Promoting Clean Urban Public Transportation in Kazakhstan, Kyrgyzstan and Moldova

3. Summary of the main findings and observations from the country-level analyses and training workshops

Abstract

This chapter describes the main results of the preparation process for green public investment programmes in Kazakhstan, Kyrgyzstan and Moldova. It starts with a brief transport sector and air pollution assessment for each of the three focus countries. It then presents the main outcomes of the respective programme analysis, including costs and associated environmental benefits. The design also proposes a three-level structure for managing each country programme: 1) a programming entity; 2) an implementation unit; and 3) a technical support unit. Finally, it illustrates some key obstacles observed during implementation of the respective country projects.

3.1. Kazakhstan

3.1.1. Transport sector and air pollution assessment

Structural and technical features make vehicle transport an important contributor to the high level of air pollution in many cities in Kazakhstan. Transport vehicles generate 88% of greenhouse gas (GHG) emissions in the transport sector and contribute to the already high carbon intensity of the Kazakh economy. Most of these vehicles in Kazakhstan are more than ten-years-old. Cars and buses run mostly on diesel (about 80% of the fuel used). For their part, diesel engines barely correspond to the Euro 4/IV standard compared to Euro 6/VI used in Europe.

The basic policy and regulatory framework that can support advancement of clean public transport is in place. However, Kazakhstan still lags behind in development of modern emission norms for passenger cars, as well as heavy-duty truck and bus engines. The government has committed to develop energy-efficient local public transport. Kazakhstan presented its Intended Nationally Determined Contribution (INDC) at the Conference of the Parties (COP21) in Paris in 2015. It set the ambitious target of reducing GHG emissions by 15-25% by 2030 compared to 1990 levels (GoK, 2015[1]).

The analysis of the (urban) public transport systems in the 23 major cities of Kazakhstan further justifies the project. The State Programme for Infrastructure Development “Nurly Zhol” for 2015-19 set an ambitious target. It stated that 96% of settlements with a population of more than 100 people were to have regular bus routes by 2019.1 In addition, it sought to progressively halve the share of depreciated buses on regular passenger routes by 2019 (EO PoK, 2016[2]).

As of the first half of 2016, 185 providers – of which four are utility companies – operate urban public transport systems in Kazakhstan in cities of more than 100 000 inhabitants. The total bus fleet comprises 12 314 buses, including 3 555 minibuses (about 29% of the total fleet). Of these, transport providers own 6 258 vehicles, while the remaining 6 056 are leased or rented. Nearly one-third of buses (31%) are more than ten-years-old. Within the analysed fleet, over three-quarters of the buses (76%) are diesel-powered. Compressed natural gas (CNG) and petrol-powered vehicles each constitute 10% of the fleet, while liquefied petroleum gas (LPG) is used as a fuel in only 1 out of 25 (4%) vehicles.

The analysis of air pollution in Kazakhstan’s cities is based on data from the 2015 information bulletin on the environment. This bulletin is prepared by Kazakhstan’s National Hydrometeorological Service – RSE Kazhydromet, which monitors air quality based on 25 pollutants (Kazhydromet & MoE, 2016[3]). Kazhydromet assesses air pollution over the year using the air quality indicators. It estimates the amount of air pollution by type by comparing the actual concentration of a pollutant with its maximum allowable concentration (MAC, in mg/m³ or µg/m³).2

The Concept for Transition of the Republic of Kazakhstan to Green Economy is the main policy justification for the investment programme. The policy provides for the development of energy-efficient transport infrastructure and increased energy efficiency of local public transport by conversion to cleaner fuels (such as gas). The conversion would take place through specific measures to modernise the transport fleet. Through the policy, Kazakhstan would also apply European emission standards, inspect vehicle fleets and transition to gas in large cities such as Almaty, Astana, Karaganda and Shymkent by 2020 (sector) (EO PoK, 2013[4]).

Changing this situation will require significant resources, both private and public. However, transport fares are low – about USD 0.2 per ride (2016). Furthermore, high interest rates (13-19%) constrain access to credit. Without state support or tariff increases, the modernisation of the public transport fleet will continue to lag.

In 2015, the OECD and Kazakhstan joined forces to analyse how a public investment programme could achieve two goals. First, the programme needed to spur development of cleaner public transport. Second, it had to reduce air pollution and GHG emissions from the public transport sector in large urban centres in the country. They agreed the programme would focus primarily on supporting the shift to modern buses powered by clean fuels, such as CNG and LPG.

3.1.2. Programme analysis

The investment programme is designed to be implemented in two stages. A pilot phase (or Phase 1) covers the cities of Kostanay3 and Shymkent.4 A scaling-up phase (Phase 2) would extend the programme to cover all major urban centres in Kazakhstan. Unlike the Moldova or Kyrgyzstan country case studies, inter-city transport is not part of the programme. This is mainly due to a sufficient number of cities/towns with public transport networks, as well as large distances between them.

Kostanay is an ideal pilot city because it has 421 old buses (all diesel) and only 6 relatively new ones (also diesel-fuelled). Most of the old buses are 15-20 years-old. Shymkent uses 61 very old diesel buses (over 15-years-old) out of the fleet of 1 685 vehicles (about 4%). It also has 117 relatively old (10-15 years-old) models (about 7%) in the fleet. Given a bus usually has a useful life of 12 years, up to 89% of the fleet might be already depreciated. Since both cities suffer from air pollution from transport, reducing emissions of air pollutants is an important objective for municipal authorities.

Three project pipelines were identified for analysis and evaluation. They were considered both cost-effective and realistic to implement, including through the regular budgetary process. The pipelines focus on the replacement of the old bus fleet in urban centres with modern buses fuelled by:

1. compressed natural gas (CNG), where available

2. liquefied petroleum gas (LPG)

3. diesel, but considering the import of Euro 5 and Euro 6 fuel (until respective fuel standards are implemented in Kazakhstan).

Analysis shows that use of CNG and LPG to power public transport buses will bring down operating costs and create savings. This is due to the lower prices of these fuels compared to diesel. Improved diesel fuel, however – such as Euro 5 and 6 – can also be viable alternatives where neither CNG nor LPG is available.5 Within the analysed fleet in 23 towns/cities, over three-quarters of the buses (76%) are diesel-powered. CNG- and petrol-powered vehicles each constitute 10%, while LPG is used as a fuel in only 1 of 25 vehicles (4%).

Other potential investments include studies, construction of CNG filling stations, creation of maintenance workshops for new buses. Additional investments could also improve public transport services that accompany the replacement of buses in the three pipelines (CNG, LPG and diesel).

Replacing the outdated and depreciated domestic bus fleet would create more than environmental benefits. The analysis shows that domestic production of CNG-powered and diesel-powered buses can also be competitive and create additional jobs.6

Phase 1

The pilot phase, which covers the cities of Kostanay and Shymkent, is designed to run for one year. During this phase, 200 buses in Kostanay are expected to be replaced with modern models that run on LPG.7

The pilot phase for Kostanay is estimated to cost KZT 6 421 million (USD 18.72 million). Of this amount, the programme will co-finance KZT 3 079 million (USD 8.98 million). Private or municipal bus operators will invest the balance of KZT 3 342 million (USD 9.75 million).

In Shymkent, it is assumed that 100 buses will be replaced with modern CNG-fuelled buses.8 The total cost will amount to KZT 3 531 million (USD 10.3 million). Of this amount, the CPT Programme can contribute KZT 1 705 million (USD 4.97 million). Private or municipal bus operators can contribute the balance of KZT 1 826 million (USD 5.32 million).

The total cost of 100 CNG-fuelled and 200 LPG-fuelled buses (not minibuses) is estimated at KZT 9 952 million (USD 29.03 million). Of this amount, public finances will cover KZT 4 784 million (USD 13.95 million) and private or municipal bus operators will contribute KZT 5 168 million (USD 15.07 million).

Phase 2

The public transport sector has more room for substantial environmental improvements. After the pilot phase, an estimated 2 458 buses that are more than ten-years-old will remain in Kazakhstan. Of these 2 458 buses, 1 471 will still be more than 15-years-old.

Therefore, two scenarios for a second phase were costed using the Excel-based model developed for this study. The second phase is designed to cover all major urban centres in Kazakhstan (19 under Scenario 1, and 21 under Scenario 2) over five years. It will aim to replace buses of more than 15-years-old (Scenario 1) or buses more than 10-years- old (Scenario 2). Some cities (four for Scenario 1 and two for Scenario 2) are not included because they have no old buses.9

The two scenarios have one major difference. Under Scenario 1, the programme would only finance replacement of buses that are more than 15-years-old. Under Scenario 2, the programme would also support replacement of buses older than ten years.

Scenario 1: Modernising the old bus fleet in urban centres of 19 cities/towns in Kazakhstan. This would involve replacement of 15-year-old vehicles with 286 new CNG buses and 1 241 new LPG buses.

• Under Scenario 1, investments are estimated at KZT 51 574 million (USD 150.44 million). Of this amount, public financing amounts to KZT 25 615 million (USD 74.72 million). Private or municipal bus operators would contribute KZT 25 958 (USD 75.72 million).

Scenario 2: Modernising the old bus fleet in urban centres of 21 cities/towns in Kazakhstan. This would involve replacement of ten-year-old vehicles with 853 new CNG buses and 1 630 new LPG buses.

• Under Scenario 2, total investment would rise to KZT 84 629 million (USD 246.86 million). The public financier would contribute KZT 41 818 million (USD 121.98 million). Private or municipal bus operators would contribute KZT 42 811 (USD 124.88 million).

