An ADB Loan to the Republic of Georgia will Strengthen the Nation’s Electricity Transmission Sector12/2/2021 On September 21, 2021, the Asian Development Bank (ADB) approved a USD 100 million Policy Based Loan (PBL) to the Republic of Georgia. The PBL can be used for general government budget support, but the loan is based on key policy updates that target the electricity transmission network in the country. I was honored to provide support to the program by conducting the economic and financial analyses for the loan and policy reforms.
The loan is intended to improve the operational structure, corporate governance, and financial management of the country’s electricity transmission company Georgia State Electrosystem (GSE), and its subsidiary, EnergoTrans. According to ADB Director General for Central and West Asia Yevgeniy Zhukov, "This is a flagship program for Georgia, focusing on improving the financial and corporate governance of two major energy sector state-owned enterprises (SOEs). We expect this to set the path for other Georgian SOEs to follow and ADB stands ready to support the government’s broader SOE reform agenda and economic growth." Georgia has made significant progress in reforming the electricity sector from state monopoly to liberalized market structure. However key structural, financial and governance barriers remain, especially as they relate to GSE and Energotrans. The program addresses these barriers through three primary objectives: (i) it creates structural changes that will improve operational and network efficiency, (ii) it corporatizes GSE using a modern governance model, and (iii) it brings financial sustainability for GSE. These reforms will be vital to a healthy energy sector, which will play a key role in Georgia’s COVID-19 economic recovery.
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On November 10, 2020 the Asian Development Bank (ADB) approved a USD 200 million Policy Based Loan (PBL) to the country of Uzbekistan. The PBL can be used for general government budget support, but the loan is based on key policy updates that target the electricity sector, especially the distribution networks in the country. I was honored to provide support to the program by conducting the economic and financial analyses for the loan and policy reforms.
Policy-based lending has been a practice of the ADB since 1978 but has seen most of its growth since the Global Financial Crisis of 2009. A country’s primary motivations for seeking PBL are to achieve a quick response to immediate financing needs and for valuable policy advice / technical assistance for a particular sector’s growth. In Uzbekistan, the program provided critical budget support and targeted policy actions aimed at restructuring the power sector to enable competition and create a conducive environment for private investment. Specifically, the reforms target the following areas: 1) power sector restructuring and strengthened regulation; 2) financial sustainability for sector entities; 3) decarbonizing the sector; and 4) improving demand side energy efficiency. Economic benefits include: 1) loss savings, 2) carbon savings, and 3) demand side efficiencies. The following summarizes the analysis [1]... |
Richard Swanson, Ph.D.Asset valuation and project finance expert, specializing in financial and economic analysis of civil infrastructure assets. Archives
June 2022
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