Technical Assistance Consultant’s Report€¦ · being spent in the Khatlon region, at Nurek HPP and elsewhere in the southern system, to undertake the most urgent rehabilitation

Technical Assistance Consultant’s Report

This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents. (For project preparatory technical assistance: All the views expressed herein may not be incorporated into the proposed project’s design.

Project Number: 34515 August 2006

Tajikistan: Power Rehabilitation Phase II(Financed by the Asian Development Bank)

Prepared by Hydro Electric Corporation

Hydro Tasmania Consulting (Australia) in association with EDF Hydro Engineering Centre (France) and Islohotkonsaltservis (IKS–Uzbekistan)

Tasmania, Australia

For Barki Tajik State Joint Stock Company

REPUBLIC OF TAJIKISTAN Asian Development Bank: TA 4596-TAJ

POWER REHABILITATION PHASE II Volume 1 – Power Sector Overview

Hydro Tasmania Consulting (Australia) in association with

EDF Hydro Engineering Centre (France) and Islohotkonsaltservis (IKS – Uzbekistan)

TAJIKISTANPOWER REHABILITATION PHASE II

TA 4596-TAJ

ADB TA 4596-TAJ Final Report – Vol.1 Power Rehabilitation Phase II

Hydro Tasmania Consulting, EDF Hydro Engineering Centre and Islohotkonsaltservis i


CURRENCIESTajikistan currency unit Somoni (TJS)

TJS 1.00 = 100 dirams

In this report, “$” refers to US dollars

Exchange rate, at 30 June 2006:

TJS 1.00 = $0.30

$1.00 = TJS 3.33

ABBREVIATIONSADB - Asian Development BankBT - Barki Tajik State Joint Stock CompanyCB - circuit breakerCCGT - combined cycle gas turbineCDC - Central Dispatch CentreCHP - combined heating plant CIS - Commonwealth of Independent States CIGRE - (Int. Council on Large Electric Systems) DFR - draft final reportDSM - demand side managementEIRR - economic internal rate of return FIRR - financial internal rate of returnGDP - gross domestic productGOT - Government of TajikistanHPP - hydropower plantIAS - international accounting standardsICB - international competitive biddingIDB - Islamic Development BankKfW - Kreditanstalt fur WiederaufbauLRMC - long range marginal costMOE - Ministry of EnergyNCB - National competitive biddingNPV - net present value OPEC - Organisation of Oil Exporting CountriesPIU - Barki Tajik’s Project Implementation UnitSECO - Swiss Secretariat for Economic AffairsTA - technical assistanceTADAZ - - Tajik Aluminium SmelterToR - Terms of Reference for TA 4596-TAJ USTDA - United States Trade & Development Agency

GWh - gigawatt-hour = million kWh kWh - kilowatt-hourMW - megawattMWh - megawatt-hour = thousand KWh

Hydro Tasmania Consulting, EDF Hydro Engineering Centre and Islohotkonsaltservis ii


EXECUTIVE SUMMARY

1 Objectives, Approach and Background This Project Preparation Technical Assistance, TA 4596-TAJ, is the first element of the

Power Rehabilitation Phase II Project. The objective of this TA is to assist the

Government of Tajikistan and the national electricity utility Barki Tajik in reducing the

power deficit in the Southern Grid in winter months, including examining the feasibility

of rehabilitating:

Four hydropower plants on the Vakhsh River: Baipaza, Golovnaya,

Perepadnaya and Centralnaya HPPs; and

Transmission and distribution facilities in the Khatlon Region.

This project follows on from the Power Rehabilitation Project (in this report it is called

Phase I Power Rehabilitation) which is now in its implementation stage and is being

jointly financed by the ADB, other similar institutions and Barki Tajik. About $63M is

being spent in the Khatlon region, at Nurek HPP and elsewhere in the southern

system, to undertake the most urgent rehabilitation tasks.

The project that is the subject of this report – Power Rehabilitation Phase II – will build

on the Phase 1 work. This TA began in mid-October 2005, and it was conducted in two

stages, essentially a pre-feasibility stage and a feasibility stage. This is the report on

both stages of the TA.

This volume of the report contains a review of Barki Tajik’s financial position, a review

of the load forecast and analysis and recommendations on tariffs. It also contains an

assessment of other measures that might reduce the winter deficit, including some

possible optimisation of the operation of the Vakhsh cascade of HPPs. Capacity

building and policy matters in the Energy Sector are addressed.

Volume 2 of the report contains detailed investigation of possible rehabilitation options

for the power system, and the recommended Rehabilitation Project.

2 Barki Tajik’s Financial Position The Consultant has confirmed the impression, conveyed in the ToR, that Barki Tajik is

badly constrained by its low revenues. It is understood that billing and revenue

collection have been greatly improved in recent years, and from published accounts it

Hydro Tasmania Consulting, EDF Hydro Engineering Centre and Islohotkonsaltservis iii


is evident that income covers operational expenses. However, the level of maintenance

of Barki Tajik’s aging assets is low, the depreciation allowance in its accounts is far too

small in relation to the assets’ true value, and it appears that little of the profits is being

spent on new capital works or set aside to cover future capital works. The major

reason that Barki Tajik’s revenues are low is that the tariffs are very low by international

standards.

Another major financial problem for Barki Tajik is the revenue from TADAZ, the

aluminium smelting company. Payment for electricity by TADAZ has been erratic in

recent years, and its debt at the end of 2005 stands at over six months of power supply

to the company, even after making allowance for the settlement of some accounts by

barter which has occurred, for instance supplying aluminium conductors to Barki Tajik.

Overall, by the end of 2005 BT had received only 53% of the revenue in respect to the

energy supplied to all customers in 2005, with TADAZ being the major contributor to

this poor situation. It is encouraging to see that this issue is on the way to being solved,

with a formal agreement (plan of repayment) between the Government and TADAZ in

place.

Barki Tajik badly needs to increase its revenue, if it is to provide a reliable electricity

supply in the medium and long term – and, importantly for this study, if the winter deficit

is to be eliminated. Raising tariffs is therefore the only sensible way that these aims

can be achieved.

In Section 9, BT’s financial projections for the next 10 years are discussed. If the large

tariff increases recommended (by World Bank and this Consultant, see below) are

adopted by the Government, BT will be on a path to a secure future with funds

available for adequate maintenance of its assets and for development of the power

system, and will be able to provide a much greater reliability of supply to its customers.

However, as the sensitivity analysis in Section 9 shows, partial adoption of the

recommended tariff increases puts BT’s return to financial strength at risk.

3 Current Condition of Assets Baipaza HPP was found to be generally in good condition, but the other three HPPs

were found to be in poor condition, although being adequately kept in operation by

dedicated staff. Lack of spares for obsolete equipment is a problem for many

components. There are opportunities for increasing the efficiency of the

turbines/generators at Golovnaya in particular; however the lack of available funding in

Hydro Tasmania Consulting, EDF Hydro Engineering Centre and Islohotkonsaltservis iv


recent years has led to modernisation being repeatedly deferred. There are also

opportunities to increase the efficiency and output at Perepadnaya and Centralnaya by

excavation of obstructions from the tailrace canals.

The condition of the transmission assets that were inspected, and the very small

sample of distribution assets that were observed, was found to be generally poor with

most of the network having been built in the 1960s and 1970s. The lack of spare parts

is also an issue here.

In winter, load shedding is implemented, to cope with the shortage of water in the

Vakhsh River for generation – it is common in regional and rural areas that supply is

limited to shorts periods in the morning and the evening, typically about three hours a

day in total. The network is often overloaded especially during peak hours. The

overloaded period must be limited, in order to minimise aging of the transformers. One

of the consequences is that loads on transformers must be drastically reduced after the

overloaded period, by load shedding. The poor reliability of the protection system –

circuit breakers and protection scheme - can and does lead to faults that are not

cleared with the required efficiency and in the required time for such a network, leaving

equipment at risk of damage with consequent power cuts to customers.

Opportunities exist to improve reliability of supply to consumers, and to reduce network

losses, by means of transmission substation rehabilitations. It is considered that

investment in the aging transmission lines is less urgent.

4 Network StudiesUsing a model of the 220 kV and 110 kV transmission network in the Khatlon Region,

load flow and contingency analyses were carried out; also a short circuit analysis was

done. Then voltage stability studies were carried out for particular parts of the network,

where the results of the load flow studies indicated this was necessary.

Load flow modeling beyond 2006 was done, and the situations in both 2010 and 2015

were considered for both the expected and high growth scenarios, and comments are

given on the network augmentations likely to be needed by those dates to prevent

major overloading of transformers and/or transmission lines.

