Material utilizado en el tratamiento – GUIÓN PSICOEDUCACIÓN

Tariff design often has to meet competing objectives. Sound pricing of power is critical to meeting the huge investment needs of the sector. At the same time, policymakers need to ensure they meet equity and affordability objectives. Marrying all these goals is challenging, and few countries have been able to achieve all these objectives simultaneously. Chad, Mozambique, Rwanda, and Uganda have done well on cost recovery but poorly on

affordability and equity, while South Africa, the Democratic Republic of Congo, Tanzania, and Zambia have fared well on the social objectives but have not been able to achieve cost recovery (Briceño-Garmendia and Shkaratan, 2011). Nevertheless, other country experiences, such as the progress in Kenya, indicate that it is possible to make substantial progress in both cost recovery and affordability.

There is considerable scope to achieve subsidy savings without compromising targeting. The most common electricity tariff regime is based on consumption (increasing block tariffs or IBTs), where consumers face higher unit prices

on higher blocks of consumption. 23 _{However, IBT regimes have been}

implemented with a variety of fl aws. In many cases, they tend to be highly regressive because consumption in the fi rst block is subsidized even for those with higher total consumption and income. In addition, although in some countries the size of the fi rst—or lifeline—block seems reasonable given subsistence consumption (e.g., 15 kWh in Uganda), in others it would appear very large (e.g., 300 kWh in Ghana and Zambia) (Briceño-Garmendia and Shkaratan, 2011). In some countries, block prices increase too slowly with higher volumes. Thus, cost recovery is compromised even for higher blocks,

22 _{Metering and billing should remain functions of the utility. Where billing is too costly, for example, in poor} areas with no metering, transaction costs can be reduced by assuming a minimum level of consumption per household (i.e., a fixed volume under a lifeline band).

23 _{Pricing for nonresidential consumers is typically based on linear tariffs, and the regime is more complicated} than for residential consumers and includes fixed, demand, and volume charges.

and better-off households benefi t from the subsidies. Some countries also duplicate the lifeline block with social tariffs. A more effi cient and progressive design is the volume-differentiated tariff (VDT) where consumption above a threshold leads to a higher price on all consumption. The VDT is an effective method to effi ciently target lifeline blocks, thus reducing costs associated with subsidy schemes for the poorest (e.g., Cape Verde). This requires progress in metering, which remains an important challenge in most SSA countries. Regardless of pricing mechanism, correct calibration of block sizes and associated price levels requires a good knowledge of consumption patterns derived from Household Expenditure Surveys. More broadly, there are alternatives to consumption-based targeting that perform considerably better, such as geographic targeting (e.g., Liberia) or means testing.

More recently, emphasis has moved from subsidizing tariffs to subsidizing connections. Surveys show that prohibitive connection costs (e.g., around $1,000 in Liberia) are the main factor preventing people from accessing grids. Meanwhile, “willingness to pay” analysis confi rms that households are often willing to pay for electricity, because they would be saving the expense of alternative and less convenient energy sources (e.g., Ethiopia). Subsidization can take different forms, including interest-free loans (e.g., Kenya) or deferred payments by installments (e.g., Liberia), broadly matching the savings from

switching from expensive energy sources to the grid. 24 _{In fact, expanding the}

customer base in areas close to the main lines can make fi nancial sense for utilities, because it may improve the ratio of paying to nonpaying customers with limited infrastructure investment (e.g., Liberia, Kenya).

Other issues in tariff design merit attention. Special pricing of power to commercial and industrial consumers is important given they often account for one half or more of revenue. Special tariffs are sometimes provided to large electricity users, such as large industrial and mining customers, and are not refl ected in the general tariff structure, or even in estimates of the subsidy (e.g., Copperbelt Energy Corporation in Zambia). Originally intended to guarantee minimum demand to support the development of large power projects, they now impose a signifi cant fi scal cost given competing demands, some from more competitive enterprises.

Access

Only 30 percent of the population in SSA is connected to the grid

(International Finance Corporation, 2012). Africa is thus home to the world’s largest off-grid population: approximately 590 million people and more than

24 _{The interest-free loan contributed to doubling the customer base in Kenya from 800,000 to 1,600,000 in the} five years since 2006.

10 million microenterprises have no connection to their national electric grid (International Energy Agency, 2011). Power plans must thus deal with the unavoidable: universal access to the grid is decades away for most countries in SSA. Large and dispersed rural populations make grid expansion costs prohibitive. But coverage in urban areas is also limited, particularly in poor neighborhoods, often because of affordability issues.

Over the last decade, several countries have established special-purpose agencies and funds for rural electrifi cation. On average, greater progress in access in rural areas has been made in countries with rural electrifi cation

agencies, especially if supported by dedicated funds. 25 _{Countries with higher}

urban populations also tend to have higher levels of rural electrifi cation, because urban populations tend to subsidize rural electrifi cation.

Several SSA countries have implemented rural electrifi cation programs to enhance access outside the main cities (e.g., Mali, Box 3; Kenya, Ethiopia, Liberia, Rwanda, Uganda). Given SSA’s demographics, expanding the grid to rural areas would be prohibitive. However, greater access to power is still a key to human and economic development in rural areas. Thus, several countries have set up program and institutions providing alternative solutions to power supply.

25 _{Half the 40 countries in the World Bank’s Africa Infrastructure Country Diagnostic (AICD) sample have} rural electrification agencies, and more than two-thirds have rural electrification funds (Eberhard and others, 2011).

26 _{Multifunctional platforms appear in Togo’s latest draft Poverty Reduction Strategy Paper (PRSP).}

Box 3. Mali: Rural Electrifi cation Program Succeeds in Expanding Access

Mali succeeded in increasing rural electrifi cation through off-grid solutions and private sector participation. In rural areas of Mali, only around 13 percent of the population could access electricity in 2009. Most rural households thus meet their lighting and small power needs with kerosene, dry cells, and car batteries. More than 80 percent of Malians use wood or charcoal for cooking and heating. These sources of energy cost about $1.5/kWh, more than 10 times the price from the grid. To address these problems, the government established a rural electrifi cation agency and a Rural

Electrifi cation Fund aimed at providing partial start-up capital for private operators of mini-grids. The project fostered local private sector participation. As of May 15, 2010, 43,311 off-grid connections for households and public lighting provided electricity to about 650,000 people. In addition, about 803 public institutions, including 172 schools and 139 health centers, received off-grid access. With the installation of multifunctional platforms by local operators in 64 communities, resulting in 7,200 connections as