Sector Wide Approach (SWAp) - Organizing, Planning, Implementation and Financing Universal Electricity Access

Rwanda National Electrification Program Experience, lessons, implications

Arun P. SanghviConsultant

Workshop on Achieving Universal Electricity Access in MyanmarNaypyitaw, May 31 – June 1, 2013

master may 30 6pm

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Sector wide approach (SWAp) - What is a SWAp?- architecture differs from other approaches used to plan, finance and implement

development projects

Rwanda National Electrification program (NEP) - SWAp experience – National context and drivers– SWAp building blocks– Prospectus - fProspectus - from vision to implementation rom vision to implementation

– Key policy and planning issues– Implementation results to date

Lessons – Implications for Myanmar

Organization of Presentation

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Government leadership and policies make the difference International experience

Population without Access to Electricity and poverty prevalence (2008)

Country-owned and led, results focused, long-term sector development program

Brings together development partners and other stakeholders to coordinate aid effectiveness within the sector

Implementation aligned with national development priorities and targets

Traditionally used to coordinate investments in schools and health clinics; but now being deployed effectively for scaling up electricity access nationwide (Rwanda, Kenya, Indonesia, SE4ALL)

Sustainable and predictable funding anchored by a least cost sector-wide investment plan for national electrification program; integrating technical, financial and implementation.

Shift from piecemeal aid delivery, project-by-project, donor-by-donor to programmatic, results-focused implementation framework

Anatomy of a SWAp organizing framework “Many Partners, One Team, One Plan”

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Rwanda National Electrification Program – clear vision and targets

Post-conflict imperative for rapid scale up of productive infrastructure for powering accelerated growth and social sector services delivery, and meeting basic energy needs

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July 2008 - Energy Sector Working Group (SWG) established. MoU signed - Ministers of Finance and Energy, and senior development partners

Bankable Prospectus prepared (2009) - high level information document anchored by :

– Geospatial least-cost national rollout program 2010-2030 (grid and off-grid)

– Integrated with most effective renewable energy supply sources

– Connection costs based on affordability– Explicit cost reduction strategy– Transparent and sustainable financing platform

agreed jointly with development partners

Rwanda NEP SWAp – building blocks

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Rwanda Prospectus Scope

• Task 1: Rapid appraisal and readiness assessment (Sept – Oct. 2008)

– institutional framework– key institutions– Technical, financial, policy, regulatory, capacity

• Task 2: Geospatial least-cost grid roll-out + off-grid plan fro national electrification

• Task 3: Review adequacy of bulk power supply system and investment requirements

Prospectus Scope….Rwanda

• Task 4: Sector financial analysis & projected financing (balance sheet, sources and uses of funds)

– Investment and recurrent costs– Revenues from tariffs, efficiency improvements, utility self generation– Government equity transfers, other committed financing

• Task 4: Draft Prospectus and first round Donor review (January 2009)

• Task 5: Final Prospectus and Donor Financing Round Table to address financing gap (March 2009)

Geospatial least cost national electrification plan Grid extensions and rollout coordinated with off-grid complement

• Physical plans and investment cost for increasing electricity access for households, health centres, administrative offices and schools, consistent with policy targets and with overall sector growth

• Comprehensive GIS (Geographical Information System) data base- Population density, economic activity areas, priority social institutions (health centers,

schools, administrative offices)

- data from National Bureau of Statistics, National GIS Centre, MINALOC, MINEDUC, MINISANTE, MININFRA, ELGZ

- Digitization of existing and planned national electricity grid

- Affordability based on household income and expenditure data

• Supply options off-grid

- Micro-hydro mini grids, diesel grids, solar home size systems, charging products

Current Electricity NetworkTotal Connections 110,00

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Population Coverage

6%

Social Connections

Schools 21%

Health centres 74%

Admin offices 67%

• More than 60 per cent of population live within 5 km of existing network

AFREA Support for Energy Sector SWApsTransitional off-grid areas shrink as grid rollout expands

Rapid spatial planning platform utilized in Rwanda

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Population Density• Source:CGIS-NUR, Ministry of Local Government – National ID Project,Ministry of Infrastructure, National Institute of Statistics, Rwanda

Health Centers

• 74 percent of health centers currently have access• Sources: MINALOC, MININFRA, MINISANTE

Secondary Schools

• 21 percent of schools currently have access• Sources: MINALOC, MININFRA, MINEDUC

Administrative Offices

• 67 percent of administrative offices currently have access• Sources: MINALOC, MININFRA

Affordability of Electricity by District

• Percent of population with expenditure of less than

US$1.25 per day• Source: EICV2 Survey

GIS-Based Rapid Spatial Planning Platform Powerful Planning Tool for National Electrification Program Rollout to meet time bound targets

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2009 Grid Program Total Connections 146,969

Population Coverage 7%

Social Connections

Schools 27%

Health centres 82%

Admin offices 69%

Total Connections 204,397

Population Coverage 10%

Social Connections

Schools 35%

Health centres 88%

Admin offices 83%

2010 Grid Program

Total Connections 270,380

Population Coverage 13%

Social Connections

Schools 43%

Health centres 93%

Admin offices 92%

2011 Grid Program

Total Connections 350,000

Population Coverage

16%

Social Connections

Schools 50%

Health centres 100%

Admin offices 100%

2012 Grid Program

Access Programme to 2020Total Connections 820,00

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Population Coverage

36%

Social Connections

Schools 68%

Health centres 100%

Admin offices 100%

AFREA Support for Energy Sector SWApsSpatial least cost national electrification rollout in Rwanda grid and off-grid, 2009-2020

