ASTAE-Supported Activities during FY12 |
Allocations, Expenditures, and Country Updates
FY12 | Starting Activities under the New Business Plan
At the beginning of FY12, on July 11, 2011, the new ASTAE multidonor trust fund (MDTF) became effective and replaced single donor trust funds previously used. This MDTF provides the implementing tool for FY 2012-15 business plan was prepared by the ASTAE team in collaboration with the Technical Advisory Group (TAG) and donors. The fiscal 2012-15 business plan was presented at the ASTAE session of the 2011 Donors Consultative Group meeting.
In FY12, the ASTAE MDTF was endowed by two donors for a total of US$10,905,625:
- The Government of the Netherlands, with a deposit of US$8,000,000
- The Swedish International Development Agency (Sida) with a deposit of US$2,905,625
The Department for International Development of the United Kingdom also joined in FY13.
Overview of Allocations and Disbursements
With the MDTF in place in the summer of 2011 and funding received during the first half of FY12, ASTAE launched a call for proposals and subsequently allocated funds to approved activities in the fall of 2011.
In FY12, ASTAE allocated US$4,459,000 to new activities and disbursed US$741,930. Allocation levels are as targeted for FY12 in the business plan, allowing for a rapid ramp-up of activities. The relatively low levels of disbursements are explained by the shortened window for activity in FY12 and the usual lag between allocation of funds and disbursements that are conditional on advancement and completion of an activity’s tasks. However, with close to US$4.5 million allocated to activities in FY12, the pace of disbursements is expected to pick up in the coming years.
Allocations and Initial Disbursements
In FY12, ASTAE allocated funding to 16 activities in 9 countries and to 4 regional-level activities.
Consistent with donor agreements, ASTAE funds are primarily allocated to support activities, with the remainder used for administrative and reporting purposes (table 2-1).
Given that FY12 marks the start of a funding cycle, the focus of this report is on allocations, which illustrate the trend and direction of work undertaken using ASTAE funds. In accordance with the administration agreement, ASTAE allocated 91 percent of its funding in FY12 to in-country or regional activities, for a total of US$4,459,000. The next section explains these country and regional allocations and the related initial disbursements in further detail.
With only US$960,043 disbursed, and disbursements differing significantly from allocations, FY12 is not a representative year, for multiple reasons.
First, the one-time central administrative fee of 2 percent is withdrawn by World Bank central services at receipt of the donor contribution, and is not based on disbursement levels. The high level of endowment received in FY12 mechanically led to a US$218,118 central services fee (of which only US$98,000 can be allocated to FY12) that inflates the FY12 central administrative costs.
Second, with US$232,292 in FY12, ASTAE internal administration and reporting costs might appear high compared with total disbursements. However, these expenses remain within the 7 percent agreement when compared with allocations to activities (7 percent of US$4.9 million is US$343,000). It is expected that in the coming years, disbursements will increase significantly and will better reflect the share and amounts allocated to activities.
ASTAE Budget-Related Leverage
When ASTAE funds activities, the World Bank Group also contributes from its various budgetary sources to help carry out project tasks. This fund matching demonstrates the budget-related leverage that donor funding exercises in influencing World Bank projects.
Here again, FY12 is an atypical year, similar to FY04 or FY07 when the World Bank self-funded a significant portion of the project-related activities at the start of new business plan periods. The US$960,043 disbursed from the donor trust fund was complemented by US$1,034,339 from the World Bank, or 48 percent and 52 percent, respectively, of the total US$1,994,382 allocated to developing sustainable energy as a result of ASTAE-related activities.
As shown in figure 1, both the absolute value of resource mobilization and the ratio of World Bank–to-donor contributions vary over the years. Changes in the pattern of donor contributions and variation in the number of sustainable energy projects in the World Bank lending pipeline or under implementation cause these fluctuations. FY12 shows a drop in total resource implementation, as well as in the ratio of the donor share. This change is due to the new funding cycle, and both numbers are expected to increase significantly in the next few years.
Since its inception, ASTAE's leverage has doubled, to more than US$68 million, the budget for identification, development, and supervision allocated to sustainable energy by the World Bank in Asia. This successful leveraging highlights the value of donor funding that enables World Bank task teams to undertake challenging activities for which Bank budgets are normally very limited, but that are nonetheless necessary for identifying and preparing future sustainable energy projects or to troubleshoot problems in ongoing projects.
