ANALYSIS OF THE SITUATION

The sector is currently experiencing an unprecedented financial crisis brought on by a number of factors including neglect, which began in the last years of the Soviet period and worsened after independence, unclear responsibilities and competencies, and most importantly a lack of resources. None of the sector's institutions is able to cover even basic operational and maintenance costs, let alone replacement or rehabilitation of deteriorating facilities or construction of new ones. The water supply system is continuously deteriorating – old water treatment facilities break down, the system leaks, standpipes are continuously running, the supply of water is irregular, and polluted groundwater flows into the pipes during periods of interruption.

The use of energy is extremely inefficient. The difficult economic climate adds to the already tremendous pressure on the distribution networks, which are in a poor condition, badly maintained and overloaded. At the same time, collection levels are low, and consumers steal energy or accumulate large debts. More than 40% of energy is lost. Energy prices that are far from any cost reality add to commercial losses in the sector and account for a very large part of the countries quasi-fiscal deficit, thus exerting an overall negative impact on the economy.

COOPERATION GOALS

The goals of Swiss cooperation are to provide access to affordable, reliable and sustainable infrastructure and services in the domains of water and energy as the basis for economic and social development.

APPROACH

The focus of the cooperation is on rural, poorly serviced and regulated areas. These include appropriate tariff policies and promoting renewable resources and energy-saving measures. The preferred investment is in resource-saving structures, energy-saving technologies and environmentally sound goods and services.

The approach to Rural Water Supply and Hygiene that was tested successfully in Uzbekistan during the Mid-Term programme (2004-2007) will be replicated in neighbouring areas of Tajikistan through a new regional project. An exchange of experience among the urban water supply projects in Kyrgyzstan, Tajikistan and Uzbekistan will also be launched.

DEVELOPMENT PROJECTS

In frame of the Regional Cooperation Strategy in Central Asia (2007-2011), Switzerland continues to commit itself to the sustainable development of the region. The water and energy sectors have been chosen as response to key challenges posed to the region and as a domain critical for achievement of these strategic objectives. In the domain of Basic Infrastructure, which includes water and energy sectors, Swiss cooperation is to establish a reliable and adequate infrastructure as the basis for economic and social development.

In Kyrgyzstan, Rehabilitation of Drinking Water Supply System of Karakol Project aims to rehabilitate the whole water supply infrastructure of Karakol city. The rehabilitation of the Karakol water supply system will benefit 70,000 inhabitants and the local economy, particularly the tourism and food industries. Better water supply service will improve sanitary conditions among domestic consumers and in public buildings, including schools, markets and hospitals.

The Naryn III Electricity Losses Reduction Project focuses on the rehabilitation of electricity distribution systems in Naryn oblast. The development objective of the project is the improvement of the overall socio-economic conditions in the Naryn region through achievement of a sufficient and reliable electricity supply.

With this project, Switzerland is the largest bilateral donor in the country in the electricity sector. SECO also works together with the World Bank, the Kyrgyz government and the Parliament on creating an effective policy that would regulate the energy sector and support the reform. Since 1996 SECO has been financing three projects in the energy sector, with a total budget of USD 26 million.

In Uzbekistan, the Rural Water Supply (RWS) Project aimed to meet the existing demand for drinking water, improve health, and increase the living standards in the Ferghana valley. To achieve its goals, the project is installing or rehabilitating water supply systems in a number of villages in the Andijan and Ferghana regions of Uzbekistan and the Sugd Region of Tajikistan. It is also planned to build drinking water supply systems in 14 additional villages in Uzbekistan and 6 villages in Tajikistan.

Samarqand and Bukhara Water Supply and Sanitation project aims to improve the water supply by halting the deterioration of the supply infrastructure in Samarqand and Bukhara, reducing inefficiencies and addressing some of the most urgent priorities.

The project targets 650,000 residents in both cities, and involves an experienced private sector operator helping to bring better management to specific operations of the vodokanals, such as water supply services and the financial and commercial operations, as well as operational and technical know-how.

In Tajikistan, the Rural Water Supply Project emphasizes decentralized management of sustainable rural water supply and hygiene services at village level. Khujand Water Supply Project was launched in the second half of 2004. The Project has been undertaken to rehabilitate the necessary infrastructure and improve institutional capacity of Khujand Water Company (KWC). Main objective of the Swiss funded part of the Power Rehabilitation Project is to improve the quality of life of the Tajik population, particularly of poor people, by increasing availability and reliability of the electricity supply at an affordable price. The Government of Switzerland is co-financing the Pamir Private Power Project by subsidizing so-called "life line tariffs" with a contribution of 5 million USD for a period of 10 years. The project has pilot character as it is the first so-called Public Private Partnership Project (PPP) in Tajikistan.

CROSSCUTTING ISSUES

Swiss projects promote equal access to resources for men and women, and equal decision-making possibilities in the management of infrastructure. These projects also support the development of policies and laws that create incentives for more sustainable use of water resources.