MALI’S INFRASTRUCTURE: A CONTINENTAL PERSPECTIVE

## **Box 2 Rural electrification in Mali**

Among new African rural electrification agencies, AMADER (Agence Malienne pour le Développement de l’Energie Domestique et l’Electrification Rurale, or Malian Agency for the Development of Domestic Energy and Rural Electrification) has had considerable success. The starting point for AMADER is a country in which only about 3 percent of the rural population has access to electricity. Until they are connected, most rural households meet their lighting and small power needs with kerosene, dry cells, and car batteries, averaging monthly household expenditure of $4 to $10.

Created by law in 2003, AMADER uses two major approaches to rural electrification: (a) spontaneous, ―bottom-up‖ electrification of specific communities and (b) planned, ―top-down‖ electrification of large geographic areas. The bottom-up approach, which typically consists of minigrids managed by small local private operators, has been more successful. By late 2008, about 41 bottom-up projects had been financed, comprising 36,277 household connections at an average cost per connection of $776. Typically, AMADER provides grants for about 75 percent of the connection capital costs.

Because Mali has limited renewable resources, most of the minigrid systems are diesel fired. Customers on these isolated minigrids typically receive electricity for six to eight hours a day. In promoting these new projects, AMADER performs three main functions: (a) provider of grants, (b) supplier of engineering and commercial technical assistance, and (c) de facto regulator through its grant agreements with operators. The grant agreement can be viewed as a form of ―regulation by contract‖ that establishes minimum technical and commercial quality of service standards and maximum allowed tariffs for both metered and unmetered customers.

To ensure that the projects are financially sustainable, AMADER permits operators to charge residential and commercial tariffs that are higher than the comparable tariffs charged to similar customers who are connected to the national grid. For example, the energy charge for metered residential customers on isolated minigrids is about 50 percent higher than the comparable energy charge for grid-connected residential customers served by Energie du Mali (the national electric utility). Many of the minigrid operators also provide service to unmetered customers, who are usually billed a flat monthly charge per lightbulb and outlet, combined with load-limiting devices to ensure that a customer does not connect lightbulbs and appliances beyond what he or she has paid for.

Financing has been a problem for both AMADER and potential operators. AMADER has been hindered by insufficient and uncertain funding for providing capital cost grants. Potential operators have had difficulty raising equity or obtaining loans for the 20–25 percent share of capital costs not funded by AMADER. Promoting leasing arrangements and instituting a loan guarantee program for Malian banks that would be willing to lend to potential operators have been discussed as methods of reducing financial barriers for operators.

_<u>Sources</u>_ <u>: Rysankova; World Bank 2009</u>

# **Challenges**

Access to electricity to electricity in Mali more than doubled in the last decade and is now around 17 percent of the population. Compared with its low-income peers, Mali’s power generation capacity is average—about 23 megawatts per million people—but residential consumption per capita is much lower than in countries with similar incomes (table 8). Moreover, there is a substantial rural-urban gap in access. Mali’s population is 13 million, but there are only about 150,000 electricity connections, two-thirds of which are in the capital city of Bamako. The ratio of urban connections to rural connections is fourteen to one.

The rural-urban electrification divide reveals that the country’s improvements in service access and quality were either in areas that were already electrified or were a result of extending the network to areas close to an EDM supply point. Mali’s subsidy policy to new connections (which was in place until 2004) and the additional power coming from Manantali supported this outcome. Demand growth has been about 27