Articles

The electricity-livelihood nexus: some

highlights from the Andhikhola Hydroelectric
and Rural Electrification Centre (AHREC)
Badri Prasad Bastakoti
University of Reading, International and Rural Development Department (IRDD), Reading RG6 6AR, UK
E-mail: b.p.bastakoti@reading.ac.uk

The belief that the provision of electricity in rural areas can bring about desired socio-economic
changes (increased economic opportunities, improved health and education facilities) has been chal-
lenged on two related counts. First, it is argued that electrification only brings changes to resource-
rich households, and second, that it drains the resource-scarce rural economy. However, changes
witnessed over the years in electrified areas in rural western Nepal demonstrate some positive out-
comes. In response to the availability of electricity, village people have found various productive
uses for it. The activity portfolios adopted in the post-electrification phase are not simply dictated
by basic needs, but are also crafted by new opportunities emerging from the introduction of elec-
tricity. However, in order for positive outcomes to be routinely realized, concerted efforts must be
made and policies framed by the utilities and the government to render electrification conducive to
livelihood diversification. To support improvement of people’s welfare through livelihood diversifi-
cation, it is critical that electricity utilization is not limited to lighting and basic domestic uses.

1. Introduction of Kathmandu, and (2) electrified areas in Nawal Parasi

This article aims to promote an understanding of the dy-
namics of livelihood diversification after electrification
witnessed in the area served by the Andhikhola Hydro-
electric and Rural Electrification Centre (AHREC). Live-
lihood diversification comprises enlargement of the set of
activities that a household undertakes for sustaining live-
lihood. For over two decades rural electrification has been
emphasised in Nepalese government plans. However, its
contribution to diversifying the local livelihood and im-
proving well-being is inadequately understood. This article
aims to help fill this gap in understanding the nexus between
rural electrification and livelihood diversification.
Five decades ago the United Nations described the pro-
vision of electricity as a means of “development first”, to
improve the economic status of the population residing in
the rural areas by increasing the productivity of human
capital and secondly to promote rural welfare by provid-
ing an environment equal in comfort and convenience to
that enjoyed in urban areas [United Nations, 1954, p. 33].
However, the predominant view is that economic use of
electricity in households and industry remains limited in
the rural areas of developing countries [Foley, 1990].
Therefore, there is a need to understand how electrifica-
tion impacts households and industry in rural areas in the
context of livelihood diversification.
This paper is based on the author’s current research
study work carried out in (1) selected electrified areas
served by the AHREC, owned by the Butwal Power Com-
pany Private Limited (BPC)[1] in Syangja, a mid-hill dis-
trict in the western region of Nepal, some 300 km west
district in the lowland terai of the same region served by
the Nepal Electricity Authority (NEA), a Government of
Nepal undertaking. In this paper the author wishes only
to highlight the preliminary observations made at the
AHREC rather than give a full account of the research,
because the geographical comparisons are still in progress,
which combines a mix of spatial and comparative case-
studies of households, rural enterprises and other broader
community-wide application.
2. Method
Fieldwork in AHREC was split into three geographical
areas: hills, roadside areas and plains (mainly in the low-
land valley along the Kali Gandaki river). The basic cri-
teria for choosing survey areas were: (1) areas electrified
for at least 5 years; (2) grid-connectedness or regular
power supply; and (3) location within 10 km radius from
a road-head. In each area, 30-plus households were sur-
veyed[2]. The survey served as a lynchpin of the research,
among other tools such as participatory wealth-ranking,
focus group discussion and transect walks. Participatory
wealth-ranking involves local people in determining
wealth categories of the population residing in the re-
search areas and is increasingly applied to avoid the re-
searcher’s biases and to elicit information that is not
readily apparent. Transect walks are walks conducted to
observe people, resources and surroundings with local
people. Transects provide an overview of socio-economic
differentiation, inter alia, in the particular community
[Garforth, 2001]. They are also an appropriate strategy to

26 Energy for Sustainable Development ! Volume X No. 3 ! September 2006

 Articles
familiarise researchers before formal surveys with indi-
vidual questionnaires between people to be interviewed
and researchers. In the case of industries, however, those
running all sorts of existing industries were interviewed.
