ATTACHMENT_J.6_Energy_Links_Annual_Report_Y2.pdf

CAR Energy Links – Contract AID-176-C-14-00004 – Quarterly Performance Report i

CENTRAL ASIAN REPUBLICS

CENTRAL ASIAN REPUBLICS

ENERGY LINKS PROJECT

CONTRACT NO. AID-176-C-14-00004

ANNUAL REPORT

FOR THE PERIOD 1 OCTOBER 2015 – 30 SEPTEMBER 2016

OCTOBER 31, 2016

This document is made possible by the support of the American People through the United States Agency for International Development (USAID.) The contents of this document are the sole responsibility of ECODIT, LLC and do not necessarily reflect the views of USAID or the United States Government.

ii CAR Energy Links – Contract AID-176-C-14-00004 – Annual Report

October 1, 2015 – September 31, 2016

CENTRAL ASIAN REPUBLICS ENERGY

LINKS PROJECT

CONTRACT NO. AID-176-C-14-00004

ANNUAL REPORT

For the Period October 1, 2015 – September 30, 2016

October 31, 2016

This document is made possible by the support of the American People through the United States Agency for International Development (USAID.) The contents of this document are the sole responsibility of ECODIT, LLC and do not necessarily reflect the views of USAID or the United States Government.

iii

October 1, 2015 – September 31, 2016

Acronyms and Abbreviations

Although an effort was made to reduce the number of acronyms used in this document, many are commonly used and are included here – specifically donors, government institutions and commonly used technical terms.

Whenever the acronym or abbreviation appears for the first time, it is defined in the text.

ADB Asian Development Bank AMEP Activity Monitoring and Evaluation Plan BT Barki Tojik CAPS Central Asia United Power System CAR Central Asian Republics CASA-1000 Central Asia-South Asia 1000 CCN Cooperating country national CO Contracting Officer COP Chief of Party COR Contracting Officer Representative DCOP Deputy Chief of Party DSM Demand Side Management ED Executive Director of the CASA-1000 Secretariat EE Energy efficiency EPC Engineering, procurement and construction FGD Focus Group Discussion GGPAS USAID Good Governance and Public Administration Strengthening Project GOKR Government of the Kyrgyz Republic GOTJ Government of Tajikistan HICD Human and institutional capacity development HVAC High-voltage alternating current HVDC High-voltage direct current IEC International Electrotechnical Commission IGC Inter-Governmental Council of CASA-1000 ISC Independent Settlement Center JWG JWG of CASA-1000 JSC Joint Stock Company KESC Kyrgyz Electricity Settlement Center KR Kyrgyz Republic KZ Republic of Kazakhstan LSC Legal subcommittee of CASA-1000 LTTA Long-term technical assistance MDM Meter data management MEI Kyrgyz Ministry of Energy and Industry MEWR Ministry of Energy and Water Resources of Tajikistan MOE Ministry of Economy of Kyrgyzstan MOU Memorandum of Understanding PPA Power purchase agreement RESET USAID Regional Energy Security, Efficiency, and Trade Project SOW Statement of work SPMF State Property Management Fund STTA Short-term technical assistance TA Technical assistance TJ Tajikistan TM Turkmenistan TUTAP Turkmenistan-Uzbekistan-Tajikistan-Afghanistan-Pakistan TCN Third-country national UCA University of Central Asia UZ Uzbekistan WB World Bank iv

I. INTRODUCTION

II. BACKGROUND AND PROJECT OBJECTIVES

III. YEAR 2 AT A GLANCE

IV. YEAR 2 SUCCESS STORIES

V. MAJOR ACTIVITIES, ACHIEVEMENTS, AND PROGRESS TOWARD ACHIEVEMENT

OF MILESTONES AND TARGETS – Technical A. Progress on Regional Tasks B. Progress on Kyrgyz Republic Tasks C. Progress on Tajikistan Tasks D. Progress on Turkmenistan Tasks

1. List of CASA-1000 Meetings Conducted in Year 2

2. List of STTA Trips Conducted in Year 2

3. List of Reports and Presentations Made in Year 2

VI. CHALLENGES DURING IMPLEMENTATION IN YEAR 2

VII. SUMMARY OF ADMINISTRATIVE AND STAFFING ISSUES

VIII. FINANCIAL INFORMATION

IX. MONITORING AND EVALUATION SURVEY

X. ENVIRONMENTAL CONSIDERATIONS

XI. ACTIVITIES PLANNED FOR THE NEXT YEAR

1. Annex 13 – Activity Monitoring & Evaluation Report

2. Annex 14. Performance Indicator Tracking Table

3. Annex 15. Current State of the Central Asia Regional Connectivity and Cross-Border

Electricity Trade

October 1, 2015 – September 31, 2016

I. INTRODUCTION

This is the second Annual Report for the Energy Links Project of USAID/Central Asian Republics (CAR), and covers the period from October 1, 2015 to September 30, 2016. Per Contract Number AID-176-C-14-00004, the Annual Report presents details on major activities and achievements, progress toward achievement of milestones, the Annual Work Plan, success stories, and progress toward standard indicators for Activity Monitoring and Evaluation Plan (AMEP). The report includes the following key components:

• An overall summary of Year 2 accomplishments

• Success stories for Year 2

• A summary, by task, of all activities and accomplishments against planned targets and deliverables in the Year 2 Work Plan (progress against the AMEP will be detailed in a separate attachment)

• Challenges encountered during the project implementation and remedial measures taken

• A summary of administrative and staffing issues

• The anticipated activities for the next year

II. BACKGROUND AND PROJECT OBJECTIVES

Through Energy Links, USAID/CA is uniquely positioned to address challenges and seize timely opportunities to achieve increased energy security for countries in Central Asia. On September 30, 2014, USAID signed a contract with ECODIT for the Central Asian Republics Energy Links Project (AID-176-C-14-00004). Certain countries in Central Asia – including Kyrgyz Republic (KR), Tajikistan (TJ), and Afghanistan (AF) and Pakistan (PK) in South Asia - experience severe electricity shortages and poor and intermittent electricity supply.