Summary and benefits

The pilot phase will result in 300 new urban public transport vehicles in two pilot cities (100 CNG and 200 LPG buses). After the scaling-up phase (Scenario 1), there will be 1 827 new urban public transport vehicles in 19 towns/cities in Kazakhstan (386 CNG and 1 441 LPG buses). Assuming the more ambitious scaling-up phase (Scenario 2) is implemented, 21 towns/cities in Kazakhstan would have 2 783 new urban public transport vehicles (953 CNG and 1 830 LPG buses).

Together, both phases of the programme would imply the following total costs:

• Phase 1 and Scenario 1 of Phase 2: Total estimated investments amount to KZT 61 526 million (USD 179.47 million). Of this amount, public financing amounts to KZT 30 399 million (USD 88.67 million). Private or municipal bus operators would contribute 31 126 (USD 90.79 million).

• Phase 1 and Scenario 2 of Phase 2: Total investment would rise to KZT 94 581 million (USD 275.89 million). The public financier would contribute KZT 46 602 million (USD 135.94 million). Private or municipal bus operators would contribute 47 979 (USD 139.95 million).

CO₂ and NO_x promise the greatest emission reductions. Obviously, significant emission reductions start accumulating with the implementation of Phase 2 of the CPT Programme. By the end of Scenario 2, CO₂ emissions are estimated to begin decreasing by about 68 367 tonnes/year. This represents a reduction of 27.2% compared to the baseline.10 In the case of NO_x, the decrease in emissions is estimated at 1 724 tonnes/year, which represents a reduction of 83.5% compared to the baseline. These reductions are estimated using the normative pollution factors approach.

The greatest relative improvement would be in emissions of small particulate matter – PM_2.5. After the end of Scenario 2 of the scaling-up phase, PM_2.5 emissions would be reduced by 98.2% (or 50 tonnes/year). SO₂ emissions would decrease by 39 tonnes/year (a reduction of 83.3% compared to the baseline). CO emissions reductions would amount to 315 tonnes/year (a reduction of 56.1% compared to the baseline).

3.1.3. Programme implementation and institutional map

Programme implementation will require institutional arrangements that entail transparent and cost-effective decisions. The report analyses several options; a number of institutions in Kazakhstan could potentially be selected to manage the programme. Whatever the choice, the implementing entity should have a degree of independence. Decisions should reflect rules and criteria in line with the programme objectives, and not be subject to undue political influence.

Potential financing mechanisms are available in the country that could support the transition to clean public transport. However, the programme does not need to be completely financed through grants. By its nature, the public transport sector saves operating costs through replacement of old fleet components with new models and the use of clean fuel. This means that financing should increase investment without having to support profitable projects that would have occurred regardless of government involvement.

Inter-ministerial co‑operation is vital for successful implementation of the programme. Such a programme can help increase the profile of the environment and climate on the transport policy agenda. In transition to clean public transport, the Ministry of Energy would benefit from closer co‑operation with the Ministry of Investments and Development and its Transport Committee. The Ministry of Finance and the Ministry of Economy could also support the programme and contribute more effectively to achieving low-carbon mobility in the country.

To facilitate future programme implementation, the study has developed supporting materials that include the following, among others:

• A proposal for project cycle management (PCM) procedures, including eligibility criteria, project appraisal criteria, project-ranking procedures and financing rules.

• A proposal for institutional arrangements comprising three levels:

  • Programming entity (PE): In general, the PE designs the programme. In Kazakhstan, the Ministry of Energy (MoE) is responsible for environment (natural resources) and green economy (renewable energy). The ministry focuses on legislation and regulation, but has no capacities for managing green investment programmes.11 Still, the MoE (Green Economy Department) is best suited to perform the role of a PE and oversee the implementation process.

  • Implementation unit (IU): The IU drafts the programme’s operating regulations and consults their preparation and use with the technical support unit(s) (TSUs). The IU will also define the allocation of the programme budget for the given year (or programming cycle) into project types (project “baskets”). The Astana International Financial Centre (AIFC) expressed interest in helping identify potential financial sources for the programme. The AIFC, created with support from the European Bank for Reconstruction and Development (EBRD), has human resources and was trained in fundraising and programme management. However, given its existing work, it has no capacity to take on the CPT Programme.12 The programme, however, will follow-up on its offer to identify potential financing. Programme management could also be outsourced to the “Zhasyl Damu” Environmental Defense Fund13 and, for the pilot phase, the Social Entrepreneurship Corporations at the local level.14 Neither, however, is prepared to implement a clean transport programme without more capacity development.

  • 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. The Alliance of Legal Entities "Kazakhstan Association of High-tech Energy-Efficient and Innovation Companies" (ALE-KAHTEIK) – established with support by the United Nations Development Programme – could play this role. The Association of Kazakhstan’s Car Business (AKCB) could also be considered. It is a non-profit professional association of official dealers, importers, distributors and national manufacturers of the automobile market of Kazakhstan. Other TSUs may be identified, as deemed necessary and prudent.

Whatever the choice, the implementing entity should have a degree of independence. Decisions should reflect rules and criteria in line with the programme objectives, and not be subject to undue political influence. Because programming is a political process, the responsibilities for programming and PCM should be separate and distinct. The IU should manage the project cycle.

3.1.4. Main obstacles and opportunities

Obstacles to implementing a CNG support programme in Kazakhstan’s public transport sector identified by this analysis include the following:

• CNG infrastructure. This is not evenly developed throughout the country. Natural gas pipelines are mostly concentrated in the south and southwest and do not serve the northern parts of Kazakhstan.

• Programme focus: CNG vs. LPG vs. diesel. Currently, 98% of cars in Kazakhstan run on petrol, 0.1% on CNG and LNG, and the rest on diesel (UNDP, 2015[5]). CNG has high initial costs, including both the purchase of new vehicles and the conversion of existing petrol and diesel vehicles. Therefore, the private sector in Kazakhstan – individuals as well as companies – favour LPG systems. The cost of conversion to LPG is between KZT 200 000 and KZT 300 000 (USD 600‑900), which is roughly half the cost of conversion to CNG.

• Air pollution monitoring: Methodology and infrastructure for monitoring air pollution are lacking. Different government entities monitor and collect data on transport and on air pollution from the transport sector. Kazakhstan’s Agency of Statistics does not have data on the transport sector, including the number of transport companies and amount of fuel consumed (UNDP, 2015[5]). Most of the information and data on the numbers, types and status of vehicles can usually be found at the Ministry of Internal Affairs website, as it conducts annual technical checks of vehicles.

• Borrowing limits. The upper limit of borrowing for the state is 50% of gross domestic product (GDP). This rule is defined in the Agreement on Co‑ordinated Macroeconomic Policy, one of 18 sectoral agreements that serve as a legal basis for the Common Economic Space (CES). The agreement was signed in Moscow on 9 December 2010 in accordance with the Maastricht agreements. These agreements regulate the ceilings for annual public budget deficit, national debt and the rate of inflation (Secrieru, 2014[6]). The government of Kazakhstan managed to maintain its public debt at 60% of GDP, which is among the lowest levels worldwide (Lovasz and Gizitdinov, 2012[7]).

On the other hand, opportunities include the following:

• Readiness of local actors to co-operate. For example, the gas distribution company KazTransGaz Onimderi LLP is ready and willing to support the programme by developing the CNG infrastructure in the country.

• Kazakhstan’s commitment to innovative clean energy projects. The country has a target to meet 3% of its energy needs from renewables by 2020 and 10% by 2030. To achieve these targets, Kazakhstan subsidises renewable energy production to encourage investment in clean energy. The programme designed as part of this study could contribute to achievement of these targets.

• The national “green” policy framework. The government’s Astana Green Bridge Initiative promotes green economic policies (green growth and low-carbon development). It bridges Europe and Asia through knowledge sharing and green investment facilitation.15 Within the framework of the initiative, according to the World Bank, a USD 25 million fund should be set up to support green mini-projects (with up to USD 100 000 of grants or loans per project). The fund will be managed by the Department of Green Economy at the MoE. The World Bank and Global Environment Facility will each contribute USD 10 million to the fund. The call for proposals was to be announced in 2017 (depending on the decision of the government of Kazakhstan).

3.2. Moldova

3.2.1. Transport sector and air pollution assessment

Since Moldova gained independence from the Soviet Union in 1991, the government of Moldova has committed to promoting sustainable development. National policies, programmes and action plans have been developed and approved in the main sectors affecting the economy and environment. These include energy, industry, transport, agriculture, forestry and waste.

At less than 5%, transport makes a small contribution to the country’s GDP. Yet the sector is responsible for 22% of the country’s GHG emissions, making it the second biggest contributor after the energy sector. The transport sector is the main source of air pollution, in particular in urban areas, accounting for 86% of total emissions (GoM, 2018[8]). According to the latest available data (2018) from the National Bureaus of Statistics of Moldova (NBS), the share could in fact be as high as high as 96%.16

Most transport vehicles in Moldova are more than ten-years-old. Cars and buses run mostly on diesel, while diesel engines barely correspond to the Euro 4/IV standard compared to Euro 6/VI used in Europe. For example, of 20 994 buses, 11 790 units (56% of the bus fleet) do not correspond to any Euro standard. Only about 7.7% of the total fleet comply with Euro IV‑VI norms.17 According to Art. 153 par. (9) of the Road Transport Code (No. 150 of 17 July 2014), these public transport units should be renewed or replaced by 2020.

These structural and technical features make road transport an important contributor to the high level of air pollution in Moldovan cities. While data are not readily available or reported, Moldovan cities experience air pollution typical of cities in the eastern part of Europe. Accordingly, of concern are PM_2.5 and PM₁₀ from use of wood and coal for home heating, as well as diesel fuels. the air in Chisinau is polluted with one or more types of toxic gases half of the year (BCI and TUM, 2006[9]).18

Transport accounts for most of the increase in emissions in sulphur dioxide (SO₂). Between 2005-11, SO₂ emissions more than doubled (from 2 400 to 5 800 tonnes annually). Transport accounts for around 75% of these increased emissions (UNECE, 2014[10]). The number of deaths caused by ambient air pollution in Moldova has more than tripled since 2004 (WHO, 2009[11]).19 Moreover, diseases of the circulatory system – to which air pollutants (especially particulates) increasingly contribute – constitute the main causes of death in Moldova.20 The municipality of Chisinau in particular is experiencing a substantial increase in air pollution-related diseases (GoM, 2013[12]).

