E 35998 R Annual Report 2004 ENERGY SECTOR G MANAGEMENT ASSISTANCE PROGRAM Copyright 2005 The International Bank for Reconstruction and Development The World Bank Group ESMAP 1818 H Street, N.W. Washington, DC 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 endorse- ment 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 All photos from World Bank Group Photo Library Design Studio Grafik Editorial Support Grammarians, Inc. Production Coordination Marjorie K. Araya Printing District Creative, Inc E N E R G Y S E C T O R M A N A G E M E N T A S S I S TA N C E P R O G R A M CONTENTS Foreword ...............................................................................................................................................1 Energy Challenges: Servicing the Energy Poor Under Increased Vulnerability ......................................3 1. ESMAP at a Glance ............................................................................................................................5 2. The ESMAP 2004 Portfolio in Brief.....................................................................................................7 3. Details of the ESMAP 2004 Portfolio................................................................................................11 Summary of ESMAP Achievements..............................................................................................11 ESMAP Portfolio Review by Strategic Area..................................................................................13 4. Governance and Management .........................................................................................................37 5. Financial Review ...............................................................................................................................41 Annex 1: Proceedings from the Joint Consultative Group of the Energy Trust­Funded Programs 2004 Consultative Group Meeting...................................45 Annex 2: Map and Table of Completed, Approved, and ongoing activities in 2004..........................52 Annex 3: Publications and Knowledge Dissemination Activities........................................................64 List of Abbreviations and Acronyms .....................................................................................................70 ANNUAL REPORT 2004 i N ESMAP strives to expand the global knowledge base for addressing energy issues. ER GY ii ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM FOREWORD For the Energy Sector Management Assistance Program (ESMAP), 2004 was a year of accom- plishments and a year of transition. The Program concluded its 2002-2004 Business Plan with a strong focus on energy-poverty activities, environmental sustainability, and energy market development. This year ESMAP began the development of a new business strategy covering the next three years. The Program will continue to promote the role of energy in poverty reduc- tion and economic growth in an environmentally responsible manner, but responding to sever- al new challenges emerging in the energy sector ­ from the increased instability of the energy Mr. Jamal Saghir environment for developing countries, to the need to scale up renewable energy, and the urgent financial requirements for energy investments to serve the poor. Monitoring the impacts of ESMAP activities continues to be a fundamental part of the Program's emphasis. In partnership with donors and developing countries, in 2004 ESMAP supported several activ- ities focused on energy and poverty reduction, including a major review of best practices of rural electrification programs, an analysis of energy expenditures by the poor in 45 cities, and several activities on gender and energy linkages. The work supported by ESMAP to address the energy-development-sustainability nexus included the promotion of renewable energy for development as a key element in meeting the challenge of reducing energy poverty and energy vulnerability. Progress was also made in developing methodologies and conducting research on the synergies between energy and development. This work connecting energy and the Millennium Development Goals enhances our understand- ing of the linkages between productive uses of energy and social development issues. In these areas, ESMAP supported the preparation of a book on Health Impacts of Traditional Fuel Use in Guatemala, the development of a toolkit on renewable energy, a conference on women and mining, and a paper on the Impact of Higher Oil Prices on Poor People Low Income Countries. Finally, ESMAP continued its work on sustainable energy markets. An assessment of the impact on the poor of more than ten years of energy sector reforms was completed. There also was progress in the development of public-private partnerships that we hope will lead to private investment in crucial areas such as rural energy, energy efficiency, and energy produc- tion. Of particular note was the support for the interaction of business and development through roundtables, workshops, and ESMAP's involvement and support to the Global Village Energy Partnership (GVEP). The high prices of hydrocarbons and their impact on the poor is an area of growing importance for the Program. ESMAP's effectiveness and its ability to provide support to both clients and partners on energy issues of great importance would not have been possible without the continued and gener- ous support of its Program donors. Mr. Jamal Saghir Director Energy and Water The World Bank ANNUAL REPORT 2004 1 2 ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM Energy Challenges: Servicing the Energy Poor under Increased Vulnerability The year 2004 was marked by continued increases in energy prices, causing particularly acute sector development challenges. Even without rising prices, bringing modern energy services to the poor is an enormous challenge. Today 1.6 billion people lack access to electricity, and 2.4 billion rely on tra- ditional biomass fuels for cooking and heating. Contrary to myth, poor people pay a high price--in cash or in labor--for the energy they use. Moreover, they spend a much greater share of their household income on energy than do wealthy peo- ple, not only because their incomes are much smaller but also because the fuels they use are much less efficient than modern fuels. Finally, there is recent evidence that biomass energy prices are linked in many urban areas to the price of petroleum fuels. This linkage means that even those poor house- holds using wood for cooking in the urban areas of many developing countries are not exempted from problems of rising petroleum fuel prices. In modern times no country has managed to substantially reduce poverty without massively increasing the use of energy. Modern energy has the biggest effect on poverty by boosting poor people's produc- tivity and thus their income. Electricity helps improve health care and education for poor people by pow- ering lights and modern equipment and makes it more likely that women will read and children will attend school regardless of their income class. Modern energy also lightens the burden on women and reduces the impacts on the health and livelihoods of poor people that result from the use of traditional fuels. These strong links with poverty reduction--through income, health, education, gender, and the envi- ronment--suggest that the energy sector needs to work with other sectors to ensure that the poor benefit as much as possible from greater access to modern energy. Public policies ostensibly aimed at helping the poor often end up doing the opposite. Selling fuels at subsidized prices does poor people little good if there are restrictions that they face in obtaining the fuel in the market. Even taxing the fuels used by the well-off hurts the poor by causing the price of fuels they use to rise as well. ANNUAL REPORT 2004 3 Contrary to myth, poor people pay a high price--in cash or in To be sustainable, programs to increase access to efficient fuels need to harness private entrepreneurship. When improved stove programs simply gave away the cook stoves, the labor--for the energy program faltered. But when the programs involved local private manufacturers and deal- ers, the program became sustainable. they use. Moreover, they How best to design and implement policies for assisting the poor through expanding access spend a much greater to affordable energy requires learning from experience. Experience shows the importance of removing institutional and regulatory barriers, designing subsidies carefully, ensuring local share of their household involvement in the design and delivery of energy services, and protecting the poor during reforms. Policies like these, while not enough to end energy deprivation are certainly neces- income on energy than sary for doing so, and they can improve the performance of the energy sector as a whole. do wealthy people, not ESMAP recognizes that no one way of applying these policies will work under all the world's widely varying social and economic conditions. Accordingly, ESMAP sponsors innovative only because their research in many areas. ESMAP also forges alliances and partnerships with organizations, gov- ernments, private and community stakeholders to help provide modern energy to the poor. incomes are much Ending energy deprivation will not be easy. In most developing countries efforts to develop smaller but also because innovative ways to deliver modern energy services to the poor confront formidable institu- tional and regulatory barriers. This issue affects rural and urban areas alike, but in sharply the fuels they use are different ways; these differences must be taken into account in formulating policies. much less efficient than ESMAP's activity in 2004 occurred against a backdrop of a particularly challenging envi- ronment. On the one hand, the environment for the supply and use of energy services in modern fuels. developing countries became increasingly unstable. The instability was driven by a range of factors including increasingly volatile hydrocarbon prices, macroeconomic uncertainties, climate change, and high levels of political instability. On the other hand, there is further consensus among developing countries and their partners that access to energy services is a key input in achieving economic growth, in improving living standards, and in achiev- ing the Millennium Development Goals (MDGs). ESMAP activities in 2004 were conducted in line with the directions given by the Consultative Group (CG) of donors and the three-year (2002­04) ESMAP business plan and were anchored on achieving the MDGs. Therefore, the activities emphasized the link- ages between energy and poverty reduction through three strategic pillars: access to ener- gy services, market development, and environmental sustainability. The operational activi- ties to support these three strategic pillars are described in this report. Ms. Dominique Lallement Program Manager ESMAP, The World Bank Group 4 ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM 1. ESMAP at a Glance The Energy Sector Management Assistance Program (ESMAP) is a global multidonor technical assistance program aimed at promoting energy solutions for poverty reduction and economic growth in an environmentally responsible manner. ESMAP recognizes that access to affordable and reliable ener- gy services is indispensable in achieving the Millennium Development Goals. ESMAP provides policy advice and helps build consensus on sustainable energy development in developing countries and economies in transition with governments, development part- ners, and the private sector. ESMAP undertakes cutting-edge analytical work on sector issues, contributes to the transfer of knowledge among sector stakeholders, and pioneers implementation and financing mechanisms for the delivery of sustainable energy services. ESMAP was established in 1983 and is managed by the Energy and Water Department of the World Bank; it is gov- erned by a consultative group of donors. ESMAP's Mission Statement ESMAP promotes the role of energy in poverty reduction and economic growth with redistribution in an environmentally responsible manner. Its work applies to low-income, emerg- ing, and transition economies and directly contributes to achieving the Millennium Development Goals. ANNUAL REPORT 2004 5 How ESMAP Pursues Its Mission How to Apply for ESMAP's Support ESMAP pursues its mission through four main mechanisms: In 2004, applications for ESMAP support came from many sources, but mostly from governments and World Bank staff. · Providing experts to work with governments, research Starting in 2005, ESMAP will agree on annual activity pro- organizations, nongovernmental organizations (NGOs), grams with World Bank Energy Sector and other managers financial institutions, the private sector, and other develop- who will in turn conduct consultations with country govern- ment organizations on strategies, policies, and technical, ments to establish priorities for project funding. In addition, institutional, and financial solutions that will enable the ESMAP staff will conduct its own workprogram identified as scaling up of sustainable energy services important to the energy practice. · Undertaking cutting-edge analytical work on global or local sector energy issues not yet mainstreamed by govern- Applications for ESMAP support can be downloaded from ments or in the portfolios of bilateral or multilateral devel- the ESMAP website (http://www.worldbank.org/esmap) or opment institutions and the private sector requested from the management unit. Proposals are · Identifying and disseminating experience and lessons assessed against priorities and criteria established within the learned from sector policies and projects through confer- World Bank and within the donor-approved three-year ences, workshops, publications, and its website business plan. Those criteria are based on government com- · Implementing pilot projects to test innovative institutional mitment, alignment with World Bank Country Assistance and financial solutions relating to energy and development. Strategies (CASs), alignment with Poverty Reduction Strategy Papers (PRSPs) agreed with the beneficiary govern- ESMAP's mandate and products have evolved over time to ments, and the potential for both mainstreaming and replic- meet the changing needs of its clients. ESMAP has operat- ability in donor-supported and private sector programs. ed in more than 100 countries through more than 600 activ- ities since its inception. The Country Energy Assessments in the 1980's initially branded the program and served to fill the How ESMAP Delivers Services knowledge gap on the energy situation and development options in an environment of rapidly rising energy prices. ESMAP-financed activities are led by World Bank Group staff in partnership with international, national, regional, and/or Today, ESMAP focuses on the development of specific studies local organizations. International and local consultants are that include pre-investment issues, advisory services, confer- extensively used. Procurement is governed by World Bank ences, workshops, and training, publications and websites, guidelines. More information about procurement arrange- and pilot activities that have clear potential for improving policy ments and consultancy opportunities is available on the and scaling-up energy investment in developing countries. ESMAP website. ESMAP also conducts evaluations, documents emerging best practices, and disseminates information in order to pro- mote knowledge transfer to the developing community. 6 ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM 2. The ESMAP 2004 Portfolio In Brief During 2004, the ESMAP portfolio under implementation This evolution in the portfolio is explained by the following grew slightly in number of activities (from 89 to 96) but factors: decreased by 4 percent from US$21.2 million to US$20.3 million. This was partly due to the increased number of activ- · Expansion of the Fast-Track Portfolio: To respond to a ities that were completed and the consolidation of the port- demand by the Energy Sector Board for just-in-time sup- folio in order to close the 2002-2004 Business Plan. port, ESMAP introduced a Fast-Track Window in 2002 to finance activities costing less than US$50,000, usually for During 2004, 39 new activities worth more than US$4.8 mil- studies and knowledge workshops to help policymakers lion were launched, a slight decrease from 2003 (44 activities for immediate decisions. Since its launch more than 30 launched for a value of US$5.8 million), and 49 activities Fast-Track activities entered the ESMAP portfolio, which worth US$7.8 million achieved financial closure. Table 2.1 has led to an increase in the number of activities and a provides an overview of changes to the portfolio in 2004. decrease in the average value per project of activities financed. Although the expectation was that these activi- Table 2.1: Evolution of the Portfolio ties would be implemented faster, a recent review of the Fast-Track activities found out that most of them experi- Value Overview of Changes in Portfolio 2004 Number (US$ million) enced delays, partly owing to country situations. Portfolio as of January 1, 2004 124 30.3 Activities Completed, with · Lengthening of the average implementation period: publications in process 35 9.1 One-third of the activities in the portfolio have been under Portfolio Under Implementation implementation for more than two years. However, 67 as of 1/1/04 89 21.2 activities were completed in 2004, of which 14 activities New activities launched during 2004 39 4.8 were financially closed. This compares with 29 completed Activities closed and published during (19) (2.4) activities in 2003. 2004 Financially closed (14) (1.5) While little can be done to change specific country situations To be financially closed (5) (0.9) that hamper prompt implementation, ESMAP's management Activities withdrawn during 2004 0 0 believes that the new programmatic approach that is pro- Activities Completed, with publications posed for the 2005-07 business plan will facilitate the imple- in process 48 12.4 mentation of the projects managed by the World Bank's Portfolio Under Implementation as of regional staff. 96 20.3 12/31/04 Source: ESMAP project database, 2004. ANNUAL REPORT 2004 7 Among the strategic areas, the environmental portfolio The share of the access-poverty portfolio increased consider- remained the largest in 2004, but its share decreased both ably, both by number (31 percent) and by value (27 percent). by number and by value when compared with 2003. It pres- The launching of new activities, such as GVEP activities and ents half the portfolio by value and 35 percent of the portfo- rural electrification in Peru, has contributed to this increase. lio by number. The two Bolivia biomass activities worth US$3.9 million that are in the process for publication are The market portfolio accounted for 28 percent of total activ- included in the environmental portfolio. As the two activities ities and 19 percent of total funding, which represents a close in 2005, the ESMAP portfolio will resume a balance decline in proportion from the previous year (Figures 2.1-2.4). among its three strategic areas. Figures 2.1 and 2.2: Portfolio Structure by Strategic Area in Value Breakdown by Strategic Area 35 (as a % of US$ Value) 30 25 Cross-Cutting: 4% U.S.$ 20 of 15 Access: 27% illions 10 M 5 0 End End End End End End End 1998 1999 2000 2001 2002 2003 2004 Total Total Total Total Total Total Total Value: Value: Value: Value: Value: Value: Value: $21.7m $27.7m $28m $26.3m $28.3m $30.3m $32.7m Environment: 50% Market: 19% Cross-Cutting Environment Market Access Figures 2.3 and 2.4: Portfolio Structure by Strategic Area in Number Breakdown by Strategic Area 150 (as a % of Number of Projects) 120 Cross-Cutting: 6% ojectsrP 90 of Access: 31% 60 umber N 30 0 End End End End End End End 1998 1999 2000 2001 2002 2003 2004 89 107 114 110 110 124 144 Projects Projects Projects Projects Projects Projects Projects Environment: 35% Market: 28% Cross-Cutting Environment Market Access 8 ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM Figures 2.5 and 2.6: Portfolio Structure by Region in Value 35 Breakdown by Geographic Area (as a % of US$ Value) 30 25 U.S.