Poverty & Social Impacts of the NEP Removing barriers to electricity access

Critical Project Needs: Protect poor and vulnerable at risk of exclusion Ensure consumers are informed of their options and allow opportunity for feedback to improve service Balance financial sustainability with consumer concerns over quality and affordability Why Study Poverty and Social Impacts? Study Aims: Better understand institutions and roles in electrification process Identify use patterns and barriers to access Understand to local community perspectives and involvement Data obtained: In interviews and surveys of 24 villages, 16 wards engaging leaders, VECs, women, livelihood groups, SMEs, govt agencies Data from 2009/2010 living standards survey

Grid-connected households pay less monthly than non-grid (diesel, battery) Self Reliant Electrification can be enhanced with support for poor households Up-front costs significant inhibiting factor for poor and middle income HHs Unreliable grid supplies lead to additional burdens (use of back-up diesel) Service quality: Increases in tariffs and responsive service go hand in hand Village Electrification Committee can be a force for inclusive participation Key Observations Monitoring and evaluation to assess effectiveness / identify those in need of support Expanded community consultations and information disclosure Targeted subsidization for poor and vulnerable households Key Recommendations

The Cost of Getting Connected Poor pay more Rural/poor HH connection fees are on average higher than wealthy HH Poorest cannot pay Poorest could not afford to pay for minimal lighting (use candles) Seasonal Ability Rural HHs have more income availability during harvest season, livestock sales High up-front costs for rural households Variable connectivity 77% urban HH and 10 % rural HH grid connected, high variability for the rest (diesel gen set, candle only, batteries, solar pv).

Connection Charges and National Electrification Rates Golumbeanu & Barnes 2013:7 World Bank

Impact of Tariff Increases Tariff Concerns Quality, reliability, affects on high urban use (middle and high income, SMEs), costs more for back-up during blackouts Example: service quality improvement in Mandalay Public-Private Regional DESE partnered with private companies since 2012 New equipment and reliability: HHs noticed replacement of old analogue with new digital meters, Less blackouts, voltage variation, improved capacity Reaction to tariff increases Reduce concern about increases by demonstrating improved service Low impact on poor Existing users very little electricity (below 100 kwh lifeline) and new users already pay more on private sources Willingness to pay Demonstrated in use of more expensive private suppliers when grid unavailable Private Suppliers more expensive, less reliable Average 2.2% of HH expenditure (Grid only 1.4%) Fluctuating diesel prices impacting SME productivity. 40w TV costs 3,000 Kyats for 3 hrs on diesel Gen Set but only 126 kyats at 35 kyat/kwh for 3 hrs (plus ability to use for hours)

VEC participation: Variable VEC selection process, unclear member roles, lack of public consultation Interpersonal networks: Levels of information provision, support dependent on leadership networks Limited oversight: Irregular inspection leading to poor quality construction, delays, inability to cover repairs Discretionary funding: Support from benefactors, high-interest loans, sale of assets to cover costs Variable tariffs: Differ from government rates, some maintenance fees, collection fees Information requested: Village leadership approaches Township Electricity Department Village Electrification Committee (VEC) formed: members selected, proposal developed Proposal Review: Township ED and Regional DESE: Review proposals, designs and cost estimates Construction: VEC follows 12- point guide to engage with utility provider for construction Readiness to connect: Township ED Inspects construction Average time to electrification 3 years Limited access or system shutdown: Only wealthy villages / HH can connect, system financially unviable “it was a huge investment for us. Electricity is much more expensive than a pair of oxen. Until now, some cannot buy their cattle back, some were never able to get their farmlands back, and some are still badly in debt. Our village hasn’t yet recovered from the ‘electricity shock’. Poverty was the price for electricity.” (elder farmer quoted p. 30 PSIA 2015) SRE process Influencing factors Key risks Self-Reliant Electrification Indebtedness: HHs sell cattle, farmland and borrow at high interest rates impacting on livelihoods Delays and frustration: due to poor planning, unexpected costs (meter installment, repairs etc)

