Introduction to Results-Based Financing and Output-Based Aid

Transcription

1 Introduction to Results-Based Financing and Output-Based Aid Luis Tineo GPOBA Oliver Knight ESMAP

2 What is results-based financing? Payment for outputs delivered Used to incentivize deployment, market creation, innovation Wide range of instruments, including output-based aid (OBA) Significant experience in other sectors (e.g. health)

3 DRIVERS Public pressure in donor countries to pay for results Client country interest in efficiency and private sector delivery Greater transparency and accountability Encourages innovation LIMITATIONS Complementary approach not a silver bullet Issue of pre-financing and capacity to deliver Lack of reliable indicators Data collection and auditing Challenge of setting the incentive

4 Result level Objective Mechanism Impact Reduce energy poverty Evaluation Outcome Outputs Processes Inputs Increase energy access Energy supplied Units sold Connections installed Plans and sector-wide strategies Policies and regulations Incentives and financing modalities Public funding (domestic, donor, MDBs) Private and public financing Carbon finance Results-based aid Results-based financing Investment lending Market awareness Technical assistance Capacity building Climate Investment Funds GPOBA/ESMAP

5 Results-based financing Output-based aid Performancebased contracting Output-based disbursement Advance market commitment/ incentives Vouchers Inducement prizes Basic infrastructure Pro poor Capital subsidies Single contract covering construction, rehab and maintenance Service provider paid according to quality over time Improvement in asset efficiency Financing linked to cost of output Pre-financing may be provided Market creation for goods or services Upfront commitment on price and/or quantity Revenue support Market creation and/or consumer subsidy Allows targeting of consumer group Technological or business innovation Stimulates crowd sourcing One-off payment linked to best/first solution

6 Example: Improve grid efficiency Objective Reduce transmission and distribution losses Instrument Provide an incentive of $5m for every 1% reduction in losses

7 Example: Establish bio-briquette market Objective Incentivize local production and distribution of bio-briquettes to displace charcoal Instrument State-wide commitment to purchase up to 10,000 biobriquettes at $500/tonne for three years

8 Example: Support private mini-grid operators Objective Catalyze private sector business models for mini-grids Instrument $20 per live mini-grid connection per quarter for four years

9 Example: Establish domestic SHW industry Objective Nurture domestic manufacture of solar hot water heaters in response to new building regulations Instrument Provide public organizations with $2000 voucher redeemable against pre-screened SHW systems

10 Case study: Stimulate innovation in cookstoves Objective Instrument Innovation program to develop new cookstoves for the local market $1m for the three best products developed OR $100,000 for each percentage improvement in efficiency above X%

11 Opportunities Climate Investment Funds: Piloting RBF through the multilateral development banks Energy+: Strong interest in RBF EnDev: Piloting RBF through GIZ country programs ESMAP-GPOBA-PPIAF: Funding window to design and pilot innovative RBF proposals ESMAP: Cross-support, funding for consultancy inputs, guidance materials P4R: Opportunity to support government-initiated RBF schemes?

12 Questions? Comments? Luis Tineo Sr. Operations Officer GPOBA The World Bank Tel: Oliver Knight Sr. Energy Specialist ESMAP The World Bank Tel:

13 Target Beneficiaries No pole service customers under the low voltage network of the utility Able to pay regular electricity bills, but have not connected within 18 months after commissioning Outputs 100,000 low income households connected (approx 495,000 beneficiaries) country wide Service Providers Licensed Distribution Companies (LDCs) Umeme, WENRECO, Kilembe Investments Limited, Ferdsult Engineering Services Progress to date Implementation Manual completed and approved Funding from KfW and GoU confirmed and available Implementation structures instituted at REA

14 Government of Uganda/ REA OBA basket of funding from GPOBA, KfW & GOU ERA licensed Service Providers Pre-finance Service Account (1) Subsidy (4) Subsidy Fund in local currency managed by REA Independent Verification Agent (3) Consumer Awareness Consultant Output Delivered = 100,000 Connections installed, service delivered (2) Low income households not connected for 18 months after commissioning 14

15 A demand-driven model for providing access to electricity in rural areas where grid is difficult/ expensive to reach Implemented by the Infrastructure Development Company Limited (IDCOL), Government owned company with the help of NGOs Started in January 2003 with a target to install 50,000 systems over the 5-year project period Target was achieved within 2 years Over 1.2 million SHS installed so far with support from the World Bank and other partners (ADB, kfw, GTZ, IDB, GPOBA) Monthly installation rate now is about 40,000 15

16 s Suppliers Provides approval Seeks approval Technical Standards Committee Supply Equipment Pay for Equipment PO Selection Committee Applies Select POs PO Provide grant & loan Seeks grant & loan IDCOL Funds Sells SHS & provide service Pay downpayment & installment Grant & soft term credit Operations Committee Household IDA and others

17 Grant of US$10 million covers part of the capital investment required for connecting 16,806 poor households (approx. 80,000 people) to the electricity grid. Service provider: The Liberia Electricity Corporation (LEC), the single national public power company with a mandate for generation, transmission and distribution. Targeting: Geographic: focusing on 21 selected slum-like neighborhoods Means-testing at the individual household level, with the housing condition used as income proxy The GPOBA subsidy: US$595 per connection.

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19 Objective: increase access to electricity for poor hhs in rural towns and villages with grid access Targets rural areas which were grid-electrified for at least 12 months Outputs: 228,571 connections; 2 CFLs; 5-year loan contract Subsidy offsets EEPCo s working capital cost of providing a 5-year loan and 2 CFLs for an average connection cost of $75

20 Government of Ethiopia Pre-financing Subsidy GPOBA/WB EEPCo Independent Verification Agent Outputs = 228,000 connections; 2 CFLs per hh; 5-year loan contract. Low income households not connected within 12 months of village electrification 20