World Bank’s Energy Program in Asia

Dr. Dejan R. OstojicLead Specialist

Energy & Extractives Global PracticeMarch 25, 2016

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Mission statement Strategy, structure and services Investment profile Examples of country programs Key contacts

AGENDA

The World Bank Group aims to end extreme poverty & promote shared prosperity in a sustainable manner...

…including by supporting client countries to secure affordable, reliable, and sustainable energy supply

By 2030: Ensure universal access to affordable, reliable and modern energy services Increase substantially the share of renewable energy in the global energy

mix (18% to 36%) Double the global rate of improvement in energy efficiency (1.3% to 2.6%)

The 2013 Energy Sector Directions Paper guides WBG finance

From projects to sector policy and planning: large-scale investments and cross-border collaboration Priority to increase access where applicable

(e.g. Myanmar) Commitment to reduce pollution through

efficiency, renewables and hydropower Engage more in natural gas: bridging fuel and

enabler for variable renewables No coal except in rare circumstances

The framework also guides projects with greenhouse gas impacts

World Bank (2013) Toward a sustainable energy future for all: directions for the World Bank Group's energy sector.

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ex) Indonesia Energy Sector Development Policy Loan

ex) Myanmar Economic Value of Natural Gas

ex) Myanmar National Electrification Project

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EEX Global Practice: Current Portfolio (FY10-15)

10.08

5.855.34

3.35

6.83

4.43

0

2

4

6

8

10

12

FY10 FY11 FY12 FY13 FY14 FY15

FY10-FY15 Commitment (USD Billion) in Energy Sector

General Energy Policy, InstitutionalDevelopment & Capacity Building

Upstream Extractives

Thermal Power Generation

Transmission and Distribution

Energy Efficiency

Renewable Energy (Non-Hydro) generation

Renewable Energy (Hydro) generation

World Bank finance to energy & extractives in South & East Asia($11.9 billion active, $2.4 billion to be approved by June 2016)

Includes IBRD and IDA only. Excludes Global Environment Facility, Trust Funds and Analytic & Advisory Services.

Active: $4,886m

Pipeline $1,225m

East Asia & Pacfic

Active: $7,024m

Pipeline: $1,221m

South Asia

n=16 n=7

n=2 n=3

n=3

n=13 n=2

n=6

$m

$500m

$1,000m

$1,500m

$2,000m

China Indonesia Lao PDR Mongolia Myanmar PacificIslands

Philippines Vietnam

Other Sectors (Non-Energy)Policy & Institutional DevelopmentExtractivesThermal PowerRenewable Energy (Non-Hydro)HydropowerEnergy EfficiencyTransmission & Distribution

World Bank finance to energy & extractives in East Asia & Pacific(43 active projects plus 9 projects to be approved by June 2016)

Lending Projects Only, Excludes Analytical & Advisory Services.

n = number of projects

World Bank finance to energy & extractives in South Asia(26 active project plus 4 projects to be approved by June 2016)

Lending Projects Only, Excludes Analytical & Advisory Services.

n=5

n=4

n=8

n=6n=1

n=4

n=2

$m

$1,000m

$2,000m

$3,000m

$4,000m

Afghanistan Bangladesh India Nepal Maldives Pakistan Regional

Other Sectors (Non-Energy)Policy & Institutional DevelopmentExtractivesThermal PowerRenewable Energy (Non-Hydro)HydropowerEnergy EfficiencyTransmission & Distribution

n = number of projects

Challenges Solutions

• 35,000 new generation capacity in 5 years to catch up with rising supply

• 2 million new connections a year to achieve 100% access by 2020

• 23% of renewable energy in fuel mix

• Reduction of PSO as subsidies target the poor only

Need to mobilize $12.5 billion of investment a year

to address the above challenges

Financing • Support PLN to mobilize massive soft and long-term

financing through direct lending to SOEs; • Automatic and gradual tariff adjustment for cost

recovery • JV with foreign partnersDelivery• Simplifying IPP/PPP procedures and incentive packages• Strengthen Central Integrated Planning & Tendering for

new capacity (geothermal, hydro, IPP)• Clarify responsibility/accountability between central

gov., local gov. and PLNRegulations• Issue implementing regulations for geothermal• Issue new domestic gas pricing • Performance-based regulation for PLN• Move licensing issuance responsibility for hydro from

local to central government • Improving gas sector governance an regulation

World Bank Energy support in Indonesia

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Financing Energy Infrastructure

Renewable Energy & Low Carbon Development Access to Modern Energy

Investment lending• Indonesia Power Transmission

Development ProjectIBRD: US$ 225 million

• Second Power Transmission Development Project IBRD: US$ 325 million.

