A new, dedicated institution for rural energy will pull together efforts focusing on Lesotho’s off-grid, mountainous areas.
Wired electricity is still an emerging utility in Lesotho, and the majority of rural populations –some 92%- still live without access. Lesotho is a country that can’t afford significant additional nationwide grid-connected electrification: the mountainous terrain makes expansion a costly challenge for the nationalised electricity company. Considering the energy expenditures of the rural population, off-grid solutions are much more viable than extending the grid.
In terms of promoting rural energy solutions, although the basic institutions are in place in Lesotho, a dedicated SE4All TAF mission found misalignments of roles and responsibilities between the relevant institutions, as there was no clear distinction between policy making and implementation. Two institutions are responsible for grid extensions, but none for the off-grid areas.
HCL’s SE4All TAF team came in to design new mandates for the institutions in the sector, and within this context advised to launch a new institution dedicated to off-grid regions: a ‘Rural Energy Agency (REA)’. Focusing on off-grid areas, REA will design rural energy programs and seek funds from donors to fulfil Lesotho’s electrification master plan.
The idea is, on one side, to establish a financing mechanism – an off-grid window to an Energy Fund- for rural energy access that can help scale up the development of ‘small-scale projects’ (mini-grid, stand-alone systems, in particular in off-grid areas), and create an ecosystem that will attract the participation of the private sector. On the other side, implementation of the governmental policies should be monitored by a dedicated agency.
The financing mechanism will mobilise contributions either from government budget, sector resources and/or soft loans and grants from international and local financial institutions, and will be implemented through the Local Finance Institutions operating as Trust Agents.