Inadequate generation supply, combined with poor transmission and distribution infrastructure and a regionally fragmented grid, represent the most critical cause for the gap between the growing demand and the existing supply. Key drivers of electricity market fragmentation are conflicts and tensions within and among the countries, including over how to manage water resources in a more equitable manner. Both KR and TJ heavily rely on hydropower to satisfy local demand in the winter, which reduces the volume of water available for irrigation in the downstream countries of Kazakhstan (KZ), Turkmenistan (TM), and Uzbekistan (UZ).

Nationalism and the quest for energy independence exacerbate conflicts and generate distrust.

The currently fragmented regional grid and infrastructure gaps exacerbate electricity shortages in parts of the region and squander millions of dollars of potential export revenues that could improve the financial bottom line of the electric companies and contribute to power sector investment and maintenance, if secured. Weak regulatory environments augment revenue and infrastructure deficits. As a result of low electric tariffs, large losses, and poor bill collection, electricity companies fail to generate the needed revenue for upgrading or replacing crumbling generation and transmission infrastructure. A massive institutional capacity and skills deficit within public and private institutions, along with widespread corruption and theft, prevent government regulators from effectively monitoring electricity flows and enforcing rules, and electricity companies from effectively managing and disclosing finances and operations. Partly as a result of these challenges, inefficient energy use, especially by large industrial facilities, is also rampant.

The objective of Energy Links is to increase national energy security for countries in Central Asia via four supporting goals:

• Outcome 1: Increased transparent intra- and inter-regional energy trade

• Outcome 2: Improved legal and regulatory framework and investment climate for the countries’ energy sectors

• Outcome 3: Improved corporate governance, operations, and commercialization of the energy companies

• Outcome 4: Improved energy efficiency (EE) and demand-side management (DSM)

October 1, 2015 – September 31, 2016

For the purposes of conducting regional activities under the project, the region is defined as Kazakhstan (KZ), Kyrgyzstan (KR), Tajikistan (TJ), Turkmenistan (TM), Uzbekistan (UZ), and Afghanistan (AF) and Pakistan (PK). The bilateral aspects of this project focus mainly on TJ and the KR, but also target TM.

III. YEAR 2 AT A GLANCE

Our major project accomplishments and developments in Year 2 are summarized below.

Regional Accomplishments:

• CASA-1000 Master Agreement (MA) Amended. Energy Links successfully facilitated introduction of the

Amendment to the CASA-1000 MA that extended the deadline for satisfying conditions precedent until December 7, 2015. Without this action, the MA would have been rendered void and ineffective on October 24, 2015. On October 23, 2015, all four countries signed the Amendment.

• Core Project Agreements Signed. During Intergovernmental Council (IGC) and Joint Working Group (JWG) meetings on November 23-24, 2015, in Istanbul, Turkey, Kyrgyzstan (KR) and Tajikistan (TJ) signed their respective Coordination Agreements (CA) and all four countries signed the Resolutions on approving the assignment of CASA-1000 Acting Executive Director (ED). On December 6, 2015, PK and AF signed their respective PPAs. This finalized the process of signing of all the main core project commercial agreements.

• CASA-1000 Project Reconfiguration Approved. The price for Convertor Stations offered by JV TBEA/CSGI with the initial three HVDC terminal configuration turned out to be several times higher than the originally estimated price for HVDC converters and ground electrode stations per a market feasibility study. The IGC approved the restructuring of the project by reconfiguring the three-terminal design to a two-terminal design due to the difficulties in obtaining acceptable proposals for the three terminals configuration. The new concept also envisions that the 300 MW Afghanistan’s CASA-1000 energy entitlement will be supplied through the existing Sangtuda (Tajikistan) – Pul-e-Khumri (Afghanistan) HVAC line and that a new HVDC back-to-back (B2B) substation would be built at Pul-e- Khumri. The proposed new concept merges elements of CASA and TUTAP (Turkmenistan-Uzbekistan- Tajikistan-Afghanistan-Pakistan) projects. On April 21, 2016, IGC Resolution approved the project reconfiguration.

• CASA-1000 Secretariat ED mobilized. In June of 2016 Robert Schenck was unanimously recommended by the CASA-1000 ED Technical and Evaluation Committee (TEC) for approval to the CASA-1000 IGC.

On July 25, 2016, Mr. Schenck became a full-time ECODIT staff member. As of this report submission date, he is still awaiting his official appointment to ED position by the IGC.

• HVAC Owners’ Engineer Contracts Signed. The signing by the Kyrgyz and Tajik Governments on August 11 and 19, respectively, of the contract with HVAC Owner’s Engineer (OE) Monenco signifies the completion of the contract and its ratification by all four governments.

• Reconfigured CASA-1000 Project Successfully Promoted by Project Countries to the Potential HVDC Manufacturers and Operators. The CASA Secretariat successfully marketed the reconfigured project to prospective HVDC manufacturers and operators during the International Council on Large Electric Systems (CIGRE) on August 21-26, in Paris. Concurrently, the Secretariat coordinated meetings between the HVDC manufacturers and the high-level government representatives who attended CIGRE and held a CASA-1000 Procurement Committee (PC) meeting on August 23-25, 2016. All major project issues were discussed and the potential bidders received detailed responses to their initial inquiries.

Kyrgyz Republic Accomplishments:

• The Kyrgyz Energy Settlement Center (KESC) Established. On November 17, 2015, KESC was registered by the Ministry of Justice as an independent legal entity. This development was a direct result of continued advisory assistance by Energy Links, which included but was not limited by recommendations and

October 1, 2015 – September 31, 2016 presentations on KESC structure, staffing plan, analysis of regulatory impact and other various issues related to its establishment and startup activities.