$ 20 Latin America Global: 22% of & Caribbean: 34% 15 illions 10 M 5 0 Africa : 16% End End End End End End End 1998 1999 2000 2001 2002 2003 2004 Middle East Total Total Total Total Total Total Total & North Africa: 3% Value: Value: Value: Value: Value: Value: Value: $21.7m $27.7m $28m $26.3m $28.3m $30.3m $32.7m Europe & Central Asia: 8% East Asia Latin America Middle East Europe & & Caribbean & North Africa Central Asia South Asia: 3% & Pacific: 14% East Asia South Asia Africa Global & Pacific Figures 2.7 and 2.8: Portfolio Structure by Region in Number 150 Breakdown by Geographic Area (as a % of Number of Projects) 120 ojectsrP 90 Latin America Global: 21% of & Caribbean: 24% 60 umber 30 N Middle East & North Africa: 3% 0 End End End End End End End Africa : 24% 1998 1999 2000 2001 2002 2003 2004 89 107 114 110 110 124 144 Europe & Projects Projects Projects Projects Projects Projects Projects Central Asia: 8% South Asia: 5% Latin America Middle East Europe & & Caribbean & North Africa Central Asia East Asia & Pacific: 15% East Asia South Asia Africa Global & Pacific ANNUAL REPORT 2004 9 10 ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM 3. Details Of The ESMAP Portfolio 2004 ESMAP is committed to having a major development impact. For example, the recommendations from the India Indoor Air In approving the 2002-2004 Business Plan, the CG endorsed Pollution (IAP) activity in India (ESMAP Activity P075756 and a framework for measuring the impact of all its activities. Formal Report 263/03) were included in India's Tenth Five- Accordingly, all ESMAP activity proposals include a set of Year Plan, and the Brazil Rural Electrification (ESMAP Activity expected outputs and performance- and impact-monitoring P074149, Technical Report 066/05) helped in formulating indicators. This may, however, capture only the short-term Brazil's National Rural Electrification Strategy. impact of the project during its execution or at completion. The longer-term impact either on the beneficiary client organ- In 2004, eight ESMAP activities were completed that led to ization or on the country is harder to measure. Nevertheless, revised sector strategies in the area of air pollution, including the portfolio monitoring and impact evaluation reviews have the Clean Air Initiative for Sub-Saharan Africa activity demonstrated the contribution and impact of ESMAP's port- (ESMAP Activity P080210, Technical Reports 038-041/03 folio on energy policy and legislative and regulatory changes; and 079/05), under which several African countries issued on the development of sector management and analytical strategies for the elimination of leaded fuels, and the tools; in generating new knowledge; in the design of innova- Thailand Motorcycle Upgrade (ESMAP Activity P069992, tive transactions; and in facilitating resource mobilization. ESMAP Formal Report 275/03), under which a new policy for the phasing out of two-stroke engines was prepared. Summary of ESMAP Achievements ESMAP activities supported the adoption by several coun- tries of policies and strategies for regional systems integra- Energy Strategy and Policy tion. For example, the Opportunities for Power Trading: Nile River Basin (NBI) (ESMAP Activities P064935 and P070940, ESMAP is focused on cutting-edge research and technical ESMAP Formal Report 277/04 and Technical Report assistance with the potential to affect sector-wide policy and 067/05) contributed to the formulation of the Nile River Basin strategy formulation. Since its creation, ESMAP has helped NBI power trade strategy, and the Mekong Regional Energy governments develop and implement a number of innovative Market (ESMAP Activities P048933 and P068663, ESMAP cutting-edge strategies in the areas of both traditional and Technical Report 015/01) was important for the formulation nontraditional energy use. of a joint strategy by the member countries. ANNUAL REPORT 2004 11 The role of energy in reducing poverty reduction in line with ESMAP's activities in combination with World Bank lending meeting the MDGs was taken up by the Africa, Manila, and projects have led to significant improvements in the regula- Latin America and the Caribbean Workshops on Energy for tory and in the legislative framework of the energy sector in Poverty Reduction activities held in 2004, which contributed many developing countries. to a multisectoral approach integrating energy services into national poverty reduction strategies (ESMAP Reports Analytical Instruments 266/03, 268/03, 278/04, 286/04, 294/04, 295/04, 296/04, 298/05, and 043/03). In addition, a flagship study on ESMAP has funded the development of innovative analytical Environmental Health and Traditional Fuel Use in Guatemala instruments, continuing its early activities in developing was completed in 2004 and now has been jointly published methodologies for preparing Country Energy Assessments. by ESMAP and the World Bank in the Directions in These assessments originally served to fill the knowledge Development Series. This study led to including an Indoor Air gap on the energy situation in a specific country and now Pollution component in a new health project to be financed can help provide and analyze options to address the issue of by the World Bank. Finally, the study on Power Sector rapidly rising energy prices. Reform and the Rural Poor in Central America (ESMAP Report 297/04) has provided the analytical framework for the In 2004, ESMAP completed activities that contributed to continued policy dialogue in these countries. developing new instruments for the analysis of the environ- mental impact on alternative power sector plans through the Legislation and Regulation pilot Rajasthan and Karnataka Power Sector Long-Term Planning activities (ESMAP Activity P072936, Formal ESMAP has funded activities to advise on changes in legis- Reports 292/04 and 293/04). In addition, ESMAP supported lation and regulation in areas such as urban air pollution, the innovative introduction of the energy stability concept in renewable energy, and decentralized energy service. sector planning in Mexico through Mexico: TA for Long-Term ESMAP's lead phase-out activities in Latin America, Africa, Program for Renewable Energy Development (ESMAP and Asia have persuaded many countries to pass regula- Activity P073535). ESMAP also pursued further the develop- tions for switching to unleaded gasoline. ment of much-needed methodologies for project monitoring and evaluation and for measuring the impact on poverty of The Nicaragua Renewable Energy (ESMAP Activity P078519) energy sector policies. project led to the formulation of a renewable energy law. The Tanzania Technical Assistance (ESMAP Activity P023711, Knowledge Dissemination and Capacity Technical Report 024/02) led to the revision of the regulation Building to allow TANESCO to be partly privatized through a highly successful management contract, while the Zambia Energy In 2004, ESMAP continued to promote information exchange Sector Restructuring (ESMAP Activity P023879, Technical in the international energy community and capacity building Report 032/03) prepared the issuance of a new law on sec- with clients. ESMAP issued 52 publications, of which 3 were tor regulation. The conclusions of the Vietnam Institutional joint publications and 3 translations, and made them available Reform Petroleum activity (ESMAP Activity P050391, on its website (www.worldbank.org/esmap.org). In addition, Technical Report 053/04) were partly incorporated in the ESMAP considers the interactive nature of workshops, con- new sector regulations. ferences, and training programs as a critical part of its knowledge dissemination strategy. ESMAP contributed to 12 ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM the delivery of a number of local and international workshops ESMAP Portfolio Review in 2004. The international roundtable on public-private sec- by Strategic Area tor participation in energy services and the Global Village Energy Partnership (GVEP) regional workshop on micro- Energy-Poverty finance brought together practitioners with varied experience to focus on resolving current bottlenecks. The energy and poverty reduction program goal is to design policies enabling increased investments in projects that will Investment Leverage benefit the poor by increasing access to sustainable energy services. This covers a wide range of issues, including sup- ESMAP's upstream pre-investment activities often lead to, or plying rural electrification, providing access to petroleum contribute to, the formulation of follow-up investment proj- products by poor and rural households, and improving the ects. In 2004, six investment projects were identified and sustainability and efficiency of biomass fuels (which repre- developed on the basis of ESMAP upstream activities, main- sent the largest energy source used by the poorest house- ly for reduction of air pollution. Another area in which ESMAP holds). The program activities target the problems facing activities led to investment projects is access to energy. governments, local communities, and donors in preparing These ESMAP activities found in Box 3.1 laid the foundation and processing energy access activities, making the project for follow-up energy access projects of the World Bank. In development process easier and less costly. addition, ESMAP's assistance in developing renewable ener- gy policies and strategies in Nicaragua and Mexico has pro- Lack of access to modern energy services continued to be vided key inputs into World Bank­Global Environment a priority area in 2004. ESMAP has already done substantial Facility (GEF) projects in these two countries. foundation work on access issues, by: · Documenting best practices in rural electrification. Box 3.1. Investment Activities in Fiscal Year · Developing methodologies and case studies that demon- 2005 Influenced by ESMAP Activities strate how targeted energy service investments can ben- efit the poor. · Senegal Rural Electricity Service Project · Documenting how the poor meet their energy needs, both (ESMAP Activity P085798) in the rural and peri-urban areas. · China Renewable Energy Scale Up · Launching the Global Village Energy Partnership (GVEP) (ESMAP Activity P067828) which provides a concerted framework to accelerate the · Vietnam GEF Rural Energy II delivery of energy services for poverty reduction and eco- (ESMAP Activity P080074) nomic growth. · Yemen Rural Electrification and Renewable Energy (ESMAP Activity P066397) In the past 25 years, the world has extended access to elec- · Philippines Rural Power Project tricity and modern fuels to more than 1 billion people. (ESMAP Activity P066397) However, big gaps in access remain. Four out of five people · Cambodia Rural Electrification and Transmission without access to electricity live in rural areas of the develop- (ESMAP Activity P071591) ing world, mainly in South Asia and Sub-Saharan Africa. However, over the next three decades almost 95 percent of ANNUAL REPORT 2004 13 rural grid electrification or developing off-grid solutions require careful design and skillful implementation. Nevertheless, rural access to electricity in low-income coun- tries may not increase appreciably in the foreseeable future. Therefore, increasing the efficiency of biomass fuel use, as well as promoting modern cooking fuels such as liquefied petroleum gas (LPG), should be priorities. Rural Areas Are Far Behind in Access to Electricity According to the International Energy Agency, 1.6 billion people--around a quarter of the world's population--lack access to electricity. Moreover, under today's energy policies and investment trends in energy infrastructure, projections the popula- show that as many as 1.4 billion people will still lack access tion growth will to electricity in 2030. Lack of access is far more prevalent in occur in urban areas, rural than in urban areas. In Sub-Saharan Africa, only 8 per- potentially creating huge gaps cent of the rural population has access to electricity as com- in access in the developing world's cities. Substantially pared with 51 percent of the urban population. A similar dis- reducing the number of people without access to electricity parity exists in South Asia, where only 30 percent of the rural will therefore require targeting efforts to urban areas. population has access as compared with 68 percent of the urban population. Indeed, four out of five people without The issues involved in energy access call for a large body of access to electricity live in rural areas of the developing work focused mainly in two areas: distribution of commercial world, largely in South Asia and Sub-Saharan Africa. energy sources and the efficient use of traditional fuels. The issues are somewhat different between urban and rural An ESMAP highlight during the past year was the comple- areas. tion of Meeting the Challenge of Rural Electrification in Developing Nations: The Experience of Successful Programs In rural areas, remote locations and low density of demand (ESMAP Activity P075756, a version for Discussion was raise the costs of modern energy services--both electrifica- made available during the World Bank Group Energy Week). tion and liquid petroleum fuels--to nearly prohibitive levels. The main goal of this study was to illustrate how a variety of Still too few countries have well-designed rural energy poli- countries have successfully addressed the problems of rural cies that provide for the legal and regulatory framework that electrification. Examining and documenting the best prac- enable effective public-private partnership to increase invest- tices of programs that successfully provided electricity to ments in the services. Many policy solutions exist and have their rural populations will benefit other countries where rural been experimented with or implemented in developing electrification efforts are underway or just starting. countries. Solutions such as subsidizing capital costs for 14 ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM Rural electrification can be constrained by different institu- Continuing Reliance on Traditional Fuels tional ways of providing electricity to rural people. In this study, the case studies were divided up into several cate- Large gaps in access to modern fuels such as kerosene and gories. The first involved a model of rural electrification LPG also remain. Nearly 2.4 billion people in developing exemplified by the rural electric cooperative model derived countries still rely on wood, agricultural residues, and dung from the experience of the United States. Examples of devel- for cooking and heating (table 3.1). Projections show that oping countries following this model include Bangladesh, without greater efforts to address this problem that number Costa Rica, and the Philippines. The second, and probably will grow to 2.6 billion by 2030. the most common, path to rural electrification is through public companies. Examples include Thailand, Tunisia, and These people must contend with the burdensome disadvan- Mexico. Finally, two case studies involved private or decen- tages of using traditional fuels. As noted, cooking with fuels tralized electrification companies. Chile has had private such as biomass is far less efficient than cooking with mod- sector electricity distribution companies for more than 20 ern fuels such as kerosene or LPG. Women and children years, and they have a unique subsidy program encouraging must spend hours gathering biomass fuels. In addition, bio- service to people in rural areas. Although not classified as a fuels if burned in poorly ventilated homes and inefficient private program, China's electricity distribution program stoves cause harmful indoor pollution and lead to serious developed in a very decentralized manner. The results point health damage. toward a set of characteristics of successful programs. Table 3.1: People Relying on Biomass for Cooking In addition, several new projects are for countries in the last and Heating in Developing Countries, 2000 stages of their rural electrification programs. In Mexico, Percentage Brazil, and India, the remaining rural households are in very Countrwy or region Millions of population remote areas that are a real challenge to reach through tra- China 706 56 ditional grid expansion. Therefore, in these countries new Indonesia 155 74 ESMAP projects are examining innovative ways to reach Rest of East Asia 137 37 these remote and very poor people without creating a finan- India 585 58 cial strain on the companies involved in the program. Rest of South Asia 128 41 Latin America 96 23 Middle East and North Africa 8 0.05 Sub-Saharan Africa 575 89 All developing countries 2,390 52 Source: International Energy Agency, 2002. ANNUAL REPORT 2004 15 Two ESMAP activities completed during the year that added For the poor, energy expenditures already represent a high to our understanding of biomass energy issues included a share of their revenues--20 percent or about US$15 a study in Guatemala, Environmental Health and Traditional month--of which more than half is spent on cooking fuels Energy Use in Guatemala (ESMAP Formal Report 284/04) and less than a third on electricity (ESMAP Household and a worldwide review of biomass energy, Advancing Survey, sample from 45 cities). Because the primary energy Bioenergy for Sustainable Developments (ESMAP Formal needs for households are heating for cooking (and space Report 300/05). heating in cold climates), with such low incomes the poor often resort to nonlegal means to acquire electricity, such as Projected Strains on Urban Access to Electricity through third-party providers of illegal connections. The resulting service is also expensive (although probably less According to the International Energy Agency, as of 2002 expensive than legal service), but of poor quality and high almost 91 percent of the world's urban population had risk. Electrocutions and short circuits that cause devastating access to electricity. Indeed, in some parts of the world, fires are often the results of faulty connections in slums. almost the entire urban population had access. In North Africa, East Asia (including China), the Middle East, and Latin In urban areas, extending electricity access to the poor also America the share was at least 98 percent (International requires the right policy and regulatory framework. The main Energy Agency 2002). infrastructure is generally already in place, and demand and disposable cash incomes tend to be higher than in rural However, tension in the provision of sustainable energy serv- areas. Nevertheless, poor people still often cannot afford the ices owing to the fast growth and impoverishment of the connection fees or the monthly rates. urban population is already evident in many parts of the world. In fast-expanding peri-urban areas, smoke from wood Supportive regulatory policies are needed that make service and charcoal shrouds densely populated areas where the expansion to the urban poor sustainable. Thus, several poor are concentrated, a visual reminder that the poor do not activities that highlight urban or peri-urban access to energy have access to clean fuels to meet their primary energy need: were initiated in 2004. These studies in different parts of cooking. Most poor households cannot afford a legal con- Africa, including Yemen (ESMAP Activity P080572) and nection or the monthly charges for the electric service, and Lagos, Nigeria (ESMAP Activity P081048), benefited from street lighting--a key element for urban safety--is sparse. the collaboration between ESMAP and those involved in Frequent outages leave entire neighborhoods in the dark for assessing the impact of energy pricing on the poor. extended periods, deprive Small and Medium Enterprises (SMEs) of their primary source of energy to sustain their activ- Gender and Energy ities, and cause both households and SMEs to invest in backup energy sources (from candles to kerosene or LPG) at During the past year, ESMAP's work on gender and energy a higher cost than what could be provided by the utility. has been highlighted in the ENERGIA News, a newsletter of the network for gender and sustainable energy (see Box The provision of sustainable energy services in poor or 3.2). The issue highlights recent ESMAP activities such as impoverished areas is complex, both for non-electricity and The Impact of Energy on Women's Lives in Rural India electricity services, primarily because the consumer base is (ESMAP Activity P070938, Formal Report 276/04), The Role weak from the perspective of the supplier of energy servic- of Gender in the Bangladesh Rural Electrification (ESMAP es. That is, the poor have limited cash incomes, which there- Activity P081980, Technical Report 054/04), and Gender fore limit effective demand. and Mining in Papua New Guinea (ESMAP Activity P085108, 16 ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM Technical Report 063/04). Completed projects include ESMAP complemented the project work with a strong out- Bangladesh Women in Renewable Energy Phase I (ESMAP reach effort. It sponsored a practicum with Columbia Activity P065453, Technical Report 055/04) and Supporting University in the United States that enabled students to visit Gender and Sustainable Gender Initiatives in Central Bangladesh as part of their research activities. A result of this America (ESMAP Activity P070922, Technical Reports work is the recently published Integrating Gender in Energy 061/04 and 062/04). Provision: Case Study of Bangladesh (ESMAP Activity P081980, ESMAP Technical Report 054/04). ESMAP also Box 3.2: ENERGIA News, Issue on Gender and Rural Electrification: Viewing Electrification Through a Gendered Lens In most of the developing world, electricity constitutes a A gendered perspective helps see how the impact of elec- small fraction of total energy consumed. However, when trification is different for women than it is for men. The end available, electrification has the potential to improve peo- uses of electrification are many and varied, but if we care- ple's lives exponentially. At a minimum, it provides good- fully focus our lens, we see that electrification is being quality lighting that enables people to take care of chores used for some activities far more than it is being used for or reading and studying in the evening. When exploited to others.... Electricity has yet to be fully exploited for reliev- its full potential, it can increase agricultural and industrial ing women's hardship. Many still pound grain and walk productivity; improve the delivery of health care to mil- long distances carrying heavy pots or head loads to pro- lions; relieve many drudgery-laden chores like processing cure water and biomass. Entire days are spent doing tir- food grains, washing, or cleaning; widen horizons with ing and heavy subsistence work. While household electri- access to the radio and television; provide lighting for fication brings a welcome relief on many fronts, such as adult education and literacy classes; and assist in access to good-quality lighting and increased leisure and income-generating activities. Electrification is thus wel- reading time for all, the promise of electricity remains far comed by all as a harbinger of a better life, and access to from being fulfilled for women who work mainly in the it has long been used as an indicator of development. subsistence economy. However, this gender-neutral perspective on the dynam- ics of electrification as a good indicator of development is Contributed by: Sen, Mitali, Douglas Barnes and increasingly difficult to sustain.... Dominique Lallement. 2004. Editorial: Viewing Electrification Through a Gendered Lens. Energia News 7 In some countries, the predominant focus of policy on (1): 1­3. rural electrification has been on economic growth--main- ly to increase agricultural and industrial productivity. Men are the main actors involved in these types of activities, and thus such a concentration on policy prescriptions for development unveils a masculine agenda. Thus, the importance of providing electrification for households may remain a secondary goal. So at the policy level, household electrification sometimes is neglected.... ANNUAL REPORT 2004 17 participated in the Gender in Energy workshop at the World Impact of Gender Projects Renewable Energy Congress, proposing a new concept (see Box 3.3) to ensure that gender be mainstreamed in energy The lessons generated by past ESMAP activities sometimes policies and investment projects. are being adopted by others to replicate similar initiatives that benefit peoples' lives (see Box 3.4). Box 3.3: Mainstreaming Gender Equity The inspiration for Women as Solar Power Entrepreneurs: in Energy Pilot Project in the Sunderbans1 came from the success story of the ESMAP-financed action-research activity, Five steps to improve gender equity: Opportunity for Women in Renewable Energy Technology in Bangladesh2 (Technical Report 055/04), which has been · Policy Making: Increase the number of women in implemented by a women's cooperative, with technical government cabinets, parliaments, and city councils, assistance from Prokaushali Sangshad Ltd. since 1999. that are informed and in charge of energy matters; · Household decision making: Provide information to The pilot project was based on The Energy and Resources households on the range of energy solutions that Institute's (TERI)3 prior collaboration with the Ramakrishna could improve the way of life for women and men Mission in Sunderbans and a proposal to the National and children. Renewable Energy Laboratory that a pilot project for devel- · Enterprise development: Provide a way for more oping women solar-power entrepreneurs be implemented women to become entrepreneurs of energy enter- with the dual purpose of (a) creating sustainable sales and prises, large or small. service networks in villages that have large unmet demand · Information and knowledge dissemination: Present for solar systems and (b) empowering women by giving information in ways so that both, women and men them economic freedom. Subsequently, the project was will share knowledge of the benefits to society of sanctioned by the National Renewable Energy Laboratory in gender equity in energy services. 