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Presentation to the FES-Conference in Lusaka

Presentation to the FES-Conference in Lusaka. Financing basic utilities for all. By EASTERN AFRICA POWER POOL ( EAPP ). Lusaka - April 24 th , 2007. CONTENT. Introduction; Identifying the needs of the poor; Financing basic utilities for the poor: electricity; Minimizing costs;

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Presentation to the FES-Conference in Lusaka

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  1. Presentation to the FES-Conference in Lusaka Financing basic utilities for all By EASTERN AFRICA POWER POOL ( EAPP ) Lusaka - April 24th, 2007

  2. CONTENT • Introduction; • Identifying the needs of the poor; • Financing basic utilities for the poor: electricity; • Minimizing costs; • Cost recovery; • Conclusion

  3. I. Introduction ”Ensuring sustainable access for the poor through internal revenue generation:Electricity” • 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.

  4. 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.

  5. III. Financing basic utilities for the poor • Financing options: 1. External financing: IFIs, Carbon Fund, GEF.. 2. Internal revenue generation: - pooling together the efforts : => Role of Municipalities and NGOs, => Organizing people in associations or cooperatives; - Government subsidies: direct, tax levies, cross-subsidies;

  6. 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: => Government/Municipality provide subsidies => Private sector ensure implementation, maintenance and equity; ! The main role to be played by Government / Municipality =>initiative, planning as well as financing.

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

  8. IV. Minimizing costs (Cont.) Efficiency => 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).

  9. 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.

  10. VI. Conclusion • For the poor basic utilities should not be considered as commercial commodities, particularly water and electricity; • Generating internal revenue: • => pooling efforts together through cooperatives or associations; • => government or municipality should be the leading entities: initiative, planning and financing; • => Subsidies are a necessity:direct or cross-subsidies have to be considered; • =>PPP accompanied with subsidies could be an option.

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

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

  13. THANK YOU EAPP

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