Purposive sampling[3] was done in the cases of the mill-
ing, furniture-making and iron fabrication (grill) indus-
tries that numbered more than three units. However, in
the cases of industries such as animal feed, ice-candy, and
dairy products, represented by less than 3 units, all were
interviewed.
3. Energy issues and the Nepalese context
This section discusses pertinent issues inherent to energy
supply in rural areas of Nepal.
Modern energy (electricity and biogas) agendas were
formerly not high priorities until recently in Nepalese ru-
ral development planning. Much more work and planning
regarding rural energy has been witnessed from the mid-
1980s. For rural energy planning firewood was consid-
ered, but from the natural resource enhancement
perspective. However, Panjwani and Cecelski [2003] warn
that “unless work is done with sectors other than forestry,
forest degradation cannot be contained”.
Panjwani and Cecelski [2003] state that environmental
degradation and concomitant menaces are the outcome of
poverty, increasing population and inappropriate develop-
ment interventions in the hill and mountain areas of de-
veloping countries. Population growth with dearth of
alternative gainful employment opportunities outside
farming leads poor peasants to overly rely on natural re-
sources or to migrate. Illegal settlement in the Nepal
terai[4] and shifting cultivation – especially slash and burn
in the mid-hills – are conspicuous examples of the intri-
cate socio-economic relationship of a population in search
of the means of survival against a declining natural re-
source base. Blaikie et al. [2002] argue that despite claims
of increasing entrepreneurship in non-agricultural activi-
ties in the Nepal Living Standard Measurement Survey
(NLSMS), there appears no significant development of
livelihood diversification options for rural households.
Entrepreneurship flourishes in a propitious policy envi-
ronment with sufficient provision of physical infrastruc-
ture such as roads, electricity, communications and water
supply, which is limited in the rural hinterlands of Nepal.
4. Gender and labour
Rural people – mostly women and children – spend sev-
eral hours per day in gathering firewood[5] and carrying
water. Declining forest cover has exacerbated the problem
in recent decades. On average firewood collection requires
41 hours per month per household or 8.5 hours per house-
hold member per month in rural Nepal [Loughran and
Pritchett, 1997]. Nepalese women spend about 12 hours
every day compared to 9 hours for Indian women in
household chores [REDP, 2000, p. 7] which include cook-
ing, food preparation – manual grinding, dehusking of the
rice, one of the arduous jobs, and water collection. In
another mid-hill district, Kavre Palanchowk, it was ob-
served that women and girls worked 17 hours a day on
Energy for Sustainable Development
average, about six hours more than their male counterparts
[Panjwani and Cecelski, 2003]. The subjugation of
women articulated by the patriarchal nature of the Nep-
alese society makes a clear delineation of intra-household
division of labour against women. Most often, firewood
collection and household chores fall upon the women, as
if it were naturally a task that must be performed by
women. This unequal time allocation in relation to gender
is more prominent amongst the so-called high-caste Hindu
families than others. A high and deliberate sense of izzat
(pride and self-esteem) inculcated in the male members
of society, according to which their honour would be com-
promised by doing certain tasks, reinforces this attitude.
5. Health
Biomass fuels have numerous health disadvantages.
Smoke and soot diminish the lives of many, especially
women and children, who are exposed to cooking with
these fuels. Studies have shown that non-smoking women
in India and Nepal who cook on biomass stoves have a
higher than normal incidence of chronic respiratory dis-
ease [Barnes et al., 1997]. A study carried out by The
Energy and Resources Institute (TERI, formerly the Tata
Energy Research Institute), established that in India alone
2.5 million people die prematurely due to air pollution –
primarily indoor air pollution [World Bank/ESMAP, 2002,
p. 68]. Nepal’s own situation must be worse than India’s,
given its heavy reliance (89.6 % of total domestic energy)
on traditional energy sources and its higher altitudes[6].
India’s reliance on traditional energy sources is only
31.5 % of its total [UNDP, 2001, p. 202]. High incidence
of uterine prolapse in Nepal has been attributed to carry-
ing heavy loads of firewood (and water) soon after child-
birth [Cecelski, 2003]. Poor health has an economic effect
at both the personal and national levels. It weakens a per-
son’s ability to work. As a consequence her/his income
falls and recurring treatment costs add to the cost of liv-
ing. In addition family members are diverted to look after
the sick. This vicious circle of factors related to energy,
health and poverty has a greater effect on the poor and
vulnerable groups of society. Therefore, over the years the
World Bank has helped a number of client countries, in-
cluding Nepal, embark on new energy initiatives to com-
bat indoor pollution.
