1 IBEKA can then be considered ... innovative
Transcription
1 IBEKA can then be considered ... innovative
1 How to provide access to electricity to remote areas in a sustainable way ? IBEKA, Indonesia, November 2010 INTRODUCTION November 2010, in between business trips to Tanzania, Zürich, South Korea, and lectures at Cornell University or MIT, Tri Mumpuni, founder of IBEKA (Institut Bisnis Dan Ekonomi Kerakyatan), received us in her house (also the headquarter of the organization) in Jakarta. Even if she is now asked to give conferences all around the world to spread her model, she found the time to discuss with us about the genesis, history and success of the communitybased Micro-Hydro Power-plant (MHP) system she set up. Two days later she organized for us a visit of a MHP chosen by the United Nations Economic Commission for Asia and the Pacific, UNESCAP, as a Public Private Partnership model in the Asia Pacific region. A few-hour drive from Jakarta, in a delightful environment, we had a thrilling lesson and discovered how a MHP works. IBEKA can then be considered as an innovative community-based social business. Tri Mumpuni has developed a Pro-Poor Public Private Partnership model for rural electrification. ISSUE 42% of the Indonesian population (around 105 million people) lives without electricity. These people are mainly found in the poorest and most remote areas of the country. While it has not been able to solve the challenge of bringing electricity to these areas (yet it has tried to create mega hydropower supply infrastructures, the projects have failed and only resulted in high costs and environmental damages), the government still gives huge subsidies to the 58% having electricity (USD 4.3bn in 2008). On the other hand, some off-grid systems using MHP technology have tried to face the problem but often had to close down once the state-owned power companies enter the market and undersell the electricity: it became impossible to remain sustainable under such an unfair competition from state-subsidized electricity. Tri Mumpuni has set up a model to tackle the issue of electricity access but also tries to answer a far more global question: how to create more sustainable wealfare for all human beings, starting with the poorest Indonesians. GENESIS As en agricultural engineer, Tri Mumpuni has very quickly turned into rural development issues. She was working on systems that could outreaches and includes even the poorest people in the process. She soon reckoned that energy is a powerful tool. Though electricity is not development, economic development needs electricity. Not only energy contributes to development, it is also and foremost a good way to make the community believe. And, as we have heard many social entrepreneurs say so, selfconfidence is the most powerful tool to make development happen. Tri Mumpuni first wanted to connect the huge part of Indonesian population still out of any grid. And she then started to think of electricity for additional activities and as a source of additional income for the villagers. The first goal of the construction of a plant is the electrification the whole village; and then to produce excess capacity to generate profits and make the model sustainable. With the help of her husband and his company, Hidropiranti, which designed the MHP technology, she decided to set up some small micro-hydro power plants in remote and off-grid areas. 2 STRATEGY Following Tri’s belief, IBEKA’s model relies upon two major principles: The full transfer of ownership of the MHP to the communities: the community should take part in the design of the plant and then own and run the operations; The possibility for the MHP to sell electricity at a good price to the national grid. The first principle is the only way to keep the system sustainable and running in the long-term. The communities need to be prepared how to use the electricity: one should make sure that a better economic productivity can be generated. But once the community has been trained to run a plant and use the benefits to maximize its development, it should decide everything based on a consensus at a village level. A community based system is the insurance of sustainability (contrary of government based projects). Any extra money would first be secured for maintenance and A canal to the plant depreciation. The second is the only way to bring together public and private partners and for the community to generate extrarevenues. Both allow the villages to develop rural programs and get out of the poverty trap thanks to access to electricity and income generation. Today the total installed capacity is 2,8MW and IBEKA has already launched 60 MHP. Only two are not 100% community-based. Business model and financing Some of the MHP are co-managed with private investors, while others have become fully owned by the community itself. IBEKA empowers the communities, which fully run and manage the system. At the beginning, IBEKA helps the village to fund the construction, build the plant and organize the management and the maintenance. First an engineer checks the field and context to make it sure there is enough potential. He then designs and budgets the MHP.IBEKA and the communities receive land for free from villagers to set up the plants. developing the rural entrepreneurship that results from rural electrification. Use of the money by the community and social development The money generated by the running of the MHP has a triple use: Operation and maintenance Depreciation