2004, and the pilot project is currently being implemented by · Research: Provide encouragement so that more TERI and Ramakrishna Mission (India), with Jadavpur women and men will be involved in research that will University, Kolkata, as its technical advisor. meet the technology and other energy needs of women and men in developing countries. While building upon the Bangladesh project framework of women-based solar enterprises, the Sunderbans project Contributed by: Dominique Lallement, Manager, introduced an institutional mechanism--the Market ESMAP, The World Bank Group. Facilitating and Enterprise Development Organization (MFEDO)--which was created within the institutional set-up of Ramakrishna Mission to provide an anchor to those entre- preneurs and to nurture them. It is also expected to facilitate replication of this experience beyond the pilot phase. 1. Sunderbans, in the state of West Bengal in India, is a part of the vast delta of the river Ganga, an area characterized by mangrove swamps and islands interwoven by a network of small rivers, waterways, creeks, and tracts. The remote villages and hamlets of the delta suffer from chronic shortages of energy owing to non- availability of grid power. Solar and biomass are relevant and chosen options for energy supply in this area. 2. The project focuses on the role of rural women in off-grid electrification service delivery in Bangladesh, giving access to electricity with DC lamps, which are battery- operated and typically used with solar home systems. 3. The project has its origin in an earlier TERI project, Ramakrishna Mission Initiative Impact Study (an NREL-funded project under subcontract AAD-0-30604-01), which assessed the impact of providing solar home systems to the population of selected villages and village-level institutions in Sunderbans, West Bengal, India, through sustainable dissemination models. The study highlighted that women beneficiaries are not only proud users of the systems but also have keen interest in understanding more about new designs, products, and so forth. It also pointed out that village male youths, once trained to service the solar systems, find better opportunities with the photovoltaic industry and migrate to the cities. This not only leaves a gap in providing service facilities within access to the customer but also renders the investment in capacity building ineffective. 18 ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM Box 3.4: Women as Solar Power Entrepreneurs: Piloting MFEDOs. Market Facilitation and Enterprise Development Organizations (MFEDOs) in the Sunderbans Objectives · Set up one MFEDO and ensure that they have necessary knowl- edge and skills to carry out their mission. · Use the MFEDO facility to train women solar power entrepreneurs. Tasks · MFEDO was established at Kalpataru Youth Club of Kakdwip Island in Sunderbans. It is equipped with a workshop for servicing and assembling solar photovoltaic (PV) products. It also has a solar lantern charging and renting station that will be managed by women entrepreneurs on a profit-sharing basis with the MFEDO. · Through an initial selection process, five women have been identi- fied through an initial selection process. They will be supported in their entrepreneurial venture. These women have undergone exten- sive training on technical and commercial aspects of the solar PV business. · Following a market assessment study by Jadavpur University, A few products and services have been identified following a market assessment study by Jadavpur University that can seed the market in this region. Project Outcome · Charter for renaissance and empowerment of women: The project has launched a platform for women to achieve self-reliance and economic independence. · The MFEDO acts as a catalyst in strengthening the energy-based livelihood activities in this geograph- ically disadvantaged region. · Potential for replication: The MFEDO also becomes an incubator for such enterprises by extending tech- nical, infrastructural, and (possibly) financial support to entrepreneurs. · Access to affordable and need-based customized products: Population in this region has an access to customized products and services that are within reach. Beyond the Pilot Phase The MFEDO has received encouragement and an expression of intent for support from the local govern- ment for expanding its activities. It has also attracted the attention of one of the largest private sector manufacturers and suppliers of PV systems for extending its service network in the region by using women entrepreneurs. While for MFEDO opportunities lie in replicating this model in other neighboring islands in the region, for women entrepreneurs their opportunities in getting access to low-cost finance and a broader market base through MFEDO are expanding. Contributed by: Akanksha Chaurey, Associate Director, Regulatory Studies and Governance Division, TERI, India. ANNUAL REPORT 2004 19 The Global Village Energy Partnership (GVEP) the International Conference on Renewable Energy in Bonn that further pushed progress on the shift to scale up devel- GVEP reached a major milestone during the past year with the opment of low carbon energy technologies and resources. transfer of the host organization for the Technical Secretariat ESMAP activities in the energy and environment area from ESMAP to the Intermediate Technology Development focused on developing renewable energy policies and Group (ITDG)--now named Practical Action--an NGO based strategies, testing innovative energy efficiency financing in the United Kingdom, and the hiring of an internationally mechanisms, and improving urban air quality. recruited full-time manager. ESMAP has continued to support the functioning of the Technical Secretariat both through the Renewable Energy: Some Generic Lessons from the financing and the administration of the host organization and Portfolio other service contracts and with its own expertise. Insights gained from the ESMAP portfolio has led to some In addition, ESMAP has supported more than 10 GVEP coun- valuable lessons during the past year. They included the fol- try and regional projects. After the regional energy-poverty lowing: workshops broached the multisector multistakeholder approach, the GVEP country teams focused on developing · Developing countries each face distinct challenges as they energy-poverty action plans at the country level, which will be adapt various models of grid-based renewable power aligned with programs within each country's poverty reduction supply to their situation. strategy. Such a linked action-plan activity has been success- · There is a need to evaluate a diverse portfolio of energy fully completed in Senegal, where it culminated in a new con- options rather than just one type of project or technology. cept for output-based rural electrification concessions. · It is difficult to raise local financing for renewable energy schemes without international assistance. Multisectoral Poverty Reduction and Economic Management · There is a need to encourage development and produc- (PREM) projects aim to link the service delivery to its application tion of energy appliances compatible with low-cost renew- in social or productive uses. Work initiated in other countries able energy systems. include the preparation of programs targeted to service the indigenous populations in Bolivia, in developing the regulato- ESMAP projects on grid-connected and off-grid renewable ry framework for private sector participation in Honduras, energy policies have highlighted the importance of clear legal and in developing off-grid energy efficient services in Mexico. and regulatory frameworks to facilitate a level playing field for all technologies, including those for renewable energy sources. Environmental Sustainability Increase grid-connected renewable energy investments: The establishment of competitive wholesale power markets Energy and environment was one of the three thematic areas can indeed provide good opportunities to increase grid-con- in the ESMAP Business Plan for 2002­2004. ESMAP nected renewable energy investments. However, the private addressed the energy-development-sustainability nexus at sector may be reluctant to invest in renewable energies the local, regional, and global levels as related to energy pro- because of the capital intensity, as found in the ESMAP duction, transportation, and consumption. A key internation- Nicaragua study (ESMAP Activity P076709), and private util- al event during the year in which ESMAP participated was ities hesitate to purchase intermittent renewable energy 20 ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM resources unless there is a clear tariff framework to recover · Subsidy schemes should be as narrow as possible and be costs from the consumers. Various incentive models for designed to achieve only stated objectives to avoid spoil- power suppliers have been developed to date. The most ing the market. widely applied include: · Subsidies should be applied to up-front capital costs and · Quantity-based renewable energy portfolio standards, not to operation and maintenance costs. which require that a minimum share of power or a mini- · Subsidies should be reduced over time, with a clear exit mum level of installed capacity in a given region be met by strategy, and incentives are needed to develop the renew- renewable energy. able energy market and reduce costs, including building a · Price-based feed-in tariffs, which require mandatory pur- local service provider industry and addressing the afford- chase of renewable energy at a fixed price. ability issues for the poor. · Competitive tendering mechanisms, which allow the · Subsidy scheme rules should be fair and transparent, power suppliers to competitively bid for renewable energy allowing competition among all parties, including both obligations. large international companies and small local enterprises. The ESMAP work suggests that compatibility with institu- ESMAP plans to conduct a further in-depth study on best tional structures will be a key challenge for developing coun- practices of subsidy schemes for decentralized energy sys- tries seeking to apply these models to their own country tems that will deepen the insights from recent more general conditions. work being conducted on both water and energy issues. Another lesson from ESMAP's work is the need to incorpo- Other lessons from ESMAP projects relate to the difficulty in rate all renewable energy and conventional thermal options raising financing for renewable energy schemes. However, into least-cost energy planning to optimize energy portfolio some successful examples exist in Bangladesh, India, diversification. The analysis enables ESMAP to weight the Kenya, the Philippines, Sri Lanka, and so forth, which can be various options on a life-cycle basis, which includes fuel used and replicated elsewhere. The availability of consumer price and availability risks. Renewable energy options can financing is another important success factor, as was indeed also reduce off-taker risks and lead to "green power" demonstrated in Kenya, where the local microfinance institu- sales in some countries. tions were trained through an ESMAP technical assistance project to promote solar home systems (SHS). As a conse- Off-grid renewable energy investments: ESMAP projects quence, they developed what has become a very success- demonstrated the difficulty in attracting private sector invest- ful market for solar home equipment. ments in poor areas for off-grid renewable energy invest- ments. The difficulty may arise, because of the additional One final lesson is the need to diversify the renewable ener- investment costs and the limited effective demand in terms gy­based appliances to include low-cost, small-scale, renew- of both load and ability to pay for services. able energy systems that are affordable for the low-income population. In China and Kenya, for example, the most popu- Given the dilemma between meeting the energy needs of lar SHSs delivered on a cash sale basis without any donor the poor and the cost of providing low carbon energy serv- funding are those small-scale solar modules of 10­20 watts ices, various subsidy schemes were tested. Among the les- systems and not the standard SHSs of 50 watts systems, sons learned: which are promoted in most international aid projects. ANNUAL REPORT 2004 21 Renewable Energy: Learning from Specific Projects tional energy options against fuel price and availability risks (see Box 3.5). The activity supported analyses by the nation- Providing Technical Assistance to Formulate a Long-Term al government on policies and strategies for the large-scale Program for Renewable Energy Development in Mexico promotion of renewable energy in Mexico. It conducted an (ESMAP Activity P073535) demonstrated that least-cost economic analysis to compare the costs of renewable ener- energy planning should incorporate energy portfolio diversi- gy with those of thermal power plants, accounting for adjust- fication values to compare renewable energy and conven- ed capacity factors, diversification values, and environmen- Box 3.5: Mexico: Providing Technical Assistance to Formulate a Long-Term Program for Renewable Energy Development While Mexico has available a broad array of wind (includ- In this context, in 1991 the Secretaría de Energía (SENER) ing at least 5 gigawatts of world-class sites), hydro (up to confirmed its strong support for World Bank-ESMAP 50 gigawatts of small hydro), biomass, and solar assistance in formulating a comprehensive long-term pro- resources, it has thus far focused on development of con- gram for development of renewable energy sources. ventional fossil generation. SENER indicated that first priority was a broad evaluation of the policy framework for energy, with a specific focus The ESMAP project, Providing Technical Assistance to on the degree to which existing pricing, subsidy, and tax- Formulate a Long-Term Program for Renewable Energy ation policies impede commercialization of renewables. Development, was driven by Mexico's desire to reduce That was to be followed by a review of specific regulations environmental emissions and increase diversity in its elec- and industry practices that may work against renewables, tric sector, which, because of a constitutionally based principally for serving the grid, thus providing a basis of mandate to procure generation at least cost, is increasing- evaluation of current frameworks and the development of ly becoming heavily concentrated in natural gas and sub- new programs. ject to increasing price and supply risk and increased reliance on imports. Renewable energy market development policies presently adopted in the Organization for Economic Co-operation The majority of capacity built or contracted by the public and Development, and evaluated under the ESMAP sector during the 2001-10 period will be met with com- Mexico work included: bined cycle gas turbines, resulting in gas-based genera- tion accounting for 52 percent of total generation by 2010, · Price-defined targets: To set a defined price at which up from 9 percent in 2001. Thus, diversification of the renewable electricity must be purchased. In the United Comisión Federal de Electricidad generation mix is seen States, an early example of this was the 1978 U.S. as a crucial factor to protect against any supply disrup- Public Utility Policies Regulatory Act, under which util- tions and ensure sustainable economic growth. ities had an obligation to connect and to pay the avoided cost. In Germany, Spain, and France, feed-in laws were used to set a specific price for favored technologies. 22 ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM tal benefits, and concluded that renewable energy is a com- groundwork for a US$70 million World Bank­GEF project, petitive energy choice. It also developed an optimal energy which is under preparation. portfolio diversification scenario that recommended to sub- stantially increase the share of wind and geothermal in In Nicaragua, Developing a Policy/Strategy for the Promotion Mexico. In addition, the activity recommended a policy of Renewable Energy Resources (ESMAP Activity P078519, instrument of the auction-based, least-cost subsidy mecha- publication in process) aimed to assist the government nism to scale up renewable energy. ESMAP support laid the in developing renewable energy policies and strategies · Renewable portfolio standard: Electricity suppliers are Another highlight of the ESMAP analysis involved a spec- required to show that a certain amount of their electric- ification of optimal shares of renewable energy, based on ity was generated from renewable energy sources. application of the capital asset pricing methodology. The Least-cost acquisition to meet required targets is typi- model results illustrated optimal energy portfolios for cally left to market mechanisms, with utilities either pro- Mexico and demonstrated that the current portfolio is ducing their own power, procuring it directly, or engag- suboptimal in terms of risk exposure: Adding more renew- ing in purchases of "green certificates." able energy would be least cost because the risk-adjust- · Systems benefit charge: Utilities call for competitive ed cost of this resource (up to the limit) is lower than the bids from private developers to build capacity up to a equivalently calculated cost of conventional fossil energy. predefined level, normally stated in terms of installed capacity. Developers providing the least-cost bid or As a direct outgrowth of the ESMAP assistance, the World bids receive funds to make up the difference between Bank is now working with the Mexican government in their bid cost and the market price of electricity. An early developing a policy and financial stimulus program to example of the systems benefit charge approach is the accelerate the development of large-scale renewable ener- U.K. Non-Fossil Fuel Obligation. gy in Mexico. The US$70 million GEF project proposes a two-phase project approach to address key policy and tar- A key conclusion of the ESMAP work was that a system iff issues currently hindering renewable energy develop- benefit charge approach was favored for Mexico, given ment and to facilitate initial investments with use of GEF the aforementioned least-cost requirements that obviate support in a competitive financial mechanism to overcome the feed-in law approach, and the difficulties in stimulat- initial investment barriers. ing the renewable portfolio standard competition among utilities in an environment in which a single, vertically inte- Contributed by: Charles Feinstein, Sector Leader, LCSFP, grated operator dominates the landscape. World Bank Group. ANNUAL REPORT 2004 23 (see Box 3.6). The study found that while Nicaragua has rich investment and therefore is biased against renewable ener- renewable energy resources, the sector reform did not gy development. The report recommended four strategies address the specific requirements of renewable energy to scale up renewable energy development in Nicaragua: Box 3.6: Nicaragua: Developing a Policy/Strategy for the Promotion of Renewable Energy Resources The ESMAP project, Nicaragua: Policy/Strategy for the · A presentation by the president of the CNE who talked Promotion of Renewable Energy Resources, was concep- about the collaborative CNE-El Centro Nacional de tualized with the Nicaragua Comisión Nacional de Energía Despacho de Carga (the dispatch operator)­Union (CNE) in 2002 to respond to the following stark reality: that Fenosa (distributor) analysis of generation expansion Nicaragua, in large part because of policy failure, ranks a options, which showed that over the middle term clear last place in Central America in terms of fraction of renewable energy emerges as Nicaragua's least-cost total electricity supply derived from renewable sources supply option. and dependence on fossil energy while ranking first (geot- hermal) or near the top (wind) in terms of volume of com- · The announcement by the operations manager of Union mercially exploitable renewable resources. Fenosa in Nicaragua that Union Fenosa´s next tender for generation capacity will specifically target renewable The ESMAP-CNE project was executed in two stages. energy. This decision was taken as a result of the least- The initial effort was directed toward the elaboration of cost planning studies and also directly responds to one three detailed case studies covering geothermal, hydro, of the recommendations in the ESMAP synthesis report. and wind energy. The wind analyses included detailed modeling of the impact of injecting increasing amounts of · The ESMAP recommendation that indicative least-cost wind energy into the Nicaraguan grid and resulting planning should specifically incorporate energy portfolio impacts on dispatch and system stability. The case stud- diversification values.. Union Fenosa and the CNE are ies identified and highlighted common barriers limiting the now requesting further technical assistance to begin at development of renewable energy in Nicaragua: least partial implementation of the appropriate method- ology in time for integration in the forthcoming genera- · Barriers in the electricity market that limit the entry of tion tender. renewable sources (market organization, contract forms, tenors, prices, and so forth) The ESMAP project has also led to the formulation of a · Inequality in the financial treatment of (capital-intensive) renewable energy law, which was prepared by the CNE renewable resources compared with the policies that apply and has been tabled for the consideration of the to fossil sources (in terms of taxes, subsidies, and so forth) Asamblea Nacional in the first half of 2005, and to a · Payment and credit risks due to the effective monop- request for an identification mission for a new GEF sony (monopoly of a single utility buyer) and the percep- Geothermal Energy Development Project based on the tion of its financial condition ESMAP case study findings. The recommendations were presented at an ESMAP-CNE Source: Contribution from Charles Feinstein, Sector project workshop held on February 1, 2005, and was attend- Leader, LCSFP, World Bank Group. ed by about 65 representatives of agencies, the private sector, and NGOs. Among the workshop highlights were: 24 ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM · Improving demand-side conditions (by introducing a man- In Shanghai, China, dated market for intermittent power and encouraging ESMAP and the large consumers to enter the bulk market). Asia Alternative · Improving supply side conditions (by introducing new leg- Energy Program islation for exploitation of renewable energy resources and (ASTAE) co-funded the providing a risk-sharing facility for geothermal). Jade Electricity activity · Improving access to financing through partial risk guaran- to pilot a green electricity tee and revenue bonds scheme (see Box 3.7) in · Integrating renewable energy into rural electrification. which consumers can purchase power from a green supplier, usually at The study recommended adoption of a fixed-price or mar- a premium. So far such schemes have been mostly adopted ginal-cost-based buy-back tariff and consumer-financed in developed countries, such as the Netherlands and the production-based subsidy schemes for renewable energy. United States. The Jade Electricity scheme is one of the first As a result, the ESMAP analysis led to the preparation by efforts to introduce the green power model to developing the Compañía Nacional de Electricidad of a new renewable countries. This activity conducted extensive consultations energy law, and it requested ESMAP's further assistance in with consumer groups (mostly joint-venture companies) that incorporating energy portfolio diversification values into expressed willingness to purchase green electricity. It also energy planning. resulted in a Municipal Government Decree that provides the legal basis for green electricity schemes in Shanghai. Box 3.7: Shanghai Jade Electricity Project The Shanghai municipal government (with assistance With the support from ESMAP and ASTAE, a Municipal from ESMAP and ASTAE) developed a green electricity Government Decree and Implementation Plan was pre- program called Shanghai Jade Electricity that will pass pared. The decree will provide the required legal basis to through the incremental cost of electricity generated by market green electricity in Shanghai. The decree has renewable energy sources to consumers who are willing passed two approval stages and is awaiting final approval to pay and actively participate in protecting the environ- by the municipal government. Shanghai Jade Electricity is ment and developing more renewable-based electricity expected to be available in 2005. On the basis of a con- capacity in the municipality. sultation meeting with CEOs of large national and foreign companies located in the Shanghai municipality, it is The program will initially support wind and photovoltaic expected that the available amount of green electricity will (PV) electricity only. Green electricity will be available to be sold very quickly. This would provide a strong signal for households, industries, and commercial customers, developing additional renewable electricity generating although initially the focus will be on large, nonhousehold, capacity in Shanghai. consumers who must buy blocks of 6 megawatt-hours, with a minimum number of blocks depending on the total Contributed by: Noureddine Berrah, Lead Specialist, electricity consumption of the consumer. Households World Bank Group, and Enno Heijndermans, Consultant, must buy blocks of 12 kilowatt-hours, with a minimum of EASEG, World Bank Group. 