Tajikistan: Power Rehabilitation Project

Validation Report Reference Number: PCV: TAJ 2011-06 Project Number: 32513 Loan Number: 1817 April 2011 Tajikistan: Power Rehabilitation Project Independent Evaluation Department

CURRENCY EQUIVALENTS (as of {Day Month Year}) Currency Unit somoni (TJS) TJS1.00 = $0.22395 $1.00 = TJS4.4652 ABBREVIATIONS ADB Asian Development Bank EIRR economic internal rate of return FIRR financial internal rate of return GWh gigawatt-hour (1,000,000 kilowatt-hours) IAS international accounting standards NHPP Nurek Hydropower Plant PCR project completion report PIU project implementation unit PMU project management unit RRP report and recommendation of the President TA technical assistance WACC weighted average cost of capital WTP willingness to pay NOTES (i) (ii) The fiscal year (FY) of the government and Barki Tajik ends on 31 December. In this report, $ refers to US dollars. Key Words adb, asian development bank, barki tajik, hydropower, power, power rehabilitation, Tajikistan Director Team leader Team member R. B. Adhikari, Independent Evaluation Division 1, Independent Evaluation Department (IED) B. E. Palacios, Senior Evaluation Officer, IED I. Garganta, Senior Evaluation Assistant, IED In preparing any evaluation report, or by making any designation of or reference to a particular territory or geographic area in this document, the Independent Evaluation Department does not intend to make any judgments as to the legal or other status of any territory or area.

PROJECT COMPLETION REPORT VALIDATION A. Basic Project Data Project Completion Report (PCR) Validation Date Project Number 32513 Loan Number 1817 Project Name Power Rehabilitation Project Total Project Cost ($ million) Country: Tajikistan Loan/Grant ($ million) (SDR million) Sector Energy (electricity transmission Total Cofinancing (subsector) and distribution) ($ million) Asian Development Bank (ADB) Financing ($ million) Asian Development Fund 34.00 Ordinary Capital Resources 0.00 Islamic Development Bank Government of Switzerland Approved April 2011 Actual 62.80 75.41 34.00 39.95 26.58 26.58 15.30 25.87 9.30 17.01 6.00 8.86 Cofinanciers Islamic Development Bank Borrower ($ million) 0.00 0.00 Government of Switzerland Beneficiaries ($ million) Others ($ million) 13.50 9.59 Barki Tajik Approval Date 20 Dec 2000 Effectiveness Date 26 May 2001 21 Aug 2001 Signing Date: 26 Feb 2001 Closing Date 30 Jun 2006 23 Apr 2009 Project Officers Name A. Jude Location: ADB headquarters From 2000 To 2000 S. Vivekananda ADB headquarters 2000 2001 X. Humbert ADB headquarters 2002 2007 B. Byambasaikhan ADB headquarters 2008 2009 L. Mtchedlishvilli ADB headquarters 2009 2009 Validator: Quality Control Reviewer/Peer Reviewer B. E. Palacios P. Perera Source: Power Rehabilitation Project files. Director R. B. Adhikari, Independent Evaluation Division 1 B. Project Description (Summarized from the Report and Recommendation of the President) 1 (i) Rationale. Before the Soviet Union broke up, Tajikistan s power system was part of the electricity pool of Central Asia, helping to provide peak and reserve capacity that regulated voltage and frequency in the region. Tajikistan supplied the region with low-cost hydroelectric power, and it received oil and gas through net resource transfers. The disintegration of the Soviet Union in 1990 severely affected the power sector of Tajikistan. The weakly performing economy and damage caused by the civil war pushed the power supply system to the verge of collapse. The country stopped building new hydropower plants, and infrastructure maintenance languished from lack of funds. In addition, as gas and petroleum imports became more costly, residential consumers switched to hydropower sources, adding to demand. Power outages were common, especially in winter, when there was not enough water resources for power generation. If the power supply did not improve, the lives of the poor in particular would stay miserable. Social surveys during the 1 ADB. 2000. Report and Recommendation of the President to the Board of Directors: Proposed Loan to the Republic of Tajikistan for the Power Rehabilitation Project. Manila.

