Promoting Clean Urban Public Transport in the Kyrgyz Republic by OECD

Promoting Clean Urban Public Transport in the Kyrgyz Republic Designing a green investment programme POLICY HIGHLIGHTS

Introduction The Organisation for Economic Co-operation and Development (OECD) and the Ministry of Economy of the Kyrgyz Republic (hereafter “Kyrgyzstan”) joined forces in 2018. Together, they analysed how a public investment programme could benefit the country’s environment. Specifically, they explored how an influx of funds could spur the development of cleaner public transport, and reduce air pollution and greenhouse gas (GHG) emissions from public transport in large urban centres. This work was carried out as part of the OECD project on “Promoting Green Growth and Low-Carbon Development: Analysis and Support to Policy Dialogue on Key Governance Elements of the Green Economy Concept in the Kyrgyz Republic” (2018-2019). The investment programme focused mainly on supporting the shift to modern buses. Such buses would be powered by cleaner (fossil) fuels – such as natural or petroleum gas – or electricity generated by these or other renewable energy sources (wind, solar or hydro power). This collaboration led to the development of the Clean Public Transport Investment Programme (CPT Programme), and a stepby-step guidance on its design and implementation in two phases: l Phase 1 (pilot phase) that will cover two cities – Bishkek and Osh l Phase 2 (scaling-up phase) that would be extended to cover suburban areas of the two pilot cities together with some intercity connections in Kyrgyzstan. The programme developed and costed two different phases, and identified and analysed four possible investment project pipelines. The pipelines focus on the replacement of the old public transport fleet in urban, suburban or even rural areas of the country. The new vehicles would be modern buses fuelled by compressed natural gas (CNG) or liquefied petroleum gas (LPG), or by electric power (trolleybuses and battery-powered trolleybuses). As a final option, Kyrgyzstan could continue with diesel-fuelled buses that meet Euro V/VI emission standards. The OECD also developed an accompanying model, Optimising Public Transport Investment Costs (OPTIC) (Box 2), to estimate costs and benefits of the CPT Programme for each respective phase and pipeline.

POLICY HIGHLIGHTS

Why a clean public transport programme? The context The transport sector is responsible for 28% of GHG emissions in Kyrgyzstan and, in cities like Bishkek, for 75% of emissions of air pollutants. Most public transport vehicles in the country are well beyond their useful life and need replacement. Buses and minibuses mostly run on diesel, while diesel engines typically correspond only to Euro IV standards or lower. The country has two “unconditional” mitigation targets to reduce GHG emissions. By 2030, it seeks to reduce emissions by 11.5-13.8% compared to business as usual (BAU). By 2050, the target increases to 12.7-15.7% below BAU. In addition, it has “conditional” targets to reduce GHG emissions between 29.0-30.9% below BAU by 2030, and from 35.1-36.8% below BAU by 2050. These targets are conditional on international support for the country, including low-cost financial resources, technology transfer and technical cooperation. Kyrgyzstan has the basic policy and regulatory framework to advance clean public transport in place. However, it still lags behind in developing modern emission norms for passenger cars, as well as for heavy-

duty truck and bus engines. In the country’s public transport, 97% of all vehicles run on diesel and 54% of the fleet is more than 15-years-old. These structural and technical features make vehicle transport an important contributor to poor air quality in many cities in Kyrgyzstan. The government has committed to develop energyefficient local public transport. However, this shift will require significant resources, both private and public. On the one hand, transport fares are as low as USD 0.12 per single ride. On the other, high interest rates on credit – about 15-16% per year on newly issued long-term credit in national currency – constrain access to financing that could allow purchase of a modern fleet. Without state support and/or tariff increases, the modernisation of the public transport fleet will continue to lag.

Figure 1. CO2 emissions by sector in Kyrgyzstan, 1990 and 2018 (percentage of total fuel combustion) % 40 1990

2018

35 30 25 20 15 10 5 0 Transport

Electricity and heat production

Manufacturing industries and construction

Residential buildings and commercial and public services*

Other sectors

Note: *2000/2018 figures Source: World Bank (https://data.worldbank.org).