The Programme on Promotion of Green Economy in the Republic of Moldova for 2018-2020 and the Action Plan for its Implementation sets out targets for transport (GoM, 2018[8]). The programme emphasises effective, efficient and ecological (urban) public transport. For example, it puts greater focus on larger public transport than on passenger cars in urban centres or applies restrictions on the use of old vehicles. It also advocates for the adoption of clear environmental objectives – e.g. the use of alternative fuels and new technologies in all modes of transport – in transport policies.

As of mid-2017, 32 service providers operate urban public transport systems in Chisinau and Balti. In these cities, the total bus fleet comprises 414 trolleybuses, 208 regular buses (diesel-powered – Euro IV or lower) and 1 406 minibuses (diesel-powered). At least half of the bus fleet and nearly all of the minibus fleet need repair or replacement.

Changing this situation will require significant resources, both private and public. However, transport fares are low – about USD 0.11 (trolleybus) and USD 0.16 (bus and minibus) per ride in 2017. Access to credit is constrained by high interest rates on credit. In 2018, for example, the average interest rate on long-term (over five years) credit for businesses equalled 9.76% annually in national currency and 4.60% annually in foreign currency.21 Without state support or tariff increases, the modernisation of the public transport fleet will continue to lag.

The programme will focus mainly on supporting the shift to modern buses powered by clean fuels, such as CNG and LPG. In addition, to the extent possible, it will help strengthen existing infrastructure to use trolleybuses.

3.2.2. Programme analysis

The investment programme is designed to be implemented in two stages. A pilot phase (or Phase 1) covers pilot investments in the cities of Chisinau22 and Balti.23 A scaling-up phase (Phase 2) would replace all old bus fleets in the cities of Chisinau and Balti, as well as extend the programme to the suburbs of pilot cities (Scenario 1) and inter-city connections in Moldova (Scenario 2).

In Chisinau, approximately 124 trolleybuses (36%) of the fleet of 366 vehicles have met or exceeded their operating terms, and should be replaced. In the bus fleet, at least 56 vehicles (48%) in the running fleet (i.e. that are not in need of repair) and 76 vehicles (56%) of the total fleet should be replaced. In the Balti trolleybus fleet, 11 units (about one-third) of the total of 34 are more than ten-years-old. Non-electric public transport is provided by 48 regular buses and 116 minibuses. All are diesel-powered and the vast majority are at least 15-years-old (all figures as of July 2017).

Four project pipelines, considered both cost-effective and realistic, including through the regular budgetary process, were identified for analysis and evaluation. The pipelines focus on replacement of the old bus fleet in urban centres with modern buses fuelled by the following:

1. compressed natural gas (CNG)

1. liquefied petroleum gas (LPG)

2. diesel that meets Euro 5 and Euro 6 emissions standards

3. electric power (trolleybuses and battery trolleybuses).

As Moldova’s bus fleet is ageing, the proposed “pipelines” are intended to help buy new vehicles (buses/minibuses and trolleybuses) rather than modernise existing engines. Renewing the bus fleet will increase the reliability and efficiency of public transport. The domestic market will be encouraged to produce, or at least assemble, modern buses and trolleybuses.24 Because the bus fleet in Moldova consists of too many minibuses, the CPT will give priority to replacing a part of the minibus fleet with regular buses.

Use of electricity, CNG and LPG to power public transport buses will bring down operating costs and create savings, given the lower costs of these fuels compared to diesel. The use of electrification is limited to the existing trolleybus network in Chisinau and Balti. Furthermore, the CNG is available in both cities. Improved diesel fuel, however, can also be viable alternatives where CNG and LPG are not available (for inter-city connections in Scenario 2).

The proposed investment pipelines should be accompanied by other investments in infrastructure. These include new trolleybus lines, CNG/LPG refuelling and electricity charging stations. Additional activities to improve the transport system in urban centres should also be supported, including creation of bus lanes, improvement of bus stops and smart traffic control.

The domestic assembly of trolleybuses can create additional jobs, offering further benefits in addition to replacing the outdated and depreciated domestic trolleybus fleet.

In terms of vehicle replacement, the two phases will include following:

• The first (pilot) phase will be launched in two cities (Chisinau and Balti) and will focus primarily on electric transport (trolleybuses). In total, 62 trolleybuses will be purchased: 31 will replace the old trolleybuses and the other 31 will extend the network by replacing old diesel buses. Also, a pilot replacement of a small number (15) of minibuses should be carried out during the pilot phase.25

• The second (scaling-up) phase would extend the pilot phase. There are two possible scenarios for this phase: Scenario 1 would extend it to the suburban areas of the pilot cities (735 new vehicles), while Scenario 2 would include inter-city public transport across the country (2 510 new vehicles).

Phase 1

The pilot phase of the programme, which covers the most urgent needs in the cities of Chisinau and Balti, is designed to run for a period of one year. In Chisinau, it proposes purchasing 60 new vehicles for public transport. This will include the following:

• replacing 25 old trolleybuses with the same number of new vehicles (including battery trolleybuses)

• purchasing another 25 trolleybuses (including battery trolleybuses) to strengthen the existing fleet – these will replace diesel buses that are more than 15-years-old (currently about 25)

• replacing 10 diesel-fuelled minibuses with CNG-powered models

• extending the trolleybus network to reach more remote areas where the trolleybus power-delivered network is not available (extending the trolleybus power-delivered network to cover the whole area would be too costly).

The total cost of the CPT Programme for Chisinau is estimated to be MDL 280 million (USD 15.1 million). Of this amount, MDL 141 million (USD 7.6 million) will be co-financed from the programme. Private or public bus operators are expected to invest MDL 139 million (USD 7.5 million).

In the pilot phase in Balti, the CPT Programme proposes purchasing 17 new vehicles for public transport. This will include the following:

• replacing six old trolleybuses with the same number of new vehicles (including battery trolleybuses)

• purchasing another six trolleybuses (including battery trolleybuses) to strengthen the existing fleet – these will replace diesel buses that are more than 15-years-old (currently about six)

• replacing five old diesel minibuses with the same number of new vehicles running on clean fuel (CNG or LPG).

In Balti, the total cost of purchasing 12 trolleybuses and 5 minibuses would amount to MDL 72 million (USD 3.9 million). Of this amount, the CPT Programme can support MDL 37 million (USD 2 million). Public and private bus operators could contribute MDL 36 million (USD 1.9 million).

Overall, the pilot phase will lead to the purchase of 62 new trolleybuses and 15 minibuses. This makes three assumptions. First, it assumes Moldova has the market capacity to supply the required quantity of modern vehicles on an annual basis. Second, it assumes that private and municipal bus operators could invest in new assets over a one-year period. Third, it assumes the government has the capacity to invest in relevant infrastructure.

This phase will, in a broader sense, build on and add to the experience of previous (EBRD-supported) trolleybus replacements that began in 2010-13. Also, both pilot cities have a large number of minibuses (usually diesel-fuelled) in their public transport fleets that urgently need replacement.

The total investment costs of the pilot phase of the CPT Programme would amount to MDL 353 million (USD 19.1 million). Of this amount, MDL 178 million (USD 9.6 million) in public support would be needed (Table 2.3).

Phase 2

Phase 2 (i.e. an extension to Phase 1) considered two institutional options with different levels of public co-financing lasting up to five years. Two scenarios for the second phase of the programme were also costed and assessed.

Scenario 1: Modernising the remaining old bus/minibus fleet in Chisinau and Balti, including those on the suburban routes. Scenario 1 would involve replacing all old buses (including minibuses), i.e. below Euro 5/V standard across the urban and suburban areas of Chisinau and Balti. This would mean purchasing 393 modern regular buses and 280 minibuses (including the 15 minibuses from the pilot phase) powered with CNG or LPG, or possibly modern diesel engines.

• Under Scenario 1, total estimated investments amount to MDL 2 427 million (USD 145 million). Of this amount, the public financing share for Option 1 amounts to MDL 607 million (USD 36 million). For Option 2, public financing amounts to MDL 1 415 million (USD 85 million).

Scenario 2: Modernising the remaining old bus/minibus fleet in Chisinau and Balti, including suburban routes. The public transport fleet operating inter-city connections in the entire country would also be modernised. The inter-city routes were chosen since there is little urban transport in other cities in Moldova. These routes act as a substitute (i.e. covering suburbs and centres of towns on the route). Scenario 2 assumes replacing all buses (including minibuses) that are below Euro 5/V standard and that provide public transport within and between cities in Moldova. This would involve purchasing 1 456 modern buses and 992 minibuses (including 15 minibuses from the pilot phase) running on cleaner fuels.

• Under Scenario 2, total investment would rise to MDL 8 871 million (USD 531 million). For Option 1, public finance would contribute MDL 2 218 million (USD 133 million). For Option 2, public finance would contribute MDL 5 365 (USD 321 million).

Summary and benefits

In total, the programme will result in 77 new urban public transport vehicles in the pilot phase (62 trolleybuses and 15 buses). The scaling-up phase (Scenario 1) would generate 735 new urban and suburban vehicles (62 trolleybuses, 393 buses and 280 minibuses). Assuming the more ambitious scaling-up phase (Scenario 2) is implemented, Moldova would have 2 510 new urban, suburban and inter-city vehicles (62 trolleybuses, 1 456 buses and 992 minibuses). They would be distributed between the pilot cities of Chisinau and Balti, and other regions of Moldova.