2 project feasibility study confirmed the fact that the poor had much less access to electricity supply than other sectors of the population. Given the urgent need to overcome the power supply constraints and to increase the efficiency of energy supply and use, the government assigned top priority in the medium term to retrofitting and rehabilitating power facilities rather than building new plants. Such measures were expected to particularly benefit the poor, who could not afford other fuels. The report and recommendation of the President (RRP) confirmed the importance given to the energy sector and the power subsector by the government and the Asian Development Bank (ADB), as expressed in ADB s interim operational strategy for Tajikistan. 2 (ii) (iii) Objectives or expected outcomes. The project was aimed at improving (a) the availability of electricity to poor consumers, so they could live better lives and poverty could be reduced; (b) the availability, reliability, and quality of electric supply in general; and (c) sector efficiency. These objectives were to be achieved in an environment-friendly manner through the rehabilitation of generation, transmission, and distribution facilities developed during the Soviet era. The targets set in the project framework were (a) an additional 7,571 gigawatt-hours (GWh) of electricity from the rehabilitated facilities; and (b) more reliable and better-quality electricity supply. Components and output. The project had five components: (a) rehabilitation of distribution lines and transformers in poor areas in the Khatlon region (part A); (b) rehabilitation of the Nurek Hydropower Plant (NHPP) and associated transmission facilities (part B); (c) improvement of power supply reliability in the Dushanbe region (part C); (d) bulk metering of power supply (part D); and (e) consulting services (part E). The output targets listed in the project framework were (a) 36 GWh more electricity supplied to the Khatlon region (for part A); (b) an additional 24,000 poor households with electricity connections, increasing total connections from 148,000 to 172,000 (also for part A); (c) 320 GWh more electricity generated from NHPP (for part B); (d) reduced load shedding in the Dushanbe region (for part C); (e) 3 months accounts receivable, down from 11 months in 1999, and international accounting standards (IAS) adopted (for part D); and (f) implementing guidelines developed for the Energy Law (for part E). To help Barki Tajik meet the targets set in the energy sector action plan, two advisory technical assistance (TA) grants were approved together with the loan. The first was for the design and implementation of a billing and collection system to reduce accounts receivable. 3 The second TA was to introduce IAS and prepare the corporate accounts of Barki Tajik for 2001 in line with both national regulations and IAS. 4 C. Evaluation of Design and Implementation (Project Completion Report Assessment and Validation) (i) Relevance of design and formulation. The project conformed to the government s development strategy, and to ADB s country assistance strategy for Tajikistan and its strategic objectives at the time of approval. The rehabilitation of infrastructure, especially roads and power, was a priority area in ADB s interim operational strategy for the country. The government s policies for the energy sector included (a) facilitating the development of laws and regulations for efficient sector operations, (b) increasing electricity tariffs toward full cost recovery, (c) encouraging private sector participation in the generation and supply of power with the passage of the Energy Law, and (d) promoting energy conservation. The planned outcomes confirmed the project s close relevance to ADB s and the government s development objectives and strategies for the country. The 2 ADB. 1998. Economic Report and Interim Operational Strategy for Tajikistan. Manila (IN.253-98, November). 3 ADB. 2000. Technical Assistance to the Republic of Tajikistan for Improving Barki Tajik s Billing and Collection System. Manila (TA 3600-TAJ, approved for $500,000). 4 ADB. 2000. Technical Assistance to the Republic of Tajikistan for Introducing International Accounting Standards at Barki Tajik. Manila (TA 3601-TAJ, approved for $500,000).

