1. Lessons and Experience Rural Electrification in Bangladesh, Laos and Cambodia
Jie Tang
Lead Energy Specialist
South Asia Region, The World Bank
May 31 – June 1, 2013

2. Rural Electrification
Bangladesh – Solar Home System (SHS) Program for lighting
Laos and Cambodia – Grid-extension for Rural Electrification

3. Bangladesh - SHS Installation Rate
Celebrated installation of
2 million SHS in early 2013

4. Bangladesh SHS Program
A viable business model for providing SHS for access to electricity for meeting basic lighting needs
Implemented by the Infrastructure Development Company Limited (IDCOL) – Government owned Company
Started in January 2003 with IDA and GEF funds. Target was 50,000 systems by 2008, but achieved by August 2005
Later on jointed by other donors: including ADB, kfW, GiZ, IDB, GPOBA, and JICA just started
Installation rate now is over 50,000 SHS/month
Next Target - another 2 million by 2015

5. The Ownership Model
Partner Organizations (POs), mostly NGOs install the SHSs under a micro-credit program
Households pay down payment (10-15%) of the system cost net of grant. The rest is paid under micro-finance (2-3 years repayment at interest rate of 12-16% per year)
The micro-finance extended by the POs are refinanced by IDCOL (5-7 years at 6-9% interest rates) allowing POs to install more systems

6. The Ownership Model Technical Standards Committee Supplierss
Technical Standards Committee
Suppliers
Seeks approval
Provides approval
Supply Equipment
Pay for Equipment PO
PO Selection Committee
Select POs
Applies
Seeks grant & loan
Provide grant & loan
IDCOL Funds
Operations Committee
Seek operation related solutions
Provides Solutions
Household
Sells SHS & provide service
Pay down-payment & installment
IDA and others
Grant & soft term credit

7. Financing Scheme Figures in US$ for a 50 Wp system
(a) Solar Home System Cost
400
(b) Buy-down Grant from IDCOL (for all size) 25
(c) Cost net of Grant (b-a)
375
(d) Household Down payment [15% of (c)] 56
(e) Credit to customers (c-d)
319
Loan Tenor
2-3 years
Interest Payment
12-16%
Monthly Installment Payment
8.5
(f) Refinancing from IDCOL to PO [80% of (e)]
255
Same grant for all sizes lead to higher % of grant for smaller systems compared to larger systems.
System size ranges from 10 Wp to 120 Wp with shifting preference for smaller systems (30Wp or less)
System prices are in the $8-10/Wp range

8. Role of IDCOL
PO Selection Committee of IDCOL selects the POs as per eligibility criteria
Technical standards committee of IDCOL develops technical standards for the equipment (panels, batteries, charge controllers)
Inspections by IDCOL inspectors before release of funds to POs
Hotline service for customers. IDCOL does not release payment until customer complaints are addressed by the PO

9. Phased Reduction of Grant
Item
Amount of Grant Available per SHS
Total
Buy-down grant
Institutional Development Grant
First 20,000 SHS
$90
$70
$20
Next 20,000 SHS
$55
$15
Next 35,000 SHS
$50
$40
$10
Next 88,160 SHS
€38
€30 €8
€36 €6
Next 235,000 SHS
€34 €4
Next 100,000 SHS
€28
€25 €3
Currently
$25
$22 $3

10. Transition to “Commercial” Financing
IDCOL refinancing % is being reduced from 80% to 60%
Repayment terms from POs to IDCOL are becoming more “commercial”
For large POs- 9% interest rate, 5 year repayment and a 6-month grace period
For smaller POs- 6% interest rate, 7 year repayment, 1 year grace period

11. Critical Success Factors
Geographic concentration of rural population
Economies of Scale
A viable business model for providing SHS
Existing network of NGOs
Public acceptance of NGO services
Supervision and Monitoring by IDCOL

12. Thanks!

13. Laos – Grid-extension for Rural Electrification
15%
1995
84%
2013
Access to Electricity
Population: million, about 1.2 million households