Recommendations from these studies include:

new transformers at Rumi, Pryadilnaya and Kolhozabad;

Hydro Tasmania Consulting, EDF Hydro Engineering Centre and Islohotkonsaltservis v


building of the planned new 220 kV transmission line from Lolazor Substation to the Kulyab vicinity, by 2008; an upgrade of the protection system to enable ring operation of large portionsof the network, as opposed to the present radial operation, and so reducelosses;extra CBs and protection to permit sectionalisation of the network in the eventof a fault, and so reduce the amount of un-served energy; and the provision of modern system planning software for use by the CentralDispatch Centre.

5 Supply-side solutions to the winter electricity deficit For rehabilitation of the power system in the Khatlon Region, the Project that is

described in Volume 2 of this report will deliver a partial solution to the winter deficit, by

supplying 136 GWh p.a. more energy to the consumers (principally by greater

generation efficiency and lower transmission losses) and improving the reliability of

supply.

It is thought that the operation of the cascade of HPPs on the Vakhsh River can be

improved so as to deliver additional energy – see below. Large new hydropower

installations, such as Sangtuda A, are a way of reducing the deficit, provided the unit

cost of their output is competitive – these have not been studied in this TA. However,

the following have been studied as possible solutions to the deficit and have been

rejected as being too expensive:

Additional imports of electricity; New generation schemes other than hydropower – thermal, wind, biomass,geothermal, solar

6 Tariffs Electricity tariffs in Tajikistan are very low by international standards and low compared

with those in other CIS countries, in fact less than half the tariffs in any other CIS

country. The average tariff in Tajikistan stands at the equivalent of about 0.65 US

cents/kWh. Certainly, this is a big increase compared with 0.28 cents/kWh as recently

as 2001, but it is still remarkably low by international standards.

At present, regular daily load shedding is used in winter to limit consumption to match

the available supply. The amount of suppressed demand is estimated at 1000 GWH

pa; when the average net import in recent years, 800 GWh pa, is added, the total

effective reduction in demand that is required to achieve a proper demand-supply

balance is 1,800 GWh pa.

Hydro Tasmania Consulting, EDF Hydro Engineering Centre and Islohotkonsaltservis vi


The tariff increases that are needed to moderate demand for electricity sufficiently to

achieve a demand-supply balance, for various GDP growth scenarios, have been

calculated as follows:

Overall Tariff Increases Forecast (exc. TADAZ)With Balanced Demand and Supply

0%

10%

20%

30%

40%

50%

60%

70%

2004 2006 2008 2010 2012 2014

High Expected Low

Indicative ‘target’ tariffs, necessary for Barki Tajik to recover the full real costs of

supplying electricity, have been calculated – see Section 6; however it should be noted

that the transmission and distribution components of these real costs have been

assessed from an estimate of the assets’ replacement costs that deserves to be

studied in much more depth than was possible in this study, and hence the ‘target’

tariffs are only indicative.

The World Bank and ADB have recently been in negotiation with the Government of

Tajikistan over tariff settings. The World Bank has recommended to GOT a set of

tariffs through to 2010, designed to increase Barki Tajik’s revenues and put it in a

financially sustainable position quickly. The Consultant supports the World Bank

recommendations as a means to quickly put Barki Tajik in a sound financial position –

a vital requirement for the energy sector and for its contribution to the country’s

economic growth. Taken on balance, the Consultant prefers the World Bank’s

objective of a financially secure Barki Tajik to the objective, mentioned above, of

balancing supply and demand. Hence the recommended tariff action plan aligns with

the World Bank recommendation, as follows:

Hydro Tasmania Consulting, EDF Hydro Engineering Centre and Islohotkonsaltservis vii


Dirhams/kWh US cents/kWh2006 2007 2008 2009 2010 2006 2007 2008 2009 2010

TADAZ-Total 2.66 3.33 3.99 4.59 5.16 0.85 1.04 1.22 1.37 1.50Otherindustries

2.66 3.33 3.99 4.59 5.16 0.85 1.04 1.22 1.37 1.50

Agriculture 1.18 1.95 3.21 5.30 8.75 0.38 0.61 0.98 1.58 2.54IrrigationPumping(Summer)

0.50 0.95 1.81 3.52 6.86 0.16 0.30 0.55 1.05 1.99

IrrigationPumping(Winter)

1.00 1.90 3.61 7.04 13.73 0.32 0.59 1.10 2.10 3.99

BudgetOrganizations

1.70 2.98 5.36 9.64 17.35 0.54 0.93 1.64 2.87 5.04

Residential(250 kWh)

2.70 5.39 9.37 14.67 18.70 0.86 1.69 2.86 4.37 5.44

Other(commercial)

4.18 5.64 7.62 11.43 17.37 1.34 1.76 2.33 3.40 5.05

WeightedAverage(nominalvalues)

2.18 3.08 4.32 6.10 8.60 0.70 0.96 1.32 1.82 2.50

WeightedAverage(Real – 2006 values)

2.18 3.01 4.13 5.68 7.81 0.70 0.94 1.26 1.69 2.27

Recommended Tariff Action Plan

7 Optimisation of Vakhsh River HPP operation The reservoir at Nurek is the only significant storage on the Vakhsh River. It fills in late

spring and summer, then its water level falls in autumn and winter, and this pattern is

integrated with Tajikistan exporting energy in summer and importing (in parallel with

widespread load shedding) in winter.

In the operation of Vakhsh Cascade HPPs, the key decision at any time is how much of

this water to use for generation (at Nurek and then at the downstream HPPs), and how

much to store for later use. At present very little use is made of computers to support

these decisions. The Consultant considers that use of a computerized simulation

model would help Barki Tajik to achieve economic benefits. One change that would

enable more energy to be produced (indicative estimate of 275 GWh per year, an

increase of about 2.5%) and that such a model would probably demonstrate to be

feasible, is keeping the reservoir level near full in October and even November by

importing more in those months, then importing less in February and March. Once the

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simulation model is integrated into BT’s operational processes it could be followed by

the introduction of optimization software, with additional economic benefits anticipated.

8 Proposed Rehabilitation Project The proposed rehabilitation Project is described in full in Volume 2. The following table

summarizes the proposed configuration of this Project, to match the funding that is

expected to be available for implementation (including amounts that are expected but

not assured):

Composition of Project Lots ProcurementMethod

EstimatedCostsUSDM

Lot 1: Substation rehabilitation and Golovnaya Transformer

Rumi Substation rehabilitation 4.46

Golovnaya HPP: Replacement of Generator Transformer T3 2.89

Total

InternationalCompetitive Bidding

7.35

Lot 2: Canal rehabilitation

Perepadnaya Canal 0.14

Centralnaya Canal 0.18

Total

NationalCompetitive Bidding

0.32

Lot 3: Metering in transmission substations Limited InternationalBidding

1.13

Lot 4: Golovnaya and Baipaza HPPs – rehabilitation

Golovnaya HPP – rehabilitation of Unit Nos 1 and 3 15.82

Baipaza HPP – excitation rehabilitation 1.80

Total

InternationalCompetitive Bidding

17.62

Implementation consultancy 3.00

Duties & taxes 1.46

Price contingency and Interest during Construction 5.00

Total 35.88

An alternative Project has also been configured to match the amount of assured, i.e.

committed funding, USD 16M.

Hydro Tasmania Consulting, EDF Hydro Engineering Centre and Islohotkonsaltservis ix


9 Recommendations Tariffs

It is recommended that tariffs be increased, according to the tariff action plan in Item 6

above, with automatic adjustment in line with recorded inflation in Tajikistan.

It is also recommended that the Ministry of Energy, in consultation with BT, conduct an

education campaign, to accompany the tariff changes. This should focus on:

the need for BT to have sufficient funds to keep its power system in goodworking order, through adequate maintenance and investment in newequipment; and the benefits of other forms of energy for cooking and heating.

Note: Recommendations relating to social protection and safety net measures in the light of the proposed tariff increases are given at the end of Volume 3.

Vakhsh River Cascade Operation Optimisation

It is recommended that the ADB undertake a TA for optimisation of HPP operation on

the Vakhsh River Cascade.

System Studies

Flowing from the system studies that were carried out, the following initiatives are

recommended:

Installation of a second auto-transformer at Rumi Substation, also atPryadilnaya & Kolhozabad substations when funds become available; Construction of a new 220 kV transmission line from Lolazor Substation to anew substation near Kulyab, with a connection to the existing Kulyab Substation;Upgrading the protection system to enable ring operation at 110kV; andProviding ability for sectionalizing greater portions of the transmission system.

More details of these recommendations are given in Section 10.

It is also recommended that the ADB undertakes a technical assistance (TA) in the

area of power system planning, to develop Barki Tajik’s expertise by means of

providing software, and also training to selected staff.