• Structure of the National Energy Holding Company (NEHC) Strengthened. As a result of continued assistance by Energy Links to the NEHC, the KR Parliament granted its approval on May 18, 2016, for the transfer of shares of nine energy companies to NEHC. At the request of USAID/Kyrgyz Republic Energy Links undertook an assessment of the NEHC establishment, developed discussion note that covered international experience and suggested for consideration of the NEHC. Energy Links provided ad hoc assistance and advice in developing their own presentation and points to make in Government / Parliamentary discussions.

• International Data Exchange Standards (DES) Adopted. On June 16, 2016, Kyrgyzstandard adopted 25 voluntary data exchange standards from the International Electrotechnical Commission (IEC) framework.

This package of IEC standards had been purchased under another USAID project, marking the continued efforts toward organized implementation of standardized data collection approaches and automation systems, increasing their compatibility and reducing implementation time and costs.

• Energy Regulator Supported through Local Experts. Energy Links team of LTTA local hires embedded in the Energy Regulator commenced their activities on June 16, 2016. Their technical work is planned for one year and is intended to provide support to the Energy Regulator according to our joint Work Plan (WP).

• Staff Ranks and Salaries of the KR Regulator Increased. In line with Energy Links recommendations Kyrgyz Government approved a 50% salary increase for the Energy Regulator staff, compared to the prevailing salary levels, as well as additional 15 staff members. This signifies the influence the Energy Links assistance has had on institutional capacity strengthening.

• Electricity Law Approved in the First KR Parliamentary Reading. On June 30, 2016, the Parliament of the Kyrgyz Republic approved the Electricity Law in its first reading. The Law was drafted by the Ministry of Energy working group with active participation and guidance from the Energy Links. The Electricity Law was published on the KR Parliament website and its further review will take place during the second and third readings at the KR Parliament’s fall session.

• Toktogul Reservoir Operating Rule and Naryn HPPs Cascade Electricity Generation Assessments Developed and Presented to Key KR Counterparts. In some way retention of this STTA was delayed.

Energy Links identified the preferred STTA candidate for this assignment late in the fall of 2015, but his contract negotiations with ECODIT were unsuccessful due to the fact that his compensation demand exceeded maximum allowable USAID rates. Energy Links then located another expert but the earliest he became available was February 2016. It has to be noted that qualified hydrology specialists familiar with multiyear regulation reservoirs is not that easy to locate. The assessments were prepared by the Energy Links STTA and discussed with the Ministry of Economy (MoE), Ministry of Agriculture, Kyrgyz Hydro and Meteorological Center, Energy Regulator, State Environmental and Technical Safety Inspectorate, Scientific Center Energia, and the power companies. Implementation of the model and training for the end-users are planned for November 2016 (Project Year 3).

• DES Implementation Working Group Established. On July 6, 2016, the NEHC issued an order to establish an Inter-Agency Working Group (IAWG) on IEC Standards consisting of Kyrgyzstandard, NEHC, all KR energy companies and Energy Links. Three consecutive meetings of the IAWG were hosted by Energy Links between July – September 2016, with the working group agreeing on the timeline and sequence of implementation of obligatory requirements for information exchange in the energy sector of the Kyrgyz Republic, legal aspects, gaps in legislation and ways of mitigating them.

• Draft Rules for Providing Equal Access to Services of Regulated Natural Monopolies Developed. Per the MoE’s request, the Energy Links team and short-term local consultants developed a regulatory framework (draft Rules) for Providing Equal Access to Services Provided by Natural Monopolies, presenting them to the MoE in late July 2016. Energy Links developed draft Rules in compliance with the current laws and regulations of the Kyrgyz Republic for introducing non-discriminatory access to the services in the electrical energy sphere for all customers.

Tajikistan Accomplishments:

A Memorandum of Understanding (MOU) between Ministry of Energy and Water Resources (MEWR) and USAID Signed. This critical framework document for cooperation in the energy sector between Energy Links and the Government of Tajikistan was signed between MEWR and USAID on November 19, 2015, in Dushanbe, by Mr. Usmonali Usmonzoda, Minister of Energy and Water Resources; Mr. David G. Brown, Acting Mission Director USAID/CA; and in her capacity of Honorary Witness by Ms. Leslie M. Hayden, Charge d’Affaires, a.i., United States Mission, Republic of Tajikistan. The MOU is in effect for two years from the date of signing and may be extended by mutual consent of the parties.

In furtherance of the MOU, Energy Links developed an Action Plan on implementations of MOU’s provisions.

On February 12, 2016, pursuant to a MEWR request, the draft Action Plan for implementation of the Energy Links activities in Tajikistan was developed, agreed upon with MEWR, and subsequently discussed with USAID/TJ and USAID/CA. The Action plan covers the same period as MOU and specified implementation activities in more details. By the end of the Year 2 Energy Links conducted the following activities:

• Workshop on Energy Project Development and Finance Organized. Energy Links facilitated a workshop on “Project Development and Project Finance” in Dushanbe on February 29 - March 4, featuring representatives from Barki Tojik (BT) and MEWR. Technical area experts included Michael Bekker (EL DCOP), Kendrick Wentzel (STTA Deloitte) and Dr. Hameed Nezhad (STTA ECODIT). At the end of the training Rustam Rakhimov, Energy Links’ BT liaison for Energy Links in TJ , reported to the BT management on the successful completion of the workshop and active participation of the company representatives in the workshop discussions.

• University of Central Asia (UCA) Implementing English Language Courses for MEWR and BT Representatives. In April 2016, Energy Links arranged long-term English courses for MEWR and BT through UCA. To date, over 70 representatives from MEWR and BT have successfully completed the first semester and have graduated to the next level.

