Report no. 76572 Knowledge Series 013/12 Rwanda | Extending Access to Energy Lessons from a Sector-Wide Approach (SWAp) TA B L E O F C O N T E N T S EXECUTIVE SUMMARY 1 T H E VA L U E O F A S E C T O R - W I D E A P P R O A C H 3 Key Characteristics of a SWAp 3 Background on SWAps 3 PROJECT DESCRIPTION AND DESIGN 6 The Rwanda Energy SWAp 6 Planning the SWAp Framework 7 Spatial Network Plan 7 Addressing the Issue of Affordability 8 C O S T I N G , F I N A N C I N G , B E N E F I T S , A N D R E S U LT S 11 Financing Plan 11 Funding the Energy Access Program 11 Bene�ts of Employing a SWAp 12 Results 13 Monitoring and Implementation 14 R E C O M M E N D AT I O N S 15 Lessons Learned 16 CONCLUSION 17 ENDNOTES 18 REFERENCES 18 A C R O N Y M S A N D A B B R E V I AT I O N S 18 L I S T O F B O X E S , F I G U R E S , A N D TA B L E S Box 1 | SWAp Project Details 1 Box 2 | Evaluating the Affordability of Electricity in Rwanda 9 Figure 1 | Spatial Planning Approach 8 Figure 2 | Energy Access Program through 2020 14 Table 1 | Approaches to Development Assistance 4 Table 2 | Summary of Access Program Support Required 11 Table 3 | Electri�cation Results in Rwanda 13 Table 4 | Monitoring and Evaluation of Rwanda SWAp 15 Rwanda | Extending Access to Energy i EXECUTIVE SUMMARY In recent years, different approaches to providing aid have emerged. The sector-wide approach (SWAp) is a country-led, results-focused framework that brings together development partners and other stakeholders to coordinate aid within a sector. This approach aims to support country and government leadership in sector policy and planning, utilizing government systems and procedures and an agreed expenditure program. SWAps have traditionally been used to coordinate investments in schools and hospitals, but recently have been applied to other infrastructure sectors. Rwanda is one of the �rst countries to use a SWAp in the energy sector to increase access to electricity. With the assistance of Energy Sector Management Assistance Program’s Africa Renewable Energy Access (AFREA) Program, the SWAp began in 2009 with the goal of increasing electricity access from 6 percent of the population to 16 percent by 2013. The SWAp is anchored by an investment prospectus that integrates technical, financial, and implementation planning components. The prospectus provides comprehensive details on the electri�cation plan, helping to reduce the costs facing development partners. This report provides a number of key lessons realized from the Rwanda Energy SWAp for development partners and governments considering using such an approach. Country and government ownership and leadership is essential for ef�cient program planning and implementation, as is an alignment with national priorities and policies. Accurate data analysis to determine the costs and bene�ts is essential, as well as a clear picture of the technical and �nancial investments required. Overall, the experience in Rwanda shows that SWAps in the energy sector can achieve success. Access to energy within the country has increased and more than US$ 200 million has been raised toward the costs of the electri�cation program, which is now being implemented. Box 1 | SWAp Project Details Project Title: Sector-Wide Approach to Extending Access to Energy Sector: Energy Type of Project: Electricity Access Program Country: Rwanda Population: 11.37 million (2011) Targeted Electricity Access: Increase access from 6% to 16% by 2013 Total Cost of Access Program: US$ 377.6 million Project Status: Ongoing (2009–2013) Executive Summary 1 THE VALUE OF A SECTOR-WIDE APPROACH The sector-wide approach (SWAp) emerged in the 1990s as an alternative to traditional development aid. The SWAp—based on a country-led, results-focused framework—encourages engagement across all sector stakeholders to ensure that investments work together to contribute to desired outcomes. This approach emphasizes government and donor partnerships, with govern- ment assuming a leadership role and working with partners to formulate policy. The use of existing government systems and processes and the achievement of speci�c goals and outcomes are key to this approach. In addition, donors and other stakeholders assist with � nancing, drawing on diverse channels of funding, and bringing ongoing projects in line with sector priorities. A SWAp can help promote local involvement, accountability, and capacity in the countries in which they are implemented. In 2009, Rwanda initiated a SWAp in the energy sector to help achieve its target of increasing access to electricity from 6 percent of the population to 16 percent over a �ve-year period, through 2013. The ongoing program also focuses on providing off-grid access to electricity for schools, hospitals, and administrative buildings that would not have electricity otherwise. A comprehensive investment prospectus provides development partners and local stakeholders with the technical and �nancial implementation plans for the program. The experience in Rwanda