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Providing Electricity in Rural Lao PDR

Last Updated: April 2007
IDA at Work: Energy - Providing Electricity to Poor Rural Provinces of Lao PDR

Challenge

The project set out to provide electricity to seven poor rural provinces of Lao PDR and strengthen the capacity of the country's sole electricity provider, Electricité du Laos (EdL), to expand its reach to the rural poor through electrification investments and to operate on a commercial basis.

Approach

IDA resources provided the Electricité du Laos (EdL) with the needed investment to expand its network, while helping it become financially sounder through improved cost recovery efforts. IDA also supported the Ministry of Energy and Mines to pilot and establish sustainable off-grid electrification delivery systems. IDA established close working relationships with key policy makers in reforming the power sector.

Results

Access to electricity across the nation has tripled in the past 10 years.

Highlights:
- At the time of the project closing (June 2005), these partner MCOs were serving about 100,000 active clients (four times more than in 2002).
- In 1995, only 15 percent of households in Lao PDR had access to electricity. By 2004, grid access had almost tripled to cover 44 percent of the rural population. This project accounted for 26 percent of that increase.
- Through this project, more than 51,000 households (averaging five people per household) in 721 rural villages are now receiving electricity through the main power grid. Another 6,097 households have been connected to off-grid systems, such as solar and village hydro schemes. New small-scale, home-based businesses have thrived, with increased productivity. Children are now able to study at night.
- A comprehensive social economic survey conducted after completion of the project showed a growing number of new businesses in newly electrified villages, especially retail stores, weaving and knitting shops and rice mills. The use of electric tools and appliances has improved living standards and allowed for other productive activities.
- Technical assistance to Electricité du Laos (EdL) has built the agency's capacity in master planning, design, procurement, installation, and environmental and social impacts assessment. The successful implementation of EdL's Financial Recovery Plan has enhanced the financial sustainability of the utility and the power sector as a whole.
- The project applied innovative techniques to connect households in very remote areas. Solar home systems and small, village-based hydro schemes helped electrify more than 6,000 households in villages without grid coverage. Village electricity committees were set up to assist in the planning, development and implementation stages. This helped promote the participation of small- and medium-sized enterprises in providing the off-grid electrification systems.
- Through better monitoring, losses from the electricity grid have been reduced from 19 percent in 1998 to about 16.4 percent in 2003. The project has attracted public financing from users -- about US$100 per grid-electrified household and about US$100-200 for each off-grid household, creating a better sense of ownership.

Contribution

Total project costs were US$41.4 million, of which US$34.4 million came from IDA, US$0.74 million from the Global Environment Facility and US$6.3 million from the government.

Partners

Due to the success of the project, other donors are now stepping in. The next phase of the program (until 2012) has been developed through dialogue with the government. Lao PDR has received grants from other international agencies for rural electrification in the country (US$10 million from NORAD - the Norwegian Agency for Development Cooperation) and public financing (US$4.36 million from local community contributions).

Next Steps

The government faces two major challenges: to connect 70 percent of the country's households to reliable electricity supplies by 2010 and 90 percent by 2020; and to develop its huge hydropower resources to enhance revenues from the export of electricity. Building on the success of this project, IDA plans to continue its support to the government through two rural electrification projects and a Greater Mekong Sub-region power trade project. These projects will further scale up rural electrification through the construction of the transmission facilities to allow electricity export; support development of Laos' hydropower resources; and the development of a national load dispatching center.

Learn More

Southern Provinces Rural Electrification Project (1998-2004)
Project documents


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