1. INTERIM CG MEETING Copenhagen April 29, 2002 Strategy of World Bank for Supporting Power Sector Projects in Central Asia Presentation by Raghuveer Sharma Team Leader, Central Asia Energy Programs The World Bank, Washington DC, USA Conference on Sustainable Development and Ecologically Secure Functioning of Uzbekistan’s Energy Sector – Perspectives and Problems September 20 to 22, 2005 Tashkent, Republic of Uzbekistan

2. INTERIM CG MEETING Copenhagen April 29, 2002 Strategic Context Fast growing demand for energy in Asia (China, India, but also Iran and Pakistan) Significant inefficiencies and large investment needs in Central Asia’s energy sectors Integrated power transmission systems, but domestic self-sufficiency strategies World Bank objective: –Unlocking power sector potential through exports –Priority investments to maximize efficiency gains

3. INTERIM CG MEETING Copenhagen April 29, 2002 Central Asia’s Electricity Export Potential

4. INTERIM CG MEETING Copenhagen April 29, 2002 Installed Capacity

5. INTERIM CG MEETING Copenhagen April 29, 2002 Annual Generation still less than in 1990

6. INTERIM CG MEETING Copenhagen April 29, 2002 Annual Load Curves Essentially Winter Peaking System

7. INTERIM CG MEETING Copenhagen April 29, 2002 Central Asia and its Neighboring Electricity Export Markets Rogun HPP Investment US$2,455 mil. Capacity 3,600 MW Annual Generation 13,000 GWh AIC of Generation 2.83 cents/kWh Vaksh Cascade of HPPs Actual Annual Generation 14,000 GWh Additional Generation by the existent Cascade with Rogun HPP 300-1,500 GWh Sangtuda HPP Investment US$370 mil. Capacity 670 MW Annual Generation 2,700 GWh AIC of Generation 1.97 cents/kWh Talimarjan TPP Unit #1 Units #2-4 Investment US$ mil. 100 1,200 Capacity MW 800 2400 Annual Generation 4,538 13,613 AIC of Generation cents/kWh 1.68 2.76 Kambarata 1 HPP Investment US$1,940 mil. Capacity 1,900 MW Annual Generation 5,100 GWh AIC of Generation 7.17 cents/kWh Kambarata 2 HPP Investment US$280 mil. Capacity 240 MW Annual Generation 1,116 GWh AIC of Generation 3.72 cents/kWh

8. INTERIM CG MEETING Copenhagen April 29, 2002 Central Asia - Supply/Demand Forecasts

9. INTERIM CG MEETING Copenhagen April 29, 2002 Central Asia Regional Demand Supply Assessment Summary There is a shortage in the winter months currently –But this shortage is small – 5% of demand in those months Can be made up by loss reduction, efficiency improvement And trading for electricity Even now, there is quite a surplus in summer – 11000 GWh available for export – minimum of 6000 GWh

10. INTERIM CG MEETING Copenhagen April 29, 2002 Possible Transmission Links for Exports

11. INTERIM CG MEETING Copenhagen April 29, 2002 Estimates of Transmission Costs Almaty-Urumqui 500 kV DC Line Length 1050 kilometers Annual Power Transmission 10000 GWh Investment US$ Mn.210 Cost of Transmission 0.83 USc/kWh SS Surhan-Mashad 500 kV AC Line Length 1150 kilometers Annual Power Transmission 10000 GWh Investment US$ Mn.320 Cost of Transmission 0.53 USc/kWh Kabul-Tarbela 500 kV AC Line Length 360 kilometers Annual Power Transmission 2000 GWh Investment US$ Mn.90 Cost of Transmission 0.66 USc/kWh Kandahar-Karachi 500 kV AC Line Length 900 kilometers Annual Power Transmission 3500 GWh Investment US$ Mn.227 Cost of Transmission 0.97 USc/kWh Kabul-Kandahar 500 kV AC Line Length 490 kilometers Annual Power Transmission 5000 GWh Investment US$ Mn.118 Cost of Transmission 0.35 USc/kWh SS Surhan-Kabul 500 kV AC Line Length 515 kilometers Annual Power Transmission 10000 GWh Investment US$ Mn.153 Cost of Transmission 0.22 USc/kWh

12. INTERIM CG MEETING Copenhagen April 29, 2002 Competitiveness of Central Asian Electricity in Neighboring Markets Based on Crude Oil prices at US$30/barrel

13. INTERIM CG MEETING Copenhagen April 29, 2002 Afghanistan –very keen but needs are small –Will have payment problem, although under World Bank encouragement willing to use Donors Trust Funds –Best approach is to supply electricity in exchange for right-of-way to reach Iran and Pakistan Pakistan and Iran are real markets –Both have asked World Bank to help create electricity trade with Central Asia –Both keen to trade with Central Asia Electricity Exports- Strategic Considerations

14. INTERIM CG MEETING Copenhagen April 29, 2002 Market Risks are real –Electricity is often equated with national security –Dependence on imports for large part of need is not politically viable Need to invite importers to have shareholding in the projects –This is one way of getting them to commit to import Russian Strategic Interests and Actions Other Strategic Considerations

15. INTERIM CG MEETING Copenhagen April 29, 2002 Russia and CIS Current Energy Interests Source: The Economist

16. INTERIM CG MEETING Copenhagen April 29, 2002 A Strategy for Energy Sector Development

17. INTERIM CG MEETING Copenhagen April 29, 2002 Central Asian Republics Power Development and Trade Strategy Loss Reduction & Rehab. Programs Transmission Links: North-South Project Power Trading Capacity: Sangtuda Level of Risk Low High Time Frame Near-Term 1- 5 yrs Medium -Term 3 - 10 yrs Long -Term 8 - 15 yrs Domestic & Regional Capacity Balance: Bishkek II & Talimardjan I Export Market Negotiation South Transmission Links Development Export Capacity PPP: Rogun & Talimardjan II Russia Afghanistan Pakistan Iran China?

18. INTERIM CG MEETING Copenhagen April 29, 2002 World Bank’s Central Asia Energy Program KazakhstanKyrgyz Republic TajikistanUzbekistanRegional Loss Reduction and Rehabilitation Public Private Partnership (PPP) for generation and distribution rehabilitation Power Plant Rehab Policy Loans TA Credit Distribution PPP Pamir Private Power Energy Loss Reduction Project Strategy advice Policy and Strategy advise New project for efficiency improvement Build Winter Capacity Develop Electricity Trade Infrastructure North South Transmission Line Project Water Energy Nexus Develop Electricity Trade Capacity New capacity under PPP Sangtuda I project as IBRD enclave Regional Export Potential