1. COUNTRY BACKGROUND

Nepal presents a regional model for developmental concerns and RET dissemination approaches, due to its exaggerated geographic and social features which highlight the challenges we face all over the South Asia region. Whereas, availing access to RETs in remote areas is a challenge in almost all SA countries, Nepal must face this challenge in an amplified manner. The following points illustrate some of the remote challenges facing Nepal:

i.	75% of the country remains un-electrified.
ii.	Nepal has the lowest per capita income in the region.
iii.	SHS systems remain priced about the same or more than in the neighboring countries, etc.
iv.	Extremely rugged and farthest remote terrain.
v.	Nepal presents a unique showroom for varied RET use, as several RETs play strong roles in facing remote electrification challenges such as Micro-Hydro (MH), PICO, Small Peltric, Solar Home Systems (SHS), Bio gas, etc.

Nepal’s remote villages are often spread in clusters of 3-6 households in the middle hill region and the prospects of line transmission in these areas can run from $10,000 to $30,000 per running kilometer for the cost of the line and poles alone. Costs to run such lines that produce and transmit power while sustaining monthly cash collections from cash-poor villagers reveal a completely unfeasible commercial proposition for reaching even 30% of its remote population within the next 50-100 years using grid-tied methods.

What is new in the Nepal case is that due to Nepal having the lowest per-capita income in the SA region, the need to adapt new innovative financing mechanisms for the Nepalese which tie in productive end uses for RETs and income generation, is perhaps even stronger than anywhere in the region. In other words, even the RET private sector is in great need to penetrate the poorest buyers (largest in number) and improving their conditions or meeting them “on their terms” has become a topic for the private sector and NGOs.

Himalayan Light Foundation (HLF), an NGO, formed in 1997 has a focused objective to implement programs which intrinsically tie RET system dissemination with income generation, health, education, and pollution reduction. HLF’s program designs are reactions to specific community mobilization and development challenges faced in the field by both governments and the private sector when taking on the challenge of serving some of the most remote populations in the world.

During the mid 1990’s the Nepalese Government was encouraged by donors to create the Alternative Energy Promotion Center (AEPC), in order to define and administer donor support for RET systems and to facilitate RET system dissemination. The AEPC began orienting itself to an already established private sector in the RET field and was mandated to play a facilitative role for the private sector who were later called “implementers”. It can easily be said that the creation of the AEPC was spurred by existing private sector RET production and installation success and capacity. Loans for SHS commenced with support from Nepal’s Agricultural Development Bank (ADB/N) and its then 700 -1000 remote branches.

By using a combination of subsidy through the AEPC and loans from the ADB/N the Nepalese government was able to catalyze a dramatic, if not excessive, rise in private sector investment in the RET field; particularly for solar PV and further develop the infrastructures required for the actual RET dissemination programs to operate. AEPC was also able to liaise between donors and ministry-level conduits to assure international leveraging support for their RET programs. In essence, the early days have substantially increased the flow of RETs and also remote village awareness about the technologies and benefits, while enabling the private sector to scale-up to meet the growing village demand.

As SHS sales progressed largely within the confines of the government subsidy and loan program, it became apparent that the better-off villagers were obtaining systems whereas the poorest and vulnerable populations were unable to qualify for the various facilities offered. During times of subsidy lag, (an un-plannable nightmare for manufacturers), it became clear that few villagers were able to pay cash and the largest market of the poorest villagers was completely inaccessible to the private sector’s “demand-driven” approach. Moreover, the poorest villagers were denied access to even small electricity facilities offered by RETs. This experience is common throughout South Asia.

Except for cases of MH, the AEPC support facilities served individual homes on a subsidy basis for RET systems and eligibility rested on proof-of-citizenship of the villager. Similarly, loans from the ADB/N were made available only to those with adequate land holding in their names leaving out the poorest of the poor in both cases. For these reasons and with an HLF design proposal with program implementation support, the AEPC decided to collaborate with HLF to support the HELP™ program to see if a replicable model of reaching the poorest villagers with RETs was possible using an innovative financing mechanism with integral income generation activities.

