|Date||October 1, 2007|
If only Nepal – and especially the poor of Nepal – could harness this environmentally friendly and renewable energy for their own development and benefit! Developing hydropower, in today’s world, is better than drilling for oil in Saudi Arabia!
It was in trying to answer this question that a team of us from United Mission to Nepal (UMN) and People Energy & Environment Development Association (PEEDA) came up with the Pro-poor Hydropower (PPHP) concept. We were very aware that much of the commercial hydropower development in Nepal to date has benefited the rich. Wealthy businessmen from Kathmandu and overseas have invested in very profitable projects. Little of the profits from these projects has reached the local poor, even though the projects are built on their rivers.
Yet how do the poor people living high in the mountains of Nepal provide a living for themselves? Most scratch out a living farming on little terraced fields clinging to the steep slopes. At such high altitude, this type of farming produces very little for all its backbreaking work. How can such poor people afford the costs of buying food, health care, education and all the other services we take for granted.
The Pro-poor Hydropower Concept
Pro-Poor Hydropower is a concept by which the rural poor of Nepal are facilitated into the profitable ownership of their water resources. This is achieved through development of commercially profitable1 and socio-ecologically acceptable hydropower projects with the local poor gaining the majority of the benefits of the projects.
But how can the rural poor attain majority ownership?
The mechanism by which the local poor attain majority ownership is by building on the labour component of the project’s construction and operation. Generally, the local poor have nothing to invest except their own labour. In PPHP, opportunities for the local poor to be employed on the project are maximised. Their labour is paid for in both cash and equity (shares) – see the figure. The labourer earns shares by sacrificing part of their wage. This wage sacrifice is then multiplied through a grant and soft loan facility. For each share that is earned through labour contribution, a number of shares are purchased through a grant (from donors). Another few shares are purchased through a soft loan facility.
Currently, we are in the first phase of a trial project which is looking at the feasibility aspects and putting all the project components together. Phase 2 will see the project move into implementation. Should the trial project prove to be successful, we are looking to role out the project to many more areas of Nepal. Our aim is that poor communities will be able to receive a regular cash income through dividends, many years into the future.