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Cost Efficiency and

Effectiveness of the Sitio and


Household Electrification
Program

Dr. Adora Navarro


PIDS Senior Research Fellow
Philippine Institute for Development Studies

Outline
Overview
Findings
Recommendations

Philippine Institute for Development Studies

Why the study was


commissioned
In 2012, the DBM sought the
assistance of the PIDS in informing
the zero-based budgeting (ZBB)
approach that the Aquino
administration is adopting.
The Department of Energy (DOE)s
household electrification program
and National Electrification
Administration (NEA)s sitio
electrification program were included
in programs to be scrutinized for the
2013 ZBB.
Philippine Institute for Development Studies

Overview of the Programs


Sitio Electrification Program (SEP) of
NEA
aims to energize sitios
through on-grid electrification
2015 target: 100% sitios
energized; covering at least
648,820 households

Year
2011
2012
2013
2014
2015
Total

Targets
1,500 sitios
7,500 sitios
7,500 sitios
7,500 sitios
8,441 sitios
32,441 sitios

Table
1. Annual Targets of SEP
Philippine Institute for Development
Studies

Overview of the Programs


A barangay which has at least 20 energized HHs is already considered an energized barangay. Given
that a barangay can have as many as___ HHs, it is highly probable that there are still many HHs in a
barangay which need to be connected. Example of energized brgy:

A sitio is considered energized if it is successfully connected


to the grid and at least 20 households are given electricity
connections

unenergized
HHs
20 energized HHs connected to the grid

unenergized
HHs

unenergized
HHs

Philippine Institute for Development Studies

Overview of the Programs


NEA Board

DBM

subsidies

NEA

ATEO
(ad hoc)

Mindanao Division

subsidies

subsidies

Visayas Division

subsidies

Luzon Division

Electric cooperatives

Figure 4. NEA-SEP Institutional Arrangement


Philippine Institute for Development Studies

Overview of the Programs

Household Electrification Program


(HEP) of the DOE
energization of off-grid
households using mature
renewable energy technologies
such as photovoltaic solar home
systems, photovoltaic (PV)
streetlights and micro-hydro
systems
target: at least 2,000
households every year; 90%
households electrified by 2017
2011: installed 2,750
households and 46
communal PV systems
2012: targeting 3,200
households and 75
communal PV systems.

Philippine Institute for Development Studies

Overview of the Programs


DBM

DOE

subsidies

Renewable
Energy Management
Bureau
projects

projects

DOE field personnel,


Team Energy
Foundation
(social preparation)

Households
Community associations

Figure 5. DOE-HEP Institutional Arrangement


Philippine Institute for Development Studies

Findings

NEAs SEP:
cost efficiency ratio: Php530,809 per sitio
or Php26,729 per household in 2011
cannot be compared with other programs
because this is the first time that a sitio
electrification program was implemented

DOEs HEP:
cost efficiency ratios: Php11,100 to
Php14,500 per 25Wp PV (solar) system;
Php18,300 to Php20,700 per 50Wp PV
system; Php25,400 to Php27,700 per
75Wp PV system
average cost per unit: Php35,913 per
household.
more cost efficient than the BEP (19992009) program which has average cost of
Php42,029 per HH in 2010 prices

Philippine Institute for Development Studies

Findings
Benchmarking relative to targets
NEAs SEP:
2011 target: 1,500 sitios
2011 accomplishment: 1,520
sitios
DOEs HEP:
2011 target: 2,000 households
2011 accomplishment: 2,750
households
Both SEP and HEP have
surpassed their respective targets.
Philippine Institute for Development Studies

Poverty impact assessment

SEP in 2006 and HEP in 2011: no direct poverty


impact assessment undertaken
Data on the poverty-related
characteristics of the household
beneficiaries before and after they
become recipients of the program are
currently lacking; the gathering and
compilation of these in standard formats
had not been incorporated early on in the
implementation design
As an alternative: poverty impact of rural
electrification in general, using data from the
Annual Poverty Indicators Survey (APIS) 2010
Finding - household access to electricity
in rural areas tends to:
raise per capita income by nearly
36%
raise per capita spending by nearly
34%.

Philippine Institute for Development Studies

Recommendations
Note: Expanded Rural Electrification Team
(ER Team)
set-up in 2003 and reconstituted
in 2006; currently inactive
fat bureaucratic setup; quite
expansive ER Team with many
established groups and
committees

Re-activate the ER Team


Streamline the setup in order to give the
team more focus and greater
accountability
Assign the responsibilities to positions
in offices rather than specific persons
Philippine Institute for Development Studies

Recommendations
Use household connections rather than
sitios in target-setting and monitoring;
sitios can be used as identifiers
Include local economic development in the
prioritization criteria
On the connection fee acting as a barrier
to the poor:
Include in the criteria: electric coop
or community association to show
evidence of having an affordable
amortization package for the initial
connection fees of households

Philippine Institute for Development Studies

Recommendations
Come up with strategies to boost
absorptive capacity of electric coops
given the acceleration of meeting the
targets
Continued (but more targeted) rural
electrification given its poverty reduction
impact

Philippine Institute for Development Studies

Thank you!
Philippine Institute for Development Studies

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