3 rehabilitation of the power network in the Khatlon region and the provision of better and more reliable electricity supply through the NHPP were expected to improve the quality of life in the region. The passage of the Energy Law and the establishment of a Ministry of Energy were made conditions for the appraisal of the loan, the first to be made by ADB to Tajikistan for its energy sector. (ii) Project output. The original project design had four major components (not including consulting services). Parts A, B, and D were completed with their scopes reduced. The project achievements at completion compared with the achievements planned at appraisal are listed in Appendix 1 of the project completion report (PCR). 5 In part A, 61% of the 230 kilometers of medium-voltage lines in poor areas in the Khatlon region and 76% of the 415 kilometers of low-voltage lines were rehabilitated. The number of transformers that were replaced (100) was 6% below target (107). Although the Central Hydropower Plant was rehabilitated, the project did not achieve the target generation of 36 GWh per year, according to the PCR. Generation increased by only 9.4 GWh, 42% short of the 16.2 GWh target increase. The rehabilitation of the Sovhoz 2 substations was canceled; the implementation consultants saw no need for it. In part B, the rehabilitation of the control and protection systems for the 500/220 kilovolt Regar substation was canceled because of government budget constraints and because the work required turned out to be more costly than anticipated. A more reliable NHPP was expected to increase generation by 320 GWh. Generation increased by only 95 GWh as a result of the project, but the PCR gives no reason for the lower-than-expected increase in generation. The proposed improvement of power supply reliability in the Dushanbe region under part C was achieved as planned. At appraisal this component was foreseen to help reduce load shedding in the region. The RRP, however, gave no information about the frequency of load shedding or the power rationing in practice at the time of appraisal. The PCR also does not mention any improvement in load shedding, but it refers to the persistence of power rationing during the winter months of November to April. A change in scope, approved in February 2003, allowed the use of $1.5 million from the contingency balance for the restoration of power in Dushanbe, which had been without power since the winter freeze of December 2002. In part D, 95 high-voltage bulk-power energy meters were installed in lieu of the 500 proposed at appraisal. The reduced number was declared sufficient during implementation. At appraisal, it was envisioned that more efficient customer billing and collection would improve accounts receivable to 3 months worth from 11 months in 1999 and that IAS would be adopted. At the time of the project completion review mission, accounts receivable were still a problem. At the end of 2008, accounts receivable stood at 8.8 months (para. 38 of the PCR). This was better than the 11 months accounts receivable in 1999 but still fell short of the target. Furthermore, the financial accounts for 2002 2008 that were submitted to ADB indicated that Barki Tarji had not yet adopted IAS (para. 39 of the PCR). The output expected at appraisal and achieved at completion is cataloged in the PCR, and the details are explained adequately in the report. 5 ADB. 2009. Project Completion Report: Power Rehabilitation Project in Tajikistan. Manila.

4 (iii) Project cost, disbursements, borrower contribution, and conformance to schedule (as relevant to project performance). The project was implemented at a total cost of $75.41 million. The total base cost was $66.57 million, 37% higher than estimated at appraisal, despite the reduced scope of parts A, B and D. The appraisal and actual costs for each component are compared in the following table. Project Cost by Component, Appraisal and Actual Cost ($ million) Overrun (Underrun) Item Appraisal Actual Amount % Part A 17.46 28.27 10.81 61.91 Part B 17.03 13.88 (3.15) (18.50) Part C 9.85 18.88 9.03 91.68 Part D 0.76 0.75 (0.01) (0.13) Part E 3.44 4.79 1.35 39.24 Total Base Cost 48.54 66.57 18.03 37.14 Project monitoring 2.68 2.68 unit Contingencies 7.43 0.00 (7.43) (100.00) IDC 6.83 6.16 (0.67) (9.81) Total Costs 62.80 75.41 12.61 20.08 ( ) = negative, IDC = interest during construction. Source: Project completion report. The total cost for part C includes $1.87 million for emergency rehabilitation approved on February 2003. Without this amount the cost overrun for this component would be 72.69%. The actual cost incurred for the project monitoring unit was not programmed. The government decided unilaterally to establish this unit in July 2006 (section C[iv]). The PCR gives the following reasons for the cost overrun: (a) the rise in commodity and equipment prices in real terms between