INTRODUCTION . 1

Designing a green investment programme

Key policy messages The analysis and consultations with Kyrgyz stakeholders have brought to light some key barriers to the development of clean public transport in the country. These barriers, and the required policy actions to overcome them, are described below. KEY BARRIERS Lax diesel engine emission norms: The Kyrgyz Republic has not yet developed modern emission norms for both passenger cars and heavy-duty truck and bus engines. Euro 5 standards are to come into effect in 2019, but only for fuel, not engines. In contrast, in 2014, Europe instituted the Euro 6/VI standard. Low (diesel) fuel standards: Modern diesel engine emission norms cannot be introduced if the available fuel does not meet certain standards. This is because engines include equipment sensitive to low-quality fuel, and sulphur dioxide (SO2) emissions directly depend on the fuel’s sulphur content. It is possible to find Euro 5 fuel in the Kyrgyz Republic, but most available diesel fuel only meets Euro 3 standards.

same time, banks face low levels of trust from potential depositors, lack of good bankable projects and low rates of loan recovery.

POLICY ACTIONS TO OVERCOME THE BARRIERS Inter-ministerial co-operation in greening transport policies. The involvement of other ministries beyond the Ministry of Economy may increase the chances of success for the CPT Programme. This is particularly true for the Ministry of Transport and Roads. The Ministry of Finance (as the main guarantor of public debt) can support the programme by issuing guarantees on bank loans; this would contribute to achieving low-carbon mobility.

Weak technical inspection standards: Although buses must pass periodic technical inspection, the process has become a mere formality. Few vehicles fail the test. Accordingly, if inspections are not strict on emissions, there is no signal to bus owners to improve emissions standards of their vehicles. Inadequate pricing signals: Although CNG and LPG fuels are cheaper than diesel, the buses are more expensive (or require installation of additional equipment). In addition, operators have no real incentives to switch to clean fuels. Signals that might encourage a switch – such as value-added tax (VAT) and duty tax exemption for clean(er) transport means or infrastructure – are weak. Insufficient support to producers for clean buses: Although some bus production in Kyrgyzstan exists (or is planned), producers and investors have no fiscal incentive to manufacture (or plan to manufacture) modern and cleaner vehicles in the country. Lack of easy access to credit: The financial sector in Kyrgyzstan is relatively small and dominated by banks. Due to high interest rates and high collateral on loans, banks play a limited role in providing credit. At the 2 . OECD POLICY HIGHLIGHTS: PROMOTING CLEAN URBAN PUBLIC TRANSPORT IN THE KYRGYZ REPUBLIC

POLICY HIGHLIGHTS

Changes in the fare system for public urban transport. Tariffs should maximise the social welfare of both passengers and public transport providers, subject to budget and capacity constraints. Changes in public tenders for providing public transport in urban centres. Kyrgyzstan could shift from short-term contracts among operators that effectively discourage investments towards a medium- or longterm approach. Together with a good fare system, regulatory improvements and financial support from the state, longer contracts are more likely to lead to the modernisation of bus fleets. Incentives for CNG/LPG vehicles. The National Sustainable Development Strategy 2013-2017 envisaged the promotion of green technologies via new financial tools such as green taxes or customs duties (GoK, 2013). The government of Kyrgyzstan could also consider targeted tax exemptions (including VAT and import duties) for CNG/LPG vehicles and for owners of refuelling stations.

