Rural Electrification Concessions in Africa: What Does Experience Tell Us? Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
Total Page：16
File Type：pdf, Size：1020Kb
Public Disclosure Authorized Rural Electrification Concessions in Africa: What Does Experience Tell Us? Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Richard Hosier, Morgan Bazilian, Tatia Lemondzhava, Kabir Malik, Mitsunori Motohashi, and David Vilar de Ferrenbach Energy and Extractives Practice | Africa Region, World Bank Rural Electrification Concessions in Africa: What Does Experience Tell Us? Richard Hosier, Morgan Bazilian, Tatia Lemondzhava, Kabir Malik, Mitsunori Motohashi, and David Vilar de Ferrenbach Energy and Extractives Practice | Africa Region, World Bank With support from © 2017 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington, DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved This work is a product of the staff of The World Bank with external contributions. The findings, interpre- tations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guaran- tee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Nothing herein shall constitute or be considered to be a limitation upon or waiver of the privileges and immunities of The World Bank, all of which are specifically reserved. Rights and Permissions This work is available under the Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO) http:// creativecommons.org/licenses/by/3.0/igo. Under the Creative Commons Attribution license, you are free to copy, distribute, transmit, and adapt this work, including for commercial purposes, under the following conditions: Attribution—Please cite the work as follows: Richard Hosier, Morgan Bazilian, Tatia Lemondzhava, Kabir Malik, Mitsonuri Motohashi, and David Vilar de Ferrenbach. 2017. Rural Electrification Concessions in Africa: What Does Experience Tell Us? Washington, DC: World Bank. All queries on rights and licenses should be addressed to the Publishing and Knowledge Division, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights@ worldbank.org. Cover photo credit: Curt Carnemark/World Bank CONTENTS Foreword . v Acknowledgments . vii Executive Summary . ix Acronyms and Abbreviations . xix 1 Introduction . 1 Private sector participation in rural electrification in Africa . 1 Defining concessions . 2 Forms of power concessions in Sub-Saharan Africa . 4 Conditions for successful concessions . 9 Study methodology . 11 Outline of the report . 13 Annex 1A . Electrification concessions in Africa: Terminated or never implemented . 14 2 Rural Electrification Concessions in Africa: Mini-Grids . 15 Viability and impact of mini-grid concessions . 23 Advantages and disadvantages of the mini-grid model . 27 Suggestions to improve future mini-grid concessions . 29 3 Rural Electrification Concessions in Africa: Solar and Zonal . 31 Solar home system concessions . 31 Rural zonal concessions . 34 Senegal’s experience with zonal concessions . 35 Lessons from solar and zonal concessions . 38 4 National Utility Concessions . 41 Experience with national utilities operating under concession . 43 Viability and impact of national utility concessions . 47 Prospects for national utility concessions in rural electrification . 48 III 5 Lessons from Other Regions . 51 Mini-grids in Sri Lanka and Cambodia . 51 Solar home system concessions: Argentina’s PERMER . 53 National utility concessions: Peru and Guatemala . 54 Main lessons from other regions . 55 6 The Contribution of Concessions to Rural Electrification . 57 Mini-grid concessions . 57 Concessions of solar home systems and zonal concessions . 61 National utility concessions . 62 Concluding remarks . 64 Notes . 67 References . 69 Figures 1.1 Concessions on the spectrum of public-private sector institutional engagement .............3 Tables ES.1 Four types of rural electrification concessions ........................................xiv ES.2 Improved Access to Electricity in Sub-Saharan Africa, 2000–12: Twelve Fastest Growing and Those with Concessions .................................. xv ES.3 Sub-Saharan African countries with mini-grid concessions ..............................xvi 1.1 Four types of rural electrification concessions .........................................5 1.2 Improved Access to Electricity in Sub-Saharan Africa, 2000–12: Twelve Fastest Growing and Those with Concessions ..................................12 1A.1 “Buyer’s remorse”—Electricity concessions implemented but terminated early .............14 1A.2 “Cold feet”—Planned electricity concessions that were never implemented ...............14 2.1 Sub-Saharan African countries with mini-grid concessions ..............................17 2.2 Features common to mini-grid concessions in Sub-Saharan Africa .......................18 2.3 Financial status of mini-grid concessions in Sub-Saharan Africa ..........................24 3.1 South Africa’s solar home system concessions and their active customers.................32 3.2 Typical features of rural zonal concessions in Senegal .................................35 3.3 Status of rural zonal concessions in Senegal..........................................37 4.1 Features common to national utility concessions......................................42 6.1 Necessary conditions for concessions: Examples from the case studies ...................59 IV FOREWORD Recent estimates presented in the 2017 version also have been applied to mini-grids, solar home of the Global Tracking Framework established by systems, and even previously unelectrified zones. the international initiative known as Sustainable This report presents a review of the experi- Energy for All (World Bank and IEA 2017) show ence of Sub-Saharan African countries in de- that roughly a billion of the world’s people still ploying concessions to increase both the level of live without access to electricity. Over half of electrification and the level of private investment these people are estimated to live in Sub-Saha- in rural electrification from the 1990s until the ran Africa, with approximately 482 million living present. The results have been mixed. In several in rural areas and another 105 million in urban. cases, concessions have proven successful at In order to achieve the UN Sustainable Develop- increasing access to electricity. In others, ev- ment Goal #7, which focuses on ensuring access idence indicates that the effect of electricity to affordable, reliable, sustainable, and modern concessions on the pace of electrification has energy for all by 2030, an estimated $49 billion been minimal. In yet another set of instances, the per year will have to be invested in extending concession proved unprofitable or unworkable, electricity. and the model was abandoned. Public funds alone are insufficient to meet Regardless of whether the concession ap- this daunting challenge. Various approaches to proach to rural electrification is a promising solu- increasing the flow of private investment to rural tion (and the authors believe that, under certain electrification have been attempted, but consis- conditions, concessions can deliver results), this tent and replicable success remains elusive. report presents a first-of-its kind summary and Electricity “concessions” represent one of inquiry into the use of these public-private part- those approaches. A concession is a form of pub- nerships for enhancing rural access to electricity lic-private partnership in which the private sector in the region. By learning from experience, we is granted the right to build, operate, and expand can find effective ways to meet the formidable public infrastructure for a predefined period and urgent challenge of universal access to elec- of time. Although electricity concessions have tricity in Sub-Saharan Africa. been used most prominently to attract private investors to improve the operational efficiency of Lucio Monari, Director national utilities and distribution networks, they Energy and Extractives Global Practice World Bank Group V ACKNOWLEDGMENTS The authors would like to acknowledge the sup- who contributed (in alphabetical order): Katha- port of the African Renewable Energy and Access rine Baragona, Malcolm Cosgrove-Davies, Koffi (AFREA) program and the Energy Sector Manage- Ekouevi, Raihan Elahi, Jon Exel, Christophe de ment Assessment Program (ESMAP) in funding Gouvello, Mark Moseley, Christina Paul, Venkata the work presented in this report. Ramana Putti, Pedro Sanchez, and Robert Schlot- A significant number of World Bank col- terer. We appreciate the thought put into their leagues and friends proved instrumental to the comments, which improved the final product. formulation, production, and completion of this We regret that not every insightful comment may review and we would like to thank them for their have found its way into this final version. Life is a support. Meike van Ginneken provided early series of compromises. guidance and encouragement in shaping the The consulting team behind the review that framework for the activity. Lucio Monari pro- was the basis for this report was fielded by vided honest and candid feedback that helped Castalia, Ltd. We wish to single out the individual