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ADB Approves $300 Million to Reform Pakistan’s Energy Sector

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The Asian Development Bank (ADB) today approved a $300 million policy-based loan that will help the Government of Pakistan to address financial sustainability, governance, and energy infrastructure policy constraints in Pakistan’s energy sector.

The financing will support the first of three subprograms totaling $1 billion under the Energy Sector Reforms and Financial Sustainability Program, a key component of a comprehensive multidonor economic reform program led by the International Monetary Fund that aims to put Pakistan’s economy on the path to sustainable and inclusive growth after a deterioration in its fiscal and financial position in recent years.

“The cash shortfall across the power supply chain in Pakistan, also known as circular debt, has shot up to more than $10 billion and is a longstanding chronic issue ailing the country’s power sector,” said ADB Director General for Central and West Asia Mr. Werner Liepach. “A comprehensive and realistic Circular Debt Reduction Plan, assisted by ADB in close coordination with other development partners, is the cornerstone of this subprogram. The plan aims to drastically cut the new flows of circular debt and provides policy directions on addressing accumulated circular debt.”

While Pakistan has made significant effort in recent years to expand its electricity generation capacity and stabilize supply, the country is yet to overcome the challenge of inefficiencies, distortions, and uneven reform progress in the sector. These inefficiencies were estimated to have cost the country’s economy up to $18 billion, or 6.5% of gross domestic product, in 2015.

The energy reform program aims to address the underlying causes of circular debt with a focus on improving inadequate tariff and subsidy systems, strengthening energy accounting, and reducing generation costs.

ADB will finance the program with support from its development partners. The Export–Import Bank of Korea has confirmed it will provide $80 million in cofinancing for the first subprogram.

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Policy Measures to Advance Jordan’s Transition to Renewables

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A new report published today by the International Renewable Energy Agency (IRENA) has identified a series of policy measures that can help advance the energy transition towards renewable energy in Jordan.

The “Renewables Readiness Assessment: The Hashemite Kingdom of Jordan” – developed in co-operation with Jordan’s Ministry of Energy and Mineral Resources, suggests opportunities exist to deepen private sector engagement in national efforts to reach a 31 per cent share of renewables in total power by 2030.

“The recommendations of this report comply with the newly issued Energy strategy 2020-2030 and its action plan,” said H.E. Engineer Hala Zawati, Minister of Energy and Mineral Resources in Jordan. “We are fully aware that to achieve all these ambitious targets, a strong partnership between the public and private sectors is needed. We are also eager to work with international friends and partners to make renewable energy a main pillar of the Jordan energy sector.”

The report presents policy action areas to increase energy security and boost supply diversity through the accelerated uptake of renewables and includes ideas to boost end-use electrification and increase the availability of energy transition investments from domestic institutions.

Jordan’s share of electricity from renewables grew from almost zero in 2014 to around 20 per cent in 2020 thanks to enabling frameworks and policies that have supported the deployment of renewable energy technologies, including solar photovoltaic (PV) and onshore wind.

“Jordan boasts significant renewable energy resource potential that if realised will reduce consumer energy costs, improve national energy security, create jobs and stimulate sustainable growth – boosting post COVID-19 economic recovery efforts,” said IRENA Director-General Francesco La Camera. “This report highlights a series of policy and regulatory measures that will allow Jordan to build on its energy transition progress to date and align it with 2030 national decarbonisation goals.”

Capacity building in local financing institutions and project developers can drive their engagement in the energy transition, the report says, while helping the country to meet its needs in important areas such as the build-out of electric charging infrastructure for the transport system.

Challenges associated with integrating higher shares of renewables in Jordan can be addressed by building and upgrading transmission and distribution infrastructure, deploying storage, promoting demand-side management and incentivising electrification of heating, cooling and transportation.

