjoyed strong support sume less heat and have lower heat expenditures from the Government of Armenia, and it is be- than usually associated with a district heating ing followed up by several projects supported system. Even though district heating systems can by various donors including the World Bank be the most cost-effective heating mode given Group, USAID, and UNDP-GEF. The lessons a high heat load, their high fixed costs make learned from this project are that: 1) it is critical them potentially very expensive for consumers to conduct demand surveys of household income demanding less heat. To investigate sustainable levels and ability to pay, to provide consum- and affordable provision of heat in those cir- ers with heating systems that are flexible (that cumstances, ESMAP supported a project in the is, controllable and metered) to enable them to Kyrgyz Republic and Armenia that developed choose the level of heat consumption and ex- comprehensive and phased strategies and action penditure in accordance with household income; Annual Report 2002 29 Box 3.8 South Asia Urban Air Quality Management Ambient concentrations of fine particles in a number of South Asian cities rank among the highest in the world. Fine particulate pollution in turn has been shown to be extremely damaging to health, being linked strongly to premature death and serious illnesses. To address the social and economic costs of outdoor air pollution, the South Asia Urban Air Quality Management program aims to reverse the deteriorating trend in urban air by supporting the region-wide process of developing and adopting cost-effective and viable policies and efficient enforcement mechanisms. Fostering debate and exchanging information and lessons learned have been two of the principal components of this program. To this end, a website with an on-line discussion forum has been set up and a series of briefing notes widely circulated. The briefing notes are intended for policymakers, NGOs, professionals in urban air quality management, researchers, and other affected stakeholders, and cover topics ranging from how to assess the health impact of air pollution to urban planning and fuel adulteration. The notes have been featured in the media not only in South Asia but also in Australia, and solicited responses from policymakers in regions as far away as South America. A few targeted studies have been commissioned, and the results are made immediately available on the website and summaries have been published in briefing notes. One lesson that emerges is that engaging a diverse group of stakeholders with different and sometimes even incompatible objectives is very much necessary if sensible policy formulation is to prevail. At the same time, this type of engagement requires an enormous amount of sustained effort, and its impact can be assessed only in the long run. Transport is one of the major sources of ultra-fine particulate emissions, particles considered most damaging to public health. For this reason, this program has focused especially on vehicle emissions, and more specifically on in-use vehicles among which gross polluters are found. The systems for identifying polluting vehicles and requiring them to be repaired in South Asia have been assessed in light of international experience. These lessons are being incorporated in the World Bank's urban transport projects in the region. Contributed by Masami Kojima. and 2) public support should be given to enable Reducing Energy Costs in Water Utilities. ES- more providers of heating services to enter the MAP is supporting energy conservation projects market under less restrictive rules. This innova- in water utilities in Brazil, Central Asia, and Chi- tive approach is also being applied in another na. Energy costs account for a substantial portion ESMAP project in Lithuania, where in addition, of the operating cost in water utilities--50 to 70 new technological options will be explored. The percent in Central Asia, 40 to 60 percent in China, collective experience of heating sector reform in and up to 40 percent in Brazil. Improving energy Central and Eastern Europe informed the design efficiency in water utilities offers significant po- of a recently launched ESMAP project on heat- tential for energy savings, up to 40 percent in ing pricing policy reform in China. Central Asia and China and 25 percent in Brazil. 30 Energy Sector Management Assistance Programme Box 3.9 Air Pollution and Acid Rain Control in China Sulfur emissions from China's huge coal consumption have resulted in acid rain and high ambient concentrations of sulfur dioxide (SO2), a large contributor to fine particulates in Chinese cities. Sulfur emissions have raised concerns among scientists, government leaders, and the public over damage to agricultural production and impacts to human health. Recognizing the threat of current and projected future sulfur emissions, in late 1998 the Chinese government passed far-reaching legislation to control sulfur emissions from power plants, industry, and other emitters in Two Control Zones (TCZ): 1) the SO2 control region, comprising large coal consuming metropolitan areas in the North; and 2) the acid rain control region, comprising a wide area of the country south of the Yangtze River. Municipalities in China will be largely responsible for implementing sulfur control measures under the TCZ legislation. By simply focusing on reducing sulfur emissions, important questions were: 1) to what extent would control measures help to reduce ambient sulfur concentrations in the cities and the incidence of acid rain; and 2) what are the relative costs of different control measures. With these questions in mind, the World Bank Group, with the support of ESMAP, initiated a project in 1999 to assist two municipalities in China in assessing the environmental benefits and costs of various sulfur emission control options. In collaboration with the State Environmental Protection Agency, a series of training programs were organized between June 2000 and December 2001 to provide local environmental bureaus from Shijiazhuang in Hebei Province and Greater Changsha in Hunan Province with the analytic tools to evaluate the impact of sulfur emissions and the effectiveness of their sulfur control proposals. The main conclusions from the project are the following: · Shijiazhuang. The analysis indicates that planned sulfur control measures would fall short of allowing the city to meet ambient pollution standards as required under the TCZ policy. However, additional emission reductions sufficient to ensure compliance could be gained most cost-effectively by the use of additional low-sulfur coal from neighboring Shanxi Province. · Greater Changsha (including Xiangtan and Zhuzhou). The analysis shows that while the planned sulfur control measures would allow Greater Changsha to meet national sulfur emissions goals, environmental costs from acid rain in Hunan would still be significant. In addition, sulfur control targets are threatened over the short-term by social and economic constraints of shutting down local high-sulfur coal-producing mines, and over the medium term by the construction of new coal-fired power plant capacity in Greater Changsha. Aside from providing the cities with new analytical tools for assessing sulfur emissions, the results of the two case studies will be of value to the State Environmental Protection Agency as it continues to evaluate and revise national sulfur control measures Contributed by Sarath Guttikunda and Todd Johnson. ESMAP report 267/03. Annual Report 2002 31 Applying Energy Efficiency Measures To Improve Commercial Viability of Box 3.10 Water Supply Concessions in Small and Medium Sized Municipalities of Brazil Due to decentralization of federal and state government structures and regulatory processes, municipalities in Brazil--where over 85 percent of the existing 5,500 municipalities are classified as small municipalities because they have populations of 100,000 or less--are increasingly taking over responsibility to close the "access" gap in the provision of utility services by promoting, among other things, a greater degree of private sector participation through concession arrangements. In response to those reforms, a Brazilian association of private water supply utilities (ABCON) has been formed to actively engage small and medium sized municipalities in public-private partnerships. Under an ESMAP activity Brazil Energy Efficiency in Small and Medium Water Supply Operations, three ABCON members (Agua do Imperador, NOVACON, and SANEATINS) have been receiving technical assistance over the past year, to determine, how they can apply energy monitoring and targeting (M&T) methodology to reduce operating losses. Reducing operating losses will bring the costs of water supply below the ability to pay of local consumers in small and medium sized municipalities in Rio de Janeiro State (Petropolis), Sao Paulo State, and Tocantins State (Palmas, Porto Nacional, Paraiso). At their request, ESMAP is assisting designated teams in each of the three ABCON members to become proficient in the use of M&T methodology as a means to overcome specific barriers, such as the lack of managerial know-how to improve system efficiency, and the lack of technical capacity to collect, analyze and utilize the relevant supply-side and/or demand-side data to achieve energy efficiency improvements. The results to date have been very promising for each ABCON member, especially for the municipality of Petropolis. Specifically by strategically deploying additional water and electricity metering systems under a system-wide M&T set-up, and implementing low-cost measures --resizing pumps, power factor correction--Agua do Imperador is reducing annual electricity expenditure by about 15 percent. Moreover, the private concessionaire is exploiting operational synergy between existing water and energy acquisition systems--in particular the installation of micro-hydropower turbines in the existing water intake structures--to self-produce 30 percent of electricity requirements. Overall, the ESMAP activity has so far established a firm basis for the private water supply concessionaire to reduce its annual electricity expenditure for operations in Petropolis from R$1.125 million to about R$0.500 million. The projected life-cycle investment to put the efficiency improvements in place would be on the order of R$2.2 million; hence the expected payback period would be about three years. Contributed by Amarquaye Armar. ESMAP report 265/03. In Brazil, ESMAP supported the Energy Efficien- through this project, including installation of cy in Medium and Small Water Supply Utilities micro-hydro turbines at water intake points. in Brazil Project (see Box 3.10). As a follow-up, Working with the SEBRAE-RJ/GTZ Project and one private concessionaire is planning to invest local financial institutions, ABCON intends to set in the energy saving measures recommended up a sustainable dissemination mechanism that 32 Energy Sector Management Assistance Programme can provide outreach to enable other municipal cific targets for reduction of energy consumption water utilities to replicate this approach. In ad- as part of a set of performance criteria that the dition, they plan to collaborate with PREPAS- private operator will need to achieve in order to SIST, a pre-investment facility, managed by the receive a bonus payment. This project has been Fiorello LaGuardia Foundation, for Sustainable viewed with great interest by other countries in Small-Scale Infrastructure, to develop "bank- the region for replication of this approach given able" proposals for presentation to international the very similar challenges faced by urban water sources of financing, including the Community utilities in FSU countries. Development Carbon Fund. One important lesson learned was that the key barriers to improving Engaging Private Sector in Industrial Park in energy efficiency in water utilities are the lack of Morocco. In many developing countries, the managerial know-how and technical capacity to industrial sector contributes to a major share improve system efficiency. This project overcame of energy consumption in the economy, and these barriers by using local consultants--who there exist many opportunities for significant previously had received training under the earlier energy savings. An innovative ESMAP activity ESMAP Monitoring and Targeting (M&T) proj- to improve energy efficiency in the industrial ect in Brazil--to extensively transfer know-how sector is the Global Efficiency in Sidi Bernoussi in M&T methodology to the ABCON members. Industrial & Peri-Urban Area in Morocco Project. The second lesson was that the analysis of water This project aims to increase energy and water loss minimization and energy efficiency options efficiency in the industrial park of Sidi Bernoussi should be conducted at the same time. in Casablanca, which consists of about 700 in- dustrial enterprises, and that also contributes a The Energy Efficiency in Urban Water Utili- portion of the economic benefits from the en- ties in Central Asia Project conducted a rapid ergy and water costs savings to an Environment technical and economic assessment of potential and Social Fund (see Box 3.11). This project has energy efficiency gains in investment projects conducted three pilot activities, and is planning of public water utilities in Uzbekistan. The com- a workshop to disseminate this approach to other mon assumption of water utilities of the former countries in the region. As a follow-up, a GEF Soviet Union was that all pumps were highly Medium Sized project of US$750,000 leveraged inefficient and that their replacement was an US$800,000 from FFEM of France and approxi- obvious investment. The study found that this is mately US$10 million from commercial banks to not the most cost-effective approach. First, there scale up the approach demonstrated through the is great variability in the energy efficiency of ESMAP activity from pilot phase into a full proj- individual pumps. Second, some simple low-cost ect dealing with the whole industrial zone. This technologies can save up to 20 percent of en- project established a direct and clear linkage be- ergy with small investments that do not require tween energy, environment, water, and poverty replacement of the pumps. Third, the extremely reduction, and has wide replication potential in high water leakage levels measured in the water the region. distribution network indicate that the sizing of any pump to be replaced should be carefully Developing an Innovative Energy Efficiency chosen to avoid over-sizing. (A joint water loss Financing Mechanism in Romania. Even though and energy efficiency approach is recommended many energy efficiency projects have substantial to bring the two perspectives into a single study). environmental benefits with sound financial re- The project also provided training to local staff turns, this potential is not always being realized. in water utilities. The results of the study are Availability of commercial financing is usually finding immediate applications in a management a major barrier inhibiting mainstreaming of en- contract with the private sector that includes spe- ergy efficiency investments. The main financing Annual Report 2002 33 Box 3.11 Improving Energy Efficiency in the Industrial Zone in Morocco The industrial zone of Sidi Bernoussi Zenata in Casablanca is one of the oldest