Washington, April 26

The International Finance Corporation (IFC) will help develop rural electrification programme in select Indian villages in West Bengal, Bihar, Orissa, Madhya Pradesh, Gujarat, Punjab, and Rajasthan.

A Memorandum of Understanding was signed at IFC’s headquarters in Washington, DC with Power Finance Corporation (PFC), India’s public financial institution dedicated to developing the power sector. At present, millions of villagers in India do not have access to electricity.

The IFC is the private lending arm of the World Bank group and Indian Minister of Power, Sushil Kumar Shinde, was present at the signing ceremony.

The pilot projects will include long-term technical and franchising support and would be based on National Rural Electric Cooperative Association (NRECA) experience with rural electrification in the US The NRECA model has been exported to several developing countries over the last forty-plus years.

NRECA is a not-for-profit association of cooperatives that provides power to rural areas of the US It also has world-class knowledge in designing and operating rural electrification programmes in emerging markets such as Bangladesh, the Philippines, Guatemala, Bolivia, and other countries. NRECA’s members provide power to about 12 per cent of the US population covering 85 per cent of the US land mass.

According to Mr Vivek Talvadkar, Senior Vice-President of NRECA International, India’s push for universal electrification by 2012 provides a timely opportunity to address sustainability issues in the sector.

“Farmers, businesses, and households in India are not that different from their US counterparts when it comes to electricity.

They want reliable service to help them prosper, not a handout.” Noting that India’s non-urban distribution losses cost about $5 billion annually, he said, “without addressing rural subsidies and distribution losses, the Indian economy will suffer needlessly.”

He said the IFC/NRECA partnership with Power Finance Corporation and the states is aimed at establishing business models that reduce economic inefficiencies by focusing on the consumer’s role as the ultimate guarantor of power sector investment.

The programme would focus on the creation of specialised rural area electric service enterprises in selected states. The new rural entities will be demand-driven and commercially sound, serving as models for addressing the electricity service needs of rural populations in currently unserved or underserved regions. The project format is highly flexible and can be adapted to brownfield or greenfield areas, grid extensions or distributed generation, and conventional or alternative energy sources, according to the IFC.

The initial priority states will be selected from West Bengal, Bihar, Orissa, Madhya Pradesh, Gujarat, Punjab, and Rajasthan. After projects are implemented in the initial states, other states will be approached.

IFC promotes sustainable private sector investment in developing and transition countries, helping to reduce poverty and improve people’s lives. — UNI