6. The livelihoods diversification approach: origins
and applications
The livelihood “concept” emerged in a significant way
after the 1970s as a result of global crisis and develop-
ment failure. Ellis [2000, p. 7] defines livelihood as the
link between assets[7] and the options people have in prac-
tice to pursue alternative activities that can generate the
income level required for survival. Still, despite fifty years
of international development efforts, the number of poor
is continuing to grow, with little or no impact on poverty
reduction [Gilling et al,, 2001]. The emerging consensus
is that poverty reduction requires action on a range of
broad, interlinked fronts. A recent policy document from
the UK Department for International Development [DfID,
! Volume X No. 3 ! September 2006 27
 Articles
2002, p. 8], recognises that provision of energy services
is an essential ingredient of all three pillars of sustainable
development – economic, social and environmental.
Creation of an effective demand through a positive
“chain effect” with accelerated agricultural growth
through investment in new technology would establish em-
ployment and income for farmers was a much-hyped pol-
icy assumption during the 1970s [Mellor, 1976]. However,
despite this belief in livelihoods through natural resources
and due to the subsistence nature of agriculture, farming
on its own has failed to provide a sufficient means of
survival in the rural areas. Livelihood diversification is a
phenomenon made up of a variety of factors such as rural
population growth, farm fragmentation, and declining re-
turns from farming compared to other activities [Ellis,
2000, p. 56]. It is a process by which households construct
a diverse portfolio of activities and social support capa-
bilities for survival and to improve their standard of living
[Ellis, 2000, pp. 231-232; Carney, 1998]. For long the
term diversification was used in a restrictive sense only
to apply to activities based on the farm, i.e., farm-based
or farm-centred diversification only. However, some have
put forth the term “pluriactivity” purportedly to overcome
the ambiguities of diversification to include on-farm, off-
farm and non-farm activities [Mackinon et al., 1991]. Start
[2001, p. 492] includes a broader meaning of diversifica-
tion as “an increasing mix or multiplicity of activities re-
gardless of the sector” or a shift away from traditional
rural sectors such as agriculture to non-traditional activi-
ties associated with the growth of rural non-farm econ-
omy. However, Barghouti et al. [2004] define
diversification as that which “reflects a change in business
activities based on the flexible and differentiated response
to changing opportunities created by new production tech-
nology or market signals”.
In Nepal, similarly, the Tenth Five Year Plan (2002-03
to 2007-2008] has stipulated the objectives, inter alia, of
extending reliable and better quality electricity services
(i.e., voltage fluctuations are low) all over the country at
a reasonable price, tying up electrification with economic
activities, and supporting development of rural electrifi-
cation. The plan aims to provide electricity services to
55 % of the population and to increase per capita elec-
tricity consumption to 100 kWh/year from the present 47
kWh per year. Only 7 % of the population in rural areas
has electricity, either grid-connected or off-the-grid. It has
been acknowledged that lack of electricity is one of the
major hindrances to rural development [HMG, 2004],
livelihoods and well-being of the rural populace.
7. Electricity in rural development and the Nepalese
context
Some authors have suggested that electrification processes
need to be put into the rural development context [Foley,
1990; Pearce and Webb, 1987; Fulford et al., 2000, p.
976]. However, it is by no means clear whether electrifi-
cation needs to be integrated with other rural development
projects or considered the basis of independent projects
for developing rural areas. However, integrated rural devel-
28 Energy for Sustainable Development
opment project models have been criticised in the past for
their failure to create a “trickle-down effect”. Clancy
[1999, cited by Cecelski, 2003, p. 13] notes that rural
energy has never been a priority of development circles
as a basic need like water and food. The energy agenda
has not even entered rural development practice, as Cecelski
aptly points out, as opposed to the other community devel-
opment sectors (i.e., water, health, forestry and agriculture),
which in many instances are basically executed through
through extension workers, whereas the energy sector works
on a macro or project basis [Cecelski, 2003, p. 13].
