World Bank Enables Thousands of Africans to Access Modern Energy Real results from World Bank projects in Africa s power sector

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1 BACKGROUND Contacts In Washington: Christopher Walsh (202) World Bank Enables Thousands of Africans to Access Modern Energy Real results from World Bank projects in Africa s power sector (World Bank Portfolio As of April 2008, US$3 billion, 48 projects) Ethiopia In Ethiopia, only 5-7% of the population has access to electricity, while most use wood-burning as a source of energy for household activities. Indoor pollution from wood-burning is a major cause of respiratory illness, low birth weight, and even lung cancer. Using wood for fuel has also led to increased deforestation in Ethiopia. Under the Ethiopia Energy Access Project (FY03, US$132.7 million equivalent), the World Bank financed the purchase, distribution, and installation of 1 million energyefficient stoves to Ethiopian families whose prior source of cooking energy was wood. In addition to providing electricity for the first time to some 3.5 million people (700,000 households), ongoing projects have addressed issues such as energy efficiency, electricity affordability for people in rural areas, ways of providing modern energy to remote areas, and ways to ensure that grid-access increases productivity and wealth. For households already electrified, the World Bank is financing the replacement of incandescent light bulbs with the more energy-efficient Compact Fluorescent Light bulbs, reducing at least 55% of poor customers' electric utility bill as well as drastically reducing their carbon footprint. The WB is supporting Ethiopia in mini-hydropower and solar photovoltaic power systems for off-grid public institutions, social services, and residents, as well as in the "Lighting Africa" program for those in remote areas, which seeks to replace lanterns and other fuel-based lighting with modern, safer products such as hand-cranked, or solar powered, portable light products. With support from Global Program on Output-Based Aid, the World Bank is reducing the cost of individual house connections to electric utility poles, which had been a major barrier for the poor to have metered electricity, even once the power grid had reached the village. Furthermore, a joint energy and agriculture team is working on piloting postharvest agriculture productivity in areas where grid access becomes available to assure that electricity is not only used for lighting, but also for other productive uses.

2 Guinea In Guinea, electricity service is available almost exclusively in the capital and even there it is at best sporadic. In an attempt to improve sector performance, the electric utility, EDG was concessioned in 1994, but the concession collapsed in 2001 and has been in the Government s hands since then. The sector s condition was at a crisis level for years, and was recently approaching a state of collapse, especially given the utility s inability to collect revenues for sold power. The World Bank in partnership with the Government of Guinea undertook urgent efforts to address the crisis. The Guinea Decentralization and Rural Electrification Project (FY03, US$5 million equivalent IDA, US$2 million GEF) has seen promising developments in Guinea s power sector with respect to fostering rural electrification. The project has also enabled 4000 rural households to have electricity for the first time, with another 15,000 currently in the planning stages. Other results from the project so far include: 14 consulting firms have been trained The decentralized electrification financing mechanism is operational and has a sustainable source of government financing and financial support from donors, including 14 loans awarded so far, 16 projects in the pipeline About 800 million Guinean Francs mobilized from the private sector for rural electrification 2 solar projects and 2 mini hydropower projects under development The project has already facilitated 9 sub-projects currently in operation, 5 subprojects under construction, and an additional pipeline of 16 sub-projects with confirmed private sector sponsors, under an innovative low-cost Small & Medium Enterprise (SME) approach. The projects have been implemented in all 4 regions of Guinea in varying demographics and socio-economic conditions from small villages to larger rural towns. Substantial interest has been generated from the local SMEs for the participation in the program, even surpassing available financing. Guinea-Bissau The Guinea-Bissau Multi-sector Infrastructure Rehab (FY06, US$15 million) project provided emergency power to Guinea-Bissau in January 2008 at a time when the country s only 1.2 Megawatts of power generation had failed. The project provided a short-term alternative to total darkness while adding another 2.3 Megawatts from leased power generators in February and another interim 5 Megawatts slated for May 2008 until the broader regional power project is commissioned. In a country where only 2.6% of the population, mostly in the capital, Bissau, can access electricity, the emergency thermal power generators provided the stepping stone needed to improve economic and overall conditions. Kenya The Kenya Energy Sector Recovery Project (FY05, US$80 million equivalent) provided for the upgrade, reinforcement, and extension of Kenya s electricity distribution