and largest in Morocco, comprising some 700 industrial units. The area has a number of infrastructure problems ranging from poor road quality, inadequate sewage systems, nonexistent (or nearly so) garbage collection, and inappropriate street lighting, to the coexistence of over 1000 households located in 10 slums huddled between the walls of industrial units. Realizing the extent of the problems at hand and the insufficiency of initiatives taken by public authorities, the industrialists of the zone got together to create an association, IZDIHAR (Association des Opérateurs Economiques de la Zone Industrielle de Sidi Bernoussi Zenata). IZDIHAR acts both as a lobbying agent with local and national public authorities and as the focal point for projects mobilized through international financing. They realized that improving the efficiency of water and energy consumption is consistent with the objectives of improved competitiveness. The key characteristics of this ESMAP initiative included the following: · Working through the association of industrialists as a whole, an energy and water efficiency services "market" can be developed, achieving economies of scale; · The industrialists interested in benefiting from improved water and energy efficiency benefit from a "quality control" through IZDIHAR which qualifies the consultancy and service companies; and · A proportion of the energy savings are paid back to a special account for environmental and social activities managed by IZDIHAR. The project has completed the analysis on potential efficiency gains and on the interest of slum dwellers for a relocation plan. The estimated savings potential of water, electricity, and fuel is 18 percent, 7 percent, and 30 percent, respectively, with a simple payback period ranging from 10 to 20 months. A social impact assessment survey was undertaken covering some 800 households, and concluded there was an overall interest by slum dwellers for an improved housing plan. The pilot phase under implementation proposed an investment plan of three industrial units, and one of the 10 slums of the zone is being targeted for a priority improved housing plan. Contributed by Anjali Shanker, IED (Innovation Energy Development). barriers include high transaction costs and high and lessons learned from previous energy ef- perceived risks associated with energy efficiency ficiency activities in Romania; worldwide ex- investment, and a lack of expertise in identify- perience with energy efficiency funds, such as ing and developing commercially viable energy in China, Hungary, and India; and other inter- efficiency investment projects. national experiences with financing of energy efficiency and environmental investments. The ESMAP supported an upstream activity to iden- important lessons learned from this review are: tify the barriers to energy efficiency investments 1) the financing institution needs to be very pro- in Romania and aid in the design of a market- active in the development of a project pipeline; based energy efficiency financing mechanism. 2) energy efficiency financing should use exist- This project extensively reviewed experiences ing market players where possible; and 3) energy 34 Energy Sector Management Assistance Programme efficiency financing mechanisms should initially and India. The project seeks to achieve major in- focus on projects with high rates of return to creases in energy efficiency investments by the quickly demonstrate the benefits of these invest- domestic financial sectors in Brazil, China and ments to other market players and encourage India. The important lessons learned from this them to participate in market-based energy effi- project are: 1) it is critical to carefully choose the ciency schemes. This ESMAP upstream work has topics and design the discussion questions well led to the design and establishment of the Roma- for an effective exchange; and 2) participation nian Energy Efficiency Fund (FREE), which was from international consultants and Bank staff initially capitalized through the US$10 million should be limited. GEF Energy Efficiency Project in Romania. FREE combines project development and a financing DEVELOPING SUSTAINABLE facility that provides primarily debt financing to ENERGY MARKETS medium-sized energy efficiency projects within restructured/private industries. Throughout the 1990s, ESMAP supported training, knowledge generation, and technical assistance Disseminating Knowledge Through South- on the reform of electricity and hydrocarbon mar- South Cross-Exchange of Energy Efficiency kets. This included the following activities: Programs. There exists a wealth of knowledge and best practices of energy efficiency programs · Supporting the corporatization of state-owned in developing countries. ESMAP supported a utilities (power in Ghana and Cambodia, oil project to facilitate "South-South" energy ef- and gas in Vietnam); ficiency practitioner networks and exchanges of · Developing designs for restructured markets information and best practices for implementing (power in Bolivia and China); programs. This project held five well-targeted · Strengthening the contractual and regulatory and designed workshops on: frameworks (oil and gas in Vietnam, power in Poland); · Energy Service Companies (ESCOs); · Building understanding on sector restructuring · District Heating; (power in Bangladesh, Slovenia, South Africa, · Energy Efficiency Funds; and Uganda); · Operating Utility Demand Side Management · Learning the lessons of reform experiences (the (DSM) Programs in a Restructuring Electricity UK power pool and power distribution conces- Sector; and sions); and · Developing Financial Intermediation Mecha- · Taking stock of the progress on reform (the nisms for Energy Efficiency Projects--Focusing global scorecard on energy sector reform). on Commercial Banking Windows. ESMAP's Business Plan 2002-2004 underscored The project increased knowledge and capacity that the development of sustainable energy of practitioners from developing countries as markets is far from complete and, therefore, well as of Bank staff. The workshops provided ESMAP's support to the development of energy support and key inputs to World Bank-GEF op- markets should continue in two strands. First, eration projects in Brazil, China, India, Romania, continued knowledge dissemination must occur, The Baltic States, Poland, Thailand, Uruguay, capitalizing on the significant global knowledge and Vietnam. As a result, a follow-on activity pool that exists to help policymakers make in- is now under implementation with support from formed decisions about basic sector reform and ESMAP and the United Nations Foundation-- market structure issues. Second, knowledge must Developing Financial Intermediation Mechanisms continue to be developed by engaging in work for Energy Efficiency Projects in Brazil, China on the next generation of reform issues. The Annual Report 2002 35 2002-2004 Plan includes three new business numbers represented 22 percent of all IPCTs lines focused on issues that are at the cutting territory and the area under exploration in in- edge of sustainable energy market development: digenous territories represented 28 percent of all the country's concessions. For half of these 20 · The mitigation of environmental and social IPCTs, concessions covered more than 95 percent impacts of hydrocarbon development; of their geographical area. · Governance and revenue management; and · Gauging the impact of sector reform on the The exploration and development projects across poor. the region have led to the mobilization of indig- enous peoples in each of the Andean countries, All three business lines have the overall objec- with active support from international environ- tive of making formal energy markets benefit mental groups. The indigenous organizations the poor. This section presents work supported have become aware of their minority rights rec- by ESMAP under each of these business lines ognized in International Legal Conventions, such during 2002. as the ILO Convention 169, ratified in local laws. The resulting conflicts have moved governments Benefiting the Poor to introduce improved social-environmental from Hydrocarbon Revenues regulations that require consultations with the affected indigenous peoples. As these conflicts The objective of this business line is to equip have caused delays in project closure and imple- the indigenous peoples of the Andean region to mentation and driven project development costs become more effective stakeholders in the nego- up, the oil and gas industry has become more tiation of oil and gas development operations so sensitive to the need to work with indigenous they can gain their share of the rents generated peoples' concerns. by extraction and production of oil and gas. The governance and revenue management business An underlying impediment to the resolution of line has begun to build awareness. these conflicts was the lack of capacity among these players to appreciate each other's posi- Mitigating the impact of hydrocarbon opera- tions. The indigenous peoples' representatives tions on indigenous peoples in the Andean re- did not understand the hydrocarbon business. gion. Hydrocarbon development in Latin Ameri- ca and the Caribbean has grown substantially in the 1990s. According to the Organización Lati- noamericana de Energía (OLADE) the region's oil production rose by 32 percent from 1991 to 2000 and gas production rose 50 percent in this period. Since the early 1990s, oil and gas exploration in the Andean region has gradually entered envi- ronmentally sensitive and culturally vulnerable areas of the Amazon and Orinoco watersheds, which are mainly populated by the indigenous peoples of the region. For example, in Bolivia, by 2000, twenty IPCTs (Indigenous Peoples' Indigenous peoples' representatives receiving field train- Communal Territories under Bolivian law) were ing during a visit to gas processing operations near Santa affected by 32 exploration ventures. These Cruz, Bolivia. 36 Energy Sector Management Assistance Programme The oil and gas companies did not have a com- try, and indigenous peoples) to identify socially prehensive appreciation for the socioeconomic, adequate and enforceable regulations. cultural, and environmental impact of resource exploration-exploitation on the indigenous · ESMAP's unique role as an honest broker peoples despite their resolve to develop the com- able to support activities at the regional level munity trust, social transparency, and a new ap- allowed for a wider, non-confrontational proach to corporate responsibilities. dialogue. The stakeholders expressed strong commitment to building capacity among the In view of the rising tensions in each country in indigenous peoples of the region. This work- the Andean region, and the commonality of prob- shop was followed by a work plan of activities lems, it was clear that a regional approach would across the region. Among these activities are: be most instrumental to building communication · The strengthening of tripartite dialogues in and understanding above the politics surround- the participating countries with the purpose of ing specific projects. The parties understood that achieving better communication between the much was at stake and that there was room for most important parties, facilitating the search developing a dialogue that could lead to consen- for better regulations, and, if necessary, offer- sus on the basic principles under which industry ing solutions to conflicts. operations should or should not proceed. · The development of an information network --supported by the Andean Corporation for ESMAP's contribution. In 1997, ESMAP--with Development and OLADE--which has created Canadian funding--supported the efforts of the a website (http://www.OLADE.org.ec/redeap) World Bank to team with OLADE in the establish- with the goal of providing all those interested ment of a program entitled Energy, Population, with easy access to relevant information. and Environment. The program was designed · The preparation of reference documents that would permit the improvement of the regulatory to support a broad initiative of communication framework of industry operations in the Ama- and information exchange among 11 countries zon Basin under common criteria. This activity of the region, with a focus on the sub-Andean has been executed with financial support from region. The goal was to begin a dialogue among the program of Canadian cooperation to the the region's players and help develop a com- Regional Association of Petroleum Enterprises mon approach to environmentally and socially (ARPEL), now an active member of the Energy, acceptable industry operations. The activity Population and Environment program. was launched on the basis of the recommenda- · A training program that seeks to improve the tions of a comparative analysis of the existing environmental and social standards, and the ba- legal, institutional, contractual, and regulatory sis of dialogue between the parties. This activity frameworks of the participating countries.7 This is being carried out in five countries --Bolivia, analysis became the basis for two 11-country Colombia, Ecuador, Peru, and Venezuela --with workshops in 1998 in Quito, Ecuador, attended the support of Capacity Building International, by representatives of each government. This a German development organization. comparative study and workshop was considered · A comparative study of the distribution of rents the first phase of the initiative to facilitate the from oil operations destined for the development adoption of a long-term program by the govern- of regions where the industry is active, and in ments. The second phase was intended to involve particular, the areas where indigenous peoples tri-partite consultations between all stakeholders live and are directly affected by the operations. 8 (that is, representatives of governments, indus- 8 See ESMAP Technical Paper 020/03. 