Promoting local production of clean engines. The CPT Programme focuses on providers of public transport services. However, another support programme could introduce incentives for manufacturing or assembly of efficient buses running on alternative fuels (CNG, LPG) with lower carbon dioxide (CO2) and particulate matter (PM) emissions. As similar investment programmes in post-Soviet countries have shown, creating local demand for new vehicles can spur domestic production (mostly in co-operation with a foreign manufacturer). Encouraging (energy) efficiency in public transport. In densely populated areas, regular (higher capacity) buses are more efficient than minibuses. Fuel, and therefore cost, savings can be achieved by increasing the efficiency of public transport operations. For example, dedicated bus lanes can reduce the need to use inefficient mechanical braking. Eco-driving â&#x20AC;&#x201C; a driving-awareness technique that can reduce fuel consumption â&#x20AC;&#x201C; can be promoted at schools for bus drivers.

KEY POLICY MESSAGES . 3

Designing a green investment programme

Essential elements of a green public investment programme The public financier needs to ensure that green public investment programmes are designed in line with good international practices. These practices reflect the minimum requirements to ensure transparency and cost-effectiveness of public spending: Clearly defined objectives and priorities â&#x20AC;&#x201C; these objectives should be specific, measurable, realistic and time-bound and priorities

Clearly defined timeframe of the programme

Specified cost estimates of achieving the objectives

Specified sources of financing, specified eligible project types and eligible beneficiaries

Clearly defined terms of financing including, among others, financial instruments (eligible form of subsidy), co-financing requirements, minimum/maximum level of support

Well-documented principles, rules and operating procedures for project cycle management

Clearly defined and robust criteria for appraisal, selection and financing of investment projects Source: OECD (2007).

A public investment programme consists of two main stages: analysis and design (defining essential elements) and implementation. Implementation requires that public authorities select the best institutional

arrangement; ensure stable and predictable sources of finance; and hire qualified managers. While these elements may look rather obvious and logical, their practical application is often quite challenging.

BOX 1. OECD TOOLBOX FOR STRENGTHENING GREEN PUBLIC FINANCE IN EECCA The OECD has assisted the countries of Eastern Europe, Caucasus and Central Asia (EECCA) to improve the management of their public resources allocated for green investments. The OECD toolbox includes a number of practical tools that can be used in the preparation of public investment programmes:

l An Excel-based model called Optimising Public Transport

Investment Costs (OPTIC) and a methodology to support the design of green investment in the public transport sector. The methodology, developed as part of the study on Kazakhstan (OECD, 2017), calculates the main financial and environmental parameters of the programme.

l Good practices for public environmental expenditure

management www.oecd.org/env/outreach/38787377.pdf. l Handbook for appraisal of environmental projects financed

from public funds www.oecd.org/env/outreach/38786197.pdf.

4 . OECD POLICY HIGHLIGHTS: PROMOTING CLEAN URBAN PUBLIC TRANSPORT IN THE KYRGYZ REPUBLIC

POLICY HIGHLIGHTS

Step

STEP 2: Defining programme objectives

Step

What are the main objectives and why were they selected? The programme seeks to reduce air pollution and GHG emissions primarily in urban centres, and help the government achieve its climate-related and environmental objectives. In line with Kyrgyzstan’s transition to a greener path of development, the CPT Programme will also contribute to socio-economic advancement of the country. In particular, the programme’s objectives are to:

Step

Specifying programme targets

Estimating programme costs and level of subsidy

Defining eligible projects and beneficiaries

Selecting programme’s institutional set-up

Step

Defining programme objectives

Setting programme timeframe

l Reduce GHG emissions. l Reduce emissions of hazardous air pollutants in

urban areas.

Step

Determining sources of programme financing

l Modernise the urban (suburban, inter-city) transport

fleet, increasing the reliability and efficiency of public transport. l Stimulate the domestic market to produce, or at least

assemble, modern buses and trolleybuses.

Step

Choosing financial instruments

STEP 1: Determining the focus of the programme What is the main focus of the programme in Kyrgyzstan? The CPT Programme seeks primarily to green the public transport sector in Kyrgyzstan and encourage lowcarbon mobility. This would be achieved by switching to modern public transport vehicles (buses, trolleybuses and minibuses). These vehicles would run on cleaner fossil fuels – such as natural gas, petroleum gas and diesel Euro 5 and 6 – or have power generated by cleaner fossil fuels or renewable resources (wind, solar and hydro power). How was programme focus determined? Defining the focus of the programme is a political decision. In this case, the Ministry of Economy made the decision. It consulted with main stakeholders in the country, both governmental and non-governmental at the national, regional and local levels.

