1. NEP - POVERTY AND SOCIAL IMPACTS ANALYSIS Patricia Fernandes, 5 November 2014

2. National Electrification Plan Sustainability and Access by Vulnerable Groups  Electrify 100% of Myanmar’s households by 2030  Connecting 7.2 million households (16 years)  Financial sustainability  Poverty and Social Impacts Analysis  Understanding consumers’ concerns  How to protect poor and vulnerable consumers  Inputs to NEP Design 2

3. National Electrification Plan Source of data for PSIA 3  Quantitative data on energy consumption  Limited availability  IHLCA – “Deep Dive”  Qualitative analysis  Ongoing research program of the Livelihoods and Food Security Trust Fund (LIFT)  Further qualitative analysis implemented by Enlightened Myanmar Research (EMR)

4. What quantitative data on consumption? 4

5. National Electrification Plan IHLCA 2 5  28% of households connected to the public grid in 2010  Marked differences between rural and urban areas  77% urban vs 10% rural households  Highly correlated with income  Better off much more likely to use electricity (particularly the public grid) than poorer households.  Substantial gaps in access to reliable electricity  Communities and households developed innovative alternatives

6. National Electrification Plan IHLCA 2 6  Households connected to the public grid reported spending 1.4% of total expenditures on electricity  Households accessing electricity from private suppliers reported spending 2.2% of total consumer expenditures on electricity  Constant across the income distribution (for poor as well as rich households).

7. National Electrification Plan IHLCA 2 7  Low spending  Low tariffs  Generous lifeline tariff cut-off, coupled with low electricity consumption.  Low consumption (below 100 kWh/month)  In urban areas: 30% of households below 50 KWh/month and 66% below 100 KWh/month  In rural areas, 53% of households below 50 KWh/month and 88% below 100 KWh/month

8. National Electrification Plan IHLCA 2 8  IHLCA data does not suggest that electricity affordability is a concern for households currently connected to electricity services in Myanmar.  BUT in a context where better off households are currently much more likely than poorer households to be connected to the grid.  This finding was not reflected in the qualitative analysis and warrants additional study.

9. What qualitative analysis findings? 9

10. National Electrification Plan Qualitative Analysis: Rural Areas 10 Region/StateAccess to Electricity Government Service Private Company Community initiative or SMEs(hh. selling electricity) Individual connections only (solar panels or generators) Chin Village 1 - Hydro) Village 4 - (Hydro) Mandalay Village 7 - (Generator) Villages 10 and 11 Ayeyarwa Villages 12 and 13 Magway Village 3 - (Grid) Village 5 - (Generator) Shan Village 2 - (Grid) Village 6 - (Hydro) Rakhine Villages 8 & 9 – (Generator)

11. National Electrification Plan Qualitative Analysis: Urban Areas 11 City Poorer Ward Middle- Income Ward Better-off Ward Industrial Zone HakhaCHN-1CHN-2CHN-3 SMEs spread across the cities to conduct interviews MandalayMDY-1MDY-2MDY-3MDY-4 YangonYGN-1YGN-2YGN-3YGN-4

12. Barriers to Access, Use & Quality 12

13. National Electrification Plan Barriers to Access in Rural Areas 13  Self-Reliant Electrification Approach (SRE) provides no financial support to communities  Access is limited to better off villages  Costs of the connection from the main “transmission” line to the village  Limited technical support provided  Little regulation of the role of electricity committees that oversee SRE at village level

14. National Electrification Plan Barriers to Access in Rural Areas 14  Within villages a significant proportion of the population remain without access  The fees associated with connection to the grid  Poor households excluded from the planning stages  No instances of cross-subsidization  In five villages with a functioning electricity scheme, poor households did not use electricity  Batteries, candles and paraffin lamps.

15. National Electrification Plan Barriers to Access in Urban Areas 15  Barriers to access were less relevant in the main urban centers  Significant for smaller cities (Hakha) and for informal settlers in poorer wards (Yangon and Mandalay)  Informal settlers face particular challenges  High reliance on informal service providers for poor and marginalized groups

16. National Electrification Plan Uses and quality of service in rural areas 16  Uses very consistent in rural areas  Lighting and TV  “bBeing linked up to the outside world”  Lighting and “homework’  Livelihood activities  Diesel for livelihood activities  Cost of diesel (and fluctuations in cost) significant constraint to profitability  High demand among rural SMEs for grid-based electricity services  Good quality of grid-based services

17. National Electrification Plan Uses and quality of service in urban areas 17  Uses varied more markedly across wards/income groups and cities  More appliances: refrigerators, stoves, kettles and rice- cookers and air-conditioning among higher income households  Use of electricity for cooking in better-off wards  Issues of quality of service were stressed in poorer wards, by middle-income respondents & in Yangon  Availability  Reliability of the supply  Speed/cost of repairs.

18. Perceptions of Affordability 18

19. National Electrification Plan Perceptions of cost in rural areas 19  Overall lack of knowledge about the electricity tariffs charged by Government and the increase taking effect in April 2014.  Across all 13 villages visited, only a very limited number respondents had heard about the tariff increases.  Standard government rates were applied only in two of the four villages  In the other two sites, tariffs collected were much higher at 200 Kyats/kWh and 50 Kyats/kWh  Set by the electricity committee.

20. National Electrification Plan Perceptions of cost in rural areas 20  In rural areas the poorest villages and most vulnerable households within the communities are not connected  For currently with access payments were considered affordable:  Not concerned about the upcoming tariff increases;  Not planning to further reduce electricity consumption.  In terms of coping strategies, landless/land poor households did resort to late payments  The poorer groups in the rural areas visited  Could not afford to pay electricity charges  Even for the minimum lighting in the evenings

21. National Electrification Plan Perceptions of cost in urban areas 21  Generally good understanding of the new tariffs  Greater clarity in terms of the different charges in the bill Wealth Quintile Average Usage (units kWh) Previous monthly bill (average) Current monthly bill (average) Estimated increase % Well-off1,44350,50070,0038 Medium2829,80011,50017 Poorer1384,9005,000 marginal changes

22. National Electrification Plan Perceptions of cost in urban areas 22  Yangon and Mandalay  Middle-income households  Strong negative feedback but no negative coping strategies  Focus on lack of quality improvements  Poor and marginalized households  Not impacted by changes  Pre-existing concerns with making payments  SMEs  Middle-sized businesses  Electricity & Diesel  Concerns with quality

23. National Electrification Plan Perceptions of cost in urban areas 23  Laying off staff  Reducing production  But focus on quality rather than tariff reduction Cities Number of SMEs by consumption (Units kWh) 1-500501-10,00010,001-20,000 Yangon8170 Mandalay13102 Total21272

24. Implications for NEP Implementation 24

25. National Electrification Plan Implementation in rural areas 25 SRE Approach  Subsidization of village connections  Connections for poorer households  Technical Assistance  Regulation of functioning of Electricity Committees  Governance  Social Accountability  Inclusion  Review tariffs (subsidization for poor and marginalized groups)

26. National Electrification Plan Implementation in urban areas 26  Subsidizing connections to the households  Poor and marginalized groups  Informal settlers (documentation requirements)  Improvements in service quality will be key  Acceptability of further increase by middle-income households  Review service/tariffs available to SMEs

27. Thank you! 27