Analysis suggests that the total costs of the CPT Programme will be substantial. The investment cost of Phase 1 and Scenario 1 of Phase 2 is estimated at MDL 2 779 million (USD 150.2 million). Of this amount, between MDL 783-1 593 million (USD 42.3‑86.1 million) in public support would be needed, depending on the financing option selected. The investment cost of Phase 1 and Scenario 2 of Phase 2 is estimated at MDL 9 223 million (USD 498.6 million). Of this amount, between MDL 2 394‑5 542 million (USD 129.4‑299.6 million) in public support would be needed.

The environmental cost-effectiveness of Scenario 1 is expected to be greater than Scenario 2. This is due to the higher concentration of air pollutants in urban and suburban areas than in rural ones. Urban areas of other cities would also benefit from improved inter-city connections, although to a lesser extent than pilot cities. Therefore, it is advisable to start with Scenario 1 in the scaling-up phase.

CO₂ and NO_x promise the greatest emission reductions. Obviously, significant emission reductions start accumulating with the implementation of Phase 2. By the end of Scenario 2, CO₂ emissions are estimated to begin decreasing by about 73 944 tonnes/year. This represents a reduction of 42.2% compared to the baseline.26 In the case of NO_x, emission reductions are estimated at about 1 444 tonnes/year. This represents a reduction of 83.5% compared to the baseline. These reductions are estimated using the normative pollution factors approach.

The greatest relative improvement would be in the emissions of PM_2.5. This would be reduced by 98.8% (or 35 tonnes/year) after the end of Scenario 2 of the scaling-up phase. SO₂ emissions would decrease by 29 tonnes/year (a reduction of 88.9% compared to the baseline). CO emissions reductions would amount to 301 tonnes/year (a reduction of 76.3% compared to baseline).

3.2.3. Programme implementation and institutional map

Programme implementation will require institutional arrangements that entail transparent and cost-effective decisions. The report analyses several procedural and institutional options:

• A proposal for project cycle management (PCM) procedures, including eligibility criteria, project appraisal criteria, project-ranking procedures and financing rules

• A proposal for institutional arrangements comprising three levels:

  • Programming entity (PE): In general, the PE designs the programme. The Ministry of Agriculture, Regional Development and Environment (MARDE), in co-operation with the Ministry of Economy and Infrastructure, shall oversee the programme. However, the environmental section of the MARDE employs only 29 people.

  • Implementation unit (IU): The IU drafts the programme’s operating regulations and consults on their preparation and use with the technical support unit(s). The IU markets the programme, identifies beneficiaries and appraises beneficiaries’ project proposals for eligibility. It would also provide MARDE with information on the planned number of beneficiaries and programme financial needs. The IU would report to MARDE on programme expenditure. This would enable MARDE to monitor budget implementation for a given year (or programming cycle) and project type (project “baskets”).

  • Technical support unit (TSU): The TSU would give specialised assistance, advice and expertise in the areas of energy and fuel efficiency, CNG, LPG, modern diesel buses/trolleybuses, and air pollution and GHG emission reductions. The National Agency of Road Transport (Agenția Națională Transport Auto – ANTA)27 could play this role. The agency falls under the Ministry of Economy and Infrastructure (formerly, Ministry of Transport and Roads Infrastructure). Other TSUs may be defined as deemed necessary and prudent.

Several institutions in Moldova could be selected to manage the programme. The first choice would be the existing National Environmental Fund, which is part of MARDE. Most of the work could be split between regular duties of the ministry and fund. However, changes in the structure of the ministry also make different changes in the fund possible (up to merging it with the Regional Development Fund).

There are some other institutions in Moldova, like the Energy Efficiency Fund, which was created from international support. It has been implementing green investment programmes, but is not prepared to broaden its scope to cover the CPT Programme. The existing plans to create agencies that will, respectively, manage the Regional Development Fund and possibly merge with the Environmental Fund, might be a good direction to build institutional capacity.

The role of IU could be fulfilled by a local bank or banks selected through public tender, and which would sign a co‑operation agreement with MARDE. The proposed Environmental Protection Agency is another potential IU.

Whatever the choice, the implementing entity should have a degree of independence to ensure that decisions reflect rules and criteria in line with the programme objectives, and not be subject to undue political influence. Because programming is a political process, responsibilities for programming and PCM are separate and distinct, with the IU managing the project cycle.

Potential financing mechanisms are available in Moldova to help support the transition to clean public transport. As mentioned, the grant scheme already exists and is used by different funds in Moldova. Option 2 considered deployment of bus providers’ own resources combined with a public grant to motivate bus operators to allocate their own financial resources. This option requires a higher share of public subsidy and a central body for implementation.

The interest of the banking sector in supporting the programme makes option 1 possible. Commercial loans would be combined with public support via loan guarantees. A relatively small grant could be given to bus operators to repay a portion of the loan. In this case, the programme implementation unit will still be needed. However, its role will be reduced to programming, setting rules and procedures and monitoring. Local banks will co‑operate directly with beneficiaries.

3.2.4. Main obstacles and opportunities

Banks in Moldova do not play a significant role in the country’s economic development and business activity. Moldova’s high sovereign credit risk was combined with high inflation rates up until 2016. This has led to high interest rates and limited availability of affordable and long-term bank loans. This lack of long-term credit is an especially persistent problem in the country’s banking system.

Therefore, although banks dominate Moldova’s financial sector, their function as financial intermediaries is limited. This is due both to high interest rates and collateral requirements. Banks, on the other hand, face constraints such as lack of bankable projects and low rates of loan recovery. In the case of public transport operators, these factors might be caused by the low passenger fares mentioned above.

One factor contributing to this situation was the off-the-scale bank fraud unveiled in November 2014. More than USD 1 billion – equivalent to 15% of the country’ annual GDP or half of the reserves of the BNM – had disappeared from three of Moldova’s leading banks (Banca de Economii,28 Unibank and Banca Sociala).29 The resultant bailout of these (suddenly bankrupt) financial institutions cost national authorities almost half of Moldova’s annual budget and prompted an overdue clean-up of the banking sector.

This led to a currency “collapse” (from a European perspective). It put the national economy into its third annual GDP decline within a period of only six years (after 2009 and 2012). However, this third “collapse” turned out to be not as steep as the first one.30 Between November 2014 and November 2015, the Moldovan currency lost about 18% of its value against the Euro.31 This decline was also due to a run on Moldovan leu caused by the “missing” billion. This resulted in a general rise in prices (e.g. household electricity, which increased by 30%32), whereas salaries and pensions remained frozen. The World Bank, the International Monetary Fund and the European Union suspended financial aid to the country.

Since then, trust in the country’s banking sector has, to a large extent, been restored, though corruption still remains an issue.

3.3. Kyrgyzstan

3.3.1. Transport sector and air pollution assessment

Kyrgyzstan’s GHG emissions are relatively low. This can be largely explained by the prevalence of hydroelectric power plants, which provide about 90% of the total electricity generation in the country. Emissions from the transport sector are included in the energy sector; with other fuel combustion, they account for approximately 71% of emissions within the energy sector (USAID, 2017[13]).33

The transport sector is responsible for 28% of Kyrgyzstan’s GHG emissions, and in cities like Bishkek, for 75% of air pollutants. Most public transport vehicles are old and in need of replacement. Of the country’s entire public transport fleet (about 6 240 vehicles in 2017), about 54% are 15 years or older. Therefore, more than half of the fleet is beyond its useful life. In the minibus fleet (5 370 vehicles), the situation is even worse – around 89% of the fleet is over ten-years-old. Buses and minibuses mostly run on diesel, while diesel engines typically meet only Euro 4/IV standards or lower. Structural and technical features also make vehicle transport an important contributor to air pollution in Kyrgyzstan. These features include the importance of road transport for the country combined with an insufficient network of technical inspection centres.

Kyrgyzstan continues to lag behind advanced countries in the development of modern emission norms for both passenger cars and heavy-duty truck and bus engines. Since 2013, post-Soviet GOST34 standards have applied to member states of the Eurasian Economic Union. In 2014, the Eurasian Economic Commission increased standards to Euro 5. These are set to come into effect in Kyrgyzstan in 2019, but only for fuels and not for vehicle engines; vehicle emission requirements and the associated fuels do not necessarily align.35 In transportation, fuel consumption decreased significantly between 1993 and 1997 due to changes in the country’s vehicle fleet; the number of trucks and buses decreased significantly, while cars increased.36

These structural and technical features make vehicle transport an important contributor to the high level of air pollution in the country’s two main cities. Indeed, most transport vehicles in the Kyrgyz Republic are more than ten-years-old. Cars and buses run mostly on diesel. Diesel engines barely correspond to the Euro 4/IV standard compared to the Euro 6/VI used in Europe.

The programme will primarily support the shift to modern buses powered by clean fuels, such as CNG and LPG, as well as trolleybuses. In other words, outdated buses would be placed with modern diesel-powered vehicles. At the same time, trolleybus networks would be expanded to replace diesel-powered vehicles. These shifts would help reduce pollution from particulate matter, as well as NO_x and SO₂. An effective technical inspection system for cars would also reduce harmful substances in the atmosphere.

The Agency of Hydrometeorology of the Ministry of Emergency Situations of the Kyrgyz Republic (Kyrgyzhydromet) monitors air quality. It uses 14 stationary posts in five cities of the Kyrgyz Republic that cover about 64% of the country’s urban population. However, air pollution data in the Kyrgyz Republic cities are not readily available or reported. Indeed, the stationary posts of Kyrgyzhydromet have outdated laboratories. They lack emissions analysers to identify the pollution data.