One of the major shortcomings of rural development
philosophy is that it is not a theory of economic and social
change [Ellis, 2000], but it is a “blanket policy” or a
broad-brush approach towards poverty mitigation – espe-
cially through the provision of basic amenities to the rural
people. Ramani [1992, p. 23] critically alleges that “rural
development suffers from a multiplicity of views, insuf-
ficient action and excess of political rhetoric”.
Evidently, connecting the rural areas to electricity does
not necessarily create an economic benefit unless the users
are enthused to put the energy into the productive context
by providing complementary inputs. A complementary in-
put mechanism generally refers to access to information
on technical matters with back-up, small-scale enterprise-
related training, capacity-building, facilitation of rural
producers to make the most of their production with ac-
cess to the market, credit facilities, to list but a few req-
uisities. The NEA with over 8000 employees lacks an
internal institutional process in its mega-structure for pro-
viding post-electrification complementary service mecha-
nisms. The private utilities extending the grid supply also
lack such a mechanism. An Enterprise Development Pro-
gramme (EDP) was put out in the field under the auspices
of the BPC with donor support from 1993 to the end of
1998 with a mandate to promote effective end-uses of
electricity through enterprise promotion in the area dis-
cussed. It has now been phased out [Bastakoti, 2003] sim-
ply for reasons of funding; this suggests that utilities are
not willing to put some profit aside to promote people-
centred development approaches as envisaged by the live-
lihoods philosophy, but are solely oriented to commercial
interest.
In contrast, however, the isolated systems promoted in
Nepal by the Rural Energy Development Programme – a
UNDP-supported programme – aim to enhance rural live-
lihoods and preserve the natural environment for the sus-
tainable development of rural energy systems, adopting
an integrated approach. These approaches include: promo-
tion of indigenous human capacity, supporting institu-
tional development at the macro-, meso- and micro-levels,
promoting technology development and adopting mul-
tisectoral rural energy development [Panjwani and Cecel-
ski, 2003, p. 10]. The programme’s philosophy aims to
put energy into the productive context without necessarily
imposing a financial burden on rural areas. Panjwani and
Cecelski [2003] note that in a project covering seven
countries including Nepal, rural people (85 % women)
were capable of running micro-enterprises using mostly
! Volume X No. 3 ! September 2006
 Articles
renewable energy sources which enhanced not only their
income opportunities but also generated a range of posi-
tive social impacts. The increase in income of the partici-
pating poor households ranged from as high as 306 % in
Sri Lanka to as low as 9 % in Nepal (this does not how-
ever cover the area currently discussed). On an average
it amounts to a 124 % increase in income.
The other grey area hindering the successful outcome
of rural electrification is coordination failures among the
service delivery institutions. Coordination failures are
most often the outcome of the rigidities besetting the in-
stitutions and the individual approaches adopted by the
institutions at work in the community. Successful electri-
fication requires a three-tier, coordinated policy that in-
cludes technology, training, and finance. Combining these
elements in a single institutional set-up is rare in Nepal.
Institutions working for promoting technology highly em-
phasize its specialization and scope, and the same applies
to finance and training. While all of these are important,
the most important finding is a policy coordination fail-
ure. In our research it was found that coordination at the
field level exists in name only, not in rigorous action.
Despite critics, several studies confirm that the provi-
sion of electricity to rural people has a positive outcome
in terms of productivity gains, mitigating social disparity
and enhancing the opportunity to participate in the greater
development process, provided other infrastructure ele-
ments are in place. For instance, Ranganathan and
Ramanayya [1998] in a study in the Indian states of Uttar
Pradesh and Madhya Pradesh show that electrification of
irrigation led to increased ownership of farming assets
and over time agricultural labourers were able to become
land-owning farmers. Empirical observations suggest that
electricity contributes to growth of the rural non-farm sec-
tor and bringing people out of poverty. Electricity,
through affecting access to technology, contributes to
directly increased employment and incomes of the poor
and, through electrified irrigation, raises farm produc-
tivity, reducing the incidence of poverty, vulnerability
and shocks by improving access to productive activities
[Ali and Pernia, 2003].