2. ASSURING INCREASED ACCESS TO RETS WITH INCOME GENERATION

Several years ago, HLF decided that in order for the private sector to penetrate into the larger market segment of Nepal and to thereby reach and mitigate poverty in hitherto un- served markets, that a truly innovative development approach was needed for RETs. Development of such an innovative financing method for the poorest and vulnerable populations, would require a close look at the villagers’ non-cash economy. In fact, villagers in Nepal are not in as much trouble as in many other least developed countries even though they have the lowest per-capita income as far as cash is concerned. Most Nepalese obtain two or three square meals per day, have land holdings, and often have at least some spare time in their days. They also have forest, agricultural and even skill resources to draw from, although their isolation from world markets obscures these values. So the challenge became one whereby commercial dissemination of RETS would have a limited penetration compared to programs which also address other developmental concerns and challenges.

Women working under solar light, Khotang

From close analysis of the villager’s actual economic conditions, the Home Employment and Lighting Package™ (HELP™) program design was born.2 The basic HELP™ model was to accept that villagers had other things of value to offer besides their scarce cash and were willing to pay for RETs with these other resources such as labor, skills, services, village products etc. HELP™ also assumed that villagers having a chance to earn income from such a program would gladly join and do their level best to keep up with the required payments especially in the context of monitoring from their peers. By putting buying power into the hands of the poorest villagers, a large market segment could open up to the private sector.

The HELP™ program initial village called Bongadovan in West Nepal:3 was able to provide 75 initial homes that joined the program for income generation with 20Watt SHS with three lights each to the poorest of the poor. The SHS were installed under the coordination of the Solar Development Committee (SDC); the community based organization formed to handle the village level operation of the HELP™ module. Villagers
were trained in production of a handicraft which was already indigenous in the area (hand made crocheted bags in the case of Bongadovan) and the bags were used to pay back for the cost of the systems on a monthly basis. The product value correlated with a single monthly payment required to pay back the SHS in 24 months. In other words, if one bag was paid to the SDC each month without fail, the SHS would be owned outright by the household after 2 years. Product payments demonstrated a repayment rate of 97%. Due to the successful collection and sale of product, recovered funds enabled the expansion of the HELP™ program to serve over 100 systems within one and a half years. The program revolving fund was called The Revolving Electrification and Income Enterprise Fund™ or RELIEF™ for short and registered.

Currently, the HELP™ program allows for the creative financing of SHS systems by implementing their dissemination using only the SHS itself and a community-based social organization as collateral. The financial revenues for the program is derived from the additional revenue streams availed from the prerequisite income generation activities, product sales etc. within the program. That is why the HELP™ program has, perhaps, sole title to the word “intrinsically combined” in discussions of RET dissemination and income generation. Due to the additional revenue streams created in the program combined with a lowered entry barrier (no need for cash or for a loan etc.) the HELP™ mechanism has become a successful model in availing SHS to the poorest and vulnerable populations in Nepal whereas no other existing program has accomplished this. Although the scale of the proof of concept and 1 st phase replication was small, the success of the modality has been clearly demonstrated in several villages and HLF now seeks to expand and replicate HELP™ in the SA region and eventually in a fully blown commercial manner. Other villages produce various products depending on raw material availability and local skills. The “Paper and Power” village (another HELP™ village) pays back SHS costs with hand made lokta paper products while the “Paint and Power” villagers pays with detailed Buddhist scroll paintings.

In the “Paper and Power” village in West Nepal, further adjustments ad tests were proposed in additional villages slated for HELP™ program replication.4 The Lekhane village hand made paper product resulted from the availability of the daphne plant in their surrounding forests. The presence of proper raw materials for such paper production was a key element of assigning non-cash values to the village itself. Similarly, in the “paint and Power” village the relatively high cash-value “Thankga” paintings was an indigenous skill simply needing adequate market access to yield cash income from their production.

In development circles it is known that the presence of even small amounts of electricity correspond to a greatly increased human development index and Nepal is no different. However, in the case of Nepal most efforts have been, until fairly recently, focused on “getting RET systems deployed” and government programs which support these initiatives have left resulting income generation activities to chance. Discussing productive end uses for RETs seem to fall in two categories: 1) haphazard or natural creative end-uses, and 2) RETs end uses which fall into NGO supported and guided developmental activities.

Solar drying, Lekhani

The lack of truly innovative finance schemes for RETs has resulted from a lack of a concerted, cross-sectoral approaches, where non-cash aspects of villagers developmental economy are cohesively brought together with RET dissemination programs. This does not mean that normal or commercially driven methods of RET dissemination are unfavorable, but when considering the poorest and most vulnerable populations, their economies must be taken into account “as they are” to prevail in the long term battle of serving real portions of the remote area dwellers in Nepal and the region.

