I. BACKGROUND

A. Introduction

1. The Power Sector Development Program (the project) will intensify the implementation of ongoing reforms and restore the financial sustainability of the power subsector in Tajikistan. The Asian Development Bank (ADB) has supported Tajikistan’s power subsector reforms through the ongoing Sector Operation Performance Improvements (SOPI) program since 2012, which has built the basis for the proposed fundamental reform program that includes unbundling the vertically integrated power utility company, restructuring the utility’s excessive liabilities, establishing a regulator, adopting a tariff methodology, and establishing a new centralized cash control system among unbundled entities. As a part of reforms and institutional capacity building, a newly established power distribution company will be operated under a 5-year management contract. Investments in the retail advanced metering system in Dushanbe and six other cities will also fill the key deficiencies in the subsector’s power loss accounting and bill collection systems

2. The government’s efforts to restore the financial sustainability of the power subsector included annual tariff increases, the revival of exports to Uzbekistan in 2018,2 and investments in metering and billing systems in Sugd. While these have had positive impacts, Barqi Tojik’s financial condition continued to deteriorate, calling for more fundamental and comprehensive reforms. The government requested ADB, the EBRD, and the World Bank to support such reform actions, and developed a joint reform program based on the accumulated analyses and policy engagements since 2012, mainly through SOPI. Combined with essential metering investments, the ADB reform program plans to focus on five output areas of which outputs 1 and 2 are the policy component and outputs 3–5 are the project component (from its concept).