A consumer movement is born

Across Nepal, close to 420 electricity user groups, cooperatives and committees are working to extend the grid into villages. They are taking charge of electricity distribution, maintenance and ‘customer service’. Together they have electrified 176,000 rural households according to nea; another 90,000 are in the pipeline. These numbers are significant because 70 per cent of rural Nepal is not connected to the grid.

Most of this expansion has happened in a little more than four years since a handful of electricity user groups formed an association, the National Association of Community Electricity Users Nepal (NACEUN), in 2005; it now has 202 members. This is more than double the electrification rate of the government utility, and despite the Maoist conflict roiling the country.

NACEUN helps its members sharpen their technical and financial proposals to NEA and trains them on in-house wiring, electrical safety and account book-keeping. As a consumer movement, the association has become a key player in advocating legislative changes to promote the interests and rights of electricity users in Nepal.

In its recent general body meeting, members voted to create a fund to enter power generation in the 1 MW to 5 MW scale.

NACEUN chairman Dilli Prasad Ghimire recalls how the partnership between communities and government began. “I was determined to bring electricity to my village Sankhu, 66 km from Kathmandu,” he said.

This was 1993, and after many futile visits to the NEA office in Kathmandu, members of 19 village development committees from South Lalitpur district organized themselves into the South Lalitpur Rural Electrification Movement Committee.

“We proposed what we thought was a winning formula: we will contribute half the costs to electrify our villages,” Ghimire said.

The community share worked out to be NRs 35 lakh. For many years the plan was in limbo “because there was no act or policy to provide electricity to us in bulk for community-led distribution”. This became a rallying cry for the movement.

He recalled the telephone call he made to Dipak Gyawali, then minister for water resources who managed the energy portfolio and served on NEA’s board of directors. “I told his secretary to tell Gyawali ji, ‘We need electricity’,” Ghimire recalled. Gyawali returned the call the following day, asking for a guided tour of South Lalitpur. Impressed with the movement’s ambitions and plans, Gyawali promptly set up a committee to review community-led rural electrification and distribution in the country. Ghimire was inducted as a member. The bylaws were finalized and notified in February 2003.

Gyawali considers the bylaws among his ministry’s big achievements, and serves on the board of NACEUN today. He recalled the anxiety the proceedings sometimes caused his bureaucrats. “The bylaws went through 27 drafts, and I would insist this was listed on top of the day’s agenda in every meeting,” Gyawali said with a laugh.

Key catalyst

The Community Electricity Distribution Bylaw 2060 (February 2003) allows any group, company, association, committee, cooperative or user association—with their constitutions suitably amended—to distribute electricity to members. The same year the Community Rural Electrification Department (CRED) was created under NEA to carry out community-based electrification.

The first grid extension project in South Lalitpur was under the 50:50 scheme, where the community pooled in half the share. Later NEA increased its contribution to 80 per cent. Today the South Lalitpur Rural Electricity Cooperative—it registered itself as a cooperative in 2000—covers 19 village development committees, distributes electricity to 2,321 households, about a quarter of the households in the district.

The cooperative offers the clearest example of how electricity is the energy that can drive a local economy. It has 37 sub-committees that actively raise funds for grid extension within the district, while a telecommunications centre and three milk chilling plants are the biggest consumers. As per a study by University of Cambridge researchers A Yadoo and H Cruickshank, under review for publication in Energy Policy, the cooperative supplements its income from tariff payments with the sale of electrical appliances and wiring bought at wholesale prices from the manufacturer.

Interest payments from a micro-financing scheme that targets poor households and income-generating and welfare projects add to the resource pool. Between 2005 and 2008, micro-loans alone catalyzed 167 meter connections, 237 small enterprises—such as carpentry tools, poultry, irrigation units and a community milk refrigeration unit—and the building of 23 biogas digesters, the study points out.

This emerging consumer movement is more efficient. Three years since grid extension by community started, pilferage is down due to less theft and timely payments, cost of service is lower than government utility, service requests are handled promptly, while the focus on finding on electricity-driven activities means some electricity user groups are already in the black, say people associated with the initiative.

Costs are cut when communities lead electrification efforts. Ratna Sansar Shrestha, a water and energy analyst, has crunched the numbers: the per household cost of connection is three times lower when communities get involved—roughly US $100 compared with US$ 300 when the government utility is involved. One reason for lower cost is that NEA pays for the higher capacity hardware, while the low capacity transmission lines and substations fall on the user groups’ plate.

Grid ‘communitized’

“The point,” said Gyawali, “was to democratize the grid; in fact, communitize it to ensure control, use and access to electricity in rural areas.” This was more than ‘unbundling’, or fracturing the vertical government monopoly of generation, transmission and distribution of electricity. It was to pluralize it by bringing in community distribution to act as checks and balances between private, commercial and statist interests—functional democratization, if you will.

Electricity user groups are just a recent addition to a long list of community-led development interventions—from the powerful federation of forestry user groups (FECOFUN alone comprises 11,200 user groups representing 8 million people across Nepal), to water user associations (NFIWUAN has 2,139 user associations), mothers’ groups, user groups in water supply sanitation, to community-operated community radio.

Still the movement faces stiff tests. One is the opposition from the entrenched trade unions of NEA that fear job losses with increased community participation. Two, cooperatives that grow too fast too big often replicate the inefficiencies of centralized utilities they seek to replace. Third is how to accommodate these urgent needs into an already overloaded grid. Community involvement must also make business sense (see: Scale matters).

“The 20:80 scheme is perhaps the country’s biggest development programme today,” said Kishore Thapa, secretary, Water and Energy Commission Secretariat – government’s policy making body on these matters. “It is very popular with rural communities, and the government is trying to facilitate this process.”

Thapa said the government has set aside NRs 1 billion a year as a backstop grant to those communities that fall short of their contribution in the scheme.