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Revolving Fund Unlocks Power for People in Rural Nepal

Salang village is just 80 km away from the capital Kathmandu. It is located in one of the adjoining districts on the southern side of the capital city. Despite its proximity to the capital, it was just a couple of years ago that people received access to electricity. The Community Rural Electrification (CRE) Programme was the key to access as it enabled the community to obtain a partial government subsidy for extending the grid and thus, reach their households. The CRE Programme tackles the challenge that many villages are unable to provide sufficient cash. A revolving fund was set up under the roof of the utility Nepal Electricity Authority (NEA) with support of the GIZ implemented EnDev project. The fund bridges the financial gap needed for the infrastructure development. Overall, 49 rural communities or 172 300 people and 2,557 SMEs received access to electricity through the fund instrument.

In Salang, the revolving fund facilitated electricity access for 522 people, with positive impacts. A recent study found a close connection between electricity availability and socioeconomic development in the five years since the grid reached Salang. The study found that electricity is mainly used for lighting, but 96% of Salang families also use electricity for information and communication purposes while 55% of the total surveyed families indicated that their quality of life has improved. Moreover, 81% of the people think that electricity enables better educational conditions for their kids. And 90% of the people believe that access to electricity contributes to the development of small and micro enterprises like poultry farms, hauling and grinding mills, chilling centers, saw mills and carpentries. Grid electricity also replaced diesel engines used in rice mills and reduced the hourly operation costs by around 0.3 USD, on average, and decreased the service fee for customers by 10%.

Another effect of electricity is in the agricultural sector. Farmers in Salang use light bulbs in their vegetable farms so that insects gather near the bulbs and then can be killed more easily using pesticides. Because of this, farmers use fewer pesticides as they do not apply them throughout the whole farm. And, at the same time, vegetables are pesticide free.