7 9 This work is documented in ESMAP's Report 217/99, Environmental and Social Regulation Documented in ESMAP Report 244/01. Oil Industry Training for Indigenous People: The of Oil & Gas Operations in Sensitive Areas of the Sub-Andean Basin. Bolivian Experience. Annual Report 2002 37 Milestones in 2002. ESMAP's efforts in both Bolivia and Ecuador reached important mile- stones in 2002. In Bolivia, CIDOB established its Technical Unit for Hydrocarbons dedicated to sustained engagement with the hydrocarbon sector. In Ecuador, CONFENIAE, the umbrella organization for indigenous peoples, has re- quested further ESMAP support to establish its own technical unit for hydrocarbons after the initial training. At the last tripartite meeting (Iquitos, Peru, November 2002), the representatives of three key stakeholder groups agreed to continue the Energy, Population, and Environment program The importance of training. Training of indige- focusing on improving the information systems, nous peoples rapidly became a major concern to obtaining more detailed information on the dis- improve the quality of the regional and national tribution of rents, disseminating Reference Doc- tri-partite dialogue and to facilitate the projects uments to improve the regulatory frameworks consultation and participation arrangements. At and developing capacity for a more participatory the regional level, COICA (Coordinadora de Or- approach to environmental monitoring. ESMAP ganizaciones Indígenas de la Cuenca Amazónica) has pledged its support to this new phase of the has entered into a specific agreement with Ca- EPE in which dialogue starts to evolve toward pacity Building International to obtain financial concrete recommendations and practical appli- and human resources to build additional capac- cations to industry projects. ity to continue the dialogues. Although industry knowledge is still limited, the At the national level, the governments of Co- first program for Ecuador indigenous peoples lombia and Peru have financed the training of has shown very positive results. In particular, indigenous peoples' representatives using their CONFENIAE (Confederation for the Indigenous own funds. In 1999, the government of Bolivia Peoples of the Amazon) has provided significant and the Confederation of Indigenous Peoples input to the preparation of the recently approved of Bolivia (CIDOB) requested ESMAP support Regulation for consultation. It has also created for conducting training courses for indigenous its own company, Amazonia Gas, for entering in peoples' representatives. In Bolivia, representa- commercial ventures for processing associated tives were trained to become trainers who can flared gas, and is requesting a second training then transmit the knowledge to other members program aiming at developing a technical advi- of the indigenous communities.9 In Bolivia, the sory team on hydrocarbons. training of indigenous peoples is completing a second phase aimed at strengthening CIDOB's The experience gained using ESMAP's continu- capacity to understand the industry and partici- ous support to multi-stakeholder and multicul- pate in small-scale gas developments. This expe- tural initiatives could be replicated in other re- rience became a model for similar ESMAP work gions where extractive industries are confronted in Ecuador, begun in late 2000.10 with the interest of local communities and where clarity and understanding are essential to reach 10 See ESMAP Technical Paper 025/02. common sustainable development goals. Con- 38 Energy Sector Management Assistance Programme tacts have already been established to assess ments. For example, the Extractive Industries how to transfer the positive experience from Review, which is initiated by the World Bank Latin America to Nigeria, in particular to the Ni- Group and involves wide-ranging stakeholder ger delta where the development of hydrocarbon consultations on what the World Bank Group's resources is confronted with major conflicts. role in the oil, gas, and mining sectors should be, among other issues looks into what it takes Improving Governance and Revenue to achieve good governance in these sectors. Management in the Hydrocarbon Sector The Soros Publish What You Pay Campaign and the Extractive Industries Transparency Initiative Revenues generated by oil and gas production by Tony Blair are multi-stakeholder programs represent a substantial share of GDP, budget, designed to increase revenue transparency--a and foreign exchange earnings in many petro- prerequisite to good management and account- leum and gas producing developing countries. ability. The UN-Business Global Compact seeks This wealth presents both an opportunity for to uphold a set of core values in the areas of development and a challenge of governance. human rights, labor standards and the environ- Unfortunately, evidence to date suggests that the ment, including transparency. The International opportunity has been overshadowed by the chal- Peace Academy Project addresses linkages be- lenge in developing countries. tween resource revenue mismanagement and violent conflict. And the New Economic Partner- To take an example, Nigeria's GDP for 2002 ship for Africa (NEPAD) is preparing to launch a was approximately US$41 billion, no less than continent-wide campaign for improved resource 40 percent of which (some US$17 billion) came revenue management. from oil exports.11 During 2002, petroleum exports accounted for 90 percent of its total The World Bank Group has taken a lead position export revenues. In the last 25 years, oil rents in the campaign to improve oil revenue manage- generated in Nigeria are estimated at US$300 ment in the developing world, and is well placed billion. Petroleum revenues on this scale pres- to play this role. The Bank's response has been ent an enormous potential for positive impact wide-ranging, comprising external partnerships on development. Yet gross national income and consultations, global and regional initia- per capita for many in Nigeria remains at 80 tives, country- and project-specific programs cents of a dollar a day, infant mortality stands and, through the IFC, corporate social responsi- at nearly 80 deaths per 1000 births, and female bility initiatives. adult illiteracy is greater than 53 percent. Only 10 percent of rural households and approxi- ESMAP's Contribution. Under its Business Plan mately 40 percent of Nigeria's total population 2002-2004, ESMAP has committed to address have access to electricity. this issue with the development of a global knowledge base that can become the foundation Growing Interest. The growing number of inter- for sustained awareness building to persuade national initiatives and partnerships advocating countries to improve their revenue management better governance and transparency in the petro- policies. This strategy leverages ESMAP's global leum sector represents an increasing awareness knowledge generation mandate as well as its role of this paradox among civil society, oil company in providing operational tools for policy formu- investors, development agencies, and govern- lation and implementation. A two-day international stakeholder workshop 11 Nigeria Country Analysis Brief, Energy Information Administration, Department of Energy, United States government (www.eia.doe.gov/emeu/cabs/nigeria.html), April 2003. (see box 3.12) in October 2002 in Washington, Annual Report 2002 39 Box 3.12 Making Petroleum Revenue Work for the Poor Transparency and good governance dominate discussion on petroleum revenue management. The link between oil revenues and governance was taken up at a two- day workshop convened at the World Bank Group's headquarters in Washington, D.C. co-sponsored by the Oil, Gas, Mining and Chemicals Department and the Energy Sector Management Assistance Programme (ESMAP). The 150 participants came from governments, major oil corporations, nongovernmental organizations, and From left to right: Bennett Freemann, Former Deputy Assistant Secretary of State for Democracy, multilateral organizations to debate the merits of existing Human Rights and Labor in the US Government; and proposed methods of revenue collection, management Alan Detheridge, Vice President International Affairs at Shell; by Ezekwesili, Senior Advisor to and distribution. President Obasanjo of Nigeria. "Proper management of petroleum revenues depends on a number of factors, including institutional capacity and more importantly, the quality of governance. Where governance is poor, there is little chance that sound policies will be implemented," said Peter Woicke, Managing Director of the World Bank Group and Executive Vice President of the International Finance Corporation (IFC). Much of the discussion on revenue collection focused on the importance of transparency. Karin Lissakers, Senior Advisor to George Soros, underscored the importance of disclosure in her keynote address in presenting Publish What You Pay, a transparency initiative led by the Open Society Institute and Global Witness that targets disclosure for natural resource companies in G8 countries. Yet full disclosure by companies is not sufficient. Representatives of the governments of Angola and Nigeria and of NGOs noted that weak institutional capacity precludes host countries from using information effectively regardless of how complete and accessible it may be. Even assuming capacity is built, participants agreed that there is a need to simplify tax arrangements. On revenue distribution, past experience has revealed that, "the government's take is not necessarily the public's take," said Arvind Ganesan, Senior Researcher at Human Rights Watch. "It may just be the government's take." "It is not just pressure from NGOs, NEPAD, the UK government. It is the communities themselves, among whom we operate," said Alan Detheridge, Vice President, International Affairs of Shell International. But reform, including the active engagement of civil society, must be in line with political realities, said Oby Ezekwesili, Senior Advisor to the President of Nigeria. "The shift from an environment of no transparency to transparency involves a tremendous cost." Rashad Kaldany, Director of the Bank's Oil, Gas, Mining and Chemicals Department, called for a holistic approach to revenue management and reiterated the importance of transparency and simplifying accounts. Kaldany noted that this workshop would serve as a model for similar workshops in developing countries and countries in transition. 40 Energy Sector Management Assistance Programme DC, kicked off ESMAP's work in this area. With society and to assist in poverty reduction. Most 150 participants from governments, major oil studies, including those supported by ESMAP, on corporations, nongovernmental organizations, the impact of energy sector reform have focused and multilateral organizations, the workshop fo- on the overall performance of the sector (reduced cused on three broad issues: revenue collection, electricity tariffs or fuel prices, increased total management (for example, of oil funds), and number of connections to the grid, and so on), distribution. The workshop emphasized the core not on the direct impact on the poor. elements of good governance--transparency, accountability, inclusion, and adequate institu- A review of the available literature on the impact tional capacity--as critical to success in meeting of power sector reform on the poor commissioned these challenges. A position paper that outlines by ESMAP in 200012 found that the knowledge the main issues was prepared for the conference. available is diffuse and the required data is lim- This paper is to be published by ESMAP with an ited to a handful of countries. It also found that annotated bibliography of readings on the topic, while reform opponents usually focus on the as well as the presentations and speeches made most directly visible impacts of reform--electric- at the conference. ity price changes--there is less understanding of the indirect impacts of reform such as the The governments of Angola and Nigeria have changes in the role of energy in development shown great interest in improving their national and the issues raised by energy subsidies. The petroleum revenue management regimes. During review strongly recommended that more knowl- 2003, ESMAP will support national workshops in edge be accumulated about this important topic both countries. Similar workshops are being dis- through pre- and post-reform social assessments cussed with the governments of Bolivia, Timor and evaluations of good practice. Leste, and Sudan. In addition, since little or no systematic research has been done on publicly- To fill these knowledge gaps, ESMAP is support- owned oil companies (among the most important ing a number of projects to assess the impact players on the oil revenue management scene), of sector reform on the poor. The Rural Electri- evidence on their performance is mostly piece- fication and Power Reform in Central America meal or anecdotal. Therefore, a study of national Project has examined four case studies in Cen- oil companies was also approved in ESMAP's tral America, including El Salvador, Guatemala, October 2002 Call for Proposals to heighten Nicaragua and Panama, where the sector reform stakeholder awareness of the issue by develop- started later than in South America. It aims to as- ing a credible set of data and materials that can sess rural electrification strategies and priorities be used to engage host countries proactively on for both on-grid and off-grid alternatives when the issue so that an attractive and manageable these countries undertake power sector reforms. economic and political strategy for reform of The project found that most of the countries in these companies can be developed. the region are aware that rural electrification needs to be incorporated into the power sector Impact of Sector Reform reform; however, the poor in the rural areas are on Energy Access for the Poor generally left out of the reform process due to a lack of effective implementation strategies. The liberalization and development of compe- tition benefit society as a whole in terms of a The Power Sector Reform in Africa Project is greater, more efficient, and financially sustain- intended to assess the impacts of power sector able supply of energy services. However, there has been rather little analytical work to document 12 See ESMAP Technical Paper 002/00: Impact of Power Sector Reform on the Poor: A Review of the impacts of reform on the poorer members of Issues and the Literature, July 2000. The paper includes a bibliography on the subject. Annual Report 2002 41 reforms on the poor and to design strategies of poorer households to the use of energy that to ensure integration of pro-poor measures in can be directly impacted by sector reform, and the reform process in eight African countries it uses household survey results to assess how as illustrated in box 3.13. The project is taking much impact sector reform has actually had on a pragmatic methodological approach to this these links in four reforming countries: Botswa- work given the nature of the data available on na, Ghana, Honduras, and Senegal. This project reform processes in Africa. Instead of attempting takes a more quantitative approach focused on to identify causality between reforms and im- household energy use. Household energy surveys pact through a quantitative "macro-analytical" will be conducted in an attempt to gain an in- approach, the project is taking a qualitative ap- depth understanding of how reforms in both the proach mixing interviews, existing studies, and power and hydrocarbon sectors are felt by the some data collection. poor given their patterns of energy use, and the methods of supply available to them. The Assessing the Impacts of Energy Sector Reform on the Poor Project identifies the links Box 3.13 Electricity Reform and Access in Africa Dr. Alix Clarke of the Graduate School of Business at the University of Cape Town, South Africa, spoke about how electricity reforms can contribute to poverty reduction in Africa at ESMAP's regional workshop on "Modern energy services and poverty reduction" (Addis Ababa, Ethiopia, October 2002). Dr. Clarke observed that in many African countries, access programs and power reforms are not being planned together. Although the data in this area is thin, it appears that reforms are slowing access initiatives down as subsidies are reduced and tariffs increase. The lack of coordination between reform and access programs has also meant that reforms focus mostly on mainstream activities in the formal economy to the detriment of those on the fringes of the formal economy. Despite this disconnect, electricity tariff and subsidy reforms in African countries are unlikely to impact the poorest of the poor since they do not use electricity as a source of energy (the average rate of electricity access across sub-Saharan Africa is below 