suggests that using SWAps in the energy sector is a viable and attractive option. The successes and lessons learned, which are detailed in this report, can help inform the use of future SWAps across the energy sector. KEY CHARACTERISTICS OF A SWAP A SWAp differs from other approaches used to plan, finance, and implement development projects. For some countries and sectors, SWAps provide a more effective means of delivering development assistance than a traditional project-by- project approach. Through a SWAp approach, governments, donors, and other stakeholders join together within a particular sector to coordinate sector-specific policy, funding, and goals. Under government leadership, the approach involves movement over time toward common goals and more coordination for funding and procurement. The traditional approach, in contrast, relies on donors to coordinate and implement aid on a project-by-project basis, with less government integration and leadership. Table 1 compares and contrasts the SWAp framework to a project-speci�c approach. BACKGROUND ON SWAPS SWAps have most commonly been used in the social infrastructure sectors, particu- larly healthcare and education. Recently, the approach has been extended to other sectors, including trade, agriculture, justice and law, and energy. Although middle- income countries, such as Brazil, have begun to use the framework, low-income countries have the most experience with SWAps and provide many important lessons. Education and health-sector SWAps have improved information sharing and increased the effectiveness of educational training and resource mobilization.1 The Value of a Sector-Wide Approach 3 Table 1 | Approaches to Development Assistance Key Characteristics SWAp Program Approach Scope • Sector-wide emphasis • Emphasis on project-speci�c on targeted capacity- technical assistance strengthening of sector • Weak results focus: the institutions in a staged “success� of many local manner projects does not deliver • Results-focused, strategic nationally transformative • Long-term program impacts Government • Country ownership and • Weak government leadership |nvolvement government leadership • Outside national priorities across �nanciers and country systems • Coherent policy framework and strategy Stakeholder • Throughout the sector • Specialized in technical areas |nvolvement • Joint accountability Level of Coordination • Harmonization of • Project-speci�c monitoring processes, procedures, and evaluation implementation, and • High transaction costs tied to monitoring each project • Lower transaction costs • Possible duplication of • All projects �nanced within activities SWAp timeframe • Each implementation unit funded by speci�c donors Funding • Basket funding: all funding • Donors focus their funding directed toward a single- on speci�c projects, without expenditure program and coordination with other policy donors • Predictable �nancial flows: • Less predictability, often a single-expenditure plan because full expenditures increases transparency plans are not completed of the use of all funding sources Drivers • Aligned to national priorities • Supply driven: donors • Demand driven: donors determine the project focus may direct funding to targeted subprojects Source | Authors. Uganda’s experience using a SWAp for water access suggests that a minimum of �ve years is needed for a successful program. Nepal, one of the �rst countries to implement the SWAp framework in the energy sector, coordinated national policies to clarify the energy-related legal framework and improve �nancing in a sector that is heavily dependent on external donors. 4 Rwanda | Extending Access to Energy PROJECT DESCRIPTION AND DESIGN The Rwanda Energy SWAp arose out of a combination of different factors, including a low electri�cation rate of 6 percent (approximately 65,000 connections in 2008), a severe drought period that led to supply shortages, and a low available generation capacity of 41 MW. Together these preconditions highlighted the need for energy diversi�cation and better power planning and implementation. Against this backdrop, the Economic Development and Poverty Reduction Strategy set a target to increase connections from 100,000 in 2008 to 350,000 by 2012, with a special emphasis on electri�cation for social infrastructure. To execute a comprehensive, inclusive strategy, the Ministers of Finance and Energy and senior development partners launched the energy SWAp with the main objectives of meeting basic energy needs, providing electricity for accelerated growth, and powering the social sectors. New legislation encouraged a signi� cant role for private-sector investment and management in developing the sector. This support, combined with a regulatory environment to enable cost recovery for investors and protection of consumer interests, is vital to the implementation of the program. The SWAp’s main objectives include: ■ determining a high-level investment and capacity building plan for sustainable and predictable �nancing over the term of the program; ■ enabling electricity access expansion to meet Rwanda’s national targets; and ■ attaining supply adequacy by expanding generation capacity by quali�ed indepen- dent power producers. From the broader perspective of powering growth and improving the quality of life of the population, the SWAp is designed to identify the lowest cost network rollout over the next 20 years, with a medium-term target for 2014. Speci�cally, the �rst �ve-year time period of the program aims to increase electricity connections from 100,000 to 350,000 and to substantially increase access to electricity for social infrastructure facilities in health and education sectors. THE R WANDA ENERGY SWAP A sector working group was formed in 2008 to implement the SWAp in Rwanda. A secretariat within the working group actively coordinated the interactions between government of�cials and development partners. Members include: ■ Energy, Water, And Sanitation Authority2 (EWSA), formerly Electrogaz, the organi- zation responsible for all power-sector operations; ■ Central government; ■ Ministry of Infrastructure (MININFRA); ■ Ministry of Finance and Economic Planning (MINECOFIN); ■ Other line ministries, including the Ministry of Local Government (MINALOC), Ministry of Health (MINISANTE), and the Ministry of Education (MINEDUC); 6 Rwanda | Extending Access to Energy ■ Rwanda Utilities Regulatory Agency (RURA); ■ Local government; and ■ Development partners, including the African Development Bank, the World Bank, the International Finance Corporation, and the governments of Belgium and the Netherlands. PLANNING THE SWAP FRAMEWORK The Electricity Sector Access Program Investment Prospectus presents a �ve-year plan for extending electricity access that achieves Rwanda’s targets and integrates technical, �nancial, and implementation planning components. The prospectus was developed in efforts to raise US$ 250 million from development partners to co�nance the gap in funding for access program investments and focuses on the period from 2009 to 2013. The technical, � nancial, and implementation planning, however, is developed on a longer horizon through 2020. The prospectus presents a transparent and sustainable �nancing platform through a combination of in-country funds (via tariffs, revenues from connection charges, and government contributions) and the balance, to be funded from development partner contributions via their respective program agreements. Aiming to ease the analytical burden on development partners by providing credible information on Rwanda’s electri�cation plans, the prospectus presents all relevant information and analysis in one document. The prospectus: ■ describes the role of electricity sector institutions, the relevant policy background, and the legal environment; ■ provides the physical plan for extending lowest cost network access, taking into account implementation capacity and sustainability, and addressing required �nancing based on credible estimates of capital expenditure costs and �nancial inflows; ■ considers the social and economic characteristics of each sublocation within the country, as well as demand conditions; ■ addresses the technical and economic aspects of access expansion and energy supply alternatives—grid-based and off-grid, as well as decentralized service options—and affordability to new bene�ciaries; and ■ provides a framework for monitoring and evaluating program outcomes. The prospectus was presented at the donor roundtable in March 2009 and proved a successful path to rallying stakeholders, support, and �nancing for the �rst phase of the national electri�cation program. S P AT I A L N E T W O R K P L A N This technical plan identi�es the best way for electricity to be extended over the next 20 years, based on social and economic characteristics of different locations within the country, and the supply and demand conditions in each sublocation, geospa- tially speaking. An overview of the spatial planning approach is provided in Figure 1. The country was divided into 9,300 planning cells and a simple demand forecast was computed for each, in addition to the capital and operating costs of different methods of providing electricity. The least-cost option for electri�cation was selected for each Project Description and Design 7 Figure 1 | Spatial Planning Approach Cost Data: Comparison of Cost of – MV line Demand Forecast Technology Options – Fuel Costs (by sublocation) (grid, diesel, hydro, PV) –O&M Selection of Least-Cost Electri�cation Option (for each sublocation) Demographics: – Population Geospatial density Prioritisation for Grid – Affordability Compatible Areas – Infrastructure Off-Grid Electri�cation Planning for Non- Grid Compatible Areas Geospatial Load Forecast and Review of Distribution Capacity Investment Plan for Electricity Access Programme (grid and off-grid) Source | World Bank 2009. cell by comparing the cheapest decentralized electri� cation option (from diesel, micro-hydropower, and solar