Elite membership with limited mobilization: only two cases of election and one case of regular village-wide meetings surveyed, varying bills and tariffs No participation of poor households: early decision made by VEC to only include those who could afford connections Formal participation of women: considered ineligible due to domestic responsibilities despite these including provision of energy for obtaining domestic use (firewood, charcoal) No subsidization: cross-subsidization (wealthy HH paying more) or payment installment options (credit and long-term payment periods for poor HH) Representation of minorities: risk of inequality between the ‘haves and have nots’ Village Electrification Committees (VECs) in practice Governance: election and periodic rotation of membership Representation: of different ethnic groups present in the village Responsive: regular meetings to receive, address community questions and concerns Transparency: accounts audited, clear billing and explanation of charges Support: Township electricity dept training villages in operation and maintenance Key focal point: Compile HH lists, arrange pool of funds, supervise construction, collect fees, communicate with Township and with participating households Good Practice Observed Challenges Observed Risk of exclusion from access

Factors inhibiting social inclusion The PSIA identifies impacts on consumer participation Lack of information and financial awareness, unclear bills, varying fees and charges Exclusion of women from formal decision-making positions in VECs Lack of systematic guidance on household participation in electrification planning Few options for provision of feedback and response (phone no, TED pamphlets) The PSIA identifies those most vulnerable and at risk of missing out Rural HH with limited labour (elderly dominated, youth out-migration, female headed) Informal urban settlers without HH/land registration, landless farmers, day laborers Rural communities that cannot afford village grid connection Households in rural communities that cannot afford HH connection Communities uninformed about choices and actions required to access electrification

Technical assistance for social inclusion Key challenge for NEP target of universal coverage: Barriers for vulnerable (the poor, female-headed households, minorities) are not only financial but linked their awareness of options and participation in decision-making. Identifying financial mechanisms for inclusion of the poor: Targeted subsidies for connections for disadvantaged households (eg. interest-free loan repaid alongside tariffs over 3 years) Eligibility criteria (eg. 1. permanent structure safe to electrify 2. poor = 6-month rice shortage, or no livestock, or no land title, delay period after first electrification effort) Establish criteria allowing informal settlers to apply for access in designated urban wards Tiered lifeline tariffs (instead of 35 kyt for 100 kwh, targeted tier to assist low consumption) Lessons from stakeholder consultation in Myanmar CDD project, subsidization eligibility in Lao PDR Power to the Poor Scheme Putting clear citizen engagement practice in place: Enhancing community involvement in electrification decisions through Village Electrification Committee formation, composition and decision-making structure and consultation process Disclosure and consultation (information dissemination and feedback meetings) Collaboration (membership in decision-making bodies, participatory planning and management) Grievance redress (formalized and functioning feedback mechanisms) Citizen-led monitoring and evaluation (satisfaction surveys)

Closing the loop: monitoring and evaluation Impact evaluation Identifies benefits and impacts of electrification (income, education, health, productivity) Identifies levels of electricity access including reliability and capacity of electricity service Assesses ability and willingness to pay for electricity Identifies who needs help (targeted subsidization) Monitoring and evaluation Provides feedback for improvement Evaluates effectiveness of the implementation process and approach Assesses effectiveness of consultations Reviews the grievance redress mechanism Tracks overall progress as well as for specific physical investments under the project Develop program to assist those who need Help Information from M&E and impact evaluation will help us formulate policy and a specific program to help those who need it by providing a baseline to inform the terms of eligibility screening, outputs and outcomes

Critical issues: Balance financial sustainability with consumer concerns over quality and affordability Protect poor and vulnerable at risk of exclusion Inform consumers of plans and options and allow opportunity for feedback Study Aims: Explain the institutions and roles involved in implementation of the NEP Identify barriers to accessing electricity in urban and rural areas Understand perceptions of affordability (connections, tariffs) and perspectives on quality Study Scope: Phase 1: February-June 2014, Phase 2: February-March rural villages and 16 urban wards involving well-off, middle income, poor households/wards Rural: Chin, Mandalay, Ayeyarwady, Kayin, Mon, Magway, Shan, Rakhine: community leaders, VECs, women, livelihood groups (agriculture, handicrafts) Urban: Yangon, Mandalay, Hakha, Sittwe, Thaton: township electricity departments, SMEs, industry as well as consultations with government agencies, private sector, CSOs Study Methods: 605 short household interviews (455 rural), 464 Key Informant Interviews (120 rural), 203 Focal Group Discussions (197 rural) Qualitative research into access barriers, demand, uses, perceptions of affordability and quality, coping strategies. Quantitative review of 2009/2010 Living Standards Survey (Myanmar Central Statistical) for consumption patterns, distributional impacts of new tariffs Further Information on the Poverty and Social Impacts Analysis 2015