10%). Dr. Clarke underscored that current reform programs in African countries have increased the ability to absorb change in the electricity sector as well as the opportunities for scaling up electricity access during reforms. Access can be increased through financing arrangements that reduce pressure on governments (as in Chile and Argentina), ring-fenced funding for increasing access (as in Ghana, South Africa, Thailand, Indonesia, and Brazil), cost-reflective tariffs and targeted nonrecurring subsidies, policy frameworks that encourage integrated and coordinated development, an institutional infrastructure to support ongoing electrification programs (as in South Africa), and an increased role for rural cooperatives and NGOs. 42 Energy Sector Management Assistance Programme Annual Report 2002 43 ESMAP KNOWLEDGE DISSEMINATION 4 ESMAP KNOWLEDGE DISSEMINATION Energy Sector Management Assistance Programme During 2002, ESMAP expanded its knowledge energy market and the strategies being adopted dissemination along two key avenues: through by market players. direct knowledge dissemination events, and through the adoption of the knowledge transac- The introduction of business lines in ESMAP's tion approach in ESMAP activities. The direct 2002-2004 plan has helped increase the focus knowledge dissemination events were held under of ESMAP's intellectual work. As these business ESMAP's seminar series for dissemination within lines began to gain momentum within the World the World Bank Group. And the knowledge Bank Group, more frequent and better targeted transaction approach--which diffuses knowledge knowledge dissemination activities were planned and expertise through interactions among stake- for 2003. holders and experts--has been systematically mainstreamed into ESMAP's work. Knowledge transaction approach in ESMAP activities. During the 1999-2001 business plan Seminar series. During 2002, ESMAP con- period, ESMAP brought about a systematic shift ducted seminars within the World Bank Group in the design of its activities by ensuring that to disseminate knowledge and catalyze debate knowledge dissemination was a significant com- on topics of interest through its seminar series. ponent of every one of its knowledge genera- Where appropriate, work generated by ESMAP- tion activities. The "quality at entry" checks in funded activities has been showcased at these ESMAP's proposal review process ensures that events. For example, ESMAP-funded work on each activity is designed as an opportunity to the Institutional and Economic Barriers to the disseminate knowledge and build capacity rather Commercialization of Improved Cookstoves than just an exercise in generating new knowl- for the Poor in Ulaan Baatar, Mongolia, was edge. Proponents are advised to adapt their pro- presented in February by ESMAP task manager posals to take a knowledge transaction approach, Salvador Rivera. In September, Navroz Dubash which can be summarized as the development of presented the findings of research funded by knowledge/policy options to address a well-de- the World Resources Institute into the politics fined development objective through a process of electricity sector reform in six developing that consistently involves all stakeholders as well countries during the 1990s. These findings have as a client institution, ready to make decisions been published in the volume "Power Politics: and implement. Equity and Environment in Electricity Reform." The presentation's assertion that financial dri- ESMAP management demonstrated this ap- vers behind reform have tended to crowd out proach with the Africa Energy team of the World social and environmental considerations gen- Bank in a three-day workshop held in Addis erated a healthy debate among the seminar's Ababa, Ethiopia, in October 2002 (see ESMAP more than 40 participants. In October 2002, Report 266/03). The workshop's objective was Shehnaz Atcha and Duncan Austin of the World to bring a cross-section of stakeholders from Resources Institute introduced the work of the Ethiopia, Ghana, Kenya, Tanzania, Uganda, and Green Power Market Development Group of Zimbabwe to address two key questions. The first the World Resources Institute and Business for question was: How Can Modern Energy Services Social Responsibility. The Group is working to Contribute to Poverty Reduction Targets? The transform energy markets to enable corporate second was: What Mechanisms Can Improve Liv- buyers to diversify their energy portfolios with ing Standards and Income Opportunities of the green power and to reduce their impact on cli- Poorest Segments of the Population? To serve the mate change. The presenters outlined the chal- inter-sectoral theme, the participants included lenges and success in catalyzing the private sec- ministers and senior officials from the ministries tor to support and grow the domestic renewable of finance, of energy, and of the productive and Annual Report 2002 45 social sectors; representatives of civil society, alone. But, more importantly for knowledge dis- academia and the private sector; as well as se- semination, the process has diffused the method- nior representatives from the World Bank and ologies and considerations for developing such other donor organizations. The workshop was plans among the stakeholders. designed to maximize the interaction of the par- ticipants through working groups that sketched With the knowledge transaction approach, ESMAP energy-for-poverty-reduction strategies for each has moved beyond mechanical knowledge dis- participating country. The process of developing semination measures such as distribution of these strategies engendered knowledge exchange reports and stipulations about the use of con- among the African participants about their re- sultants from developing countries. These mea- spective countries. Such exchange illustrates the sures are based on what can be called a "knowl- knowledge transaction approach that has been edge provision" approach. While both of these systematically mainstreamed into the ESMAP knowledge provision measures remain, ESMAP portfolio. activities systematically bring stakeholders and decision makers in direct contact with Another example of the knowledge transaction international as well as local experts through approach is the development of the Cambodia seminars, workshops, and group discussions. Renewable Energy Action Plan (REAP). This plan These interactions have transformed ESMAP has been developed through multiple workshops activities in that they do not simply generate in which international, as well as local experts knowledge and recommend policy options. The exposed stakeholders to strategies for renewable map of workshops held under ESMAP activities energy development. This process has resulted (see figure 4.1) illustrates that ESMAP saw sig- in a plan that has greater ownership than if the nificant action on the knowledge dissemination plan were developed by international experts front in 2002. 46 Energy Sector Management Assistance Programme Figure 4.1 Workshops Held Under ESMAP Activities in 2002 Belgium (16, 17) Turkey (1) Azerbaijan (2) USA (14, 15) Cambodia (3,4) Ecuador (13) Bolivia (12) Brazil (10, 11) Co^te d'Ivoire (9) India (5, 6) South Africa (8) Ethiopia (7) 1. Turkey: A number of reports produced under the 10. Brazil: A document about the national rural Turkey Energy Environment Review (Phase III) energy strategy was discussed at a stakeholders' project were discussed at a major stakeholders' consultation workshop under the Brazil Rural workshop in Istanbul (June 2002). Electrification Strategy project (June 2002). 2. Azerbaijan: The Azerbaijan­Natural Gas Sector 11. Brazil: Stakeholder roundtable about financing Restructuring and Regulatory Reform project options for energy efficiency projects was held presented NERA's inception report at a stakeholder in Rio de Janeiro, under the Brazil Energy workshop in Baku (March 2002). Efficiency Monitoring & Evaluation for Water 3. Cambodia: First national stakeholder workshop Utilities project (September 2002). was held under the Cambodia Renewable Energy 12. Bolivia: Third of four stakeholder workshops Action Plan project in Phnom Penh (January held in Trinidad, Bolivia, under the Training 2002). Program for Key Group Representatives of 4. Cambodia: Final national stakeholder workshop Indigenous Peoples (September 2002). was held under the Cambodia Renewable Energy 13. Ecuador: The Ecuador­Indigenous People's Action Plan project in Phnom Penh (November Training Program on Oil Development activity 2002). held a consensus-building training course for the 5. India: A major regional workshop was held representatives of indigenous peoples (February under the India Indoor Air Pollution activities in 2002). Delhi (May 2002). 14. USA: An ESMAP-supported session on solid 6. India: Three-country workshop was held in Delhi fuel use in developing countries (with 12 under Financial Intermediation Mechanisms for sponsored developing-country participants) was Energy Efficiency Projects in Brazil, China and held at Indoor Air Pollution 2002 Conference, India activity (May 2002). Monterrey, California (July 2002). 7. Ethiopia: Regional Energy and Poverty 15. USA: An international stakeholder workshop Reduction Workshop was held by ESMAP and on Petroleum Revenue Management was held the World Bank's Africa Energy team in Addis in Washington, DC, under the Governance and Ababa (October 2002). Revenue Management project (October 2002). 8. South Africa: The Global Village Energy 16. Belgium: EU/ESMAP workshop on power sector Partnership was launched at a well-attended for EU accession candidates was held in Brussels side event at the World Summit on Sustainable (March 2002). Development in Johannesburg (August 2002). 17. Belgium: EU/ESMAP workshop on power sector 9. Côte d'Ivoire: ESMAP and the World Bank's for EU accession candidates was held in Brussels Africa Energy team co-financed a workshop (November 2002). on rural electrification for poverty reduction in Abidjan (March 2002). Annual Report 2002 47 GOVERNANCE AND MANAGEMENT 5 GOVERNANCE AND MANAGEMENT Energy Sector Management Assistance Programme THE CONSULTATIVE GROUP experimentation; disseminating/transacting knowledge; capacity building; and implement- The Governance structure of ESMAP includes a ing change. ESMAP's management pointed out Consultative Group (CG) composed of a chair- specific links between the strategic directions person, representatives of donors, and members outlined in the ESMAP 2002-2004 business "at large" from countries receiving ESMAP assis- plan and the Renewal Strategy by demonstrat- tance. During 2002, Mr. Jamal Saghir, Director of ing how ESMAP's business lines fit into the the Energy and Water Department of the World four petals of the Renewal Strategy. Bank and Chair of the World Bank's Energy Min- · Lessons from the Programs. Each program re- ing Sector Board, continued as Acting Chair of ported on progress, setbacks and deliverables the CG. Mr. Rufino Boomasang, President and within the calendar year. ESMAP's report cen- CEO, PNOC Exploration Corporation, Philippines, tered on its 2002-2004 Business Plan, trends in and Mr. Ketane Sithole, Business Development the global energy-related private sector, struc- Manager, Grinaker-LTA, Botswana, continued as ture of the Global Village Energy Partnership, Members at Large. and linkages between energy and the MDGs. The annual meetings of the Energy Trust Funded Annex 1 presents the Summary Proceedings of Programs (ETFP) managed by the World Bank the April 2002 CG meeting. were held from April 29 to May 1, 2002, at the Royal Danish Ministry of Foreign Affairs THE TECHNICAL ADVISORY GROUP in Copenhagen, Denmark. The theme for the 2002 meeting was "The New Environment for The Technical Advisory Group (TAG) consisted the Provision of Energy Services for Poverty of five members in 2002: Messrs. Alfredo Mirkin Eradication." The objective of the meeting was (Moderator), Andrew Barnett, Youba Sokona, Jan three-fold: to discuss the strategic directions of Moen, and Ms. Jyoti Parikh. the energy sector, to further strengthen coher- ence among the ETFPs, and to share views on Professor Jyoti Parikh joined the TAG on Octo- preparations for the World Summit for Sustain- ber 23, 2002. Prof. Parikh is a renowned energy able Development (WSSD). expert who has worked in the field of energy for over 20 years beginning with a World Bank proj- The discussions focused on the following: ect titled "Energy Systems and Development." Oxford University Press later published a report · New environment for energy. These discussions from this project in 1981. She subsequently highlighted the necessity of energy services for worked on rural energy system modeling, gender achieving the Millennium Development Goals issues, rural energy technology assessment, and (MDGs) and the importance of development other issues. She is also a national project coor- assistance for empowering the poor to partici- dinator for rural pollution and health projects. pate in the establishment of sustainable energy markets. During the reporting period, members of the TAG · Implementing the World Bank Group's (WBG) maintained frequent contact with the ETFP man- Energy Business Renewal Strategy and the agement team, and held meetings with several ETFPs. Mr. Saghir delivered a presentation task managers, providing advice and guidance. on energy investments in relation to the Re- newal Strategy. ETFPs managers highlighted The TAG's mandate is approved by the CG the programs' complementarity to the Renewal through the TAG's Terms of Reference, and its Strategy by providing illustrations detailing line of authority is exercised through the CG the connection, which included innovation/ Chair. A major task for the TAG in its expanded Annual Report 2002 49 Terms of Reference to the ETFPs was to gain a the ESMAP review panel's recommendations, complete understanding of donors' views of each and two, in securing funding from donors once a Program. To this end, a series of interviews were full proposal is approved. conducted in a sample of agencies in European capitals in November 2002. The capitals included To get client feedback about its two-step propos- Brussels, Copenhagen, London, Oslo, Stockholm, al process, ESMAP conducted an informal survey and The Hague. The overall views expressed were of energy task managers in September 2002. The that the donors were generally pleased with the two-step process involves the submission of a work carried out by the ETFPs. In particular, they two-page concept note which is evaluated by the were satisfied with the "upstream" approach ES- ESMAP review panel on a basic set of criteria MAP applied to operational activities, as this ap- (relevance to ESMAP goals, innovativeness, cli- proach allowed for space to reflect, learn lessons, ent interest, value-added, soundness of design, and innovate. They were also pleased by the move etc.) followed by detailed full proposals submit- to unify the Consultative Group meetings. ted for the concept notes that pass the first stage. The task managers gave overwhelming support The TAG is currently overseeing a review of to the two-step process because it allows them ESMAP's work on regional integration of en- to test the waters with ESMAP without a great ergy markets. The review focuses on five ESMAP deal of effort. projects intended to engender regional integra- tion in the Mekong River delta, the