10 blocks. At present, the Shanghai municipality has 3.4 megawatts of wind and 10 kilowatts PV capacity with another 21 megawatts wind under construction. ANNUAL REPORT 2004 25 Energy Efficiency To address these specific financing barriers to energy efficiency projects, ESMAP launched a series of activities to Energy efficiency activities with sound financial returns exist develop innovative financing mechanisms for energy in many developing countries. However, the potential of efficiency activities in Mexico and Poland and financial inter- energy efficiency is not being realized because of a number mediation mechanisms in Brazil, China, and India. of major financing barriers: Innovative Financing Mechanisms for Energy Efficiency in · Transaction costs of identifying, developing, and financing Mexico (ESMAP Activity P086256) and Innovative Financing energy efficiency activities are high primarily because of Mechanisms for Energy Efficiency in Poland (ESMAP Activity the small size of energy efficiency activities (mostly under P086790) aimed at facilitating transparent and affordable US$1 million). financing mechanisms to bundle small-scale energy efficien- · Perceived risk of energy efficiency projects is high. Energy cy projects (see Box 3.8). The activities focused on develop- efficiency activities are nontraditional activities for com- ing a financial intermediary to serve as a conduit between mercial banks in that the returns from this investment are qualified activities and capital. The intermediary is responsi- based upon operating cost savings and not on increased ble for bundling activities and presenting them as a package revenue. to sources of finance. In Mexico, the ESMAP activity is · Combination of financial and technical skills is necessary working with the North American Development Bank to to successfully develop energy efficiency activities. design innovative products for them to finance energy effi- However, institutional combination of these skills in com- ciency. In Poland, the activity identified potential energy effi- mercial banks is rarely available. ciency activities in municipal buildings, hospitals, and hous- ing cooperatives and designed innovative financing struc- tures to finance them. This activity is expected to generate deal flows and pilot innovative schemes for the World Bank- GEF energy efficiency guarantee program in Poland In Brazil, China, and India, an ESMAP activity aimed to achieve major increases in energy efficiency investments by the domestic financial sectors in the three countries by developing energy efficiency investment activity packaging capacity, both in existing financial institutions and through 26 ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM Box 3.8: Innovative Financing Mechanisms for Energy Efficiency in Mexico and Poland The objective of these two projects (one in Mexico and finance. Solutions to the problem can lie in the use of one in Poland) was to facilitate transparent and affordable accepted Mexican transaction documents, including financing for energy efficiency projects through the cre- lease bond insurance agreements. ation of a financial intermediary to serve as a conduit between qualified projects and capital. In Poland, the project completed its first phase, the purpose of which was to open contacts to Polish financial institutions In Mexico, there is a nascent energy service company and to develop a pipeline of projects that can be offered for (ESCO) industry. In Poland, ESCO models have been used financing through financial intermediaries. The project is for a number of years. However, most financing for ener- focused on hospitals, municipal buildings, and residential gy efficiency to date takes place on the basis of standard buildings belonging to housing cooperatives. Such projects balance sheet financing with high levels of asset backing will be widely replicable in Poland and offer opportunities to and security requirements in both countries. demonstrate several different financing models. The ESMAP project attempted to tackle the issue of the So far, the project team recommended two separate high transaction costs that would normally be faced in try- financing structures to deal with the housing cooperatives ing to arrange financing for the medium-scale energy effi- and the hospital. For the housing cooperatives, the local ciency opportunities in the US$250,000­US$1,000,000 district heating company will finance and implement investment range. These barriers have severely con- improvement of in-house installations and agree that the strained the growth of this market. debt can take the status of junior loans that can be paid back over the heat bills, thereby facilitating borrowing for In Mexico, during the first phase, a number of specific building upgrades by helping the cooperatives to meet projects were identified for which specific, appropriate equity requirements from local banks. For the hospital, financing models were being developed in parallel. One guarantees from the regional administration and the local project was an energy upgrade of a hospital in Monterrey regional environmental fund will work as credit enhance- for which private equity funds expressed interest in pro- ment options. The options being considered for the pub- viding equity and the North American Development Bank lic buildings include master lease agreements and out- is considering providing debt financing. The project team sourcing. The project team hopes at a later stage to be is currently working on ways to provide security for the able to execute an umbrella credit agreement when the bank loan. The idea is to use the hospital project as a way projects are more fully developed and the lending terms to demonstrate the concept of energy efficiency financing have been more thoroughly explored. to the bank and other potential investors and then, at a later stage, move from this relatively simple concept to In both countries the transactions hoped to be pioneered more complicated concepts involving clustering or estab- with ESMAP assistance and external debt financing lishment of special purpose entities. should serve as a model that can be replicated by domes- tic financing institutions, and for this purpose model trans- Another project being developed with the Chamber of action and structuring documents will be placed in the Commerce of Nuevo Leon involves eight of its members, public domain and reviewed at an end-of-project work- all of which are industrial companies with large energy shop for developers and financiers. costs and good opportunities for savings. The crucial issue is to provide enough collateral for debt financing in Contributed by: Peter Johansen, Senior Energy the case of such industrial projects, given the unfamiliarity Specialist, ECSIE, World Bank Group, and Charles of local finance institutions with energy efficiency project Feinstein, Sector Leader, LCSFP, World Bank Group. ANNUAL REPORT 2004 27 new entities (see Box 3.9). As a result, several Indian com- cern. The health impact has been strongly documented in mercial banks launched energy efficiency programs and the past, and mitigation measures are now known and well started energy efficiency investments, and a World Bank tested. Progress has been made in the past five years with energy efficiency investment project in China is under identi- the elimination of leaded gasoline in all regions from Asia and fication. ESMAP held a successful knowledge exchange Latin America to Africa. event to disseminate the results of this activity. The phasing out of two-stroke engines has also produced Urban Air Quality prominent results in South and Southeast Asia. The Thailand Motorcycle Upgrade (ESMAP Activity P069992) is aimed at With rapid urbanization, air quality, particularly in fast-devel- reducing emissions from motorcycles in Bangkok, Thailand. oping urban and peri-urban areas, will be a mounting con- The project organized motorcycle clinics and developed Box 3.9: UNF/ESMAP-Supported Three-Country Energy Efficiency Project Catalyzes Indian Banking Sector Support for Energy Efficiency Lending The objective of this multiyear project is to achieve major India and Canara Bank. Together, these two banks repre- increases in energy efficiency investments by domestic sent more than 25 percent of the total assets of all Indian financial institutions in Brazil, China, and India. The proj- banks, and their 10,000-plus branches ensure that the ect provides for the establishment of an informal country new schemes can have wide coverage. A third participat- working group in each country, consisting of representa- ing bank, Union Bank, has recently announced that it will tives from the local financial and energy efficiency com- launch a similar scheme as well. munities, and provision of support for these groups to complete applied research and analysis on the most The three-country project also supported numerous activ- pressing operational topics in energy efficiency financing, ities in China and Brazil, including capacity building and including commercial bank financing of energy efficiency, training activities for ESCOs and ESCO associations, energy service company (ESCO) development, guarantee implementation and assessment support for partial risk facilities, and equity financing of energy efficiency. The guarantee facilities and other risk-mitigating instruments, project also provides a series of focused international an analysis of regulatory measures that can increase ener- cross-exchange activities involving practitioners from the gy efficiency investment (such as the wires charge pro- three countries to share experiences and potential solu- gram in Brazil), and analysis of equity financing for energy tions to similar problems. efficiency projects and companies, both internationally and within each of the three countries. The benefits of this project were enthusiastically received by the participating members of the Indian banking com- Additional information on the Indian banking schemes, the munity, and the completed in-country activities develop- proceedings from two international cross exchanges, and ing appraisal methodologies and financial structures for other activities is available at the project website energy efficiency projects increased local bank capacity www.3countryee.org. to expand their lending for energy efficiency. The project directly supported the launching of specific energy effi- Contributed by: Chandrasekar Govindarajalu, Senior ciency lending schemes for small and medium enterpris- Environment Specialist, World Bank Group, and Jeremy es at two of the largest banks in India, the State Bank of Levin, Consultant, SASES, World Bank Group. 28 ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM analytical framework to access cost and emissions reduc- More recently, the high prices of hydrocarbons driven by tion benefits. The study design and concept were well political instability, high oil demand, and refinery bottlenecks appreciated by the Motorcycle Manufacturers Association. have raised new issues for oil-producing developing coun- As a result, one of the private sector companies started a tries regarding the transparent management of their mineral new clean motorcycle manufacturing facility in Thailand and resources and of their increased oil revenues. has recently partnered with key governmental agencies and the Bangkok Metropolitan Administration to implement the Energy Market Reforms and Access to Energy project on their own. Modern energy rarely reaches the poorest households in ESMAP continues to contribute to the Clean Air Initiative, developing countries. In many cases, the reasons for the which has facilitated the transfer of knowledge across coun- problems lie in the discrepancy between the business objec- tries and regions, as well as between different stakeholders, tives and obligations of the institutions involved in delivering and has built capacity and increased awareness for stake- energy services and the economic profile of the poor or their holders in client countries on urban air quality management. geographical dispersion in areas difficult to access or with a limited natural endowment. The Clean Air Initiative has been successful in large cities in Asia and Latin America. Numerous countries have adopted Although the inability to provide access to all users, and par- relevant legislation, and municipalities have built up their reg- ticularly the poorer ones, was identified as one of the short- ulatory and air quality monitoring capacity. comings of traditional state-controlled sector organizations, the wave of sector reforms of the 1990s focused largely on ESMAP's work has also generated several projects that grid-based power supply and petroleum products. Reforms received World Bank loans in the urban and transport sec- by-passed rural and peri-urban energy and did not seek to tors to improve urban air quality. Building on the successful specifically address access to energy in isolated areas, rural experience with phasing out lead in gasoline and three- or peri-urban. It was assumed that market forces, stimulated wheeler, two-stroke-engine vehicles, ESMAP is now shifting by sector reforms, would ensure that access would be accel- to newly emerging urban air quality issues. For example, erated, possibly with some targeted state support for the realizing that diesel pollution in many cities has become one more vulnerable segments of the population. International pri- of the key urban environment issues, ESMAP recently vate investments in the 1990s were essentially limited to large launched an activity, Developing Diesel Pollution Reduction energy projects and often overlooked access projects in iso- Strategies in Cities (ESMAP Activity P086036). lated rural and peri-urban areas, although demand for servic- es is increasing rapidly, not only to meet the needs of grow- ing economies and urbanization but also to catch up with the Developing Sustainable Energy Markets lag in rural and peri-urban services. Inefficiencies in energy markets were identified in the 1990s Designing Energy Reforms to Reach the Poor as causes for the slow increase in access to affordable and sustainable energy services to users in rural and peri-urban In 2004 ESMAP supported an assessment of the impact on areas, particularly in Africa, Latin America, and Asia. They the poor of 10 years or more of energy sector reforms, with were also seen as one of the causes for the higher-than-opti- a view to help governments design measures that would mum price of energy, which in turn harms the poor, because ensure that the reforms actually benefit this segment of the of their limited capacity to pay, and national economies, by population. The issue is controversial and is too often dis- lowering their competitiveness on international markets. cussed without sufficient grounding in the facts or in data. ANNUAL REPORT 2004 29 Several ESMAP projects seek to identify and document objectively the impact, positive or negative, of energy sector reforms on the poor including activities in Pakistan, Lesotho and in Central America. The collection of statistically valid evidence was the first task covered in order to provide a firm factual basis to assess the impact of reforms. Several ESMAP activities have been involved in assessing the impact of reforms on the poor. One project addressing this issue is The Pakistan Household Impact Analysis of the Energy Sector Reforms (ESMAP Activity P085637). On the basis of direct field surveys, the activity examines the impact of the current sequence of reform in the energy sector in Pakistan on the poor in terms of access and price changes; identifies where there could be serious adverse effects on the poor; and helps the govern- ment design and implement mitigation measures, pricing policies, or alternative reform sequencing to ensure that the poor benefit from sector reforms. Another project is The Lesotho: Impact on the Poor of Electricity Sector Reforms (ESMAP Activity P085304). It approaches the evaluation of the impact of reforms from the users' behavior standpoint through household data collec- ties in most Central American countries finance their invest- tion and surveys covering all types of users but particularly ments and operate the electric power system. The reforms the poorer segments of the population. It establishes how have improved the efficiency of service and improved the targeted government action and reforms can address quality of the power produced. behavioral barriers to access by the poor and quantifies the impact of power sector reforms on the entire energy con- The greatest challenge, however, has been to reach the pop- sumption pattern. ulations that do not have access to electricity services. In many countries, reform programs have not focused as they Beyond the country field studies that provide the basic fac- should have on the problems involved in rural electrification. tual material, ESMAP supported in 2004 the preparation of The private sector proved unable to extend electricity to iso- regional syntheses on the impact of sector reforms, with a lated areas, so in most cases some form of incentive or sub- view to draw lessons for the benefit of the governments that sidy was required. Although the reforms were similar, the are implementing the reforms. treatment of how to deal with extending access to mainly rural people without electricity were addressed in a variety of The ESMAP study, Power Sector Reform in Central America ways, and most of them have involved some problems. As (ESMAP Activity P053523), reviews the impact of reforms in indicated in box 3.9, governments must retain an involve- four countries (see Box 3.10). It shows that power sector ment in programs for improving electricity access for poor, reform programs have dramatically changed the way that rural households. the electricity generation, transmission, and distribution utili- 30 ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM Box 3.10: Power Sector Reform and the Rural Poor in Central America Over the past 10 years, significant effort and investment subsidy funds have languished. Either expected gov- have been employed to restructure power sector institu- ernment contributions have not been made or the funds tions in Central America. These efforts have resulted in themselves have not disbursed grant money as dramatic changes in ownership patterns, operating prac- required. Some subsidy funds for rural electrification tices, and the relationship between public and private sec- have stagnated because of insufficient administrative tor institutions participating in power sector investment capacity on the part of the agency responsible for pro- and provision of services. gram management. There is a clear need in all of the countries in Central America for stronger and more Has the reform process improved access to rural electric independent rural electrification management capacity. services? A false perception is that the private sector will solve the rural electrification problem. Privatization in · Include both grid expansion and off-grid electricity serv- Central America has brought certain benefits. The public ices: Most rural electrification programs historically recognizes that private companies have been improving have been based on the expansion of electrification the reliability of electric power services and in general coverage via the expansion of an electric grid distribu- have been improving the efficiency of distribution. The tion system. The result of this approach has been to transfer of responsibilities that came with privatization to a restrict access to service to those communities that lie certain degree also has taken some of the politics out of within the economic reach of the grid. Communities the industry, but it turns out that the private sector cannot beyond this limit have been left without access to grid be expected to serve poor populations in remote areas service and without access to the subsidy funds that without some form of public policy support. The hope that might be used to finance a non-grid solution. privatization would lift the burden of rural electrification from