• Introductory Workshop on Energy Sector Regulation conducted. On June 2 – 4, 2016, the Energy Links team successfully conducted an introductory workshop in Dushanbe on energy regulation, featuring best international practices and experience in establishing independent energy regulatory authorities. The speakers at the workshop included current and former regulators and members of regulatory agencies’ staff from Lithuania, Georgia, Bulgaria, and the United States, illustrating the wide range of energy regulatory models. The workshop was delivered specifically to the staff of MEWR and BT and was well attended.

• Assistance in the procurement of modern software for project management and establishing a centralized project database on energy projects. Energy Links retained international IT experts for conducting research and analysis on office equipment needs who prepared “AS IS” and “TO BE” reports (assessment stage) for project management system software and hardware. The preferred version of the hardware/software package was identified and agreed upon with MOEWR, BT and USAID TJ and USAID CA. Upon completion of these tasks by the summer of Year 2, Energy Links engaged in preparation of documentation necessary to conduct the competitive tender to recruit a hardware supplier in accordance with ECODIT procurement rules. The tender documentation was prepared by the end of the Year 2.

Turkmenistan Accomplishments:

• Local TM Project Coordinator Mobilized. Per a request from USAID/TM and USAID/CA, Energy Links contracted Mr. Dovlet Hangeldiyev as a part-time Energy Links local coordinator in Turkmenistan starting in January 2016.

• Priority Activities in the Energy Sector Discussed with Turkmenenergo. Mr. Hangeldiyev has organized a series of meetings with experts from «Turkmenenergo» to discuss priority activities for the Energy Links project in TM, including:

1. Technical trainings for experts in energy efficiency technologies and standards for energy efficiency equipment. Conducted at Mary Energy Institute (MEI).

2. Trainings for energy lawyers. Conducted at Ministry of Energy (ME).

October 1, 2015 – September 31, 2016

• Legislation for energy efficiency and renewable energy (ME lawyers currently work in the Parliament on the energy efficiency and renewable energy legislation)

• Energy audits.

3. Legislation for energy efficiency and renewable energy, energy audits in industrial and other plants.

Conducted at State Service of Academy under the President of Turkmenistan.

The MEI also indicated interest in transmission planning software, in particular, the DigSielent model, and receiving assistance in procurement of and training on this software.

• Starting in May 2016 EL TM project coordinator has been tracking down a situation with a response from the MEI and ME for providing trainings. As of September 30, 2016, no response has been received from the relevant TM counterparts. EL TM project coordinator will continue monitoring the interest from the MEI and ME to receive capacity building in the relevant areas. In the absence of commitment by the TM government, Energy Links may not be able to secure the STTA services envisioned for the proposed tasks, as the timeline has not been confirmed.

October 1, 2015 – September 31, 2016

IV. YEAR 2 SUCCESS STORIES

Regional Tasks

1. CASA-1000 Core Project Agreements Signed

One of the primary objectives of Energy Links is to increase transparent intra- and inter-regional energy trade, in part by supporting the US$1.17 billion multi-donor Central Asia-South Asia 1000 (CASA-1000) transmission line through its planning, construction, and implementation phases. As part of the US Government’s overall $15 million commitment to the CASA-1000 Project, Energy Links employs and provides resources for the CASA-1000 IGC Secretariat, an executive body that provides coordination and leadership support for negotiation of terms and implementation of the project. At the end of the first year of the project, the Secretariat shepherded the IGC, the leadership body comprised of high-level representatives from the member countries, to near completion of the core project agreements. Finishing these agreements represents the “conditions precedent” required to pave the way to the construction phase of the project.

On November 23-24, 2015, during the JWG/IGC meetings in Istanbul, member countries signed Resolutions on approval for the assignment of Mr. Fadil Ismaili as the CASA-1000 Secretariat’s Acting ED. Countries also signed the Amendment to the Master Agreement (MA) to extend Condition Precedent deadline, signing Coordination Agreement (CA) ) between Kyrgyzstan and Tajikistan and initialed PPA between Afghanistan and Pakistan.

During Quarter 1 of Project year 2, the IGC finalized all of the remaining core agreements, meeting the remaining conditions precedent. Specifically, representatives from the “seller countries,” the Kyrgyz Republic and Tajikistan, signed the Coordination Agreement; and the “buyer countries,” Afghanistan and Pakistan, signed the Afghanistan-Pakistan power purchase agreements (PPA). Securing these agreements represents the culmination of several long years of project planning and negotiations ever since the Parties signed a Memorandum of Understanding (MOU) to develop the CASA-1000 Project in 2008.

The CASA-1000 Secretariat assisted the IGC to keep the Master Agreement in force until all of the conditions precedent could be met. Originally, the deadline for satisfying the conditions precedent was October 24, 2015, six months after the Master Agreement was signed. However, Afghanistan and Pakistan were unable to reach an agreement on their PPA in time. Taking quick action, the Secretariat team successfully facilitated an Amendment to the Master Agreement, extending the deadline until December 6, 2015. On December 6, 2015, Afghanistan and Pakistan signed their respective PPAs, completing the final core project commercial agreement and enabling the project to move forward to the construction phase.

Mr. Humayoon Kohistani, Director of Energy Programs, MEW, Afghanistan; Mr. Muhammad Younas Dagha, Secretary, MoWP, Pakistan; Mr. Jamshed Shoimzoda, Deputy Minister, MEWR, Tajikistan and Mr.