photovoltaic) to the cost of making a grid extension. By applying weight to grid-compatible cells, depending on demographic and cost factors, a geospatial prioritization plan was created to ensure the program maximizes bene�ts while minimizing costs. ADDRESSING THE ISSUE OF AFFORDABILITY In most areas in Rwanda, between 50 and 80 percent of households have incomes of less than US$ 1.25 per day. Estimates for each planning cell indicated that between 19 and 51 percent of the population would elect to receive electricity access if offered, depending on income levels. The average take-up rate based on these affordability levels was 34 percent. A study conducted by the Ministry of Infrastructure in late 2009 explored the uptake of electricity connections in the Nyagatare district. Results from this study and work done by the Belgian Technical Cooperation indicated that approximately 35 percent had accepted the connection. This suggests that the prospectus’ estimations of the technical issue of affordability are accurate and realistic (Box 2). 8 Rwanda | Extending Access to Energy Box 2 | Evaluating the Affordability of Electricity in Rwanda Extending access to electricity will help alleviate poverty in Rwanda. However, examining individual households’ ability to pay for electricity is crucial to balance the goal of alleviating poverty against the program’s �nancial sustainability. Currently, no detailed information exists regarding consumers’ ability to pay for electricity in Rwanda. The prospectus uses data on household expenditures from the Household Living Conditions Study (EICV2) and general information on comparative expenditures on energy in the region. The EICV2 survey collected data on 6,900 households and divides the country into 30 districts, which are then split into expenditure quintiles. A recent survey commissioned by the European Union has also been used to compare the results of the EICV2 survey with more recent data. The data broadly shows that the average household in the highest quintile in each district spends 3 times the average household in the next highest spending quintile, and 13 times the average household in the lowest quintile. The data also shows that households in the Kigali area are able to spend relatively more than other parts of the country. Nevertheless, widespread poverty remains in the Kigali area, with over 40 percent of survey respondents spending less than US$ 2.50 per week. The survey responses have been used to estimate the proportion of households in each district able to afford an electricity connection, assuming that a household could afford an electricity connection if: Total Expenditure ϫ Energy Expenditure (%) Ͼ Current Tariff ϫ Minimum Consumption (kWh) The minimum consumption level is assumed to be 20 kWh per month. This is a very low level of consumption from two to three energy-efficient light bulbs and a radio. The proportion of energy expenditure in each household varies, depending on the characteristics of each household and community, and on the cost of electricity substitutes (such as kerosene, batteries, and candles). Recent comparative data on urban household expenditures on energy in Africa ranged from 12.5 percent in Burkino Faso to almost 25 percent in Mauritania, and, along with data from Ethiopia, support two important conclusions: 1 | Poorer households (typically in more rural communities) tend to spend a higher proportion of their expenditures on energy, often because household expenditures in rural areas do not include food that is grown within the household; and 2 | Average household expenditures on fuel and power are typically in the range of 5 to 6 percent in urban areas and 10 to 12 percent in rural areas. The following assumptions have been used on the maximum proportion of expenditures that would be spent on electricity in Rwanda: Approximate Average Expenditures on Electricity Area Max. Energy Expenditures (%) Expenditures on Min. Consumption (%) Urban 10 2–3 Peri-urban 15 4–5 Rural 20 8–10 Deep Rural 25 10–14 Source | Authors. A further assumption is economic growth in Rwanda, in which average household income is expected to increase by 5 percent annually over the next 10 years. The overall effect of this income increase is an average 1.5 percent increase in the proportion of households that can afford electricity. Project Description and Design 9 C O S T I N G , F I N A N C I N G , B E N E F I T S , A N D R E S U LT S Under the energy SWAp, Rwanda created an integrated �nancing and funding plan for the access program. The �nancing plan identi�ed the capital sources that would pay for the up-front costs of the grid and off-grid extensions, and the funding plan mapped out the � nancial infl ows that would be available from tariffs and reliable subsidies to fund each stage of the development process. FINANCING PLAN To determine the level of �nancing required to support the program, the prospectus provided a detailed estimation of program costs. Capital costs of the physical plan