As rural electrification spread through remote rural
areas of the Republic of Ireland, small industries
emerged and the availability of electricity opened up
new prospects [Shiel, 1984]. People have more access
to income-generating possibilities. Rana-Deuba [2001]
reports changes seen in remote rural districts of Nepal
in terms of reduced drudgery by the introduction of
electrically driven mills saving women’s time and open-
ing up various income-generating opportunities, in all
the districts that implemented rural energy development
activities. She further adds that livelihoods of women
and families have remarkably improved and discusses
outcomes but not processes and scope for long-term
sustainability. Electricity at the household and produc-
tive sector level has two main roles: one is to facilitate
the existing household activity and the other is to create
activities that can generate income by linking people’s
capabilities or assets.
Energy for Sustainable Development
8. Some major features of the AHREC
The AHREC is owned and operated by the BPC. The 5.1
MW capacity hydropower plant commenced electrifica-
tion work in the middle of 1991. By the end of April
2003 the number of domestic consumers had reached
16,700 (unmetered, 13526; metered, 3174) and it had 174
industrial consumers. It covers 31 village development
committees (VDCs) and one municipality[8]. It has three
distribution centres in Galyang, Waling and Rampur. The
surplus energy is sold to NEA, connecting the national
grid.
8.1. Tariff
Tariff and cost of connection is a major determinant of
whether a household or an enterprise will choose to con-
nect itself to electricity. Similarly, a utility decides
whether to supply power to a community depending on
the latter’s socio-economic parameters. The design of dif-
ferent tariff structures in the AHREC is to make electricity
available to all strata of the rural community according
to their economic ability. Hence, keeping in view the rural
economy, the AHREC applies a “power”-based tariff (i.e.,
not based on metered energy consumption) to suit the spe-
cific socio-economic setting of the area, as presented in
Table 1. The metered consumers have to pay Rs. 1.75 per
kWh for energy charges in addition to demand charge.
The peak demand tariff of 25 W and 50 W categories
were formulated keeping in mind the ability to pay of the
marginalized sections of the community and their desire
to electrify their households. These tariff categories are
based on the principle of lifeline tariff. The unmetered
subscribers are limited by a current limiting device or cut-
out, which means that whenever a customer’s load ex-
ceeds his/her subscribed peak demand of power, the
limiting device automatically trips until it is corrected by
switching off part of the load. Inversin [1994, p. 23] de-
scribes the power-based tariff introduced by BPC as rarely
used by electric utilities around the world.
Nafziger [1990] describes the BPC electrification sys-
tem as based on a non-conventional ideology as opposed
to the conventional system of NEA – a state-run utility.
At present, BPC is the only non-NEA utility engaged in
grid-based rural electrification. To its credit, the rural elec-
trification work of the BPC has filled a deficiency that
has been described by the World Bank thus: “Resources
required to continue and accelerate rural electrification ef-
forts exceed the capabilities of NEA” [World Bank, 2001].
Innovative approaches that have been initiated in the
AHREC include technical as well as organizational inno-
vations. Some of the salient features of AHREC have been
described as promotion of electric cooking through low-
wattage cookers, power-based tariff and metering, a users’
organization (UO) to avoid encumbering itself with logis-
tical difficulties and to maximize the participation of the
local people in the construction and management of the
system, and well-trained motivators to increase awareness
among the rural consumers about electricity, usage and
tariff categories [Inversin, 1994].
The investment incurred by the BPC for electrifica-
tion per household comes to about Rs. 10,000. To get
! Volume X No. 3 ! September 2006 29
 Articles

Table 1. Tariff in the AHREC service area of servicemen to look after the electricity supply in the
communities, illegal hooking and supplying power to non-
Tariff category Rs./month[1] End-use subscribers has not been recorded in the villages.
Peak demand
8.2. Household electric appliance usage
An inventory of household electrical appliances at the ba-
25 W 19 Lighting, radio/cassette player zaar site (Galyang and other areas along the roadside) in-
dicates that more appliances are in use in the bazaar area,
50 W 39 Lighting, radio/cassette player obviously showing the relationship to relatively high dis-
100 W 66 Lighting, radio/cassette player, TV posable income, access to markets and services. Appli-
ances include electric rice cookers, refrigerators, irons,
250 W 116 Lighting, radio/cassette player, radios and cassette players, fans, televisions and recharge-
TV, low-wattage cooking able flashlights. The use of refrigerators in most bazaar
400 W 176 As above
households in Galyang was not only for domestic pur-
poses but to make ice-lollies and sell them to children
Metered Demand charge, during the summer season, mostly on school days. More-
Rs./month (energy over, the ownership of such appliances is gradually mak-
charge, Rs./kWh) ing the people more aware of the preservation of
500 W 89 (1.75) Lighting, radio/cassette player,
perishable food and expanding new market opportunities.
