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This article explores the successful model of local participation and rural development in Costa Rica through the establishment of cooperatives for rural electrification. It discusses the initial challenges faced, the financial model adopted, the political dimensions involved, the system design, and the key role of consumer involvement. The impact of the program and the recommendations for other regions are also highlighted.
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Energizing Rural Costa Rica: A Model of Local Participation & Rural Development March 8 2006 Energy Week at The World Bank Misael Monge m_monge@racsa.co.cr
Costa Rica RE Model • Three cooperatives originally formed in non-ICE service territory in the Meseta Central • ICE (national utility) played role of RE technical supervisory agency & power supplier • Cooperatives were established as private, local, independent service providers • Banco Nacional de Costa Rica co-financed USAID grant and assisted cooperatives to manage member contributions • 9,800 members initially connected to system
Initial Challenges • ICE had no bulk power tariff, and tariff levels for industrial clients was relatively high. • Initial tariff design was problematic – discouraged productive uses of electricity – consumers used energy for lighting only. • Coops initially did not enjoy tax exempt privileges as did other electric suppliers.
Financial Model • Total initial program cost was $4.2 million, composed of: • USAID $3.3 million loan matched by • $800,000 from local contributions • Cooperative members had to contribute at least $118,000 in capital contributions • Tariffs established to cover cost of service • Area coverage model followed to allow all members within 100 meters of primary line to receive service.
Financial Model (2) • After USAID project was completed, each new consumer paid the full capital cost of service connection • Financed through bank loans in favor of the consumer to the coop • Each cooperative designed tariffs in accordance with cost of service for its respective service territory
Political Dimensions of RE • Political support within Costa Rica in the early years of program implementation • Country guarantee to support USAID loan • ICE and INFOCOOP were directed to support the program by GOCR • Bank of Costa Rica provided concessionary credit to members seeking connection loans
System Design: ICE’s responsibility • ICE (Costa Rican Institute of Electricity) was responsible for executing design & construction of cooperative distribution systems • NRECA assisted by developing design & construction standards • Extensive use of single phase service, small transformers, very limited secondary
Consumer Involvement: Key to Success • Membership was involved from the outset • Member contributions required to capitalize cooperatives • As owners of the cooperative, members elected board of directors • Staff hired from local communities • Productive use programs were aimed to directly address specific member electric needs in each area.
Program Impact • More than 140,000 cooperative members enjoy service in Costa Rica today • In the first two years of operation, coops lost $40,000; in 2004 net income was $3 million • CONELECTRICAS formed in 1994, a generation and transmission utility, now valued at $35 million with no outstanding debt. • Coops are integral part of each community they serve
Conclusions • Looking back: • Improved gov’t understanding regarding the challenges, goals, and objectives of the RE program • More proactive productive use program • Recommendations for Africa: Emphasize consumer education! • The real work is in the field, preparing leaders who have the integrity and community orientation required to support community economic development .