appraisal in 2000 and procurement in 2004 2005, (b) the higher costs of construction in Tajikistan due to the country s terrain, and (c) the decline in the value of the dollar against the euro. Project records suggest that the increase in costs was largely attributable to implementation delays, especially those that were due in part to the unfamiliarity of the project implementation unit (PIU) and the executing agency, Barki Tajik, with ADB procurement procedures and international competitive bidding. Cost estimation during project design should have been more rigorous and should have considered the country s difficult terrain. The project closed after two extensions and almost 3 years delay. ADB did not approve a third extension of the closing date to 30 September 2009 as the remaining works were not substantial and the project would not be any less effective if they were not implemented. As explained in the PCR, the 2-year delay at the start of implementation was partly due to the unfamiliarity of Barki Tajik with ADB s policies and procedures. This validation report takes the view that this shortcoming could have been addressed during project design. The lack of familiarity with the policies and practices of multilateral financing agencies of similar countries is among the lessons from earlier projects and seminars that were mentioned in the RRP (which did not, however, cite the source of the lessons). Capacity-building activities, such as seminars and workshops, even before the project would have acquainted Barki Tajik with those procedures in preparation for implementation. Work overload in the PIU also hampered the smooth implementation of the project.

5 (iv) Implementation arrangements, conditions and covenants, related technical assistance, and procurement and consultant performance. The PCR reports that implementation arrangements envisaged at appraisal were generally applied. A PIU was formed as agreed, but in July 2006 the government decided unilaterally to centralize project implementation responsibilities in the state project management unit (PMU). The PMU, separate from Barki Tajik, would handle all power projects in Tajikistan regardless of donor agency. The PCR fails to mention this major implementation issue. During implementation, ADB made known its disapproval of the arrangement to the government and pointed out that it was clearly in breach of the provision in the loan agreement that required the Borrower [to] cause Barki Tajik to maintain at all times a PIU within Barki Tajik. An ADB review mission in February 2007 found the PMU to be lacking in the required capacity for the efficient day-to-day operations of the project. In May 2007, nearly 1 year after the PMU was created, another ADB review mission informed the government that the PMU was ineffective because it lacked (a) ownership, (b) incentives for meeting disbursement and time schedule targets, (c) a streamlined bureaucracy, and (d) staff with international exposure. Moreover, its existence in place of the PIU in Barki Tajik violated a provision of the loan agreement with ADB. The PCR also states (para. 36) that the government and Barki Tajik had complied partly with the loan covenants at the time of the project completion review mission, but it does not give the number of covenants that were fully complied with. With Appendix 5 of the PCR as reference, this validation report notes that 11 of 24 covenants (46%) were complied with, 6 (25%) were partly complied with, 5 (21%) were not complied with, and 2 (8%) were not yet due. Of the 6 financial covenants, 2 were partly complied with and 4 were not complied with. Despite repeated reminders from ADB, Barki Tajik consistently failed to submit audited project accounts and audited financial statements on time. Quarterly progress reports were also submitted late. Partly for this reason, ADB in 2003 declared the project to be at risk. Another reason was Barki Tajik s high accounts receivable, which reached 13.3 months of gross billing in 2002. The PCR does not give an assessment of the implementation consultants performance. This validation report considers the performance only partly satisfactory. On several occasions ADB expressed its disappointment over the consultants failure to inform Barki Tajik of changes in scope and procurement procedures, which resulted in more implementation delays. At Barki Tajik s request, however, the services of the implementation consultants were retained despite the ADB review mission s dissatisfaction with their performance. The mission proposed the recruitment of an independent international consultant to assist the PIU in its day-to-day management of the project. Bidding documents were also of unacceptable quality, with many inconsistencies such as imprecisely defined scope of works. Two TA grants attached to the loan, for improving Barki Tajik s billing and collection system and