TV, low-wattage cooking, business 8.3. Electricity vis-à-vis other fuels in cooking
The selling of loads of firewood for domestic and business
600 W 107 (1.75) As above purposes has sharply declined in Galyang bazaar for the
last five years. It has been substantially substituted by gas
700 W 125 (1.75) As above
and kerosene oil. At present there are three gas dealers in
800 W 142 (1.75) As above the bazaar. A good number of houses also have high-watt-
age electric cookers as well as BPC-distributed low-watt-
1000 W 178 (1.75) As above age cookers. This finding clearly supports the earlier
1500 W 267 (1.75) As above
research findings by several authors of the relationship
between economic growth, financial access and appliance
2000 W 356 (1.75) As above usage [Townsend, 2000]. The main reasons for adopting
electric vis-à-vis bottled gas cooking in the bazaar were
Industrial tariff
given as higher disposable income, convenience, wish to
Demand charge Peak-time Off-peak tariff live in a smoke-free environment and relatively reliable
tariff, electricity supply. Other reasons cited by the residents are
Rs./ month that there are too few suppliers of firewood these days
(energy charge, because of other wage opportunities that have emerged in
Rs./kWh)
the locality with more construction work and increasing
0-5 kVA 135 (1.75) 75 (1.70) restrictions on logging from the declining common forest.
For those who sell firewood too, there is no financial in-
6-15 kVA 135 (1.75) 90 (1.70) centive in relation to the higher wage available in the lo-
cality and the prices they get from selling firewood. One
Above 15 kVA 135 (1.75) 100 (1.70)
back-load of firewood can be sold for Rs. 40-50, which
Source: BPC, 2002. is about a half a day’s work for collection, while taking
Note it to the market takes another couple of hours. Another
1. The conversion rate for 1 US$ was Rs. 74.25 on 21 Oct, 2004, www.nrb.org.np study in the northern mountainous region says that efforts
to reduce firewood use with the introduction of alternative
connected to electricity the initial investment required fuels such as electricity and kerosene have only been par-
from the consumer for a very small kachchi (mud and tially successful. The reasons cited were the lower cost
thatch roof, one hall)[9] house is about Rs. 3125 while that of firewood gathered by low-paid labour than that of kero-
for a bigger pakki (well-built, cemented or stone-walled, sene, and, as regards electricity, in most of the distribution
4 rooms) house is about Rs. 5625. The cost breakdown area the voltage was just enough for lights, and electricity
is as follows. has limited use [Stevens, 2003]. This clearly shows that
• For a kachchi house: Rs. 2625 + Rs. 500 = Rs. 3125 adoption of modern fuel in cooking is not only because
• For a pakki house: Rs. 2625 + Rs. 3000 = Rs. 5625 of the supply constraint of firewood but a combination of
Rs. 2625 represents the cost of kWh meter, meter box, factors such as lack of or availability of alternative em-
miniature circuit breaker (MCB), service wire of 25 m ployment, disposable income and reliable supply of alter-
length, 6 mm2 concentric aluminium cable and connection native fuels.
charge. Rs 500 and 3000 represent the cost for wiring of However, the situation in the rural households is rather
kachchi and pakki houses respectively [Joshi, 2004]. Due different from the case of the bazaar and adjacent areas.
to regular monitoring and higher degree of accountability Firewood is still the predominant source of energy for

30 Energy for Sustainable Development ! Volume X No. 3 ! September 2006

 Articles
Table 2. Energy cost for cooking under different tariff regimes
Tariff Energy cost Energy use per Weekly cost
category per kWh (Rs.) day for cooking (for 7 days)
NEA 6.8 4 hrs 190.4
BPC 1.7 4 hrs 47.6
cooking and space-heating for the great majority of the
rural households. Firewood collection is a joint activity
in a rural family, but more often it falls on the women
than the men, especially for carrying. Rural people still
consider collecting firewood a zero-cost activity in rela-
tion to the other employment and wage-earning potential
and the existing labour exchange (parma) system in the
rural areas that limits the hiring of labour for firewood
collection for the majority of the households. Also, an-
other interesting finding is that firewood collection activ-
ity occurs during the non-farming months of January and
February for which generally there is no need for hiring
outside labour. When analysed carefully, the use of elec-
tricity in cooking clearly offers no financial incentive to
users. A brief analysis here can substantiate this statement.