the government has not proved to be true. · The way forward. It is critical that governments create proper incentives to encourage the provision of rural The main conclusion of this study is that power sector electricity services to the poor. The service delivery reform does not solve the problems of providing electrici- models should provide strong incentives to ensure that ty in rural areas. The private sector will not, on its own, service is continued and maintained long after the extend electricity to rural areas, so in most cases some equipment is installed. It is not too late to develop form of incentive or subsidy is required. Although the approaches and programs that can serve the poor. The reforms were similar, the issue of how to deal with extend- study identified ways to solve the problems of manage- ing access to mainly rural people without electricity was ment of the electrification funds and to target support to addressed in a variety of ways, and most of them have rural areas based on 10 years of experience with involved some problems. The conclusion is that govern- reforms without burdening the national government and ments must retain an involvement in electrification pro- power utilities with unsustainable subsidies grams for improving access to the poor, rural households. Contributed by: Douglas F. Barnes, Senior Energy But how can it be made effective and sustainable? Specialist, World Bank Group · Correct operational weaknesses of capital subsidy funds: Most of the governments of Central America set up a subsidy fund for rural electrification as part of the reform process. With the exception of Guatemala, these ANNUAL REPORT 2004 31 A parallel activity, Power Sector Reforms in Africa: Assessing rarely profitable. The management of financial support to the Impact on the Poor and Influencing Policy Decisions large utilities for rural access has proven to be a challenge for (ESMAP Activity P080820), is under preparation for eight the government, as large utilities, as monopolists, have no African countries to assess the impact of power sector incentive to lower government-subsidized access cost in the reforms on the poor, mainly in terms of access to modern absence of competition for entry in the market. The delivery energy and energy prices (see Box 3.11). It suggests that in of energy services through small and medium enterprises most of the surveyed countries, energy sector reforms have (SMEs) and decentralized enterprises is likely to be the not clearly benefited the poor, and that in the design itself of response to the challenge of managing small dispersed the reforms the poverty dimension was not specifically taken points of demand that cannot be served effectively by large into account. It proposes principles and approaches to and centralized organizations and to the lack of appetite of design reforms that integrate pro-poor measures. international investors for financing and managing decentral- ized access to energy. With the increased emphasis on private-public partnership for extending access to energy services following the ebb of SMEs and decentralized enterprises bring more flexibility in private sector investment in energy, the driving principles for technical design of small isolated systems, lower overheads energy sector reform are being revised toward more flexibil- and structural cost, and closer commercial proximity to ity and better risk allocation. The dissemination of ESMAP clients and personalized service, and can be submitted to work and its integration in sector dialogue will help ensure competitive challenge, at least at market entry level to mini- that suitable measures are included in the reform package mize subsidies. In this context, reliance on small local for the poor to gain from the reform process. investors, local cooperatives, or community-based groups for the provision of energy services in isolated rural or peri- Private Public Partnership for urban areas is an attractive option. Energy Access in Isolated Areas This approach, however, has its own problems, including Access to energy for the poor and in isolated areas pose transparency, stability and minimum technical standards for specific problems that state-owned enterprises and large licensing of SMEs, regulation of quality of service and tariffs private companies have not addressed effectively: in the longer run, and access to financing from the local · Technical standards need to be adjusted to meet cost banking system. effectively the demand of small consumers. · Type of service needs to be closely aligned with the needs Technical and managerial capacity building are also needed of poor and isolated users where the balance between for the sustainability of SME energy businesses as a new cost and quality of service differs from the preference of domain of activity for local entrepreneurs. Setting up the richer urban users. right business environment and attracting local entrepre- · Close client relationship for billing and collection is essential. neurship in this new line of business are emerging chal- lenges that have been reflected in ESMAP's 2004 activities, From the corporate standpoint, the cost of developing and which included the regulation of small decentralized systems maintaining branches in remote and dispersed areas where in Cambodia (ESMAP Activity P083199). the demand and revenues are low is difficult to justify and is 32 ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM Box 3.11: Power Sector Reform in Africa: Assessing the Impact on Poor People A number of African countries have adopted policies and been a substantial retreat from these policy pronounce- plans to unbundle and privatize their power sectors and to ments. Many governments have been reluctant to fully pri- introduce competition. How effective have these reforms vatize the main utility, believing national utilities continue been? Has the performance of electricity utilities in Africa to play a vital developmental role. Nevertheless, signifi- improved? Are they better able to provide reliable and cant steps in power sector reform have occurred. Tariff affordable electricity services for households and support reforms have been instituted in all survey countries. economic activity and employment growth? Private participation has been encouraged in the form of management contracts (for example, SOGEM in Mali and Study methodology: Analyses, conclusions, and recom- TANESCO in Tanzania, currently) and also to prepare them mendations appearing in this report are based on case for privatization. Private sector participation has been studies and based on field surveys undertaken in Ghana, explored in distribution (for example, in Namibia and Mali, Namibia, South Africa, Tanzania, and Uganda. The Ghana). Private players are also being attracted into rural report assesses the primary impacts of these reforms on concessions in Mali, Ghana, Uganda, and South Africa. programs to expand access to electricity and on electric- Privatization has occurred in the form of long-term con- ity prices, costs, and subsidies. It also looks briefly at sec- cessions and takeovers in Mali and Uganda. Investment ondary impacts of power sector reform, such as the qual- has been attracted through new independent power pro- ity and reliability of electricity services and the degree to ducer projects in Ghana, Tanzania, Ghana, and Uganda. which expanded electricity services have supported the Further, in all the countries, either an independent regulator provision of social services (for example, schools and clin- exists or legislation has been passed for its establishment. ics) and economic activity in the form of small business development. It also provides some brief comments on In several countries there has been a significant increase the impacts on public finances. in access, although this cannot always be linked to the reform process. Governments have tended to design spe- Significant reform steps: Power sector reform in African cial access programs in parallel to the reform program, countries has often commenced with grand visions of and efforts to promote electrification have taken prece- unbundling, competition, and privatization. There has dence over other parts of the reform program. continued on next page ANNUAL REPORT 2004 33 Box 3.11: Power Sector Reform in Africa: Assessing the Impact on Poor People continued Nevertheless, governments are increasingly aware that Some countries have found it politically difficult to sustain there is a need to design reform programs that explicitly tariff increases that resulted from alignment of tariffs with include access programs. In most countries access to costs as part of the reform process and have either electricity for social services (health, education) has rescinded tariff reforms or allowed inflation to erode tariffs improved the quality of services. However, access was to levels below full costs. The tension around tariff reforms generally not the result of sector reforms but of specific has tested the independence of newly established regula- and targeted social and electrification programs devel- tors, with some bowing to political pressures to reduce tar- oped by the governments. iffs. Nevertheless, there are cases where regulatory institu- tions have managed to establish a track record for inde- pendence. Most tariff reform programs have incorporated measures to minimize the impact on low-income house- holds. In general, no clear linkage between tariff increases and acceleration of access through investment from the power utility was observed. Tariff increases sometimes have led to switching back to traditional fuels. In general, however, it seems that improvement in quality of service is considered just as important, if not more so, than price. One of the expected benefits of sector reforms was to reduce sector dependence on government budgetary support. Experience suggests that reforms did not reduce budgetary transfers significantly because governments often had to compensate for the adjustment of tariffs to actual costs or continued to provide guarantees for the sector to raise financing. Nevertheless, a clear benefit was that reforms introduce more transparency in the manage- ment of government transfers. Contributed by: Contribution from Robert Bacon, Consultant, COCPO, World Bank Group. 34 ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM An ESMAP project, Philippines Rural Electricity Private framework is unlikely to be effective because of the limited Participation and Regulatory Reforms (ESMAP Activity number of players of economical size. Moreover, isolated small P08803), provides a diagnostic of the sector, including iden- domestic markets do not allow the optimization of the energy tification of current investment, regulatory, and subsidy poli- production potential, at an additional cost to the economy and, cies and obstacles to entry and development, and assesses ultimately, energy users. Also, the security of energy supply is the potential of the cooperative and SME business model. It more difficult and costly to achieve in isolated systems. identifies issues and options for development of the regula- tory framework, private participation, and contractual There are, however, political obstacles to energy systems approaches for minigrids and proposes targeted subsidy integration that need to be lifted through dialogue and inter- schemes. The revised regulatory framework is under imple- national cooperation. Energy systems integration can con- mentation, and a follow-up investment project based on out- tribute to develop more competitive and effective energy put-based aid for local private investors to accelerate access markets and can contribute to lower prices through is under preparation. A revised regulatory framework, how- increased competition, optimized system operation, and ever, is unlikely to be sufficient to ensure that small local more economically efficient investments, thereby benefiting investors enter the new energy access business: There is a the poor by making energy more affordable. need for training and transfer of management know-how to local entrepreneurs. In 2004, ESMAP developed activities in support of the regional integration of power markets at different stages of Another project, The Design and Pilot Testing of Capacity- development. Technical Assistance for Establishing a Water- Building Product Line for SME Utility Services Providers in Energy Consortium in Central Asia (ESMAP Activity West Africa ((ESMAP Activity P083015), designs and pilot P091937) helps in building an initial political consensus for tests a new approach for capacity building jointly with the regional cooperation between four Central Asian countries in Africa Project Development Facility. It provides just-in-time recognition of the importance of the political process as a technical, financial, and skill development support to SMEs driver for energy systems integration. involved in the delivery of utility services to peri-urban commu- nities and rural towns in the target West African countries. The Greater Mekong Sub-Region Power Trade Strategy (ESMAP understanding of the potential role of local entrepreneurship Activity P085314) takes the process one step farther and for the provision of energy services, the design of a support- supports the development of regional institutions and of a ive business environment, and the implementation of meas- regional mechanism for energy exchanges, building upon ures to develop a supportive business climate need much the initial political consensus for the integration of the power more work to adapt to the local context and to get beyond the systems. Power Trade in Nile River Basin (ESMAP Activity pilot project stage. Building on the initial 2004 work, ESMAP P064935, ESMAP Formal Report 277/04) provides support will step up its activity in support of the development of local to address the same issue for 18 African countries help entrepreneurship for the provision of energy services. developing regional international institutions, based on an initial political consensus expressed in the National Business Lowering the Cost of Electricity Initiative Common Vision, which will support the integration and Improving Energy Security process, coordinate investments, and facilitate energy trad- ing. Development of a Regional Power Market in West Africa One of the expected benefits of sector reforms is to lower activity (ESMAP Activity P068875) goes farther downstream the cost of energy through widening competition and ration- and provides support for the harmonization of regulations alizing sector investment based on market signals. In many and sharing of information to allow effective competition and small- and medium-sized countries, competition in a national more reliable trading of energy. ANNUAL REPORT 2004 35 In addition to facilitating the integration of regional energy international oil companies. Most traditional oil exporters markets, countries can lower the cost of energy and already have more or less effective regulations and revenue increase its reliability through the development of a national management mechanisms and procedures in place. New energy infrastructure to provide alternative sources of ener- producers or new independent suppliers on the world mar- gy and access to economical forms of energy. To achieve ket need access to independent advice to develop regulato- this objective, each government needs to determine the ry frameworks that will protect their national interests while economically optimum mix of energy in the perspective of its providing fair business opportunities for international part- long-term strategy and compare alternative scenarios. ners. Vietnam Policy Dialogue Seminar and Mining Code (ESMAP Activity P072947) supported the development of ESMAP has supported projects for the analysis of the eco- regulation for oil exploration and exploitation in partnership nomic aspects of interfuel substitution and optimization of with international companies. domestic resources to lower the cost of energy in Peru. Extending the Use of Natural Gas to Inland Regions in Peru With high oil prices, the issue of the management of oil rev- (ESMAP Activity P087433) developed a methodology to enues by exporting countries and of the channeling of the assess the economic, social, and environmental benefits of additional revenues for social programs and poverty reduc- alternative long-term strategies for providing lower-cost ener- tion has become more acute, and so have the governance gy to certain provinces based on the utilization of domestic issues often associated with the management of oil revenues. national gas and as part of a national long-term strategy. ESMAP has provided access to best international practice on oil revenue management and governance (for example, Impact of High Hydrocarbon Prices through the Nigeria Petroleum Revenue Transparency Audit project [ESMAP Activity P087579], through which terms of Without anticipating or speculating on future hydrocarbon reference are being prepared for the design and implementa- prices and possible future price volatility, which would affect tion of an audit system in Nigeria that will ensure enhanced the poor both in net exporting and net importing countries, transparency and reliability of petroleum payment and rev- the issue faced by hydrocarbon-exporting developing coun- enue data and encourage greater efficiency and accountabil- tries in the recent past was the impact of high prices and ity in the management of petroleum revenues). how to manage it transparently. An ESMAP study (ESMAP Activity P092878, ESMAP Formal Report 299/05) provided With net importing countries, the increase in prices has stim- a framework to assess the impact of oil price volatility for low ulated the interest in the development of indigenous energy income net importing countries and for low income house- sources as possible substitutes or mitigating factors to holds. The study reviewed empirical evidence that highlight- exposure to fluctuating oil prices, provided that such ed the fact that the lowest income groups are twice as vul- sources are proven to be competitive in today's markets. nerable to oil price increases as upper income groups. It ESMAP supported initial work to identify domestic forms of also discussed policy options to mitigate that impact, such alternatives, in addition to renewable energy. The landfill gas as targeted subsidies. project in Latin America (ESMAP Activity P077801, ESMAP Technical Report 065/05) and the survey in Sub-Saharan High prices have caused a resurgence of exploration in a Africa of the potential for using landfill gas as a source of fuel number of countries, which need to manage effectively and for power generation (ESMAP Activity P083164, ESMAP transparently the licensing process for the exploitation of Technical Report 074/05) was an initial step that may lead to their underground resources and their relationships with the identification of future investment projects. 36 ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM 4. Governance And Management ESMAP is managed in the Energy and Water Department · Defining ESMAP policies and strategies (EWD) of the World Bank Group Infrastructure Vice · Endorsing the three year Business Plan and financing plan Presidency. It reports to the Director of EWD and is overseen · Reviewing ESMAP performance of the previous year by the Energy and Mining Sector Board. ESMAP is governed · Overseeing the TAG by a Consultative Group (CG) made up of representatives of contributing donors, which is chaired by the World Bank Technical Advisory Group Vice President, Infrastructure. The CG is common to all ener- gy trust­funded programs (ETFPs) managed by the World TAG's mission is to provide an informed, independent opin- Bank. A Technical Advisory Group (TAG) of three interna- ion to the CG of the ETFPs, which include ESMAP, about the tional experts selected by the CG provides independent purpose, strategic direction, and priorities of ETFPs. In par- advice to the CG. A program unit manages day-to-day ticular, TAG is asked to provide advice and suggestions to ESMAP in accordance with the strategy and principles laid the CG in the following areas: out in the ESMAP business plan approved by the CG. · Current and emerging global issues in the energy sector Consultative Group that are likely to have an impact on growth and develop- ment in low- and middle-income countries As provided by the ESMAP charter, the membership in the · Strategy, overall priorities, and their development into CG is open to all contributing organizations without restric- practical business plans, taking into account the volume of tions (Table 4.1). Contributions can be either for core funding likely donor funding that can be secured for each trust- of ESMAP or for non-core thematic funding, whose use is funded program in the context of the World Bank's energy restricted to specific themes, activities, or regions. ESMAP business strategy remains open to receive contributions from official donors, · Business plans for each of the energy trust funded pro- international financial institutions, official agencies, or private grams and their contribution to the implementation of the enterprises. The CG meets annually to review the strategic World Bank's energy business strategy. directions of the ESMAP program, its achievements, and its · Potential impact of each program and a high-level assess- utilization of resources and funding requirements. The CG is ment of the actual impacts from implementation, especial- responsible for: ly on the World Bank's energy business and on the pro- grams and interests of the donors. ANNUAL REPORT 2004 37 · Potential for the program to arrive at innovative approach- The key responsibilities of the ESMAP Program Unit include: es and new knowledge for improving energy service deliv- ery in developing countries. · Delivering on ESMAP's annual work program and busi- · Any other area, as requested by the chair of the CG. ness plan. · Review of the overall impact of implementing the ETFPs. · Preparing the annual work program and budget and the ESMAP business plan for review and approval by the CG. At the CG meeting of March 14­15, 2004, it was decided to · Reviewing proposals for ESMAP assistance, in accor- reduce the TAG membership from five members to three, dance with the criteria and procedures approved by the with a view to facilitate communication between the TAG CG. members and to raise the level of personal engagement of · Providing support services to the CG and the TAG. the members in their mission. The members were selected · Maintaining relationships and ensuring adequate reporting on the basis of their expertise in various areas related to with the donors and contributors. energy services and poverty reduction and appointed on · Maintaining effective relationship with external stakehold- August 2, 2004, by the Bank. The list of members of the TAG ers, including recipient countries, civil society, academia, is given in Table 4.1. and the international energy practice. · Maintaining relationships with the Mining and Energy The TAG met in Washington, DC, from November 29 to Sector Board of the Bank and with the Bank energy practice. December 6, 2004, to review and comment on the draft · Managing the ESMAP human and financial resources in 2005-07 ESMAP business plan prior to its presentation to accordance with sound management principles and the the CG on March 17-18, 2005. World Bank standard practices. ESMAP Program Unit Project Selection Criteria The ESMAP Program Unit is responsible for the day-to-day The projects that are financed by ESMAP are selected management of the ESMAP program, following the general according to the following criteria: strategy of its business plan and annual work program approved by the Director of EWD and then by the CG. The · Alignment with, and contribution to, the ESMAP business unit comprises eight staff (see Table 4.1). plan. · Alignment with the ESMAP annual work program. The unit delegates the implementation of certain tasks to · Support from the recipient country or relevance to the Bank staff outside of ESMAP and relies on the support of international development community. external consultants and expertise to deliver certain activi- · Coordination with other donors' activities. ties. Consultants and external services are procured follow- · Complementarity with analytical work already available. ing the Bank guidelines on procurement. · Linkage to specific monitorable outcome indicators. · Cost effectiveness. · Last resort source of financing after possibility of funding from Bank projects or from its own budget and from other donors' programs have been explored. 