3 system, while providing energy meters to connect 400,000 new customers. In 2007, electric utility company, KPLC, connected 122,000 new customers to power supply. The number of electricity consumers has increased from 600,000 to 1,000,000 as of January 2008 and system losses have come down from about 18.7 percent in 2004 to about 17.6 percent as of June The European Investment Bank, the Agence Française de Développement, and the Nordic Development Fund are co-financing the project. Kenya is also taking advantage of the project s resources to create a Geothermal Development company to take over geothermal exploration from KenGen and sell geothermal steam to private and public generators. This would add to Kenya s current 128 Megawatts of geothermal power already installed. The project is also financing an extension of the Olkaria II geothermal power plant with a third, 35 Megawattt generator. The Olkaria II extension also qualifies for carbon financing because of geothermal power s renewable characteristics. Meanwhile, the private sector is also expanding its geothermal power plant with a 35 Megwatt generator with the help of a MIGA guarantee. Mali In Mali, barely 8 percent of the rural population has access to electricity. Most rural households meet their lighting and small power needs with kerosene, dry cell and car batteries. About half of the 5700 villages of Mali have a school or health center clinic or both; however, most are without any form of energy for lighting or for operating equipment. Under the Household Energy and Universal Rural Access Project, the newly created rural electrification agency, called AMADER, has approved roughly 40 rural electrification business plans that will allow a cumulative number of 30,000 household connections by December Local private operators are the driving force of this project. They have provided an average matching co-financing of 25% of the financed programs. AMADER has innovated in adding a public lighting network to the multifunctional platforms. A total number of 3,400 public lighting points and cumulative number of 690 public and community institutions and centers are connected including 82 schools and 45 health centers. These multifunctional platforms are managed by women s associations who receive training in basic accounting in local language provided by the project. By moving from open fires and candles to higher energy services, children are able to do their homework at night, nighttime motherhood is safer, people can generate income in new ways, such as through ice-making, food-processing, and rural telephony, and markets are open at night for business. Recreational activities such as weddings, traditional ceremonies as well prayer sessions can now be extended after daylight to the delight of villagers. The household energy component of the project funded the distribution of 421,000 improved wood and charcoal stoves, and 30,000 Compact Fluorescent Lights which use less energy and emit less carbon. Access to better cooking equipment reduces health risks associated with indoor air pollution, such as acute respiratory diseases, lung cancer, and low birth weight. Rwanda

4 Rwanda s electric grid was all but decimated in the 1994 civil war, and had not been maintained since. Power service was unreliable, unsafe, or was lost to technical losses or theft. Under the Rwanda Urgent Electricity Rehabilitation Project (FY05, US$29.9 million), the World Bank has helped Rwanda to begin the repair of its electric grid, and helped Rwanda s electric utility to reestablish operations and financial well being. To manage heavy peak electricity demand, the Bank financed the distribution of Compact Fluorescent Light bulbs, which use less power, emit less carbon, and last longer than traditional lights, to 50,000 households. The program will distribute 400,000 CFLs by the project s end and is Rwanda s first carbon finance project. Although Rwanda is still using costlier emergency diesel fuel generators while other power sources are developed, these steps will help provide the foundation for the country s electricity access expansion program, which aims to connect 200,000 households in the next several years, compared to 85,000 currently. Senegal Under the Senegal Electricity Services for Rural Areas (FY05, US$29.9 million equivalent IDA and US$5 million GEF) project, 20,000 families, businesses, and social services in rural areas now have access to electricity, whereas before they had none. This project enabled the private sector to bid on the development of new connections for rural customers to increase their access to modern energy services. Tanzania Prior to 2001, Tanzania was dependent on costly thermal power from imported heavy fuel oil- and diesel fuel in addition to domestic hydro plants to provide electricity for the national power grid. However, Tanzania now largely relies on its own natural gas reserves (in addition to hydropower) for power generation with the help of the World Bank Tanzania Songo Songo Gas Development & Power Generation Project (FY02, US$220 million equivalent), which financed the purchase and installation of a natural gas pipeline from Songo Songo Island to the Ubungo power station in Dar es Salaam. The World Bank also financed the project s resettlement housing and infrastructure according to international social safeguard policies. In addition to the laying of the pipeline, the project financed the conversion of the Ubungo power station from fuel-burning, to gas-burning, which is less costly and more environmentally friendly. Relying on the country s own gas supply for power has saved an estimated US$1 billion over the last seven years, thereby reducing the cost of electricity for the end users. The project is a solid example of an Independent Power Producer (IPP) operating efficiently and successfully in Tanzania, and has enhanced contractual discipline within the sector. The World Bank also provided technical assistance to the Government of Tanzania to develop an overall least-cost power sector expansion plan, an IPP policy, and provided legal and financial advisors towards the implementation of the next IPP.

5 Uganda In Uganda, between five and eight percent of the population has access to electricity, with most of those electrified living in or around the capital, Kampala. Because of a lack of adequate, stable electricity supply, those connected to the power grid have had to endure rolling blackouts in recent years, bringing an otherwise growing economy to a virtual stand still. While additional sources of power generation are developed, the Government looks for other ways to reduce the load on the power grid. The World Bank-led Uganda Power IV Project (FY02, US$62 million equivalent) supported that effort by financing the distribution of 800,000 Compact Fluorescent Light (CFLs) bulbs, which use less power, emit less carbon, and last longer, to households, businesses, and social services. Meanwhile, the Uganda Energy for Rural Transformation Project (FY02, US$49.2 million) is currently between its first and second of three phases, having already established and implemented an institutional framework that facilitates the development of rural electrification. Under the project, rural communities are harnessing power sources, such as solar- and mini-hydropower, to provide access to electricity for the first time to homes, clinics, and other social services. Some communities vest an initial 20-30% of project cost, while the rural electrification agency steps in to subsidize the difference, and while private sponsors then operate the power plants on a commercially oriented basis. The project also developed a standardized Power Purchase Agreement, which has played a major role in encouraging the private sector to support mini-hydropower projects. The project has, and continues to finance the purchase and installation of the electricity transmission lines that run from these power sources to the newly connected customers.