Nile Basin, ESMAP then set about designing a proposal South America, Southern Africa, and West Af- process that would reduce the cycle time from rica. The report is expected to be completed by six months to ten weeks. A standard concept the end of 2003. note form was developed so that proponents submit all the information required for an ef- IMPROVEMENTS IN ESMAP SYSTEMS ficient evaluation by the review panel. The full AND BUSINESS PROCESSES proposal form was also streamlined to reduce the time and effort required by task managers to The October 2002 Call for Proposals introduced im- complete them. portant improvements in ESMAP's interface with its immediate clients--the energy task managers of Armed with these tools for an improved pro- the World Bank Group--as well as non-energy task cess, ESMAP management decided to aggres- managers. The two Calls for Proposals preceding sively reach out to task managers in the energy the October 2002 call met very low responses. The practice as well as in other groups to make the November 2001 call received only nine proposals October 2002 Call for Proposals a turning point and the April 2002 call received ten. in ESMAP's operations. ESMAP staff elicited proposal ideas in conversations with task man- Informal consultations following the April 2002 agers and helped them develop their two-page call identified the processing time for propos- concept notes. als--from submission to funding--as the key reason for discontent among task managers. In As a result, ESMAP received high demand within July 2002, ESMAP conducted an analysis of the and outside the Bank: 49 proposals from the preceding seven Calls for Proposals and found Bank task managers, and 70 proposals from that the average time between submission of external submissions. In addition, the quality of a proposal to ESMAP and the first funding al- the proposal submissions also improved. ESMAP location to it was around six months. The most approved about 50 percent of the proposals sub- significant delays were in two areas: one, the de- mitted, as compared to 15 percent in the previ- velopment of full proposals in accordance with ous calls. Of the 24 remaining proposals, 10 were 50 Energy Sector Management Assistance Programme not retained and 14 are still good candidates on ESMAP also opened up a fast-track window for which task managers are expected to come back. smaller, just-in-time activities. For proposals un- The October 2002 call also demonstrated an in- der US$50,000, ESMAP announced a cycle time crease in Africa representation. Among the 24 of two to four weeks (depending on whether core projects approved, 10 were from Africa. Of the funding could be used) from submission to fund- 24 approved projects, 11 focused on rural energy ing allocation. This window was well received access, 8 on market development, and 5 on en- with 13 fast-track proposals submitted in the ergy and environment. Most approved proposals October 2002 call. The window remains open on received funding allocations within two months a rolling basis. from the announcement of the call. Annual Report 2002 51 FINANCIAL REVIEW 6 FINANCIAL REVIEW Energy Sector Management Assistance Programme DONOR CONTRIBUTIONS a decrease of about 47 percent from its level of US$1.03 million in 2001. This is a result of Contributions to ESMAP in 2002 totaled US$7.8 broad-based reforms of all World Bank Group million, roughly maintaining the level of 2001 trust funded programs, which are causing a (US$8.2 million). Of these 2002 contributions, shift of program management overheads to actual cash receipts were US$5.1 million during donors. 2002 but, as detailed in table 6.1, contributions earmarked for 2002, which were received by Including these, core contributions totaled about ESMAP in early 2003, bring the 2002 total to US$1.92 million in 2002 or 25 percent of total US$7.8 million as illustrated in figure 6.1. Table contributions. Denmark, Finland, and Germany 6.1 also shows that donors have already made provided their entire contributions to ESMAP as pledges for US$7.3 million for calendar year core funding. Sweden's contribution beginning 2003. With some donors yet to make 2003 con- in 2001 was all core funds and Sweden provided tributions, ESMAP expects that total contribu- project-specific funding in 2002. United King- tions for 2003 will cross the US$8 million mark dom provided core funding along with proj- evidencing a trend of higher contributions in the ect-specific funding carrying restrictions on the 2002-2004 business plan period compared to the use of their contributions in identified recipient 1999-2001 period. countries. Other donors provided either thematic funding or project funding. NEW DONORS Among major thematic contributions, the Dutch As ESMAP's Consultative Group of donors en- government's thematic contributions totaled dorsed ESMAP's Business Plan 2002-2004 at its US$3.1 million compared to US$4.5 million in Copenhagen meeting, a funding gap of approxi- 2001. mately US$16 million appeared between the business plan's US$40 million budget require- Germany will provide thematic funding of ment and donor pledges. To help bridge this gap, 1,850,000 Euros for the years 2003-2006 in ad- ESMAP management continued to pursue new dition to their core contribution. The grant will opportunities with other donors. In addition to be utilized on ESMAP's Energy & Environment the World Bank Group, eight donors made cash sub-portfolio and activities under the Global Vil- transfers to ESMAP through trust funds. Fund- lage Energy Partnership (GVEP). raising efforts will continue in the coming year with the objective of mobilizing the additional The Government of Norway and the World Bank resources needed to implement the ESMAP Busi- Group have recently established the Norwegian ness Plan 2002-2004. Trust Fund for Private Sector & Infrastructure (NTF-PSI) that consolidates Norwegian support CORE AND THEMATIC FUNDING to the World Bank Group in the areas of Private Sector and Infrastructure. The NTF-PSI agree- Table 6.2 shows core contributions from donors ment will channel funding of US$800,000 in other than the World Bank Group totaled US$1.38 2003 to ESMAP and will be used to finance the million in 2002 compared to US$2.42 million in Global Village Energy Partnership; improve the 2001. This was a decrease of 21 percent com- enabling environment for private sector invest- pared to core resources mobilized in 2001. ment; and fund other innovative activities. The Government of Norway did not make a direct The World Bank Group's contribution (which contribution to ESMAP in 2002 because the is considered core) was US$545,000 in 2002, NTF-PSI was being processed during 2002. Annual Report 2002 53 Table 6.1 ESMAP Receipts, 2000-2002 (US$ thousands) Pledges Total 2000 2001 2002 Percentage of for 2003 00-02 Total Donor (US$ thousands) Receipts Core 2002 UNDP 57.2 0.0 100.0 100.0 157.2 1.3 1.7 World Bank 820.3 1,032.4 545.4 1,000.0 2,398.1 7.0 25.8 Belgium 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Canada 134.6 255.9 737.8 257.7 1/ 1,128.3 9.4 0.0 Germany 80.1 72.4 899.5 2/ 845.2 3/ 1,052.0 11.5 3.7 Finland 0.0 168.7 82.8 0.0 4/ 251.5 1.1 2.7 Netherlands 1,008.6 4,468.8 3,097.0 5/ 1,500.0 6/ 8,574.4 39.6 0.0 Denmark 234.3 234.8 258.1 0.0 7/ 727.2 3.3 7.8 Norway 507.7 576.5 0.0 800.0 8/ 1,084.2 0.0 11.7 Switzerland 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Sweden 1,010.7 487.4 636.4 469.3 9/ 2,134.5 8.1 19.1 France 260.3 0.0 0.0 0.1 260.3 0.0 0.0 1,875.3 United Kingdom 856.1 880.3 1,125.2 2,861.6 14.4 27.0 10/ Private Sector 45.0 0.0 0.0 0.0 45.0 0.0 0.5 United Nations 0.0 0.0 335.0 11/ 550.0 335.0 4.3 0.0 Foundation Total 5,014.9 8,177.2 7,817.2 7,347.6 21,009.3 100 100 1/ Installment payment for LAC Region Energy from Landfill Gas: Best Practice, Dissemination, & Future Programs 2/ Includes $708.5 received on Feb. 28, 2003 for new Agreement dated Dec. 20, 2002 for years 2003-2006. 3/ Second payment of $708,500 for new Agreement dated Dec. 20, 2002 for years 2003-2006. Third & fourth installment payment of $136,700 for 2003, Agreement dated Dec. 20, 2001. 4/ New Agreement for the years 2003-2004 to be agreed with the government of Finland. 5/ Second installment payment for Energy Access & Sector Reform Fund for 2002 was received by BNPP in 2002, and transferred to ESMAP on Feb. 25, 2003. 6/ Third installment payment for Energy Access & Sector Reform for 2003. 7/ New Agreement for the years 2003-2004 to be agreed with the government of Denmark. 8/ First installment of $800.0 received on March 17, 2003. 9/ Contribution for 2003, which is the last installment payment. 10/Received in March 2003: $800,950 for Core Funds and $445,348 for Project Funds. Expected $629,000 as second installment for China Indoor Air Pollution. 11/Contribution for GVEP was $35,000. First installment payment of $300,000 received on Feb. 7, 2003 for "Developing Financial Intermediation Mechanisms for Energy Efficiency in Brazil, China & India: In-Country Activities." 54 Energy Sector Management Assistance Programme Figure 6.1 ESMAP Receipts 2000­2002 Denmark 4% Belgium 0% France 1% Germany 5% UNF 2% Belgium 0% Canada 5% Denmark 4% Canada 5% France 1% Finland 1% Netherlands 41% World Bank 11% Germany 5% UNDP 1% Netherlands 41% Norway 5% Norway 5% United Kingdom 14% Finland 1% Private Sector 0% Sweden 10% Sweden 10% Switzerland 0% Switzerland 0% Private Sector 0% UNDP 1% United Kingdom 14% World Bank 11% PROJECT-SPECIFIC FUNDING contribution to GVEP in 2002, they are expected to contribute US$1.216 million in project-spe- Table 6.3 shows project-specific funding totaled cific funds for the 2003-2004 period, channeling US$2.15 million in 2002 compared to US$256,000 funds via their cooperation with the United Na- in 2001. These contributions were provided by tions Environment Program. CIDA, Sweden, and the United Kingdom. Given the continuing gap between financing needs and EXPENDITURES core or thematic resources, additional funding will continue to be mobilized from donors on a Table 6.4 shows that expenditures in 2002 to- case-by-case basis for promising projects as they taled US$6.0 million, a decrease of US$0.30 clear the evaluation process. million from expenditures in 2001. Expendi- tures through ESMAP projects (disbursements) The United Nations Foundation became a new decreased in 2002 by US$0.221 million. Ex- donor in 2002. In addition to their US$35,000 penditures on work program development (time Table 6.2 Core/Thematic ESMAP Donor Contributions, 2000-2002 Core plus Total of which, Core as % Thematic as % Donor a/ of which, Core plus of Total Donor of Total Donor Contributions Core Thematic Contributions Contributions Year ($m) ($m) ($m) (%) (%) 2000 4.13 2.40 3.41 58.0 82.4 2001 7.14 2.42 6.89 33.9 96.5 2002 7.17 1.92 5.02 26.8 70.0 Total 18.5 6.7 15.3 36.5 83.0 a/ Does not include World Bank and UNDP. Annual Report 2002 55 Table 6.3 Receipts by Type of Funding in 2002 level of activity from workshops, in-house semi- Amount nars, and published ESMAP reports. (millions US$) WB Contribution 0.545 FUNDING FOR NEW PROJECTS AND CASH BALANCE UNDP 0.100 Core 1.921 During 2002, ESMAP launched 29 new projects Thematic 3.097 with a cumulative budget of US$5.6 million. Out Project 2.154 of this total cost, ESMAP has provided fund- Country Program 0 ing of US$3.1 million. The difference of US$2.5 Total 7.817 million is required to fully fund the launched projects. In addition, as of March 2003, ESMAP spent by ESMAP staff to help develop specific has approved 13 projects that amount to US$1.7 ESMAP projects) increased from US$40,000 to million. Ongoing projects, which were approved US$51,000. Program management costs, which prior to 2002 and have already been partially increased by 27 percent in 2001, were reduced funded, require about US$1.8 million to fully fi- by 7 percent in 2002, reflecting a stricter ac- nance their remaining activities. In total, ESMAP counting discipline under which staff from the requires US$6.0 million to finance the remaining ESMAP management team charged their time to partially funded projects and new approved proj- specific projects when working on the substance ects as of March 2003. of such projects. Dissemination costs increased by US$88,000 in 2002, as a result of an increased After taking into account the expenditures and receipts, cash balances in ESMAP trust funds and UNDP accounts on December 31, 2002, amount- Table 6.4 ESMAP Expenditures, 2000-2002 ed to US$12 million (of which US$421,093 is in (thousands US$) UNDP accounts) compared to US$9.4 million in 2001 (of which US$101,024 was in UNDP ac- 2000 2001 2002 counts). The unallocated cash balance at the end Project 6,698 5,445 5,224 of 2002 amounted to US$3,695,543 (of which Expenditures US$1,437,800 is in core funds). Therefore, as of Work Program 22 40 51 Development 1/ December 31, 2002, ESMAP faced a funds mobi- lization target of US$2.3 million for its approved Program 334 425 394 Management projects. Knowledge 43 82 170 Dissemination ESMAP's Annual Report 2000-2001 stated that Governance 147 321 172 the remaining funds in the UNDP accounts held in ESMAP would be disbursed during 2002 and of which TAG 62 166 72 the accounts would be closed. However, a World of which CG 85 155 100 Bank audit of the accounts delayed their closure. Total 7,244 6,313 6,011 Consequently, in the UNDP accounts, there was of which funded 6,367 5,281 5,366 an increase of funds of about US$220,000 in by Donors 2002, as a result of the World Bank Group's broad of which funded review of Bank-executed trust funds, launched from World Bank 820 1,032 545 budget in September 1999. The review identified some of which funded expenditures that were not entirely consistent 57 0 100 by UNDP with the specific provisions of the trust fund 1/Includes Review of Proposals. agreement or with Bank policies and procedures 56 Energy Sector Management Assistance Programme even though these funds were used for purposes in line with the broader development mandate of the Bank and UNDP. With respect to the expen- ditures found to have been charged inappropri- ately, the Bank has covered these expenditures. The UNDP accounts will remain active in 2003 and will disburse the funds in the same year. The Danish funds under the UNDP account have not been returned, due to the delay in receiving the clearance of the report from the government. It is expected that funds in the amount of about US$91,000 will be returned in 2003. Annual Report 2002 57 ANNEXES ANNEXES Energy Sector Management Assistance Programme ANNEX 1 SUMMARY PROCEEDINGS OF THE JOINT DONORS' MEETING FOR TRUST FUNDED ENERGY PROGRAMS MANAGED BY THE WORLD BANK, ESMAP/ ASTAE/AFFREI/RPTES, APRIL 29, 2002, COPENHAGEN, DENMARK. Summary Proceedings The joint Consultative Group (CG) for the Energy Trust-Funded Programs (ETFPs) managed by the World Bank met at Copenhagen, Denmark, on April 29 through May 1, 2002. Mr. Jamal Saghir, World Bank Group Director for Energy and Water and Chair of the World Bank Group Energy and Mining Sector Board chaired the meeting on behalf of Ms. Nemat Shafik, World Bank Vice President for Private Sector and Infrastructure and Chair of the CG. This document presents a summary of this meeting's proceedings. After welcoming remarks by Mr. Jens Rasmussen, Chief of Infrastructure at DANIDA, Denmark, Mr. Jamal Saghir outlined the three-fold objective of the meeting: to further strengthen the coherence among the ETFPs in the context of the