Social development IBEKA then helps the community to structure itself and to elect some representatives to monitor the income generation and use. In the 1990s the Ministry of cooperatives subsidized a part of the project before IBEKA financed itself through socially responsible funds and individuals. The community needs some donations to set up and install the plants. But then the users pay installment, connection and consumption fees which cover the costs and even generate some profit. Besides some of the plants can now sell some electricity to the national grid and generate some profits. Training and income generation IBEKA promotes a global model that includes all the aspects in the community: a kind of integrated social model. During the construction of the plant (i.e. 5 to 6 months), IBEKA organizes some trainings for the villagers and teaches them how to use and manage the system. Sometimes an engineer of IBEKA stays a few months to assist them. IBEKA not only trains a villager to operate the plant, but basically trains the villagers how to improve income and productivity. They may for instance explain to the villagers how to increase their productivity in thee patchouli oil production. Trainings tend to focus on Inside a Micro-Hydro Power Plant Village committees are very cautious and keep lot of money for depreciation and replacement. There may then be some plans to spend more on social development if there is some extra money. Some communities have for instance been able to launch some micro-credit programs or to organize other supportive actions for the poorest. For all the social development projects chosen and implemented by the committee of the community, the poverty criteria are defined by the community (in a fully transparent way). Legal barriers and connection to the national grid There is a big potential around the MHP: excess capacities could and should be sold to the national grid. From the instant the MHP generates some profit by selling the excess capacities, it becomes possible to involve private partners and to contract some loans (and not only depends on grants). 3 But, the first hurdle that must be overcome is the Indonesian regulatory framework. Until recently, no MHP could remain sustainable and being run as a business. Tri Mumpuni lobbied ministers and governments to allow small electricity producers to sell back into the grid. Tri Mumpuni has been able to force the government to vote a new law: national utilities have obligation to buy any renewable energy. By allowing MHP to sell their excess capacities, the new law has opened huge opportunities. for instance). hand and you give little to people. It’s not sharing as the model she promotes. SOCIAL IMPACT IBEKA doesn’t regularly assess its social impact yet. It has only implemented an operational follow-up. There have also been some surveys with local NGOs to know the differences in people’s lives before and after the project. IBEKA’S PRIORITIES IBEKA has two constant objectives: Connect all the MPH to the grid to allow them to generate extrarevenues and attract new investor Increase the number of MHP and give access to electricity to an always higher number of people At that point, the main barrier to IBEKA’s expansion is still funding. Major funds come from big NGOs, Multilateral Institutions or big international donors (Netherlands and Japanese Aid Lobbying tirelessly, she is patiemment overcoming any institutional barrier and is changing all the energy Indonesian regulatory framework. Proving to the private investors her model is working and sustainable, she is progressively scaling up IBEKA’s activities and attracting new partners. And before all, day after day her organization allows more and more people to get access to electricity and to the confidence in their capacity to get out of poverty. Public private partnership The average investment for the construction of a MHP is around USD 500,000 – a huge upfront lump sum without access to any loan or private investment. But IBEKA succeed in establishing a first community pro-poor public private partnership with an Austrian company, Andritz Hydro. IBEKA then could contract an important loan with Kontrol Bank, an Austrian bank. She has made joint ventures between community cooperatives and private investors feasible. She strongly believes in communitybased programs. A Micro-Hydro Power Plant But IBEKA hasn’t time and resources to dedicate to a more formal and detailed assessment. Operational management is here crucial. Tri Mumpuni prefers to give access to electricity to more villages or to train more villagers to increase their income, than spend some time and money on measuring IBEKA’s social impact. ACKNOWLEDGMENT We would like to warmly thank Tri Mumpuni who gave us some of her precious time and welcomed us in her home Jakarta. We also would like to thank Adi Laksono Dwi Putranto who kindly took a day to show us the MHP near Jakarta. We finally would like to thank all IBEKA’s staff. But a single figure can give an idea of the impact IBEKA has on Indonesia: 300,000 to 400,000 villagers now have access to electricity thanks to IBEKA. Even Tri says it is far from enough to solve the issue, it is a good start! CONCLUSION Tri remains very critical of CSR, which still means that everything is in your CONTACTS Planete d’Entrepreneurs www.planetedentrepreneurs.com [email protected] IBEKA www.ibekanetsains.com trimumpuni.com Adress: Madrasah II no 28 Sukabumi Utara 11540 Jakarta Indonesia Phone/Fax: +62 21 5492087