11 _Source_ : ASER Senegal.

The World Bank is implementing Global Partnership on Output-Based Aid (GPOBA) grants to reduce the burden of connection charges in Liberia, Kenya, and Uganda by encouraging utilities to connect poor people who otherwise would not be able to pay the full charge for a grid connection. In Monrovia, Liberia, the program subsidizes part of the overall cost of $950 for providing a connection (inclusive of upstream development).<sup>8</sup> In the slums of Kenya, a subsidy is provided to lower the $300 connection charge. Subsidy disbursement schemes vary from country to country, but are linked to verified household connections. That is, the subsidy is disbursed only after a certain number of households have obtained connections. Such initiatives are in early stages of development, but they bode well for the future of electrification in Sub-Saharan Africa.

In Ethiopia, the national utility, the Ethiopian Electric Power Corporation (EEPCo), has connected about 60,000 poor households under the World Bank–funded Electricity Access Rural Expansion Project, Phase 2 - GPOBA (see box 2). The grant allows the utility to finance 80 percent of the connection charge for poor rural households through five-year, interest-free loans—reducing the up-front financial burden for households to just 20 percent of what it was previously. Households also receive two free compact fluorescent lamps as part of the connection package to promote energy efficiency and to make monthly electricity bills more affordable. The poor households in rural areas were targeted through implementation of the GPOBA financing scheme a year after the community was connected to the electricity grid. The preliminary results of an impact assessment analysis show that the program has been accurately targeted toward poor households.

# **Box 2. Ethiopia’s Rural Electricity Access Expansion and GPOBA**

The goal of the World Bank–funded Second Electricity Access Rural Expansion Project, Phase 2 (GPOBA), is to establish a sustainable program for expanding access to electricity in rural communities, thus supporting broad-based economic development and alleviating poverty. Ethiopia’s goal is to increase the rate of household connections to the main power grid in rural towns and villages that already have electricity. The project is helping the Ethiopian Electric Power Corporation (EEPCo) finance connection charges. Rural households participating in the program must pay 20 percent of the $75 connection charge levied by the EEPCo, with the rest being paid in installments of about $1 per month, which covers the remainder of the payment over five years. The utility receives a subsidy of $35 per household, which covers the interest rate of financing the connection charge over five years and two compact fluorescent lamps worth about $6. Preliminary results appear to confirm that spreading the initial connections charges over time does increase the number of new poor households connecting to the main grid.

_Source_ : World Bank 2012.

The financial contribution of customers is essential for sustainability, and financing options that allow customers to make payments over time are a good way to make connection charges affordable. However, the recovery of high connection charges through monthly bills

> 8 The connection cost is based on the medium-voltage distribution system that is used in Monrovia. According to the Liberia Electricity Corporation (LEC) Master Plan 2011, the charge includes medium-voltage lines, transformers, drop lines, suitable drop-line anchors, poles, line hardware, auxiliary equipment, meters, and installation.