Presentation to the
FES-Conference in Lusaka
Financing basic utilities for
all
By
EASTERN AFRICA POWER POOL
( EAPP )
Lusaka - April 24th, 2007
CONTENT
I.
II.
III.
IV.
V.
VI.
Introduction;
Identifying the needs of the poor;
Financing basic utilities for the poor:
electricity;
Minimizing costs;
Cost recovery;
Conclusion
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.
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.
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;
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.
IV. Minimizing costs
1. Best identification of the needs => supply what really
needed (how much energy and for what use);
2. Assessment of the optimal supply option =>
transmission line, solar system (PV), micro hydro,
wind energy, biomass, etc.;
3. Taxation: No taxes for materials dedicated to
electricity access for the poor;
4. 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:
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).
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.
VI. Conclusion
1. For the poor basic utilities should not be considered as
commercial commodities, particularly water and
electricity;
2. 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.
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 longterm:YES;
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 !
EAPP
THANK
YOU