Donors have often expressed their frustration with the poor correlation between small RET dissemination (particularly for SHS) and productivity in villages. This angst clearly results from a “lets see what happens” attitude proposed by the RET dissemination modalities currently in main stream use. RET systems are disseminated and resulting uses will either occur naturally or they won’t occur at all. This has been the donor and Nepal government reflection on their own RET programs. Most donors still tend to cling to outdated issues such as the price per-kilowatt that a specific technology offers as the main measure of its’ appropriateness or the fear that smaller amounts of electricity such as from SHS can never result in income generation due to the technology’s limited ability to power larger machines etc.

The fact remains, the presence of RETs enhances rural life in numerous measurable and immeasurable ways ranging from haphazard productive end-uses such as hair cutting, tailoring, prolonging of store hours, lodge lighting, etc. to more organized or guided end-uses found by NGO interventions such as health post electrification, thangka painting, village handicraft production en-masse, schools, solar photovoltaic powered ozone water treatment, etc. Arguments that RETs should be termed “luxury items” on the whole are based on results of programs which fail to integrate other village development activities.

Normally the words “Income generation” have commonly been understood to mean “additional cash income” and often taken out of actual typical village economic contexts. Within HELP™, the fact that the presence of RETs reduces long term cash drains on village families due to their expenditures on small batteries, kerosene, candles and time / drudgery spent harvesting diyalo (fatwood) in Nepal (a resinous wood used for lighting commonly harvested at a rate of 4 trees per family per year) has been drawn into the “income calculations” in a straightforward manner.

In Nepal, villagers are prone to be attracted towards practical and tangible benefits rather than those perceived as obtuse (such as hygiene, or preparation for the long term future in its several guises) HLF has recognized RETs as a basis for obtaining villagers’ interest in their other developmental programs. Moreover, attending to basic needs of the communities can include RETs due to the villagers awareness of their benefits in reducing their monthly cash costs, reducing drudgery and offering clean lighting which has immediate benefit for them.

The category of villagers who applied and participated in the HELP™ program would not have been able to obtain SHS from any other quarter. Since their cash incomes were negligible and their collateral undocumented if not valueless, these villagers benefited from the program by obtaining SHS whereas they would have received nothing otherwise. Without the cash burden placed on them for obtaining such SHS, the poorest villagers could enjoy the benefits of the clean solar lighting systems and look forward to cash incomes once their systems were paid back.

3. STRENGTHS AND CHALLENGES OF THE HELP™ PROGRAM

The first HELP™ program was designed and launched by HLF with assistance from the Global Environmental Facility (GEF) Small Grants Program (SGP) via the United Nations Development Program funding conduit. Bongadovan is a West Nepalese village, approximately three days walk from the nearest road head. The villagers of Bongadovan were particularly uneducated and had never had an NGO working in their area and as such were unfamiliar with how to organize themselves as a group and take decisions as a community.

Since the HELP™ program has as its core the formation of a “Solar Development Committee” (SDC) the social mobilization was the first task to make the program possible. Without adequate self governance the exit towards commercialization would be compromised. The SDC was to assure repayment of product to the RELIEF™ fund by proposing additional social pressure from non-SHS-recipient SDC members. In other words if one family failed to make monthly product payments for the SHS they received, another family could take over the system and balance payments.

The costs of establishing a community mobilized interface for HELP™ had to be well understood and then once established or proven, the model had to be made efficient for replication and expansion. Subsequently HLF support a Thangka painting school village where Thankgas (a detailed Buddhist scroll painting) were made with a high resale value. The second HELP™ program launched a village with a new product (handmade paper), covering a less remote area (one days walk) and implemented improvements based on the learning experiences gained in the first village. Several SA regional NGOs have expressed their interest in replicating the HELP™ program in their areas combining existing program infrastructure with the HELP™ module to leverage their programs while their field presence and field capacity leverage the HELP’s™ cost-effectiveness. This year HELP™ slates launching in Sri Lanka and Bhutan with the partners Sewalanka Foundation and Tarayana Foundation respectively. One of the
motivations for this presentation is to draw out additional stakeholders to the table for various supports and collaborations such as donors, NGOs working on village product, international market access etc.

During the initial feasibility stage of the project it was already clear that although the theory of the HELP™ modality was sound enough, the level of acceptance of the villagers was not predetermined. Moreover, even if the villagers worked in earnest making products and repaid SHS payments with sufficiently high quality products in a timely manner, that these products would be able to be sold and sold at a price which would carry the weight of the village’s remoteness when compared to products that were made in urban factories. Competing with urban factories meant dealing with the strategic advantages urban factories have in distance, control over quality, access to transport etc.

