| The World Bank is assisting the Government of Eritrea to prepare a Power Distribution and Rural Electrification Project. In support of broad-based economic growth, the project's development objectives are to: (i) establish a sustainable program for expanding the population's access to electricity; and (ii) improve the security of electricity supply. Broadly, the Project envisages four components: Institutional and Capacity Building, to support the development of the institutional and regulatory aspects of the power sector; Asmara Distribution System Rehabilitation and Expansion; Rural Electrification, to increase electricity access in 50 rural towns and villages near the towns of Keren, Dekemhare, Barentu and Adi Keih to grid electricity; and Environmental Mitigation, which will finance the cost of implementing the Environmental and Social Management Plan prepared for the project. The Bank's assistance strategy for the power sector includes: (i) policy dialogue and technical support for capacity building; (ii) laying out the foundation, via technical assistance and investments, for commercially oriented development of the power sector. In this regard,
(a) the project will support the establishment of a financially viable electricity sector. It will assist the Government to make EEA an autonomous and financially self-sustaining company and to establish a legal and regulatory framework for the power sector, which, in the future, would enable private sector participation.
(b) the project's access expansion component seeks to change the way rural electrification is handled. First, it proposes to introduce technologies that would lower the costs of electricity distribution. Second, it proposes institutional changes that would facilitate the use of targeted capital subsidies in promoting service provision by cooperatives or private entrepreneurs.
(c) the rehabilitation component seeks to increase the security of electricity supply to support economic growth and to utilize the excess capacity in the plant at Hirgigo to remove the financial burden that would be imposed for as long as the plant is underutilized.
The project seeks the following outcomes:
For Increased Electricity Access: (i) EEA established as an independent and financially self-sustaining power company; (ii) modern power sector regulatory and institutional framework, conducive for future private sector participation adopted; and (iii) electricity supply extended to new consumers either directly or indirectly through improved public services.
For Improved Quality and Reliability of Electricity Supply: (i) voltage fluctuations and power outages in Asmara reduced to acceptable levels; and (ii) network losses significantly reduced.
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