Hydro Tasmania Consulting, EDF Hydro Engineering Centre and Islohotkonsaltservis x


Recommended policies in the area of energy development are shown in matrix form in

Section 10.4.

Recommendations for Barki Tajik’s institutional strengthening and capacity building are

shown in Section 10.1 and 10.3. A particular recommendation in this area is as

follows:

Asset Valuation: It is recommended that ADB establish a TA for valuation of its generation, transmission, distribution and telecommunications assets.

The Consultant’s recommendations for rehabilitating the power system are listed in

Volume 2.

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CONTENTS1 INTRODUCTION 1

1.1 Structure of This Report 1

1.2 Execution of the TA 1

1.3 Background 1

1.4 This Project 3

1.5 Nurek 6

1.6 Transmission Line to Afghanistan 7

1.7 Acknowledgements 7

1.8 Counterparts 7

2 EXISTING SITUATION AND ANALYSIS 102.1 Energy Efficiency 10

2.2 Tariffs 12

2.3 Load Forecast 14

2.4 Level of Suppressed Demand 31

2.5 Consumer Metering 38

2.6 Billing and Collection 40

2.7 Non-Technical Losses 43

3 EXISTING SITUATION - HPPs 453.1 Baipaza 45

3.2 Golovnaya 48

3.3 Perepadnaya 60

3.4 Centralnaya 65

4 EXISTING SITUATION – TRANSMISSION & DISTRIBUTION 704.1 Premises Visited & Proposed Assets to be Analysed 70

4.2 Analysis and Assessment of the Existing Situation 71

4.3 Consumer Characteristics 71

4.4 Bulk Metering – Analysis and Assessment 72

4.5 Availability 72

4.6 Losses Analysis 74

5 POWER SYSTEM STUDIES 765.1 Objective 76

5.2 The Electrical Power System 76

5.3 Criteria for System Planning Studies 81

5.4 Preparation for Load Flow and Contingency Analysis 86

5.5 Results of Power System Analysis 92

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5.6 Strategy for Prioritizing Projects 105

5.7 Recommendations 106

5.8 TA for Providing Software to Barki Tajik 107

6 TARIFFS 1096.1 General 109

6.2 Tariff Increases Necessary to Align Supply and Demand. 109

6.3 Long Run Marginal Cost of Supply 112

6.4 Target Tariffs 116

6.5 Tariff Framework & Recommended Action Plan 119

6.6 Social Impacts 128

6.7 TADAZ Tariffs 128

6.8 Automatic Adjustment Mechanism 129

6.9 Customer Education 129

7 OTHER MEASURES TO REDUCE WINTER DEFICIT 1317.1 Electricity Imports 131

7.2 Substitution of Gas or Coal for Heating 132

7.3 New Generation Schemes 135

8 OPERATION OF VAKHSH RIVER HPPs 1398.1 Background 139

8.2 Optimisation Considerations 140

8.3 Suggestions for improvement 143

8.4 TA for Optimisation of Cascade Operation 146

9 BARKI TAJIK ISSUES 1489.1 FINANCIAL ANALYSIS – OVERVIEW OF BARKI TAJIK 148

9.2 FINANCIAL ANALYSIS – THE LAST FIVE YEARS 148

9.3 FINANCIAL ANALYSIS – THE NEXT TEN YEARS 161

9.4 COMPLIANCE with ADB’S COVENANTS 171

9.5 Notional Additional Costs 174

9.6 Compliance with the Energy Sector Action Plan 175

10 RECOMMENDATIONS 17710.1 Institutional Strengthening & Capacity Building Requirements 177

10.2 Possible Approach to Institutional Strengthening 180

10.3 TA for Asset Revaluation 181

10.4 Policy Matrix for Energy Development 184

10.5 Other Recommendations 189

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APPENDICESA1 Record of Tripartite Meeting, 1st March 2006 193

A2 Phase I Power Rehabilitation – Details 187

A3 Consumption and Tariffs 198

A4 HPPs – EM Data Sheets 199

A5 HPPs – EM situational analysis 209

A6 Transmission & distribution – visit report & assessment 215

A7 Transformer losses comparisons 237

A8 Network data for Systems Studies 245

A9 Load forecasts for System Studies 250

A10 Load flow studies 254

A11 Possible future network developments 257

A12 Estimated Replacement Cost of Network Assets 259

A13 Draft Terms of Reference – System Studies 260

A14 Draft Terms of Reference – Vakhsh Cascade Optimisation 265

A15 Financial projections – additional items 272

A16 Draft Terms of Reference – Asset revaluation 276

A17 Energy Sector Action Plan, 2000 282

A18 Contact details for the Consultant 287

LIST OF FIGURES Figure 1-1 Tajikistan and the Khatlon Region 2

Figure 1-2 Tajikistan Hydropower System 4

Figure 2-1 Barki Tajik’s Load Forecast 16

Figure 2-2 Barki Tajik’s Assumed Tariffs 16

Figure 2-3 Forecast GDP Scenarios 20

Figure 2-4 Lorenz Curve for Household Expenditure 22

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Figure 2-5 Electricity Consumption versus Income 24

Figure 2-6 Seasonal Consumption by Region 25

Figure 2-7 Historical Consumption by Sector 26

Figure 2-8 Historical Consumer Numbers by Sector 26

Figure 2-9 Historical Average Consumption per Consumer 27

Figure 2-10 Forecast Customer Numbers by Sector 28

Figure 2-11 Load Forecast with Current Tariffs 30

Figure 2-12 Load Forecast for Southern Grid with BT’s Proposed Tariffs 31

Figure 2-13 Daily Load Curves – Winter (solid) and Summer (dashes) 32

Figure 2-14 Synthetic Load Curves 33

Figure 2-15 Scaled Daily Load Curves by Market Sector 34

Figure 2-16 Demand Forecast by Sector – Expected, High and Low 37

Figure 3-1 Baipaza HPP Transmission towers on left bank 48

Figure 3-2 Golovnaya HPP Tailbay 49

Figure 3-3 Golovnaya HPP Detail of wicket gate, Unit No 5. 53

Figure 3-4 Perepadnaya HPP: View downstream from surge tank towers 62

Figure 3-5 Centralnaya HPP : Machine Hall 67

Figure 4-1 Transmission in the Khatlon Region and Substations Visited 73

Figure 5-1 Location of Existing and Proposed Power Stations in Tajikistan 77

Figure 5-2 Current Rating of Conductor 88

Figure 5-3 Voltage Profile for 2006 System in Winter Normal Conditions 93

Figure 5-4 Fault Level Map for 2006 103

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Figure 6-1 Load Forecast with Balanced Supply and Demand 110

Figure 6-2 Tariff Increases to Balance Demand and Supply 111

Figure 6-3 Tariff Levels for Balanced Demand and Supply 112

Figure 6.4 Household electricity expenditure, Tajikistan 2004 120

Figure 6.5 Urban household energy consumption by income, 2004 121

Figure 6.6 Comparison with World Bank Proposed Tariffs 126

Figure 6.7 World Spot Market Forecast 128

LIST OF TABLES Table 1.1 Projects Investigated and their Estimated Costs 5

Table 1.2 Proposed Project for Implementation 6

Table 2-1 Historical Tajikistan Tariffs 12

Table 2-2 CIS Country Tariffs – US Cents/kWh 13

Table 2-3 Projections of Population and Residential Consumers 18

Table 2-4 Forecast GDP Scenarios 19

Table 2-5 Indicative Income Statistics in $USD 2003 values 21

Table 2-6 Dushanbe Consumption Data – October 2005 23

Table 2-7 Total Consumption versus Average Tariff 27

Table 2-8 Average Consumption versus Average Tariff 27

Table 2-9 Seasonal Consumption 35

Table 2-10 Historical Import and Export of Electricity 37

Table 2-11 Barki Tajik Collection Monies 40

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Table 2.12 Accounts Receivable 41

Table 3-1 Main Data for Baipaza HPP 46

Table 3-2 Main Data for Golovnaya HPP 50

Table 3-3 Main Data – Perepadnaya HPP 61

Table 3-4 Main data – Centralnaya HPP 66

Table 4-1 Technical Losses – Barki Tajik Networks 75

Table 5-1 Characteristics of Existing Generating Stations 77

Table 5-2 Transmission Line Lengths in Southern System 79

Table 5-3 Grid Substation Numbers and Total Capacities 80

Table 5-4 Distribution Line Lengths in Southern System 81

Table 5-5 Distribution Substations in Southern System 81

Table 5-6 Allowable voltage variations 83

Table 5-7 Allowable maximum 3 phase short circuit levels 84

Table 5-8a Load security criteria for loads up to 60MW 85

Table 5-8b Load security criteria for loads greater than 60MW 86

Table 5-9 Voltage profiles for the Lolazor - Kulyab -Shugnou 110kV line 94

Table 5-10 Fault Levels 101

Table 6-1 Average Generation Costs – Central Asian Region 114

Table 6-2 Proposed ‘Target Tariffs’ 118

Table 6.3 Efficiencies and Costs of Energy Sources 121

Table 6.4 Suggested Household Usage Requirements 123

Table 6.5 Suggested Social Welfare Tariff Block Sizes – kWh per month 124

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Table 6.6 Tariff Framework 125