Many key program elements became evident only after the first year operation. They include:

a.	A very high percentage of the villagers were willing to participate in the income generation activities proposed in by the HELP™ program, especially when linked with the facility of obtaining a solar lighting system for their homes without having to pay cash or take a loan from a bank. i.e. demand for the4 HELP™ program was and remains high.
b.	Raw material logistics challenges would be best met by choosing future HELP™ villages partly by their locally available resources.
c.	Assuring product quality requires significant outside supervision
d.	Project location proposed a major cost compared to other elements
e.	Nepal presents a unique showroom for varied RET use, as several RETs play strong roles in facing remote electrification challenges such as Micro-Hydro (MH), PICO, Small Peltric, Solar Home Systems (SHS), Bio gas, etc.
f.	A variety of products were needed to bring them effectively into the international market.
g.	Web based sales presented auxiliary challenges to program operation.

Accordingly, adjustments were made to the HELP™ module in subsequent HELP™ villages:

i.	Villages were chosen partly due to their proximity to useful raw materials
ii.	More time was spent on village orientation about market expectations of product quality
iii.	A somewhat less unruly location was chosen for subsequent test villages
iv.	A greater focus was placed on the international marketing efforts for village product sales.
v.	A variety of products was stimulated to assure a more attractive web-based offering and to assure greater experience gain in which products were easiest to make while being in high international demand.

4. WORKING WITH LOCAL COMMUNITIES

One of the most interesting factors in working with the villages, vis a vis RETS, is their remoteness and all that remoteness presents such as lack of education, cash poverty etc. In fact, HLF has purposely chosen some of the more remote areas to establish the HELP™ program as these locations are common and present the ultimate financial challenge for replicable success. HLF’s assumption was that if HELP™ was successful in these areas that it could be easily applied almost all over the SA region.

Whereas villagers are familiar with barter as a method of commerce in their daily lives, the concept of HELP™ was initially opaque to villagers. Even after several months of explanation, villagers felt there was a “hidden catch” … that it could not be possible that their labor was given such a value as to pay for the cost of a subsidized SHS. Eventually, and due to program commencement, the picture became clear and the repayment rate of products on a monthly basis was over 97% during the first year. The first village was later attacked by Maoists and program operation has been temporarily halted. Subsequent villages have been much luckier, and currently show similar product repayment rates.

The essence of HELP’s™ final replicable and sustainable strength lies in its market access component. Although the first HELP™ model villages have proven the innovative financing element of the concept beyond a doubt, the expansion and reliability of the HELP™ program lies in: 1) the strength of the market pull for village products, 2) the sustained commercial conduit of such products and 3) adequate funding or donor support to boot-up HELP™ villages to put them in a position to serve these markets.

The last item is also required to mitigate the devastating handicap presented by the remoteness of the villages in question. Whereas talk abounds on reducing poverty, the cost of the required actions to meet the remote locations where poverty prevails seems to be nobody’s to bear.

Until now, almost all donor works have related to dissemination of RETs in isolation of their use contexts. The cost of RET dissemination schemes are borne by host governments, the private sector (who do not have the objective to complete government developmental works in villages) and villagers who must pay their own way. Left to these three alone, “development” e.g. electrification and poverty alleviation, of the poorest people in the remote areas will be left for the tides of urban migration to handle. In other words, real employment is quickly found in central cities and since the rate of taking care of remote area poverty
reduction is too slow to perceive; urban migration wins the race.

5. THE WAY FORWARD

The Nepal RET situation in general and the HELP™ program operations in particular offer a strong experience base to draw on for regional program replication. The HELP™ program was originally designed and operated to prove beyond a doubt that a truly comprehensive RET dissemination approach was possible and sustainable fully integrating innovative RET financing methods with income generation / productive end-use activities. HELP’s™ pilot villages operations have come very close to accomplishing that. Although the numbers of RET systems deployed in the HELP™ program are few compared to the requirements we see in the SA region it is clearly proof of a highly replicable modality worth scaling up.