How were the objectives defined? A market analysis determined the need for public support in the target sector – i.e. public transport – given the programme’s objectives. It reviewed the status of the bus fleet (ownership status, age, fuel type used); the market for CNG (or liquefied natural gas – LNG), LPG and electricity as alternative transport fuels/power carriers; domestic production and import of buses; bus fares for urban transport; and co-financing available for investment projects. Figure 2. Emissions of air pollutants from mobile and stationary sources in Kyrgyzstan, 1990 and 2010 600

Transport

Others

500

Thousand tonnes

Determining the focus of the programme

400 300 200 100 0

1990

2010

Note: Reflected air pollutants include NOX, CO and SO2. Source: GoK (2016).

ESSENTIAL ELEMENTS OF A GREEN PUBLIC INVESTMENT PROGRAMME . 5

Essential elements of a green public investment programme

STEP 3: Specifying programme targets The programme objectives are translated into straightforward and measurable numeric targets: l Reduce CO2 emissions in the transport sector in

Kyrgyzstan by 0.6% after the pilot phase, and by 3.2% after the scaling-up phase (compared to a 2010 baseline).

l Reduce emissions of air pollutants in the transport

sector in Kyrgyzstan – carbon oxide (CO), nitrogen oxides (NOx) and sulphur dioxide (SO2)1 – by 0.2% after the pilot phase, and by 0.9% after the scaling-up phase (compared to a 2010 baseline), and contribute to a reduction of particulate matter (PM) – especially PM2.5 – by 6.0 tonnes after the pilot phase and by 29.0 tonnes after the scaling-up phase. 1. The total emissions value is based on simple summation of individual pollutant emission weights. In the baseline value, CO accounted for 88%, NOx for 11% and SO2 for 1% of the total weight.

l Increase the ratio of new buses (less than five-years-

old) used for urban, suburban and inter-city public transport in Kyrgyzstan from 5.7% (a 2017 baseline) to 38.0% after the pilot phase, and to 83.6% after the scaling-up phase. l Increase the ratio of new trolleybuses (less than five-

years-old) in the fleets of Bishkek and Osh from 44.1% (a 2017 baseline) to 91.8% after the pilot phase. l Decrease the ratio of minibuses in the public

transport fleet in Kyrgyzstan from 86.0% (a 2017 baseline) to 83.1% after the pilot phase and to 66.3% after the scaling-up phase. l Increase the ratio of CNG-fuelled buses in the public

transport fleet in Kyrgyzstan to 4.6% after the pilot phase and to 23.2% after the scaling-up phase. To achieve these targets, the government of the Kyrgyz Republic needs to assign institutional roles for programme implementation and designate financing for it.

The new vehicles would be modern buses fuelled by compressed natural gas (CNG) or liquefied petroleum gas (LPG), or by electric power (trolleybuses and battery-powered trolleybuses).

6 . OECD POLICY HIGHLIGHTS: PROMOTING CLEAN URBAN PUBLIC TRANSPORT IN THE KYRGYZ REPUBLIC

POLICY HIGHLIGHTS

How were the targets defined? The targets were defined as part of the analysis in the market study. Among other issues, the market study analysed the feasibility of the programme targets.

STEP 4: Setting programme timeframe

The project used OPTIC, an Excel-based model, to determine the amount of reductions of CO2 emissions and air pollution possible through replacement of an outdated public transport fleet. The OPTIC model was developed within the framework of the OECD regional project of which Kyrgyzstan is a part (“Strengthening public finance capacity for green investments in the countries of Eastern Europe, Caucasus and Central Asia”).

Implementation of the CPT Programme is proposed in two phases.

