Presentation to the FES-Conference in Lusaka

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Presentation to the FES-Conference in Lusaka
Financing basic utilities for all

• By
• EASTERN AFRICA POWER POOL
• ( EAPP )

Lusaka - April 24th, 2007
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CONTENT

1. Introduction
2. Identifying the needs of the poor
3. Financing basic utilities for the poor
   electricity
4. Minimizing costs
5. Cost recovery
6. Conclusion

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I. Introduction

• Ensuring sustainable access for the poor through
  internal revenue generationElectricity
• In order to achieve MDGs it is imperative for all
  stakeholders to ensure increased sustainable
  access to basic utilities for all
• the positive impact of access to basic utilities
  on health, education and gender is no more
  questionable
• The question is whether we should consider basic
  utilities for the poor as commercial commodities
  or not
• The answer to this question would guide to the
  assessment of best options for financing related
  infrastructure.

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II. Identifying needs for the poor

• Optimize the knowledge of the real needs through
  participatory approach
• Participatory approach
• - sustainability of the infrastructure
• - ownership strengthened
• How to do it ? sensitization through meetings
• - In kind contribution of the
  beneficiaries (labor intensive
  works, maintenance after adequate training)
• ! Better identification of the needs
• - ensure sustainability and ownership, eases the
  implementation and success of the
  projects for access to electricity.

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III. Financing basic utilities for the poor

• Financing options
• 1. External financing IFIs, Carbon Fund, GEF..
• 2. Internal revenue generation
• - pooling together the efforts gt
  Role of Municipalities and NGOs,
• gt Organizing people in associations or
  cooperatives
• - Government subsidies direct, tax levies,
  cross-subsidies

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III. Financing basic utilities for the poor
(Cont.)

• Financing options
• 2. Internal revenue generation
• - Private Sector only possible if in
  partnership with public (PPP)
• - PPP alleviates the burden of public
  funds
• gt Government/Municipality provide
  subsidies
• gt Private sector ensure implementation,
  maintenance and equity
• ! The main role to be played by Government /
  Municipality gtinitiative, planning as well as
  financing.

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IV. Minimizing costs

• Best identification of the needs gt supply what
  really needed (how much energy and for what use)
• Assessment of the optimal supply option gt
  transmission line, solar system (PV), micro
  hydro, wind energy, biomass, etc.
• Taxation No taxes for materials dedicated to
  electricity access for the poor
• Efficiency gt possible use of local material
  (wood poles instead steel poles,etc.)
• gt possible use of local labor (cheap and
  ensure sustainability)
• gt technology and costs trade off

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IV. Minimizing costs (Cont.)
Efficiency gt technology and costs trade
off latest technology may be expensive
in investment but have low maintenance
costs and best efficiency old
technology may be cheap in investment but have
high maintenance costs and low
efficiency adequate equipments has to
be assessed (single phase transformers)
consumer side use of energy saving
lamps (CFLs).
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V. Cost recovery

• Ensuring sustainable access for the poor.
• Is it possible to provide electricity to the
  poor and expect cost recovery financially
  speaking ?
• What do we expect to recover as costs from a
  person earning less than 1 per day ?
• Cost recovery YES. But the economic cost and
  most of time in the long-term
• ! Again basic utilities for the poor should not
  be considered as commercial commodities.

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VI. Conclusion

• For the poor basic utilities should not be
  considered as commercial commodities,
  particularly water and electricity
• Generating internal revenue
• gt pooling efforts together through
  cooperatives or associations
• gt government or municipality should be the
  leading entities initiative, planning and
  financing
• gt Subsidies are a necessitydirect or
  cross-subsidies have to be considered
• gtPPP accompanied with subsidies could be an
  option.

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VI. Conclusion (Cont.)
3. Basic utilities for the poor should be
primarily a duty of Government and
municipality 4. Minimizing costs gt Best
identification of the needs gt Assessment of
the best supply option of electricity gt
efficiency in implementing projects and at the
consumer side to be considered gt No taxation!
Subsidies are a necessity. 5. Cost recovery -
Economic cost recovery in the long- termYES

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VI. Conclusion (Cont.)
5. Cost recovery - Financial cost recovery is
very difficult 6. Best cycle Government/Municip
ality finance access to electricity income
generating activities gt economic growth gt
increase in purchasing power Private sector
intervention in health, education, etc. Note The
private sector will only come when the poor is
more poor !
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THANK YOU
EAPP