ADB ready to support private sector's electricity distribution projects in Azerbaijan

The Asian Development Bank (ADB) has expressed its readiness to support private sector projects in electricity distribution in Azerbaijan, according to its final report on the Investment Program for Improving Electricity Distribution implemented in the country since 2016.

According to Report, which cites the document, the goal of Azerishig OJSC, Azerbaijan's national power distribution company, to gradually liberalize the electricity market indicates an increasing role for the private sector in this field in the future. This aligns with the global trend of power sector reforms aimed at boosting efficiency, attracting investments, and improving service quality.

In addition to sovereign financing, ADB is prepared to support private sector projects in electricity distribution. The bank also stands ready to continue supporting Azerishig's reform efforts by promoting regular tariff reviews and supporting the adoption of necessary measures for market liberalization.

Azerbaijan has been making steady progress in improving its power infrastructure and reducing losses. The ADB report notes that out of the three outcome indicators, one has been fully achieved, while two have been partially achieved. The average annual unserved energy due to power outages was targeted to be less than 1% of energy sales by 2022, but this was only partially achieved, with unserved energy being less than 5%.

Losses in the country's distribution network were aimed to be reduced to 8%, and this target was partially met, with losses decreasing to 10.3% (8.6% technical losses and 1.7% commercial losses), down from the 16% baseline in 2014. The collection rate at national distribution companies was set to increase to 95%, and this goal was successfully achieved, reaching 96%.

The ADB recommends that future projects should involve more intensive engagement with Azerbaijan on tariff rationalization and with "Azerishig" on ways to improve financial sustainability.