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SWAp - sector-wide national electrification planning platform - Spatial least-cost national grid (and off-grid complement) integrated rollout investment & implementation plan proved to be extremely effective:

• Seen as a national development plan rather than a electricity sector plan

• engaging all key stakeholders (in country and external)

• rallying development Partner contributions

• Modest cost and frequent updates – resulting in a dynamic planning platform:

Electricity access planning for national electrification

Classical style “RE Master Plan”

overly cumbersome (2-3 years)

high cost (1-2 million $)

updated less frequently

static in representation of changing conditions over time (grid rollout, demand, priority locations);

project here and there and now and then approach when donors come “shopping”

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Controlling costs Technical specifications were revised:

– Changing from lattice framed steel towers to wooden poles (below)

– Using single-wire earth return (SWER) lines in rural areas

Using local manufacturing for required materials, wherever possible

Doubling contract sizes to gain economies of scale

Targeted cost reduction per connection: US$1,000 (in 2009) to US$600 (in 2013) due to planned efficiencies

Planning for affordabilityThe proportion of households that live on less than US$1.25 per day is between 50% and 80% in most areasBut affordability analysis showed a relatively high willingness to pay for electricity

Despite low income levels in Rwanda, analysis showed that370,000 hhs would be willing and able to pay cost of grid connection and recurrent charges

Balancing affordability for new users, improving financial health of national

utiltity, and program financing on a sustained basis

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Consensus built around “80-10-10” policy for first SWAp Prospectus Concessionary finance from Donors on-granted to ELGZ , with policy to be re-visited for second SWAP time slice post 2014

Sustainable Financing Policy Platform Underpinning NEP- SWAp Prospectus time slice 2010-2014

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Partner Pledges - Prospectus Donor Financing Round Table (Sum)

Programmed Donor Contribution

World Bank+GEF

Dutch Government

78.3

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JICA

African Development Bank

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50

Committed Donor Funding (Off Grid)

European Commission 35

New Partners

BADEA

OFID

Saudi fund

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Government Contribution ($10m/yr.)

ELGZ

Customers

50

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TOTAL financing 357.3

Donor financing Roundtable, Kigali, April 2009Matching NEP investment and TA costs with syndicated financing

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Programme Connections (Target and Actual) 2008 Actual

2009 2010 2011(August)

2014 Target

• New connections < 5,000 32,995 43,733 40,419

• Households connected to electricity 110,896 143,891 187,624 228,043 350,000

Donors Round Table April 2009 - successful syndication (financing) pledges of US$225 million for first slice of the program (2009-2013) identified in program Prospectus. Donors uniformly commented that the Prospectus presented in a consistent, comprehensive and convincing manner:

The program is transformative; It is technically sensible; It is economically and financially viable; and it is implementable

ELGZ, established the National Electrification Program Management Department integrally within Electrogaz’s corporate structure to oversee planning, design, and implementation, pooling of all funds irrespective of donor, monitoring and evaluation, and Reporting accountability (no more enclave style PMUs ).

Commitment to the staged reductions in average unit connection costs - first two years of connections achieved within budgeted unit cost estimates of US$1,000/connection, Substantially lower cost than pre-SWAp program project averages

Program implementation early results – On track to achieve objective of 16% electrification by 2013

Rwanda NEP –SWApKey outcomes and implementation results

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Strong country ownership and leadership up and down the chain of accountability– Cabinet , MINECOFIN, MININFRA, Other Line Ministries – Health, Education, Environment – Committed National Utility (ELGZ)

Linkages to comprehensive and inclusive national vision and priorities– Ensured that the SWAp is aligned with the policy direction of the Government

Key stakeholder consensus and buy-in built from outset, through work by the SWG, led by the Minister on Energy

– Consultation process, workshops, retreats prepared stakeholders well for the Donor Round Table

South-South Cooperation and Training– Technical designs, planning, implementation, logistics\

GIS anchored data capture and grid rollout planning– Preparation across all key ministries in a coordinated manner

Affordable and inclusive– Connection charges set at affordable levels

Managing the transition from planning to implementation

Rwanda lessons – Key Success Factors

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Increased predictability (and possibly scale) of sector funding

Increased transparency and accountability

More effective partnerships

Increased donor coordination– leading to complimentary investments– less duplication or wasted resources

Lower transaction costs of disbursing and receiving donor funds

Ensures an appropriate level of input from development partners into policies, priorities, and sector expenditure

Key benefits of a SWAp framework for national electrification

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AFREA Support for Energy Sector SWAps

Kenya NEP (population 41 million; access ~ 29 %)•Prospectus raised US$1.5 billion to support government target of 1 million new connections over 2009-2013; implementation rate scaled up from ~40,000/yr. to ~ 250,000 connections/yr.

Indonesia Prospectus preparation ongoing (population ~235 million. Access ~ 70 percent) •75 million w/o access; investment required ~ $700m/yr. plus generation; implementation rate ~ 1,000,000 connections/yr. PNG NEP Prospectus preparation ongoing (population 7 million; access ~ 17 percent)

Other National Electrification programs utilizing SWAps

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Kenya National Electrification Program Investment Prospectus (2009-2014) - $1.9 Billion

Total Cost Breakdown AmtGeneration $634 M Hydro upgrade 27

Geo (new+ maintenance) 215Coal (proposed) 391

Transmission $565 M New transmission lines 360International Tran lines 195

Distribution $718 M Transformers, Substations 78PV for schools 29Isolated Mini grids 90LV reinforcement 61Grid Connections 460

Wither Forward - Myanmar's National Electrification Program

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Myanmar’s - National Electrification Program

Towards a Brighter Future for All Within a Generation?

“Yes we can”

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cè-zù tin-ba-deh thank you