In a typical rural economy, a wage-earner can earn Rs.
60[10] a day, yet this figure might vary from one region
to another and from the lean agricultural season to the
peak season and agricultural to non-agricultural work in
rural Nepal. Collection of a back-load of firewood (about
35-40 kg) from the forested common takes about 5-6
hours. One kg of firewood can give as much heat as 1
kWh of electric energy use, given the thermal efficiency
of the open hearth system used in rural Nepal [Pandey,
2000]. For a rural household of typical size one back-load
of firewood may last 3 days to a week. If the same family
uses the same amount of electricity as firewood for cook-
ing, it has to pay about Rs. 50 in the BPC tariff system
and about Rs. 200 in the existing NEA tariff system for
a week for the energy cost alone[11] (see Table 2). From
the cost point of view, this simple comparison can show
that there is no financial incentive for the rural household
to make use of electricity for cooking.
Lighting of households is perceived as comfort and
convenience in all areas. Women and children seem to be
the greatest users of light. Radios and cassette players are
in use in almost all houses, but television is still scattered.
As opposed to bazaar area residents, people in the rural
areas tend to have more black-and-white televisions.
Households which have no television sets frequently go
to their neighbours’ homes. People have realized that the
possession of television is a status symbol and consider
it a luxury. Except the agricultural programmes in the vil-
lages, all programmes are more or less equally popular in
the villages and the bazaar areas. The most popular are
news, folk music, comedy and sports. A surprising obser-
vation which can be attributed to the influence of televi-
sion is that school-age children play cricket with
home-made bats and balls, something that was not preva-
lent some five years ago.
Energy for Sustainable Development
8.4. Rural industry
Table 3 highlights the rural industrial growth in the
AHREC area and compares the pre- and post-electrifica-
tion situations.
Some industries in the pre-electrification section in-
clude knitwear and pottery which do not use electricity
even in the post-electrification phase. Such industries
have not been included in the post-electrification data in
Table 3.
The numbers of industries currently in the AHREC area
are as follows: mills (agro-processing) 95, furniture 24,
feed 4, cinema 1, spices 2, grill-making 16, ice-cream 5,
photo-processing 2, soap 1, noodles 1, dairy products 3,
milk-chilling 1, pump and drinking water 3, concrete
block 2, steel furniture 1, cocoon-drying 1, press 1, auto
workshop 1, cold store 1, dry-cleaner 1, pork processing
1, miscellaneous 2, bakeries 2.
One interesting feature of the electrification is that all
the mills and the bakery in operation before electrification
have converted to electricity. The reasons for this, inter
alia, were given as reduced frequency of breakdown and
hence fewer interruptions, and electrical machines are
more reliable compared with other fuel-based machinery
and equipment. Of 15 rice mills visited 60 % of the own-
ers said that milling is not very rewarding due to fierce
competition. However, from the consumers’/customers’
perspective, they now have to walk less to reach a mill.
In none of the areas do people have to walk more than
30 minutes to reach a mill.
On the employment creation side of established indus-
tries, mills an on average employ 1.5 workers each and
almost all mills are run by family members, thus affording
self-employment. Furniture and grill[12] industries employ
5-6 people on an average. Ice-cream industries employ
5-20 people each depending on the weather. One popcorn
industry employs 15 people. Other industries employ 3-4
people. Interestingly, it was observed that the industry-
owners do not depend on a single business only; they are
also engaged in running farms and other allied businesses
as well.
In addition to these industries there are about 13 poultry
farms in Galyang and Ramdi areas. However, only 7
farms are now operating. The reasons given for closing
down were: losses due to high poultry mortality, setting
up the business with insufficient technical knowledge,
switching to another line of business, disagreement with
a business partner, drudgery, the rising prices of feed and
chicks and a poor market price relative to rising costs.
