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Power Sector Reform and the Rural Poor in Central America

This report focuses on the progress of rural electrification programs after power sector reform in Guatemala, El Salvador, Nicaragua, and Panama. It evaluates several issues, including the progress made in developing and financing projects and the degree to which those projects have improved access to electric power service in rural areas. The report also compares the rural electrification practices in Central America with those found in the most successful programs around the world.

Based in their level of economic development, the electricity access rates in Central America are comparable to or lightly below those found in many other parts of the developing world. The region has passed through some turbulent times including devastating hurricanes and civil wars, and is ready for sustained and new growth opportunities. However, such growth generally is not possible without extensive and efficient infrastructure, including that of rural electric power.

The main conclusion of this study is that power sector reform does not solve the problems involved in providing electricity to people in rural areas. The private sector cannot be expected to extend electricity to areas that do not justify their investments, so in most cases some form of incentive or subsidy is required. Although the reforms were similar, the treatment of how to deal with extending access to mainly rural people without electricity were addressed in a variety of ways, and most of them have involved some problems. In this respect, governments must retain an involvement in programs for improving the electricity access to the poor, rural households.

Citation

Barnes, Douglas F. and Waddle, Daniel. 2004. Power Sector Reform and the Rural Poor in Central America. ESMAP Report 297/04. Washington, DC: World Bank.

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