Distribution of Activity-Specific Allocations
ASTAE allocated US$4,459,000 to activity implementation in FY12. This section focuses on the activity-related portion of allocations; it does not include administrative and reporting costs. To provide an analysis of the use of donor funds, ASTAE’s activity-related allocations are broken down according to the key funding allocation metrics agreed upon in the business plan. These metrics are ASTAE pillars (figure 2); ASTAE countries (figure 3); type of execution; and supplementary themes such as cross-sector application, gender relevance, or early support to project development.
Activity-Related Allocations, by Pillar
In figure 2, the outer ring represents the amount allocated; the inner ring represents the number of ASTAE activities related to an intervention pillar. An ASTAE activity can relate to several pillars, therefore, the sum of activities in the inner ring among all pillars may exceed the total number of activities supported by ASTAE. However, in this report, to avoid double counting of fund allocations, allocation amounts in U.S. dollars are allocated among pillars based on the activity task team estimate of the percentage of the work applicable to each pillar.
ASTAE allocations in FY12 by pillar (figure 2) reflect the higher allocations to renewable-energy-related activities, with 54 percent of the total funds and 12 activities. This is in line with the business plan target to allocate half of the funding to the development of renewable energy. Access to energy is the second area of focus, with close to one-third of funding. Allocations to energy efficiency were below the planned amount. It should be noted that 10 out of 16 activities combine several pillars, with the combination of energy access and renewable energy being the most frequent combination.
With regard to country distribution of work by pillar, activities or components relating to renewable energy were present in every country covered in FY12, and energy-efficiency-related activities were developed in only three countries. Access-related activities stand in between, being the focus or a component of ASTAE activities in six countries.
Activity-Related Allocations, by Country
In FY12, two-thirds of the funding was allocated to the East Asia and Pacific region (EAP) with the remaining third to the South Asia region (SAR). The ratio of activities was nearly equal with a 55–45 split between EAP and SAR. The funding disparity reflects caution on the part of the ASTAE team, given that FY12 donors did not have SAR as their core focus. In addition, the use of ASTAE funds was a relatively new idea to the South Asia team, which called less frequently on ASTAE funds and also called for smaller amounts, as reflected in figure 3. This is expected to change in FY13 with the upcoming availability of UK Department for international Development funding that embraces SAR.
The average amount allocated to activities has increased significantly from previous practice, to close to US$300,000 from an average of US$120,000. This reflects the increasing complexity of ASTAE-supported activities as well as the related growing trend toward multiyear implementation.
With four activities, regional work represented more than a quarter of the amount allocated, continuing its growth trend initiated in past business plans. Indonesia benefited the most from ASTAE funding, in part as a result of the higher number of funding requests (three) and subsequent activities illustrating a dynamic portfolio. Small islands remain well represented, with Tonga and Maldives combining for 16 percent of funding.
With US$1,205,000 and 27 percent of allocations, support to International Development Association (IDA) countries remains below the targeted 40 percent of funds, in part as a result of the high levels of regional work (IDA countries represent 38 percent of allocations if only country-specific allocations are taken into account). In addition, in conformity with donor requests, no allocation to China was made in FY12, nor to India except as a minor share of regional work in SAR.
Activity-Related Allocations and Type of Execution
The fiscal 2012-15 business plan adds a new mode of execution for ASTAE activities by allowing for recipient execution in addition to the standard Bank execution, with a target of about 15 percent of allocations to be recipient executed.
In FY12, the first recipient-executed activity was initiated in Tonga, with a budget of US$400,000 or 9 percent of allocations. To minimize transaction costs and ensure smooth disbursements, this activity will be jointly implemented with a larger US$2.5 million recipient-executed grant provided by the Australian Agency for International Development (AusAID). The ASTAE-funded portion focuses on providing technical assistance to strengthen the recipient’s implementation capacity.
Adding recipient execution increases the flexibility of ASTAE support to client countries. For example, in Tonga, ASTAE was initially requested to co-finance US$300,000 to complement an AusAID grant. However, during the negotiations for this project, the government of Tonga requested that the Bank finance a study to determine the technical and financial feasibility of installing a tidal power system in Vava’u to provide a substantial portion of the electricity for the island.
ASTAE was able to provide additional financing of US$100,000 within one day through efficient communications between Tonga and Washington, DC, an example of how ASTAE can provide “just-in-time” support that few other programs can. This would not have been possible under Bank execution and may significantly increase the likelihood of better deployment of renewable energy in the country.