What is the timeframe for implementing the programme?

The model helps to design the programme that contains: l costs, both public and private l proposed financing instruments, both repayable and

non-repayable l expected outcomes, both environmental and socio-

economic. The programme design also entails institutional arrangements that can be set up to manage an investment programme in clean public transport, as well as proposed procedures for project cycle management. The programme foresees accompanying measures to support implementation. It also reflects and proposes complementary actions based on reviews and analyses of macro-economic and environmental conditions; policy and regulatory framework for the transport sector; and market analysis of clean fuels and technologies.

The first (pilot) phase is designed for two cities (Bishkek and Osh) and is expected to last for one year. The results of this first phase should be evaluated to decide whether to continue. In the event of a positive decision, a second phase would extend the network to suburban areas of the pilot cities or even inter-city routes. This second (scaling-up) phase – designed to last for five years – would require the establishment of a programme Implementation Unit at the national level (see Step 8). Before the pilot phase of the programme is launched, a (one-year) preparation period will be needed to incorporate the programme in the state budget process. If necessary, the preparation period would also allow Kyrgyzstan to identify and apply for funding from additional sources, including donors. How was the timeframe determined? The programme held discussions with the main counterpart (Ministry of Economy) and other stakeholders. It also analysed the experience of other countries with similar publicly supported investments. In this way, it determined the timeframe, which also accounts for the time needed to assemble buses in the country (optional).

Figure 3. Proposed timeline (in years) Year 1 Programme preparation

Year 2

Year 3

Pilot phase: implementation in 2 cities Evaluation of the pilot phase

Year 5

Year 4

Year 6

Year 7

Second phase

Continuous monitoring and evaluation of the programme

Setting up of the Implementation Unit

Programme marketing Source: Author’s assumptions

ESSENTIAL ELEMENTS OF A GREEN PUBLIC INVESTMENT PROGRAMME . 7

Essential elements of a green public investment programme

STEP 5: Estimating programme costs and level of subsidy What are the costs of implementing the CPT Programme? Two phases were proposed and costed. Phase 1 (pilot phase) covers urban public transport in the cities of Bishkek and Osh. Phase 2 (scaling-up phase) extends to suburban areas of the pilot cities and some inter-city transport. Phase 1 targets primarily the replacement of the most worn-out vehicles, whereas Phase 2 aims to increase the service area. l In Phase 1, the cost of replacing 95 trolleybuses and

adding 20 new ones (115 in total) and purchasing 288 CNG buses – that will retire 128 diesel buses – will be KGS 4 088 million (USD 59.36 million), of which KGS

2 037 million (USD 29.58 million) is required as public co-financing. l Phase 2 considers the replacement of buses in

suburban areas of Bishkek and Osh, as well as a rough estimate for an indicative portion of buses used for inter-city connections. This would involve a purchase of 870 CNG buses and 90 modern diesel buses for KGS 9 603 (USD 139.44 million), of which KGS 3 762 (USD 54.63 million) is required as public co-financing. The investment cost of both Phase 1 and Phase 2 of the CPT Programme is estimated at KGS 13 691 million (USD 198.8 million). Of this amount, the public support needed will be KGS 5 799 million (USD 84.21 million). These costs exclude preparation and implementation. If these elements are included, the cost to the state budget will be KGS 5 814 million (USD 84.42 million).

BOX 2. THE OPTIC MODEL The Optimising Public Transport Investment Costs (OPTIC) model is an Excel-based, simple and easy-to-use decision support tool. OPTIC helps calculate and optimise total programme costs, emissions reductions of CO2 and other pollutants from urban public transport (CO, NOX, PM, SO2) that could be achieved via the proposed project pipelines. The model also allows calculation of the optimal level of subsidy that can be offered to potential beneficiaries. Optimisation of costs and benefits implies achieving given targets at the lowest possible cost for the public financier. Both targets and subsidy levels can be further re-calculated

(or optimised) and adjusted accordingly. This would occur if underlying economic conditions in the country change over the programme (e.g. tariffs are increased, interest rates on commercial loans are lowered) and/or available public financing is reduced or augmented. The model consists of seven modules: i) assumptions; ii) emission factors; iii) transport sector overview with information on current bus fleet and age; iv) determination of subsidy level; v) cost calculation; vi) emission reductions calculation; and vii) programme costing and environmental effects.