The main sources of pollution of atmospheric air are power plants, mining and processing industries, construction materials industries, and the municipal and private sector. The main cities in Kyrgyzstan suffer especially from air pollution caused by human activities. This includes vehicle emissions, and using coal to heat homes and facilities. In Bishkek, the 666-MW coal- and gas-fired combined heat and power (CHP) plant is a huge emitter. The inner-city location of the plant also contributes to the environmental impact.

The impact of motor transport on the environment in the Kyrgyz Republic is defined by the intensity of transportation and technical condition of the vehicle fleet. Two factors lead vehicles to emit harmful substances that exceed defined norms: the age of motor vehicles and inefficient technical inspection and maintenance. According to the State Agency for Environmental Protection and Forestry (SAEPF), 240 000 tonnes of pollutants are emitted into the atmosphere in Bishkek annually. Of this amount, 180 000 tonnes are from motor vehicles (Levina, M., 2018[14]).37

In 2018, the National Council for Sustainable Development adopted a new National Development Strategy (“Zhany Doorgo – kyrk kadam”) 2018-2040. In the transport sector, the strategy foresees a transition to environmentally friendly modes of transport using electric vehicles and electrification of railways (GoK, 2018[15]). As one of its objectives, the Road Transport Development Strategy 2012-2015 sought to improve the technical condition of motor vehicles based on the experience of other countries. It also tried to limit the operation of vehicles whose emissions of harmful pollutants exceeded the established standards (GoK, 2012[16]).

Reaching these goals will require significant resources, both private and public. At the same time, transport fares are low – USD 0.12-0.15 in Bishkek and USD 0.09-0.15 in Osh per ride (2018). Moreover, high interest rates constrain access to credit. The average weighted interest rates of newly issued three-year loans were 15.8% in national currency and 9.2% in foreign currency.38 These cities, which are owners of the main public transport fleets in their municipalities, have already incurred loans for public transport programmes. Such loans, mainly through the EBRD, have reduced creditworthiness. Without state support and tariff increases, the modernisation of the public transport fleet will continue to lag.

Passenger transport is now covered by more than 252 legal entities. These include 35 legal entities as taxis and involve more than 12 000 individuals. In addition, 69 enterprises (agencies) of the structural divisions of the Ministry of Transport and Roads of Kyrgyzstan are involved in the transport branch.

Automobile transport accounts for the main means of overland transport, and its share is increasing. Conversely, the number of passengers transported by trolleybus is slowly and steadily decreasing. The number of bus passengers is increasing, albeit not at the high rate of automobile transport.

3.3.2. Programme analysis

The investment programme is designed to be implemented in two stages. A pilot phase (or Phase 1) covers the pilot investments in the cities of Bishkek39 and Osh.40 A scaling-up (Phase 2) covers the remaining old bus/minibus fleet of Bishkek and Osh, including suburban routes, as well as some indicative inter-city connections in the entire country.

Even when considering the data discrepancies, about 2 800 minibuses (70%) of the minibus fleet in the capital are over 15-years-old. However, well over 90% of the fleet would exceed the useful life of a minibus (usually seven years). The situation for the bus fleet is similar – around 70% of vehicles are beyond their useful life (usually 12 years).41 Trolleybuses fare somewhat better – only 5 vehicles (5%) of the total fleet of 100 fall into the oldest category (at least 15-years-old). Conversely, over half are less than five-years-old. Trolleybuses also have a longer useful life (between 15‑20 years). Therefore, at least 95% of trolleybuses are still within their useful life limits.42

The EBRD-financed programmes mean that Osh and Bishkek have a similar structure of trolleybus fleets. In Osh, most (about 60%) of the fleet is younger than five-years-old (23 of 40 vehicles). Only two vehicles (5%) are fully depreciated (at least 15-years-old). The age of the bus and minibus fleet is a little higher than in Bishkek. About 75% of buses in Osh have reached their useful life limits (12 years). At least 97% of minibuses are over seven-years-old (the usual useful life for minibuses, depending on mileage and service). Only 17% of minibuses (396 vehicles of 2 332) and 25% of buses (134 of 530) are less than 15-years-old (all 2016 figures).

The study analysed the market for cleaner fossil fuels and sources of power. It identified four groups of investment projects (“pipelines”) to replace the old urban, suburban and inter-city bus fleet. Modern buses equipped with engines would run on one of the following:

1. CNG

2. electricity (trolleybuses and battery trolleybuses)

3. LPG

4. diesel Euro 5 and Euro 6 emissions standards.

Given Kyrgyzstan’s ageing bus fleet, the proposed investment “pipelines” are intended to help buy new vehicles rather than only to modernise engines. These proposed investment pipelines should be accompanied by other investments – either from public or private sources. Areas for investment include new trolleybus lines, CNG/LPG refuelling and electricity charging stations. Other supporting activities would also be useful to improve the transport system in urban centres (e.g. the creation of bus lanes, improvement of bus stops and smart traffic control).

Because the bus fleet in Kyrgyzstan has too many minibuses, replacing part of the minibus fleet with regular buses is the priority. While buses powered using LPG are given medium priority, Bishkek and Osh have no plans to invest in LPG buses. For this reason, the results of the OPTIC model do not include LPG buses. The model can, however, be used to include LPG buses should policy makers re-evaluate this option.43

Modernising the bus fleet will increase reliability and efficiency of public transport. As a result, the domestic market will be encouraged to produce, or at least assemble, modern buses and trolleybuses.

In terms of vehicle replacement, the two phases will include the following:

• Phase 1 (pilot phase) covers a limited number of buses in the centres of pilot cities (Bishkek and Osh). This would involve replacement of old trolleybuses and expansion of the CNG bus fleet to displace diesel-fuelled minibuses. This would involve purchasing 115 trolleybuses and 288 new CNG buses.

• Phase 2 (scaling-up phase) would cover the remaining parts of the pilot cities (suburbs), as well as inter-city connections linking rural areas in Kyrgyzstan. Phase 2 would involve further expansion of the CNG fleet into suburban areas and on some inter-city routes. This would involve purchase of an additional 870 CNG buses and 90 modern diesel buses.

Phase 1

The CPT Programme anticipates the purchase of 216 new vehicles for public transport in the pilot phase in Bishkek, which will focus on the following:

• Replacing 78 old trolleybuses with the same number of modern trolleybuses. This continues a programme already begun, with the replacement of 52 buses.

• Purchasing another 20 trolleybuses to strengthen the existing fleet. The focus should be on trolleybuses equipped with electric batteries and on extending the trolleybus network in Bishkek to reach more remote areas where the trolleybus network is not available.44

• Replacing 78 old diesel buses with the same number of CNG buses. This builds on an ongoing programme under which 52 new CNG buses are to be purchased in 2018.

• Replacing 200 old diesel minibuses with 40 CNG buses.45

Bishkek has a large number of minibuses (usually diesel-fuelled) that provide public transport services to the population. The city plans gradually to replace these buses and extend services of the trolleybus and CNG-bus network in their place. Although LPG is sometimes used in the Kyrgyz Republic, the CO₂ emissions from LPG-powered engines are higher than from CNG-powered ones.

The total cost of the CPT Programme for Bishkek is estimated to be KGS 2 209 million (USD 31.81 million). Of this amount, the programme will offer co-financing of KGS 1 263 million (USD 18.18 million). Private or public bus operators and/or the city of Bishkek will invest KGS 946 million (USD 13.62 million).

Osh is the second largest city in the Kyrgyz Republic in terms of population. It is the only city beyond Bishkek with a trolleybus network and a developed public transport system.

The CPT Programme proposes to purchase 187 new vehicles for public transport in the pilot phase in Osh, which will focus on the following:

• Purchasing 17 new trolleybuses, continuing the EBRD programme that has so far replaced 23 trolleybuses.

• Replacing 50 old diesel buses with the same number of CNG buses.

• Replacing 600 old diesel minibuses with 120 CNG buses.

In Osh, the total cost of this phase would amount to KGS 1 879 million (USD 27.28 million). Of this amount, the CPT Programme could support KGS 774 million (USD 11.24 million). Public and private bus operators, and/or the city of Osh, would contribute KGS 1 104 million (USD 16.03 million).

Overall, the pilot phase would see 115 new trolleybuses and 288 new CNG buses purchased. These numbers make three assumptions. First, they assume that Kyrgyzstan has the market capacity to supply this quantity of modern vehicles. Second, they assume that private and municipal bus operators have the capacity to invest in these new assets over a one-year period. Third, they assume the government has the capacity to invest in the necessary support infrastructure.

The purchase of 98 new trolleybuses in Bishkek and 17 in Osh will, in a broader sense, add to and learn from the experience of previous (EBRD-supported) replacements. These replacements began in 2011 and 2014 in Bishkek and Osh, respectively. Also, both pilot cities have a large number of minibuses (usually diesel-fuelled) in their public transport fleets that urgently need replacement. Therefore, 200 old diesel minibuses will be replaced in Bishkek and 600 in Osh for 40 and 120 CNG regular buses, respectively.

The investment costs of the pilot phase would amount to KGS 4 088 million (USD 59.36 million). Of this amount, KGS 2 037 million (USD 29.58 million) would need to come from the public purse.

Phase 2

For the purchase of buses in Phase 2, the CPT Programme considered the number of old diesel buses (with engines of up to Euro IV standard) and minibuses providing public passenger transport services. This estimate also considers the possibility that the number of minibuses will be reduced and that about half will be replaced with regular buses (i.e. buses that are more than 10-m long).

• Phase 2, the scaling-up phase, would last up to five years. It foresees the purchase of an additional 870 new CNG buses (730 in Bishkek, 80 in Osh and 60 for inter-city transport routes). Inter-city transport would also be strengthened by 90 new diesel buses. The total estimated investments for this phase would be KGS 9 603 million (USD 139.43 million). Of this amount, KGS 3 762 million (USD 54.63 million) in public financing would be required.