Table 6.7 World Bank Suggested Tariff Structure – Nominal Values 125

Table 6.8 Tariff Action Plan 127

Table 7.1 Historical Import and Export of Electricity 132

Table 7-1 Access to Energy in Tajikistan, 2004 133

Table 7.2 Water Spilt from Nurek Reservoir 136

Table 9-1 Historical Tajikistan Tariffs 151

Table 9-3 Restated Income Statement (from 2001 to 2005) 153

Table 9-4 Restated Cash Flows Statement (from 2001 to 2005) 154

Table 9-5 Capital Structure Synthesis 155

Table 9-6 Gross Domestic Product Growth Scenarios 163

Table 9-7 Suggested Tariff Structure – Nominal Values 164

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1 INTRODUCTION

1.1 Structure of This Report Volume 1 (this volume) comprises:

Summary Report on the existing situation of the four hydropower plants and thetransmission/distribution networks in the Khatlon Region; and Report on power sector, institutional and policy issues, i.e. topics other thanspecific rehabilitation measures

Volume 2 comprises:

Summary Report on feasibility studies of rehabilitation sub-projects;The recommended ‘Project’, i.e. the recommended set of sub-projects to beimplemented; and Proposed implementation arrangements for the recommended ‘Project’, i.e.the recommended set of sub-projects.

Volume 3 comprises:Initial Environmental ExaminationPoverty and Social Assessment

1.2 Execution of the TA The project preparatory technical assistance (PPTA) Power Rehabilitation Phase II,

TA 4596-TAJ, has been carried out in two stages:

Stage 1: Existing situation and needs assessment, hence candidate projects;

Stage 2: Feasibility studies for top-ranking candidate projects.

The project team’s Interim Report was issued in February 2006. This was followed

by the first Tripartite Meeting, on 1st March 2006 in Dushanbe, which confirmed the

projects that were to be the subject of feasibility studies. The Tripartite Meeting

marked the end of Stage 1 and the start of Stage 2 of the study. The record of this

meeting is shown in Appendix A1.

1.3 Background Tajikistan is recovering from the post-soviet economic depression in the 1990s. The

Government is implementing reforms, and the annual gross domestic product has

shown increases since 1997. However, Tajikistan remains one of the poorest former

Hydro Tasmania Consulting, EDF Hydro Engineering Centre and Islohotkonsaltservis 1


Soviet Union countries. The Khatlon region, in the south west of the country (see

Figure 1-1) is one of the two poorest regions, the other being Gorno Badakhshan

(GBAO).

Figure 1-1 Tajikistan and the Khatlon Region

A lack of new investment has led to considerable deterioration of the power system,

which was mainly built in the 1960s and 1970s. This poor funding situation has also

seen physical deterioration of the existing equipment, and also a shortage of spares.

This leaves the system vulnerable to breakdowns. In addition there has been a shift

in the load pattern away from industrial towards residential customers, and this has

made the demand more ‘peaky’, and consequently overloaded transformers and

transmission lines.

The installed power generation capacity is 4,405 megawatts (MW), comprising

mainly six hydropower plants (HPPs) totalling 4,060 MW and two fossil fuel-fired

combined heat and power stations totalling 345 MW. Annual hydropower energy

output is about 16,000 gigawatt-hours (GWh) and electricity is delivered to nearly

100% of the population of about 6 million, of which the Khatlon Region comprises 2.2

million. By far the largest HPP is Nurek, which has been in operation since the mid-

1970s; it has an installed capacity of 3,000 MW, and provides considerable



regulation of the Vakhsh River, as well as providing stability to the power system in

Kazakhstan, Uzbekistan and Kyrgystan, as well as Tajikistan.

The country has three separate power systems (grids): the southern system, the

northern system (these two are interconnected, but only via the Uzbekistan grid) and

the small eastern (Pamir) system. The southern system is the largest, with installed

generation capacity of 3,895 MW on the Vakhsh River and a further 15 MW

elsewhere. The Khatlon Region is served by the southern grid.

Both the southern system, which includes Dushanbe, and the northern system have

a generation deficit in winter, and rely on imported energy from Uzbekistan. This is

because of lack of snow melt and therefore low river flows in autumn and winter. In

the Khatlon Region in winter, electricity can only be supplied for about 3 hours per

day. However, in summer there is surplus electricity available from the HPPs on the

Vakhsh River.

Barki Tajik (BT), the vertically integrated state-owned utility, is responsible for power

generation, transmission, distribution and sales in both southern and northern

systems.

The Tajik Aluminium Smelter (TADAZ), situated to the west of Dushanbe, consumes

about 40% of the energy generated in the southern and northern systems.

This project follows on from another similar project: the Power Rehabilitation Project

(in this report it is called Phase I Power Rehabilitation), which is now in its

implementation stage. It is being jointly financed by the ADB, other similar institutions

and Barki Tajik. About $63M is being spent in the Khatlon region, at Nurek HPP and

elsewhere in the southern system, to undertake the most urgent rehabilitation needs.

Details of the Phase 1 work are in Appendix A2.

1.4 This ProjectThe project that is the subject of this report – the preparatory stage of Power

Rehabilitation Phase II – will build on the Phase 1 work.

The focus of this project is a reduction in the power deficit in winter, particularly in the

Khatlon Region, in other words addressing the situation where there is un-met

demand in winter. The size of the winter deficit is unknown because, in effect, load

shedding is used to restrict consumption so that it balances the total of the available



generation and a limited amount if imported power. However, the Consultant has

estimated that during autumn and winter there is 1,800 GWh of un-met demand.

Figure 1-2 Tajikistan Hydropower System1

Several options were investigated for reducing the winter deficit:

(a) adding new generation capacity; (b) rehabilitating and up-rating four existing HPPs (Baipaza, Golovnaya,

Perepadnaya and Centralnaya HPPs, in other words the HPPs on theVakhsh River other than Nurek – see Figure 1-2);

(c) rehabilitating parts of the transmission and distribution network, and up-rating them to reduce losses;

(d) increasing tariffs, improving metering and bill collection and otherdemand-side management (DSM) measures with the aims of promotingthe efficient use of electricity, curtailing demand in winter and strengthening BT’s financial position.

The funding available for implementing Power Rehabilitation Phase II is understood

to be as follows:

1 Source: United Nations Coordination Unit in Tajikistan



ADB loan: USD 8.0MOPEC loan, administered by ADB: USD 6.0MFrom Barki Tajik funds: about USD 2.0MIn addition, it is understood that a USD 2.4M loan from OPEC, originallyallocated to the Regional Power Transmission Modernisation project, whichwas subsequently cancelled, may available for this project.Also, it is understood that the IDB and a Japanese development agency areboth considering providing loan funds for this project; at the time of writing(August 2006) arrangements for securing these loans have not been finalised.

The two funding scenarios considered are USD 35.9M and USD 16.0M.

Investigation of rehabilitation options has been the focus of the study. In Stage 1,

many options were investigated at pre-feasibility level, screened and ranked. The

result of this was that eleven projects were investigated at feasibility level in Stage 2

of the study, with the following results: This is covered in detail in Volume 2 of this

report.

Sub-Project Base Cost EstimateUSD – Millions

1. Rumi Substation Rehabilitation 4.456 2. Pryadilnaya Substation Rehabilitation 3.529 3. Kolhozabad Substation Rehabilitation 4.274 4. Kurgan Tube Substation Rehabilitation 2.505 5. Metering at Transmission Substations 1,129 6. Golovnaya HPP – Replace Transformer T3 2.891 7. Golovnaya HPP – Rehabilitate Unit No.3 9.336 7A. Golovnaya HPP – Rehabilitate Units Nos.1&3 15.816 8. Baipaza HPP – Excitation Rehabilitation 1.795 9. Perepadnaya HPP – Tailrace Canal Excav’n 0.144 10. Centralnaya HPP – Tailrace Canal Excav’n 0.175

Table 1.1 Projects Investigated and their Estimated Costs

The proposed Project for implementation comprises the best of the sub-projectslisted above. It is detailed in Volume 2, and is summarised as follows:



Composition of Project Lots ProcurementMethod

Estimated

Costs

USDM

Lot 1: Substation rehabilitation and Golovnaya

TransformerRumi Substation rehabilitation 4.46

Golovnaya HPP: Replacement of Generator Transformer T3 2.89

Total

International

Competitive Bidding

7.35

Lot 2: Canal rehabilitation

Perepadnaya Canal 0.14

Centralnaya Canal 0.18

Total

National Competitive

Bidding

0.32

Lot 3: Metering in transmission substations Limited InternationalBidding, although

International Shop-

ping should be

investigated as an

alternative

1.13

Lot 4: Golovnaya and Baipaza HPPs –

rehabilitation

Golovnaya HPP – rehabilitation of Unit Nos 1 and 3 15.82

Baipaza HPP – excitation rehabilitation 1.80

Total

International

Competitive Bidding

17.62

Implementation consultancy 3.00

Duties & taxes 1.46

Price contingency and Interest during Construction 5.00

Total 35.88

Table 1.2 Proposed Project for Implementation

An alternative Project, to suit USD 16M of funding, is detailed in Volume 2.

