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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
ADB TA 4596-TAJ Final Report – Vol.1 Power Rehabilitation Phase II
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
ADB TA 4596-TAJ Final Report – Vol.1 Power Rehabilitation Phase 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
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ADB TA 4596-TAJ Final Report – Vol.1 Power Rehabilitation Phase II
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
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ADB TA 4596-TAJ Final Report – Vol.1 Power Rehabilitation Phase II
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;
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ADB TA 4596-TAJ Final Report – Vol.1 Power Rehabilitation Phase II
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.
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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:
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ADB TA 4596-TAJ Final Report – Vol.1 Power Rehabilitation Phase II
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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ADB TA 4596-TAJ Final Report – Vol.1 Power Rehabilitation Phase II
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.
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ADB TA 4596-TAJ Final Report – Vol.1 Power Rehabilitation Phase II
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.
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ADB TA 4596-TAJ Final Report – Vol.1 Power Rehabilitation Phase II
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.
Hydro Tasmania Consulting, EDF Hydro Engineering Centre and Islohotkonsaltservis xi
ADB TA 4596-TAJ Final Report – Vol.1 Power Rehabilitation Phase II
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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ADB TA 4596-TAJ Final Report – Vol.1 Power Rehabilitation Phase II
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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ADB TA 4596-TAJ Final Report – Vol.1 Power Rehabilitation Phase II
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
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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
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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
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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
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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:
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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).
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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
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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
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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
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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.
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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.
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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.
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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:
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(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.
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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
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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
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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
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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)
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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%
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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
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ADB TA 4596-TAJ Final Report – Vol.1 Power Rehabilitation Phase II
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%
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ADB TA 4596-TAJ Final Report – Vol.1 Power Rehabilitation Phase II
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.
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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,
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ADB TA 4596-TAJ Final Report – Vol.1 Power Rehabilitation Phase II
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.
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ADB TA 4596-TAJ Final Report – Vol.1 Power Rehabilitation Phase II
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.
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ADB TA 4596-TAJ Final Report – Vol.1 Power Rehabilitation Phase II
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.
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ADB TA 4596-TAJ Final Report – Vol.1 Power Rehabilitation Phase II
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
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ADB TA 4596-TAJ Final Report – Vol.1 Power Rehabilitation Phase II
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
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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
.
TADAZ Industry Commercial Agriculture Residential Generated
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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
.
TADAZ Industry Commercial Agriculture Residential Generated
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
.
TADAZ Industry Commercial Agriculture Residential Generated
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ADB TA 4596-TAJ Final Report – Vol.1 Power Rehabilitation Phase II
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
.
TADAZ Industry Commercial Agriculture Residential Generated
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
.
TADAZ Industry Commercial Agriculture Residential Generated
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
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ADB TA 4596-TAJ Final Report – Vol.1 Power Rehabilitation Phase II
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