World Bank's energy strategy, to discuss the strategic direc- tions of the energy sector, and to share views on preparations for the World Summit for Sustainable Development (WSSD) to be held in Johannesburg in August 2002. New Environment for Energy Mr. Richard Jones of the UK's Department for International Development (DFID) emphasized the ne- cessity of energy services for achieving the Millennium Development Goals (MDGs). He stressed that the MDGs are driving both the development and the energy agenda. DfiD's Working Group on Energy for Poverty Eradication (EnPov) is working to consolidate efforts to bring energy back to the develop- ment agenda, particularly its links to the MDGs. Among these efforts are: EnPov's matrix demonstrat- ing the contribution energy can make to achieving the MDGs and a paper proposing an approach to incorporating energy interventions into development programs. Mr. Griffin Thompson of the United States Agency for International Development (USAID) pointed out that there is an increased acknowledgement in the development community that energy is catalytic to the achievement of the development goals. This shift demands that the energy business respond with business models, which not only link good governance with private investment but also address fundamental questions of social justice and equity. Distributed generation opens many paths for such work at the convergence of major trends: the decentralization of political decision-making and the distribution of technological capability to the local level. The ensuing discussion highlighted the importance of development assistance for empowering the poor to participate in the establishment of sustainable energy markets. While the new implementation challenges presented by distributed energy were acknowledged, the importance of large energy plants in an increasingly urbanized world was also underlined. Annual Report 2002 59 Implementing the Energy Trust Funded Programs (ETFPs) The Technical Advisory Group (TAG) Report Mr. Alfredo Mirkin, member of the TAG, prefaced the presentation of the TAG report by stating that the TAG understands that the achievement of the MDGs and the implementation of the World Bank Group's energy strategy should be the reference framework for the ETFPs. Each of the ETFPs should retain its own identity as they work more coherently. Before summarizing the TAG report, Mr. Andrew Barnett stressed that the TAG is issuing this report with the intention of stimulating discussion, not to present recommendations because a thorough analysis of the ETFPs has yet to be conducted. He identified the TAG report's main message to be of strong support for greater coherence among the ETFPs. While the TAG found the programs to be very effective in delivering their current mandates, it focused on how these mandates fit into the overall strategic directions. Each program's different mandate and character reflects the varied donor motivations for supporting these programs. These motivations vary between learning more about the energy and development arena to leveraging these programs to influence the strategic directions of the World Bank's energy operations. Within the World Bank Group, the ETFPs provide flexibility for innovation, which would not be other- wise available. The TAG report points to a potential conflict between the World Bank Group's poverty reduction mission and the mandate of some programs to mainstream renewables. The TAG report also raises concerns about the ability of the ETFPs to play their requisite role in the achievement of the MDGs in an environment of insufficient emphasis and support by the donor com- munity for the MDGs. The ETFPs are ahead of the knowledge curve on many of the broader issues, including those discussed in the preceding session, but the challenge is to communicate the new in- sights and knowledge. The TAG invited the CG to share its comments on the current TAG report and requested the World Bank Group to provide its comments formally on future TAG reports. By the first quarter of 2003, the TAG proposes to deliver substantive results of its review of the ETFPs along the following six themes: cli- ent orientation, adequacy of funding and match to task, output orientation, poverty focus, knowledge management, and transparency. Mr. Barnett also presented summaries of three papers written by TAG members on challenging issues facing the energy sector. These papers are included in the TAG report and are titled: "Beyond Enron: the Emerging Challenges for Regulation and Restructuring" (by Jan Moen), "Reflections on the Restructuring of the Energy Sector" (by Alfredo Mirkin), and "Development is More Than the Environment" (by Youba Sokona and Andrew Barnett). Many donor representatives commended the TAG report for asking the right questions. Discussion fo- cused on two main issues: the mainstreaming of innovation of the ETFPs into the World Bank Group's operations, and to what extent the TAG's expanded role requires the TAG to evaluate the World Bank Group's non-ETFP work. The discussion on mainstreaming innovation reached the conclusion that while more needs to be done to incorporate the innovation from the ETFPs into the Bank's lending op- erations, a broader picture of the functioning of the programs is needed to determine if either program 60 Energy Sector Management Assistance Programme had served its purpose and should itself be mainstreamed. There was consensus that while the TAG needs to site its review of the ETFPs in the World Bank Group's lending operations, the TAG's terms of reference do not include an evaluation of those lending operations. The World Bank Group reiterated its commitment to providing all information required for the TAG's review, including reports of its Operations Evaluation Department (OED). Implementing the World Bank Group's Energy Business Renewal Strategy and the Energy Trust Funded Programs Mr. Jamal Saghir presented the energy investment context in which the World Bank Group's energy business renewal strategy is being implemented. He categorized the past decade of private capital flows into three phases: overall optimism about energy projects and potential returns in developing countries (1990-1997), heightened risk perceptions after the East Asia and Russia crises (1997-2000), and finally, skepticism about risk and return in energy investments in the developing world (2000- present). Energy investment in developing countries was geographically very restricted, mostly favor- ing two regions (three quarters of investment in 1990-2000 went to Latin America and East Asia) and six countries (Brazil, Argentina, China, Philippines, Indonesia, and India received over 55 percent of this investment). Meanwhile, Official Development Assistance (ODA) flows into infrastructure have also declined, particularly to the least developed countries. Against this backdrop, the Energy Business Renewal Strategy is bringing the World Bank Group's energy practice back into action with a sharp focus on poverty impact. Energy is beginning to appear more meaningfully in Country Assistance Strategies and Poverty Reduction Strategy Papers, environment issues are increasingly integrated into the Bank Group's energy projects, and over US$1.5 billion in new World Bank Group commitments are planned for fiscal year 2002. Mr. Saghir reminded the meeting of the challenge to match the enormous investment needs for energy service delivery in developing countries over the next 20 years. On behalf of Mr. Ananda Covindassamy, Energy Sector Manager for Africa at the World Bank, Mr. Arun Sanghvi, Program Manager of AFRREI, presented the World Bank energy strategy and portfolio in the Africa region. In addition to the Africa component of the Energy Business Renewal Strategy and a profile of the Africa energy portfolio, Mr. Sanghvi outlined how a realignment of the Africa portfolio is being conducted to address the key issues facing the Africa energy team. These issues include: portfolio quality needs improvement; the volume of new commitments is low compared to the demand; alignment with Bank priorities is weak (10 percent of the portfolio is focused on direct poverty alleviation); project implementation periods are long; resource mobilization needs to rise; and the knowledge function needs to be strengthened. He pointed out that the priorities of the Africa ETFPs (AFRREI and RPTES) have clear links to the regional energy strategy and are integrated with the Africa region's work program. Mr. Mohammad Farhandi, Energy Sector Manager for East Asia at the World Bank and Program Manager of ASTAE, presented the shifts in regional priorities in East Asia and South Asia, and how ASTAE's activities in the two regions are consistent with the Energy Business Renewal Strategy. AS- TAE contributes to poverty reduction goals through its support of renewable energy for rural access programs. ASTAE's work in supporting development of grid-connected renewables and energy effi- ciency produce environmental benefits from reduced emissions and reduced energy intensities. ASTAE also helps accelerate the commercialization of private sector provision of alternative energy and works to improve governance by supporting policy and regulatory mechanisms in support of the above. He outlined how ASTAE is implementing its programmatic themes under this strategy. These themes Annual Report 2002 61 include: scaling up renewable energy through provision of rural access (for poverty alleviation) and energy efficiency (for environmental protection); support for alternative energy policy and regulatory frameworks; and alternative energy in cross-sector applications. Ms. Dominique Lallement, Program Manager of ESMAP, presented the placement of the ETFPs in the framework of the Energy Business Renewal Strategy. She provided illustrations to show how each characteristic of the ETFPs serves the strategy. These characteristics include: innovation and experi- mentation; catalyzing change by influencing policy, building capacity; implementing change; and mobilizing resources incrementally by influencing the World Bank Group's and others' energy portfo- lios; and disseminating and transacting knowledge. Lessons from the Programs Asian Development Bank's Trust Funded Initiatives in the Energy Sector Dr. Aminul Huq of the Asian Development Bank (ADB) outlined the ADB's realignment of its energy sector assistance toward poverty reduction, expansion of access, improvement of governance, pro- motion of private participation, promotion of environmentally clean energy, and regional energy trade. He illustrated the ADB's energy sector assistance with a presentation of the ADB's trust funded initiatives, particularly the ALGAS project and the Renewable Energy, Energy Efficiency and Climate Change (REACH) Program trust funds. Expanding the Frontier of Knowledge: Innovation, Experimentation & Dissemination Messrs. Arun Sanghvi and Charles Feinstein of the World Bank Group presented the main value of the ETFPs as knowledge transaction: building awareness and "buy-in" among decision-makers and com- munities for new ideas. They highlighted two examples of innovation and experimentation emerging from the ETFPs: AFRREI's cross-sectoral approach to energy interventions in Uganda, and ASTAE's passive solar heating in rural health clinics in China. They outlined the programmatic approach taken by ASTAE, ESMAP and others in the China Renewable Energy Scale-up Program (CRESP) and RPTES's Senegal Sustainable & Participatory Energy Management Project as illustrations of the ETFP's influence on policy. ESMAP's contribution to developing the grounds for the World Bank/GEF/Government of Ni- caragua PERZA project for energy access in isolated areas and RPTES's contribution to the World Bank/ Government of Ethiopia Energy Access Project were cited as examples of ETFP work influencing energy sector investments. ESMAP's work in leveraging its indoor air pollution activities in India for developing similar activities in China was highlighted as an instance of knowledge transaction by the ETFPs. Evaluating Results and Impacts Mr. Jeremy Levin of the World Bank Group presented the basic issues facing the ETFPs for improving the evaluation of their results and impacts in the context of the MDGs and their corresponding indica- tors. He emphasized that the results and impacts of the ETFPs have to be placed in the perspective of what outputs they produce. To extend measurement of results and impacts beyond those outputs to include effectiveness towards the MDGs, the ETFPs must review the value and adequacy of their cur- rent indicators, consider options for new indicators (including a possible energy-related subset of MDG indicators), and make a determination of the costs, processes, and methodologies involved. 62 Energy Sector Management Assistance Programme The distinction between program indicators (more focused on projects and their outputs) and develop- ment indicators (more focused on the overall development agenda and its outcomes--such as the MDG indicators) was explored in depth in the discussion that followed. There was consensus that the energy business needs to monitor and evaluate its impact and outcomes rather than measure its performance in terms of megawatts and efficiency figures. The Country Assistance Strategy and Poverty Reduction Strategy frameworks at the country level and the Millennium Development Goals at the global level provide mechanisms for measuring the collective outcomes and impacts of projects. However, while tracking performance at this level, the program level cannot be ignored because bad projects need to be identified and addressed. A combination of these top-down and bottom-up perspectives would constitute a suitable approach. In a discussion of the resources required for such measurement, it was pointed out that the capacities available in developing countries for such measurement need to be strengthened. It was also observed that bilateral donors need to be as active on such measurement as they expect multilateral institutions like the World Bank Group to be. Overview of the Trust Funded Energy Programs Achievements in 2001: Program Managers' Reports Asia Alternative Energy Program (ASTAE) Mr. Mohammad Farhandi presented the work through which ASTAE has been able to achieve its ini- tial goal of ensuring that alternative energy represents 10 percent of total World Bank power sector lending in the two Asia regions. He attributed the success of the ASTAE model to its focus on project development as part of the World Bank's operations, its regional location within Bank operations, and the strong partnerships it has built. Given that the projected demand for alternative energy in Asia dwarfs the impact of current projects, ASTAE has decided to embrace an additional goal for the next decade. This goal is to mainstream alternative energy in national energy policies and programs. Mr. Farhandi stated ASTAE's two-fold success indicators to be: 1) that three key Asian countries adopt national energy programs/policies to encourage large-scale development of alternative energy; and 2) the impact of individual Bank lending operations. ASTAE was complimented for achieving its initial target. It was also commended as a source of in- novation in the renewables community and as a contributor of value in integrating alternative energy components to projects. GEF, the World Bank, and client country decision makers were also