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Today, the Ministry of Finance of Kyrgyzstan and the World Bank signed an agreement to provide a grant in the amount of $8 million as a contribution from the Swiss government to finance the project of modernization and sustainable development of the electric power sector.
The grant agreement was signed by the Minister of Finance of the Kyrgyz Republic Almaz Baketaev on behalf of the Cabinet of Ministers of the Kyrgyz Republic and by Navid Hasan Naqvi, Head of the World Bank Representation in the Kyrgyz Republic, in the presence of the Ambassador to the Kyrgyz Republic Olivier Bangerter.
The Kyrgyz Republic’s electric power sector faces problems that have accumulated and worsened over the years. There is a shortage of electricity in the country, caused by its insufficient production, especially in the winter period. Total losses in the sector are around 20%, more than double the commercial and technical losses in high-income and some middle-income countries. Around half of generation capacity and up to 70% of distribution assets have already reached the end of their useful life, leading to partial interruptions in electricity supply due to equipment failures and overloads in all the countries. Moreover, the Kyrgyz Republic has one of the lowest electricity tariffs in the world. The sector is highly indebted, the total debt exceeds 137 billion soms (equivalent to about 1.5 billion dollars) or about 20% of GDP, which constitutes a heavy financial burden for the country, according to the statement from the embassy. from Switzerland.
“With joint efforts, we will be able to implement anti-crisis measures to stabilize the economy and minimize economic risks for Kyrgyzstan,” Finance Minister Almaz Baketaev said.
This project, for a total amount of 58 million dollars, provides for the financing of urgent investments in four main directions: 1) the reconstruction and modernization of distribution networks; 2) digitization of distribution networks; 3) strengthen the social protection system; and 4) institutional development to facilitate the development and implementation of priority reforms in the energy sector.
“This winter, the Kyrgyz Republic reached a historic peak in electricity consumption, forcing the country’s energy companies to make enormous efforts to get through the autumn-winter period. There is an urgent need to modernize the energy sector and its sustainable development, as the true engine of the ‘green’ country”, said Navid Hasan Naqvi. “The World Bank fully supports the position of the Cabinet of Ministers regarding the development of the energy sector and supports the proposed roadmap of reforms for the next decade.”
Swiss Ambassador Olivier Bangerter noted that the new project will contribute to improving financial indicators, providing a reliable supply of electricity to the population and businesses, as well as creating a social protection mechanism for vulnerable groups of the population.
“The aim of the project is to enhance the energy security of the Kyrgyz Republic. The project will also lead to more efficient use of water resources, which is extremely important for the country due to the negative consequences of climate change. We hope that through investment in people, procedures and infrastructure, this project will contribute to the development of a more reliable energy supply in the Kyrgyz Republic.” The implementation of the modernization and sustainable development project of the electric power sector will be done until 2028 in accordance with all international standards, including procurement and financial management rules, as well as anti-corruption principles. -corruption.