Aibek Kaliev, Deputy Minister, MEI-MoE signing CASA-1000 IGC

2. Landmark decision to restructure the CASA-1000 Project is reached at the IGC Meeting

The JWG IGC meetings were held in Almaty, Kazakhstan on April 19 - 21, 2016. High-level officials of the CASA-1000 Project countries (Afghanistan, Kyrgyzstan, Pakistan and Tajikistan), representatives of the World Bank (WB), Islamic Development Bank (IsDB), Department for International Development (DfID), European Bank for Reconstruction and Development (EBRD), USAID and International Finance Corporation (IFC) attended the meeting. CASA-1000 Secretariat facilitated the meeting.

The IGC approved the restructuring of the project by reconfiguring the three-terminal design to a two- terminal design due to the difficulties in obtaining acceptable proposals for the former configuration. The new concept also envisioned that a 300 MW Afghanistan CASA-1000 energy entitlement will be supplied through an existing Sangtuda – Pul-e-Khumri HVAC line and that a new HVDC back-to-back substation would be built at Pul-e- Khumri. The proposed new concept merges elements of CASA-1000 and TUTAP projects.

3. The Government of Tajikistan hosts a launching ceremony of the CASA-1000 Project Implementation Phase

Ministers from the four CASA-1000 countries shake hands following the signing of the IGC Resolution on April 19-21, 2016. Pictured (from left to right): Mr. Khawaja Muhammad Asif, Minister of Water and Power of Pakistan; Mr. Ali Ahmad Osmani, Minister of Energy and Water of Afghanistan;

Mr. Usmonali Usmonzoda, Minister of Energy and Water Resources of Tajikistan;

and Mr. Arzybek Kozhoshev, Minister of Economy of Kyrgyzstan

Kyrgyz Prime Minister Sooronbai Jeenbekov, Tajik President Emomali Rahmon, Pakistani Prime Minister Nawaz Sharif and Afghan Chief Executive Abdullah Abdullah at the opening ceremony of the CASA-1000 Project Implementation Phase in Tursunzade, Tajikistan.

October 1, 2015 – September 31, 2016

CASA-1000 Secretariat and Energy Links attended the CASA-1000 Roundtable on May 11, 2016, in Dushanbe and the Opening Ceremony of the CASA-1000 Project Implementation Phase on May 12, 2016, in Tursunzade, Tajikistan. The ceremony featured high-level representatives from all four countries, namely President of Tajikistan Emomali Rahmon, Chief Executive of Afghanistan Abdullah Abdullah, Prime Minister of Pakistan Nawaz Sharif and Prime Minister of the Kyrgyz Republic Sooronbai Jeenbekov, marking the commitment of the four project countries to supporting increased regional electricity trade opportunities.

In line with the IGC Resolution of April 21, 2016, the JWG was directed to review the Core Project Agreements to determine the changes that would be required to accommodate the Project’s new structure in terms of its technical, commercial and financial implications.

4. Legal Subcommittee and JWG agreed on modifications to CASA-1000 Core project Agreements to reflect the decision on project reconfiguration

The LSC and the JWG met during June 15-20, 2016, in Washington, DC to identify and agree upon changes in selected areas of the Core project agreements to reflect the project reconfiguration and plan the next project implementation steps. The CASA-1000 Secretariat Legal Counsel Lloyd Richardson facilitated the preparation of the amendments. Several issues were referred to IGC for action, including allocation of additional project related expenses for interconnection and utilization of existing 220 kV line between Tajikistan and Afghanistan, as well as changing of the reference period for indexation due to the project implementation delays.

Also during this meeting, the Technical Evaluation Committee (TEC) conducted final interviews with two short-listed candidates for the position of the CASA-1000 Secretariat permanent Executive Director and selected Robert L. Schenck to be recommended to IGC fill the Executive Director position.

Members of CASA-1000 Joint Working Group negotiate proposed amendments to the Core project agreements

October 1, 2015 – September 31, 2016

5. CASA-1000 Project Participates at CIGRE Exhibition in Paris, Conducts PC Committee meetings

On August 21-26, 2016, CASA-1000 Secretariat attended the CIGRE convention in Paris and conducted the marketing and promotional meetings with the HVDC manufacturers. Parallel meetings of the Procurement Committee were organized on August 23-25, 2016. Meetings were very fruitful and all the attendees demonstrated high interest in the project. HVDC manufacturers noted that reconfiguration significantly simplified the project and reduced security concerns. However, they raised a number of issues:

• Joint package including two convertor stations and B2B could be more attractive

• Budget for convertor stations is underestimated

• Prequalification criteria should be reduced for partners in consortium

• Time for submitting of the technical proposal should be increased to four months

• Implementation time might be longer than 36 months

• Project logistics might be complicated

• Additional communication facilities in Afghanistan might be needed due to the length of HVDC line

Potential bidders also expressed their security concerns. Most of the issues were discussed and potential bidders were satisfied. The rest of the issues will be incorporated as comments in the tender documents. Following the successful promotion of CASA-1000 at CIGRE, USAID requested Energy Links and the Secretariat to attend the Afghanistan Energy Business Opportunities Conference on September 18-19, 2016, in Dubai, UAE.

Kyrgyz Republic Tasks

The group photo of the CASA-1000 Delegates from Afghanistan, Kyrgyzstan, Pakistan and Tajikistan at CIGRE Exhibition, Paris, France.

1. Energy Links and the Kyrgyz Energy Regulator approve the Second Year Work Plan, reconfirm continued assistance

On April 15, 2016, Dr. Olga Mandrugina, Energy Links COP, and Mr. Taalaibek Nurbashev, Director of the KR Energy Regulator, approved the Second Year Work Plan (WP), witnessed by USAID. The WP focuses on strengthening the independence and capacity of the Energy Regulator through drafting legal acts to provide the legislative framework for the Regulator’s functions; assisting with public hearings and implementation of regulatory acts; providing capacity building and training; developing the monitoring tools and other activities.

Energy Links also supported the Energy Regulator in their participation at Energy Regulators Regional Association (ERRA) General Assembly ERRA Licensing/Competition Committee Meeting that took place on May 10-11 in Warsaw, Poland.

