1 belarus cem discussions energy sector stable sector structure and governance over the past decade...
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Belarus CEM DiscussionsBelarus CEM DiscussionsEnergy SectorEnergy Sector
Stable sector structure and governance over the past decade together with recent macro economic performance of Belarus economy and its energy sector create favorable conditions for embarking on sector structural and institutional reforms that are crucially needed for supporting further economic growth of the country
Minsk, June 29, 2005
ECSIE
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Content
Energy Sector SWOT analysis
Progress achieved so far
Challenges facing the sector
Proposed policy measures to address the challenges
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Energy Sector SWOT AnalysisStrengths
Location as a transit country Geographical proximity to its primary energy
supplier Extensive wood resources Established electricity network Established gas transmission network
Export refining capacity
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Energy Sector SWOT AnalysisEnergy Sector SWOT AnalysisWeaknessesWeaknesses
Limited indigenous energy resources High dependence on imported energy Very heavy dependence on Russia as a supplier
of primary energy Aging physical infrastructure Limited oil and gas storage A weak legislative and regulatory framework
Limited commercial focus
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Energy Sector SWOT AnalysisOpportunities
Increased production of domestic resources (primarily wood)
Diversification of energy supply sources Expanded transit activities and increased
transit revenues Increased security of domestic supply as a
result of expanded storage facilities Private sector participation
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Energy Sector SWOT AnalysisThreats
Disruption in energy supplies from Russia (particularly gas)
Higher energy import costs Deterioration in service quality Further deterioration of the domestic
infrastructure Pressures on fiscal revenue streams as a result
of explicit and implicit subsidies
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Progress Achieved so far
Payments to Russia for imported gas and electricity
reached 100%
Electricity and gas monetary collections from end
consumers are close to 100%
Electricity and gas tariffs approach cost recovery
Electricity and gas tariff misbalancing is being
eliminated
Technical state of sector assets is good as
compared to FSU countries
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Challenges facing the Energy Sector
1. Reducing risks associated with the excessive energy dependence on Russia
2. Further strengthening the creditworthiness of sector companies
3. Maximizing benefits associated with Belarus role as energy transit country
4. Protecting interests of the sector stakeholders
5. Attracting financing to the sector
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Challenge 1Reducing Energy Dependence on Russia
Proposed policy measures: Increasing use of indigenous resources,
namely peat and wood
Further improving energy efficiency of the
economy
Diversifying electricity import
Performing as a good transit country
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Challenge 2Ensuring Creditworthiness of Sector Utilities
Proposed policy measures Phasing-out implicit subsidies through
introduction of cost-recovery tariffs for all
categories of consumers and full bill collection
Restructuring both internal and external debt
obligations
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Challenge 3 Maximizing Benefits from Energy Transit
Proposed policy measures Consistently perform as a reliable transit
country Ensure required financing via:
Securing commercial borrowing (barriers: corporate governance and disclosure standards required by lenders)
Entering in JV or consortium arrangement with Russia and eventually with its European gas customer(s)
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Challenge 4Protecting interests of sector stakeholders
Proposed policy measures
Setting up a proper regulatory framework
through establishing a dedicated regulatory
body and investing in its capacity building
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Challenge 5Attracting Financing to the Sector
Proposed policy measures Further strengthening the financial viability of
sector utilities
Unbundling of VINCs
Introducing the disclosure and corporate
governance principles
Developing PPP
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