Only 30 percent of Bolivia's rural population has access to electricity, the second-lowest level of access in Latin America. Bolivia is the poorest country in South America, with gross domestic product (GDP) per capita f US$4,495 in 2008. The incidence of poverty in rural areas, where more than one third of the population lives, is particularly high, with 82 percent of the population classified as poor, and 59 percent as extremely poor. The country's sparse population (eight people per square kilometer on average), and low per capita income translate into high infrastructure costs, particularly in rural areas. The provision of infrastructure services to rural Bolivia is therefore a national priority, but also a comparatively costly one.
Responding to this challenge, in 2003 IDA approved a US$20-million credit for the Decentralized Infrastructure for Rural Transformation (IDTR) project. The second of its kind in Latin America, the project, which has been effective since 2005, seeks to expand and improve the delivery of electricity as a catalyst for the development of rural areas in Bolivia. It is an integral part of the government program called "Electricity to Live with Dignity".
The project developed an integrated approach to expand access to electricity in Bolivia's difficult geographical conditions, by (i) implementing a new model for providing electricity through installation of solar systems in isolated rural areas and grid densification in peri-urban areas (usually those areas on the outskirts of major towns or cities), (ii) putting into place the necessary regulatory framework for sustainable rural electrification and (iii) partnering with World Bank-managed trust funds to provide technical assistance to the government for project design and implementation; and (iv) replicating the IDTR approach in the GPOBA supported Decentralized Electricity for Universal Access Project, which will also pilot provision of "Pico-PV" solar lanterns to the poorest households.
(i) The IDTR approach uses innovative medium-term service contracts to install solar PV systems and provide operation and maintenance support for four years after installation, to assist in sustainability and development of the local market. These medium-term service contracts were awarded through a process of international competitive bidding in 2005. The bidding documents established a maximum subsidy (US$650) and minimum number of systems to install for each area, and contracts were awarded to the bidders who offered the highest numbers of solar home systems per area. Under the contracts, operators are being paid against outputs.
(ii) The project also supported the adoption of an adequate regulatory framework, through the Rural Electrification Regulations adopted in 2005 and the creation of the Office of Technical Monitoring in 2007, to supervise and regulate the service contracts. The Office of Technical Monitoring is responsible for monitoring and evaluation, verifying outputs and other contractual obligations.
(iii) The Project has mobilized support from the Energy Sector Management Assistance Program to strengthen design and implementation of the activities. An ESMAP study helped define a model for the dissemination of small solar lanterns ("Pico-PV") for the poorest of rural families, and financed the provision of just-in-time capacity building to the government by international experts for the implementation and design of project components.
(iv) The Global Partnership on Output Based Aid is now financing a US$5.2 million grant to expand the IDTR approach to 7,000 households. It i also provides technical assistance to design the bidding documents for the solar component of the IDTR.
The project is providing new electricity service to an estimated 130,000 people in rural and peri-urban areas of Bolivia. In rural, remote areas of Bolivia, where grid electrification is not economically viable, the project has developed a new model to provide sustainable access to solar electricity. Since project inception in 2005, more than 9,200 solar home systems have been installed in the poorest rural areas of Bolivia, benefiting an estimated 45,000 people. In addition, 87 solar home systems have been installed in schools and clinics, benefiting another 30,000 people. Public lighting has also been provided for 20,000 inhabitants in the large poor satellite city of the country's capital, El Alto. Approximately 8,000 additional new electricity connections benefiting an estimated 35,000 people are under construction, as part of an effort to extend the power grid to consumers that are nearby, but outside, concession obligations.
The project also supported the government's program, "Electricity to Live with Dignity," with two main results: (i) the adoption of electricity service as a basic human right under the Bolivian constitution in 2008, (ii) the elaboration of regulations for rural electrification in 2005. In 2007, t he project also financed the creation the Office of Technical Monitoring - the de-facto regulator for offgrid rural electrification – under the Vice Ministry of Electricity and Alternative Energy.
The IDA is providing a loan of US$20 million for the IDTR Project, out of total costs estimated at US$32.8million.
The Global Partnership on Output Based Aid (GPOBA) is providing a grant of US$5.2 million for the installation of about 7,000 solar home systems.
The project has built partnerships at several levels: (a) with municipalities and prefecturas who helped indentify beneficiaries and provide co-financing; (b) with the US and Bolivia branches of the US National Rural Energy Cooperatives Association, which assisted with training and technical assistance for peri-urban densification; (c) with the German cooperation agency (GTZ) for the testing and development of a market of small Pico-PVs and for assisting in the development of a delivery model for the installation of efficient cook stoves; and (d) with the Lighting Africa initiative regarding the Pico PV component.
- The second bidding for the grid extension component, which is expected to generate 7,000 additional connections, has been launched and is under evaluation.
- The Global Partnership on Output Based Aid Decentralized Electricity for Universal Access bidding was launched in July 2010.
- The Project will prepare a request for additional financing to further expand the provision of service through solar home systems and peri-urban densification of the grid to respond to considerable unmet demand and expand the benefits of these systems to an even larger group of households.