IEEE Power & Energy Magazine - July/August 2014 - 31

table 3. A summary of key determinants for successful utility-scale rural electrification programs.
Institutional Conditions and Legislation
✓

Rural electrification programs require a strong public-sector initiative, especially during their early stages.

✓

The institutional framework should allow for the introduction of innovative solutions to expand electricity services.

✓

Don't rely too much on market forces for rural electrification. The idea that privatization will lift the burden of rural
electrification from governments has not proved to be true.

✓

Proper legislation and regulation are needed to enable a commercial approach to power supply and operational
autonomy of the utility.

The Political Conditions
✓

A long-term politically and socially stable environment is a must to get the donor community and the private sector
on board.

The Business Environment
✓

No single solution fits all. The cooperative model may be a good option in one country, while a national public
utility may be the solution in others.

✓

The tariff structure and level should offer the service provider sufficient revenues to recover its costs and achieve
financial sustainability.

✓

Given the differences in the business environment and available human resources, utilities in industrialized and
developing countries are often not comparable in terms of organization and management.

✓

The degree of maturity of the infrastructures, the technology deployed for rural electricity supply, and backgrounds
differ from country to country, and as an obvious consequence, decision makers will have to adopt solutions that
are appropriate to their local circumstances.

Support from the International Community
✓

Most people living in rural areas of developing countries are poor, but they are nevertheless usually willing to pay
a substantial part of their incomes for reliable electricity.

✓

Despite this, subsidies on initial investments and appropriate financing schemes with smart subsidies for the
beneficiaries will be needed.

✓

Improved donor coordination and harmonization is an important priority so as to allow for efficient and effective
decision processes and cooperation.

✓

Long-term commitments from both developing and donor countries are needed, independent of the political
election cycle.

✓

We cannot expect that developing countries carry the complete financial burden. Macro and micro financing,
including customer credit schemes, are necessary.

The Electrification Process
✓

In view of the diversity of the needs and the affordability issues facing the rural customer base, both initially and
over time, it is extremely important that local conditions and perceptions be used as the starting point for rural
electrification planning. To that end, a well-developed stakeholder communication process is needed.

✓

Initial demand is often low and only matures slowly. The technical solutions on both the demand and supply sides
should be adapted to this reality.

✓

To meet the demand for energy services in the most efficient, sustainable, and environmentally and socially
acceptable ways, the electrification process should consider all local opportunities for power production.

supply and have also demonstrated appropriate performance in
other respects. But there are developing countries where efforts
to provide electricity to rural areas have only had limited success and, despite international support, the utilities concerned
continue to show substandard performance. among the main
causes of the substandard performance of these utilities and
the disappointing results of a number of rural electrification
projects in some developing countries are uneconomically low
tariffs, low load factors and levels of demand, badly targeted
subsidy schemes, a lack of operational autonomy, and, in some
cases, extreme political interference.
july/august 2014

There is general agreement that under such circumstances, reform to the electricity sector is needed. any
reform should be approached with a healthy degree of skepticism, however. in most developing countries the market is
relatively small, the infrastructure is limited and expanding,
and the human resources needed for strong regulation are
often lacking. Power sector reform and the privatization of
utilities in latin america have demonstrated that rural electrification is successful only when the state creates specific
stimulus schemes, as attractive business opportunities are
clearly not often found within the low-income rural sector.
ieee power & energy magazine

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