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EmailThe World Bank held its annual Energy Week on March 31 to April 2, 2009 and an Energy Sector Learning Week for World Bank staff on April 6-9.
Output-Based Aid (OBA) approaches in the energy sector were discussed at one session:
Learning Session on Output-Based Aid (OBA) Approaches in the Energy Sector
Expansion of energy access in many developing countries has involved public utilities preparing technical feasibility studies for conventional grid extension, and then procuring equipment and works. Customers have to pay high connection fees and internal installation costs. This approach has failed because of public utilities’ lack of financial capacity, inefficiency of providers that leads to increased costs, and customers’ limited ability to pay.
OBA is one approach being implemented in the energy sector to increase access and improve targeting for the poor. OBA is a mechanism that ties the disbursement of public funding to the achievement of clearly specified “outputs” or services. In the World Bank Group, 26 OBA schemes in the energy sector have been identified. OBA has been most prevalent in rural energy and is in fact becoming one of the main tools used for expanding off-grid access.
This OBA learning session was part of a joint session with the World Bank’s Treasury Department that also covered IBRD financial products. This session gave participants an introduction to OBA in the energy sector and presented them with a case study of a rural electrification project in Ethiopia with funding from IDA and the Global Partnership on Output-Based Aid (GPOBA).