However, recipient execution is expected to remain a small portion of ASTAE funding because transaction costs are high for the relatively small grants that ASTAE can provide. Requirements related to procurement, financial management, or environmental and social safeguards, as well as the significant Bank supervision that these activities require, will limit the use of such recipient-executed activities to a narrow range of cases for which the gains from improved client engagement supersede these costs.
Activities that Contribute to Supplementary Themes
The fiscal 2012-15 business plan formalizes the contribution to supplementary themes that are now implemented and tracked by ASTAE in addition to its regular indicators. These supplementary themes relate to the support to and implementation of work that (a) facilitates cross-sector interactions, (b) contributes to the integration of the energy-water-food-security nexus, (c) enhances gender awareness and inclusion in projects, and (d) leverages private sector involvement.
Working on and including these supplementary themes is sometimes complex under regular Bank operations, and teams that have to focus on time-bound and energy-related outputs and impacts have difficulty finding the time and resources to explore alternative ways to deliver beyond their core stakeholders, even when they are interested in trying new approaches. Thus, building on a method that has proved successful in mainstreaming alternative energies, ASTAE will provide funding that can be used to add a component or a study related to these supplementary themes that will better inform a project.
Alternatively, funding can also be used to test a new idea or methodology that does not yet have a project application but that may be mainstreamed later. The latter option provides a chance for teams to take a risk that would not be possible under tight Bank budgets but that could provide high rewards in future Bank operations.
Facilitate Cross-Sector Interactions
In FY12, ASTAE funded two cross-sector activities with a combined total allocation of US$800,000. Cross-sector activities are usually activities that relate in one manner or another to energy but are handled, supervised, and implemented by teams from other sectors or units than the energy sector.
The first activity supported an initiative by the education sector that examined the development of innovative models to enhance access to renewable energy at the grass-roots level rather than through large-scale centralized initiatives. This initiative in Indonesia pilot tested technical and business support to small entrepreneurs in clean energy from the angle of working-adult-focused continuing education.
The second activity supported the continuation of previous work aiming at mitigating greenhouse gas emissions in the transport sector during construction of highways. Using previous ASTAE funding, a toolkit had been produced that helped road construction teams evaluate the different levels of emissions according to different construction methods. The new funding will enable the toolkit to be field tested in a specific road project in Vietnam to extend its use beyond construction to include the service phase in operations and maintenance, thereby getting closer to a real life-cycle analysis.
This attention to cross-sector collaboration will continue, and is likely to be extended in the coming years to other sectors, such as water or agriculture, with its focus on the energy-related dimension of cross-sector work.
ASTAE will fund activities that enhance the understanding and integration of the energy-water-food-security nexus in Bank programs. Activities under this nexus can be handled by energy teams or by teams from other sectors, in which case they are also considered to be cross-sector. In FY12, engagement related to this nexus was undertaken with the Vietnam energy team, and efforts will be made to reach out to other sector teams in the future.
ASTAE allocated US$450,000 to an activity that enables the energy sector in Vietnam to better analyze the impacts of hydro projects on related water, agriculture, and other stakeholders. The Cumulative Impact Assessment (CIA) activity on small hydropower projects in Vietnam will review all existing or reasonably foreseeable investments, facilities, or activities (“stressors”) under the Renewable Energy Development Project that have impacts on the river flow regime or its water quality in six rivers and will conduct a risk ranking of additional cumulative impacts.
The team will identify the potential receptors of negative impacts from the operation of the stressors in the six rivers considered. This review will include all Valued Ecosystem Components (VECs) that could be significantly adversely (or positively) affected. In the project context, VECs would be mainly those most vulnerable to hydrological or water quality changes that affect the flow regime, aquatic and riverine ecosystems, and economic activities and livelihoods depending on water from the six rivers (for example, fisheries, irrigated agriculture). The nature of the impacts will be described and their scale assessed in a qualitative manner.
River stretches with a combination of VEC and significant effects on either flow regime or water quality will be evaluated for environmental and social impacts. The use of the river and the aquatic life for ecosystem services and economic dependency on the rivers by local communities will be assessed, including through consultations.
