Binu Parthan from SEA writes on the implementation of a pro-poor public-private partnership (5P) model for micro-hydropower in Indonesia.
I first heard about the 5P model or the Pro-Poor-Public-Private-Partnership in 2012 when I was in the mountain kingdom of Lesotho. The UN’s Economic Commission for Africa were scoping for an energy centre to be run by a cooperative as a 5P model. I found the idea of PPPs in rural energy that focused on poverty alleviation quite compelling in the context of the rural energy work I was doing at the time. This approach was reflected in the Lesotho Energy Alternatives Programme (LEAP) that I developed for UNDP and the Sustainable Thermal Energy Partnerships (STEPs) project that Xavier Lemaire of UCL Energy Institute and I developed with during 2012-2013. Fast forward 2 years and the STEPs project is generously funded by UK Aid and on its way, and while responding to the baseline study on the STEPs project, I hear from Hongpeng Liu and Deanna Morris at the Energy Division of UN’s Economic and Social Commission for Asia-Pacific (UN-ESCAP) about the original 5P model which has been working for over 10 years in Cinta Mekar, Indonesia.
With kind support from Tri Mumpuni of People Centred Business and Economic Institute (IBEKA) (who incidentally is a recipient of Magsaysay award for her work on hydro power for rural electrification), weeks later I find my way to Cinta Mekar, a relatively remote hilly village about 3 hours drive from Jakarta. The Cooperative at Cinta Mekar – Makar Sari is headed by a diminutive Yuyun Yunegsih, a grandmother of three who was elected a few years ago by the 450 members of the cooperative. The cooperative manages the 120 kW hydro power plant which was commissioned in 2003. The investment in the hydro-mechanical and electro-mechanical equipment and the building materials were financed 50:50 by UN-ESCAP and a private company Hidropiranti. The facilitation was by IBEKA and the members of the community and cooperatives contributed labour and local materials for civil construction in a normal PPP mode. Today after 12 years the hydro power system is still working well and generating and selling electricity to the local utility – PLN at slightly over US cents 4/kWh. 40% of the $650-$1100 monthly revenues go to Hydropiranti and 40% to Mekar Sari cooperative while 20% is set aside for maintenance, repairs and replacement.
The Mekar Sari cooperative has done a number of impressive ‘pro-poor’ initiatives over the years with its share of the revenues. It has provided financial assistance to households which could not afford to obtain an electricity connection. The cooperative also provides scholarships to 360 kids from the community, provides a land fund for members who do not have land holdings, provides an allowance for women in the community to cover childbirth related expenses and also pays an allowance to older members in the community. It has plans to construct public toilets, drinking water fountains etc. all of which seems very impressive. This is an impressive ‘pro-poor’ element that I have not seen in energy projects in general. I have seen impressive pro-poor energy initiatives driven by visionary and charismatic individuals but not by organisations for such a long duration and consistent track-record.
While the social development and pro-poor schemes have been very impressive, the business side has been slightly less impressive. The cooperative has not been successful in renegotiating in higher off-take tariffs in the power purchase agreement with PLN which pays almost a three times higher tariff for similar community hydro plants. A major investment in a manufacturing facility to make gluten-free banana flour which would have employed 10 people have not been successful and lies largely unutilised as the supply chain and market prospects were not investigated properly. It’s possible that the cooperative may have benefitted from some hard-nosed business advice. However the initiative can be considered a notable success in establishing a technical and management solution at an institutional level which has worked for over 12 years and has continued to be profitable and having driven social development in the community.
From the STEPs project perspective it was interesting to see that almost all the electrified community was using LP Gas or gathering wood from the forests for cooking, thus affirming our view that the thermal energy aspect is often overlooked and left to individual households to solve. What was interesting was also that many households which could afford were using electric rice cookers for cooking the main staple food, and efficient electric cooking is something STEPs hasn’t paid much attention. For the STEPs project plans, 5P model which combines private sector quality, efficiency and investments with public and community investment and participation, with community organisations managing social benefits and which combines both electricity and gas supply could indeed be a better model economically and socially. The question whether the institutionalised community leadership in Cinta Mekar can be replicated elsewhere remains. After my visit I asked Yuyun what the cooperatives biggest challenge was and contrary to what I expected it turned out to be the efforts by the local government to take over the cooperative. So while technical, economic and social challenges can be overcome in rural energy services, political challenges often pose a greater risk to sustainability.
– Binu Parthan, SEA