Cheap, Reliable and Renewable Electricity a Step Closer for Pacific Islanders

June 12, 2007 - The World Bank

The World Bank Board of Executive Directors today approved US$9.5 million provided by the Global Environment Facility to fund renewable energy electricity supplies for rural communities in Papua New Guinea, the Solomon Islands, Vanuatu, Fiji and the Republic of the Marshall Islands.

In the Pacific Islands, access to electricity can be as low as 7% in rural areas of Papua New Guinea to a high of 65% in Fiji. However, power generation has been heavily dependent on diesel and most lighting is still provided by kerosene lamps. With the cost of diesel and kerosene soaring in the past two years, many rural households have been spending 25% or more of their income on fuel. Schools in Papua New Guinea have been spending around 70% of their budget on diesel for electricity.

With the support of ANZ Pacific, (an international bank operating in the Pacific region) assistance will be provided to rural Pacific Islanders so they can access low cost, long term finance to purchase electricity at a fraction of the cost they are now paying for diesel. The Sustainable Energy Financing project will draw on the Pacific Islands good renewable energy endowments, particularly solar PV (Solar Photo Voltaic), Pico-Hydro and Biofuels (coconut oil).

World Bank experience in China, Sri Lanka and Bangladesh has shown that renewable energy technologies have become a cheaper option for increasing access to electricity for rural households and small enterprises.

The project will also provide technical assistance so that quality energy equipment, such as solar PV kits, pico-hydro units and coconut oil tanks, can be provided reliably. The low cost loans over a five year period provided through ANZ Pacific will help to overcome the previous reluctance of local financial institutions to lend money on affordable terms.

“This project has the potential to bring cheap, reliable electricity so that Pacific Islanders can have light at night, listen to the radio, run a small refrigerator and at the same time, use power sources that are environmentally sound and sustainable,” said Mr Nigel Roberts, World Bank Country Director for Papua New Guinea, Timor-Leste and the Pacific.

“The Sustainable Energy Financing Project, is an excellent example of cooperation between the World Bank and the International Finance Corporation, the private sector arm of the World Bank Group,” commented Mr Richard Ranken, IFC Director for East Asia and Pacific. “It will encourage sustainable development through the private sector and help to break down some of the common barriers to obtaining finance in small or remote communities”.

In Papua New Guinea, the Teachers’ Solar Lighting Project, which will continue under this new initiative, has already been a success. Initially set up to provide financing for 2,500 teachers to purchase solar home lighting kits, there are now more than 9,000 teachers on the waiting list and the cost of purchasing the Solar PV kit has been cut in half from 4,200 kina (USD1,235) to 2,100 kina (USD 618)

The Sustainable Energy Financing Project will be run over 10 years and will be jointly implemented by the World Bank and the IFC through their Sydney offices. While the World Bank will take primary responsibility for Fiji, Papua New Guinea and the Solomon Islands, IFC will take responsibility for the Marshall Islands and Vanuatu.

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For more information, please visit www.worldbank.org/pg, www.worldbank.org/pi, www.ifc.org

For information on ANZ Pacific, please contact: Mr John Velegrinis, General Manager, Distribution, ANZ Pacific, Ph: +61 3 9273 6762

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