**_Policy,_** _Planning, and Research Working Paper Series_

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## **107. A Review of World Bank** Lending for Electric Power

### Mohan Munasinghe, Joseph Gilling, and Melody Mason

_More people worldwide have access to - electric power but the overall performance of sector utilities is deteriorating. Bank lending should place greater emphasis on improved economic, financial, and managerial efficiency._ A review of about 300 power projects financed by the World Bank and IDA between 1965 and 1983 shows a declining trend in sector performance. More people have access to electric power, and more kilowatt hours are generated per capita, but overall sector performance has declined, while the quality of service is poor and shows no signs of improving.

Therefore in its operations, the Bank should put more emphasis on:

* Making energy production and allocation more efficient (supplying electricity at the lowest cost andbasing prices on real marginal costs) rather than using the supply of power to meet other goals such as social equity.

* Increasing incentives to make utilities more efficient and productive. * Encouraging sector restructuring and institutional reform, including greater private participation, to improve the social compact between government, consumers, and the electric utility.

I Evaluating power projects with better understanding of power, energy, sector, and national economic linkages. * Striking a better investment balance between power generation and distribution.

* Improving the quality of existing services (and reducing losses) through rehabilitationandmaintenance-rather than by simply expanding the system.

* Providing service on a priority basis to the productive sectors, such as industry and (when economically justified) agriculture.

* Using more risk and sensitivity analysis, and more scenario-oriented 'what-if' treatment of uncertainty in project preparation work rather than at appraisal. * Setting more realistic targets for physical and financial performance and clearer identification of constraints on meeting those targets.

* Developing a better institutional

memory for project data. **109.** Improving Power System This paper, a product of the Infra- **Efficiency In Developing Countries** structure and Energy Operations Divi- **Through Performance Contracting** sion, Latin America and the Caribbean Department, has also appeared as a InPhilip Yates dustry and Energy Department Working Paper. Please contact Mary Fernandez, _Utilities in developing countries may_ room S4-037, extension 33637. _want to consider a successful new ap-_ _Utilities in developing countries may want to consider a successful new approach to improvingperformance: engaging a performance contractor to improve theiroperations-inexchangeforashare of the savings. The utility, in turn, fulfills its own performance contract with thegovemment -getting more autonomy in exchange for better performance._

## 108. How to **Collect Data on** Household Energy Consumption

## Josef Leitmann

_Energy policy and activities should be based on accurate data about how households acquire and use energy - and such data is best acquired at the household level._ In the United States, some large industrial and commercial energy users have successfully used energy performance contractors to effect energy savings in exchange for a share of the savings.

This paper presents guidelines for administering household energy surveys.

In some developing countries, govemments have considered various forms of government/utility performance contract, whereby the governments give the utilities more flexibility and autonomy in exchange for better performance.

Typically, country energy balances, national budget surveys, and microstudies have been the source of information about residential energy consumption. A dedicated nationwide household energy survey will generate more relevant data for planners, policymakers, and evaluators - but may overturn assumptions in the process.

Why not merge the two concepts? A utility could engage a performance contractor to improve operations in ex- change for a share of the savings thereby allowing the utility to fulfill its performance contract with the government. The government would give the utility more autonomy in exchange for better performance.

The subsidized promotion of liquefied petroleum gas (LPG) as a charcoal substitute in Senegal, for example, was based on the assumption that subsidies alone would lead to widespread adoption of butane fuel and that as the use of butane increased, the use of charcoal would decline. But a 1987 survey indicated that although 65 percent of the households in Dakar have LPG stoves, only 2 percent use the fuel exclusively. And in the households that use both LPG and charcoal, consumption of charcoal has not changed.

This paper, a product of the Industry and Energy Department, has also appeared as an Industry and Energy Department Working Paper. Please contact Mary Fernandez, room S4-037, extension 33637.

# 110. **Impact of Lower** Oil **Prices** on **Renewable** Energy Technologles

In Niger, wealthy residents, because of their lifestyle and income, were considered the logical market for modern fuels. But a 1986 study indicate that they used alot of wood because they could afford to buy it in bulk (which made it the cheapest fuel) and they suffered none of the health or other disadvantages of wood fires because their servants did all the cooking.

Ernesto Terrado, Merle Mendis, and Kevin Fitzgerald _Falling oil prices are most likely to affect the economic viability of renewable energy technologies that compete directly in the modern sector as large-scale petroleum substitutes. Projects that involve smallscale and rural applications are less likely to suffer._ This paper, a product of the Industry and Energy Department, has also appeared as a Industry and Energy Department Working Paper. Please contact Janine Littleford, room S2-274, extension 33627.

The economic sensitivity of renewable energy technologies to changing oil prices is a function of a project's size and location. Renewable energy technologies are