May 2006 | GPOBA

Past Issue: May 2006

New GPOBA Projects

GPOBA has signed its first two grant agreements and has attracted significant donor funding for OBA subsidies and project design. These items, along with GPOBA commitment for future funding as well as recent GPOBA publications, are described below.

GPOBA Grant Agreements

Armenia Heating and Gas
The World Bank and the Renewable Resources and Energy Efficiency Fund signed a Grant Agreement in Armenia on 28 April. USD 3.1m will be provided by GPOBA to improve access to gas and heating services for an estimated 8,600 poor households in urban multi-apartment buildings mainly outside of the capital city, Yerevan. Subsidies will be provided to poor households for two purposes: (i) individual gas heater-based heating solutions, which cover the cost of the gas-heater and connection of the apartment to the gas network; and (ii) local boiler-based solutions, which cover the cost of connection of the apartment to a building or block level boiler scheme. Subsidy eligibility will be based on the existing social protection program supporting low-income households in Armenia: the Poverty Family Benefit Program. The GPOBA scheme will be combined with USD 3m funding from the World Bank''s Urban Heating Project and co-financing from the Government of Armenia to make gas and heating services accessible to some 17,000 of the country''s poorest households. For more information please contact Ani Balabanyan
Colombia Natural Gas
A US$5 million Grant Agreement has been signed between the World Bank and Promigas in Colombia, toward subsidy payments to connect 35,000 families to the natural gas distribution network. The target households cannot afford the existing connection fee despite the local distribution companies offering financing plans of up to 6 years. The US$5 million subsidy will provide a 38% connection cost subsidy. The remaining connection cost will be financed by the local gas distribution companies. OBA subsidies will be targeted in line with ongoing social protection programs and subsidies being provided following the stratified system defined in the Public Utilities Services Law. The target families belong to the lowest-income strata and subsidies will only be paid if new connections result in an ongoing service. The OBA project will be implemented by Fundacion Promigas, a social work foundation established by Promigas. For more information, please contact Dirk Sommer

Projects Approved for Commitment/Eligibility
The projects below have either received a commitment for GPOBA subsidy funding, or have been deemed eligible for GPOBA subsidy funding, subject to certain conditions/aspects of project design still to be refined.
Mongolia OBA Pilot Project of Universal Access Strategy
Since the mid-1990s, the Government of Mongolia has implemented a telecommunications reform program leading to effective liberalization of all market segments, partial privatization of the fixed line incumbent, and establishment of an independent regulatory authority. Going forward, the Government has articulated a national Information and Communication Technologies Vision 2010 providing a blueprint for the development of the ICT sector in Mongolia. The World Bank, UNDP, EBRD, and other bilateral agencies have indicated their willingness to support the Governments efforts. A demonstrative OBA scheme is currently being designed for implementation in Arkhangai and Bayankhongor provinces. GPOBA has committed subsidy funding in the amount of US$290,000 towards the implementation of a pilot project. The final design of a larger OBA scheme, of which the World Bank will contribute about $5 million, will be confirmed by the results of the GPOBA pilot. For more information, please contact Tenzin Dolma Norbhu
Kenya Community Based Water Supply
The Government of Kenya has committed to decentralization of the water sector. Community-based organizations (CBOs) have a comparatively strong track record as providers of last resort, but low income consumers are largely excluded from effectively participating in CBOs as they are not able to pay full connection costs. The overall objective of the proposed OBA pilot is to develop and test an output-based approach for water supply services by community-based providers in the broader service area of Nairobi. GPOBA has determined that the project is eligible for subsidy funding for the amount of US$1.2 million. The project consists of 20 communities providing water services themselves and working with a reputable micro-credit institution, K-Rep Bank, to finance the connection charge. The communities would be responsible to make an upfront payment equivalent to 20-40% of the project costs. The remainder, which would be financed from a micro-credit loan, would be partly repaid once the connections have been made and the operator receives the OBA subsidy. For more information, please contact Dirk Sommer

Projects Approved for Technical Assistance
Extension of Water and Sanitation services in low income areas of Kisumu, Kenya
In Kisumu, Kenya, the most recent assessment of the water and sanitation situation shows that only 38% of the population of Kisumu has access to safe water while an estimated 78 % have access to sanitation but with dilapidated infrastructure. More than 50% to 60% of the towns population lives in low-income areas. Many in Kisumu can not afford the large up-front connection cost to a reticulated water supply. The proposed project involves making water and sanitation services available to the informal settlements of Nyalenda and Manyatta, located near Kisumu, Kenya. This project builds upon an on-going AFD project which includes reinforcing the primary network, bringing water to the border of Nyalenda and Manyatta and extending the secondary network inside Nyalenda and Manyatta. GPOBA has approved US$75,000 for technical assistance in order to develop an OBA structure and depending on the conclusions of the technical assistance may provide subsidy funding. For more information, please contact Jeff Delmon

NEWS FLASH!
New Donors

GPOBA continues to grow with pledges from both the International Finance Corporation (IFC) and the Bank Netherlands Partnership Program (BNPP) . The IFC has pledged US$35 million for projects in the infrastructure, health and education sectors that involve the private sector. The BNPP pledge of US$28 million will be used toward water and sanitation projects, with a focus on Africa.

GPOBA Working Papers

GPOBA adds two publications to its working paper series: Working Paper No. 6, Lessons Learned in Infrastructure Services Provision: Reaching the Poor, and Working Paper No. 7, Connecting Residential Households to Natural Gas: An Economic & Financial Analysis.

Read more on these and other working papers here, GPOBA website