38 ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM Table 4.1: Donors and Members of the Consultative Group, Technical Advisory Group, and ESMAP Team CONSULTATIVE GROUP TECHNICAL ADVISORY GROUP · BELGIUM Alfredo Mirkinb General Administration for Andrew Barnett Development Cooperation Elizabeth Cecelski Jan Moenb · CANADA Jyoti Parikhb Canadian International Development Amitav Rath Agency Youba Sokonab · DENMARK ESMAP MANAGEMENT AND Royal Ministry of Foreign Affairs ADMINISTRATIVE TEAM · FINLAND Dominique Lallement, Manager Ministry of Foreign Affairs Marjorie Araya Douglas Barnes · FRANCE M. Ananda Covindassamy Agence Française de Développement Maureen Cuffley Laurent Durixb · GERMANY Matthew Gardner Bundesministerium f_r Wirtschaftliche Muthoni Gikonyod Zusammenarbeit und Entwicklung Ghislaine Kieffera Kazim Saeeda · NORWAY Nyra Wallace-Crawford Royal Ministry of Foreign Affairs Xiaodong Wang Yabei Zhang · SWEDEN Swedish International Development REPRESENTATIVES FROM Cooperation Agency SPONSORING ORGANIZATIONS · THE NETHERLANDS World Bank Group Sector Board Ministry of Foreign Affairs, Climate, Jamal Saghir Energy, and Environment Technology Penelope Brook Division (DML/KM) Henk Busz Yusupha Crookes · UNITED KINGDOM Susan Goldmark Department for International Dominique Lallement Development Junhui Wu Peter van der Veen · UNITED NATIONS FOUNDATION Alain Barbu COSPONSORING ORGANIZATIONS Alvaro Umana (UNDP) Susan McDade (UNDP) · WORLD BANK GROUP Minoru Takada (UNDP) · UNITED NATIONS DEVELOPMENT PROGRAMME a. Until March 2004 b. Until June 2004 CHAIR OF THE CONSULTATIVE GROUP c. Until September 2004 d. Through December 2004 Nemat Talat Shafikc Katharine Sierra Jamal Saghir, Acting Chair ANNUAL REPORT 2004 39 40 ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM 5. Financial Review Contributions Received Core and Thematic Funding ESMAP raised a total of US$8.5 million from its donors in Core contributions totaled about US$1.47 million in 2004 or calendar year 2004. This marks a 9.5 percent decrease as 17 percent of total contributions (Table 5.2). United Kingdom compared to a total of US$9.4 million in calendar year 2003. provided core, thematic, and project-specific funding. This year, eight donors, in addition to the World Bank, made Sweden provided core and project-specific funding, and cash transfers to ESMAP through trust funds. It is worth not- Germany and Norway provided core and thematic funding. ing that donors have already made pledges of about US$17.8 million for calendar year 2005. This marks a signif- The World Bank's contribution (which is considered core) icant increase as compared to previous years. This is main- was US$0.52 million in 2004, a marginal decrease of about ly because EWD's Director and ESMAP's management 2 percent from its contribution of US$0.54 million in 2003. intensified efforts to raise additional funds in preparation of its 2005-07 business plan. The total contribution received for thematic funding in 2004 was US$4.1 million. The Netherlands made a contribution of Table 5.1 shows actual receipts by individual donor for the US$2.9 million, Germany US$0.47 million, Norway US$0.35 period 2002-04, which are also illustrated in figure 5.1. million, and United Kingdom US$0.38 million. Table 5.1: ESMP Receipts 2004, (thousand US$) Of which, % of total Total core receipts % of total Pledges 2002- 2002- 2002- receipts % of total 2002 2003 2004 for 2005 2004 2004 2004 2004 core UNDP 100.0 100.0 100.0 100.0 300.0 0.0 1.2% 1.2% 0.0% World Bank 545.4 535.0 523.8 400.0 1,604.2 1,604.2 6.2% 6.1% 24.1% Canada 737.8 277.6 563.8 0.0 1,579.2 0.0 6.1% 6.6% 0.0% Germany 899.5 892.3 558.0 4,100.0 2,349.8 495.2 9.1% 6.5% 7.5% Finland 82.8 0.0 108.0 112.0 190.8 190.8 0.7% 1.3% 2.9% Netherlands 3,097.0 3,964.3 2,924.0 5,200.0 9,985.3 0.0 38.7% 34.3% 0.0% Denmark 258.1 0.0 0.0 881.0 258.1 258.1 1.0% 0.0% 3.9% Norway 0.0 1,150.0 700.0 700.0 1,850.0 925.0 7.2% 8.2% 13.9% Sweden 636.4 1,023.2 396.6 1,600.0 2,056.2 597.0 8.0% 4.7% 9.0% France 0.0 0.0 0.0 396.0 0.0 0.0 0.0% 0.0% 0.0% United Kingdom 1,125.0 1,246.3 2,047.2 4,035.0 4,418.5 2,575.0 17.1% 24.0% 38.7% United Nations Foundation 335.0 300.0 600.0 316.0 1,235.0 0.0 4.8% 7.0% 0.0% Total 7,817.0 9,488.7 8,521.4 17,840.0 25,827.1 6,645.3 100.0% 100.0% 100.0% Note: Based on projected disbursements. ANNUAL REPORT 2004 41 Figure 5.1: ESMAP Receipts United Nations UNDP: 1% Foundation: 5% World Bank: 6% United Canada: 6% Kingdom: 17% Germany: 9% Finland : 1% Sweden: 8% Norway: 7% Netherlands: 39% Denmark: 1% Table 5.2: Core and Thematic ESMAP Donor Contributions, 2001­04 (thousands US$) Total Of which, Of which, Core as percent Core plus the- donora core core plus of total donor matic as percent contributions (million US$) thematic contributions of total donor Year (million US$) (million US$) contributions 2002 7.17 1.92 5.02 26.8 70.0 2003 8.85 1.65 7.45 18.8 84.7 2004 7.89 1.47 5.58 18.6 70.7 Total 23.91 5.04 18.05 21.1 75.4 a. Does not include World Bank and UNDP. 42 ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM Project Funding Table 5.3: Receipts by Type of Funding in 2004 Amount Project-specific funding totaled US$2.3 million in 2004 (Table (million US$) 5.3) compared with US$1.4 million in 2003. These contribu- Bank contribution 0.524 tions were provided by Canada, Sweden, the United UNDP 0.100 Kingdom, and the United Nations Foundation. Core 1.475 Thematic 4.106 Expenditures Project 2.316 Table 5.4 shows that disbursements in 2004 totaled US$8.9 Total 8.521 million, an increase of US$1.4 million from disbursements in 2003. Expenditures on work program development (time spent by ESMAP staff to help develop specific ESMAP proj- Table 5.4: ESMAP Disbursements and ects) increased from US$0.75 million to US$0.1 million. Expenditures, 2002-04 (thousand US$) Program management costs increased from US$0.4 million 2002 2003 2004 in 2003 to US$0.6 million in 2004. This increase is mainly Project costs 5,224 6,727 7,886 due to the expansion of staff strength at ESMAP and the increased volume of activities. Work program Developmenta 51 75 103 Program Management 394 401 597 Sources and Uses of Funds Knowledge Dissemination 170 165 125 From ESMAP receipts of US$8.5 million, US$6.7 million was Governance 172 212 252 Of which TAG 72 133 52 allocated to projects prior to 2004 that were partially funded. Of which CG 100 79 42 A total of US$1.0 million was expended on work program development, knowledge dissemination, and program man- Total 6,011 7,580 8,963 agement governance. Knowledge dissemination expenses Of which funded by donors 5,366 7,045 8,439 include brown bag lunches, publications, workshops, and Of which funded from web page development and maintenance expenses. The World Bank budget 545 535 524 balance of funds not yet allocated to projects was US$0.8 million, of which US$0.2 million are core funds and the a. Includes review of proposals. remaining US$0.6 million non-core funds. This illustrates the renewed trend in more non-core than core funds. ANNUAL REPORT 2004 43 44 ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM Annex 1: Proceedings From The Joint Consultative Group Of The Energy Trust­Funded Programs AEP/ASTAE/ESMAP, March 15­16, 2004, Washington, DC Summary Proceedings · The multidimensional nature of energy security: One dimension is the contrast between the energy rich and The Consultative Group (CG) for the energy trust­funded energy poor. Industrialized countries have clear motiva- programs (ETFPs) managed by the World Bank met in tions regarding energy security and have developed well- Washington, DC, on March 15­16, 2004. Mr. Jamal Saghir, articulated strategies, while developing countries have the World Bank's Director for Energy and Water and Chair of complex motivations and no clear strategy. There are also the World Bank's Energy and Mining Sector Board, chaired tensions within developing countries with major disparities the meeting. This document presents a summary of the in the availability of affordable and efficient energy services meeting's proceedings. between income groups, geographical regions, and rural and urban populations. In her welcoming remarks, Ms. Nemat Shafik, the World Bank's Vice President for Infrastructure, emphasized that the · Access to energy services: Mr. Saghir emphasized the World Bank had reengaged in the infrastructure business enormous need for investment into expanding access to and that the Infrastructure Action Plan (IAP) had laid out a energy services through a wide range of technologies, clear-cut strategy. The Bank Group is now focusing on oper- including the use of hydrocarbon products. Also, renewable ationalizing the IAP, which was the theme of Energy Week energy can make a significant contribution. Mr. Saghir 2004 (March 8­11). It highlighted the crucial role played by stressed the World Bank Group's commitment to scaling up energy in the implementation of the IAP. Ms. Shafik renewables, including large-scale hydro (see below). He also addressed the importance of energy services to reduce stated that the Bank Group was working on developing poverty and to achieve the Millennium Development Goals implementation plans for scaling up both energy services (MDGs). She expressed her appreciation to donors for their and renewables. Under these initiatives, each regional ener- commitment to the energy trust­funded programs and gy team outlined its scale-up strategy during Energy Week. encouraged donors to focus on implementation. · The growing energy investment gap: Rapid urbanization Post-World Summit on Sustainable and economic growth in developing countries has posed Development (WSSD) Implementation Plans a huge demand for energy infrastructure investment. For example, electricity infrastructure in developing countries Mr. Saghir's Presentation needs about US$120 billion of new investment per year until 2010, according to the International Energy Agency. In his opening remarks, Mr. Saghir first outlined the issues, However, there is a large and growing gap to supply the observations, and lessons from Energy Week 2004. The key demand. Private sector investors are few; international pri- points were: vate investors have retrenched, and domestic capital par- ticipation is also very limited. The investment lags have resulted in shortages, system failure, and slow system expansion, which slow economic growth. ANNUAL REPORT 2004 45 · Public-private partnership: Despite the Bank Group's for the Technical Energy Sector (RPTES) have transformed plan to scale up its energy business, the magnitude of the into a single Africa Energy Sector Multidonor Trust Fund with needs is such that all possible resources from all stake- greater strategic coherence and focus on biomass energy holders, including the international financial institutions, and rural electrification. ESMAP has expanded its team to public sources, bilateral funding, the private sector, and deliver greater intellectual leadership and has developed pro- civil society, will need to be pooled. To begin engaging the posals for a new business model to operationalize its intel- private sector, the Bank Group has issued a guidance lectual leadership agenda. note to staff on public-private partnership and will follow this with a series of technical notes on how to operational- At the end of his presentation, Mr. Saghir outlined the objec- ize this guidance note. The Bank Group is also convening tives of the CG meeting: For the first day, to hear from each a roundtable of the CEOs of leading power investors in donor its present aid cooperation policy in energy since the developing countries to initiate a process of engagement. World Summit on Sustainable Development (WSSD), to hear from the Technical Advisory Group (TAG) its retrospective · Renewable energy: Mr. Saghir made special mention of review and ideas for the future, and to discuss the major ini- the Bank Group's increased focus on new renewable tiatives taken by Germany on renewables and the energies and the need to leverage existing resources for Netherlands on energy for development. For the second day, renewables. Mr. Saghir was emphatic about the Bank to discuss the business plans of the ETFPs and to analyze Group's support to large-scale hydroelectric power. Large the implications for the donors, in terms of both financial hydro is a renewable energy resource and has a significant commitments and the organization of the CG. During the potential for meeting the energy needs of developing ensuing discussion, donors emphasized that they expect countries; at the same time, the Bank recognizes that from the Bank to continue its leadership in scaling up renew- large hydro projects must be undertaken in an environ- able energy. mentally and socially sustainable way. Donors' Presentations · The Infrastructure Action Plan: With the Infrastructure Action Plan, approved by the World Bank Board of The donors and observers presented their respective aid Executive Directors in July 2003, the infrastructure busi- cooperation policies in energy since WSSD. Their positions ness, including energy, is back on the Bank Group's agen- on energy and their priority energy issues are summarized in da. The lending for energy projects is already increasing, the table on the following page: and the Bank Group will do more. The Bank is combining all instruments (International Bank for Reconstruction and The donors also raised the importance of harmonization of aid Development [IBRD] and International Development cooperation policies between donors, as well as between the Association [IDA] loans, credits and guarantees, International Financial Institutions (IFIs). In this context, numer- International Finance Corporation [IFC] loans and invest- ous partnerships were highlighted by donors: Global Village ments, and Multilateral Investment Guarantee Agency Energy Partnership (GVEP), EU Energy Initiative, Global [MIGA] guarantees) to scale up its energy services. Network for Sustainable Energy Development (GNSED), Renewable Energy and Energy Efficiency Partnership Mr. Saghir highlighted the progress made by the three (REEEP), LPG Challenge, Energy-Environment Partnership ETFPs on deliverables identified at the Berlin CG meeting in (Central America), Extractive Industry Transparency Initiative April 2003. Since the Berlin meeting, Asia Alternative Energy (EITI), Gas Flaring Initiative, and so forth. Program (ASTAE) has broadened the definition of alternative energy, with a focus on access to modern energy services The donors also emphasized the importance of effective and environmental sustainability. It has also developed a new monitoring and evaluation. They highlighted the need for strategy and business plan for donor review. Africa Rural and accounting for results and greater country-level engage- Renewable Energy Initiative (AFRREI) and Regional Program ment. The issue of enhancing the participation of the local 46 ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM Priority Issues Is energy Regional Capacity high on Access project/ Renewable Public-private Energy building for agenda? scale-up energy trade energy partnership security policy/strategy Canada Not yet X X X X Denmark Not yet X Finland Not yet X X X X X France Yes X X X X X Germany Yes X X X IsDB Yes X X Netherlands Yes X X Norway Yes X X X X Sweden Yes X X X UNDESA Yes UNDP Yes X X X X UNF Yes X X United Kingdom Not yet X X X United States Not yet X Note: IsDP, Islamic Development Bank; UNDESA, United Nations Department of Economic and Social Affairs; UNDP, United Nations Development Programme; UNF, United Nations Foundation. private sector in development-oriented activities was also Report of the Technical Advisory Group (TAG) mentioned. Within this context, the Netherlands mentioned a call for ideas, inviting proposals from the private sector and Mr. Andrew Barnett, acting moderator of the TAG, presented NGOs. the report of the TAG to the CG. He stated that the TAG sup- ported the change in the Bank's energy sector policy, which The ensuing discussion focused on how to put energy high- was viewed as "less ideological and more programmatic." After er on the donors' agenda. It was pointed out that out of revisiting the Berlin conclusions of the need for "increasing WSSD a consensus has emerged that energy is not an end coherence among the ETFPs," Mr. Barnett stated that the TAG in itself, but that energy needs must be addressed at the recognized the good progress that had taken place in that country level, within the overall development agenda. direction. TAG reported on the India Client Survey led by Jyoti Concerns were raised that energy issues were not included Parikh. Forty-five clients provided feedback through question- in many Poverty Reduction Strategy Papers (PRSPs). Mr. naires and interviews, covering four ESMAP projects and one Saghir confirmed that the Bank conducted a review of ener- ASTAE project. They reported that ESMAP made a significant gy issues in PRSPs, and the results were disappointing. contribution to the formulation of the Power Sector Reform and Nevertheless, the Bank has committed to work with coun- Renewable Energy Policy in India, and that ESMAP's value tries and to scale up energy services at the country level. added is to bring the international experience. They would like Donors supported the idea of an "energy champion" on the to see a faster publication process and broader consultations international scene to raise the profile of energy in the devel- and participation in the definition of the ESMAP activities. At the opment agenda. request of the chair of the CG, the TAG presented its view on the key energy challenges facing the donor community: ANNUAL REPORT 2004 47 · Africa's energy future remains a critical and complex issue. The TAG commented that the review provides valuable results It is important to identify the key interlocutors for energy in even though it was limited by insufficient information. The TAG the discussions on PRSPs and MDGs. agreed with ESMAP's project selection and stated that the · There is a need to develop an "energy alert" system that risks ESMAP took were fully acceptable. The TAG also sug- could give the global energy and development communi- gested that ESMAP draw all the experience of energy trade ty early warnings about important issues such as security into a manual and give priority to developing broader partner- of supply failures. ships if new projects are supported. During the ensuing discus- · How to ensure "sustained political will" to ensure that sion, ESMAP was complimented for providing a forum for dis- reform transitions are implemented successfully. cussion of energy trade issues and pulling together resources · There is a need for more systematic research on the ener- for countries (especially for high-level officials) on this topic. gy-related household health issue, which is beyond indoor ESMAP's management response is included in the report. air pollution. Energy Conferences The TAG stated that it thinks that the ETFPs are worthwhile from the cost-benefit prospect and that it sees the ETFPs Mr. Manfred Konukiewitz of BMZ, Germany, presented the add value to the work of the Bank and the wider communi- background, preparation arrangements, and structure of the ty. The TAG stressed that the ETFPs (especially ESMAP) Renewables 2004 Conference in Bonn, Germany, and invited needed to be more "ahead of the curve," helping the donor all donors to the conference. He stated that this conference community to anticipate and find a way through the tough has gained a high level of political support and is being organ- issues that would emerge in the energy sector over the next ized to be action-oriented and demand-focused, and he few years. Mr. Barnett stated that the TAG is now in a critical encouraged all to present news ideas and actions needed. period. In the past, the TAG was intended as an instrument to overlook ESMAP. Later on, other ETFPs were added. The Mr. Paul Hassing of the Ministry of Foreign Affairs, the Bank is of the opinion that the TAG should now become less Netherlands, presented the Energy for Development focused on the process and more on strategic issues. Conference, December 2004. He stated that the confer- ence's objective was to discuss sustainable development Energy Trade Review with energy, which would directly respond to WSSD. He stressed the acknowledgement of different prospects from During 2003, the TAG supervised a review of the ESMAP developing countries regarding climate change. There will be energy trade portfolio, conducted by Dr. Robert Means and a long debate on the tension between economic growth, funded by ESMAP. Mr. Jan Moen, a TAG member, present- poverty reduction, and environment protection. But new ed the following summary of Dr. Means' conclusions: ideas are also expected from this conference. Mr. Hassing stated that the conference was still in the process of prepa- · The work generally was successful in developing political ration, and he welcomed ideas and comments. support for regional power trade and the development of institutions capable of dealing with the technical issues Mr. Fernando Echavarria of the U.S. Department of State pre- involved in regional trade. sented the progress of the African Rift Geothermal Development · ESMAP should continue to extend support to such region- Facility and the achievements of the 2003 East Africa Regional al initiatives, which may look risky because they require Geothermal Conference. He focused on Kenya's successful significant upfront resources, because it should continue experience in using geothermal energy and showed the vision to operate in the more difficult areas of energy sector that geothermal, as a clean energy alternative, would address development. local resources for sustainable development. The concerns · ESMAP's ability to draw on its extensive experience in of environmental impact and the price of geothermal energy regional power trade was restricted by deficient record were raised in the following discussion. The monitoring of keeping on some projects. groundwater levels and quality was raised as an issue. 