Transforming villages with electricity in Laos

​You can see it in the smiles on the faces of villagers in Ban Nam Jing, two hours outside of Vientiane the capital of Lao PDR. People's lives are improving. In this village of 158 households incomes have increased thanks in part to the 'Power to the People' (P2P) project supported by the World Bank. The program targets the poor, especially female heads of household, with subsidies to pay for electrical connections.

The villagers I met say initially only wealthier families could pay to be connected. Poorer families were left behind unable to afford the cost with their incomes from producing rice, cassava and rubber. Now with lights at night they are also producing handicrafts and textiles to boost their incomes. There are other benefits, with refrigeration people say they can keep food longer, before it used to rot and they would have to eat it quickly. In addition, their children can now study at night and they have TV for entertainment and to learn more about the rest of the world.

P2P provides interest free credits to poor families so they can connect to the grid. So far 12,500 households in Laos are benefiting and it is expected to reach 38,000 in the next 3 years.

One villager I spoke with, Ms. Kamchanh, is now building a new house with a concrete frame to replace the bamboo hut where she lives with her children. She will pay for the US$3,000 house with the US$50 per month she earns selling baskets that she makes mostly in the evenings now that she has lights. She pays roughly US$3 per month, which covers the power and her repayment on the subsidy she received from the program for her US$80 electricity connection fee.

More and more families are getting connected to the grid in Laos where access to electricity has steadily increased from 16% in 1995 to over 84% now. It's one of the most successful electrification programs in the developing world.

Electrification has played an important role in helping Laos reduce poverty from 46% in 1992/93 to to 27.6% in 2007/08.

Part of the electricity in Laos comes from the transformational 1.070 megawatt Nam Theun 2 hydro project that is expected to generate 2 billion dollars in revenues for the country over the next 25 years. More than 90% of the power generated at the facility is sold to Thailand and that revenue helps finance health, education and other development priorities in Laos. The project is globally recognized for its socially and environmentally sustainable approach to hydro.

About 6,300 people moved to new villages and new homes to make way for the project. They have better houses, health clinics and schools and the reservoir for the dam offers access to good fishing. The people I met who have resettled in the new Nam Nien cluster village say life is better now, with roads to get people to hospitals in emergencies, more jobs available, and higher incomes. Socio-economic monitoring data suggests that the majority of villagers are better off following resettlement. Over 90% of the households are now above the national poverty line, and the project has made a significant improvement in their lives.

What do a small rural village and Nam Theun 2 have in common?

It is hydroelectric power. Thousands of villages, like the one I visited have been transformed because of hydro-electricity. The potential for hydro is huge in Laos which has an estimated viable hydropower capacity of 23,000 megawatts, compared to installed capacity of roughly 2,000 megawatts.

At the same time Nam Theun 2 has shown that responsible hydro-electric power development is possible and feasible and it can make a significant contribution to combatting CO2 emissions. This is the kind of win-win strategy in energy that can make a difference in terms of poverty reduction while also addressing growing electricity needs. We need more of this balanced approach to reducing poverty and building shared prosperity.