DUSHANBE, August 7, 2014, Asia-Plus – The report that was released by the World Bank Group (WBG) in June this year, Assessment of Household Energy Deprivation in Tajikistan: Policy Options for Socially Responsible Reform in the Energy Sector , notes that every year an estimated seventy percent of Tajikistan''s population suffers from severe electricity shortages in winter. The energy sector was affected by dramatic changes over the last few decades – regional energy cooperation was disrupted after the break-up of the Soviet Union, gas imports were interrupted, and the state was unable to invest adequately in the maintenance of the national energy infrastructure. Tajikistan has been facing severe power shortages in winter months since the district heating system collapsed and households as a consequence started to use electricity for heating purposes. This report assesses energy deprivation in Tajikistan with an emphasis on the human dimension, paying special attention to rural areas.  It analyzes energy use and spending patterns across diverse groups of consumers, low and middle-income, rural and urban, people who live in houses and those who live in apartments, as the type of energy used determines household vulnerability, examines impacts of energy expenses on the household budget, and strategies adopted to cope with energy payments, and collects consumer attitudes towards potential measures to improve energy security and affordability, such as social assistance and support to improve energy efficiency.  It explores the conditions under which an electricity tariff increase would gain acceptance among consumers.  The report also simulates the quasi-fiscal impact and the targeting performance of a series of measures that could cushion the impact of rising energy expenditure.

According to the report, Tajikistan’s electricity tariffs are the second lowest in Europe and Central Asia and energy efficiency is extremely low. A recent World Bank report on the winter energy crisis in Tajikistan emphasized the need to raise tariffs in order to better recover costs and improve services.  At the same time, there are important concerns about the affordability of electricity price increases in an environment where alternatives such as gas and district heating are no longer available, incomes are low, and where consumer trust in the integrity and transparency of the electricity utility company is limited.

The report, in particular, notes that implicit electricity subsidies - resulting from supplying electricity to households at a price that does not recover its cost - are regressive and benefit richer households more than the poorest groups.

Residential tariff increases might be acceptable to the population, especially in rural areas, but only if a number of conditions related to quality of service, and transparent and equitable billing methods are met, the report says.

An increase in electricity tariffs – needed to make plans for addressing Tajikistan’s electricity crisis financially viable – also would need to be accompanied by measures to protect low income households. The report notes that a fifty percent increase would have the largest impact on poor households in Dushanbe and other urban areas.  During the heating season, spending on energy would rise from about 14 percent to almost 19 percent of household consumption in Dushanbe and would reach 20 percent for the poorest households in other urban areas.  This assumes that electricity consumption patterns remain unchanged, a realistic assumption on the short term, especially for apartment dwellers for whom there are no safe heating alternatives.