EAP Gender September 2017 Why Measuring Energy Access for Women Makes Smart Business The Case of Lao PDR A Lessons Learned Note from the EAP Gender and Energy Facility Photo: World Bank The Lao People’s Democratic Republic, a mountainous landlocked country in Southeast Asia, has scored a remark- L ao PDR has already achieved its target to provide access to electricity to more than 90 percent of households countrywide by 2020. This was realized through a strategy that combined an ambitious program to extend the grid able achievement. In just over two to rural areas, where almost 70 percent of Laotians live, with off-grid solutions decades, from 1995 to 2017, it managed in remote regions. Key elements of the strategy included an interest-free credit to increase national access to electric- scheme (the Power to the Poor Program, P2P) for those too poor to connect, ity from 16 percent to more than 90 ensuring outreach to rural female-headed households, which were found to be percent of the population. A sustained among the poorest of households. effort to make electricity affordable for those too poor to pay initial connec- Between 2008 and 2015, more than 83,000 households in rural areas (7 percent tion charges has been key feature of the of the population) were able to access electricity services thanks to the P2P pro- achievement. Solid preparatory studies gram; of these, 6,320 were female-headed. Villages where the P2P program was and disaggregated data on specific barri- initially implemented saw electrification rates jump from 78 percent to 95 percent ers to electrification for female-headed on average. The impact on female-headed households was higher, reaching 90 households were critical for targeting percent from 65 percent before the program. and impact evaluation. The impact on individual households has been enormous. Electricity has opened This note presents the Power to the the opportunity for P2P beneficiaries to start small businesses at home and to Poor Program piloted by the Rural diversify existing income-producing activities, from handicrafts production to Electrification Project (Phase 1 and 2) in Lao PDR. The program provided poor carpentry and retailing. Other benefits have included better connectivity and households with interest-free loans that access to information through the ownership and use of mobile phones, which enabled them to obtain a connection to rose from 67 percent before connection to the grid to 86 percent after. Ben- the grid and wire their dwellings. House- eficiaries have also reduced the levels of indoor air pollution in their homes by holds headed by women were a focus exchanging diesel-fueled wick lamps for electric lighting, and while none of the of the program. beneficiaries switched from charcoal or firewood to electric financing became available from additional sources, including cookstoves, a significant number purchased an electric rice the Asian Development Bank (ADB), the program expanded cooker following access to electricity; this is expected to to cover the entire country. Between 2008 and 2015, P2P has help reduce indoor air pollution levels, with important ben- enabled access to electricity services for 83,000 poor house- efits for women, who are the primary cooks. holds; of these, 6,320 (7.6 percent) were female-headed.1 With a 100 percent repayment rate, the program is also fully self- Power to the Poor: Addressing sufficient and has been mainstreamed into EdL’s operations. Accessibility Constraints A socioeconomic survey conducted during preparation Key Success Features of the of the World Bank’s Rural Electrification Project I (2006–12) Power to the Poor Program found that poor rural households in Lao PDR overwhelmingly • P2P is embedded within national policy. P2P has directly wanted electricity and were willing to pay between $1–$3 supported Lao PDR’s goal to achieve 90 percent electrifi- monthly—that is, the same or less than what they were pay- cation by 2020, and high-level support for its implemen- ing for other energy sources such as diesel fuel or batteries. tation has been strong from the onset. But the up-front costs for connection and wiring ($80–$100) • The P2P design is based on solid preparatory studies. A were beyond their means. As a result, 30–40 percent of the socioeconomic survey conducted during the preparation poor households in villages that gained access to the grid of Rural Electrification Project identified female-headed remained without electricity years after the rest of the vil- households as a large segment of those that faced bar- lage had been connected. A follow-up survey in 2007 con- riers to access. A follow-up study provided detailed tained a more striking finding: female-headed households information on the needs of poor and female-headed were poorer on average and less likely to be able to afford households and served as the basis for the design of the the connection fee. P2P program. These findings suggested that to increase the rates of rural • P2P places no additional cost burden on poor house- electrification among the poor in general and among female- holds. Monthly energy expenditures by beneficiaries headed households in particular, a specific intervention would are no more than they were before the connection was be needed to lift the initial cost barrier. The energy utility, made. Thus, the cost of connecting to the grid does not Electricité du Laos (EdL), and the World Bank devised the P2P exceed what poor households would pay each month for program, which offered the