acknowl- edged for their role in contributing to the success of the ASTAE model. The discussion focused on the nature of ASTAE's strategic shift, in particular, what the shift would mean for the activities ASTAE undertakes and how far the original mandate of ASTAE can be mainstreamed into the World Bank's operations. ASTAE clarified that its activities will continue to involve the awareness building and capacity development required to mainstream alternative energy into the policies of client countries in Asia. These activities are not just advanced project preparation activities, and therefore cannot be mainstreamed into the Bank's operations yet. Alternative energy projects are more costly to prepare, as significant capacity building is still needed within client country counterpart agencies and among local stakeholders. ASTAE will build its new policy-focused work while continuing to support the development of individual alternative energy projects and project components since a large scale pro- grammatic, policy-focused approach may not be appropriate for all countries at this time. Annual Report 2002 63 Regional Program for the Traditional Energy Sector (RPTES) Mr. Boris Utria, Program Manager RPTES, presented the program's objectives, structure, human re- sources, and its place in the energy matrix as the context for how its activities implement the Energy Business Renewal Strategy in Africa's biomass sector. Responding to donors' questions about RPTES work, Mr. Utria emphasized RPTES' focus on capac- ity building; client ownership of activities; and persuading the biomass users and policymakers that biomass has value. This persuasion is strengthened by RPTES' experience with biomass-related policy instruments. The combination of persuasion and experience has helped RPTES make biomass schemes "bankable" by demonstrating to users and policymakers that they are losing or misusing a valuable resource and that measures are available to redress the situation. Africa Rural and Renewable Energy Program (AFRREI) Mr. Arun Sanghvi, Program Manager, AFRREI, stated that AFRREI contributes to three of the four pil- lars (excluding macro/fiscal issues) of the Energy Business Renewal Strategy in Africa. He categorized AFRREI's progress into two phases: innovation and product development, particularly the Energy for Rural Transformation concept (1998-2002), and mainstreaming and dissemination of the results of the first phase (2002-2005). Among emerging lessons learned, he listed the high level of priority placed by clients on the energy-for-rural-transformation concept and its related project work; the effective- ness of short-term workable entry points for long-term targets; the difficulties of decentralizing the decision-making processes to accommodate sectoral ministries into multi-sectoral projects; the need to increase productive uses of new energy services; and the value of smart-subsidy intermediation. Energy Sector Management Assistance Programme (ESMAP) In an overview of ESMAP's activities, Mr. Charles Feinstein, Lead Operations Coordinator, ESMAP, presented the links between ESMAP's strategic directions and the World Bank Group's Energy Business Renewal Strategy by demonstrating how each business line from the ESMAP Business Plan 2002-2004 fit into the four petals of the Strategy. He also outlined how ESMAP is "jump-starting" the Business Plan through activities already underway which fit into the business lines. The Africa portfolio of ESMAP still faces a shortfall, although the Africa energy sector manager of the World Bank has an- nounced a target of 20 successful proposals to ESMAP in 2001. ESMAP has also expanded its outreach to the Africa region and the idea of a coordinator/interface between Africa and ESMAP is being put on the table. Ms. Dominique Lallement, Program Manager, ESMAP, reported progress on the deliverables that ES- MAP was mandated with at the Lisbon CG meeting in November 2001: · The business plan draft circulated at the Lisbon meeting was finalized and distributed in this meeting, · A proposal was made for appointing a suitable senior World Bank Group staff member as a manager of each respective business line as a sub-portfolio. This would facilitate the inclusion of non-World Bank Group proposals and task managers in ESMAP activities. · Mr. Jamal Saghir also presented the report about trends in the global energy-related private sec- tor in this meeting (see section on Implementing the World Bank Group Energy Business Renewal Strategy, above). 64 Energy Sector Management Assistance Programme · The structure of the formerly designated Village Power Partnership was presented in the GVEP ses- sion of this meeting. · The paper on the linkages between energy and the MDGs is being developed as the Energy and De- velopment Report 2002 (the template being developed for this paper was circulated). This report is being developed in consultation with the health, education, and rural development sector boards of the World Bank Group, among other stakeholders. ESMAP's responsiveness to the CG's guidance since the Lisbon CG meeting was appreciated and a renewed wave of international support for ESMAP, evidenced by its suggested role in GVEP, was acknowledged. UNDP offered increased cooperation with the World Bank Group for pushing energy higher on the MDG agenda. Global Village Energy Partnership (GVEP) Ms. Dominique Lallement presented GVEP's background, tracking its progress from the first Village Power Conference in 1992 to prospective implementation following WSSD in August 2002. She out- lined the demand and delivery mechanisms for each of the services that GVEP will provide. These services are: country action plans, knowledge build-up and knowledge transaction, energy service enterprise development, funding facilitation, and monitoring of results and impacts. Ms. Lallement also proposed options for GVEP's governance and participation criteria as well as a basic budget and timeline of steps leading toward WSSD and beyond. While expressing UNDP's full commitment to GVEP, Ms. Susan McDade (Manager, Sustainable Energy Programme, UNDP) outlined UNDP efforts to advance the GVEP agenda at international fora. At the UNDP Heads of Agencies meeting in Rome (April 2002), GVEP was proposed as one of the initiatives for UNDP to pursue actively at WSSD. GVEP was also a key topic of discussion at the WSSD-related meeting of donors, key developing countries, industry representatives, and NGOs hosted by the UNDP in Brussels (April 2002). Ms. McDade emphasized UNDP's comparative advantage for capacity building in develop- ing countries as well as micro-credit and consumers and micro-enterprises. These strengths would be of great use to GVEP. She urged the participants to make GVEP a Type II Initiative at WSSD. The Netherlands, the United Kingdom, Norway, Germany, Sweden, the United States, Canada, and Finland as well as the UNDP, UNF, and the E7 expressed their keen interest in joining and supporting the Global Village Energy Partnership, and congratulated ESMAP and its partners for having advanced the proposal to that stage. The importance of ensuring that the GVEP agenda is endorsed and led by developing countries was underscored. There was consensus that ESMAP should serve as the interim secretariat for GVEP. DfiD indicated its willingness to extend support to ESMAP for this purpose. There was consensus that the senior managements of all donor agencies and multilateral institutions present should be briefed about the resounding support for GVEP as a possible Type II initiative at WSSD. To present a more detailed concept note about GVEP at the WSSD preparatory committee meeting (PrepCom3) in Bali in June 2002, ESMAP will circulate a draft document to the donors for endorse- ment and comments. Consolidated Business Plan of the Energy Trust Funded Programs The World Bank presented a consolidated budget of $61 million for the four energy trust funded programs for the 2002-2004 period. The CG found broad consensus around the proposal that a con- Annual Report 2002 65 solidated business plan for the four energy trust funded programs must be developed as a framework supporting a consolidated budget to which the CG can respond with pledges. To ensure clarity about the scope of such a consolidated business plan, the following deliverables were agreed upon: · By September 2002, the World Bank Group will circulate to the donors (on a no-objection basis) a two-page issue paper about the scope and content of the consolidated business plan. · Subsequently, the World Bank Group will secure the TAG's feedback on a detailed outline of the consolidate business plan. · By January 2003, the World Bank Group will present a basic concept to donors for no-objection. · At the CG meeting 2003, the final document will be distributed to the donors. Governance of Consultative Group and TAG Issues The meeting reached agreement on the following issues related to the governance of the Consultative Group and the Technical Advisory Group: · Mr. Andrew Barnett and Mr. Youba Sokona will be renewed for another term each starting at the end of their current tenures. · Terms will hereby be staggered to avoid the retirement of two TAG members simultaneously. · The donors will suggest candidates for a fifth member of the TAG based on a description page to be circulated by the TAG; the mechanism for candidate selection will be: the World Bank Group will in- terview candidates identified by the donors and present a shortlist to the donors for final selection. · If the information requested from the World Bank Group is not received by TAG, the TAG will record this in writing and the World Bank Group will state its reasons for withholding the information in writing. · ESMAP will fund the TAG's review of ESMAP's regional power markets work. · UNDP and its donors will decide whether UNDP funding should be extended to the expanded TAG. · The TAG will give its report to the CG a week ahead of each CG meeting. · A consolidated CG for all four ETFPs will be held annually and, to facilitate participation, its timing and location may be linked to a major energy-related event worldwide. UNDP Briefing on WSSD Ms. Susan McDade briefed the meeting on how energy has fared in the WSSD process including the discussions about the Type I Initiatives (intergovernmental processes) and Type II Initiatives ("coali- tions of the willing") as the context for GVEP's future. She emphasized the need for a Type I declara- tion to include language stating that energy is crucial to development and that the MDGs cannot be met without it. The developing countries are keen to see funded initiatives emerge from WSSD. GVEP is among the front-runners on this count and it is important for energy practitioners to ensure that energy does not get sidelined from the development agenda after WSSD. Ms. McDade also outlined the UNDP-led LPG Challenge, which has the strong support of industry as well as other players. 66 Energy Sector Management Assistance Programme 19 0,0001 0,000 1,000 0,000 $7,000 0,0001 0,000 Financing $15,000 $257,000 $186,000 $250,000 $276,130 $50,000 $1 $250,000 $15,000 $320,000 $14 $35,645 $1 $15,000 $2 $45,900 $50,000 $295,000 $15,000 $160,000 $140,000 $694,664 $12,000 $1 $250,000 $48,000 $230,000 $447,980 $1,1 $5,556,3 ESMAP . d'Ivoire. men Region/Country AFR. AFR. AFR. AFR. AFR. Bolivia. China. China. Cote ECA. ECA. Ecuador Ghana. Global. Global. Global. Global. Global. Global. Global. LCR. LCR. LCR. LCR. Mongolia. Mongolia. Nicaragua. Nigeria. Philippines. Ye Delivery Economies. Service Sea . Island Decisions Energy Sector Small olicyP China Caspian in Modern the Rural in into Extractive Countries uencing oorP Ecuador the Issues Nicaragua Development Infl in in Gender in oorP Development Funding in and Importing the Social (VPP-LAC) SSA oorP Energy olicyP ollutionP Management and Countries Sustainable in the Air Spill households Countries Resources Reaching and on Billing Oil Sustainability ollutionP ower--SeedP Mainstreaming of Caribbean Practice Indoor on Air and Renewable Energy Gasoline and for the Wind Impact Developing Best low-income in Developing and of Development Reduction Support Indoor ciency and 2 the Leaded . Pricing Alleviate for Modela in in in Effi Region: Renewable to Cooperation Fields Reform 200 overtyP Out Study Heat Projects ay" America provision of orkshop Use Gas LAC Reduction for Assessing via Framework (Francophone) W Sustainable ECA & W articulatesP Sector the IN in Developing Approaches Assessment Improving Latin Phasing National and Regional family-hydro Companies Energy Oil for Infrastructure Energy Africa: for for Oil of Fine for into Bank of Energy overtyP Promotion to Strategy in orkshop Chile: Development Energy olicyP to Mongolia the Project: W Reduction cient Energy "Rationala in on orld and Gasesll of and Regulation Access Pro-poor Effi market Enterprise: in for Access Energy National Gender W and Reform Africa overtyP overtyP of Rural artnershipP Market and Landfi Access cation on Mechanisms the of New Rural Gas orkshops Building Energy Approaches Strategy Region Fuels Sector and and W Energys Decommissioning Apportionment owerP From Infrastructure Development Energy & overtyP LAUNCHED Electrifi 2 Name Africa Clean owerP orkshop omen' Energy Energy Natural Development Sustainable W Media Developing Stimulating W Governance Mainstreaming Global Pioneering Capacity Rationing Source Rural Regional Village Energy Rural Rural olicyP Expanding Rural Energy No. 012 1 2 1 1978 1979 160 290 16 13 19 77595 77534 1975 7835 7980 780 1804 1980 1803 199 78333 78 1789 78804 1943 77905 78599 7780 1778 780 785 1780 PROJECTS P08 P080 P080820 P08 P0 P082009 P082 P080 P0 P08 P0 P0 P0 P08 P08 P08 P0 P0 P08 P0 P08 P0 P0 P0 P08 P0 P0 P08 P082262 P080572 ANNEX Project 29 Annual Report 2002 67 22 01 11 11 1 1 date 1,978 1,288 03,490 0,000 14,143 1,897 0,93 $67,694 $88,675 $64,400 $93,884 $59,2 $2 $7,632 1,9371 0,0001 $376,0 $288,5 $50,000 $1 $15,000 $148,1 $80,458 $5 $454,684 $404,695 $378,098 $379,366 $1 $7 $174,338 $2 $2 $303,053 $17 $17 ESMAP to $188,04 $4,747,536 22 01 11 11 95 1 1 16 1,978 1,288 03,490 0,000 0,93 $67,694 $88,675 $64,400 $93,884 $59,2 $2 $7,632 1,9371 14,143 0,0001 ESMAP $376,0 $288,5 $50,000 $1 $15,000 $148,1 $80,458 $5 $454,684 $404,6 $378,098 $379,366 $1 $7 $174,338 $2 $2 $303,053 $179,877 $17 $188,04 Financing $4,755,5 Alba Plas Plas Plas Plas Plas der Lallement Lallement der der der der Hoskote Floor Charpentier Rivera Rivera van Dickel M. Floor O'Connor M. Floor erradoT erradoT M. Lamech van Mayorga.O Rivera Rivera van van van S. S. J. H. Law ojimaK M. E. ojimaK M. N. Meyer N. Meyer L. J. akahashiT J. S. S. J. J. J. Daffern H. Masse S. S. TM Eric Mangesh Willem Arturo Arturo Robert Ralf eterP Masami Dominique Ranjit Willem Thomas Masaki Dominique Robert Jean-Pierre Eleodoro Arturo Masami Arturo Willem Rene Ernesto Anke Ernesto Anke Robert Robert Robert Republic Region/Country AFR Bangladesh Bolivia Brazil Brazil Chad China Croatia ECA Global Global Global Global Global Global enyaK LCR LCR LCR Mexico Mongolia Nicaragua Nicaragua Nicaragua eruP Philippines Slovak Swaziland Uganda Zimbabwe II delivery &I service Financing Phases artyP II) energy Guangdong Improvement Conference Third AT in Markets rural Phase for Program of Quality Market Air Region Strategy Generation Structures Electricity Study Gasa for Regulation Feasibility Elimination of owerP & on Market mechanisms Development (Lead Strategy Bataar