14. Laos – Grid-extension for Rural Electrification
A model of public utility-driven grid extension to expand access to electricity
Strong Government commitment and targets for rural electrification
70% by 2010; 80% by 2015 and 90% by 2020 (set in 2002)
Electricity du Laos (EdL) established strong capacity in implementation of rural electrification
Capacity building since mid 1990s when the Bank started the first rural electrification project
Efficiency in system planning, procurement, installation and commissioning
Comprehensive system loss reduction program to reduce distribution system losses thus cost of services
From about 20% in 2005 to 10% in 2010, along with the fast expansion of the distribution system into rural areas

15. Laos – Grid-extension for Rural Electrification
Programmatic approach in tariff reform to ensure cost recovery and a profit margin for EdL
Cross-subsidies among consumer categories to ensure (i) affordability of rural housheolds; and (ii) weighted average tariff cover the weighted cost of services
Strong Government support to Electricity du Laos (EdL), a public utility company, to expand access to electricity services
Financial support to EdL when tariff did not cover the cost
Provided strong support of tariff reform toward cost recovery and a profit margin
Concessional terms of loans to EdL for rural electrification projects
Special program for connecting the poor
Power to the Poor: about 20-40% of households in the villages electrified were not connected to the grid since they could not afford the upfront-connection cost (about $80)

16. Power to the Poor (P2P) – Revolving Fund
Targeting the poor 1. interest-free credit 2. households in village already electrified 3. household monthly budget neutral
EdL, IDA, GEF Grants
$80
EdL Operational Account
$2.5 /month
EdL P2P Revolving Fund
$1.5/m
+ $2.5/m
Monthly bill
Electricity payment
P2P Repayment
$80
Service Contractor for in-house wiring
Poor Households
Wiring

17. Power to the Poor (P2P) Pilot
Example: Phosaad Village
Grid to village in 2002
270 households in 2008
72 not connected over the past 6 years were all connected to the grid in about one month (Feb-Mar 2009) through the P2P
Youtube Video:
Lao PDR: Electricity for All – A Gender Lens
DY3T_1RPI&feature=player_embedded

18. Results of P2P Significant result of the P2P Program
About 25,000 poor households (2% of the population) gained access to grid electricity through the P2P
Increased the overall connection rate in P2P villages from 79% to 96%
P2P Program in a gender sensitive approach
About 1,300 female-headed households gained access to grid electricity
Connection rate increased in female-headed households from 67% to 95%
As a result of access to electricity women report:
Spending less time walking to access water, as electricty has introduced electric water pumps
Having light in the house allows women to engage in productive activities in the evening, such as weaving, bamboo baskets
Children can read and do their home work in the evening
Feeling more comfortable and and safe in general – some even enjoy TV
Lessons:
There are several entry points to addressing gender issues in energy projects
Addressing gender issues requires a slightly different focus and approach - but it is not “rocket science”
Commitment from the WB team and counterparts to “go the extra mile” is essential
Additional resources are needed, but a small amount of money can go a long way - GAP funds played a catalytic role
In the end, addressing gender issues constitutes a smart way of making a project more effective and its impact more inclusive.

19. Cambodia – Grid-extension for Rural Electrification
A model of expanding access to electricity led by private sector – about the same access rate as Laos in mid 1990s, but now still less than 30%
Private Rural Electrification Enterprises (REEs) have exclusive right in electricity service provision in licensed areas
There are about 180 REEs licensed for rural electrification
About 54% of the population are in REEs’ areas
Very weak technical and financial capacity of REEs, resulting in insufficient investments in generation and distribution, very low efficiency, and very high cost of electricity services
very high tariff, about $ /kWh
very low connection rate, about3-5% in the REEs’ areas

20. Cambodia – Grid-extension for Rural Electrification
Independent regulator
Managing the licensing of REEs
Regulating REEs’ retail tariff in the principle of “cost plus”
Different tariffs for different REEs
Public power utility company
Generation, transmission , plus distribution services in urban areas
Now is expanding MV network to REEs’ areas for bulk sales – can reduce cost of generation
Not proactive in expanding distribution networks to expand grid coverage
Governance risks
Risks in tariff setting ?
Risks of corruption – REEs are running profitable business

21. Critical Factors of Success vs no Success
Strong government commitment and support
An efficient model with public utility-driven grid extension
High efficiency in implementation of rural electrification projects due to strong commitment and capacity of EdL
Combination of lowering cost of services and increasing tariff to ensure financial sustainability of electricity services

22. Thanks!