Project assistance completion report [: small hydroelectric plants development]

Project goals have been attained. Although only 5 of 10 planned power plants were completed due to economic crises and terrorism in Peru, the completed plants are operating well, and EP plans to complete construction at the remaining 5 sites by 1991. The project substantially improved the quality of life of the rural beneficiaries - about 26,000 families in 40 communities. In addition to lighting and household uses, the provision of electricity facilitated: the use of school facilities in two and sometimes three shifts; the installation of small and cottage industries like carpentries and cheesemaking; and increased production by several old small mining cooperative enterprises. EP's public education efforts were a key factor in project success. Some 52 communities served by the 10 project sites received information and training on the use of electricity to increase economic activities and productivity. EP rural promoters made effective use of TV audiovisual materials to educate beneficiaries about the uses of electricity and about procedures for financing distribution systems and household connections. These efforts were complemented by promoters from the departmental development committees. The EP's office for small hydroelectric plants was substantially strengthened, growing from a small unit with limited activities into a large directorate responsible for implementing a countrywide program. The EP institutionalized feasibility study methodologies developed under the project, although it conducted fewer than half of the target number of studies. The project also stimulated and supported the development of a national private industry capable of manufacturing electromechanical and electrical equipment and materials for small hydroelectric plants. It received strong governmental support, primarily because the development of hydroelectricty reduces consumption of kerosene, a fuel heavily subsidized by the GOP. As a result of project experiences, the following bottlenecks were identified: (1) excessive delays when reviewing contractors' claims for extra earthmoving work (a unit price construction contract is recommended); (2) limitations of the counterpart agency in providing, on a timely basis, sufficient and appropriate technical personnel, transportation, secretarial support, and communication facilities (grant funds were used to overcome these difficulties, e.g., by hiring local TA, renting vehicles, etc.); (3) lack of definition of counterpart responsibilies, especially given the decentralization process EP was undergoing; (4) constant changes in personnel and procedures for supervising subprojects; (5) unrealistic estimates of the time required for the bidding process; (6) unrealistic pricing of electricity, mandated by the GOP, made it impossible for EP to provide timely counterpart funding.