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

CONTENT I. Introduction; II. Identifying the needs of the poor; III. Financing basic utilities for the poor: electricity; IV. Minimizing costs; V. Cost recovery; VI. 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;

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

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 long- term: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 !

THANK YOU EAPP