Manila, Philippines 13 March 2012

Designing an Output-Based Aid Scheme for Rural Electrification in Cambodia (Direct Charge)
Takafumi Kadono Energy Specialist Southeast Asia Dept.

Cambodian Power Sector - Overview

Electrification rate: 24% (national); 13% (rural)
Consumption: Tariff: Target: 157 kWh/capita/yr 18/kWh (EDC Phnom Penh) ~90/kWh (isolated private REE) 100% villages electrified by 2020; and 70% households electrified by 2030

Challenges:

Investment over $1 billion (grid, mini-grid, isolated systems)

Initial connection fee affordability

Proposed ADB Rural Electrification Projects

Rural Energy Pilot Project Amount $10.6 million Rural Electrification Project $55 million (tbd)

Financing
Approval Output

Govt of Australia $10.6 million

June 2012 (expected) 220 km MV + 400 km LV Over 13,500 households electrified in Svay Rieng

ADB $45 million + $10 million (tbd)

September 2012 (expected) 2,000 km MV Over 60,000 households (tbd) electrified in Siem Reap, Kampong Thom, etc.
HV

Impact: Increased access to grid-electricity by rural communities in Cambodia.

MV

LV

Affordability and Consumption

Use of batteries: 84% of HHs

Expenditure on batteries: $2.5/HH/mos

Energy consumption: Unit cost of energy: 2.5 kWh/HH/mos $1.00/kWh

Source: Social survey in Svay Rieng Province

Energy consumption with EDC tariff (16.3/kWh) assuming expenditure on energy is same: 15.2 kWh/HH/mos But, need to first pay initial connection costs to be connected Entry barrier

Initial Connection Cost

EDC Connection Fee (5A)
Item Initial Connection Fee Deposit Sub-Total Cost ($) 7.75 6.50 14.25 HV

MV

Physical Connection Costs

Item In-house wiring
Distribution board Cable (20 m) 2 MCBs 2 CFLs (20 W) 2 switches 1 outlet socket 2 light bulb sockets

Cost ($) 25.00

3.00 5.00 8.00 5.00 2.00 1.00 1.00

LV
Service-line

In-house wiring

Service line cable (50m) Labour cost Sub-Total

30.00 15.00 70.00

OBA to assist poor households who cannot pay upfront cost.

Output-based Aid (OBA)

What is OBA
A results-based approach to increasing access to basic services like infrastructure, health care and education for the poor in developing countries. It links the payment of aid with delivery of outputs like connection to electricity grids, water and sanitation systems, or health care services.

The OBA Approach

Service delivery is contracted out to a third party, which receives a subsidy to complement or replace the user fees.

Explicit targeting by income or geography ensures that subsidy payments help those who need it most, the poor.
Independent verification ensures that funds are paid only after the services our outputs have been delivered.

Indicative OBA Mechanism

Item EDC Initial Connection Fee EDC Deposit Physical Connection Cost Paid By 100% HHs 100% HHs 20% HHs 80% OBA Grant Total Installments Up to 6 mos n/a n/a n/a Cost ($) 7.75 6.50 14.00 56.00 % of Total 9.2% 7.7% 16.6% 66.5%

84.25

100%

Indicative OBA Mechanism

7
Payment of 80% of costs after verification

EDC
4
Invoice & OBA voucher

0
OBA grant

OBA Fund

ADB
Reports to ADB and EDC

Supply & Install Contractor

Connection and wiring

EDC contract + OBA Voucher

EDC Deposit + connection fee

OBA Voucher + 20% connection costs

Independent Verification Agent

5 1
Identification of eligible households + Issuance of OBA Voucher

Verification of connection

Poor Households - Beneficiaries

CEFPF Support and Impact

Direct charge ($60,000) to recruit expert to design an OBA scheme for rural electrification projects in Cambodia.
First ever attempt in Cambodia. To be incorporated in the two rural electrification projects. Provide specific design features to facilitate connection and mechanisms to promote demand-side management.

Enhances energy access / security and addresses climate change

Provides gender, health and productivity benefits

Power for All

thank you

tkadono@adb.org