Case Studies In Capacity Development in Power Sector With South-South Cooperation Components Final Report March 2011 Japan International Cooperation Agency (JICA) Value Planning International, Inc. Table of Contents Acknowledgments I. Background and Objectives........................................................................................... 1 II. Rise of South-South Cooperation as a Major Development Agenda .......................... 3 III. The World Bank‘s Approach to South-South Cooperation .......................................... 6 1. WBI‘s Focus on Capacity Development .................................................................... 6 2. Emphasis on South-South Knowledge Exchange .................................................... 8 IV. JICA‘s Approach to South-South Cooperation ........................................................... 13 1. JICA‘s Approach to Capacity Development ............................................................ 13 2. Japan‘s Definition and Policy on South-South Cooperation. ................................ 14 3. Overview of JICA‘s SSC Support ............................................................................ 15 V. JICA‘s CD Approaches in the Electric Power Sector ................................................. 22 VI. Case Study on Power Sector Development in Lao PDR ........................................... 25 1. Background ............................................................................................................... 25 2. Government‘s Electric Power Policy ....................................................................... 26 3. Impressive Achievement and Challenges Ahead ................................................... 27 4. JICA‘s Approach to Electric Power Sector Development in Lao PDR .................. 33 5. Lessons Learned ....................................................................................................... 41 VII. Power Sector Development in Sub-Saharan Africa ................................................... 44 1. Power Crisis in Sub-Saharan Africa ....................................................................... 44 2. Case of Zambia ......................................................................................................... 48 VIII. Recommendations................................................................................................. 53 1. Possibility for Knowledge Sharing between Lao PDR and Zambia ..................... 53 2. Possibility for Collaboration between the World Bank and JICA ........................ 54 3. Keys to Successful Triangular Cooperation (T-SSC) ............................................. 56 4. Further Studies ........................................................................................................ 62 References ............................................................................................................................ 64 Appendix 1: The History of Electric Power Industry in Japan........................................ A1 Appendix 2: The History of Rural Electrification in the United States .......................... A8 Appendix 3: Good Practices in JICA‘s SSC Support ....................................................... A11 Acknowledgments This report was prepared by Kenji Yamada (Value Planning International, Inc.) and comprising Kaoru Suzuki (Sr. Energy Specialist, the World Bank) and Marvin Fernandez (Program Officer, JICA U.S.A.). In addition to providing advice to the whole study, Kaoru Suzuki contributed to Chapter V (JICA‘s Capacity Development Approaches in Electric Power Sector) and Appendix 1 (History of Electric Power Industry in Japan). Marvin Fernandes was in charge of the analysis of JICA‘s good practices. This report was prepared under the guidance of Koji Jitsukawa. Production and organizational assistance was provided by Value Planning International, Inc. We gratefully acknowledge the cooperation and generous help we received from officials from Ministry of Energy and Mines in Lao P.D.R. and from Rural Electrification Authority in Zambia and development agencies including JICA, the World Bank and UNDP. We especially thank JICA experts in Lao P.D.R. and Zambia for their providing valuable information. We also wish to thank the participants, including representatives from government, academia, and donors, for their comments and suggestions on the report, received during the seminar on ―JICA‘s SSC Projects in the Electric Power Sector‖ at the World Bank, and ―South-South Cooperation: The New Cornerstone for Capacity-Building Programs?‖ that was organized by JICA‘s U.S.A. held in March, 2011 in Washington, U.S.A. I. Background and Objectives One of the most significant phenomena in recent years is the rise of South-South cooperation (SSC) as a major topic in the development community. Since the Accra Agenda for Action (AAA) emphasized an approach to South-South cooperation as part of the aid effectiveness agenda, SSC started to be regarded in international debates as a way of fostering horizontal partnership and drawing on the full potential of developing countries as both recipients and providers of development cooperation. In the growing interest in South-South cooperation, a set of brokering mechanisms has been established at various levels that connect the desire to share with the desire to learn among developing countries. At the global level, the World Bank established the South-South Experience Exchange Trust Fund (the South-South Facility) to meet immediate practical operational knowledge gaps by catalyzing the sharing of developing country experiences between practitioners. JICA, on the other hand, has actively supported South-South cooperation since 1975 in order to promote the self-help efforts of developing countries and the prioritization of their own development strategies, which is one of the most important philosophies of Japan‘s official development assistance (ODA). Despite recent high interest in the SSC, no definitive evidence-based answer is yet available for questions such as ―Is it really effective?‖ ―Can it overcome the weakness of traditional approach to capacity development?‖ or ―What role does South-South knowledge exchange play in upgrading capacity for development?‖ Major objectives of this study are to address these issues by analyzing JICA‘s approach to capacity development and SSC support for power sector development in developing countries as an example, and to explore the possibility for the knowledge exchange between Asia and Africa. To this end, Lao PDR and Zambia were selected as case study countries because they possess similar conditions: both are landlocked, sparsely populated low-income countries with immense hydropower potential. Over the past 15 years, Lao PDR has made a significant achievement in electric power sector development; therefore, it is expected that the experience of Lao PDR in this sector may contain many useful lessons to be learned by Zambia whose situation is similar to that in Lao PDR 15 years ago. By conducting this case study, the possibility of collaboration between JICA and the World Bank in SSC is explored by examining how they can contribute more effectively to power sector development in Sub-Saharan Africa in order to provide stable, 1 sustainable, affordable, and reliable electricity utilizing capacity development with South-South cooperation components. This report is composed of seven sections. Chapter 2 describes the recent rise of South-South cooperation as a major agenda in the development community. Chapter 3 deals with how the World Bank has responded to this global movement; its recent approach that focuses on capacity development and South-South knowledge exchange is introduced. Chapter 4 explains JICA‘s approach to South-South cooperation including its recent approach to capacity development, Japanese government‘s SSC policy, JICA‘s tools to support South-South cooperation, and its pattern of SSC support programs. From chapter 5, the focus shifts to electric power sector development. After explaining JICA‘s CD approaches in the electric power sector in Chapter 5, the power sector development in Lao PDR is tackled. The main focus here is why and how Lao PDR could make such an impressive achievement in this field. After introducing the government‘s policy and its achievement, and analyzing the characteristics of JICA‘s approach, lessons learned from Laos‘s experience in this field is examined. Chapter 7 discusses the recent power crisis in Sub-Saharan Africa and Zambia, and introduces the activities of JICA and the World Bank in Zambia‘s power sector. Based on the above analysis, the last chapter examines the possible areas for collaboration between Lao PDR and Zambia, and between the World Bank and JICA. Finally, the strengths and weaknesses of SSC support by traditional donors, called triangular cooperation (T-SSC)1, as well as their implications on project implementation are discussed, and areas for further study to promote South-South cooperation are suggested. 1 According to Guido Ashoff, T-SSC consists mainly of technical cooperation aimed at capacity building and takes place mostly in the same region where both the emerging donors and beneficiary countries are located. In many cases, T-SSC is based on previous cooperation between traditional and emerging donors, that is considered successful and worth transferring to third countries. In other cases, emerging donors have gained experience in specific areas, the transfer