ARMENIA: OBA SCHEME FOR

PROVISION OF GAS AND HEATING

GPOBA

SDN week

Washington D.C.

February, 2008

GPOBA

Armenia: OBA Scheme for Heating and GasGPOBA Armenia: OBA Scheme for Heating and Gas

GPOBA

Sector Background

Armenia: OBA Scheme for Heating and Gas

Tangible achievements in the energy sector: power sector reforms, intensive restoration of gas supply Slower progress in heating sector: use of inefficient, polluting and unsafe heating technologies

Government committed to facilitate access to efficient, clean, safe and affordable heating services: - Urban Heating Strategy adopted in 2002

- WB Urban Heating Project and various donor initiatives structured around the Strategy

Access to gas and heating picking up

Design of OBA scheme

GPOBA

Desired outcome

Improved access to gas and heating services for poor households in urban multi-apartment buildings

Approach

Demand driven

NatureOBA subsidies in form of capital grants to eligible urban poor for:

Connection of their apartments to the gas network and/or installation of a safe gas heater

Connection of their apartments to local heating systemArmenia: OBA Scheme for Heating and Gas

Design of OBA scheme

GPOBA Armenia: OBA Scheme for Heating and Gas

Targeting

The most vulnerable households involved in the National Poverty Family Benefit Program (determined based poverty level score)

Eligibility

Building connected to gas network

Mandatory cash contribution of US$30

Accountability of Service Providers

GPOBA

Payment tied to outputs

Individual gas heater solution

20% advance payment upon incumbent gas company’s signing of contract with the service contractors

70% upon independent verification of service delivery

10% upon independent verification of 12 months of satisfactory service delivery

Armenia: OBA Scheme for Heating and Gas

Local heating solution

90% upon independent verification of service delivery

10% upon independent verification of 12 months of satisfactory service delivery

Financing Leveraged

GPOBA

Total Project cost- US$ 7 million

US$ 3 million GPOBA grant

US$ 3 million financing IDA

US$ 530,000 government of Armenia co-financing

US$ 470,000 mandatory cash contribution of the eligible poor households

Projected number of beneficiaries

Over 10,000 households expected to benefit from OBA subsidy scheme

Armenia: OBA Scheme for Heating and Gas

Implementation Progress

GPOBA

Grant agreement signed: April 28, 2006

Project became effective: July 21, 2006

Results to date:

More than 10,000 applications received from the urban poor residing in 39 cities.

About 6,600 applications approved. Co-financing received for 4,900 applicants.

Gas heater installation works completed for 2,724 households with 1,621 installations verified.

Gas connection works completed for 2,680 households with 1,506 connections verified.

Armenia: OBA Scheme for Heating and Gas

Lessons Learned

GPOBA

1. Scheme design

Adequate public outreach is critical: a number of tools were employed; direct mailing worked the best

The poor households should have the option of applying directly

Mandatory cash contribution is essential

Need to ensure service delivery soon after the mandatory contribution is made

Independent verification is important

Armenia: OBA Scheme for Heating and Gas

Lessons Learned

2. Scheme implementation

Early preparatory works are warranted, especially if the OBA approach is relatively novel in the country

Adequate planning of procurements is key for smooth and timely implementation

Reliance on existing commercial practices is essential

GPOBA Armenia: OBA Scheme for Heating and Gas

Lessons Learned

3. Scheme sustainability

Early and active involvement of central and local governments is key for future scale-up

Involve them in scheme implementation starting from raising the awareness of beneficiaries, collection of application

Encourage them to co-finance the scheme and recognize and publicize their contributions

Well designed public outreach activities are important to adequately communicate the benefits of OBA approach

GPOBA Armenia: OBA Scheme for Heating and Gas

GPOBA

Thank you

Armenia: OBA Scheme for Heating and GasArmenia: OBA Scheme for Heating and GasGPOBA

GPOBA

Thank you

Armenia: OBA Scheme for Heating and GasGPOBA Armenia: OBA Scheme for Heating and Gas