for extending access revealed that medium- voltage powerline extensions comprised the most signi�cant cost. Several initiatives allowed this cost item to be reduced. The medium-voltage power lines were revised to use wooden or concrete poles—rather than the more expensive lattice- framed steel towers—that could also be locally manufactured. The low-voltage reticulation in rural areas was revised to use single-phase and single-wire, earth-return technology. Operating expenses and power purchase costs took into account the existing and new-grid and off-grid connections, new generation and transmission investments, and EWSA’s technical assistance needs. Information from the prospectus assisted in securing additionally needed funds from the international donor community. For an overview of program funding required, see Table 2. Table 2 | Summary of Access Program Support Required (US$ millions) Capital cost of access program $ 377.6 Self-�nancing from Electrogaz (–$ 39.5) Revenue from connection charges (–$ 27.9) Government contributions (–$ 50.0) Existing donor commitments (–$ 35.7) Support Required $ 224.5 Source | Castalia 2009. The additional US$ 225 million required was provided following a donor roundtable held in March 2009 with major development partners, EWSA, and key government ministries. FUNDING THE ENERGY ACCESS PROGRAM The funding plan shows that the access program is not only technically viable, but also �nancially sustainable and stable over the long term. The funding framework for the Rwanda access program was developed from an assessment of ability-to-pay and from other countries’ experiences, including that of Tunisia. Costing, Financing, Benefits, and Results 11 Financially sound utility. EWSA was expected to contribute 10 percent to capital costs from retained earnings. Cost-recovery tariffs in Rwanda were an important aspect of making this funding contribution credible to development partners, as Rwanda has among the highest electricity tariffs in Sub-Saharan Africa. Connection charges based on ability to pay. Consumers were expected to pay a nominal US$ 100 connection charge or about 10 percent of the average connec- tion cost. Government and donor support through grants. Support of this nature is required to meet 80 percent of program costs. The sector operating costs will be met through operating revenues. Forecasted cash flows suggest that this will be achievable for every quarter of the access program. Within the SWAp framework, funds can be dispersed from development partners in a number of ways, including: ■ Budget support | All funds are combined for the sector and the Ministry of Finance disburses funds across the sector according to government priorities ■ Basket funding, or pooled funding | Development partners deposit all their funds into a dedicated account, either with the sector ministry or the Ministry of Finance, established to speci�cally fund all, or individual activities of the SWAp ■ Nonpooled funding | Funding provided to �nance speci�c projects within the SWAp program The experience in Rwanda suggests that keeping options open for wide participation has bene�ts in attracting program support. BENEFITS OF EMPLOYING A SWAP The SWAp framework is expected to bring a number of bene�ts, regardless of the sector in which it is applied. The degree to which these bene�ts are achieved will depend on the characteristics of the sector in addition to the quality of the design, implementation, and monitoring processes. Key bene�ts of employing the SWAp framework include: ■ Clear leadership by government, guided by national policy and knowledge of available resources; ■ Increased predictability of funding, especially when using a public expenditure plan; ■ The ability to secure additional �nancing as a result of the investment prospectus and coordinated approach to the project, increasing the awareness of complemen- tary investments; ■ Improved accountability and transparency of resource use and a more simple means to disperse funds from a centralized authority; ■ Reduced transaction costs resulting from the coordinated approach to activities, funding, and implementation between donors, government, and recipients; ■ Effective partnerships and increased coordination of donor assistance, made possible through the efforts of the stakeholder working group and centralized program management; and ■ Greater influence over policies, priorities, and implementation plans through the centralized stakeholder working group. 