1.5 Nurek In parallel with this project, a separate TA is being implemented for Nurek HPP,

focussing on the 500kV and 220kV switchyards there, as they are suffering badly

from subsidence. That TA includes the investigation and design for the switchyard

relocation, and is being funded by Kreditanstalt fur Wiederaufbau (KfW).



1.6 Transmission Line to Afghanistan In parallel with this project, ADB is investigating the construction of a new 220 kV

transmission line from Tajikistan to Afghanistan. It would link Golovnaya in Tajikistan

with Pul-i-Khumri in Afghanistan, and could be completed as early as the end of

2008. It is designed to provide a means of exporting part of the energy to be

generated at Sangtuda A HPP (under construction), as well as surplus energy which

is currently spilt down the Vakhsh River in summer. ADB plans to seek approval

from its Board for this project and the transmission line together as a combined

project.

1.7 Acknowledgements The project team would like to thank the management and staff of the Ministry of

Energy (MOE) and Barki Tajik, including those of the Project Implementation Unit

(PIU), for their major contribution to the project, in particular the investigation and

data collection.

Their co-operation was a great help for the international specialists who always

received a warm and friendly welcome, as well as useful guidance and advice.

1.8 Counterparts Below is a list of the counterpart personnel who have been met during the project. It

does not include the names of everyone present at all meetings; apologies for any

errors and omissions.

Organisation, Department Person Position

Ministry of Energy Nurmakhmatov Djurabek Former Minister

Sulaymonov Akram Deputy Minister

Shabozov Anvar Manager of Coal Department

Barki Tajik Samiev Sharifhon Chairman

Silantiev Alexei 1st Deputy Chairman and Chief Engineer

Ubaidulaev Muhiddin Deputy Chairman

Mansurov D.M. Former Deputy Head of BT

Rakhimov Rustam Deputy Chief Engineer

Gulov Rashid Deputy Chief Engineer

Project ImplementationUnit (formerly part of BarkiTajik)

Rakhimov Sanat Director



Odinaev Shoin Former Director

Khushev Shodmon Deputy Director

Sadykov Ruslan Former Deputy Director

Usmonov Usmonali Deputy Director

Yatimov Jumakhon Environmental & Social Manager

Mironov Vasiliy Electrical expert

Saidov Umed Environmental and Social Expert

Department of Economicsand Forecasting

Narzulaev M.N. Head of Planning

Natural Monopoly SubjectsActivity Regulation Dept.

Kurbanov Davlatnazar Head of Department

Barki Tajik:

Nurekskaya HPP Kurbonov Mahmadullo Director

Abdulloev Saidsho Former Chief Engineer

Mr Boev Chief Engineer

Baipazanskaya HPP Mahmadiev Muzaffar Director

Mr Boev Former Engineer in charge

Vakhsh Cascade HPPs Goziev Nurullo Director

Mustafoev Nazrullo Chief Engineer

Abdujabarov Davlat Deputy Chief Engineer

Perepednaya & Central-naya HPPs

Turdyev Stanislav Engineer in charge

Southern TransmissionNetwork

Ubaidulaev Muhiddin Former Chief of SouthernNetwork

Egambergiev Valeriy Chief Engineer, SN

Hodjaev Haknazar Director of Energy, Kulyab

Atoev Said Director of Kulyab City Network

Sharipov Aslam Deputy Director of KulyabNetwork

Ilyosov Abdunabi Former Deputy Director ofEnergosbyt

Abduiharov Usambek Director – Kulyab Region Network

Kenjaev Abdukosym Director – Dangara Branchof Kulyab Network

Central Transmission Azimov Bakhrom Chief Engineer



Network

Nozirov Arslan Chief Engineer, Regar S/S

Load Dispatch Centre Odilov Nigmatullo Chief of Dispatch Centre

Tkachenko Sergey Deputy Chief Dispatcher

ChorshanbievOdinamamad

Deputy Chief Dispatcher

Prospective DevelopmentDepartment

Ugai Anatoly Head of Department

Halimjanova Faizi Deputy Head

Loss Reduction Department Aminov Markhmad Head of Department

Telecommunications Chepushtanov Anatoly Director of Tele-communications System

Automated Control System Alexeev Yuriy Chief of Department

Saushkin Yury Head of Central relay automatic protection & measurement

Operation and Repairs Sherbovich Vladimir Chief of Electro-technicalSector of Service

Central Book-keeping Sadullaeva Fatima Former Chief Accountant

Retail Sales Department Rakhmatov Bahtier Chief of Department

Dushanbe Energy & SalesDepartment

Haidarali Niyazov Director



2 EXISTING SITUATION AND ANALYSIS

This section describes the review and analysis that were made of the aspects of the

power sector in Tajikistan, other than the physical assets:

Efficiency of energy transmission and use Tariffs

Demand and load forecasts Consumer metering, billing and collection, and non-technical losses

2.1 Energy EfficiencyIf electrical energy could be used more efficiently than it is at present, especially in

winter, it is clear that the deficit between demand and supply would be reduced.

In February 2004, a report was completed by Sofreco on Development of an Energy

Conservation Programme. This was a broad-ranging ADB funded study2 that

discussed and analysed many issues connected with energy efficiency in Tajikistan,

mainly concerning electricity.

The report considered the legal and policy matters impacting on the conservation of

energy. It also included an analysis of energy efficiency programmes for buildings,

for industry and for equipment and appliances, and concluded that there were gaps

in Tajikistan’s national legal framework relating to the adoption, assessment and

implementation of energy and energy efficiency strategies.

The Sofreco project team obtained statistics for technical losses in the transmission

and distribution networks, and concluded that these losses were much higher than

internationally accepted norms. The team also obtained much information on load

curves by category of consumer. One key conclusion drawn was that DSM

measures targeted at reducing the morning and evening peaks would be most

worthwhile. This is good in theory, but two factors mitigate against it: (a) Tajikistan is

a long way from having sufficient electronic consumer metering that would be needed

for time-of-day tariffs, and (b) widespread load shedding during the preparation of

morning and evening meals would be socially unacceptable.

2 ADB, 2002. Technical Assistance to the Republic of Tajikistan for the Development of an EnergyConservation Program. Manila.



An action plan was recommended, consisting of eleven projects.

Of these, the ones that have direct bearing on this study are as follows:

Project No.1 – Establishing inside the MOE a statistic department and anenergy sector data base.Project No.5 – Installation of meters to all electricity consumers. Project No.6 – Set up a nation-wide system of billing and collection for the power sub-sector. Project No.9 – Demand management and river basin reservoir managementfor energy conservation. Project No.10 - Reducing the electricity technical losses to a reasonable level.

The thinking behind these planned actions is endorsed.

Progress is being made by the Government with some of the eleven actions, but as a

general observation, progress is slow.

On the key question of tariffs, the report found that the current tariff for electricity in

Tajikistan is a long way below average international tariffs (generally above 5 cents

per kWh), and implied that the Government was hesitant in moving tariffs upwards

towards a full cost recovery level. Furthermore, the methodology for setting tariff

structures and levels was not available.

Tariffs, and the importance of achieving economic efficiency with them, are

discussed later in this report, but it should be recorded here that this Consultant

echoes the tariff concerns expressed in the report Development of an Energy

Conservation Programme. Tariffs should be increased.

At present, little attention appears to be paid to energy efficiency in buildings, and

little attention is paid to electrical appliances’ efficiency, as evidenced by the small

number of microwave ovens in the shops and long-life light bulbs in use. The biggest

incentive to use these energy-saving devices is the cost of energy, and while the

tariffs are so low, even in comparison with other CIS countries (see Section 2.4.1),

this incentive does not operate.

It is recommended that, after 2010 when tariffs may have risen to about 2.1

cents/kWh (see Section 2.4.1), some of the extra revenue so generated be invested

in an education campaign to promote energy efficient design for new buildings and

the use of energy efficient electrical appliances.



