2014/22 88703 k nKonw A A weldegdeg e ol n oNtoet e s eSrei r e ise s f ofro r p r&a c t hteh e nEenregryg y Etx itcrea c t i v e s G l o b a l P r a c t i c e The bottom line Scaling Up Access to Electricity: Rwanda’s rapid achievements in expanding access to electricity The Case of Rwanda after 2009 were made possible by one of the first applications of a sector-wide approach Why is this case interesting? • Strong government ownership and the capacity to harmonize (SWAp) in the electricity sector. efforts of line ministries and other stakeholders in the sector. The World Bank played a pivotal Rapid scale-up of access is possible from a • Very low initial electrification rate that suggests opportunities to role in the operationalization very low base pick low-hanging fruit and achieve rapid growth in access. of the SWAp, first by assisting Rwanda’s experience with electrification is an interesting case of • Multiple donors with mutually agreed goals. in the formulation of an how access to electricity can be quickly scaled up despite deficits investment prospectus that laid • Geographical attributes that support rapid scale-up. Although in infrastructure and institutional capacity. The magnitude and pace the groundwork for technical, coordination and evidence-based planning should improve of the successes achieved under the country’s Electricity Access financial, and implementation implementation in every setting, Rwanda’s rapid successes were Rollout Program (EARP) surpassed even the ambitious targets set by planning. The Rwandan helped by its small size and high population density.1 the government. Those achievements were made possible by one of experience is instructive for the first applications of a sector-wide approach (SWAp) in the elec- countries considering the tricity sector. Begun by the national government in 2009, EARP was What challenges did they face? adoption of a similar approach, particularly those starting from designed to increase access to electricity from 6 to 16 percent of the Need to scale up rapidly despite infrastructure and population over a five-year period. Using the SWAp, the Rwandan capacity constraints a low base. electricity utility, the Energy, Water, and Sanitation Authority (EWSA), met the 16 percent target in 2012 (ahead of schedule) through rapidly Rwanda (box 1) has made great strides in the past 20 years to move scaled-up implementation. The current target under the Economic forward from conflict and fragility. Over the past decade, the country Paul Baringanire is a Development and Poverty Reduction Strategy for 2013–18 (EDPRS 2) has made robust progress on both social and economic indicators. senior energy specialist in the World Bank’s is 70 percent of households by 2017 (Republic of Rwanda 2013). Between 2004 and 2012, the average annual rate of growth in GDP Africa Energy Practice. Effective coordination among stakeholders in planning, financing, was 8.1 percent, which brought the poverty rate down from 59 and implementation—a result of the SWAp—has been central to the percent in 2001 to 45 percent in 2011. Kabir Malik is a Young Professional rapid successes achieved under the program. To maintain a robust rate of economic growth, the government in the World Bank’s The Rwandan experience is instructive for countries considering has emphasized private sector investment and improved its gover- Africa Energy Practice. the adoption of a similar approach, particularly those starting from a nance and regulatory capacities, in part by building accountability Sudeshna Ghosh low base. The Rwandan approach is likely to work best in countries 1 The population density of Rwanda was measured to be about 416 people per sq.km. in Banerjee is a senior with the following characteristics: 2012 – the highest in Africa. economist in the World Bank’s Energy Practice. 2 S c a l i n g U p A c c e ss t o E l e c tr i c i t y : T h e Cas e o f R wa n d a Box 1. Key facts about Rwanda Box 2. Members of the SWAp • Population: 11.46 million (2012) • Energy, Water, and Sanitation Authority (EWSA), the organization responsible for all power-sector operations • Per capita GDP: $620 (2012) • Ministry of Infrastructure (MININFRA) • Electrification rate: 6 percent (2009); 16 percent (2013) “A SWAp is a country- • Ministry of Finance and Economic Planning (MINECOFIN) • Installed generation capacity: 110 MW (2013) led, results-focused • Rwanda Utilities Regulatory Agency (RURA) • Other line ministries, including the Ministry of Local Government approach that provides a (MINALOC), Ministry of Health (MINISANTE), and the Ministry of framework for coordination mechanisms. In 2014, the country ranked 32 (of 189) on the IFC/ Education (MINEDUC) World Bank ease-of-doing-business index, a huge leap from its 2005 between development • Local governments