Minibuses dominate public transport in the Kyrgyz Republic; regular buses serve only a small number of urban and inter-city routes. Therefore, the second phase of the CPT Programme should replace only half of the minibuses with those powered by clean fuels; the other half would be replaced by regular buses that can provide space for up to five times more passengers.

Summary and benefits

In total, both phases of the CPT Programme would result in 1 363 urban, suburban and inter-city public transport vehicles. This represents 1 158 CNG buses, 115 trolleybuses and 90 modern diesel buses. The total investment costs for the entire programme are estimated at KGS 13 691 million (USD 198.8 million), including KGS 5 799 million (USD 84.21 million) of public support.

CO₂ and NO_x promise the greatest emission reductions. Obviously, significant emission reductions start accumulating with the implementation of Phase 2. By the end of Phase 2, CO₂ emissions are estimated to decrease by about 68 506 tonnes/year. This represents a reduction of 47.3% compared to baseline.46 Meanwhile, in the case of NO_x, emission reductions are estimated at 1 236 tonnes/year, or a reduction of 86.4% compared to baseline. These reductions are estimated using the normative pollution factors approach.

In terms of relative improvement, reducing SO₂ emissions will provide the best results. SO₂ emissions would be reduced by 99.6% (or 27 tonnes/year) after the scaling-up phase. PM emissions would decrease by 29 tonnes/year (or by 98.7% compared to baseline). CO emissions reductions will decrease by 307 tonnes/year (or by 94.0% compared to baseline).

3.3.3. Programme implementation and institutional map

Programme implementation will require institutional arrangements that entail transparent and cost-effective decisions. The report analyses several procedural and institutional options:

• A proposal for project cycle management (PCM) procedures, including eligibility criteria, project appraisal criteria, project-ranking procedures and financing rules.

• A proposal for institutional arrangements comprising three levels:

  • Programming entity (PE): In general, the PE designs the programme. The Ministry of Economy (MoEcon) should perform this role. In co‑operation with the State Agency for Environmental Protection and Forestry (SAEPF), the ministry should also oversee implementation. MoEcon will use its available staff and resources to undertake its programmes. In performing its duties, the PE will consult with other relevant government agencies, professional associations, local municipalities and non-governmental organisations (NGOs) as appropriate. In addition, representatives of these bodies may be invited to sit on the supervisory board of the programme and provide advice.

  • Implementation unit (IU): The IU drafts the programme’s operating regulations and consults on their preparation and use with the technical support unit(s) (TSUs). A local bank or banks could fulfil this role. They would sign a co‑operation agreement with MoEcon based on a successful public tender bid. Other potential IUs include the Investment Promotion and Protection Agency (IPPA),47 SAEPF and the Regional Environmental Centre for Central Asia (CAREC).48 The IU would provide MoEcon with information on the expected number of beneficiaries and their financial needs. It would also market the programme, identify beneficiaries and appraise eligibility of beneficiaries. In short, the IU would manage the project cycle. The IU would communicate to MoEcon on the loan and grant needs of beneficiaries. In this way, the ministry can monitor the CPT Programme budget for the given year (or programming cycle) and project types (project “baskets”).

  • Technical support unit (TSU): The TSU would give specialised assistance, advice and expertise in the areas of energy and fuel efficiency, CNG, LPG, modern diesel buses/trolleybuses, and reductions of air pollution and GHG emissions. The IPPA, SAEPF or CAREC could play the TSU role, although they cannot be both IU and TSU. Other TSUs may be defined as deemed necessary and prudent.

Regardless of the final choice, the implementing entity needs independence to ensure that decisions reflect rules and criteria in line with the programme objectives, and not be subject to undue political influence. Because programming is a political process, the responsibilities for programming and PCM are separate and distinct. The IU manages the project cycle.

There are potential financing mechanisms in the Kyrgyz Republic that can support the transition to clean public transport. These include government support (grant) or on-lending to local governments based on a credit line with a development bank (such as the EBRD or the Asian Development Bank – ADB). However, the programme does not need to be completely grant-financed. By its nature, the public transport sector can save costs by replacing old fleet components with new models and using clean fuel. This means that financing should increase investment without having to support profitable projects that would have occurred regardless of government involvement.

3.3.4. Main obstacles and opportunities

Kyrgyzstan’s GHG emissions are relatively low. However, emissions will increase from planned and expected economic development unless action is taken to reduce them. This, along with the review of air pollution in Kyrgyz cities, justifies the CPT Programme from the perspectives of public safety, public health and the environment. Road transport contributes the bulk of air pollution. Therefore, replacing outdated vehicles with modern diesel-powered or natural gas-powered buses, and with buses with higher capacity, would help reduce pollution by particulate matter, as well as NO_x and SO₂. It would also help keep GHG emissions in line with the country’s emission-reduction objectives.

However, improved energy intensity of vehicles (megajoule/passenger-km or megajoule/tonne-km) and carbon intenstity of fuels (CO₂e/megajoule) cannot stand alone.

Reducing pollution from urban public transport, in addition to investments to replace vehicle fleets, will require a combination of measures:

• avoiding or reducing the need for travel (either through better urban planning or changing personal behaviour)

• shifting travel from private cars to non-motorised modes (walking, cycling) or public transport

• improving forms of transport through technical means (especially in energy intensity of vehicles and carbon intensity of fuels and energy carriers).

In this context, road widening would only increase traffic in cities. The combination of mass public transport with non-motorised modes of transport offers the greatest mitigation potential. The first step in this direction would be to increase the capacity and number of public transport vehicles (buses and trolleybuses). Diversifying the fleet structure, increasing energy efficiency and shifting modes from car to public transport would also improve resiliency against energy price rises (diesel, gas, electricity). Regulations on the operation of ageing vehicles, sufficient maintenance and technical inspection of vehicles are necessary prerequisites.

However, increased demand for these services is also needed. The economic and environmental viability of public transport will only be achieved through increased demand. Improving the quality of public transport to meet passenger expectations, including redesigning the urban transport network, would make it more attractive. It would also help reduce the social costs of transport, such as time lost due to congestion, air pollution, accidents, etc. Such losses can generally reduce GDP by several percent, although this has not been assessed in Kyrgyzstan.

According to information from Bicycle Kyrgyzstan, Bishkek has two bicycle lanes and about 10 000 bicycles. However, only 10% of the owners use bicycles as a mode of transport due to poor infrastructure for non-motorised commute, low traffic safety and air pollution. NGOs such as Bicycle Kyrgyzstan or MoveGreen play an irreplaceable role in conducting research and awareness campaigns on altering citizens’ preferences and behaviour. Financial considerations alone – such as lower costs for public or non-motorised transport – cannot bring sustainable solutions.

3.4. Conclusions

Road transport contributes the bulk of air pollution. In urban centres, the sector produces more than three-quarters of emissions of air pollutants (although its primary energy consumption is usually much lower). Therefore, replacement of the worn-out public vehicle fleet with modern CNG, LPG or diesel Euro V/VI buses would help reduce ambient air pollution. This is especially the case for PM, NO_x and SO₂. These actions would help bring GHG emissions in line with the country’s emission-reduction objectives.

As the OPTIC model calculations have shown, the total cost of implementing the CPT Programme will be substantial. New technologies are more expensive before they reach market maturity. Consequently, public financial support will be needed to help public transport operators (both municipal and private) upgrade to a modern and environmentally friendly fleet.

The calculation of the optimal level of public support (subsidies in the form of grants), considers several factors. Running costs are lower as alternative fuels are less expensive. Operational and maintenance costs are lower as well due to higher reliability of new vehicles. Finally, there is a need to replace vehicles that have been fully depreciated.

For these reasons, the CPT Programme need not be completely grant-financed. The programme is designed to increase investments by public transport operators in the vehicle fleet. These investments would not make the replacement too profitable (or support purchases that would/could take place without public support).

In any case, a robust methodology can estimate the costs of the investment programme, set the optimal level of subsidy and forecast the expected environmental benefits. As such, it can make the CPT Programme more credible for both national and international public financiers.

Several institutional set-ups for managing the programme are possible. However, the optimal set-up should be selected only after all elements of the programme are clarified and consensus reached on its priorities.

Regardless of set-up, the programme should have an institutional structure and procedures that promote environmental effectiveness, embody fiscal prudence, and use financial and human resources efficiently. Subsequently, the government needs to ensure that resources, qualified staff and instruments are sufficient to implement the programme.

The review also revealed public financing mechanisms in Kazakhstan, Kyrgyzstan and Moldova that could fund the CPT Programme. In the past, international financial institutions and donors (such as the EBRD or the ADB) have played key roles in the modernisation of the public transport fleet in post-Soviet countries. State budget financing – either directly through the budget or from special funds (transport infrastructure, environment or regional development) – has not been used. Municipal guarantees were provided to public transport operators to secure their creditworthiness. The same guarantees were not made for private operators, however.

If the reviewed domestic financing sources cannot be used directly to provide purchase subsidies (grants) for new public transport vehicles, they could perhaps finance necessary accompanying measures (e.g. infrastructure and technical assistance).

References

[17] AOS (2011), Results of the 2009 National Population Census of the Republic of Kazakhstan, Analytical Report, Agency on Statistics of Kazkhstan, Astana, http://www.liportal.de/fileadmin/user_upload/oeffentlich/Kasachstan/40_gesellschaft/Kaz2009_Analytical_report.pdf.

[9] BCI and TUM (2006), Management of Urban Public Transport in Chisinau Municipality (in Romanian), Business Consulting Institute and Technical University of Moldova, Chisinau, http://bci.md/media/files/MTPUMC%20Final.pdf.