poorest households an interest- other energy sources, such as candles, kerosene, or diesel free loan covering between 60 and 70 percent of connection fuel. During the repayment period, monthly spending on costs, repayable in monthly installments over three years. energy is maintained at about $3, including the loan repay- P2P was piloted for a year in a few villages. Based on success- ment. Once the loan is repaid, spending tends to fall to as ful results and an available budget, EdL established a revolving low as $0.90 a month. The installation costs are offset in fund that was initially capitalized with grants from the Inter- about 38 months. national Development Association and Australian Overseas Development Agency. As the revolving fund solidified and 1. Data provided by Electricité du Laos, November 2015. Electricity Transforms Women’s Lives Electricity access has been transformative for women such as Ms. Phan, a widow living with her daughter. As a female head of household, she qualified for an interest-free loan under the P2P scheme that allowed her to connect to the grid and wire her house. One of her income- producing activities is weaving fishing nets and mats for sale. Before gaining access to electricity, she would weave at night with the help of a diesel wick lamp. But now she has two fluorescent lamps. She can see better and produce more mats and nets than before. With this gain in efficiency, she has been able to increase her income and save $5 to $6 per month, which is a considerable amount, as most P2P recipients were found to have monthly incomes averaging $21. She has to repay the connection loan over 36 months plus the cost of the electricity she consumes, but her energy expenditure has held steady at about $4 per month. Once the loan is repaid, Ms. Phan will be able to save even more. You can see Ms. Phan’s story and obtain more information on P2P impacts at Lao PDR: Rural Electrification for All—A Gender Lens, https://www.youtube.com/watch?v=h-DY3T_1RPI Photo: World Bank • P2P uses a gender-sensitive eligibility criterion. House- holds are eligible for the P2P program if their dwelling is Monitoring safe to electrify and they meet at least one of the fol- Access, Affordability, and Repayment lowing poverty criteria: the household faces a rice short- EdL monitors electrification trends in villages linked to the age at least six months of the year; it has access to less grid. When connection rates stop rising, a provincial out- than one hectare of land for rice cultivation; it owns no reach team is sent to determine the reason. If the team livestock; it cannot finance its medical costs. Based on finds that all who would be able to connect on their own implementation experience, P2P also includes a criterion have done so—usually two to three years after initial village for households with members with disabilities. To pre- access to the grid—then EdL assesses whether the P2P pro- vent “free riding,” only households in villages connected gram should be extended to the village. to the grid for two or more years are eligible. EdL has established the outreach teams as the key mecha- • P2P uses gender-sensitive methods and materials. nism for engaging rural communities. Members of the teams Trained outreach teams are assigned to identify the poor- are locally recruited, which helps ensure that they speak the est households through participatory consultations using local language and understand regional specificities, as Laos gender-sensitive information materials and involving is a multiethnic country with important differences across community institutions (women’s groups, village officials). provinces. The teams are deployed to assess the applicabil- Specific methods for reaching out to female beneficia- ity of P2P, facilitate meetings with village authorities and ries include: (i) organizing presentations and house visits individual households, and confirm that the structural and at times when women are most likely to be available; socioeconomic criteria of the P2P program are met. At (ii) using posters and other visual aids to explain the pro- a later stage, the teams confirm that wiring is of standard gram; and (iii) counseling individual households on their quality; they remain active through completion of electrifi- monthly cash flow to determine if repayment is possible. cation. Teams are trained in using the program’s implementa- tion manual (World Bank 2011), and specifically in counseling • P2P maintains a revolving fund to ensure sustainability. female-headed households. Loans are repaid into a revolving fund that is then used to support other disadvantaged households and extend the After a loan contract is signed, EdL adds the household to its program to other villages. The use of a revolving fund has billing system. When the program began, village chiefs col- allowed EdL to assume the full operation of the program lected monthly repayments, and households were billed an and to mainstream it within its operations. additional small fee for collection. But as the program scaled up, loan repayment was integrated into the general electric- • P2P has built-in flexibility. Because poor households ity bill as a separate entry. This has improved the efficiency are sometimes unable to repay the monthly install- of collection and reduced costs. Table 1 presents the process ment for grid connection on time, the scheme permits followed in implementing the program.. three months of arrearages. No household has defaulted beyond the grace period. Table 1. Implementation