position of 139. Despite these favorable trends, infrastructure and partners and country • Development partners, including the African Development Bank, private-sector growth remain bottlenecks in the quest for social and the World Bank, the International Finance Corporation, and the stakeholders to develop economic prosperity. Improving access to electricity is one way to governments of Belgium and the Netherlands a coherent strategy for deal with those bottlenecks. sector development The Rwandan government established the EARP to achieve goals set under the Economic Development and Poverty Reduction through integrated technical, financial, and implementation planning. through integrated Strategy (2009–12).2 That strategy included aggressive targets to Individual projects are embedded within the SWAp framework. technical, financial and increase electricity connections from 110,000 in 2008 to 350,000 in Although SWAps have been used to coordinate investments in the implementation planning.” 2012 and called for considerable increases in electricity connections education and health sectors, the Rwandan SWAp was one the first to schools, health centers, and other social infrastructure. In 2008, applications in the infrastructure sector. the country’s rate of electricity access was just 6 percent, with In 2006, in the run-up to the SWAp rollout, the national govern- connected households concentrated in and around the capital, Kigali. ment adopted an aid policy aimed at harmonization and alignment. The available generation capacity was 50 MW, with heavy reliance In 2008, the government began implementing the EDPRS—the on imported automotive diesel oil, making electricity supply both strategy relied on a Common Performance Assessment Framework unreliable and expensive. (CPAF) that used SWAps for various sectors, including energy. The energy SWAp was implemented by a Sector Working Group What approach was taken? made up of key stakeholders and development partners (box 2). The The SWAp allowed development partners working group provided a forum for joint planning and coordination among all key stakeholders. Traditionally, a SWAp also streamlines to coalesce behind a strong government vision finances by employing basket or pooled funding, where all develop- In contrast to traditional, project-focused development aid, a SWAp ment partners pledge their funds into a joint account managed by is a country-led, results-oriented approach that provides a frame- the government or a sector utility. In the case of Rwanda, however, work for coordination between development partners and country funding was not pooled during the first phase of the program. At the stakeholders to develop a coherent strategy for sector development time, Rwanda’s government did not have adequate tracking mech- anisms for or experience with joint funding. Instead, development 2 The government’s action was also spurred by a severe drought in 2004 that resulted in se- partners were asked to pick activities to fund from a mutually agreed vere supply shortages. The drought highlighted the urgent need to invest in reliable and resilient generation and distribution infrastructure. list. The intent was that the collaboration would gradually grow to a 3 S c a l i n g U p A c c e ss t o E l e c tr i c i t y : T h e Cas e o f R wa n d a point where the pooling of funds was possible. However, this has not financial, and implementation planning. This document, presented yet happened due to the challenges of using the country systems to a donor financing roundtable in 2008, provided a transparent and under the Integrated Partnership Framework (IPF) modality. targeted implementation strategy for the least-cost achievement of Over the years, many development partners have supported Rwanda’s electrification goals for the period 2009–12. The plan laid the program—among them the African Development Bank (AfDB), out clear roles for sector stakeholders, detailed funding requirements the Arab Bank for Economic Development in Africa (BADEA), the for proposed activities, and a robust framework for monitoring and “When expanding access Belgium Technical Cooperation (BTC), the European Union (EU), the evaluation. Based on financial analysis, it set clear financing targets to electricity, accurate Netherlands, Japan, the OPEC Fund for International Development for all partners: 80 percent from the national government and its monitoring helps maintain (OFID), the Saudi Fund, and the World Bank. As of 2013, donor con- development partners, 10 percent from the utility, and 10 percent tributions of $273 million have been complemented by a Rwandan from consumer connection fees. The prospectus was the main the momentum to achieve government contribution of $126 million. instrument used in leveraging stakeholder funding