Renewables Readiness Assessment: Jordan lists concrete recommendations around the following seven action areas:

  • Provide the conditions for renewables to grow in the power sector
  • Foster continued growth of renewable power generation
  • Plan for the integration of higher shares of renewable power
  • Incentivise the use of renewables for heating and cooling
  • Support renewable options for transport and mobility
  • Catalyse renewable energy investment
  • Strengthen local industries and create jobs in renewables

Read the full report

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World Bank Supports Angolan’s Electrification with $250 Million

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The World Bank approved $250 million to improve the operational performance of the electricity sector utilities and increase electricity access in selected cities of Angola.

The  Electricity Sector Improvement and Access Project will finance electrification investments in the provinces of Luanda, Benguela, Huila, and Huambo, delivering 196,500 new electricity connections that will benefit close to one million people and 93,857 public lights.

The project will focus on electricity access expansion and improvement of revenue collection, electricity service improvement, capacity improvement of the public electricity producer (PRODEL, Empresa Pública de Produção de Electricidade), and strengthening sustainable management of generation plants. The project also aims to increase the commercial performance of the national electricity distribution company (Empresa Nacional de Distribuição de Electricidade, ENDE) as well as provide financing to the national transport network Rede Nacional de Transporte, RNT) for targeted interventions to improve and optimize the dispatch of electricity supply and the overall management of the national transmission network. Furthermore, the Project will also finance immediate measures to raise the operational, commercial and technical capacity  of  the three national power utilities, leading to significant electricity service improvement.

“Investment in infrastructure, especially in energy, is key to  economic development ”, said Jean-Christophe Carret, World Bank Country Director to Angola “Quality access to electricity services will have a spillover effect in many other sectors, including agribusiness, health, education, just to name a few.”

Angola’s power generation capacity, largely based on hydropower, has developed at a fast pace with the national installed generation capacity quadrupling in just one decade, but transport, distribution and cost recovery remain very challenging. Less than 40 percent of Angolans have access to electricity, with inadequate electricity services impacting poverty, productivity and regional disparities. Therefore, the project aims to deliver the most critical actions needed to help expand electricity access, improve the operational and commercial performance of utilities, and ultimately boost their creditworthiness. This, in turn, will contribute to reducing extreme poverty, improving the resilience of communities to impacts arising from COVID-19, and increasing shared prosperity.

The total project cost is $417 million, financed with a $250 million loan from the World Bank and a credit of $167 million from Agence Française de Développement.

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IEA and SICA to collaborate on clean energy transitions in Central America

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The International Energy Agency (IEA) and the Central American Integration System (SICA) have signed a Memorandum of Understanding (MoU) to promote clean energy transitions in Central America. Under the MoU, the two organisations will expand their cooperation on energy data and statistics, energy efficiency and climate resilience of electricity systems. These have all been identified as key areas for energy transitions and climate change mitigation in the region under SICA’s Central American 2030 Sustainable Energy Strategy.

“The IEA is pleased to team up with SICA to expand our work in Central America, a dynamic region that is home to over 55 million people and has excellent clean energy potential with distinctive transition opportunities and challenges,” said IEA Deputy Executive Director David Turk. 

Under its Clean Energy Transitions Programme, the IEA has been expanding its collaboration in Latin America. This is taking place both bilaterally with key partner countries – including the two largest economies, Brazil and Mexico – and on a regional level through cooperation with leading regional organisations, including the Latin American Energy Organisation (OLADE) and the Inter-American Development Bank. The signing of the IEA-SICA Memorandum of Understanding is a new milestone for the IEA’s engagement with the region. 

“Today’s signing ceremony marks an important step for SICA’s work on clean energy transitions – an important priority for our member countries, which can now benefit from the IEA’s leading analysis and expertise,” said Vinicio Cerezo, SICA Secretary General.

The Central American Integration System (Sistema de Integración Centroamericana, or SICA) is an economic and political organisation composed of Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panamá and the Dominican Republic, that works to foster closer ties and integration across Central America and the Dominican Republic to promote peace, liberty, democracy and development in the region.

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