2.2 Tariffs Electricity tariffs are set each calendar year by the Government, after receiving

advice from the Anti-monopoly agency (the Natural Monopoly Subjects Activity

Regulation Department). Barki Tajik also provides advice on tariffs to the

Government.

Tariffs for the eight consumer groups for 2004, 2005 and 2006 are shown in

Appendix A3.

For the ‘population’ group, tariffs showed a significant increase from 2001 to 2003,

but otherwise have remained fairly steady, as shown in Table 2-1.

Table 2-1 Historical Tajikistan Tariffs

Year Average TariffUS Cents / kWh

1998 0.35

1999 0.36

2000 0.35

2001 0.28

2002 0.5

2003 0.6

2004 0.6

2005 0.65

2006 0.65

Tariffs in Tajikistan are very low by international standards (Table 2-2), and low

compared with those in other CIS countries,3 In fact less than half the tariffs in any

other CIS country.

3 Source: Barki Tajik’s Plan of Private Restructuring, submitted to the Government in 2005.



Table 2-2 CIS Country Tariffs – US Cents/kWh

Country Industry Population

Azerbaijan 2.65 1.95

Armenia 3.02 4.29

Byelorussia 4.14 3.14

Kazakhstan 2.52 2.2

Kyrgyzstan 2.1 1.7

Uzbekistan 2.8 2.2

Tajikistan 0.87 0.65

Barki Tajik’s current advice to Government is that tariffs should be increased

substantially. In its 2005 ‘Plan of Private Restructuring’, Barki Tajik recommended

the following increases:

2005 – 2006: 0.65 US cents

2007 – 2008: 1.2 – 1.5 US cents

2009 – 2010: 1.8 to 2.1 US cents

In the longer term, the draft recommendation was that a tariff of 3.0 to 3.1 US cents

would be needed to provide adequate foreign investment return on large hydropower

projects in Tajikistan, but that these figures would have to be reconsidered after

2010.

This Consultant considers that, on balance, tariffs do need to rise substantially.

Detailed recommendations are made in Section 6; in general terms the position is as

follows:

On the one hand, low tariffs stimulate economic activity and impose an easy financial

burden for use of electricity - an essential ingredient of modern life. On the other,

tariffs should ideally be set by market forces and in any case should cover the full

cost of supply and provide enough funds for adequate investment in the electricity

sector, both for rehabilitation of assets and for development of the system in

response to developing demand for electricity.

The Consultant has formed the impression that Barki Tajik is in poor financial health.

This impression is elaborated upon in Section 9. In summary:



(a) From Barki Tajik’s published accounts it can be seen that income covers

operational expenses, and in 2004 a net profit of 41 million TJS was

recorded, almost 20% of turnover4. The underlying difficulty with this result is

that it was achieved with a level of asset maintenance that by all appearances

is very low. In the 2004 Financial Statements, ‘repair and maintenance’ cost

the company only 8.8 million TJS, or 4% of turnover, although most of the

assets are 30 to 40 years old and need much attention.

(b) A relatively small amount of depreciation is recorded on the cost side of the

profit and loss statement: 16.9 million TJS, or 2% of the stated book value of

fixed assets of 836 million TJS. In this Consultant’s opinion the replacement

cost of the assets is between 4 and 5 billion USD and a depreciation

allowance of about 300 million TJS would be more appropriate. Further

details of this indicative estimate are given in Appendix A15.

(c) Little of the profits are being spent on new capital works or set aside to cover

future capital works. When the assets’ condition is poor, as is the case here

when compared with international benchmarks, the absence of a significant

internally-funded capital works programme is another sign of poor financial

health.

The revenue from TADAZ is another major financial problem for Barki Tajik. It has

been erratic in recent years, and the debt at the end of 2005 is reported by BT as

TJS 86 M, equivalent to about 6.5 months of revenue. This is discussed later in the

report.

Leaving TADAZ aside, Barki Tajik badly needs to increase its revenue, if it is to

provide a reliable electricity supply to its customers in the medium and long term –

and, importantly for this study, if the winter deficit is to be eliminated in the medium

and long term. Tariff increases are the only sensible way that such an increase in

revenue can be achieved.

2.3 Load Forecast

2.3.1 Approach In the light of Barki Tajik’s load forecast, which is part of its financial model, a new

load forecast is developed for the period to 2015, by customer sector, first for the

4 Barki Tajik’s Consolidated Financial Statements and Auditors Report for 2004.



combined northern and southern grids assuming current tariffs, then for the southern

grid alone based on BT’s proposed tariffs. This is done from forecasts of population

and of GDP (expected, high and low growth rates), hence number of consumers, and

from consideration of income elasticity of demand and price elasticity of demand.

2.3.2 Barki Tajik’s Forecasts The national power utility, Barki Tajik (BT), currently uses an integrated financial

model in Microsoft Excel. The focus is on the financial budget, modelling the various

costs, salaries & bonuses, and revenue & debt collection associated with the supply

side in considerable detail. However, there is only superficial (summary) regard to

the physical generation, transmission and distribution assets, operation and

maintenance cost, depreciation, technical and commercial losses etc. Similarly, the

consumers’ demand side usage pattern, assessed demand curve, consumers’

appliance investment and competitive energy options, are not included. This limits

the usefulness of the model as a tool for business planning and strategy

development, including areas such as decision & risk analysis, scenario planning and

tariff optimization.

The forecasting capacity in this financial model is limited to projections on a range of

financial and economic parameters and assumptions, such as exchange rates,

inflation rates, fuel costs, taxes, collection rates, bad and doubtful debts, etc., but the

future values of the parameters are primarily determine externally. There is a

restricted scenario facility incorporated into the financial model which allows the basis

for projection of key parameters, such as the number of consumers, their individual

consumption, collection rates for doubtful debts, salaries and expenses etc., to be

projected on the basis of percentage change, moving average, or over-written by

manual inputs. The common practice is to project these values on the basis of a five-

year moving average, which tends to stabilize to a fixed value after a few years.

The projected values are simply replaced by the actual data value each year and the

projections advanced one extra year into the future. There is no feedback facility to

compare the previously projected with the recorded actual values, or to learn from

the experience in order to assess future risks, or to adapt to future crises. The

overall concern with the model is that it is very detailed in the financial aspects,

without modelling the major “global” issues adequately.

The following forecasts are adapted from the BT model, and are projected on the

basis of the percentage change in the number of consumers in each sector, and



assumed average household consumption of about 4.6MWh pa., increasing at about

0.1MWh pa., despite the tariff more than doubling over the next five years and the

collection rate improving.

Total Consumption by Consumer Category(Cumulative)

0

2,0004,000

6,0008,000

10,000

12,00014,000

16,000

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

MW

h

TADAZ All other industries Commerical Agriculture Residential (+ Gov. Utilities)

Figure 2-1 Barki Tajik’s Load Forecast

Average Tariffs per Consumer Category(in Dirams per kWh excluding VAT)

0.00

1.00

2.00

3.00

4.00

5.00

6.00

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Dur

ams

per

kWh

TADAZ All other industries Commercial Agriculture Residential Others Internal use

Figure 2-2 Barki Tajik’s Assumed Tariffs

The above figures indicate that consumption is dominated by TADAZ (about 40%),

and the residential sector (about 40%), and illustrate the “stabilizing” effect of

projections based on moving averages. The forecast implies that the current volatility

(risk) in the market will tend to decrease, whereas a wider perspective would indicate



that it is likely to increase, with prolonged high economic growth in India and China

creating excess demand for energy resources.

2.3.3 Load Forecasting Process The more widely accepted method of forecasting electrical energy consumption is to

establish a relationship between the consumption and key demand drivers such as

population trends, Gross Domestic Product (GDP) and the tariff. This approach not

only ensures consistency throughout the models, but utilizes the expertise of other

agencies in their specific fields.

The generally accepted load forecasting process is to forecast the demand for

electrical energy by extrapolation of consumption in recent years in the short term,

and a combination of econometric and demand side end-use modelling for the

intermediate and longer term. The latter methods focus on the structural changes in

the economy and any limitations in available resources, but the resultant “abstract”

forecast model usually needs to be calibrated against current conditions to align the

forecast values in the short term. The revenue of a power utility is usually heavily

dependent on energy sales, rather than on generation, transmission and distribution

capacity, and so an energy consumption driven forecast is more relevant to the

company’s viability. Also electric energy consumption is far more stable than power

demand, which can fluctuate widely with weather patterns, and thus forecasting

energy consumption provides a more accurate prediction.

The cost of transmission and distribution are driven by the power demand and often

represents more than half the capital investment in the power supply. The power

demand at various locations in the network is estimated by determining the overall

load factor from the load duration curve, and scaling to match the local energy

consumption forecast. Any variation in the load factor between years needs to be

incorporated in the forecast by applying a probabilistic distribution to the local load

factor.