and informing the targets by identifying and Tracking systems are integral to any SWAp. When expanding implementation strategy. building on successes and access to electricity, accurate monitoring helps maintain the momen- As the co-chair of the Sector Working Group, the World Bank dis- by addressing bottlenecks tum to achieve targets by identifying and building on successes and played a strong commitment to the program and helped attract other quickly.” by quickly addressing bottlenecks. In the case of Rwanda energy donors. As the lead development partner, the Bank has contributed a SWAp, the monitoring and evaluation system is aligned with the total of $130 million, $70 million in zero-interest financing followed by EARP , which in turn is part of the CPAF. The EARP results framework another $60 million in additional financing. and key intermediate indicators encompass the entire program, as Drawing on its global and regional experience in supporting opposed to project-specific investments. Reporting on the CPAF governments in expanding access to electricity, the World Bank also indicators is done primarily at the sector level through biannual joint contributed critical knowledge in the implementation of the SWAp sector reviews in advance of the country’s joint budget support (figure 1). With funding from the World Bank, a GIS-based spatial review. Both types of review provide a forum for dialogue around the network plan was developed to optimize expansion. The plan was performance of both the government and its development partners based on a spatial optimization of expansion through the year in pursuit of the EARP goals. In addition, a comprehensive impact 2020, factoring in financial and economic considerations. With the evaluation to assess the benefits of the program is in progress. The population divided into 9,300 sublocations (cells), demand forecasts baseline survey was completed in 2014; an update is planned in were developed for each sublocation and compared with the costs 2016. of electricity supply from alternative sources (grid and off-grid). The EARP Coordination Unit is responsible for monitoring and Geospatial prioritization of network rollout was based on population, reporting on program progress. In addition, the SWAp secretariat existing infrastructure, and estimates of what households in each is responsible for producing the joint annual sector performance location could afford. The affordability analysis, which was based on review and the quarterly program monitoring reports discussed at secondary household expenditure data, helped estimate the likely meetings of the Sector Working Group. The collection and analysis take-up of electricity connections in each location. It estimated a of data from the various reports and reviews not only improves range of between 19 and 51 percent take-up by households that the effectiveness of the SWAp, but also increases the quality and were offered connections. availability of data on the Rwandan electricity sector, which can be Drawing on the experience of other countries (including Tunisia), used for future planning and operations. changes were made in design and technical features that lowered The World Bank played a pivotal role in the operationalization capital costs related to distribution infrastructure. For example, of the SWAp, first by assisting in the formulation of the EARP wooden and concrete poles replaced more expensive lattice-framed investment prospectus, which laid the groundwork for technical, steel towers in rural areas. 4 S c a l i n g U p A c c e ss t o E l e c tr i c i t y : T h e Cas e o f R wa n d a Figure 1. Spatial Diagram of Planned and Existing Network Data before project start Updated project data “Progress in the four years since the rollout of the SWAp has been rapid. Household connections were increased from 110,000 to 390,000 (about 16 percent of the nation’s households) as of December 2013.” Source: EARP Coordination Unit. Note: The GIS map is updated regularly to reflect existing grid infrastructure and planned extensions. What were the results? Reduced costs of connections. Before the EARP , the cost of a household electrical connection was in the range of $2,000. The rapid scale up of electricity access exceeded the The SWAp was instrumental in bringing it down to $880 in the first government’s original targets phase of the EARP through technical changes inspired by network New grid connections. Progress in the four years since the rollout expansion in Tunisia and elsewhere. The program focused on of the SWAp has been rapid. Household connections were increased from 110,000 to 390,000 (about 16 percent of the nation’s house- Figure 2. Growth in household connections to the electrical grid, holds) as of December 2013 (figure 2). The goal of the second