12 Rwanda | Extending Access to Energy SWAps in the energy sector also bene�t from the coordination of all participants in the sector. For example, the SWAp approach coordinates the supply chain to ensure that infrastructure is expanded ef�ciently, without duplication. In contrast, the traditional project-by-project approach may have focused entirely on extending distribution services, without regard to capacity in transmission networks and generation assets. R E S U LT S Thus far, the access program focuses on the communities close to the existing grid, with more than 95 percent of planned new connections through 2012 to take place within 5 kilometers of the existing grid. Such planning has helped minimize program costs and maximize economic opportunities while setting the stage to increase EWSA’s annual implementation rate capacity. In remote areas of the country, social facilities will gain access to electricity by solar PV units. Implementation results to date are positive in that EWSA is meeting or exceeding the targets set for investment and new connections, as well as for unit-cost reduction targets in the investment cost per new connection. Initial success has been achieved in raising the national electri� cation rate from 6 percent to 10 percent by 2011. Such efforts have increased the number of households connected to electricity from 110,896 to 228,043 by August 2011. This progress is on track to achieve the objective of 16 percent electri�cation by the end of 2013. Furthermore, under the SWAp program, EWSA has increased its annual implemen- tation rate from under 1,000 connections per year prior to the start of the program in 2008 to a current annualized rate net of 60,000 new connections. Additionally and signi�cantly, this implementation has been achieved in conformity to the target unit-cost average of US$ 600 per new connection, when compared to historical average costs from the pre-SWAp program that averaged from US$ 2,000 per new connection and beyond. More details on the electri�cation progress are provided in Table 3. Estimates show that by 2020, 35 percent of the population will have access to electricity, in addition to 70 percent of schools and all health centers and administra- tive of�ces. Figure 2 illustrates the planned extension to the grid network, using the GIS database created as part of the SWAp. Table 3 | Electri�cation Results in Rwanda Program Connections 2011 2014 to Electricity 2008 2009 2010 (August) (Target) New Connections <5,000 32,995 43,733 40,419 Households 110,896 143,891 187,624 228,043 350,000 Health Centers 50% — — — 100% Schools 20% — — — 50% Administrative Of�ces 25% — — — 100% Source | World Bank Supervision Report for the Rwanda Electricity Access Scale-up and Sector-Wide Approach (SWAp) Development Project. Costing, Financing, Benefits, and Results 13 Figure 2 | Energy Access Program through 2020 Source | Castalia 2009. Source | World Bank 2009. M O N I T O R I N G A N D I M P L E M E N TAT I O N To achieve the objectives of the access program, the implementation plan must ensure the capacity to cover critical areas of human resources, materials, funding, and management capabilities. Ef� cient monitoring and evaluation of the access program implementation is important to maintain progress, achieve targets and ensure that support for the program continues beyond the initial �ve-year period of the prospectus. A program directorate within EWSA was established to implement the program, focusing on network planning, system development, and procuring supplies and contractors in a timely and cost-effective manner. This ensures suf�cient technical expertise through partnerships with local institutions and ensures accountability for meeting �nancial and funding plans. Further implementation capacity through external private-sector participants also ensures that success continues over the longer term. This is particularly crucial for Rwanda, where EWSA and local private sector �rms will need additional support to meet program targets. Monitoring and evaluation of the SWAp framework is in line with the system used for the National Electricity Access Program (embedded within the SWAp framework). The National Electri�cation Program Management Directorate (PMD) within EWSA is the main unit responsible for collecting and reporting data for the grid rollout plan. The Ministry of Infrastructure is responsible for the off-grid program. Table 4 provides an overview of the monitoring and evaluation framework used for the Rwanda SWAp. 14 Rwanda | Extending Access to Energy Table 4 | Monitoring and Evaluation of Rwanda SWAp Data Collection & Primary Outcome Indicators Frequency Reporting Project Outcomes; Households connected to electricity Annual PMD Indicators of Public institutions connected to Success electricity Average cost per connection Rolling average monthly interruptions per kilometer of medium-voltage Quarterly National power line Dispatching Centre Intermediate Outcome Indicators National Grid Rollout Distribution network constructed Quarterly PMD Transformers rehabilitated/replaced Improved customer complaint & resolution system Green Connections New customers using CFLs Quarterly Rwanda Estimated load reduction Electricity Corporation (RECO) Energy Ef�ciency Technical Joint annual sector-performance Annual/ SWAp Assistance, Capacity report Quarterly Secretariat Strengthening, & Spatial grid rollout investment plan Implementation Support Quarterly program monitoring progress reports Source | World Bank 2009. Each