48 ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM Overview of the Energy Trust­Funded ciency, and renewables--to scale up sustainable energy Programs development. Ms. Wu outlined that in fiscal 2003, ASTAE disbursed US$2.2 million and supported more than 14 proj- Africa Energy Program (AFTEG) ects and programs, including support for nonlending activi- ties. She provided two examples to illustrate ASTAE's sup- Mr. Yusupha Crookes, Africa Energy Sector Manager of the port work. The first was the Green Electricity project in World Bank, presented the context and the strategy of the Shanghai, which is the first introduction of a green electricity World Bank's Africa energy unit. He presented the regional scheme in a developing-country city. ASTAE supported its constraints of weak utilities, weak financial sectors, and few implementation in cooperation with ESMAP. The second private players. Given the performance of the energy sector, activity was the Cambodia Rural Electrification and he addressed five immediate outcomes the Africa Energy Transmission project, under which ASTAE supported the Program (AFTEG) aims to achieve: increasing the sustain- development of a 10-year Renewable Energy Action Plan ability of biomass fuel use in urban areas, mitigating health and mini- and micro-hydro schemes. and environmental impacts of energy use, increasing electri- fication, expanding access to services, and reducing the fis- In his commentary, Mr. Gerry Collins of the Canadian cal burden of the energy sector. In addition, Mr. Crookes International Development Agency appreciated the good pointed to the approaches that the program is taking, includ- progress ASTAE has made since the last Berlin CG meeting. ing the representation of energy in PRSPs and country assis- He noted that the issue of climate change and the benefits tance strategies (CASs), strengthening institutional capacity, of renewable energy need to be addressed. The issue that building links with other sectors, and integrating the instru- ASTAE's identity was not well known was raised in the dis- ments in the Bank. cussion by the TAG, as a result of its consultation with Indian partners. The ASTAE team responded that ASTAE was In his commentary, Mr. Anders Cajus Petersen of the already well known in China and that more efforts would be Swedish International Development Agency welcomed the taken to expand its identity in the rest of Asia. In responding broad picture Mr. Crookes provided and raised the question to the question of the comparative advantage of ASTAE rel- of how the energy trust fund could contribute to regional ative to other funds, Ms. Wu emphasized the flexibility of development in Africa. The TAG commented that the Africa ASTAE, which could quickly respond to demand (for exam- energy trust fund needs to be complementary to the Bank ple, through prelending activities, midterm review, supervi- Group's strategy and operations in the Africa region, instead sion, and so forth). Ms. Wu noted that ASTAE was comple- of being fully integrated into the Bank's program. Mr. mentary, instead of competing with Bank or bilateral proj- Crookes responded that the focus of the trust fund was bio- ects. mass-based services and rural electrification, as well as ana- lytical work. He emphasized that the trust fund was a coher- Energy Sector Management ent part of the whole program and that it should be integrat- Assistance Program ed into the country and regional program. In addition to the overall program strategy, donors requested AFTEG to give Ms. Dominique Lallement, Manager of ESMAP, first intro- detailed and specific proposals for funding consideration. duced two new senior staff members at ESMAP, Mr. Douglas Barnes and Mr. Ananda Covindassamy, who have Asia Alternative Energy Program (ASTAE) joined the team as a response to the CG's request for addi- tional staff to assist with the implementation of ESMAP's Ms. Junhui Wu, Sector Manager of the World Bank for East mandate on intellectual leadership. Ms. Lallement's presen- Asia and the Pacific (EAP), presented the EAP energy strat- tation first highlighted ESMAP's progress and impact in egy, the follow-up of the CG meeting in Berlin, and ASTAE's 2003, then proposed a new business model for ESMAP for commitments to support the regional strategy. She empha- 2005­07. Ms. Lallement highlighted (a) the strength of the sized that ASTAE would "stand on three legs"--access, effi- demand for ESMAP, with an increase in proposals received ANNUAL REPORT 2004 49 through ESMAP's call for proposals from 10 in March 2002 generate, integrate, and disseminate knowledge for poli- to 42 in October 2003; (b) the improvement in the success cymaking in client countries by serving as a knowledge rate of proposals also increased, from 39 percent to 49 per- broker and working on impact measurement; and (c) an cent, showing greater presubmission engagement of propo- implementation "booster," to support innovation in govern- nents with the ESMAP team; (c) efforts to maintain efficien- ment strategies and policies, to help place energy in cy, a 10-week call-for-proposals cycle (down from six PRSPs and other development management instruments, months before 2002) and management costs at 5.6 percent to facilitate the development of country energy and pover- of contributions in 2003; and (d) ESMAP's intellectual leader- ty reduction strategies and action plans, and to support ship on conceptualizing multisector approaches to energy- selective thematic strategies. poverty reduction for PRSPs implementation plans and energy services projects, on evaluation methodologies to In his commentary, Mr. Peter Davies (U.K. Department for assess the impact of reform on the poor, and through its ini- International Development, DFiD) commended the achieve- tiative to address regulation of decentralized energy servic- ments of ESMAP over the past year and welcomed the news es. ESMAP's knowledge management was illustrated by the that the secretariat had been strengthened with additional substantial improvement in the timeliness of its publications full-time staff. The portfolio has grown, and the Fast-Track and the support to a large number of knowledge-sharing Window has greatly reduced the time to approve and fund events around the world, including in cutting-edge areas proposals. Nurturing and building GVEP has absorbed a such as gender in energy and mining. Ms. Lallement cited great deal of management effort. While recognizing that ESMAP's Honduras education-ICT project as an example of without this effort, GVEP would not have gained its interna- innovation by ESMAP. ESMAP's support for changes in poli- tional profile, for which ESMAP's management is warmly cies, legislation, and lending are examples of specialized commended, this has been a distraction from fully address- technical assistance. In addition, ESMAP continued to work ing higher-level strategic issues. The plan to move GVEP's through partnerships, especially the GVEP, Regional Power Technical Secretariat to another organization is welcomed, Trade Committees, and the Energy Efficiency Network. because this is not part of ESMAP's core mandate. As for the new business model, the overall goal of energy security Ms. Lallement presented the concept for a new business needs a clearer definition: Is this security for end users or at model for ESMAP as a response to the challenges given to a national, regional, or global level? Links to development ESMAP to provide intellectual leadership on global issues, to outcomes need to be explicitly stated. Concerns about glob- increase the circulation of knowledge, and to boost the scal- al environmental impacts and processes should not deflect ing-up challenge. This concept is the outcome of wide- attention from the core developmental issue, which is spread consultations: access to services to reach the MDGs. Countries may need help in designing medium- and long-term energy policies, · Content strategy: Ms. Lallement stated that the validity of taking account of external factors, such as the price and the three pillars of ESMAP's current strategy--energy supply of fuel. Is there a role for ESMAP here? Stimulating access and poverty, energy market, and energy environ- private sector involvement remains a priority. Mr. Davies ment--were still appropriate, but she submitted to harbor thought ESMAP might usefully work more closely with the them under the overarching goal of energy security, which Public-Private Infrastructure Advisory Facility (PPIAF), which is at the core of energy policy and operational needs in has a strong energy sector interest. emerging and developing economies. · Operational strategy: She proposed three new business lines: (a) a cutting-edge think tank, to address the key global issues for the next decade by conducting in-depth analytical work and by providing early warning about issues on the horizon; (b) a knowledge "power plant," to 50 ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM Looking Forward: The Role of the Energy Based on the "chilled" funding commitments, the raison Trust­Funded Programs (ETFPs) d'être and the organization of the CG were discussed. A proposal to conduct two-day annual meetings for the CG Mr. Saghir's summary of the three ETFPs' business lines is was approved. The first day will be along the lines of a think recorded in the table below. tank that brings together the wider energy community to dis- cuss the broad energy agenda. The second day would be a Mr. Saghir requested each donor's funding position for the meeting of only the active donors to discuss each ETFP's ETFPs. Most donors expressed their continuing support to business plan. the ETFPs. The Netherlands, the largest donor, committed to maintaining the previous year's level of funding for ASTAE The TAG's function and performance was also discussed at and ESMAP, provided that the commitments of other donors the end of the CG meeting. The TAG's role as a promoter of are reasonable as well. Canada, France, and the United the broader energy agenda and an independent monitor of Nations Development Programme (UNDP) stated that they the performance of the ETFPs was agreed as important and would maintain the previous year's contributions. Sweden valuable to the CG. Because the structure of the CG would stated that it would commit SKR 15 million for ESMAP's change, there was consensus that new Terms of Reference Africa program. Norway mentioned that it provides energy for the TAG was necessary. Messrs. Peter Davies of the funding to the Bank Group through a single channel without United Kingdom and Anders Pederson of Sweden agreed to sector indication, based on a three-year plan, and would take the lead on reviewing the TORs and sending them to alert the government on the request to reconsider funding the donors by the end of April 2004, with the objective to energy in its own right. The United Kingdom stated that it complete them by May 30, 2004. The TAG members will would at least maintain its funding level to ESMAP and that continue their current contracts, and new TORs will be draft- it needs two-page concept notes for the other programs. ed, circulated, approved, and then contracted through The U.N. Foundation confirmed the current levels of commit- ESMAP or the UNDP. ment. Total funding levels indicated were US$7.4 million for 2004­05 (12 months), as compared with a total request of Conclusion about US$15.0 million. At Mr. Saghir's request on behalf of the GVEP Board, the CG agreed that US$1.0 million of Mr. Saghir thanked the participants for their continued support ESMAP resources would be allocated to support the GVEP to the ETPFs and for the very frank and constructive discus- Technical Secretariat for the next two years of operation. sions. The meeting adjourned on March 15, 2004, at 5:30 p.m. Vision Issues discussed Funding requirement, US$ AFTEG Five immediate outcomes: Energy in PRSP, biomass, gender, M&E, US$2.5 million per year Increasing biomass fuel in urban regional trade, revenue management, utility areas, mitigating health and envi- reform, water and energy, target approach for ronmental impacts, increasing rural electrification, and Bank lending in electrification, expanding servic- Africa es, reducing fiscal burden ASTAE Three legs: Scaling up access, Cross-sector, climate change, target versus US$6.1 million for CY renewables, and efficiency indicators, renewable energy/energy efficien- 2004­06 cy in national energy policy, ASTAE versus the Bank and bilateral programs ESMAP Three operational business lines: Definition of energy security, climate change, US$15 million per year for Cutting-edge think tank, knowl- country-level policies and action plans, link CY 2005­07 edge power plant, and implemen- with Bonn conference, intellectual leadership, tation booster public-private partnership, and advocacy energy nexus for developing countries ANNUAL REPORT 2004 51 Annex 2: Map and Table of Completed, Approved, and Ongoing activities in 2004 52 ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM ANNUAL REPORT 2004 53 ACTIVITIES COMPLETED IN 2004 Africa Region Conference to Promote Low-Cost Electricity Distribution and Reticulation Networks in Peri-urban and Rural Africa Africa region Cosgrove-Davis Assessment of Power Sector Reform Priorities in Selected Countries in Sub-Saharan Africa: A Survey of African Power Sector Decision Makers Africa region Mensan-Gaba Energy and Poverty Workshop (Francophone) Africa region Lallement Institutional and Financing Framework for Rural Electrification Kenya Maweni Energy and Poverty Reduction Workshop Africa region Lallement Clean Air Initiative in Sub-Saharan African Cities Africa region Reliquet Environment and Health: Bridging the Gaps (Phase IV) Africa region Saeed Opportunities for International Power Trade in the Nile River Basin I Africa region Hoskote Decentralized Rural Electrification Guinea Feinstein Energy Sector Restructuring Zambia Saeed TA to DOE and TANESCO Tanzania Feinstein East Asia and Pacific Region Rural Development of Mongolia via Provision of Wind Power (Seed Funding) Mongolia Bale Energy Efficiency in Water Utilities (Seed Funding) China Rivera Motorcycle Fleet Upgrade to Reduce Air Pollution in Bangkok Thailand Shah Regional Electricity Market: Mekong Basin Power Pool (Phase II) East Asia and Trembath Pacific region China: Sulfur Emission Mitigation Policies China Johnson Revision of the Existing Legal and Regulatory Framework for the Petroleum Sector Vietnam Svensson Institutional Reform and Restructuring of Petrovietnam Gas Company Vietnam Svensson Commercialization of a Power Company Cambodia Covindassamy Electricity Benefits Assessment Philippines Barnes East and Central Asia Region Media Workshops on Energy in East and Central Asia Region East and Osborne Central Asia region Developing Mechanisms for Regional Cooperation on East and Oil Spill Management in the Caspian Sea Central Asia region Castberg Turkey: Energy and Environment Review (Phase III) Turkey Moose Key Aspects of Energy-Environment/GHG Strategy Macedonia Moose Energy Sector Reform (Phase I) Mexico Feinstein Energy Efficiency (Reconnaissance) Romania Atur Integrated Heat Demonstration Ukraine Meyer Central Europe: District Heating East and Meyer Central Asia region 54 ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM Latin America and the Caribbean Region Power Sector Strategy for Paraguay (Seed Funding) Paraguay Monari Study on Financing Public Sector Strategies (Seed Funding) L. Amer. and the Monari Caribbean region Natural Gas Market Development Study Bolivia Durand Middle East and North Africa Region Water and Sanitation and Energy Public Private Partnership Mid. East and Bjerde Operator and Investor Workshop N. Africa region South Asia Region Renewable Energy Practitioner Workshop in South Asia South Asia region Cabraal Access of the Poor to Cleaner Household Fuels in India India Lvovsky South Asia Urban Air Quality Management Strategy South Asia region Kojima Household Energy and Women's Lives: The Case of India India Barnes Opportunity for Women in Renewable Energy Bangladesh Iqbal Technology Utilization (Phase I) Energy-Environment Review Sri Lanka Saeed Rural Energy Study India Barnes Global GVEP Technical Secretariat Transition Global Lallement Second World Forum on Energy Regulation Global Tenenbaum Global Decommissioning of Oil and Gas Fields Global Oduolowu in Developing Countries Rapid Assessment for Meeting Immediate Needs Global Palmieri for Water and Energy Services Designing a Poverty-Focused, Gender-Sensitive Global Barnes Monitoring and Evaluation Plan for a World Bank Renewable Rural Electrification Project Petroleum Revenue Management Conference Global McPherson Alternative Energy Applications (Seed Funding) Global Labaste Gas Flaring Reduction Global Svensson Regional Project Identification (Strategy II) Global Terrado Solar Initiative Regional Strategy Global Terrado ANNUAL REPORT 2004 55 ACTIVITIES APPROVED IN 2004 Africa Region Energy-Poverty Action Plan (GVEP) Cameroon Ngankam Equatorial Guinea: Resource Revenue Management Equatorial Guinea Tordo Energy Water Assessment (Phase I) Rwanda Cosgrove-Davies Mainstreaming Low-Cost Innovations in Africa region Sanghvi Electricity Distribution Networks in Africa Formulating Strategies for Cleaner Fuels in South Africa South Africa Sanghvi Evaluating Opportunities of Using Wood and Tanzania Kaguamba Agricultural Residues as Energy in Tanzania Forest Areas Lagos Strategy for Economic Development and Poverty Nigeria Tewari East Asia and Pacific Region Implementation Strategy for China's Energy Security Objectives China Berrah Development of East Asia & Pacific Energy Business Strategy East Asia and Wu Pacific region Global Village Energy Partnership (GVEP) Asia Initiative East Asia and Wilde Pacific region China: Enabling Universal Access to Electric Power China Spencer Creating Clean Coal Market: Environmental Monitoring China Takahashi and Enforcement, and Private Participation Capacity Building Philippines Rural Electricity: Private Participation Philippines Sheung Shum and Regulatory Reform East and Central Asia Region TA for Establishing a Water-Energy Consortium in Central Asia East and Nikolov Central Asia region Women in Mining: Chance for Better Life Workshop Poland Strongman Introducing the Concepts of ESCOs to Belarus Belarus Armaly Latin America and the Caribbean Region Rural Electrification Peru Bogach Power Sector Strategy Paraguay Monari Options to Revitalize Investment and Private Participation L. Amer. and the Monari in Power Distribution in the Latin American and Caribbean Region Caribbean region Haiti: Scoping Study for Household Energy Strategy Haiti Torres Development of Regional Capabilities in Three States Mexico Azuela of the Republic to Foster Energy Projects for Rural Areas, Focusing on Renewable Energy (GVEP) Renewable Energy Systems in Peruvian Peru Wang Amazon Region (RESPAR Project) 56 ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM Latin America and the Caribbean Region continued Power Sector Strategy for Paraguay (Seed Funding) Paraguay Monari TA Preparation of an Oil Supply Strategy Paraguay Mayorga Alba Study on Financing Public Sector Strategies (Seed Funding) L. Amer. and the Monari Caribbean region Honduras: New Approaches for Delivery of Honduras Rysankova Energy Services in Rural Areas Energy Solutions for the Poor Marginalized Communities Bolivia Rysankova (in the Framework of GVEP Follow-Up) Village Energy Solutions for Remote Areas of Brazil. Brazil Porto-Carreiro Specific Support to the Implementation Strategy of the Universal Access Program and to the National Energy Action Plan Colombia ­ Natural Gas: Bases for a Colombia Torres Development Strategy of the Sector South Asia Region Commercialization of Improved Stoves India Barnes Global Designing Strategies and Instruments to Global Covindassamy Address Power Projects Stress Situations Symposium on Hydropower and Sustainable Development Global Zhao Roundtable of Power Investors for Working Group 3: Global Armar Governance Standards/Code of Conduct/ Performance Benchmarks for Electric Power PPPs Natural Gas Connection Charges and Conversion Costs Global Gerner and Their Impact on Poor Households Global Village Energy Partnership Workshop on Consumer Global Lallement Lending and Microfinance to Expand Access to Energy Services Win-Win: Demand-Side Management Options Global Maurer in Developing Countries Issues in Energy Security Global Lallement Preparation of Solar Lantern Global Technical Performance Global Cabraal Specification and PV-GAP Recommended Specifications Potential for Biofuels in Developing Countries Global Johnson Road Map for Scaling Up Modern Global Cabraal Energy Services and Clean Energy ANNUAL REPORT 2004 57 ACTIVITIES ONGOING IN 2004 Africa Region Ghana Energy PSIA of Energy Sector Reforms Ghana Keener Impact on the Poor of the Electricity Sector Reform Lesotho Pawlowska in the Kingdom of Lesotho Revenue Management Seminar Chad Tordo Landfill Gas Utilization in Sub-Saharan Africa Africa region Takahashi Energy Sector Strategy Ghana Iyer Expanding Rural Access to Infrastructure Nigeria Iyer Workshop on Rural Energy and Sustainable Development Cote d'Ivoire Ekouevi CDM-assist: A Collaborative Program to Build CDM Africa region Hoskote Capacity in Africa Power Trade in Nile Basin (Phase II) Africa region Hoskote South Africa Workshop--People's Power Workshop South Africa Sanghvi Malawi: Rural Energy Development Malawi Hoskote Regional Electricity Demand Management TA (Phase II) Africa region Wang Decentralized Rural Electrification Cameroon Wang Impact and Determinants of Success Africa region Hughes of Private Participation in Power in SSA Niger Energy-Poverty Action Plan (GVEP) Niger Benoit Energy-Poverty Action Plan (GVEP) Cameroon Noubissie Equatorial Guinea: Resource Revenue Management Equatorial Guinea Tordo Energy Water Assessment (Phase I) Rwanda Cosgrove-Davies Mainstreaming Low-Cost Innovations Africa region Sanghvi in Electricity Distribution Networks in Africa Formulating Strategies for Cleaner Fuels in South Africa South Africa Sanghvi Evaluating Opportunities of Using Wood and Tanzania Kaguamba Agricultural Residues as Energy in Tanzania Forest Areas Facility for the Follow-Up of Africa Energy-Poverty Workshops Africa region Ekouevi Petroleum Revenue Transparency Audits Nigeria McPherson AFTEG Rural and Renewable Energy Africa region Sanghvi Multisectoral Operational Plan to Maximize Senegal de Gouvello Poverty