for introducing IAS at Barki Tajik, are not assessed in the PCR, which only mentions the fact that the TA completion reports were prepared in 2004. (v) (vi) Performance of the borrower and the executing agency. The PCR rates the performance of the borrower and Barki Tajik satisfactory. Because of the borrower s less than satisfactory financial performance and low compliance rate with the loan covenants, and the unilateral change it made in the implementation arrangements, this validation report rates the performance of the borrower and Barki Tajik partly satisfactory. Performance of the Asian Development Bank. The PCR rates ADB s performance satisfactory and this validation report agrees with the assessment. The PCR states that ADB did not provide enough monitoring of the financial performance of Barki Tajik. Records, however, show that ADB persistently reminded the latter of the need to submit audited financial statements, and this enough

6 monitoring of the financial performance of Barki Tajik. Records, however, show that ADB persistently reminded the latter of the need to submit audited financial statements, and this validation report finds that ADB was not remiss in this aspect. D. Evaluation of Performance (Project Completion Report Assessment and Validation) (i) Relevance. The PCR rates the project highly relevant because it was in accordance with government priorities and ADB policies, and had the appropriate focus on repair and rehabilitation. Relevance assessment should also look at design and any change of scope during implementation. This validation report agrees with the PCR on the points raised and considers the project relevant to this day. However, the project had design weaknesses that resulted in changes in scope in three of the five components. In part A, the proposed rehabilitation of the Sovhoz 2 substations was dropped when it was determined during implementation that the power supply to the substations was adequate. This finding could have been made at the design stage Some rehabilitation works in part B were also dropped when they turned out to be more extensive and costly than originally anticipated a quality-at-entry issue. This validation report therefore rates the project relevant. (ii) (iii) Effectiveness in achieving outcome. The PCR rates the project effective. However, the PCR also states (para. 60) that electricity is used mainly for lighting and to power radios and television sets. The PCR does not give a consolidated accounting of how much more electricity was made available through the project, but the shortfall in targets under the different components indicates that the outcome target of 7,571 GWh additional electricity was not achieved. Furthermore, the PCR observes that, despite the project, cooking is still done with wood stoves and liquefied petroleum gas. At the time of the project completion review mission, Barki Tajik, unable to supply the total power demand in the winter, had resorted to rationing. This validation report believes that, for the same reasons given in the PCR, the project was less effective. Efficiency in achieving outcome and output. The project is rated partly efficient in the PCR because of the cost overruns and the implementation delays. This validation report concurs with this rating. The economic internal rate of return (EIRR), as recalculated in the PCR, is 13.2%. This validation report has several comments related to the computation of the EIRR. The PCR treats all power sold by the project as incremental, valued in terms of the PCR s estimate of willingness to pay (WTP). How WTP was estimated is unclear, and the significance of the last sentence in para. 13 of Appendix 7 is likewise ambiguous. Was the WTP estimated on the basis of the tariff? In practice, the price paid by the consumer for alternative sources of power (kerosene, candles, etc.) will indicate the WTP. The accuracy of the WTP estimate cannot be verified, given the insufficient documentation presented in the PCR. Para. 10 of Appendix 7 mentions a 10% interest rate slapped on the average economic cost of energy. The PCR should first of all document how the economic cost was estimated and the rationale for the 10% interest rate. It would have been more appropriate to break down the benefits into incremental and nonincremental benefits, and to value the incremental benefits at the users willingness to pay and the nonincremental at resource cost savings. The PCR chose to ignore commercial and agricultural consumption in estimating the EIRR because of the low tariffs. These sectors share of consumption is more than 20%, hardly justifying their exclusion from the economic benefit estimates. This validation report notes further that operation and maintenance costs and transmission charges were not converted to economic costs. Furthermore there were implementation delays and substantial cost overrun [C(iii)].

