Evaluation of Norwegian Power-related assistance

Conclusion and Recommendations

The results achieved through the power sector support are substantial, though the profiles of the programmes have been quite different in the two countries. Nepal has focused on developing its hydro-resources through a gradual increase in the size, complexity and thus financing needs of its power generation sub-sector, and has maintained a largely local development focus. In Mozambique, the focus has instead been on taking advantage of the large-volume and cheap hydropower available from Cahora Bassa, leading to a focus on national transmission and then localized distribution networks, where the small-scale hydropower schemes supported during the 1980s and early 1990s were largely for political reasons during the conflict period.

Conclusion

The benefits from electrification can be seen at national, regional, and social group level. The net benefits in projects have varied, but are largely positive, depending on the investment and expected maintenance costs over the lifetime of the infrastructure. The distributional impact has varied considerably. While Norway recognizes that the first-round effect of electrification will usually have little direct impact on poverty, it is important to note that those projects that have deliberately targeted the poor have succeeded better in ensuring that the poor have also seen positive effects.
The local partners are very positive about Norwegian power sector support and the results achieved. Norwegian assistance has clearly played a critical role in enhancing sector performance, and helped these countries to move towards a more modern power sector. While it is difficult to make cross-sectoral comparisons, there is every reason to believe that this rather sophisticated sector has moved faster and across a broader range of issues than other sectors, while at the same time strengthening its sustainability.
Because of the consistency in the partnerships, the trust and dense set of links that have been established, the results in what is often the most difficult area for development cooperation - capacity development - must be said to be quite successful. Despite this positive assessment, it is noteworthy that neither Norway nor the local partners have been good at performance monitoring. Only two projects had a baseline. Almost all the results reporting has been at inputs utilisation and activity levels. The Outputs reporting has consisted largely of listing what was produced, but without a critical assessment of productivity, deviations compared with the original plans, etc. Of greater concern is that dimensions that are important to Norway politically - poverty reduction, distribution of benefits, environmental analyses and
management, gender equity, and improvement to good governance and the combat of corruption - are largely addressed in an ad hoc manner if at all.

Lessons learned

The "lessons learned" are largely in line with what has been accepted as "good practice" principles for development cooperation, though there are some specific ones to the power sector:

• All activities need to be well planned and based on clear local ownership principles. This means that Norway at the overarching country sector portfolio level has had to adjust to quite different national power sector strategies.
• The broad-based support to the power sector has made it easier to ensure synergies between the different forms of support such as infrastructure investments and capacity development.
• Collaboration with other donors has been beneficial in several ways: Joint annual meetings and joint funding of infrastructure projects, both reducing transaction costs, and gaining a stronger "voice" by agreeing on policy issues.
• The long-term and large-scale support to the power sector has given Norway unique partnerships in the sector, and it has earned the trust of recipients.
• The large number of actors engaged in the power sector both in Norway and the partner countries has probably contributed to the stability and longevity of the power sector engagement. It has also ensured that Norway has remained strongly committed and has maintained expertise that is relevant.
• The commercial aspects of the sector are becoming even more important, which means that the purely grants-based financing provided by a donor like Norway needs to be more carefully justified, using better targeting criteria to reach intended beneficiaries.
• Unless there is a clear result focus at the planning stage with specified and operational indicators in place, it will be difficult and costly to track performance over time, thus also reducing the ability of management to make adjustments when needed.
• Overall, Norwegian development priorities, such as poverty reduction, gender equality, equity, good governance and the environment, tend to be overlooked during the planning and implementation of power sector interventions. This reveals a need to renew and strengthen the way such issues are put on the agenda, followed-up on and assessed during and after projects. When poverty reduction and gender equality are specified objectives with clear operational means, positive results can in fact increase and be notable.

Recommendations

1. Norwegian engagement in the power sector is yielding good results, in large part due to long-term commitments and broad-based engagement. These should be principles for future support as well.
2. Norway should review the criteria for providing financial support to a sector that is evolving into a more commercial one. The focus should be on activities that have public goods or similar aspects, that strengthen access and benefits to the poor and disfavored regions, that addresses gender disparities and environmental concerns better, and that improve overall governance in the sector, especially in areas that are known to be vulnerable to corruption.
3. Norway should review possibilities for helping partners manage uncertainty and risk better, where Norway can assume the financial costs of the risk-management instruments;
4. In order to ensure possibilities for performance monitoring in line with a results focus, planning must include baseline preparation. Those dimensions that are important in the specific project must be included, but also distributional concerns, environmental impact and sustainability, gender equity and good governance.
5. Linked with a baseline, the parties need to establish a realistic but aggressive monitoring system and process. This must in particular include those areas that tend to be neglected or may be controversial: gender, anti-corruption measures, and poverty reduction.
6. Concerning support to power generation and transmission lines, the long time that is often required for these kinds of investments to generate significant returns in poor countries need to be recognized and taken into consideration when assessing project proposals. The finding that smaller and local-based systems tend to provide greater benefits to the poorer segments also needs to be included when deciding on the focus for Norwegian financing.
7. Increasing Norwegian funding to the power sector in poor countries requires addressing the challenge of maintaining and strengthening relevant parts of a Norwegian knowledge network. This includes assessing instruments such as institutional twinning whose utility is clearly dependent on defined pre-conditions being in place. The Energy Task Force may be a good forum for starting a forward-looking and critical review of options that are in line with the new aid modalities.