February 2006

Past Issue: February 2006

New GPOBA Projects

The Global Partnership on Output-Based Aid (GPOBA) has awarded funding for several output-based aid (OBA) projects this past quarter. These projects involve requests for GPOBA subsidy funding ranging from US$3 million - $5 million, and technical assistance ranging from US$75,000 - $200,000.

Projects Approved for Subsidy Eligibility

Armenia Heating and Gas
In April 2005, GPOBA approved Technical Assistance towards a pilot for the upcoming IDA-financed Urban Heating Project. As a result of the subsequent OBA project emanating from the IDA and GPOBA-funded technical assistance, GPOBA has determined that the project is eligible for GPOBA subsidy funding in the amount of US$3 million. This project would support a targeted OBA connection subsidy scheme providing access to safe, clean and affordable gas supply/heating services to 8,600 poor households living in urban multi-apartment buildings in Armenia. The disbursement will be channeled through the Renewable Resources and Energy Efficiency Fund (R2E2 Fund), entitling the eligible households to fixed and variable grants provided that they co-finance a portion of the connection either by themselves or through other parties. The final stages of design of the OBA scheme are underway. For more information please contact Ani Balabanyan
Natural Gas Distribution for Low Income Families in the Caribbean Coast, Colombia
Colombia has achieved a large and rapid expansion in natural gas penetration, bringing major economic and social benefits to the urban population. Natural gas has brought substantial benefits, meeting basic household needs at about half of the equivalent cost for LPG or electricity. However, the key barrier that often prevents households reaping these benefits are the high switching costs, amounting to about US$400. The government has instituted a number of policy measures to facilitate access by low income users to gas services. As a result, about 86% of gas customers are from the lower strata for household income. However, the majority of subsidies in the sector continue to go towards the consumption of gas (through a national cross-subsidy program), a policy that has been recognized as an inefficient use of subsidies given the already significant cost advantage that natural gas represents for domestic uses. Granting connection subsidies instead of use of service subsidies would materially enhance ability to switch for low income households at a fraction of the current subsidy cost. Therefore GPOBA is currently considering a proposal towards piloting a scheme that would test the viability of connection subsidies and foster a broader policy debate as to how to implement a shift towards connection subsidies. The particular objective of the OBA scheme is to connect to the natural gas distribution network an estimated 35,000 families in the lowest income strata in the Colombian Caribbean Coast, permitting their access to natural gas. For more information, contact Dirk Sommer
Vietnam Service Expansion and Water Loss Reduction
In common with many cities, Ho Chi Mihn City (HCMC) experiences serious water shortages due to low water-supply capacity. This situation is further exacerbated in HCMC because of high water losses. A Non-Renevue Water (NRW) assessment estimates that the amount of physical leakages in the HCMC water supply system are about 35% of the water put into supply. As part of its program to address NRW, Saigon Water Corporation (SAWACO), with support from IDA, is preparing to implement an NRW-management project for the city, that will reduce losses and thus increase the water supply available to city residents. The challenge for HCMC is to find a way to steer investments so that poor people benefit from this potential increase in supply. GPOBA has approved a grant towards connection subsidies to help achieve this aim. The objective of the OBA scheme is to pilot and demonstrate an arrangement which could be used to improve utility performance (through reduced leakage) whilst at the same time scaling up the rate at which poor households living in the utility service area can access piped water supply. For more information, contact William Kingdom

Projects Approved for Technical Assistance and Dissemination
REGULATEL Study on ICT OBAs in LAC
The objective of this project is to carry out a study of universal access programs in 19 Latin American countries that are members of REGULATEL - The Latin American Telecommunications Regulators Association. The on-going study, largely financed by PPIAF, seeks to identify best practices and lessons and help regulators in Latin America define a new generation of universal access programs and pilots that will use OBA mechanisms. GPOBA has approved co-financing for a workshop followed by an international conference that will help finalize and disseminate the findings of the study, and also ensure close collaboration and some preliminary commitments from the various national regulators. For more information, contact Robert G. Stephens
Millennium Challenge Project: Water and Sewerage Project in Peri-urban Lima
The objective of the proposed project is to expand access to water and sewerage services in Lima by using innovative low cost condominial technology. The project would leverage resources of local NGOs that have technical capacity to establish connections to water and sewerage networks in low income communities. Six to ten NGOs in the Lima Metropolitan area have developed such a capacity through a major EU project to develop water systems in communities isolated from water networks. GPOBA has approved technical assistance, which will consider the design of output-based subsidies to help close the enormous access deficit in the city. For more information, contact Ventura Bengoechea
OBA in Water Supply in Uganda''s Small Towns and Rural Growth Centers
Local private sector providers have been operating water supply systems in many small towns in Uganda over the past few years through management contracts. These operators have brought clear efficiency gains to the sector. However, the challenge for the Government of Uganda is to scale up service delivery in small towns and expand into rural growth centers in order to meet its poverty reduction targets. GPOBA will be working with the government to design OBA schemes in small towns and rural growth centers that will provide targeted subsidies to the poor for access to piped water supply, while allowing private operators to expand their role providing much needed financing and expertise. GPOBA has approved funding for technical assistance to support the design of the OBA scheme. For more information, contact Yogita Mumssen
Monitoring and Tracking OBA projects throughout the world
As part of the GPOBA mandate to collect and analyze information on OBA projects underway throughout the world, GPOBA has approved funding for the development of a monitoring and tracking database of OBA projects. GPOBA is collecting information on OBA projects in the infrastructure and social services initiated by international financial institutions, donors, and governments. For more information, contact Yogita Mumssen. CALL FOR INFORMATION: If you have information on a specific OBA project/program that you are involved with which we have not already described in our website, please contact GPOBA

Read more on these and other projects here

News Flash
French and Spanish versions of the GPOBA brochure as well as the 4-page OBApproaches on, What is OBA?, are available on our website here

CALL FOR INFORMATION: If you have any information on a specific OBA project/program that you are involved with in the infrastructure, social or carbon finance sectors, please contact Yogita Mumssen