• Upper Cisokan Pumped Storage Hydro Electricity Project IBRD: US$ 640 million

AAA & Non lending• TF Smart Grid• Direct Lending to SOEs

Investment lending•Geothermal Power DevelopmentIBRD+ CTF

AAA & Non lending•Benefit Sharing for Hydropower Investments Financing Options for PPP hydro generation (ESMAP)•Biodiversity Management for Hydro (DFAT)•Geothermal Investment (ASTAE)•NZ Grant Geothermal Capacity Building to PGE•Carbon Capture & Storage•Financing Options with PPP for Hydro Power Project (ESMAP)

AAA & Non lending• Renewable Energy Resource

Mapping & Geospatial Planning (ESMAP)

• Indonesia Least Cost Electrification Planning & Access Improvement (DFAT, ASTAE, ESMAP)

• Support to RBF for Clean Stove Initiative

• Clean Stove Phase II

Governance & Sustainability Energy Subsidy Reform; Performance Based Regulation TA; Direct Lending to SOEs

- 14 -Total ongoing Investment: $1.52 billion and TA $12 million

World Bank Energy Portfolio in Indonesia

FY16 FY17 FY18

Investment lending • Geothermal Energy

UpstreamCTF : $ 50million; GEF $10

million• Result- based Sector Loan

for Distribution: $500 million

DPL• Energy DPL $500 million

Investment lending• Poko Hydro Power

Project; $ 360 million• Second Geothermal Clean

Energy Investment Project; $300 million

• Additional Financing for UCPS; $100 million

DPL• Energy DPL $500 million

Investment lending• Matenggeng Pumped

Storage Hydro Electricity ProjectIBRD: $ 500 million.

• Result- based Sector Loan for Distribution: $500 million

- 15 -Total Pipeline Investment FY16-18: $3.82 billion

World Bank Energy Pipeline in Indonesia

World Bank Energy Investment Projects in Vietnam: Ongoing and Planned

5 Ongoing Investment Projects Closing $mln Client

Renewable Energy Development Project (REDP) 06/30/2016 202 MOIT

Clean Production & EE GEF (CPEE) 06/30/2016 2.4 MOIT

Trung Son Hydropower (TS) 12/31/2017 330 EVN

Distribution Efficiency Project (DEP) 12/31/2018 450 5 PCs

Transmission Efficiency Project (TEP) 12/31/2019 500 NPT

6 Planned Investment Projects FY16-19 $mln Delivery Client

Energy Efficiency for Industrial Enterprises (VEEIEs) Project 200 FY16 MOIT

Renewable Energy Development Project (REDP) AF 100 FY16 MOIT

Power Sector Reform Development Policy Operations (PSRDPO 4, 5, 6) 200 FY17 MOIT

Distribution Efficiency Project (DEP) AF 500 FY17 5 PCs

Genco Divestiture (WBG) 400 FY18 EVN

Generation Efficiency Project – Don Duong Pumped Storage 800 FY19 EVN

World Bank energy focus in mainland south-east Asia

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Lao PDR (IDA)• Hydropower: HMTA and NT2• Access: REP2 and PGP• Regional integration

Myanmar (IDA)• Shortages of gas and electricity: MEPP• Access: National Electrification• Hydropower

Cambodia, Thailand and Malaysia:• Regional integration

On-Going Medium Term (2016-2017) Longer Term (3-5 years)

• Increase capacity and efficiency of Thaton gas-fired power station (Electric Power Project, $140M IDA Credit, including a $10M TA component)

• TA for financial viability and institutional development of power and gas sectors, including tariff and subsidy review, E&S capacity building, etc.

• National Electrification Project – NEP1 ($400M IDA Credit, including a $20M TA component) cover the first 6 years of electrification program, jointly with Lighting Myanmar (IFC) initiative.

• Hydropower Generation Project (e.g. 1050 MW Shweli-3 and 670 MW Middle Yeywa) jointly with IFC and MIGA

• Policy dialog, ASA and technical assistance on power market reform and sector development to Ministry of Electric Power and Ministry of Energy

• LNG Business Plan TA to Ministry of Energy and valuation of natural gas in domestic market

• TA on power system development and integration of grid-connected solar PV

• The second gas-fired power generation project (e.g. the 500 MW Ayeyarwady CCGT)

• Renewable Generation Project (e.g. grid-connected solar PV)

• Transmission System improvement and new Power Dispatch System (SCADA/EMS)

• NEP 2 (additional financing)

• Myingyan 250 MW IPP Transaction Advisory Services;

• Financial support for the Myingyan IPP, including MIGA guarantee

• Support MOEP to improve efficiency in power distribution and corporatize YESB(C) and MESC

• Support sustainable development of renewable / hydropower (e.g. Shweli-3 and Middle Yeywahydropower)

• Introduce private sector capital and operational capability to power distribution (YESC and Mandalay).

• Financing support for Ayeyarwady and ThaketaPPP/IPP.

• Policy Dialog on Sector Reform and Development.

• Construction of privately invested hydropower.

• Development of grid-connectedsolar PV

• Full corporatization of urban distribution sector.

• Construction and commissioning of privately invested energy projects (e.g. LNG terminal)

• Support MOEP to improve efficiency

• Develop action plan for scaling up private sector participation

• Expand reach of distribution network

• Political Risk Guarantee(s).