of the Power to the Poor Program Phases Activities Mobilization phase • Electricity provider develops awareness materials (1 month) • Electricity provider’s community-outreach team is deployed to mobilize support and awareness of the program through village meetings Selection phase • Core team works with village leaders to apply evaluation criteria and compile list of eligible households, (1 month) with an emphasis on female-headed households • Selected households are advised on secondary criteria, for example, ability to repay a loan • Village meeting seeks consensus on selection list Electrification phase • Household survey is conducted to establish livelihood baseline (1 month) • Homes are inspected to confirm safety to electrify • Electricity provider approves credit line and makes billing and accounting system entry • Households sign individual credit agreement and receive voucher • Households contract for wiring • Wiring contractor performs work, collects household copayment, submits voucher, and receives payment • Electricity provider inspects installation, reimburses contractor, sets meter Billing phase • Electricity provider tracks repayment by households (36 months) Source: World Bank (2011); interview with EdL, October 1–2, 2015. Gender-Informed The evaluation found a positive correlation between elec- Impact Evaluation trification and an increase in productive activities at home, particularly those managed by women, such as handicraft To assess the welfare impacts and benefits of the P2P pro- production and retailing. Electrification status appeared to gram, a quasi-experimental impact evaluation in 2013 com- be positively associated with the income of households pared randomly selected households that were connected engaged in business activities at home. It confirmed that elec- to the grid under P2P with a random sample of similar, poor, trified households were spending less on energy than non- unconnected households (program applicants waiting to be electrified households and that electrified households also connected to the grid under the program). The compari- benefited in other ways, for example, by gaining improved son group helped capture what would have been the out- access to communication (electrified households were more comes if the program had not been implemented (i.e., the likely to own mobile phones than nonelectrified households counterfactual). The evaluation assessed the relationship of of similar socioeconomic status). The evaluation also indi- electricity to income-generating activities, how electricity cated reductions in exposure to indoor air pollution among influences household members’ use of time, the relationship P2P households that had phased out diesel-wick lamps and of electricity to education, fuel savings, and the direct con- among those that had been able to acquire an electric rice tribution of access to electricity on health, the environment, cooker, reducing to some degree their use of solid fuels for and safety (Tuntivate 2013). cooking. These improvements made possible through access to electricity addressed women’s needs directly. Finally, all P2P households indicated an increased perception of safety following their connection to the grid. References ———. 2007. Making Infrastructure Projects Responsive to the Needs of Women in Rural and Remote Areas: Access to Rural Electrification in Indochina Research. 2013. Household Survey for Impact Evaluation of Rural Lao PDR (Report), East Asia and Pacific Region Gender Program, World Electrification Program Phase I and II–Grid Electrification and Power to Bank, Washington, DC. the Poor (P2P) Program. Completion Report. May. ———. 2011. Lao PDR Rural Electrification Program House Wiring Assis- Tuntivate, V. 2013. Welfare Benefits of Lao Rural Electrification Project tance Program Manual “Power to the Poor.” (unpublished). World Bank, Phase I and II: Power to the Poor Program. Impact Evaluation Report. Washington, DC. World Bank, Washington, DC. September. ———. 2012. Power to the People: Twenty Years of National Electrifi- World Bank. 2006. Rural Electrification Project Phase I (2006). Project cation in Lao PDR, Asia Sustainable and Alternative Energy Program Appraisal Document, Report PAD 30961-LA, World Bank, Washington, (ASTAE), World Bank, Washington, DC. DC. March. Acknowledgments This note was prepared by Veronica Mendizabal Joffre, Energy and Gender consultant, and task team leader Helle Buchhave, Senior Social Development Specialist, within the World Bank’s Global Practice for Social, Urban, Rural and Resilience. The team received comments and inputs from Keomanivone Phimmahasay, Economist and Country Gender Focal point for Lao PDR, Macroeconomics and Fiscal Management Global Practice, World Bank; and from Rome Chavapricha, Senior Energy Specialist; Awa Seck, Senior Economist; Fowzia Hassan, Senior Operations Officer; and Lucia Fort, Senior Gender and Energy Consultant—all from the Energy and Extractives Global Practice of the World Bank. This note was prepared under the East Asia and Pacific Gender and Energy Facility. The Facility supports cooperation between the social and energy teams in the East Asia and Pacific Region in integrating a meaningful approach to gender in energy operations. The Facility is funded by the World Bank’s Energy Sector Management Assistance Program (ESMAP). For further information please contact: Helle Buchhave, Senior Social Development Specialist GPSURR hbuchhave@worldbank.org and Yun Wu, Energy Specialist GEE09, at ywu4@worldbank.org.