Energy Links STTA Abgar Budaghyan led assisted Regulator’s staff in justifying staffing and salary increases and in developing a number of documents aimed to improve power sector regulatory base.

2. Kyrgyz Electric Companies Adopt Energy Sector Data Exchange Standards (DES)

On May 19, 2016, Energy Links attended a workshop entitled “Metrology support for the electricity metering” in Kyrgyzstan and delivered a presentation on “Data exchange standards in the energy sector”. The idea of data exchange standardization was strongly supported by metrologists from all Kyrgyz electric companies and the supplier of automated data collection system selected by JSC National Electric Grid Company (NEGC).

Director of the Energy Regulator Mr. Taalaibek Nurbashev and Energy Links COP Dr. Olga Mandrugina shake hands after the Work Plan signing ceremony.

Metrologists from the Kyrgyz electric companies at the newly built 500 kV Kemin substation during a metrology workshop

October 1, 2015 – September 31, 2016

Representatives of all electric companies agreed to provide their support in establishing an IAWG for the implementation of the national level DES for the electricity sector. On June 16, 2016, Kyrgyzstandard adopted all 25 IEC DES as the national voluntary norms.

Tajikistan Tasks

1. MOU between the Government of Tajikistan and USAID Signed

On November 19, 2015, the Tajikistan MEWR and USAID signed an MOU to enable the Energy Links Project to cooperate with Tajikistan power sector entities. This crucial project development will empower the project to undertake all of the training and technical assistance activities laid out in the project’s Year 2 WP. The MOU was signed by Mr. Usmonali Usmonzoda, Minister of Energy and Water Resources of TJ; Mr. David G. Brown, Acting Mission Director USAID CA; and in her capacity of Honorary Witness Ms. Leslie M. Hayden, Charge d’Affaires, a.i., United States Mission, Republic of Tajikistan. On the occasion of the MOU signing, USAID TJ issued press release.

2. Energy sector professionals in Tajikistan trained in key aspects of project management and finance

From right to left: Mr. Usmonali Usmonzoda, Minister of Energy and Water Resources; in her capacity of Honorary Witness, Ms. Leslie M.

Hayden, Charge d’Affaires, a.i., United States Mission, Republic of Tajikistan and Mr. David G. Brown, Acting Mission Director USAID/CA

Workshop on “Project Development and Project Finance” in Dushanbe on February 29 - March 4, 2016

The Energy Links facilitated a workshop on “Project Development and Project Finance” in Dushanbe on February 29 - March 4, featuring representatives from BT and MEWR. The speakers and technical area experts included Michael Bekker (EL DCOP) who discussed integrated resource planning in the power sector, Kendrick Wentzel (STTA Deloitte) who discussed power project development and finance, and Dr. Hameed Nezhad (STTA ECODIT) who discussed project management concepts and their practical application. The workshop was well received by the participants. The Tajik counterparts will use the gained knowledge to improve the corporate and decision making aspects in their day-to-day work.

3. Tajik stakeholders study best practices in power sector regulation

On June 2 – 4, 2016, Energy Links successfully conducted an introductory workshop in Dushanbe on best international practices and experience in establishing independent energy regulatory authorities. The speakers at the workshop included current and former regulators and members of regulatory agencies’ staff from Lithuania (Vidmantas Jankauskas, former Chairman of Lithuanian Energy Regulator, and former chairman of ERRA), Georgia (Nugzar Beridze, Head of Electricity Department, Georgian Energy Regulator), Bulgaria (Valeriy Vlatchkov, former Commissioner of Bulgarian Energy Regulator) and the United States (Rajendra Addepalli, Managing Director of Utility Rates and Services Department, New York State Public Service Commission). Michael Bekker (DCOP) moderated the workshop which covered issues ranging from regulatory fundamentals, functions and institutional relationships; to role of the regulatory agencies under traditional and

Speakers at the introductory workshop on energy regulation included current and former regulators and members of regulatory agencies’ staff from Lithuania, Georgia, Bulgaria and United States.

October 1, 2015 – September 31, 2016 competitive environments, regulation of independent power producers, financing in power sector, price regulation issues and tariff policies to incentivize investments. The workshop was tailored specifically for the staff of TJ MEWR and the state utility BT who actively participated in the panel discussions. Participants received certificates of completion at the conclusion of the workshop.

October 1, 2015 – September 31, 2016

V. MAJOR ACTIVITIES, ACHIEVEMENTS, AND PROGRESS TOWARD

ACHIEVEMENT OF MILESTONES AND TARGETS – Technical

This section compares progress in Year 2 against the expected tasks, sub-tasks, deliverables, timelines, and benchmarks detailed in the Year 2 Work Plan. The work plan targets and timelines are detailed in the tables, and actual Year 2 accomplishments are detailed in the text.

A. Progress on Regional Tasks

The Energy Links Project includes three Regional tasks:

• Task R1: Employ and provide resources for the CASA-1000 Secretariat staff

• Task R2: Provide intellectual leadership on energy trade projects (technical, financial, and governance)

• Task R3: Organize technical workshops and trainings for government and/or energy sector professionals from Kazakhstan, the Kyrgyz Republic, Tajikistan, Turkmenistan, Uzbekistan, and Afghanistan and/or Pakistan

Task R 1: Employing and Providing Resources for the CASA-1000 Secretariat Staff

# SUB-TASKS/ACTIVITIES DELIVERABLES EXPECTED

TIMELINE

BENCHMARKS/

MILESTONES

R 1.1

Coordinate with IGC and IFIs in the process of selecting, approving, and hiring the new permanent ED

• Work with USAID, countries and IFIs to:

• Publish ad and collect CVs of candidates

• Review CVs and develop final short list

• Interview short listed candidates and select ED

• Receive IGC approval for selected ED

• Hire and mobilize permanent ED

• ED Selected

• ED hired and mobilized Oct 2015 – March 2016

• Ad published by Oct 11, 2015

• Short list developed by Dec 18, 2015

• ED selected by Jan 18,

• IGC approved ED by Jan 31, 2016

• ED hired and mobilized by Mar 31, 2016

R 1.2

Staff the CASA-1000 Secretariat:

• Achieve approval of Acting CASA-1000

ED and continue to mobilize him and his technical advisors as needed

• Recruit, hire, and mobilize the CASA- 1000 local countries coordinators (one for each country)

• Retain legal counsel and other STTAs on as needed basis

• Training assistance to ED provided as needed

• Acting ED approved

• Other Secretariat staff hired & mobilized on as needed basis

• Fully staffed, functional Secretariat

Oct 2015 – Mar 2016

• Acting ED formally approved by Oct 2,

• Fully staffed and functional Secretariat by Mar 31, 2016

October 1, 2015 – September 31, 2016

R 1.3

Organize, facilitate and participate in conducting CASA-1000 events (IGC/JWG/LSC meetings, conferences, etc.

• Develop meeting schedules

• Determine the venues and develop budgets

• Coordinate with related parties to ensure successful organization of events

• Develop and distribute meetings and resolutions minutes

• Legal Subcommitte e and other meetings conducted

• IGC and JWG meetings successfully conducted

Oct 2015 – Sep 2016

IGC, JWG (JWG), Legal Subcommittee and other meetings conducted during Oct 2015 – Sep 2016 period as needed

R 1.4

Assist IFC in facilitating procurement activities

• Facilitate solicitation of bids, bids opening and review procedures

• Establish and maintain joint working activities with Owner’s Engineers and EPC contractors

Timely IFC procurements

Oct 2015 – Sep 2016

• Procurement Notices published as needed

• Bids opened as needed

• Evaluation reports distributed as needed

R 1.5

Assistance to IGC and CASA-1000 project needs

• Activities undertaken as needed and requested, for example: meeting organization, donor coordination, emerging TA needs

Ad-hoc TA to IGC provided, as needed

Sep 2016 TBD

Sub-Task R 1.1: Coordinate with IGC and IFIs the selection, approval, and hiring of the permanent

ED

Accomplishments: Energy Links team completed the final Terms of Reference (TOR) and the qualification documents for Secretariat ED. The TOR, position qualifications and detailed description of the selection process was approved by USAID, CASA-1000 countries, WB and IFIs.

On November 12, 2015, the ad was published in the Financial Times, CASA-1000 web site, and several other web platforms. On December 17, 2015m the link to all CVs of candidates that applied for CASA-1000 Secretariat ED position was shared with the members of the TEC. The applicants were sorted into “qualified” and “non-qualified” groups: seven qualified and 66 non-qualified candidates. Following a thorough review of the candidates’ documents, two out of seven short-listed qualified candidates were eliminated from further recruitment. On February 17, 2016, TEC interviewed and evaluated five short-listed ED candidates.

Based upon the interviews conducted on June 17, 2016, at the JWG meeting in Washington, D.C., the TEC confirmed unanimously Robert Schenck and presented his nomination for recommendation to the IGC. On August 31, 2016, Secretariat distributed for countries’ comments the draft IGC Resolution on approval of the ED. On September 1, 2016, KR WG provided their comments which were incorporated into the Resolution for internal approvals. Mr. Schenck will be officially appointed to ED position as soon as IGC approval is received.

Sub-Task R 1.2: Staff the CASA-1000 Secretariat

Accomplishments: Energy Links team conducted hiring process for the following positions:

Secretariat Country Coordinators (LTTA local). The four positions were announced on November 25, 2015. Based on CV evaluation and discussions with the countries’ WGs shortlisted candidates for further

October 1, 2015 – September 31, 2016 evaluation were identified. On July 26, 2016, the best selected candidate for AF Country coordinator (CC) was approved by AF WG and ECODIT HO started hiring process. On July 15, 2016, KR CC was hired and started to fulfill his duties. On August 1, 2016, TJ CC was hired and started to fulfill his duties. On March 14, 2016, three PK CC candidates were interviewed. Unfortunately, no one of them convincingly demonstrated skills needed to be selected for this position. Evaluation Committee decided to interview other candidates from the initial list, additional candidates are being sought.

Documents Management, IT expert (STTA expat): Due to delay of the Project implementation caused by Project restructuring this activity is postponed until the new procurement process is clarified and rescheduled.

Scheduler/Planner (STTA expat/local): Draft ToR and qualification requirements are completed. Upon clarification of the position’s hiring timeline (subject to negotiations/signing of OE and EPC contracts as well as to establishment of country PIUs), the project will submit the ToR and qualification requirements for USAID approval.

Sub-Task R 1.3: Organize, facilitate and participate in conducting CASA-1000 events (IGC/JWG/LSC meetings, conferences, etc.