Based on the results of the detailed CIA and tests of mitigation measures, operational rules for each major hydraulic infrastructure scheme will be formulated to ensure joint use of water resources among key stakeholders, including but not limited to energy, water, and agriculture users. The main objective of the proposed operational rules will be to optimize joint management of the basin. Existing schemes and agreed-on rules will be taken into account as much as possible to enable applicable rules and wide ownership.
Enhance Gender Awareness and Inclusion in Projects
Systematic engagement with the social teams in EAP was begun in FY12, with a contribution to the region’s gender action plan that led to specific gender-related activities in the following fiscal year. In FY12, one activity, with a budget of US$500,000 had significant gender and pro-poor dimensions.
The education sector–led activity targeting innovation capacity in clean energy in Indonesia will address gender issues in the use of energy-related products and services by integrating a gender-sensitive approach into both the needs identification (demand) and the design-related response (supply) phases. Many products and services that are currently in use in rural communities in Indonesia (and in other developing countries), or are marketed by businesses and nongovernmental organizations, do not consider gender-specific issues.
In many cases, energy products and services are designed with a limited understanding of the actual and cultural-specific needs of the women who will be using them. All-male research and design teams often develop only a limited understanding of needs as a result of communication barriers with women.
The program will address gender issues by targeting energy-related challenges for which women are the lead users. One example being addressed by the program is biomass cookstoves for home industries. The program will also address these gender issues by including women in the design team (which will also promote the development of women as green energy design professionals), by researching the specific needs of women during the research stage, by involving women in the co-creation process, by testing market solutions with women, and by assessing the impact of specific market solutions on gender issues. Finally, the program will address gender issues by targeting support to women entrepreneurs and promoting the inclusion of women in the choice of business mentors.
Following the pilot work, a toolkit for pro-poor, clean-energy, human-centered design will be developed and disseminated in Indonesia and globally. The toolkit will include special focus sections on gender issues in human-centered design.
Leverage Private Sector Involvement
The impact of ASTAE-funded activities on private sector development and involvement is only partially captured by the current monitoring system, which focuses on leverage of Bank projects that, by definition, are primarily implemented with and often by the government or its state-owned utilities. During its lifetime, ASTAE-supported Bank projects have registered contributions of about US$1.2 billion from the private sector; or about 22 percent of the total US$5.2 billion leveraged, an amount roughly equivalent to that provided by the governments.
However, this contribution mainly came from large-scale projects in China; therefore, with ASTAE’s withdrawal of involvement in China, this leverage of the private sector is likely to greatly diminish.
In fact, private sector involvement is expected to be higher in middle-income countries with opening markets than in IDA countries that often do not have the right frameworks and policies in place and constitute riskier markets. ASTAE will increase its attention to better tracking of the impact of upcoming activities and projects in a qualitative fashion, in addition to the hard investment numbers. However, these qualitative appraisals will be undertaken guardedly, given that past attempts to measure “indirect leverage,” in the absence of a clear metric or methodology, were at times impossible to substantiate.
Under the fiscal 2012-15 business plan, two qualitative examples of ASTAE-financed activity with high potential for private sector leverage can be provided. The first is current ASTAE support to the development of a third-party access code in Papua New Guinea to attract private sector investment and independent power producers in a more efficient manner. Access to electricity in Papua New Guinea is very low, at less than 10 percent of the population, and essentially limited to major urban areas.
Some 87 percent of the total population of Papua New Guinea lives in rural areas where electricity access is scarce. Although urban areas have access to electricity, supply is characterized as unreliable and often unaffordable. Papua New Guinea’s Electricity Industry Policy intends to address the problem by opening up competition in the industry so that households have better access to a reliable and affordable supply of electricity with sufficient power generated and distributed to meet future energy requirements. The development of the third-party access code will establish a framework for interested investors to access electricity transmission and distribution networks, with the objective of introducing further competitive avenues for the supply of electricity within Papua New Guinea.
The second example of private sector involvement can be found in the Indonesia Renewable Energy for Electrification project. In this project, ASTAE funding, in addition to providing technology mapping and a least-cost electrification plan for the use of renewable energy, is also aiming to produce a bankable prospectus. The prospectus would be prepared to fund the financing gap through syndication and related capacity strengthening by donors and interested private sector participants.
The prospectus would include detailed annexes as appropriate to make a clear, compelling, and credible case to the donors and to the private sector for filling the projected financing gap. In addition, the prospectus will identify, in sufficient detail, the implementation plan and the monitoring and evaluation and oversight mechanisms proposed to track performance, implementation progress, and results on the ground.