phase 2008–13 of EARP is to connect 1.7 million households by 2017—a 70 percent 390,000 400,000 connection rate. The program has also increased connections to 350,000 337,324 social infrastructure such as schools, health centers, and administra- 300,000 265,881 250,000 Number tive offices. Although the targets in this respect were not achieved, 187,596 200,000 more than half of Rwanda’s health centers and roughly 40 percent of 150,000 110,868 143,863 its schools had access to electricity as of December 2013. The new 100,000 50,000 target is to reach 100 percent of health centers and administrative 0 2008 2009 2010 2011 2012 2013 offices and 80 percent of schools by 2017. Source: EARP Coordination Unit. 5 S c a l i n g U p A c c e ss t o E l e c tr i c i t y : T h e Cas e o f R wa n d a connecting households within 5 kilometers of the existing grid (which generation capacity will have to increase apace if access targets was estimated to cover 60 percent of all households). That choice through 2017 are to be met. Currently, Rwanda has an installed accounts for a good part of Rwanda’s success in bringing down capacity of about 110 MW. According to the energy sector strategic connection costs and increasing connection rates. This prioritization plan for 2013–17, the government foresees a five-fold increase in of relatively low-cost connections has helped improve EWSA’s capacity, to 563 MW, by 2017–18, with 80 MW coming online by connection capacity and experience in advancing expansion to more mid-2014. Most of the increase will come from hydropower, peat, “As demand for electricity remote areas. methane, and geothermal and solar energy. Rwanda is quickly gain- rises with the addition of ing experience with solar photovoltaic (PV) technology. The country’s more households to the What challenges remain? first utility-scale solar PV facility will contribute 8 percent (8.5 MW) grid and economic growth, of Rwanda’s total generation once it is installed in 2014. Increases in Low demand and costly supply are squeezing supply from lower-cost sources will reduce EWSA’s dependence on generation capacity will utility finances expensive thermal generators, thus helping to improve its financial have to increase apace situation. Household electricity demand. Demand for electricity among if access targets through newly connected households has been lower than anticipated. This Utility finances. Though the EARP has achieved outstanding 2017 are to be met.” has sapped EWSA’s revenues and threatens the sustainability of results in terms of customer connections, EWSA’s financial situation the project. The program currently provides compact fluorescent worsened in 2013 owing to growing reliance on thermal power and lamps to newly connected households to promote energy efficiency delays in key generation projects. Despite an increase in electricity and affordability. Because most such households use electricity tariffs, the utility’s projected loss for the year ending in June 2013 only for lighting, the use of the energy-efficient lamps has kept was $11.7 million. The government is considering steps to improve electrical consumption very low. Experience from other countries the utility’s performance by introducing cost-reflective tariffs and shows that connected households in all income brackets tend to reducing the cost of generation through the use of cheaper energy acquire domestic appliances over time (see, for example, Khandker sources, accompanied by steps to reduce system losses and to and others 2009), gradually boosting electricity consumption, but increase energy efficiency. It is also planning to corporatize EWSA the fast pace of Rwanda’s electrification efforts has meant that a and make other institutional changes. large number of low-consumption households has been added at Off-grid options. Under the first phase of the EARP , new the same time. It may take several years before a meaningful rise in connections were concentrated within a 5-km radius of the existing consumption occurs. grid. To meet the targets set for 2017, connections will have to be With planned reductions in government support for the utility, extended into more remote areas of the country. This will increase the long-term sustainability of the EARP hinges on the ability to connection costs. Coupled with low demand for electricity among increase operating revenues. Reducing supply costs and ensuring newly connected households, the imminent rise in connection costs that tariffs cover an increasing share of costs are the first steps; makes off-grid options the most viable alternative in some settings. long-term financial sustainability will also require an increase in Achieving national targets over the next few years, therefore, will consumers’ ability to pay for electricity driven by productive