indicator is measured against its baseline value and the target values for each �nancial year from 2010 to 2013. The monitoring and evaluation plan has improved the collection of basic data in the sector. The increased quality and availability of data will help develop new policies and strategies and strengthen the capacity of sector institutions. R E C O M M E N D AT I O N S A number of innovative features contributed to the success of the Rwanda Energy SWAp and will prove instrumental in future SWAp efforts, including the following: Government (country) ownership and leadership. Willingness to lead and rally donors to fund a harmonized, sector-wide program is essential. The Government of Rwanda provided such leadership throughout the chain of accountability from the Recommendations 15 cabinet (the Ministry of Infrastructure and Ministry of Finance and Economic Planning), through other line ministries (Health, Education, and Environment) to EWSA. Alignment with national priorities and policies. Such alignment proved critical to achieve objectives and move away from the fragmented, project-by-project approach. Stakeholder buy-in. Commitment and support from donors and EWSA from the outset of the SWAp has ensured suf�cient �nancing, as well as technical and manage- ment support. Enabling partners to select the target of their funding contributions—in terms of scope, �nancing, instrument, and timing—in addition to providing a “menu� of investment options consistent with Rwanda’s priorities as identi�ed in the SWAp prospectus has enhanced this process. Utilization of data. In light of limited data availability, the approach taken to using data was instrumental in achieving credible estimates of program costs and outcomes. Data was collected from a variety of sources, including EWSA, government ministries, and the Centre for Geographic Information System and Remote Sensing at the National University of Rwanda. The quality of this data varied signi�cantly. However, working with the local university to evaluate the data and improve future information collection was a success factor for the program. Calculations regarding the afford- ability of electricity and the expected take-up rates of the new connections proved to be accurate. Realistic assessment of risk. To allow donors to make informed decisions regarding their contributions to the program, changes within the sector and policy risks were detailed with results from sensitivity testing. The key risks identi�ed included a change in political support, insuf�cient demand from consumers, failure to achieve capital- cost reductions or operating ef�ciencies, and an inability to mobilize funding from customer payments due to nonpayment. Credible prospectus. The SWAp investment prospectus served as a rallying point for donor involvement. The technical and �nancial analysis that supported the prospectus was robust and reliable, and reduced the due-diligence costs for donors, resulting in US$ 225 million of funds pledged to support the new connections. The prospectus also identi�ed the appropriate technical assistance and targeted the capacity building required for effective implementation. South-South cooperation. Finding the most appropriate technical designs and implementing successful techniques from other “South� countries were crucial elements of this SWAp. The Tunisian Company of Electriticy and Gas (STEG), provided assistance regarding low-cost techniques for distributing electricity, particularly in rural areas, to help lower costs by at least 16 percent. This included using a combina- tion of locally made wooden and concrete poles in place of the traditional steel lattice frame towers, and using single-phase, single-wire earth-return technology, a cost-effective and reliable technique.3 As such, South-South cooperation should be encouraged in other SWAps. LESSONS LEARNED To date, the Rwanda Energy SWAp has achieved a number of objectives despite being only halfway through the initial � ve-year implementation period. Lessons learned from this experience are crucial to improve future SWAps and to �nd more ef�cient and effective methods of extending access to essential infrastructure. 16 Rwanda | Extending Access to Energy The donor roundtable conference, held in March 2009, encouraged donors to pledge funds toward the program and provided a forum for the presentation of the invest- ment prospectus to the donor community. A total of US$ 225 million in donations was pledged towards the �rst phase of the program (2009–13), supporting the funds already pledged by the Government of Rwanda, revenues from connection charges, and self-�nancing from EWSA. During the first two years of implementation, new electrical connections were achieved within the budgeted unit-cost estimates of US$ 1,000 per connection. This is substantially lower than the pre-SWAp average project costs, and was possible due to the commitment to reduce connection costs by introducing lower cost technical designs and equipment. Staf�ng of