8 . OECD POLICY HIGHLIGHTS: PROMOTING CLEAN URBAN PUBLIC TRANSPORT IN THE KYRGYZ REPUBLIC

POLICY HIGHLIGHTS

Table 1. Financial results of modelling New buses Bus

Investment costs

Minibus

Trolleybus

mln USD

Diesel

CNG

LPG

Diesel

LPG

Total

Subsidy

Beneficiary

Phase 1

288

115

Phase 1&2

1 158

115

199

115

Source: OECD calculations, OPTIC model.

Table 2. Environmental results of modelling Emissions reductions per year CO2

NOx

PM2.5

SO2

Phase 1

12 114

63 059

249 013

6 002

5 681

Phase 1&2

68 506

306 608

1 236 180

29 022

27 291

Note: *Normative emission factors. Source: OECD calculations, OPTIC model.

How were the costs calculated? The OPTIC model was developed to calculate programme costs, emission reductions and the optimal level of subsidy (financial support) for public transport operators to stimulate demand for cleaner transport vehicles. The model optimises the return on investment for service providers with the amount of subsidy required to stimulate the market, given the pollution reduction targets. This model was also used to determine the amount of financing necessary to meet the targets. In

addition, it helped analyse the potential to raise funds for the programme. What are the main results of modelling work? Table 1 and Table 2 summarise the main financial and environmental results of the modelling. These show the number of new clean buses that can be purchased in each phase of the programme and expected emissions reductions. They also show the cost of these investments for both the programme financiers and public transport operators (beneficiaries of the programme).

ESSENTIAL ELEMENTS OF A GREEN PUBLIC INVESTMENT PROGRAMME . 9

Essential elements of a green public investment programme

Public transport operators will most likely be unwilling to opt for a higher upfront investment. Step 6: Determining sources of programme financing

to opt for a higher upfront investment. To stimulate lowcarbon mobility, the government will need to subsidise such investments.

What are the sources for co-financing the CPT programme? The CPT programme can be financed by a mix of public funds (state and/or international) and private funds. The state component would be part of the mediumterm expenditure framework process. In the preparation phase, the government may seek additional financing from donors, if necessary. In most cases, the main source of financing will be public transport operators’ own financial sources (revenue, profits, commercial loans, etc.). New vehicles are less air-polluting, but also more expensive. Therefore, public transport operators will most likely be unwilling

How was the level of subsidy defined? Given the social nature of this investment, the OPTIC model recognises that investments should generate at least a minimum return for the providers of public transport services. Thus, a social discount rate of 5% was used to determine the net present value (NPV) of the investment needed to replace an old bus. This discount rate is similar to the one used by other public financing institutions that support similar investments. The subsidy is then determined at the level at which NPV is equal to zero. The subsidy will encourage potential beneficiaries to participate in the CPT Programme without allowing them to generate a profit based on the subsidy.

Figure 4. Total investors’ and state budget costs of the CPT Programme

7 000

Investor (PTO*)

110

Programme (state)

100 90

6 000

KGS mln

5 000

70 60

4 000

3 000

40 30

2 000

1 000

10 Bishkek

Osh

Bishkek

PHASE 1 Note: *PTOs – public transport operators. Source: OECD calculations, OPTIC Model.

