ARMENIA: OBA SCHEME FOR PROVISION OF GAS AND HEATING GPOBA SDN week Washington D.C. February, 2008

GPOBA Armenia: OBA Scheme for Heating and Gas GPOBA Armenia: OBA Scheme for Heating and Gas

GPOBA Sector Background Armenia: OBA Scheme for Heating and Gas  Tangible achievements in the energy sector: power sector reforms, intensive restoration of gas supply  Slower progress in heating sector: use of inefficient, polluting and unsafe heating technologies  Government committed to facilitate access to efficient, clean, safe and affordable heating services: - Urban Heating Strategy adopted in WB Urban Heating Project and various donor initiatives structured around the Strategy  Access to gas and heating picking up

Design of OBA scheme GPOBA Desired outcome  Improved access to gas and heating services for poor households in urban multi-apartment buildings Approach  Demand driven Nature OBA subsidies in form of capital grants to eligible urban poor for:  Connection of their apartments to the gas network and/or installation of a safe gas heater  Connection of their apartments to local heating system Armenia: OBA Scheme for Heating and Gas

Design of OBA scheme GPOBA Armenia: OBA Scheme for Heating and Gas Targeting  The most vulnerable households involved in the National Poverty Family Benefit Program (determined based poverty level score) Eligibility  Building connected to gas network  Mandatory cash contribution of US$30

Accountability of Service Providers GPOBA Payment tied to outputs Individual gas heater solution  20% advance payment upon incumbent gas company’s signing of contract with the service contractors  70% upon independent verification of service delivery  10% upon independent verification of 12 months of satisfactory service delivery Armenia: OBA Scheme for Heating and Gas Local heating solution  90% upon independent verification of service delivery  10% upon independent verification of 12 months of satisfactory service delivery

Financing Leveraged GPOBA Total Project cost- US$ 7 million  US$ 3 million GPOBA grant  US$ 3 million financing IDA  US$ 530,000 government of Armenia co-financing  US$ 470,000 mandatory cash contribution of the eligible poor households Projected number of beneficiaries  Over 10,000 households expected to benefit from OBA subsidy scheme Armenia: OBA Scheme for Heating and Gas

Implementation Progress GPOBA Grant agreement signed: April 28, 2006 Project became effective: July 21, 2006 Results to date:  More than 10,000 applications received from the urban poor residing in 39 cities.  About 6,600 applications approved. Co-financing received for 4,900 applicants.  Gas heater installation works completed for 2,724 households with 1,621 installations verified.  Gas connection works completed for 2,680 households with 1,506 connections verified. Armenia: OBA Scheme for Heating and Gas

Lessons Learned GPOBA 1.Scheme design  Adequate public outreach is critical: a number of tools were employed; direct mailing worked the best  The poor households should have the option of applying directly  Mandatory cash contribution is essential  Need to ensure service delivery soon after the mandatory contribution is made  Independent verification is important Armenia: OBA Scheme for Heating and Gas

Lessons Learned 2. Scheme implementation  Early preparatory works are warranted, especially if the OBA approach is relatively novel in the country  Adequate planning of procurements is key for smooth and timely implementation  Reliance on existing commercial practices is essential GPOBA Armenia: OBA Scheme for Heating and Gas

Lessons Learned 3. Scheme sustainability  Early and active involvement of central and local governments is key for future scale-up  Involve them in scheme implementation starting from raising the awareness of beneficiaries, collection of application  Encourage them to co-finance the scheme and recognize and publicize their contributions  Well designed public outreach activities are important to adequately communicate the benefits of OBA approach GPOBA Armenia: OBA Scheme for Heating and Gas

GPOBA Thank you Armenia: OBA Scheme for Heating and Gas GPOBA

Thank you Armenia: OBA Scheme for Heating and Gas GPOBA Armenia: OBA Scheme for Heating and Gas