7 (iv) Preliminary assessment of sustainability. The PCR rates the sustainability of the project most likely (PCR uses the term highly sustainable ), given the quality of the facilities built. Even if project facilities are well built and can be useful for many years, they will require regular maintenance. To support the most likely rating the PCR should have discussed how the human, institutional, and financial circumstances of Barki Tajik could sustain the operation of the project facilities. Since Barki Tajik has submitted no corporate financial statements to ADB since 2003, its financial performance is difficult to assess. However, indicators presented in Appendix 6 of the PCR show that accounts receivable are still a problem at 8.8 months worth in 2008, significantly above the covenanted level of 3 months. Operating expenses continue to use up a very large portion of revenues generated. The PCR does not compare the recalculated financial internal rate of return (FIRR), 3.2%, with the weighted average cost of capital (WACC). At appraisal, no indicative set of interest rates could be used to estimate the WACC for the RRP. A power transmission project in Tajikistan that was approved in 2002 but subsequently canceled used the interest rate for ADB s London interbank offered rate based loans of 3.9% as a proxy for the WACC. The recalculated FIRR is below this proxy and does not support the most likely sustainability rating. This validation report rates the project s sustainability less likely because of the slow progress of corporate and financial reforms and the weak collection systems. The FIRR and available financial data also show that Barki Tajik may face some financial difficulty in funding a reasonable maintenance program for the facilities. (v) Impact (both intended and unintended). The project mostly involved the rehabilitation of existing facilities and was not expected to have any adverse environmental impact. The project was to contribute to poverty reduction by increasing energy supply to the poor. The 21,600 new connections, however, fell short of the intended impact. The project was also expected to improve the governance of state-owned energy enterprises, and the energy sector action plan provided for the corporatization of Barki Tajik. But at the time of the project completion review mission Barki Tarji had not yet been corporatized. The PCR adds that expectations regarding corporate reforms and improved financial performance and accounting practices in Barki Tajik have not yet been fulfilled. The PCR does not rate the impact of the project. This validation rates the impact moderate. E. Overall Assessment, Lessons, and Recommendations (Validation of Project Completion Report Assessment) (i) (ii) Overall assessment. The PCR rates the project successful. However, several issues identified in the PCR and this validation report indicate a lower rating: (a) weaknesses in design and formulation; (b) output below what was expected; (c) 34 months delay in implementation, actual costs higher than estimates, and a partly satisfactory rating for the implementation consultants and the borrower; and (d) failure to comply with important covenants including the corporatization of Barki Tajik. Finally, this validation report concurs with the PCR rating of less efficient on the basis of the implementation delays and cost overruns, and reiterates the necessity of recalculating the EIRR. This validation gives the project and overall rating of partly successful. Lessons. Three major lessons are identified in the PCR: (a) the need for more thorough due diligence, especially in estimating project costs; (b) the need to monitor the submission of required information by Barki Tajik; and (c) the need to ensure that Barki Tajik complies with the loan covenants.

8 This validation supports the first two lessons but feel that ADB was not remiss in reminding Barki Tajik of its obligations regarding the loan covenants. There is evidence that such reminders were issued every time a mission was fielded. The RRP brought out the lessons learned from ADB s experience in countries in transition. But listing the lessons in the RRP is not enough. Project implementation would have benefited if at least some of these lessons had been taken into account in project formulation and design. Many of the implementation problems arose because of Barki Tajik s unfamiliarity with ADB s procurement procedures, and the appraisal mission was well aware that such unfamiliarity has delayed the start of many projects in Central Asia. (iii) Recommendations. The PCR recommends (a) continued reminders to Barki Tajik of the need to monitor benefits, (b) continued monitoring of compliance with financial covenants, and (c) the inclusion in future covenants of a provision requiring Barki Tajik to charge a realistic interest rate on its overdue accounts. This validation report agrees with all of these recommendations. F. Monitoring and Evaluation Design, Implementation, and Utilization (Project Completion Report Assessment and Validation) At the start of project implementation, Barki Tajik was to submit a report to ADB on benchmark information; at project completion, it was to begin monitoring and evaluating the project benefits. Barki Tajik was also expected to submit a comprehensive report on the poverty reduction impact of the project within 3 months after project completion. The PCR is silent on these activities and it is not known whether they were carried out. The PCR also does not go into the poverty reduction impact of the project. G. Other (e.g., Safeguards, including Governance and Anticorruption Provisions; Fiduciary Aspects; Government Assessment of the Project, as Applicable) (Project Completion Report Assessment and Validation) Environment safeguards were in place. There were no resettlement issues and no adverse socioeconomic impact was expected. Local counterpart funds were provided in a timely manner. While the PCR identifies several possible governance issues (such as breach of loan agreement provision regarding implementation arrangements, delays in procurement, and poor quality of bidding documents), there is not enough information in the PCR or in the project files to indicate serious governance issues. Some of the delays in procurement may have been due, in part, to local authorities lack of experience.

