Final evaluation of private rural electrification project (367-0162)

Three MHPs -- Purang MHP with the capacity of 25 kw, Sikles MHP with the capacity of 100 kw, and Seema MHP with the capacity of 16 kw -- were all properly completed, with the exception of a minor technical problem at Sikles. The implementing agencies could have easily built six MHPs as envisioned in the project paper, but did not because of the mission's policy decision not to pursue the construction of any more plants. All three MHPs were managed by electricity users' committees, as planned. This community-management method was more effective than management of MHPs by the Nepal Electricity Authority (NEA); unlike the NEA, the users' committees can determine the electricity tariff and impose any additional charges on the electricity in order to mobilize local resources required for quick major repairs. The drawback was lack of technical support, although USAID-funded on-site training has helped villagers understand how to operate and maintain the MHPs. The major problem faced by the committees was sale of electricity; in Sikles only 40 kw out of 100 kw could be sold, and in Seema only 3.5 kw out of 16 kw could be sold. The problem may not be long-term for Sikles, where the people are better off economically (able to afford electricity) and where tourism development activities will be undertaken by the Annapurna Conservation Area Project (ACAP). It is more of a problem in Seema, where the community is comprised of subsistence farmers who are poorer and also influenced by different political ideologies. Apart from the financial subsidy, both the cost/benefit ratio and economic internal rate of return of all three MHPs are very low. Nonetheless, the MHPs have produced significant social impacts; the MHPs have fostered a new relationship between the dominant ethnic group and other minority groups because of the common ownership and management of the MHPs, women now work in a soot-free environment in the home and are less burdened by the task of collecting firewood (although their working hours have increased from 1.5 to 3 hours), there have been improvements in environment (electricity has replaced or reduced the use of kerosene and firewood for lighting and dry cell batteries used for flashlights, radios, and cassettes), foreign currency savings have increased, improvements have been made in health and sanitation, and there has been a reduction of migration of people from villages to other places. On the negative side, although all households contributed labor equally to construct the MHPs, they enjoyed its fruits unequally due to disparities in ability to pay for electricity. In conclusion, right-sized MHPs are economically replicable and sustainable because they are within the managerial capability of the rural people. This potential will be realized when MHPs are integrated within microenterprises and when the electricity generated from MHPs completely replaces firewood. The following lessons were learned. (1) Seasonal climactic conditions and labor availability must be taken into consideration during project planning in order to avoid time and cost overruns. This is applicable to all three sites. In Purang, most of the adults are not available during winter because they go to neighboring countries for trade. In Seema and Sikles, people are not available for other work during the agricultural seasons. (2) Communication gaps cause cost and time overruns, especially when so many agencies are involved in the construction of MHPs. (3) When beneficiaries learn about the benefits of electricity, they take initiative toward building an MHP, but they do not subscribe for electricity even when it is available when they are not aware of its utility.