Along with adding new generation capacity (100GW) for improving energy access, the government of India (GoI) has also launched a program for rehabilitation of existing coal-fired power stations. A key challenge in this area is the introduction of operational practices and rehabilitation practices which improve thermal efficiency of existing generation capacity as well as reduce incremental carbon emissions. The Bank is preparing a project to support demonstration of energyefficient rehabilitation as part of the GoI rehabilitation program. This project has been approved on June 18, 2009 and became effective on Mar 19, 2010. Through this engagement operational and rehabilitation practices of demonstration projects methodology of improving energy efficiency will be established and would be used as other coal-fired power plants O&M practice improvement in and outside India. In the Clean Energy Investment Framework, the Clean Energy and Development paper (submitted to Development Committee in April 2006 annual meeting and updated in September 2006) identified India and China's coal-fired power plant as a major mitigation target of greenhouse reduction. And this activity will support the specific clean energy development in India. The ESMAP activity supported this by hiring consultants to carry out the following tasks: Task 0: Familiarization Task 1: Awareness Task 2: Identification Task 3: Evaluation Task 4: Management evaluation and improvement options Task 5: Dissemination

The activity entails the following: 1. Diagnostic Study of Power Sector: The focus of this task is to carry out a comprehensive diagnostic study (gap analysis) based on the ?As-is? analysis of the utilities (in the participating States) on following aspects: (a) Financial and operational performance; (b) Energy/ Load Management process; (c) System operations (including O&M practices); (d) Project planning process; (e) Project implementation process; (f) Organization and Human Resources review; (g) Financial management and corporate governance process; (h) Regulatory compliance. Based on the findings, the utilities/power departments are benchmarked against similar domestic entities and the priority areas for improvement are identified. 2. Preparing a Capacity Building and Institutional Strengthening (CBIS) Plan: Based on findings from the above task, a CBIS Plan is prepared that identifies specific issues and highlights priorities along with recommendations (short, medium and long term) in all of the areas mentioned above that are necessary to address constraints faced by the power sector (mainly transmission, distribution and regulatory) in each of the participating states. The findings and recommendations, through the CBIS Plan, are used to design the technical assistance component to be implemented during lending project implementation.

The objective of the activity is to estimate the short to medium term impact of the 2008 financial crisis on the on-going and future energy projects (electricity generation, transmission, distribution, oil and gas projects) in the region, and to identify measures to mitigate such impact. This study helps to inform energy sector policies and priorities in response to the new challenges of attracting credit and private capital into the energy sector to deliver reliable and affordable power to people.

The Government of India wishes to increase its generation capacity by 100GW to improve access to electricity in rural areas as well as to support economic growth. A substantial part of this capacity will use indigenous coal due to energy security and cost considerations. Analysis shows that in a number of cases, the least cost option may be to rehabilitate existing plants (with a focus on improving energy efficiency). The lending program parallel to this ESW - the IBRD/GEF financed project - aims to promote conditions that increase rehabilitation of old coal-fired generating plant. Rehabilitation focused at improving energy efficiency will significantly reduce incremental carbon emissions. The overall project aims to improve commercial incentives to carry out rehabilitation and - through demonstration projects- aims to improve the capability and know-how to increase rehabilitation activity at the state level in India.