• Improve Distribution and Expand PowerGeneration System

• Improve Distribution and Expand Power Generation System

IDA

IFC

MIGA

KEY OUTCOME: raise access to electricity from 30% to 50% by 2020; connecting 6.2 mil people

MYANMAR ENERGY: WBG Joint Implementation Plan

WBG in Myanmar is working jointly with development partners

Sector Planning Legal and Regulatory

Financial Sustainability

Transmission & Distribution Generation Rural Energy

Analytical Basis for Strategic

Decisions

EITI ApplicationSupport

Financial Viability Action Plan

Dist Improve’t in Yangon and other

cities

New CCGT for MEPE & IPPs;

PPP Transactions

Off-grid power program

Energy Master Plan for NEMC

(ADB/Japan (JFPR))

Electricity Law & Electricity Regulation

(ADB/Norway)

StrengtheningFinancial

Management (Multi-donor)

4-regiondistribution

system improvement

Donated GT and generators (GOT,

Japan/JICA)

National Electrification

Project

National Electricity Master Plan(Power Sector Master Plan)

National Power Transmission

Network (ADB-JICA-Korea)

Urgent Rehab and Upgrade

(Yangon, Thilawa, Baluchaung)

Rural Power Infrastructure

(electrification in 14 regions/states)

National Electrification

Plan

RuralElectrification

Law

Economic Valuation of

Natural Gas in domestic mkt.

Advisor for YESB and Capacity Dev of T&D Engineers

PPP bidding and contracting

support

Studies on Off-grid Small Scale Hydro

Energy EfficiencyPolicy and Renewable

Energy Devel. Plan

Environmentaland Social

Safeguard and Conservation

YESB Corporatization Support through Investment and

Advisory Support

Institutionaldevelopment for

sector management of

PPPs

= ADB = Japan/JICA = World Bank Group = Others/Multiple 19

World Bank energy support in the Pacific• Planning, enabling policy, institutional and

regulatory frameworks, and capacity building: – Tonga and Vanuatu National Energy Roadmaps– Vanuatu establishment of Utilities Regulator and

capacity building and support to Department of Energy

– FSM States Energy Master Plans– Development of National Electrification Rollout Plan

in PNG, TPAC/GC, Renewable Energy resource mapping

• Utility reform: – Solomon Islands – Solomon

Islands Electricity Authority – Kiribati Reform – Public Utilities

Board – FSM Utilities Reform

Access to affordable, reliable and sustainable electricity services: Vanuatu Increase Electricity Access Project Vanuatu Rural Electrification Project Fiji Sustainable Energy Financing Project

Facilitating least cost power infrastructure,including through smart PPPs Tina River hydro and loss reduction in Solomon

Islands Naoro Brown hydro in PNG Kiribati grid connected solar PV Tuvalu Renewable Energy/Energy Efficiency Gensets in FSM

For South Asia, transformative action on low-carbon energy could require $8-13 billion additional finance by 2020

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This would require IDA/ IBRD capital increase and/or additional capital resources in the form of international climate finance.

• $1 billion of World Bank financing has helped India expand five regional transmission systems to enable transfer of power from energy-surplus regions to towns and villages in under-served regions, improve reliability and reduce losses.

• $155m World Bank financing, and $7.6m from USAID, to a public-private partnership in Bangladesh has benefited over 2 million people through installation of solar home systems in remote villages (over 70,000 solar home systems added each month: fastest rate in the world), as well as over 1,450 biogas plants and 40 solar irrigation pumps

Select highlights of World Bank energy support in South Asia

Illustration of WBG synergies for leveraging: Working with Nepal to transform the energy system

WB Policy Investment

Energy/Water DPC to facilitate sustainable public and private investments

WB Public Investments

• Hydro: Kali Gandaki Rehab• Solar: Grid Connected

Solar• Transmission: East-west

backbone line and Nepal-India cross-border line

IFC Support to Private Investments

Hydro:• Kabeli A (37MW)• Upper Trishuli (216 MW)• Upper Marshyandi (600 MW)• Upper Karnali (900 MW)• Andhi Khola• Small hydro credit lineTransmission:• Private Nepal-India Intercon• PPPs • ESG and Project Advisory

IFC local currency bond

MIGAGuarantees

Hydro:Upper Trishuli

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East Asia & Pacific China, Mongolia: Todd Johnson tjohnson@worldbank.org Indonesia: Gailius Draugelis gdraugelis@worldbank.org Philippines: Alan Townsend atownsend1@worldbank.org Vietnam: Franz Gerner fgerner@worldbank.org Myanmar, Laos, Thailand, Cambodia: Dejan Ostojic dostojic@worldbank.org Papua New Guiea & Pacific Islands: Gerard Fae gfae@worldbank.orgSouth Asia India: Simon Stolp sstolp@worldbank.org Pakistan, Afghanistan: Richard Spencer rspencer@worldbank.org Nepal, Bangladesh, Bhutan: Jie Tang jtang@worldbank.org Sri Lanka, Maldives: Sandeep Kohli skohli@worldbank.org

World Bank energy focal points for key countries in Asia