1. Energy Access for the Rural Poor A Role for Donors? 1 Palace Street, London SW1E 5HE Peter Davies Senior Energy Adviser p-davies@dfid.gov.uk

2. Infrastructure and Official Development Assistance  Developing country governments give high priority to infrastructure  Many donors see this as a discredited form of aid  Energy associated with power plant, transmission lines and dams Q. What’s the problem? A. These projects were not linked to poverty reduction, influenced by home-based business interests and corruption And yet, everyone agrees that a functioning infrastructure is essential to economic growth; without growth, poverty cannot be reduced Africa is rich in energy resources, but services are poor or non-existent

3. Who can provide new infrastructure?  About 70% of infrastructure investment in developing countries is financed by governments or public utilities. Less than 5% comes from official development assistance. Less than 10% of ODA is spent on infrastructure.  The financing gap is growing - very large investments needed ($200 billion in electricity generation in Africa to 2030 – IEA)  ODA and government budgets cannot meet this cost Private sector finance is essential Urban and rural services present different problems, needing different solutions

4. DFID’s Perspective  Grants to provide physical infrastructure will have limited impact but may be needed in the poorest countries  Create an enabling environment for investment – legal, regulatory and institutional  Reform electricity utility – place on proper commercial footing  Involve the private sector – private/public partnerships (many possible models)  Promote the local private sector in infrastructure services delivery These are complex issues. Donors need to coordinate their efforts.

5. Key Rural Energy Issues  Energy is not only electricity – the main energy requirement for rural households is cooking fuel  Electricity access needs to support productive capacity (income generation) and enable social services delivery (e.g. healthcare)  Find decentralised and off-grid solutions – all technology options  More attention is needed to the sustainable production and use of biomass and the potential for bio-fuels (local energy resources)  The poor need affordable supplies – the private sector needs full cost recovery; the case for subsidies - government role  Promote the local private sector. Viable business models for services delivery are needed to scale-up, beyond pilots and demonstration models

6. DFID’s Involvement in Energy  Limited engagement in bilateral programmes – India (power sector reform)  International partnerships working with other donors; GVEP, EUEI and World Bank (ESMAP and PPIAF)  New programme with ESMAP to promote SMEs in energy services delivery – work planned in 13 countries, 6 in Africa (incl. Ethiopia, Kenya, Uganda and Zambia) Also engaged in international forums such as CSD 14, 15 (2006/07)

7. Opportunities for Africa  Infrastructure generally and energy is rising up the international agenda – World Bank, Commission for Africa, Millennium Project, CSD 14 and 15  Africa is a focus for the G8 New grant funded opportunities – REEEP, COOPENER, EUEI PDF, EU Energy Facility (subject to European Council agreement) For more donor involvement, include energy services in PRSPs, press for greater attention at international forums (MDG+5) and make clear links to services access for poverty reduction, not just major infrastructure projects