New light on rural electrification : the evidence from Bolivia

financed a project to expand existing muncipal electrical systems in Bolivia to seven outlying rural areas with the aim of servicing an additional 8l,000 rural customers within l0 years. This report evaluates the project"s impact on the rural poor in terms of three project objectives: improving the quality of life; stimulating economic production; and creating viable electric utilities. The project showed that, contrary to conventional wisdom, rural electrification (RE) projects actually favor the poor over the rich because the poor are more numerous and RE projects aim at connecting as many households as possible. RE projects can also benefit the poor by providing them with power use rates subsidized by richer cities, although in this case such subsidies proved unnecessary and a more sustained subsidization of installation costs would have been wiser. However, even though the project provided "household light" that was eagerly welcomed by the poor, the potential to introduce social services, such as health and education, never materialized (potable water was a partial exception) because prior programs in these sectors did not exist. Except in the Santa Cruz area, the project did not stimulate rural production or reverse rural-urban migration rates. This was because the absence of previous growth led to few production opportunities and because no interest was expressed by project designers in productive uses of electricity -- irrigation being a case in point. Finally, despite a 60% success rate in potential electric connections, the project reached only between l2-22% of the households in the target area, representing only 7% of Bolivia"s rural families. A major reason for this shortfall, in a project which aimed at maximizing the number of household connections, was the use of a central grid system that provided unnecessarily high-quality service instead of a less costly system such as independent microhydro generating units. The author concludes by noting a two-fold deficiency in the project: a conflict between its goal of maximizing household connections and its capital-intensive and centralized technical design; and an unrealistic production goal due to failure of project designers to seek evidence of economic opportunities in the target areas.