uses of require an effective strategy to promote suitable off-grid alternatives the electricity to which they have recently gained access, as well as such as solar home systems, lanterns, and micro-grids. by economic growth. Staffing and donor funds. Although evidence-based planning Generation. The EARP agenda includes expansion of generation and multistakeholder coordination under the SWAp resulted in as well as access. As noted, access is expanding rapidly and is achievement of goals ahead of schedule, implementation problems projected to continue to do so. As demand for electricity rises with did occur. For example, the difficulty of finding qualified staff for the addition of more households to the grid and economic growth, the EARP Coordination Unit led to delays in the deployment of 6 S c a l i n g U p A c c e ss t o E l e c tr i c i t y : T h e Cas e o f R wa n d a Figure 3. Institutional changes in the Rwandan electricity sector Law passed to encourage IPP entry into electricity sector, Electrogaz Government reclaims breaking Electrogaz’s management contracted ownership of RECO and RWASCO monopoly to German company Electrogaz remerged into EWSA “Coupled with lack of clarity on roles and responsibilities, the RURA created to Plans to separate independently regulate Electrogaz split into electricity and profusion of stakeholders government utilities two corporations— water/sanitation including electricity RECO and RWSC functions has kept private sector investments lower than anticipated, especially in the area of generation.” 1999 2000 2002 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: Authors. monitoring and evaluation systems. Also, though the financing What lessons have been learned? needs of the SWAp program were met by the stakeholders and their development partners, difficulties were encountered in ensuring a An investment prospectus grounded in sound consistent flow of funds at various stages of implementation, thus sector planning can be very effective if certain emphasizing the importance of working out ahead of time how conditions are present finances are to be made available over the course of implementation. Strong government buy-in. Ownership by the government is Institutional capacity and coordination. EWSA underwent key to the success of any SWAp. Recognizing the need for a rapid significant managerial and restructuring changes in the first decade scale-up of electricity access to fuel the economy, the Rwandan of the 2000s (figure 3). Those changes affected the utility’s ability to government played a lead role in enabling the success of the SWAp build adequate institutional capacity to undertake its mandate. In by aligning it with national priorities and policies. Since the SWAp addition, the multiplicity of stakeholders in the Rwandan electricity relies on existing institutions, the regulatory groundwork laid by the sector made coordination challenging. Coupled with lack of clarity government and continued commitment by the various stakeholders on roles and responsibilities, the profusion of stakeholders has kept were instrumental to the successes achieved. private sector investments lower than anticipated, especially in the Strong commitment from a lead partner. The access area of generation. program in Rwanda (which is applicable to similar postconflict and low-income countries) benefited greatly from the World Bank’s ability 7 S c a l i n g U p A c c e ss t o E l e c tr i c i t y : T h e Cas e o f R wa n d a to drive the process, convene development partners, and mobilize the overall quality and availability of data in the Rwandan electricity grant funds for the upstream analytics that resulted in the SWAp sector has improved and will be very useful in future planning. prospectus. The presence of a strong partner leading the process Least-cost planning. The transfer of experiential knowledge on is essential, especially in countries where the government lacks cost-lowering design and implementation features is always import- requisite experience. ant, especially when affordability is a barrier. As highlighted above, Rwanda’s experience Coordination facilitated through the Sector Working the adoption of technical changes based on the experience of Tunisia has showed that with Group. The primary mechanism under the SWAp is centralized helped lower the capital costs of distribution. In addition, the use of management and planning though the Sector Working Group. By ready boards reduced the costs of readying households for con- government ownership and providing a platform for developing a joint, harmonized strategy, nection. The program design also allowed for staggered connection alignment with national the SWAp reduces the coordination costs of stakeholders in the payments to lower the amount that households