Published on
The Observer/UK

We Cannot Allow Institutions Like the World Bank to Impose Ill-Conceived Carbon-Based Energy Reforms on Developing Nations

Sarah Wilson

Nicaragua is one of the poorest countries in the western hemisphere. Less than half of the population has access to electricity. Many of those who do have electricity rely on makeshift connections that are both extremely dangerous and unreliable. Nicaraguan newspapers regularly report cases of people being badly burned by live power cables.

The World Bank identified a scheme to change all this. Privatization of the state-run company was the answer, it said, promising greater access to electricity and lower bills. Christian Aid was skeptical. And when we evaluated Nicaragua's electricity privatization program seven years after the reform was rushed through, what we found appalled us.

Over the past year, Nicaraguans have endured an electricity crisis with people plunged into darkness for more than five hours a day during scheduled blackouts. Julio Alberto lives in Ciudad Sandino, a barrio in Nicaragua's capital, Managua. He set up a corner shop just before the blackouts began. Then his refrigeration unit was destroyed by a surge, ruining his meat stock and requiring a costly repair.

"They told us we would have a cheaper service, which was more reliable and with more people connected to the grid. None of this has happened," says Mr Alberto. "We are paying higher bills for much less electricity and hardly any new connections have been made."

Aida Torres is a community leader in another Managua barrio called Enrique Lorente, which is located at the top of a hill. This means that running water has to be pumped, which requires electricity.

Aida not only has to contend with blackouts and power surges that destroy household appliances, she also has very limited access to running water. Because of the daily blackouts, the water authorities have rationed the pumping to two hours a day between 3am and 5am. This means that Aida has to get up in the middle of the night every night to fill up buckets and bowls of water for her family's use during the day. (Watch Julio Alberto and Aida Torres's story here.)

As the debate rages over how we need to change to save the world from environmental catastrophe, the energy policies of the poorest developing countries have been largely ignored. In fact, it is in the least developed countries, which have the smallest carbon footprint, that some of the most appalling carbon-spewing projects are being initiated. Not by their governments themselves, but under policies which international organizations like the World Bank oblige them to adopt.

It was in exchange for World Bank and International Monetary Fund (IMF) loans and debt relief that Nicaragua was obliged to privative its electricity sector. Worst of all, the new system is reliant on oil-based electricity generation. This is not only absurdly environmentally unfriendly - when many alternatives exist - it is also exorbitantly expensive. Rising oil prices are a major factor in the spiraling bills for Nicaraguan consumers.


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This type of energy reform not only denies the poorest countries a viable source of electricity. But it is also the poorest who already suffer most from an unstable global climate, as they are most dependent on the natural environment and have less protection is disaster situations.

It doesn't have to be this way. Neighboring Costa Rica has become a world leader in renewable energy. In 2004, the country was generating 98.6% of its electricity from renewable sources. At the same time, Costa Ricans enjoy the lowest prices and highest electricity coverage in Central America.

Around the world, some 1.6 billion people like Julio and Aida have no access to electricity. A further 800m lack any sort of modern fuel for cooking and heating. They might have some electricity, but only enough to power light bulbs and small domestic appliances.

It is part of the World Bank's remit to address this problem, and to ensure that new energy sources do not exacerbate climate change. At the IMF and World Bank annual meetings in Washington last weekend, the joint development committee urged the Bank to work toward "access to modern, cost-effective clean energy, especially among the poorest."

However, Nigeria is about to embark on an electricity privatization process bearing a worrying resemblance to the Nicaraguan model. The key problem is that building infrastructure to connect poor people living in remote areas to a national grid is rarely cost-effective for private investors, who require a return on their capital. The initial infrastructure required to set up hydroelectric or wind-based power systems is often greater, too, even though the running cost may be less.

Having created global warming with our own development, we are now allowing institutions like the World Bank to promote ill-conceived, carbon-based energy strategies in countries that cannot afford to make costly mistakes.

Sarah Wilson leads Christian Aid's media work on Latin America and the Caribbean. She regularly travels to the region to investigate how ordinary people are affected by global inequality.

She joined Christian Aid from Channel 4 News. She has also written for the Independent, Guardian and Mirror. She reported from Rwanda, Angola and Sudan for the Scotsman.

© Guardian News and Media Limited 2007

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