[2] EO PoK (2016), State Programme for Infrastructure Development ‘Nurly Zhol’ for 2015-2019, Executive Office of the President of Kazakhstan, Astana, https://economy.gov.kz/ru/pages/gosudarstvennaya-programma-infrastrukturnogo-razvitiya-nurly-zhol-na-2015-20.

[4] EO PoK (2013), Concept for Transition of the Republic of Kazakhstan to Green Economy, Executive Office of the President of Kazakhstan, Astana, http://gbpp.org/wp-content/uploads/2014/04/Green_Concept_En.pdf.

[15] GoK (2018), National Development Strategy of the Kyrgyz Republic for 2018-2040, Government of Kyrgyzstan, Bishkek, http://donors.kg/images/National_Development_Strategy_of_KR_2018-2040_final_ENG.docx.

[1] GoK (2015), Intended Nationally Determined Contribution – Submission of the Republic of Kazakhstan, Government of the Republic of Kazakhstan, Astana, http://www4.unfccc.int/submissions/INDC/Published%20Documents/Kazakhstan/1/INDC%20Kz_eng.pdf.

[16] GoK (2012), Strategy for Development of Road Transport in the Kyrgyz Republic for 2012-2015 (in Russian), Government of Kyrgyzstan, Bishkek, http://cbd.minjust.gov.kg/act/view/ru-ru/93738?cl=ru-ru.

[8] GoM (2018), Programme on Promotion of Green Economy in the Republic of Moldova for 2018-2020 (in Romanian), Government of Moldova, Chisinau, https://gov.md/sites/default/files/document/attachments/intr05-1_0.pdf.

[12] GoM (2013), Third National Communication of the Republic of Moldova under the UN Framework Convention on Climate Change, Government of Moldova, Chisinau, https://unfccc.int/resource/docs/natc/mdanc3.pdf.

[18] JICA (2013), The Study on Improvement of Urban Transportation in Bishkek City of the Kyrgyz Republic, Final Report, October 2013, Japan International Cooperation Agency, Tokyo, http://open_jicareport.jica.go.jp/pdf/12127585_01.pdf.

[3] Kazhydromet & MoE (2016), Information Bulletin on the Condition of Environment for 2015 (in Russian), Kazakhstan’s National Hydrometeorological Service – Kazhydromet, and the Ministry of Energy of the Republic of Kazakhstan, Astana, https://kazhydromet.kz/ru/monitor_beluten_archiv2015.

[14] Levina, M. (2018), “Smog over Kyrgyzstan capital city: Causes, effects, and solutions”, Vol. The Times of Central Asia, 27 January, http://www.timesca.com/index.php/news/26-opinion-head/19261-smog-over-kyrgyzstan-capital-city-causes-effects-and-solutions (accessed on 30 August 2019).

[7] Lovasz, A. and N. Gizitdinov (2012), “Kazakhstan may limit borrowing by state companies”, KazWorld.info, 22 May, http://kazworld.info/?p=21569 (accessed on 6 June 2017).

[21] Mokrenko, A. (2017), “Air pollution in Bishkek exceeds maximum permissible concentration 2-3 times”, News Agency 24.kg 28 December, https://24.kg/english/72240_Air_pollution_in_Bishkek_exceeds_maximum_permissible_concentration_2-3_times (accessed on 30 August 2019).

[19] NSC (2016), Environment in the Kyrgyz Republic, Statistical Compilation 2011-2015, National Statistical Committee of the Kyrgyz Republic, Bishkek, http://stat.kg/media/publicationarchive/8c0e9d22-6bb6-4145-b1d6-8311da33521d.pdf.

[20] NSC (2009), Population and Housing Census of the Kyrgyz Republic of 2009. Book I: Main Social and Demographic Characteristics of Population and Number of Housing Units, National Statistical Committee of the Kyrgyz Republic, Bishkek, https://unstats.un.org/unsd/demographic-social/census/documents/Kyrgyzstan/A5-2PopulationAndHousingCensusOfTheKyrgyzRepublicOf2009.pdf.

[6] Secrieru, S. (2014), Bumps on Russia’s road to the Eurasian Economic Union: Postponed integration, costly enlargement and delayed international recognition, Policy Paper No. 10 (93), Polish Institute for International Affairs, Warsaw, https://www.files.ethz.ch/isn/181803/PISM%20Policy%20Paper%20no%2010%20(93).pdf.

[23] Tanas, A. (2017), “Moldova says ready to start recovering stolen billion”, Reuters, 13 April, http://www.reuters.com/article/moldova-banking/moldova-says-ready-to-start-recovering-stolen-billion-idUSL8N1HL3U1 (accessed on 30 August 2019).

[5] UNDP (2015), Energy Efficiency in Transport Sector of the Republic of Kazakhstan: Current Status and Measures for Improvement, Analytical Report, UNDP / GEF Project City of Almaty Sustainable Transport, United Nations Development Programme, Almaty, http://alatransit.kz/sites/default/files/energy_efficiency_in_transport_sector_of_the_republic_of_kazakhstan.pdf.

[10] UNECE (2014), Third Environmental Performance Review of the Republic of Moldova, United Nations Economic Commission for Europe, Geneva, http://www.unece.org/fileadmin/DAM/env/epr/epr_studies/ECE_CEP_171_En.pdf.

[13] USAID (2017), Greenhouse Gas Emissions in Kyrgyzstan, USAID Factsheet, United States Agency for International Development, Washington, DC, http://www.climatelinks.org/sites/default/files/asset/document/2017_USAID_GHG%20Emissions%20Factsheet%20Kyrgyzstan.pdf.

[22] Whewell, T. (2015), “The great Moldovan bank robbery”, BBC News 18 June, http://www.bbc.com/news/magazine-33166383 (accessed on 30 August 2019).

[11] WHO (2009), Republic of Moldova, Country Profile of Environmental Burden of Disease,, World Health Organization, Geneva, http://www.who.int/quantifying_ehimpacts/national/countryprofile/republicofmoldova.pdf?ua=1.

Notes

← 1. Some experts expressed concerns about this indicator and considered it insufficiently defined and unrealistic given the timeframe (i.e. short- to medium-term). For example, in other countries, a typical indicator related to the accessibility of bus services is the proportion of households in rural areas with access to a bus stop located at a distance of no more than 800 m and providing hourly or daily service.

← 2. In accordance with the air pollution index scale, there are 14 cities with low levels of pollution, 3 cities with an increased level of pollution and 5 cities with a high level of pollution. Specifically, these are Ust-Kamenogorsk, Almaty, Zhezkazgan, Shymkent, Karaganda and Temirtau. The replacement of outdated buses with modern diesel-powered or natural gas-powered buses will help reduce pollution of particulate matter, as well as NOx and SO2.

← 3. Kostanay is a city located on the Tobol River in northern Kazakhstan (on the border of the Russian Federation). It serves as the administrative centre of the Kostanay region. The city has a population of about 215 000, while the region has 886 000 residents (AOS, 2011[17]). The city is well-connected both by road (five Russian cities and Nur-Sultan and Almaty in Kazakhstan), as well as by rail (oil supplies from the Russian Federation and Kazakhstan).

← 4. Shymkent is a city in southern Kazakhstan near the border with Uzbekistan. According to the 2009 census, the city had 603 000 people (AOS, 2011[17]). With 2018 estimates of about 1 million people, it is close to Almaty and Nur-Sultan in terms of population size. In 2018, it became one of three Kazakh cities (with these other two) that have equal status equal to a region (the city of republican significance). Prior to this, the city served as an administrative centre of the South Kazakhstan Region (now, Turkistan region). This is by far the most densely populated region in Kazakhstan (21.1 vs 8.1 people/km2 of (second) Almaty Region) with a population of 2 469 000 (AOS, 2011[17]). Shymkent is a major railroad junction on the Turkestan-Siberia Railway. The city is also a regional cultural centre and home to an international airport.

← 5. In the future, diesel buses may have higher priority if Kazakhstan implements clean fuel standards and strict air pollution limits for diesel engines.

← 6. . Domestic capacity needs to be expanded. Foreign suppliers, in particular from the People’s Republic of China and the Russian Federation, can be competitive, and import duties are not imposed on clean technology buses. According to Daewoo Bus Kazakhstan, the additional production of 500 buses will require 130 additional jobs, excluding management costs. The reason for this quite modest job increase is the relatively simple production process, which would require more assembly work than domestic manufacturing. However, if Kazakhstan produces buses domestically, direct employment would increase by 600‑800 new posts. If most of the vendor network for the bus producer is to be domestic, it could generate thousands of additional jobs. This would include employment in small and medium-sized enterprises.

← 7. It will be difficult to build a CNG bus pipeline in Kostanay given its location far from the gas pipelines in Kazakhstan. However, it is also close to the Russian border and not far from larger Russian cities (such as Chelyabinsk and Magnitogorsk). As a result, better quality diesel and petrol fuels may be available.

← 8. Shymkent is located on the route of a natural gas pipeline. It has already started to develop a modern public transport infrastructure. As of 2016, 200 CNG buses were operating in the city, which already has CNG filling stations.

← 9. Kazakhstan has 23 regional cities, but 4 do not have old buses (over 15 years-of-age). As a result, it would not be eligible for support under Scenario 1 of Phase 2 of the programme. Two of these cities, however, have buses older than ten years, which would make them eligible for support under Scenario 2 of Phase 2.

← 10. The values reflect only emissions of the vehicles to be replaced (baseline value) and the new fleet (target value), not the total emissions from all public transport in Kazakhstan.

← 11. This was observed by the EBRD and mentioned during one of the meetings with the OECD team in Astana.

