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close this bookRural Energy and Development: Improving Energy Supply for Two Billion People (WB, 1996, 132 p.)
close this folderChapter four - Options for rural electrification
View the document(introduction...)
View the documentProgress to date
View the documentPricing and financial policies
View the documentCost-effectiveness and the choice of alternatives
View the documentCosts of grid supplies
View the documentReducing initial investment costs by using appropriate design standards
View the documentMicro-grids supplied by diesel generators
View the documentElectricity supplies from renewable energy sources
View the documentRegulatory and price reforms, unbundling, and privatization
View the documentImplication for rural electrification
View the documentApproaches

Approaches

In these circumstances rural electrification will require public involvement for some time to come, and as with the general institutional reforms now taking place. no uniquely best approach is available: much will depend on individual country's circumstances. The following are some possibilities:

· A continuance of public involvement in distribution. with regulations requiring companies to expand service in ways consistent with achieving satisfactory financial rates of return to investment.

· Joint public-private investments in distribution. with the same regulatory requirement as the first option.

· When the distribution company is privately owned, a regulatory requirement to expand service. coupled with permission to meet the financing requirements out of rural specific tariffs or la second-best measure) a surcharge on general tariffs.

· Full price liberalization on private investments in distribution. with regulators acting as monitors of prices and the efficiency of service, the latter being defined to include the expansion of service where the costs and returns justify it.

· Encouragement of the formation of electricity cooperatives, the private development of micro-grids, or both.

This list is not comprehensive, and other options are possible. Barring an economic surprise. however; public leadership does seem to be necessary to expand service to rural areas and towns: it will need to be open to alternative arrangements and to a variety of ways of encouraging private investment.