had to pay up front. priorities, using SWAps sector. Development partners are able to engage the sector as a Financial sustainability. While subsidies are often needed in the electricity sector whole through the working group, thus streamlining their efforts to when increasing access to the poor, it is important to assess the achieve mutually agreed goals. Strategies optimized at the sector financial sustainability of any access program by realistically fore- is a viable and attractive level, as opposed to the project level, can exploit complementarities casting loads based on consumers’ ability to pay. Doing so makes alternative to traditional in investment and thus deliver greater overall benefits. Although the possible an accurate estimate of the additional support needed from project-based support. traditional SWAp uses a basket funding approach to consolidate government (in the form of subsidies or transfers) and donors. While resources and increase transparency of resource use, the first estimates were produced in the case of Rwanda, actual household phase of the Rwandan program showed that flexibility in the funding demand has been lower than expected, thus constraining the utility’s mechanism can help attract a diverse set of donors with differing but revenues. A greater programmatic emphasis on income-enhancing complementary interests and abilities. productive uses of electricity could be one of the lessons learned in Investment prospectus. The main tool used in the Rwandan this regard. SWAp was the investment prospectus. This document put forth a In all, the SWAp in Rwanda delivered tremendous improvements credible program framework for electricity sector development and in electricity access over a relatively short period of time. Although provided rigorous technical and financial analyses to aid implemen- challenges remain, the program is on its way to achieving the ambi- tation. It helped leverage donor funding by providing a clear plan of tious targets set for 2017 under the EARP II. Rwanda’s experience action and by reducing the due diligence that donors had to conduct has showed that with government ownership and alignment with before approving funds. national priorities, using SWAps in the electricity sector is a viable Data collection. The collection of data from various sources and attractive alternative to traditional project-based support. was critical to developing a spatial network expansion plan based Rwanda’s positive experience with the SWAp has inspired other on demand assessment and affordability. The data-collection countries. Some elements of the approach, such as least-cost effort formed the basis of credible estimates of program costs and planning and the investment prospectus, have recently been applied outcomes, improving the quality of planning and the speed of imple- in Ethiopia and Kenya. In Kenya, in particular, the investment pro- mentation. Further, with the focus on results, the program’s monitor- spectus has helped mobilize various development partners around a ing and tracking systems generate key data on the electricity sector government proposal to develop geothermal energy. Lessons learned as well as on the progress of implementation. This helps identify from Rwanda’s planning process are also being applied in many successful components and address bottlenecks quickly. As a result, countries that are now readying their plans for universal electricity access under the Sustainable Energy for All (SE4ALL) initiative. 8 S c a l i n g U p A c c e ss t o E l e c tr i c i t y : T h e Cas e o f R wa n d a References Republic of Rwanda. 2013. “Economic Development and Poverty Make further Reduction Strategy, 2013–18: Shaping Our Development.” Kigali. EARP (Electricity Access Rollout Program). 2013. 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May. and Sectorwide Approach Development Project (EASSDP).” Access to Electricity: The Case EWSA (Energy, Water and Sanitation Authority). 2012. “Mid-term Washington, DC. November. of Lighting Africa,” by Daniel Review: Rwanda Electricity Access Roll-out Program.” Kigali. World Bank. 2014. World Development Indicators. http://data. Murphy and Arsh Sharma. Khandker, Shahidur R., Douglas F. Barnes, Hussain Samad, and worldbank.org/country/rwanda. Accessed May 2014. Nguyen Huu Minh. 2009. Welfare Impacts of Rural Electrification: Live Wire 2014/21. “Scaling Evidence from Vietnam. Policy Research Working Paper 5057, The peer reviewers for this note were Erik Magnus Fernstrom (lead energy Up Access to Electricity: The World Bank, Washington, DC. specialist, Africa Energy Practice, World Bank) and Venkata Ramana Putti Case of Bangladesh,” by Zubair (senior energy specialist, Energy Sector Management Assistance Program). Sadeque, Dana Rysankova, Raihan Elahi, and Ruchi Soni.