ECSEE APL – World Bank Investment Lending to the by asb28647


									ECSEE APL – World Bank Investment
Lending to the Energy Community of
        South East Europe

     Henk Busz
     Energy Sector Manager
     Europe and Central Asia Region
     World Bank
                    Bucharest, October 12, 2004
 Energy Community of South East Europe

• Regional Members: Albania, Bosnia &
  Herzegovina, Bulgaria, Croatia, FYR of Macedonia,
  Romania, Serbia & Montenegro, Turkey, Kosovo
• Political Participants: Austria, Greece, Hungary,
  Italy, and Slovenia (EU Member States)
• Observers: Moldova, possibly Germany in the
            ECSEE’s Main Objectives

Regional members to establish EU-compatible
  energy policies, laws & regulations, and
  institutions (regulators and unbundled utilities):
• Establish a regionally integrated energy market for
  electricity and gas
• Progressively integrate with the wider EU Internal
  Energy Market
• Market opening/liberalization in line with EU
  commitments but with a suitable transition period
  Benefits of ECSEE’s Regional Approach

• Economies of scale in energy investment and
  operations, including security of supply and
• More attractive market for investors and energy
  suppliers (bigger size and EU-compatible rules)
• Integrate into the EU’s internal energy market and
  more broadly, facilitate Accession
• Promote stability and prosperity in the region
               Ingredients for Success

• Cost recovery & payment discipline
• Policy and regulatory consistency/clarity
• Structural clarity: create independent TSOs that
  coordinate with each other across borders, without
  (real or perceived) conflicts of interest
• Good governance, including anti-corruption
  measures – corporate, sector, country and regional
         Role of the World Bank in Energy

• The World Bank, at the request of its Member
  Countries, is increasing its support to
  infrastructure, including energy
• A global Infrastructure Action Plan has been
  adopted and is being implemented
• New approaches to encourage regional
  cooperation are used to provide more flexible
• More extensive use of existing instruments, such
  as partial risk guarantees, to help attract private
           WB’s Framework for ECSEE

• Phased market opening (details on next slide)
• Regional benchmarking – also to fine-tune Bank
  assistance to individual countries
• Special regional instrument - ECSEE APL – to
  support priority investments (along with
  “conventional” country-specific projects)
• Ongoing generation investment study - with EC
• Future work to assess (a) economics of
  gasification and (b) costs of compliance with EU
  environmental standards
           Phased approach to Markets

• Trade between national utilities
• Gradual opening of non-household market
• Day-ahead spot market & balancing mechanisms –
  buyer credibility essential
• Full opening including household market and
  financial/futures instruments – later/when ready
• Gradualism: each step in parallel with required
  tariff reforms and institutional development –
  restructuring/unbundling and regulation
     Adaptable Program Lending (APL)

More flexible and cost-effective way to support
  regional program:
• countries are eligible when they meet
  ECSEE requirements (specified in the Athens
  Memorandum/future Treaty ) - consistent and
  only conditionality
• countries can access funds at their own
  pace as their projects are ready for financing
                       APL Flexibility

   Countries can borrow more than once, under
  several APL phases. Examples:

- 1/load dispatch; 2/generation; and 3/ interconnectors; or
- 1/first part of a large transmission project; and 2/second part

   –   More flexible support to our clients, and
   –   More programming flexibility for WB
   –   First APL: Dec 2004 (Romania & Turkey)
   –   Seek US$ 1 billion authorization over 5 years

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