Program Forum Project American Sector Chinandega Management Energy owerP Ulaan the Energy. argetingT 2 Fuel Project Development & America Energy for in sector-led uent Development Buyer Energy Southern Study Effl II--FINEP the owerP Latin Management the Sector cation 200 etroleumP orkshop Development Renewable Project orld b/w W for Stoves private Non-Conv W Environment and by Single for Pre-feasibility in Promotion uent Production on & cation Phase IN Study and AT ransportationT in cation cation Electrifi cation Effl Fuelwood & Heating Rural A--MonitoringT Reform Energy cation ollutionP Manual Quality Strategy of of Electrifi Rural Distribution Clean Grid-Based orkshop Electrifi Development Title Downstream ciency ciency of Competitive Electrifi Charcoal Investment Electrifi Fuel Interconnection Energy Space ciency on Sector Effi End-use Effi Gas Asia articipationP Effi Electrifi Gas Energy Market & Project Forum Energy Energy Bahia Energy Rural Reduction Natural Central Accelerating Designing eri-urbanP Oil Environmental ESMAP Low-cost Regional Improving End-use Environmental Improved Sustainable Modernization Nicaragua--W Rural Strengthening Energy Solar Uganda--Rural Decentralized COMPLETED ID 2 1 12 12 0 20 1 7 15 11 1 1 0047 1901 122 18 05857 73842 P04850 P068929 P034782 P045 P044442 P0649 P06857 P065450 P0660 P0 P06530 P06 P0574 P049548 P0 P065306 P068335 P0505 P045 P062488 P066320 P064698 P053228 P0 P0433 P053242 P040067 P056574 P04456 P05342 Project PROJECTS 1999 1999 1999 1999 1999 1999 1999 1999 1999 1999 1999 1999 1999 1999 1999 1999 1999 1999 1999 1999 1999 1999 1999 1999 1999 1999 1999 1999 Source End End End End End End End End End End End End End End End End End End End End End End End End End End End End 30 68 Energy Sector Management Assistance Programme 1 13 15 7 1,76 1,8230 04,524 7,096 2,000 1,3290 2,000 15,9 ESMAP $59 $249,999 $1 $322,498 $150,659 $87,000 $53,000 $1 $133,186 $20 $30 $403,923 $50,000 $284,892 $35,000 $1 $40 $5 $335,000 $584,740 $188,979 $299,90 $340,000 Financing $2,569,1 $1,330,846 TM Savary Masse Savary Hoskote Alba Svensson Oduolowu Svensson Hoskote Meyer Barnes Durand Durand Imran Saeed Saeed Sanghvi Atur Feinstein Hoskote Bacon Benmessaoud Ahmad aylorT Mendonca Africa Lanka Region/Country Zambia Cameroon AFR Malawi AFR Global ECA Vietnam Ghana Ukraine LCR Bolivia Bolivia India Mongolia Sri South Romania Mexico AFR Global olandP Bangladesh Global Morocco 2 I) 200 (Phase 1,3 I Prevention Basin Company Utilization Area and II Gas River Capitalization Sector Nile America DECEMBER owerP the Pipelines echnologyT eri-UrbanP A--PhaseT through in & Remediation Gas ON etrovietnamP the orkshop Central in W of in radeT & Program Energy Oil Modeling, Concessions Project Issues owerPs proj) Industrial owerP gas cation Management Reform I Exchange II Corridors Program eople' (incl Renewable Restructuring owerP Cross-Border in Bernoussi PORTFOLIO Electrifi Demand Database, & & Review to Distribution Sidi Programme Environmental omen of Demonstration (Reconnaissance) International Operational in Restructuring Rural on orkshop--P W Development Reform--Phase for Regulation ransportationT Reduction Reform cation W for Heat Improvement ciency Electricity Occurrence Biomass Obstacles ciency ciency Title ESMAP Sector Programme--Phase Energy Electrifi Africa Effi Sector Sector Effi Effi Flaring Stove IN Spills Project Energy Decentralized Regional Rural etroleumP Gas Oil Institutional Corporatization Integrated Rural National Country Dissemination Coal Energy-Environment South Energy Energy Opportunities Removing Energy Opportunity Energy Global ID 75 1 1 0 11 1 126 17 180 23879 P0490 P063 P0653 Project P0 P044275 P044440 P044764 P048500 P049639 P05039 P052260 P053 P053523 P056928 P056929 P05786 P058884 P063 P064743 P064933 P064935 P065449 P065453 P065454 P06546 PROJECTS Annual Report 2002 69 16 1 1 27 00,000 0,000 00,000 0,0001 1,500 0,0001 $8,0 ESMAP $857,6 $54,68 $320,149 $279,860 $89,600 $1 $59,664 $7 $430,733 $253,792 $1 $120,000 $293,29 $2 $232,640 $225,000 $50,000 $504,000 $37 $3 $222,750 $150,000 $900,000 $175,000 $278,500 $195,000 Financing $1,525,904 TM Alba Lallement Barnes Svensson Johnson Charpentier Layec McPherson Moose Lamech Shah Gulstone raversT Reliquet Utria Correia Barnes Hoskote Shum Barnes Imran Sa Labaste aylorT Xie orresT Stuggins ojimaK Region/Country Bolivia Global Global Vietnam China EAP AFR Nigeria Macedonia Thailand Thailand AFR ECA AFR Global LCR India AFR Philippines Bangladesh India Vietnam Global Global Global Nicaragua Lithuania SAR Pradesh India and Uttar & China Organizations/Rural arnatakaK Brazil, in for Regional Sector Projects enterprises eopleP etroleumP Assessment ciency II energy Effi the Indigenous for Phase Bangkok Challenges Energy From oolP Africa in IV) & code India renewable Sector--Rapid for cookstoves est II of for Framework owerP W (Phase in Cities owerP mining Strategy Strategy ollutionP countries Case Gaps Energy new Basin Air Funding) improved African Opportunities The incubator Strategy State Mechanisms of Activity Market the cities/towns Representatives Regulatory 2 the and cation--Phase & transition and (Seed Networks 2 oliciesP Mekong owerP Reduce Energy Lives:s Energy for small Management Group to Sustainable Air Bridging Phase fund to Legal in seminar eyK Phase Electrifi Sub-Saharan omen' Rurala oliciesP Intermediation Quality Dissemination Market: W in Biomass Basin power Clean supply for Grid Review Applications Mitigation Upgrade Health: low-income & dialogue commercialization Air for Existing Regionala Energy-Environment/GHG in Gender Nile of the of and Sector Study Fleet in Energy olicy Energy Financial Regional Urban Title Program of Electricity Initiative Modern Development, Knowledge Emission oolP America Formulating Practices Aspects strategies Air radeT Asia Project rainingT Energy ESMAP Best Revision Sulfur Regional Development etroleumP eyK owerP Motorcycle Environment Heat Clean Advancing Central Household owerP Philippines--Village owardsT India--Environmental Vietnam--P Alternative Developing Developing Nicaragua--Pilot Lithuania--Heating South ID 1 12 13 16 11 00547 06787 06847 79707 09227 09387 09407 145 724 72626 72936 72947 72999 730 73 73293 73366 735 P06597 P0 P0 P0 P0 P0 P0 P0 P0 P0 P0 P0 Project P065663 P0660 P067826 P068523 P068663 P068875 P069382 P069434 P069828 P069992 P0 P0 P0 P0 P0 P0 70 Energy Sector Management Assistance Programme 1 1,83 00,000 00,000 00,000 $9,993 $3,500 ESMAP $1 $15,000 $150,000 $430,000 $49,987 $45,000 $250,000 $203,000 $150,000 $238,204 $79,992 $33 $50,000 $197,000 $160,000 $1 $65,000 $150,000 $1 $350,000 $308,000 $15,000 $230,000 Financing asquez odon TM Feinstein Rysankova Ijjasz-V Bacon Hoskote Cosgrove-Davies Carreiro Ahmed W McPherson Moose Lallement akahashiT orresT Armar Lvovsky Barnes orresT Hamso Husband Crousillat Rivera Motta ownsendT Sakairi Asia Region/Country Mexico LCR Central Global AFR Nigeria Brazil Guatemala LCR Global urkeyT Global China Honduras Brazil India Cambodia LCR ECA China Cambodia China Nicaragua Azerbaijan Mozambique coal of Renewable Bank strategies orld management Funding II Wa cation Funding) for (Seed electrifi Phase Case. Nigeria Plan sustainable Funding in rural Projects--Seed projects. Program Microcredit Africa Evaluation cation Uzbekistan in Activities national and Reform and of access--SEED development The Village Countries environmentally oorP Electrifi Energy echnologyT part Utilities Asia: capacity as and Services energy the Coal India Regulatory electricity Rural on III) CDM Solar-Net Supply in Monitoring Accession and Central Clean of delivery EU socially rural in Renewable (Phase of ater Funding of renewable Reform build Fuels W the to and to Development for Integrated service Plan utilities use Sector Conference Review (GVEP) Expansion Small provincial impacts with Restructuring program fuel Household Action Strategy and Gender-sensitive energy and Business, program water Assistance Utilities--Seed Energy assistance of Implementation Proposed Sector cation Cleaner ater alleviation Experience urban eri-Urban/RuralPs artnershipP Energy national Management Environment on to Medium Project off-grid Sector W Gas in traditional energy in to of for in Electricity long-term Bank Impacts collaborative of and Energy for A Bank' Electrifi Advice oorP cation poverty China A of Energy ciency the issues Offgrid Assistance the the Title the income Revenue ciency overty-focused,Pa in ciency effi impacts Energy Village olicyP building Effi of Effi on Electrifi Project Mexico--T Evaluation Energy Assessing CDM-assist: Initiating Brazil--Rural Health LCR--Low etroleumP urkey:T Global China: echnicalT Energy Access Designing Rural Regulatory Multilateral Capacity resources Cambodia--Renewable Energy Lessons Azerbaijan--Natural Assessing ID 1 1 149 127 196 111 1 131 09 73535 73536 73630 7375 73936 73965 74 74232 74337 74455 74557 74622 74684 75 75 75756 75883 7608 76097 76 76 7647 767 76760 76783 P0 P0 P0 P0 P0 P0 P0 P0 P0 P0 P0 P0 P0 P0 Project P0 P0 P0 P0 P0 P0 P0 P0 P0 P0 P0 Annual Report 2002 71 0,000 $1 05,000 17,000 0,000 0,0001 1,000 0,0001 0,000 $1 ESMAP $345,756 $276,130 $1 $694,664 $220,000 $160,000 $1 $7 $45,900 $2 $320,000 $250,000 $140,000 $295,000 $14 $257,000 $447,980 $186,000 $12,000 $48,000 $50,000 $15,000 Financing $1,1 TM Belguedj Ekouevi Durix Davis Ahmed Iqbal Shukla Quintero Agyen Johnson Davidson Castberg orresT Rysankova Johnson Durand Alba Baris Spencer Bacon Bale Cosgrove-Davies Maurer Oduolowu McPherson d'Ivoire men Region/Country Nigeria Cote AFR Global LCR Bangladesh LCR Bolivia Ghana Global Global ECA Nicaragua LCR Global Ecuador AFR China Ye AFR Mongolia Nigeria Global Global Global Economies Island 2) Sea Energy Decisions Small Sector (Phase in Caspian China Modern olicyP Projects: the into Extractive in Rural Countries Services Issues uencing Bangladesh Pipeline the Ecuador oorP in Development Nicaragua Infl Oil Gender in in in in Funding Social and Energy and Energy and Importing Management (VPP-LAC) and ollutionP oorP Utilization Gas Spill Resources SSA Countries Countries households ater into ollutionP in Air the Sustainability ower--SeedP W Practice Mainstreaming Oil Renewable Air of Caribbean on on Energy for Best for the Indoor Wind Expansion echnologyT and Gasoline Developing Development Pipeline Developing Impact of Indoor Needs Support and low-income in in Gas in in for the Access Region: Environment Modela Alleviate Energy Reform Renewable Leaded Cooperation of to Fields and LAC America Out provision ay Sustainable orkshop Gas W Immediate the Sector articulatesP Use Assessing via W & Assessment and for Integrating Developing Approaches Renewable Regional Latin in family-hydro Bolivia-Brazil Fine Phasing Infrastructure Oil Companies in Energy Promotion for Energy for Africa: to of Oil Meeting to the olicyP for Bank of Development Energy Reduction for Gasesll the in Mongolia Study `Rational'a omen on cient and orld for Project: Access of W Enterprise: W market Effi Access in Rural Case and National Market on overtyP Landfi artnershipP for Reform Based New Mechanisms the Africa and of Rural Title Approaches Building Energy LPG Strategy and Assessment From Energys Delivery Practice & owerP Apportionment Fuels overtyP Sector Development Decommissioning orkshop omen' Project Nigeria W Energy Rapid Energy Opportunity Regional Good Experiences W Service Capacity Pioneering Developing olicyP Village Source Stimulating Clean Sustainable Energy owerP Rural Expanding Rationing Global Governance ID 1 1 11 06 16 1 199 19 2 012 290 77 77534 77595 77689 7780 77887 77905 780 780 78 78333 7835 785 78599 78804 7980 1778 1780 1789 1803 1804 P0 P0 P0 P0 P0 P0 P0 P0 P0 P0 P080 Project P0 P0 P0 P0 P0 P0 P080 P080572 P080820 P08 P08 P08 P08 P08 72 Energy Sector Management Assistance Programme $15,000 $15,000 $15,000 $7,000 ESMAP $250,000 $50,000 $250,000 $230,000 Financing TM Sara Osborne oljonenK Durix Ofosu-Amaah Durand aylorT Shum Region/Country LCR ECA AFR AFR Global Bolivia China Philippines Funding oorP Development--Seed the olicyP Sustainable Reaching and Billing and and ciency Reduction Effi Pricing overtyP Projects Study Heat ECA Framework Improving for (Francophone) in Energy National Chile: into in Energy Strategy orkshop W Development Regulation on Gender Pro-poor Energy overtyP Market of cation Title orkshops Infrastructure W Gas Region and Electrifi Project Rural Media Africa Energy Mainstreaming Natural Development Rural ID 1943 1975 1978 1979 1980 160 Project P08 P08 P08 P08 P08 P082009 P082 P082262 Annual Report 2002 73 ANNEX 3 REPORTS PUBLISHED IN 2002 ANNEX 3 Energy Sector Management Assistance Programme FORMAL REPORTS REGION/COUNTRY ACTIVITY/REPORT TITLE DATE NUMBER EAST ASIA AND PACIFIC (EAP) Mongolia Improved Space Heating Stoves for Ulaanbaatar 03/02 254/02 Philippines Rural Electrification and Development in the Philippines: 05/02 255/02 Measuring the Social and Economic Benefits Vietnam An Overnight Success: Vietnam's Switch to Unleaded Gasoline 08/02 257/02 The Electricity Law for Vietnam--Status and Policy Issues-- 08/02 259/02 The Socialist Republic of Vietnam SOUTH ASIA (SAS) Bangladesh Reducing Emissions from Baby-Taxis in Dhaka 01/02 253/02 India Energy Strategies for Rural India: Evidence from Six States 08/02 258/02 Household Energy, Indoor Air Pollution, and Health 11/02 261/02 EUROPE AND CENTRAL ASIA (ECA) Bulgaria Energy Environment Review 10/02 260/02 GLOBAL Economic Development, Climate Change, and Energy Security 05/02 -- Annual Report 2000­2001 05/02 -- Energy and Development Report 2001: Energy and the 06/02 -- Environment Status of ESMAP Portfolio of Projects as of June 30,2002 08/02 -- Economic Development, Climate Change, and Energy Security: 09/02 and The World Bank's Strategic Perspective Paper No. 3 Private Financing for Community Infrastructure 05/02 256/02 Annual Report 2002 75 TECHNICAL REPORTS REGION/COUNTRY ACTIVITY/REPORT TITLE DATE NUMBER SUB SAHARAN AFRICA (SSA) Phase-Out of Leaded Gasoline in Sub-Saharan Africa 04/02 028/02 Nigeria Phase-Out of Leaded Gasoline in Nigeria 11/02 029/02 Senegal Regional Conference on the Phase-Out of Leaded Gasoline in 03/02 022/02 Sub-Saharan Africa Tanzania Mini Hydropower Development Case Studies on the 04/02 024/02 Malagarasi, Muhuwesi, and Kikuletwa Rivers Volumes I, II, and III EAST ASIA AND PACIFIC (EAP) Cambodia Efficiency Improvement for Commercialization of the 10/02 031/02 Power Sector Vietnam Renewable Energy Action Plan 03/02 021/02 LATIN AMERICA AND THE CARIBBEAN (LAC) Proposals to Facilitate Increased Energy Exchanges in South 04/02 016/01 America--Phase II Population, Energy and Environment Program (PEA) 02/02 020/02 Comparative Analysis on the Distribution of Oil Rents (English and Spanish) Estudio Comparativo sobre la Distribución de la Renta 03/02 023/02 Petrolera Estudio de Casos: Bolivia, Colombia, Ecuador y Perú Latin American and Caribbean Refinery Sector Development 08/02 026/02 Report--Volumes I and II The Population, Energy and Environmental Program (EAP) 08/02 027/02 (English and Spanish) Ecuador Programa de Entrenamiento a Representantes de 08/02 025/02 Nacionalidades Amazónicas en Temas Hidrocarburíferos Nicaragua Memoria Taller de Electrificación Rural 08/02 030/02 76 Energy Sector Management Assistance Programme Annual Report 2002 The World Bank 1818 H Street, NW Washington, DC 20433 USA Tel 1.202.458.2321 Fax 1.202.522.3018 Internet: www.worldbank.org/esmap Email: esmap@worldbank.org