← 12. See https://aifc.kz. The AIFC is positioning itself as a financial hub for Central Asia, the Caucasus, Eurasian Economic Union, Middle East, West China, Mongolia and Europe. The AIFC has identified green finance as one of its main directions of work. Other important issues relate to the development of capital markets, asset management, Islamic finance and private banking. At present, the AIFC does not consider it possible to serve as an implementing unit. AIFC could, however, provide support in mobilising concessional finance. This finance could be based on tax exemptions, whether personal income tax, corporate income tax or land and property taxes, until 2066.

← 13. The JSC “Zhasyl Damu” contributes to the development and implementation of state environmental policy, environmental security, and environmental regulations and standards. It also helps improve environmental protection laws and the obligations of Kazakhstan in the international conventions for the protection of the environment and the climate (www.zhasyldamu.kz).

← 14. The team visited the Social Entrepreneurship Corporation "Tobol" in Kostanay (www.spk-tobol.kz) as a potential implementing agency in the pilot city. This is one of 16 investor service centres set up by the government throughout the region. It manages regional budgetary resources allocated to support various business initiatives and programmes. The other potential implementing agency in the pilot city of Shymkent is SPK Shymkent: http://openspk.kz.

← 15. For more information on the Green Bridge Partnership Programme 2011-2020, see: https://sustainabledevelopment.un.org/partnership/?p=2237.

← 16. . See NBS data on polluting substances emitted in atmospheric air by road transport at: http://statbank.statistica.md/pxweb/pxweb/en/10%20Mediul%20inconjurator/10%20Mediul%20inconjurator__MED030/MED030400.px/table/tableViewLayout1/?rxid=b2ff27d7-0b96-43c9-934b-42e1a2a9a774; and emission of pollutants in atmospheric air by stationary sources of economic agents at: http://statbank.statistica.md/pxweb/pxweb/en/10%20Mediul%20inconjurator/10%20Mediul%20inconjurator__MED030/MED030100.px/table/tableViewLayout1/?rxid=e30e37d0-43ff-4b5b-835f-c0252bf87a4d.

← 17. . State Information Resource Centre “Registru” (www.registru.md), now located under the Public Services Agency (www.asp.gov.md/en/date-statistice).

← 18. This is according to measurements by the Municipal Centre of Preventive Medicine in eight points in Chisinau and the data of the State Hydrometeorological Service "Hydrometeo" (www.meteo.md).

← 19. . Compare (WHO, 2009[11]) with the WHO Global Health Observatory data repository from July 2018 at: http://apps.who.int/gho/data/node.main.BODAMBIENTAIRDTHS?lang=en.

← 20. . For WHO data and statistics on Moldova, see: www.euro.who.int/en/countries/republic-of-moldova/data-and-statistics.

← 21. . See BNM’s weighted average interest rates on new loans and deposits attracted and associated volumes at: www.bnm.md/bdi/pages/reports/dpmc/DPMC4.xhtml.

← 22. As the capital and main industrial and commercial centre of Moldova, Chisinau also serves as the main transportation hub in the country due to its geographical position. It is the largest and most populated city in Moldova – 533 000 for the city and 663 000 for the municipality according to the last 2014 Census (see http://statistica.gov.md/pageview.php?l=en&idc=479), whereas 2018 NSC estimates are around 690 000 for the city and 826 000 for the municipality (see http://statbank.statistica.md/pxweb/pxweb/en/60%20Statistica%20regionala/60%20Statistica%20regionala__02%20POP/POP010300reg.px/table/tableViewLayout1/?rxid=7959009c-1db7-4896-8a54-15c47d1c70d0). As a result, the city has the most developed public transport network. Since 2010, Chisinau has participated in a programme to renew part of the trolleybus fleet, co-financed by the EBRD.

← 23. Balti is the second largest city in Moldova by population – 102 000 according to the last census in 2014 (see http://statistica.gov.md/pageview.php?l=en&idc=479). NSC population estimates for 2018 are around 147 000, and 5 000 for the surrounding communes of Balti municipality (see http://statbank.statistica.md/pxweb/pxweb/en/60%20Statistica%20regionala/60%20Statistica%20regionala__02%20POP/POP010300reg.px/table/tableViewLayout1/?rxid=7959009c-1db7-4896-8a54-15c47d1c70d0). It is the only city other than Chisinau that has a trolleybus network and a well-developed public transport system. It is also located on the route of a natural gas pipeline going from the Russian Federation to the European Union via Ukraine. Similar to Chisinau, Balti has participated (since 2013) in the EBRD-supported programme to renew part of the trolleybus fleet.

← 24. There is no (clean) bus production in Moldova because there is no demand for the purchase of new buses. However, an EBRD project in Chisinau brought about a follow-up project for the licensed assembly of Belarusian trolleybuses. This has demonstrated that creating demand through the CPT Programme may help start domestic production in co‑operation with a bigger producer, or at least local assembly.

← 25. It is suggested that the pilot phase should financially support the purchase of minibuses powered by CNG rather than LPG. Although LPG is often used in Moldova, the emissions of CO₂ from LPG-powered engines are higher than from CNG-powered ones. See the economic/market analysis and Annex A to the country report.

← 26. The values reflect only emissions of the vehicles to be replaced (baseline value) and the new fleet (target value), not the total emissions from all public transport in Moldova.

← 27. National Agency of Road Transport (https://anta.gov.md).

← 28. This was then the country’s largest bank.

← 29. In 2010-14, an amount equivalent to one-eighth of the country’s GDP was laundered – mainly through Latvia’s financial system – to overseas (UK- and Hong-Kong-based firms) through a series of transactions that made no sound economic rationale (dodgy loans, asset swaps and shareholder deals). See (Whewell, 2015[23]); and (Tanas, 2017[23]).

← 30. For Moldova’s GDP growth from World Bank national accounts data, see: https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?locations=MD.

← 31. See BNM’s official exchange rates at: www.bnm.md/en/content/official-exchange-rates.

← 32. Between the first half of 2015 and the first half of 2016. See: www.statistica.md/public/files/serii_de_timp/resurse_energetice/infraanuale/Energy_prices_HH_eng.xls.

← 33. According to the World Resources Institute Climate Analysis Indicators Tool, (WRI CAIT), the GHG emissions of the country in 2013 excluding the land-use change and forestry (LUCF) sector, were mainly from the energy sector (61.1%), followed by emissions from agriculture (28.4%), industrial processes (5.7%), and waste (4.8%).

← 34. Russian: ГОСТ = state.

← 35. . Personal communication with the Center for Renewable Energy and Energy Efficiency Development (www.creeed.net).

← 36. According to the National Statistical Committee of the Kyrgyz Republic, the total vehicle fleet in the country stands at about 735 000 vehicles at the end of 2016. Of this amount, there are more than 600 000 cars, 93 000 trucks, 10 000 special-purpose vehicles and more than 32 000 buses and minibuses.

← 37. In comparison, stationary sources release around 50 000 tonnes of harmful substances into the air annually (NSC, 2016[19]).

← 38. . As of beginning of 2019. See National Bank of the Kyrgyz Republic (www.nbkr.kg).

← 39. Bishkek is the capital of Kyrgyzstan with a population of 865 000 inhabitants according to the most recent census (NSC, 2009[20]). It is the most populated city in the country. Bishkek is a separate administrative unit (independent city – shaar). It serves also as an administrative centre (apart from 2003-06) of the surrounding Chui oblast (region). This is the northernmost region in Kyrgyzstan with a population of 791 000 (NSC, 2009[20]). The capital is the financial centre of the country (home to the country’s national bank, commercial banks and other financial institutions).

← 40. Osh is the second largest city in Kyrgyzstan in terms of population – 243 000 according to the most recent census (NSC, 2009[20]). It is the only other city with a trolleybus network and a well-developed public transport system. It is also referred to as “capital of the south”, given its 3 000-year history (oldest city in Kyrgyzstan). Osh is also the only other city besides Bishkek with the administrative status of independent city (shaar). The city of Osh also serves (from 1939) as an administrative centre of the surrounding Osh oblast (region). It has a population of about 1 million (NSC, 2009[20]). The southernmost region in Kyrgyzstan, it is regarded as the country’s southern hub for industry and trade. Similar to Bishkek, Osh has participated since 2014 in an EBRD programme to renew part of its bus fleet.

← 41. . This is according to data from NSC, as the City Hall of Bishkek reports no vehicles older than 15 years in stock. These figures differ from national data for the city of Bishkek probably because national data do not deregister old vehicles.

← 42. In addition to outdated fleet, in the cities of Bishkek and Osh, traffic volumes on the roads have increased dramatically in recent years (JICA, 2013[18]). The current capacity of the road network cannot accommodate this increasing traffic volume. According to the general plan, the city roads are designed for 40 000 or 45 000 cars, but today about 500 000 cars use them (Mokrenko, A., 2017[21]). In the last ten years, only 14 new roads have been constructed.

← 43. Although LPG is used in Kyrgyzstan (mainly by private users, including public transport operators), the CO₂ emissions from LPG-powered engines are higher than from CNG-powered ones (see the economic/market analysis and Annex A to the country report). Therefore, it is suggested that the programme should financially support buses powered by CNG rather than LPG.

← 44. Even though trolleybuses have only small batteries, they are cheaper to run (in terms of operational and maintenance costs) than electric buses. They can travel on the battery for a limited number of kilometres (depending on the battery capacity), but most of the route is powered by the city’s electrical wire network, which allows the trolleybus batteries to be charged while driving.

← 45. It is proposed that the programme would support the purchase of minibuses powered by CNG rather than LPG. Although LPG is sometimes used in Kyrgyzstan, the CO₂ emissions from LPG-powered engines are higher than from CNG-powered ones.

← 46. The values reflect only emissions of the vehicles to be replaced (baseline value) and the new fleet (target value), not the total emissions from all public transport in Kyrgyzstan.

← 47. Investment Promotion and Protection Agency (http://invest.gov.kg ).

← 48. Regional Environmental Centre for Central Asia (http://carececo.org).