2.3.4 PopulationA key demand driver is the number of residential dwellings in the country. This driver

has two aspects, the overall population and the average number of people in each

household unit. The latter aspect depends on a number of socio-economic and

cultural factors, but the official statistical data indicates that it is quite stable at about

5.9 persons/household, with only a small variation between the poor and relatively

well-off households. There also may be a time delay between increasing population



and increases in the number of consumer installations, but this is partly offset by a

temporary increase in the consumption per household, and is therefore usually

neglected.

To provide a long term forecast of the population growth rate, the World Bank

Population Projection was regressed with a third order polynomial function, to give

the following medium term projections.

Table 2-3 Projections of Population and Residential Consumers

YearEstimatedPopulation

(1000’s)

PercentageIncrease

Est.ResidentialConsumers

2000 6190 900,920

2001 6221 0.5% 906,863

2002 6258 0.6% 942,906

2003 6300 0.7% 924,788

2004 6347 0.7% 949,590

2005 6399 0.8% 957,383

2006 6456 0.9% 965,870

2007 6517 0.9% 975,018

2008 6582 1.0% 984,791

2009 6652 1.1% 995,154

2010 6725 1.1% 1,006,072

2011 6801 1.1% 1,017,511

2012 6881 1.2% 1,029,435

2013 6964 1.2% 1,041,810

2014 7049 1.2% 1,054,601

2015 7137 1.2% 1,067,773

2.3.5 Gross Domestic Product (GDP)Another key driver of the load forecast is the increases in average income of the

economy and consumers, usually expressed in terms of increases in GDP.

Commercial and residential consumption are normally closely related to changes in

GDP. While the slow increases in population drives steady growth in the underlying

consumption, the changes in GDP has a much more volatile affect on the overall

power consumption. International Energy Agency (IEA), produce a World Gross

Domestic Product (GDP) forecast by Region, Reference Case, (Table A31990-2025)



A third order polynomial was regressed against the IEA forecast to produce the

annual growth rate in the following table, and these were in turn applied to the current

estimates of GDP in 2004 values estimated by the National Statistical Committee.

Table 2-4 Forecast GDP Scenarios

Forecast GDP Scenarios at Constant 2004 Prices

YearExpected

Growth Rate

High

Growth Rate

Low

Growth Rate

2001 4527 4527 4527

2002 5016 11% 5016 11% 5016 11%

2003 5567 11% 5567 11% 5567 11%

2004 6158 11% 6158 11% 6158 11%

2005 6621 8% 6743 10% 6549 6%

2006 7088 7% 7346 9% 6934 6%

2007 7560 7% 7969 8% 7313 5%

2008 8038 6% 8616 8% 7686 5%

2009 8521 6% 9288 8% 8053 5%

2010 9012 6% 9987 8% 8415 5%

2011 9510 6% 10717 7% 8774 4%

2012 10016 5% 11478 7% 9128 4%

2013 10532 5% 12275 7% 9478 4%

2014 11057 5% 13109 7% 9826 4%

2015 11593 5% 13982 7% 10172 4%



GDP Scenarios

02000400060008000

10000120001400016000

1999 2001 2003 2005 2007 2009 2011 2013 2015GD

P(20

04) M

illio

ns S

omon

i

Expected High Low

Figure 2-3 Forecast GDP Scenarios

The above graph indicates the IEA forecast of GDP for the expected, high growth

and low growth scenarios, adjusted to 2004 values.

2.3.6 Income Elasticity of DemandIncome Elasticity of Demand is the sensitivity of the consumers’ energy consumption

to their income, or more formally, the ratio of the relative change in consumption to

the relative increase in income. The individual’s consumption tends to increase in a

stepwise function as their income increases and they acquire more plant and

appliances. The effect of aggregating these individual stepwise functions across the

community, tends to produce a continuous relationship with respect to the general

income level, such as measured by the GDP. The generally accept method of

determining this income elasticity is by a detailed consumer survey focusing on the

consumers end-use. The income elasticity is likely to vary as the consumer’s income

increases, starting off at low level with the poor, since they are struggling to afford the

more basic necessities of life, then increasing as the range of appliances are

acquired, and subsequently decreasing as expenditure on other “luxury” items

increases.

Unfortunately, the available socio-economic survey data was not adequate to apply

the above method, so an alternative method was adapted to suit the information that

could be obtained. The critical information required is the distribution of income in

the population and the distribution of consumption. As the residential consumption

represents about 40% of the total, and with TADAZ using a further 40%, it was

reasonable to assume that income and consumption distributions could be matched



together, that is, consumption would increase as income increased. This distribution

matching process was performed by integrating the distribution functions into

corresponding segments.

2.3.7 Income DistributionThe income distribution for each region of Tajikistan was derived matching the overall

income distribution with the regional averages and expenditure Gini factors provided

in the ABD 30853-TJ Poverty Assessment Update report, shown in the following

table. By necessity this approach did neglect any distinction between in the income

and expenditure Gini factors, and adjusted income between sectors on the basis of

the percentage of poverty in each sector. The results should therefore be regarded

as indicative only, and the best that could be done with the limited information

available. Internally “sanity” checks did however suggest that the results were

reasonable.

Table 2-5 Indicative Income Statistics in $USD 2003 values

Region Sector Population Population%Expend.

GiniGDPper

CapitaPoverty

%

GBAO Urban 29209 0.4% 0.31 284 74%

Rural 167959 2.5% 0.26 244 86%

Sugd Urban 568299 8.5% 0.3 226 59%

Rural 1555116 23% 0.36 202 66%

Khatlon Urban 380126 5.7% 0.35 195 78%

Rural 1788950 27% 0.37 195 78%

Dushanbe Urban 629666 9.4% 0.37 468 49%

The RRS Urban 197770 3.0% 0.3 201 55%

Rural 1354728 20% 0.34 253 44%



The following graph illustrates how the overall Lorenz curves were manipulated to

correspond to the average expenditure and Gini factors for each region.

Overall Monthly Household Expenditure

0

20

40

60

80

100

120

140

160

0% 20% 40% 60% 80% 100%

Acc. Population%

$USD

Figure 2-4 Lorenz Curve for Household Expenditure

2.3.8 Consumption DistributionThe customer and consumption information in Table 2-6 was provided by BT for the

month of October 2005, for the Dushanbe region only. The total number of

consumers was 147,284 and the total consumption was 55 GWH, giving an average

of 373 kWh for the month.



Table 2-6 Dushanbe Consumption Data – October 2005

Range of Consumption

#Consum

ers

Population

%

Ass.Av.

Cons.

TotalCons. Acco

untIncome2005

Income%

kWh / month kWh / mthGWh / mth

TJS/mth

TJS/mth

0 200 29,427 29% 100 2.9 2 65 2.5%

200 300 21,260 21% 250 5.3 4 104 3.8%

300 400 17,911 18% 350 6.3 6 137 4.1%

400 500 11,504 12% 450 5.2 8 173 4.5%

500 600 7,300 7% 550 4.0 10 216 4.8%

600 700 4,471 4% 650 2.9 13 258 5.1%

700 800 2,414 2% 750 1.8 16 315 5.0%

800 900 1,638 2% 850 1.4 19 355 5.2%

900 1000 979 1% 950 0.9 21 380 5.6%

1000 1100 642 1% 1050 0.7 24 396 6.0%

1100 1200 675 1% 1150 0.8 27 409 6.5%

1200 1300 292 0% 1250 0.4 29 419 7.0%

1300 1400 227 0% 1350 0.3 32 424 7.6%

1400 1500 175 0% 1450 0.3 35 428 8.1%

1500 1600 294 0% 1550 0.5 37 432 8.7%

1600 2400 805 1% 2000 1.6 50 443 11.2%

Total 100,014 100% 35

The remaining 47,270 consumers had not paid for their consumption by the end of

November when the analysis was carried out, but used an average of 419 kWh,

compared to the average of 352 kWh by those that did pay, which would indicate that

a greater proportion of large consumers were late with their payments. The payment

was calculated on a tariff of 1.6 dirams/kWh for the first 400kWh/month, and 2.7

dirams/kWh for subsequent consumption.

Regressing the logarithm of the consumption and income gives an income elasticity

of 1.18, with an r^2 of 0.95, an F statistic of 299 and a t-ratio of 156. Since the

marginal price changed in the data sample, the analysis was repeated before and

after the increase, giving income elasticities of 1.17 and 1.18 with t-ratios of 43 and

150, respectively. Since these values where so close, and the rough assumptions

used throughout the analysis, it is considered appropriate to adopt the overall income

elasticity of 1.18. The following figure illustrates the estimated relationship with

respect to the data. The close relationship breaks down at the high income levels,



but the revenue graph indicates that this only applies to a minor amount of revenue,

and that the relationship holds well for the vast majority of revenue.

