| Development in practice - Rural energy and development |
Many people do not think about where their energy comes from They just flick a switch or start their car. For nearly two billion people in developing countries, however. the search for energy is a daily grind. These people have neither electricity nor gas nor oil to cook their food. Women and children from these families often spend hours each day gathering dung and wood - hours they might otherwise be able to spend on productive work or education. Their health is damaged by the smoke given off by these fuels. Their environment may be damaged as they chop down trees for wood.
The problems of rural energy have long been recognized. What is the World Bank doing about them'? In recent years the Bank's work in energy has largely focused on making existing energy supply and consuming industries more efficient, opening them up to competition. and encouraging private sector participation. This is an important job and is tar from finished. In many developing countries. for example, electricity prices are heavily subsidized. These subsidies often benefit the wealthiest households the most. They also undermine the financial health of utilities. making it difficult for them to extend services to rural areas.
But the Bank should not concentrate on reforming existing energy markets alone. Any reform will fail in the long run if it does not benefit the whole population. improving rural energy should therefore be seen as an important goal in itself. The exciting message of this report is that, through a combination of better technology and decades of experience. we are now able to tackle the problems of rural energy better than ever before. The report draws on the experience of many experts in government, industry, and nongovernmental organizations (NGOs). We thank them for sharhig their knowledge with us.
Tackling the problems of rural energy will force us to challenge some old assumptions. Those kings of the energy world - coal. oil. and gas, for example - are not the only modern forms of energy suitable for rural areas. This report describes the growing attractions of renewable technologies. such as solar power. It argues that policymakers, governments. NGOs, and the private sector should concentrate on improving the use of traditional fuels. such as wood, and not just on promoting modern energy, such as electricity. It stresses the importance of designing policies and projects with local people rather than Imposing schemes from above. It shows, for example, how the environment can be protected by giving farmers responsibility for managing forests.
Rural energy presents the Bank with an important challenge. It should be a key part of our work, whether we are discussing country assistance strategies. energy sector reform. or new investments. While the Bank can play an important catalytic role, real progress in tackling these issues is critically linked to the adoption of the needed policy and institutional reforms. mobilization of local entrepreneurial and NGO resources, and development of innovative rural energy delivery and financing mechanisms. We therefore also plan to promote regional and country workshops to discuss these issues, encourage investment in rural energy, and foster policy reform. Such an effort has started already: this report itself reflects the results of widespread consultations between the Bank, donors, NGOs, and recipient governments that took place during its preparation. We will regularly report back to the Board and to the public on our progress on this vital task.
Jean-FranÃ§ois Rischard Vice President
Finance and Private Sector Development The World Bank