key stakeholder groups is important for an effective SWAp. During the implementation of the Rwanda SWAp, establishment of the program management department within EWSA proved to be a major challenge, due to the limited pool of suitably quali�ed professionals available and dif�culties paying market rates for key staff salaries. As a result, deployment of monitoring and evaluation systems has been slower than anticipated. Obtaining a clear picture of how �nancing will be achieved is vital to a successful SWAp. Development partners and the Government of Rwanda pledged enough to complete the funding needs of the SWAp program at the donor roundtable. However, dif�culties were later encountered in ensuring a consistent flow of funds to �nance various project stages. CONCLUSION Ef�ciently raising funds to meet program costs is an important feature of the SWAp. Funding from the Government of Rwanda and development partners reached US$ 320 million in 2009, helping to effectively accelerate growth and reduce poverty in the nation. As household income levels rise over time, the power sector in Rwanda is expected to become �nancially sustainable. In terms of monitoring and evaluation, the existing framework has improved the collection and measurement of performance indicators, increasing EWSA’s capacity in this area. Such efforts are essential to track progress, support timely decisions, and implement corrective actions. In addition, through the SWAp, EWSA employs the same monitoring and evaluation frameworks for both their own utility and the SWAp, avoiding parallel systems. The Rwanda Energy SWAp has increased access to energy throughout the country and has increased the size of the market for EWSA, making a positive impact on the Rwandan economy and social outcomes. Although not yet complete, the SWAp serves as an instructive example for other countries considering using the approach in the energy sector. Conclusion 17 ENDNOTES 1 http://www.adb.org/education/cam-swap.pdf Sanitation Authority (RWASCO) in 2008. In 2 Founded in 1939, Electrogaz was the national 2010, these companies merged to become utility supplying water, electricity, and gas in EWSA, and EWSA was given additional respon- Rwanda. The company was split into Rwanda sibilities for sector policy and planning. Electricity Corporation (RECO) and Rwanda Water 3 http://www.ruralpower.org REFERENCES Castalia Strategic Advisors. 2009. Rwanda Meier, U., Holtedahl, T., and Pradhan, B. 2003. Electricity Sector Access Programme Volume I: Rural Electri�cation in Nepal and Possibilities for Investment Prospectus. Castalia Strategic Advisors, a Sector-Wide Approach. Washington, DC. Rwanda Ministry of Infrastructure. 2010. Rapport Karekezi, S. 2002. Renewables in Africa—Meeting de Mission 14: ACP—Energy. the Energy Needs of the Poor. In Energy Policy, World Bank. 2009. Project Appraisal Report Vol. 30 Nos. 11–12. Special Issue—Africa: for Rwanda Electricity Access Scale-up and Improving Modern Energy Service for the Poor. Sector-Wide Approach (SWAp) Development Elsevier Ltd., Oxford. Project (P111567). Washington, DC. Kenya Ministry of Water and Irrigation. 2007. Focus on Sector-Wide Approaches to Planning (SWAps). Kisima, 4: 1–8. A C R O N Y M S A N D A B B R E V I AT I O N S CFL compact fluorescent lamp EICV2 Household Living Conditions Study EWSA Energy, Water, and Sanitation Authority of Rwanda kWh kilowatt hour MINALOC Rwanda Ministry of Local Government MINECOFIN Rwanda Ministry of Finance and Economic Planning MINEDUC Rwanda Ministry of Education MININFRA Rwanda Ministry of Infrastructure MINISANTE Rwanda Ministry of Health MV medium voltage MW megawatt O&M operations and maintenance PMD Rwanda National Electri�cation Program Management Directorate PV photovoltaic RECO Rwanda Electricity Corporation RURA Rwanda Utilities Regulatory Agency RWASCO Rwanda Water Sanitation Authority STEG Tunisian Company of Electricity and Gas SWAp sector-wide approach US$ United States dollar 18 Rwanda | Extending Access to Energy Photo Credits All images courtesy of the Energy Access Rollout Project. Written by | Arun Sanghvi (Consultant, World Bank Africa Energy Unit), and Ben Gerritsen (Castalia Strategic Advisors) Energy Sector Management Assistance Program | The World Bank Production Credits Production Editor | Heather Austin Typesetting | Shepherd Incorporated Reproduction | District Creative Printing, Inc. Copyright © December 2012 The International Bank for Reconstruction And Development / THE WORLD BANK GROUP 1818 H Street, NW | Washington DC 20433 | USA The text of this publication may be reproduced in whole or in part and in any form for educational or nonpro�t uses, without special permission provided acknowledgement of the source is made. Requests for permission to reproduce portions for resale or commercial purposes should be sent to the ESMAP Manager at the address above. ESMAP encourages dissemination of its work and normally gives permission promptly. 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