9 Independent Evaluation Department H. Ratings Project Completion Report Review Reason for Disagreement and Comments Relevance Highly relevant Relevant Design weaknesses, resulting in change in scope (see section D[i] above) Effectiveness in achieving Effective Less effective Outcome only partly achieved (see outcome section D[ii] above) Efficiency in achieving Partly efficient Less efficient PCR uses the term partly but means less ; outcome and output no disagreement in ratings Preliminary assessment of Most likely Less likely No evidence of financial sustainability; also, sustainability FIRR less than WACC Satisfactory Borrower and executing agency Partly satisfactory Performance of ADB Satisfactory Satisfactory Impact Not rated Moderate Overall assessment Successful Partly Successful Quality of PCR Partly satisfactory Failure to comply with a number of covenants and unilateral changes in implementation arrangements (see section C[v] above) PCR needs to provide more evidence and analysis, such as numbers to support observations about power supply reliability, implementation issues, and covenants complied with, and calculate EIRR more thoroughly I. Comments on PCR Quality Several areas need improvement: (i) A summary evaluation of the attached TA grants should have been included in the PCR. (ii) Barki Tajik was supposed to submit benchmark information to ADB. It was also expected to carry out project benefit monitoring and evaluation upon project completion and to submit a comprehensive report (presumably to ADB). The PCR is silent on this monitoring activity. (ii) The EIRR methodology needs to be revisited. J. Recommendation for Independent Evaluation Department Follow-Up Project performance evaluation in 2011 is recommended to fill in or confirm information gaps, especially with regard to sustainability issues and the EIRR. Lessons and recommendations from the project performance evaluation report will be important in light of ADB s planned investment in energy in Tajikistan. For the period 2010 2012, ADB s country partnership strategy 6 for Tajikistan shows that 56% of ADB s public sector assistance projects and 30% of TA programs will be in the energy sector. The impact of the follow-on TA to strengthen the management of Barki Tajik (TA for Strengthening Corporate Management of Barki Tajik), 7 which was completed in March 2010, will be an important input in assessing the sustainability of the project. K. Data Sources for Validation PCR, RRP, and project files. 6 ADB. 2010. Country Partnership Strategy: Tajikistan, 2010 2014. Manila. 7 Attached to ADB. 2007. Report and Recommendation of the President to the Board of Directors: Proposed Loans, Technical Assistance Grants, and Administration of Loans to the Islamic Republic of Afghanistan and the Republic of Tajikistan for the Regional Power Transmission Interconnection Project. Manila (TA 4908-TAJ).

REGIONAL DEPARTMENT S RESPONSE TO THE PROJECT COMPLETION REPORT VALIDATION REPORT On 12 April 2011, Director, Independent Evaluation Division 1 of the Independent Evaluation Department (IED) received the following comments from circulated the draft Project Completion Validation Report for interdepartmental comments. IED received the following comments from the Energy Division of the Central and West Asia Department. We do not share some views of IED, particularly, related on the relevance of the project. No further comments from our side.