10 . OECD ALIGNING POLICY POLICIES HIGHLIGHTS: FOR A PROMOTING LOW-CARBON CLEAN ECONOMY URBAN–PUBLIC A SYNTHESIS TRANSPORT IN THE KYRGYZ REPUBLIC

Osh PHASE 2

Other cities

USD mln

8 000

POLICY HIGHLIGHTS

To stimulate low-carbon mobility, the government will need to subsidise such investments. Step 7: Defining eligible projects and beneficiaries What are the eligible project types? The main types of eligible projects that were defined to be supported through the programme include: l Projects that aim to replace old buses and that

provide public transport services in urban centres with environmentally friendly diesel models equipped with Euro VI engines, engines using CNG/LPG or with trolleybuses. –S ince Kyrgyzstan’s bus fleet is ageing, the proposed pipelines are intended to support the purchase of new buses, not simply the modernisation of bus engines.

Who are the eligible beneficiaries? The following types of beneficiaries are eligible to receive support from the CPT Programme: l private public transport operators that serve eligible

urban centres (Phase 1) and suburban areas of the pilot cities or inter-city connections (Phase 2) l municipal public transport operators that already

serve eligible urban centres (Phase 1) and suburban areas of the pilot cities (Phase 2) l city administrations (for preparation of necessary

studies).

–M inibuses that dominate public transport are not excluded, while preference is for normal buses (>10m length). l Other investments such as studies; construction

of CNG filling stations; creation of maintenance workshops for new buses; and additional investments that improve public transport services that accompany the replacement of buses in the four pipelines (CNG, LPG, diesel, trolleybuses). Only investment projects (i.e. those involving capital outlays) are eligible for financing under the programme. The programme’s Implementation Unit will review the list of eligible projects annually to ensure that identified project types are relevant to national environmental, climate and energy policy goals.

ESSENTIAL ELEMENTS OF A GREEN PUBLIC INVESTMENT PROGRAMME . 11

Essential elements of a green public investment programme

Figure 5. Financing from own sources and public grant

CPT PROGRAMME

PUBLIC TRANSPORT OPERATORS

l Grant

l Purchase of new bus fleet financed

from public transport providers’ own sources and a grant

l Programme promotion, selection

procedures and standards, monitoring

l Direct contract with the

Implementation Unit

l Direct contract with beneficiaries l Programme management by

Implementation Unit

Source: Author’s assumptions

Step 8: Choosing financial instruments

Step 9: Selecting programme’s institutional set-up

What are the financial instruments that can be used to disburse programme resources?

To facilitate implementation of future programmes, the OECD study has developed some supporting materials that include, among others:

The financial support can be provided in the form of: l grant co-funding l loan guarantees.

How were these instruments chosen? For the CPT Programme, the most likely financing option will be bus operators’ own resources (private and municipal ones) combined with a national-level public grant to motivate bus operators to allocate their own financial resources (Figure 5). To date, international financing institutions and donors have played key roles in the modernisation of the public transport fleet in Kyrgyzstan. State budget financing, either directly through the budget or from special funds, has not been used. In the future, commercial loans combined with public support in the form of loan guarantees and grants from public sources can be given to bus operators. They can use these funds to repay a portion of the loan.

l a proposal for project cycle management procedures,

including eligibility and appraisal criteria, ranking and financing rules l a proposal for institutional arrangements to manage

the CPT Programme comprising three levels: – Programming Entity (PE): The PE designs the programme; the Ministry of Energy could play this role. – Implementation Unit (IU): The IU is charged with drafting the programme’s operating regulations (marketing, announcing calls for proposals, collecting applications, appraising and selecting projects for financing, disbursing funds, and monitoring and evaluating rollout and results). – Technical Support Unit (TSU): The TSU provides specialised assistance, advice and expertise in the areas of energy and fuel efficiency, CNG and LGP buses, modern diesel buses, and air pollution and GHG emission reductions. Regardless of the institutional form, the programme management should involve an institutional structure and procedures that promote environmental effectiveness, embody fiscal prudence, and use financial and human resources efficiently.

12 . OECD POLICY HIGHLIGHTS: PROMOTING CLEAN URBAN PUBLIC TRANSPORT IN THE KYRGYZ REPUBLIC

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References