It would have been interesting to obtain equivalent data from the Khatlon Region;

however the logistics of information being held at various sites in the region made

this impractical. Although in October there are likely to be some load shedding

differences between Dushanbe and Khatlon, there would not be the heating load

differences between the regions that there is in winter.

Consumption verses Income

0

500

1000

1500

2000

2500

0 100 200 300 400 500

Income TJS/mth

kWh/

mth

0%2%4%6%8%10%12%14%16%18%20%

Inco

me

& R

even

ue%

Consumption EstimatedIncome% Revenue%

Figure 2-5 Electricity Consumption versus Income

2.3.9 Seasonal ConsumptionThe following figure shows the variation in annual consumption throughout the year

for each region in Tajikistan.



Average Consumption kWh

0

200

400

600

800

1000

1200

1400

January March May July September November

Overall Sogd Region Khation PPII Dushanbe

Figure 2-6 Seasonal Consumption by Region

The average power consumption in the Dushanbe region varies widely with the

weather, presumably due to the demand for heating, but is comparable with the

remainder of the nation for the September to November months, for the previous

analysis period. The variation in average consumption between regions, is

consistent with the average incomes in the regions. For the remainder of the nation,

the degree of variation in average consumption between summer and winter would

suggest that it is due to demand of additional lighting and television, and that the

amount of heating load in relatively small. As a result of regular load shedding in

these regions, alternative sources of heat have had to be developed by the majority

of the population.

2.3.10 Price Elasticity of DemandThe historic annual consumption data from 1999 – 2004 in the BT financial model

shows considerable fluctuations, as illustrated in the following figure.



Consumption by Sector

0

1,000

2,000

3,000

4,000

5,000

6,000

1999 2000 2001 2002 2003 2004 2005

GW

h pa

.

TADAZ Industry CommercialAgriculture Residential Utilities

Figure 2-7 Historical Consumption by Sector

The fluctuations in total consumptions have been driven by substantial changes in

the number of consumers in some sectors, as shown the following figure.

# Consumers by Sector

02,0004,0006,0008,000

10,00012,00014,00016,000

1999 2000 2001 2002 2003 2004 20050

200,000

400,000

600,000

800,000

1,000,000

1,200,000

Res

iden

tial

Industry Commercial AgricultureUtilities Residential

Figure 2-8 Historical Consumer Numbers by Sector

The average consumption has therefore varied substantially, particularly for the

residential and agricultural sectors, as shown the following figure.



Average Consumption by Sector

0

10002000

30004000

50006000

7000

1999 2000 2001 2002 2003 2004 2005

MW

h pa

.

0

2

4

6

8

10

MW

h pa

. Res

iden

tial

Industry Commercial Agriculture

Utilities Residential

Figure 2-9 Historical Average Consumption per Consumer

The overall income elasticity of 1.18 was then used to adjust the historic annual

consumption data from 1999 – 2004 in the BT financial model, for increase in income

as measure in GDP per capita. The logarithm of income adjust consumption was

then regressed against the logarithm of average tariff for each year for each market

sector, to calculate the results shown in the following tables.

Table 2-7 Total Consumption versus Average Tariff

Sector Elasticity R^2 t-ratio Scale t-ratioIndustry -0.41 0.63 -2.6 3136 97

Commercial -0.44 0.99 -26.5 3206 711

Agriculture -0.46 0.79 -3.9 2010 71

Residential -0.26 0.92 -7.0 4389 168

Utilities -0.24 0.30 -1.3 78 21

Table 2-8 Average Consumption versus Average Tariff

Sector Elasticity R^2 t-ratio Scale t-ratioIndustry -0.53 0.61 -2.2 3969 59

Commercial -1.00 0.89 -4.9 6625 71

Agriculture -0.92 0.27 -1.2 3982 12

Residential -0.29 0.87 -4.4 5 22

Utilities -0.43 0.32 -1.4 86 13



2.3.11 Number of CustomersIn order to align the “econometric” model with the historic records the number of

customers in each market sector was projected. For instance, the number of

residential consumers was just escalated by the projected increase in population.

The number of industrial customers was escalated by regressing the historic number

against number of residential customers, GDP and the year, in a Log-Log

relationship. The “year” variable captured an underlying progressive decline in the

industrial base, presumably because of cheap imports from China, which is only just

offset by the increasing GDP and local market.

Similarly, the number of commercial consumers was modelled by a Log-Log

relationship with the number of residential consumers and the GDP. Various

functional forms were assessed, giving roughly the same projected values, but the

Log-Log relationship was selected on the basis of its stability over the range of

growth in GDP. A similar relationship was found for the number of utilities in terms

of the number of residential consumers and an annual trend. However, no

significant relationship could be found for the number of agricultural consumers,

presumably due to the restructuring within the agricultural sector, and the seasonal

and periodic nature of weather variations. Therefore there was no reason to depart

from the typically five year moving average approach of the existing forecast model.

The following figure shows graphs of the actual and expected number of consumers

in each sector.

Expected # Consumers by Sector

0

500

1,000

1,500

2,000

2,500

3,000

3,500

1999 2001 2003 2005 2007 2009 2011 2013 20150

200,000

400,000

600,000

800,000

1,000,000

1,200,000

Res

id. &

Com

.

Industry Agriculture Utilities Commercial Residential

Figure 2-10 Forecast Customer Numbers by Sector



2.3.12 Load ForecastThe load forecasts, with expected, high and low GDP growth, were produced by

multiplying the above number of consumers in each sector by the projected average

consumption. For TADAZ the projected consumption was taken from the set values

in BT’s current financial model, which reflected a slow but steady increase in

consumption, consistent with the expected world demand for aluminium. For the

other market sectors, the current levels of consumption where indexed to increases

in GDP using the overall income elasticity of 1.18 and to tariff increases by the

individual price elasticity for each market sector.

Acc. Expected Load Forecast by SectorWith Current Tariffs

0

5000

10000

15000

20000

25000

30000

35000

1999 2001 2003 2005 2007 2009 2011 2013 2015

GW

h pa

.

TADAZ Industry Commercial Agriculture Residential Generated

Acc. High Load Forecast by SectorWith Current Tariffs

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

1999 2001 2003 2005 2007 2009 2011 2013 2015

GW

h pa

.




Acc. Low Load Forecast by SectorWith Current Tariffs

0

5000

10000

15000

20000

25000

30000

1999 2001 2003 2005 2007 2009 2011 2013 2015

GW

h pa

.


Figure 2-11 Load Forecast with Current Tariffs

2.3.13 Southern Grid Load ForecastThe following load forecasts for the southern grid, with expected, high and low GDP

growth, were derived from the overall load forecast above by a proportionally

reducing the forecast based on the 2004 consumption and customer statistics for

each region. The Northern Sugd region has similar average income and distribution

to the RRS and Khatlon regions which have the majority of the southern population,

although it is more industrialized.

Acc. Expected Load Forecast by Sectorfor Southern Grid with BT's proposed Tariffs

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

1999 2001 2003 2005 2007 2009 2011 2013 2015

GW

h pa

.




Acc. High Load Forecast by Sectorfor Southern Grid with BT's proposed Tariffs

0

5000

10000

15000

20000

25000

1999 2001 2003 2005 2007 2009 2011 2013 2015

GW

h pa

.


Acc. Low Load Forecast by Sectorfor Southern Grid with BT's proposed Tariffs

0

2000

4000

6000

8000

10000

12000

14000

16000

1999 2001 2003 2005 2007 2009 2011 2013 2015

GW

h pa

.


Figure 2-12 Load Forecast for Southern Grid with BT’s Proposed Tariffs

The proposed tariff increases in BT’s financial model will significantly suppress the

growth in consumption, as can be seen from a comparison of the above forecast

graphs with the current tariffs and those proposed by BT. In general, the proposed

tariff changes appear to be well planned to maintain consumption at its present level,

at least for the next five years.

2.4 Level of Suppressed Demand The TOR for this study requires the Consultant to recommend measures to reduce

the winter deficit in power generation. So an estimate of the size of the deficit, in



other words the level of demand that is suppressed by load shedding, is of

paramount interest for this study, even though it cannot be precisely established. As

noted above, Barki Tajik has estimated the winter deficit at 3,000GWh per annum5.

2.4.1 Analysis of Daily Load Curves The daily load curves from a sample of substations in the Khatlon Region (48

transformers in all) were analysed for information on the consumption pattern of the

Documents

Technical Assistance Consultant’s Report€¦ · being spent in the Khatlon region, at Nurek HPP and elsewhere in the southern system, to undertake the most urgent rehabilitation