Actual Accomplishments: During this FY16 the following CASA-1000 meetings (live and via videoconference (VC)) were organized and facilitated by Energy Links:

o JWG Videoconference on October 06, 2015.

o VC on October 12, 2015.

o VC on October 15, 2015.

o JWG Meeting via VC on October 21, 2015.

o AF-PK JWG Meeting via VC on October 28, 2015.

o JWG Meeting via VC on November 5, 2015.

o JWG Meeting via VC on November 16, 2015.

o IGC/JWG meetings on November 23-24, 2015 in Istanbul.

o PC/JWG VC meetings on December 7, 2015 in Guangzhou.

o PC/JWG via VC on January 14, 2016.

o PC meeting via VC on January 22, 2016.

o PC meeting via VC on January 28, 2016.

o PC meeting via VC on February 2, 2016.

o PC meeting via VC on February 10, 2016.

o PC and JWG meetings on February 16-18, 2016 in Almaty o PC and JWG meetings on March 16-17, 2016 in Almaty.

o PC and JWG VC Meeting on March 24, 2016.

o PC and JWG VC Meeting on March 31, 2016.

o 2016 PC/JWG VC Meeting on April 5-6 o PC/JWG VC Meeting on April 11, 2016 o JWG/IGC Meeting on April 19-21, 2016 o CASA-1000 implementation phase launching ceremony on May 11-12, 2016 in Dushanbe. A o PC Meeting via VC on May 16, 2016 o PC Meeting via VC on May 30, 2016.

o PC Meeting via VC on June 1, 2016.

o PC Meeting via VC on June 6, 2016 PC, LSC and JWG Meetings on June 14-20, 2016 in Washington, DC o JWG Meeting VC on July 13, 2016.

o JWG Meeting VC on July 20, 2016.

o JWG Meeting VC on July 27, 2016.

o Promotion of CASA-1000 at the CIGRE convention exhibition and PC meeting during August 21-26, 2016 in Paris o PC meeting on September 18-19, 2016 in Dubai

Sub-Task R 1.4: Assist IFC in facilitating procurement activities

Accomplishments: The following procurement related activities were accomplished under the Secretariat’s supervision this year:

Procurement process for IsDB components. Fourteen companies submitted prequalification applications (including twelve (12) proposals for KR component, eleven (11) proposals for TJ component and seven (7) proposals for PK component). Opening of the bids took place on December 23, 2015. All applications have been sent to countries and to Power Grid of India for processing and preparation of the evaluation report. Out of 14 companies that submitted applications only two had compliant proposals. On February 24, 2016, the CASA-1000 Tender Administrator (IFC) collected missing information from the bidders for the IsDB packages and forwarded it to the countries and the Power Grid of India for further analyses. On June 30, 2016, the Secretariat submitted to IsDB for “no objection” evaluation reports on prequalification for IsDB components approved by countries. On July 24, 2016, IsDB provided their initial comments on the report and requested additional clarifications from countries and Secretariat. On September 2, 2016, KR gave their approval of the tender documents. As it was agreed, on September 26, 2016, PK provided their no-objection. During PC meeting in Dubai, it was agreed that Power Grid of India (the consultant) would incorporate comments to the bidding documents and approved tender documentation would be submitted to IsDB for no objection on September 30, 2016.

Procurement process for EIB components On August 11, 2016, IFC distributed tender documents for EIB components with incorporated comments from countries. On August 19, 2016, KR WG provided their comments on this component. Comments included adjustment of KR portion HVAC line, allocation of financing between EIB and IDA and corrections in the Russian translation. During the meeting on August 23- 25, 2016, KR WG requested to reflect in the tender documents the actual length of KR HVAC line as 450 km.

Countries agreed with this proposal. It was also agreed to conduct a single tender for both lots. PK provided its “no objection” on September 26, 2016, as it was agreed during the PC meeting on September 19-21, 2016, in Dubai, TJ will provide technical information by October 2, 2016. The consultant will incorporate comments to the bidding documents and approved tender documentation will be submitted to WB/EIB for “no objection” by October 15, 2016. Upon approval from EIB and WB, the tender process will be launched.

Procurement process for HVDC/HVAC Owners’ Engineers. On January 12-14, 2016, and February 17, 2016, during the PC/JWG meetings, the initial and the second-round negotiations with Fichtner and Monenco as the top-ranked bidders for HVDC and HVAC Owner’s Engineers were conducted. The parties discussed and agreed to main contractual conditions, cost-sharing formulas, and contract structure. During PC/JWG meeting on March 16-17, draft contracts were agreed and finalized with Fichtner and Monenco. On May 23, 2016, Monenco was informed about the project restructuring and asked to wait until the clarification of the converter stations bid and restructuring were completed. On August 11, 2016, KR signed the contract with HVAC Owner’s Engineer Monenco. On August 19, 2016, TJ also signed the contract with Monenco. This completes the process of signing of the contracts with HVAC Owner’s Engineer companies by the countries.

PC agreed to start contractual negotiations with Fichtner as the best bidder for HVDC Owners Engineer to sign the contract with initial scope of work as soon as possible and negotiate a contract variation caused by project restructuring after the contract is signed. Fichtner agreed to this approach and the revised scope of work will be completed by the consultant, Power Grid of India. During the PC meeting in Dubai, countries expressed a willingness to sign the contract with the selected winning bidder for HVDC Owner’s Engineer, Fichtner (Germany). Changes to the scope of work due to the revised project structure will be incorporated in a contract revision and reflected in the amendment to the contract at a later date. On October 26, 2016, PC met via VC for contract negotiations with Fichtner. The main discussion topics were new cost breakdown between the countries, contract effective provisions, commissioning, and dates. Parties agreed to have more internal discussions on issues raised during the VC and to meet again via VC tentatively on October 6, 2016.

October 1, 2015 – September 31, 2016

Procurement process for HVDC lines in Afghanistan (WB components). On February 22, 2016, the updated Afghan HVDC lines bids evaluation report, which was amended to reflect updated amounts in the MA, was distributed and approved by the countries. All four countries provided their concurrence with the final report which was sent to the WB for a “no-objection” vote in early March. Chinese company Henan was the highest-ranked bidder, but its proposal validity has expired. CASA-1000 Tender Administration requested Henan to extend their proposal validity. On April 19, 2016, CASA-1000 Tender Administration informed PC that Henan, the highest scoring bidder for AF HVAC lines component, refused to extend its bid validity due to security concerns. During PC meeting on August 23-25, 2016, countries and WB procurement advisors agreed to request the clearance from the WB to start negotiations with the second best bidders. On September 2, 2016, WB provided their no-objections.