Reduction Impact of Rural Electrification in Senegal Promoting Productive Uses of Electricity in Rural Areas Africa region Sanghvi PSIA (Poverty and Social Impact Analysis) on Reforms to the Mauritania Correia Provision of Ancillary Services by the Mining Sector Expanding SME Outsourcing Opportunities from Utility Africa region Armar Sector Reform: A Survey of Eastern and Southern Africa Design and Pilot Testing of Capacity Building Product Line Africa region Armar for SME Utility Service Providers in West Africa Africa Rural and Renewable Energy Initiative (AFRREI) Africa region Sanghvi Lagos Strategy for Economic Development and Poverty Nigeria Tewari Power Sector Reform in Africa: Assessing the Africa region Covindassamy Impact on the Poor and Influencing Policy Decisions 58 ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM Africa Region continued Women's Energy Enterprise: Developing a Model for Ghana Boateng Agyen Mainstreaming Gender into Modern Energy Service Delivery Development of a Regional Power Market in West Africa Africa region Armar East Asia and Pacific Region Philippines Rural Electricity: Private Participation Philippines Sheung Shum and Regulatory Reform Capacity Building for the Electricity Authority of Cambodia Cambodia Sekse Rural Electrification Policy Development and Conceptual Design of Energy Services Delivery Projects to Improve Rural Health and Education Service Delivery Papua New Guinea De Wilde China: Policy Advice on Implementation of Clean Coal Technology projects (Phase II) China Takahashi Vietnam: Policy Dialogue Seminar and New Mining Code Vietnam De Sa Coal Stove Improvement Program Mongolia Covindassamy National Rural Electrification Planning East Timor Trembath Implementation Strategy for China's Energy Security Objectives China Berrah Global Village Energy Partnership (GVEP) Asia Initiative East Asia and De Wilde Pacific region Development of East Asia and Pacific Energy Business Strategy East Asia and Wu Pacific region China: Enabling Universal Access to Electric Power China Spencer Creating Clean Coal Market: Environmental Monitoring and Enforcement, and Private Participation Capacity Building China Takahashi Demand-Side Management in a Restructured Industry China Zhao Infrastructure Services to the Rural Poor Mongolia Rivera Diesel Pollution Reduction Strategies for Cities East Asia and Pacific Shah region/L. Amer. and Caribbean region Greater Mekong Sub-Region Power Trade Strategy Meeting East Asia and Trembath Pacific region Improved Heating Stoves and Health Impact Mongolia Kaufmann on Low-Income Consumers Scoping Study for Voluntary Green Electricity Schemes China Berrah in Beijing and Shanghai Rural Electrification Regulation Framework Philippines Sheung Shum Development of Pro-Poor National Heat Pricing and Billing Policy China Taylor Sustainable and Efficient Energy Use China Baris to Alleviate Indoor Air Pollution in Poor Rural China Cambodia: Renewable Energy Action Plan Cambodia Sekse Philippines: Village Power Fund and Incubator Philippines Sheung Shum for Renewable Energy Enterprises ANNUAL REPORT 2004 59 East and Central Asia Region Strategy to Expand Gas Distribution and Utilization in Turkey Turkey Lamech Azerbaijan: Natural Gas Sector Restructuring Azerbaijan Townsend and Regulatory Reform Energy Efficiency in Urban Water Utilities in Central Asia: Central Asia Ijjasz-Vasquez The Uzbekistan Case Energy Sector Regulation (includes gas projects) Poland Benmessaoud Women in Mining: Chance for Better Life Workshop Poland Strongman TA for Establishing a Water-Energy Consortium in Central Asia East and Nikolov Central Asia region Development of Power Generation in Southeast Europe: East and Kennedy Implications for Investments in Environmental Protection Central Asia region Introducing the Concepts of ESCOs to Belarus Belarus Armaly Innovative Energy Efficiency Financing Mechanism Poland Johansen Provision of Energy Services to the Poor in Tajikistan Tajikistan Sharma Lithuania: Heating Supply to Small Cities/Towns Lithuania Stuggins Latin America and the Caribbean Region Energy, Population, and Environment L. Amer. and Mayorga Alba Caribbean region Rural Infrastructure in Chile: L. Amer. and Sara Improving Efficiency and Reaching the Poor Caribbean region Village Power Partnership for Latin America L. Amer. and Rysankova and the Caribbean (VPP-LAC) Caribbean region Policy and Strategy for the Promotion Nicaragua Torres of Renewable Energy Resources in Nicaragua Good-Practice Case Study in Integrating Environment Into Bolivia/Brazil Quintero Gas and Oil Pipeline Projects: Experiences Based on the Bolivia-Brazil Gas Pipeline Technical Assistance to Proposed Expansion Honduras Torres of Solar-Net Village Program Health Impacts of Traditional Fuel Use Guatemala Awe Brazil: Rural Electrification Strategy Brazil Carreiro Central America Gender in Sustainable Energy L. Amer. and Balcet Caribbean region Training Program for Key Group Representatives Bolivia Mayorga Alba From Indigenous People Regional Organizations/ Rural Energy Development (Phase II) Country Program (Phase II) Bolivia Durand National Biomass Program Bolivia Durand Rural Electrification and Power Reform in Central America L. Amer. and Barnes Caribbean region 60 ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM Latin America and the Caribbean Region continued Rural Electrification Peru Bogach Power Sector Strategy Paraguay Monari Options to Revitalize Investment and Private Participation L. Amer. and Monari in Power Distribution in the Latin America and Caribbean Region Caribbean region Development of Regional Capabilities in Three States Mexico Elizondo Azuela of the Republic to Foster Energy Projects for Rural Areas, Focusing on Renewable Energy (GVEP) Haiti: Scoping Study for Household Energy Strategy Haiti Torres Renewable Energy Systems in Peruvian Amazon Region Peru Wang (RESPAR Project) Honduras: New Approaches for Delivery Honduras Rysankova of Energy Services in Rural Areas Energy Solutions for the Poor Marginalized Bolivia Rysankova Communities (in the framework of GVEP follow-up) TA Preparation of an Oil Supply Strategy Paraguay Mayorga Alba Village Energy Solutions for Remote Areas of Brazil: Brazil Porto Carreiro Specific Support to the Implementation Strategy of the Universal Access Program and to the National Energy Action Plan Colombia--Natural Gas: Basis for a Colombia Torres Development Strategy of the Sector Extending the Use of Gas to Inland Peruvian Provinces Peru Mayorga Alba Alleviating Urban Energy Poverty in Latin America: Brazil Lallement The Brazilian Case Latin America and Caribbean Region Subsidy Review Study L. Amer. and Rysankova Caribbean region Innovative Financing Mechanism for Energy Efficiency in Mexico Mexico Feinstein Diesel Pollution Reduction Strategies for Cities East Asia and Pacific Shah region/L. Amer. and Caribbean region Stimulating the Market for Family-Hydro Ecuador Durand for Low-Income Households in Ecuador Regional Approaches to Energy Sector Reform and Renewable L. Amer. and Fremond Energy Development in Small Island Economies Caribbean region Lessons on Off-Grid Electricity, Business Development Services, Nicaragua Motta and Microcredit (Seed Funding) Regulatory Issues of Off-Grid Energy Service Delivery L. Amer. and Torres as Part of National Rural Electrification Strategies Caribbean region Latin America and Caribbean Region: L. Amer. and Wodon Low-Income Energy Assistance Caribbean region Mexico: TA for Long-Term Program Mexico Feinstein for Renewable Energy Development Nicaragua: Pilot Commercialization of Improved Cook Stoves Nicaragua Torres ANNUAL REPORT 2004 61 Middle East and North Africa Region Global Efficiency in Sidi Bernoussi Industrial and Peri-urban Area Morocco Bouzaher Energy Sector Strategy for Poverty Reduction and Growth Djibouti Bjerde Regional Workshop at Sidi Bernoussi, Morocco: Dissemination Morocco Bouzaher of the Results of the ESMAP Sidi Bernoussi Industrial Park Study Energy Poverty and Access Yemen O'Sullivan South Asia Region India--Environmental Policies for the State Power Sector: India Imran Rapid Assessment for Karnataka and Rajasthan Commercialization of Improved Stoves India French Barnes Exploring Opportunities for Improving Rural Energy Access Afghanistan Imran Enhancing Access and Rural Electrification: Pakistan Haider Costs and Benefits, and Willingness to Pay Pakistan: Household Impact Analysis of the Energy Sector Reform Pakistan Kojima Opportunity for Women in Renewable Energy Technology Bangladesh Iqbal Utilization in Bangladesh (Phase II) Toward Formulating a Rural Energy Strategy Bangladesh French Barnes Global Preparation of Solar Lantern Global Technical Performance Global Cabraal Specification and PV-GAP Recommended Specifications Toolkit for Scaling Up Rural Energy Access Global Cabraal Knowledge Transaction: Reducing Energy Costs Global Armar in Water Supply Operations Women in Mining: Voices for Change Conference Global Strongman Governance of National Oil Companies Global McPherson Rationing Energy in a "Rational" Way Global Maurer Global Village Energy Partnership (GVEP) Secretariat Global Lallement Advancing Modern Biomass Energy Opportunities and Challenges Global Utria Energy Efficiency Operational Exchange Program Global Taylor Global Village Energy Partnership Workshop on Consumer Global Lallement Lending and Microfinance to Expand Access to Energy Services Issues in Energy Security Global Lallement Designing Strategies and Instruments to Global Covindassamy Address Power Projects Stress Situations Symposium on Hydropower and Sustainable Development Global Zhao Roundtable of Power Investors for Working Group 3: Global Armar Governance Standards/Code of Conduct/Performance Benchmarks for Electric Power PPPs Natural Gas Connection Charges and Conversion Costs Global Gerner and Their Impact on Poor Households 62 ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM Global continued Win-Win: Demand-Side Management Options Global Maurer in Developing Countries Potential for Biofuels in Developing Countries Global Johnson Road Map for Scaling Up Modern Energy Services Global Cabraal and Clean Energy Resource Funds: A Comparative Analysis Global Tordo (Revenue Management Proposal) Guidelines for Designing Energy Modules Global O'Sullivan in Multitopic Household Surveys Review of ESMAP's Energy Sector Reform Global Saeed and Market Development Work Developing a Sectoral Energy Poverty Index Global Sanghvi Source Apportionment of Fine Particulates in Developing Countries Global Johnson Pioneering New World Bank Approaches in Global Davidson Support of Sustainability in the Extractive Sector Capacity Building and Policy Assessment in Indoor Air Pollution Global Johnson Assessing the Impacts of Energy Sector Reform on the Poor Global Covindassamy Developing Regional Clean Air Networks Global Xie Developing Financial Intermediation Mechanisms for Global Govindarajalu Energy Efficiency Projects in Brazil, China, and India Best Practices for Grid Electrification (Phase II) Global French Barnes ANNUAL REPORT 2004 63 Annex 2: Publications And Knowledge Dissemination Activities ESMAP Knowledge Dissemniation Workshops Held Around the World Under ESMAP Activities 2004 Workshop on the ESMAP Nicaragua Policy and Strategy for the Promotion of Renewable Energy Resources Project, held in Managua, Nicaragua. February 2004 and December 2004. ESMAP Presentation at the Request of the Infrastructure Vice Presidency for the Development of the Administrative Client Support Staff (ACS). A presentation by John Strongman on the ESMAP Activity: Women in Energy and Mining--Voices for Change: A Vision for a Better Future. March 17, 2004. ESMAP Presentation at Columbia University on the Energy Challenge for Poverty Reduction and Economic Growth. March 23, 2004. ESMAP Presentation at Brown University on the Energy Challenge for Poverty Reduction and Economic Growth. March 31, 2004. ESMAP (World Bank Group) Participation in the International Conference for Renewable Energies, Bonn, Germany. June 1­4, 2004. ESMAP Mexico's Innovative Financing Mechanism for Energy Efficiency in Mexico. Presentation Delivered to PowerMex in Mexico City, Mexico. September 2004. ESMAP was one of the sponsors for the CAI-Asia: Better Air Quality 2004 Annual Conference for CAI-Asia in Agra India. December 4­9, 2004. ESMAP (World Bank Group) Participation in the Energy for Development 2004 Conference in Noordwijk, The Netherlands. December 12­14, 2004. Brown Bag Lunches (BBLs), Roundtables, and Booths Held Under ESMAP Activities in 2004 ESMAP BBL: The Dams Planning and Management Action Plan. A Tool-Kit for Bank Operations. January 20, 2004. ESMAP/IIE/SID Presentation: Domestic Energy and Women's Lives: The Case of India. January 21, 2004. ESMAP BBL: Regional Electricity Market Integration. January 22, 2004. 64 ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM Brown Bag Lunches (BBLs), Roundtables, and Booths Held Under ESMAP Activities in 2004 continued ESMAP/Energy and Mining Sector Board: ESMAP Activity: Energy and Mining Sector Board Lecture Series on Some of the Rural Electrification Work carried out by ESMAP. February 11, 2004. ESMAP BBL: Renewable Energy Policies and Action Plans. February 26, 2004. ESMAP/GPOBA BBL: Joint ESMAP-GPOBA-Energy and Poverty Thematic Group BBL: Promoting Private Investment in Rural Electrification in the Philippines. March 1, 2004. ESMAP Booth: ESMAP (World Bank Group) Participation in the International Conference for Renewable Energies, Bonn, Germany. June 1­4, 2004. ESMAP Booth: Invited by the 5th Annual Staff Exchange and Knowledge Sharing Program Conference and Expo. June 28­29, 2003. ESMAP/ESSD East Asia Pacific Region BBL: Air Pollution in China: Sulfur and Particulate Pollution Sources and Control Measures. July 22, 2004. ESMAP BBL: Lessons Learned from the ESMAP Renewable Energy Portfolio. September 29, 2004. ESMAP BBL: ESMAP Knowledge Exchange Series: Innovative Financial Intermediation in Poland. November 11, 2004. ESMAP/Urban Transport Thematic Group BBL: Eliminating Emissions from Two-Stroke Engine Baby-Taxis in Dhaka. November 16, 2004. ESMAP BBL: ESMAP Knowledge Exchange Series Presents: The Uses of Pico-Hydro Technologies in Rural Development Programs. November 22, 2004. ESMAP BBL: ESMAP Knowledge Exchange Series Presents: Scaling Up Energy Efficiency Financing in Brazil, China, and India. December 16, 2004. ESMAP/Energy and Water Department Booth: in the Energy for Development 2004 Conference in Noordwijk, The Netherlands. December 12­14, 2004. ANNUAL REPORT 2004 65 Formal Reports 276/04 India The Impact of Energy on Women's Lives in Rural India Barnes 01/04 277/04 Sub-Saharan Opportunities for Integration: Power Trade in the Nile Basin Hoskote/Miller 01/04 Africa (Phase I) 278/04 Africa Énergies modernes et réduction de la pauvreté: Un atelier Durix/Lallement 01/04 multisectoriel. Actes de l'atelier régional. Dakar, Sénégal, du 4 au 6 février 2003 (French only) (Proceedings of the Dakar Workshop) 279/04 Nigeria Nigeria Strategic Plan Beldguedj 02/04 280/04 Global A Review of ESMAP's Rural Energy and Renewable Energy Wang 04/04 Portfolio 281/04 Sub-Saharan Toward Cleaner Urban Air in South Asia: Tackling Transport Kojima 03/04 Africa Pollution, Understanding Sources 282/04 Europe and Development of Heat Strategies for Urban Areas of Low- Meyer/Johansen 07/04 Central Asia Income Transition Economies: Urban Heating Strategy for the Republic of Armenia (Including a Summary of a Heating Strategy for the Kyrgyz Republic) 283/04 Global ESMAP Renewable Energy and Energy Efficiency Reports: Lallement 05/04 1998­2004 (CD version only) 284/04 Guatemala Guatemala: Health Impacts of Traditional Fuel Use (to be Aramide/Awe/ 08/04 ISBN-0- published by the Office of the Publisher; currently, there is a Ahmed 8213- version posted on ESMAP's website) 6082-5 285/04 Global Regulation of Associated Gas Flaring and Venting: A Global Svensson 08/04 Overview and Lessons Learned from International Experiences (joint publication by the Gas Flaring program and ESMAP) 286/04 Africa Énergies modernes et réduction de la pauvreté: Un atelier Durix/ 09/04 multisectoriel. Actes de l'atelier régional. Douala, Cameroun, Lallement du 16 au 18 juillet 2003 (French only) (Proceedings from the Douala Workshop) 287/04 China Capacity Building for National and Provincial Socially and Husband 07/04 Environmentally Sustainable Management of Coal Resources in China 288/04 Global ESMAP Women in Energy Reports and Other Related ESMAP 11/04 Information (CD only) 289/04 Global ESMAP Indoor Air Pollution and Other Related Information ESMAP 11/04 (CD only) 290/04 Bolivia Capacitación de Pueblos Indígenas en la Actividad Petrolera Alba 07/04 (Fase II) (Spanish and English versions) 291/04 Bolivia Estudio Sobre Aplicaciones en Pequeña Escala de Gas Alba 09/04 Natural (Spanish and English versions) 66 ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM Formal Reports continued 292/04 India Environmental Issues in the Power Sector: Long-Term Imran 10/04 Impacts and Policy Options for Rajasthan 293/04 India Environmental Issues in the Power Sector: Long-Term Imran 10/04 Impacts and Policy Options for Karnataka 294/04 Global Energy and Poverty Reduction: Proceedings from the Global Kieffer/Siegel 11/04 Village Energy Partnership (GVEP) Workshop on the Preinvestment Funding (Berlin, Germany, April 23­24, 2003) 295/04 Global GVEP 2003 Annual Report Lallement/Siegel 12/04 296/04 Global Energy and Poverty Reduction: Proceedings from the Global Shum 12/04 Village Energy Partnership (GVEP) Workshop on Consumer Lending and Microfinance to Expand Access to Energy Services (Manila, Philippines, May 19­21, 2004) 297/04 L. Amer. and Power Sector Reform and the Rural Poor in Central America Barnes 12/04 Caribbean ANNUAL REPORT 2004 67 Technical Reports 047/04 L. Amer. and Energy Policy and the Mexican Economy Bacon/Halpern 01/04 Caribbean 048/04 Sub-Saharan Progress Report: The World Bank Clean Air Initiative in Sub- Reliquet 02/04 Africa Saharan African Cities. Working Paper #10 (Clean Air 1998­2002 Initiative/ESMAP) 049/04 Middle East and Roundtable on Opportunities and Challenges in the Water, Bjerde 02/04 North Africa Sanitation, and Power Sectors in the Middle East and North Africa Region. Summary Proceedings (May 26­28, 2003, Beit Mary, Lebanon) (CD only) 050/04 Global Energy and Environmental Health: A Literature Review and Listordi 03/04 Recommendations 051/04 Global Petroleum Revenue Management Workshop McPherson 03/04 052/04 L. Amer. and Bank Experience in Non-Energy Projects with Rural Rysankova 02/04 Caribbean Electrification Components: A Review of Integration Issues in Latin America and the Caribbean. 053/04 Vietnam Vietnam's Petroleum Sector: Technical Assistance for the Svensson 08/04 Revision of the Existing Legal and Regulatory Framework 054/04 Bangladesh Integrating Gender in Energy Provision: Case Study of Ofosu-Amaah 07/04 Bangladesh 055/04 Bangladesh Opportunities for Women in Renewable Energy Technology Ahmad 04/04 Utilization (Phase I) 056/04 Nigeria Nigerian LP Gas Sector Improvement Study Beldguedj 03/04 057/04 Nigeria Taxation and State Participation in Nigeria's Oil and Gas McPherson 08/04 Sector 058/04 Global Developing Financial Intermediation Mechanisms for Energy Taylor 08/04 Efficiency Projects: Focus on Commercial Banking Widows for Energy Efficiency (CD only) 059/04 Global Evaluation of ESMAP Regional Power Trade Portfolio (TAG R. Means 12/04 Report) 060/04 Guatemala Evaluation of Improved Stove Programs: Final Report of Awe/Ahmad 12/04 Project Case Studies (English and Spanish) 061/04 Global Supporting Gender and Sustainable Energy Initiatives in Abril/Balcet 12/04 Central America: Volume I 062/04 L. Amer. and Supporting Gender and Sustainable Energy Initiatives in Abril/Balcet 12/04 Caribbean Central America: Volume II 063/04 Global Women in Mining: Voices for a Change Conference (CD only) Stongman 12/04 064/04 South Africa South Africa Workshop: People's Power Workshop Mathur 12/04 68 ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM Special Series Reports 000/04 Global Status of ESMAP Portfolio of Projects: As of December 31, ESMAP 04/04 2003 001/04 Ukraine Ukraine: Integrated Heat Demonstration Anke Meyer 7/04 002/04 Global Status of ESMAP Portfolio of Projects: As of June 30, 2004 ESMAP 07/04 Global 2003 Annual Report ESMAP 12/04 N/A L. Amer. and Information and Communication Technologies in Isolated ESMAP 09/04 Caribbean Areas: Learning from the Solar-Net Villages Program in Empowering Honduras N/A Global The Impact of Higher Oil Prices on Low-Income Countries Bacon 12/04 and on the Poor (for discussion) Joint Publications 1--15 South Asia Urban Air Pollution: South Asia Urban Air Quality Joint 2001­ Management and ESMAP Briefing Notes 1­15 2004 N/A South Asia Indoor Air Pollution Associated with Household Fuel Use in Joint 06/04 India: An Exposure Assessment and Modeling Exercise in Rural Districts of Andhra Pradesh, India N/A Sub-Saharan Clean Household Energy for India: Reducing the Risks Joint 09/04 Africa to Health Translated Publications (New and Past) 006/00 Global Mejores Prácticas para el Desarrollo Sostenible de la Micro- Meyer 09/04 Hidroenergía en los Países en Desarrollo 290/04 Bolivia Capacitación de Pueblos Indígenas en la Actividad Petrolera Alba 07/04 (Fase II) (Spanish and English versions) 291/04 Bolivia Estudio Sobre Aplicaciones en Pequeña Escala de Gas Alba 09/04 Natural (Spanish and English versions) ANNUAL REPORT 2004 69 LIST OF ABBREVIATIONS AND ACRONYMS AFRREI Africa Rural and Renewable Energy Initiative ASTAE Asia Alternative Energy Program BBL Brown Bag Lunch CASs Country assistance strategies CG Consultative Group ESCO Energy Service Company ESMAP Energy Sector Management Assistance Program ETFPs Energy trust­Funded Programs GEF Global Environment Facility GVEP Global Village Energy Partnership IBRD International Bank for Reconstruction and Development ICT Information and Communication technologies IDA International Development Association IFC International Finance Corporation LG Leaded Gasoline LPG Liquefied Petroleum Gas MDGs Millennium Development Goals M&E Monitoring and Evaluation MFEDO Market Facilitating and Enterprise Development Organization MIGA Multilateral Investment Guarantee Agency NGO Nongovernmental Organization NREL National Renewable Energy Laboratory (United States of America) PREM Poverty Reduction and Economic Management PRSPs Poverty Reduction Strategy Papers PV Photovoltaic RPTES Regional Program for the Traditional Energy Sector SAR South Asia Region SHS Solar Home System SMEs Small and Medium Enterprises TAG Technical Advisory Group of ESMAP TERI The Energy and Resources Institute 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 WEHAB Water, Energy, Health, Agriculture, and Biodiversity WB World Bank WBG World Bank Group WBI World Bank Institute WHO World Health Organization WSSD World Summit on Sustainable Development All dollar amounts are U.S. dollars unless otherwise indicated. 70 ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM 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