Recognizing the implications of HELP™’s initial success the Global Environmental Facility (GEF), the Nepal Government and UNDP of Nepal have all supported the development of the program. GEF SGP itself has considered the HELP™ program one of the main SGP showcase examples of last year and currently seek collaborative scaling-up of the HLF SGP HELP™ model to a Medium scale Project (MSP) scale program. Similarly, The Nepal government feeling that HELP™ offered a particularly unique and appropriate program design won an award from Nepal’s Ministry of Population and Environment.

In Nepal itself the HELP™ program is seeking a scaling-up from the original GEF SGP to a GEF MSP for a broadening of the HELP™ modality use. This “broadening” will take place both in terms of partnering to increase villages served as well as technology as HELP™ may well be able to be applied to smaller MH systems such as peltric and PICO hydro sets. HLF is currently establishing a partnership with Nepal’s Rural Energy Development Program (REDP) to increase the cost effectiveness of both the HELP™ and REDP programs in terms of their ability to expand and also serve the further flung clusters of homes not able to be served by REDPs micro hydro schemes.

Solar Photovalotaic System

Although the challenging conditions faced in Nepal bode well for easier adaptation of the HELP™ module in other SA regional countries, despite strong efforts made by donors, INGOs and NGOs, our collective ability to serve the remote areas dwellers with RETs is far from adequate. Again, in the Nepal case, strong arguments have been made showing that at the current rate of electrification in general and RET use in particular Nepal will still remain largely un-electrified for the next 100 years. Meanwhile donors wish to focus their efforts on serving what they term “the poorest of the poor”. Our experiences in Nepal propose that the overall costs of not making a dramatic increase in our ability to electrify the remote areas of SA regional countries (such as costs of war, terrorism, health costs, infant mortality, deforestation, global warming, etc.) far outweigh any increased investment donors could make at this late stage.

Until today even though NGOs represent the highest value for integrated RET dissemination approaches they are still seen as “down-stream” partners when donors relate to the host country governments. Governments meanwhile often eliminate NGOs from their donor agreements thereby back shelving the NGOs in planning and objective formation stages.

With recent SARI Energy round I small grants support, HLF has now established the Himalayan Light Foundation South Asia Regional NGO Consortium for RETs and Poverty Reduction with the initial collaborative partners, Sewalanka Foundation and Tarayana Foundation in Sri Lanka and Bhutan respectively. The main goal of this consortium is to assist partners in sharing of experiences and best practices and to help the partner members to go through an adaptation and replication process with HLF technical assistance so they too can benefit from the HELP™ modality in their countries. The consortium aims at assuring ample scaling up of the adapted models and a cooperative international sales portal for web site sales of village products to assure ample revenue streams continue to drive the HELP™ village economies.5

6. RECOMMENDATIONS:

i) Donors should assure integration of RET dissemination and income generation in their funding patterns not just in their sated objectives. RET donor funds are often targeted roughly to RET dissemination schemes whereas funds for income generation are not tied to RET programs. NGOs that involve with income generation programs are rarely integrated into these RET dissemination efforts. I.E. the shape of donor funds, despite their best efforts, fails to provide for RET dissemination intrinsically combined income generation activities. In our Nepal case experience donors either wanted to fund RET dissemination or they were focused on livelihood enhancement but we rarely saw both at the same time.

ii) In contexts where subsidies are operative, NGOs should be given some portion of subsidy conduit to assure that their services and capacities are properly absorbed in the work to disseminate RETs in a comprehensively integrated manner.

iii) Regional sharing of experiences in a truly grounded or pragmatic manner with funding resulting for tangible field results is essential

iv) The stigma against the private sector and NGOs must be dropped and strong transparent stakeholder partnerships formed to further leverage developmental activities in a more integrated manner while government RET dissemination programs are being formulated. I.e. NGOs and Private sector companies both must finally be seen as true stakeholders and be fully absorbed as such when decisions are made by the government and donors.

v) Private sector support should be facilitated by subsidy with the least “opportunity cost” for obtaining the subsidy (i.e. greatly reduced processing regimes).

vi) Subsidizing remoteness is perhaps preferable over subsidizing hardware. A subsidy set in general which targets distances such as on transportation, installer’s TADA etc. can help to adjust the private sector’s focus to priority areas which fall into NGO activity sites. It is naïve to assume that the private sector should, could or would shoulder the costs of the governments’ responsibility to reach its furthest remote populations.

By donors recognizing the need to create a truly comprehensive approach which ties donors, governments, NGOs and the private sector together as true stakeholders, greatly enhanced productive end–uses for RET systems can be cost-effectively assured while attending to the responsibility of reaching the remote area populations.