Similarly, there are around 15 regular poultry farmers
in Waling bazaar. As a result of the growing poultry busi-
ness, there are 3 and 20-plus poultry butchers in Galyang
and Waling bazaars respectively. One big poultry farm
owner has established his own feed industry on a com-
mercial scale, supplying feed to other farms as well.
As a result of a variety of industries, businesses and
vehicles in the area, one small engineering workshop with
a lathe has been established in Waling bazaar and offers
good service. Its services, which were not formerly avail-
able in the area, include minor repair and maintenance of
! Volume X No. 3 ! September 2006 31
 Articles

Table 3. Rural industrial growth in the pre- (1988) and broken machines and equipment from other rural indus-
post-electrification (2003) period in AHREC tries. The availability of such services in the nearby lo-
cality has saved time and travelling expense to faraway
No. VDC No. of industries established
cities for those who need them. This has been found con-
Pre- (1988) Post- (2003) ducive to regular conduct of the business, dispensing with
1 Hungi 2[1] 4 needless waste of several working days.
Most successful entrepreneurs reported that they gained
2 Phoksingkot NA 0 a variety of types of training (entrepreneurship and tech-
3 Tulsi Bhanjyang 2 8 nical) through the erstwhile EDP which created a founda-
tion for them to think through about undertaking their
4 Jagatradevi 12 21
businesses. Some of them had even built up their technical
5 Tunibot Malunga 3 5 skills and financial capital while working as immigrant
workers for other industries in India, Malaysia or in Nepal
6 Darlam Danda NA 1
itself before setting up industries in the AHREC area.
7 Khanichhap NA 0 8.5. Selling milk
8 Nibuwakharka NA 2 Selling milk is one of the major farming occupations of
the people in the AHREC area. The Dairy Development
9 Pelakot 4 5 Corporation (DDC) has set up a 6000-litre capacity milk-
10 Pidikhola NA 0 chilling vat in Galyang bazaar. From the sale of milk, a
[1] little more than 2200 dairy farmers receive more than Rs.
11 Tindobate 2 8
30 million annually, providing a regular income. This has
12 Pakwadi 3[1] 3 tremendously improved the livelihoods of the people and
13 Heklang NA 2
provided a cushion to fall back on in times of difficulty
(staving off economic risk). Farmers have been able to
[1]
14 Thumpokhara 4 7 send their children to good schools (building future human
15 Sirsekot NA 1 capital) and save some surplus money regularly at village-
based credit and saving associations (building financial
16 Waling 12 52
capital). Some farmers have even been able to buy land
17 Darsing Dahathum 6 12 in the terai with the additional money earned by selling
milk.
18 Chhangchhangdi 0 2
8.6. Business
[1]
19 Sorek 4 4 The businesses in the area cover a wide range of activities
20 Khilung Deurali 1[1] 5 such as eating-houses, tea-shops, groceries, construction
materials, clothes, butchery, and computer institutes.
21 Arjun Chaupari NA 2 Some of the businesses are electricity-dependent such as
22 Putalibazar 33 [2]
2 butchery and computer institutes. For others lighting has
enabled them to extend their working hours. Certainly,
23 Aladi 1[1] 0
this might have enhanced their business performance but
24 Majhkot 1 0 at the same time it has weakened their family life, as some
25 Keware 1 [1]
1
businessmen admitted.
8.7. Agriculture
26 Rampur 9 17 The use of electricity in farming has not been so substan-
27 Darchha NA 1 tial. However, farmers use electric fans during rice- and
wheat-harvesting seasons to de-husk the grain. Non-owner
28 Chapakot 3 5
farmers borrow fans. Only a few farmers in Tirashi area
29 Kuwakot 3 2 near Waling bazaar have used 740-W electric motors to
irrigate off-farm vegetables – a thriving business in the
30 Gejha 3 2
district mostly supported by the district agriculture office.
31 Khaliban 4[1] 0 The trend of using electric pumps, however, is increasing
32 Dhapuk Simalbhanjyang NA 1
due to the demonstration effect.
8.8. Pumped drinking water
Total 114 175 There are five lift drinking water systems in the area: two
Sources: in Waling bazaar and three in the hill area. These systems
1. For pre-electrification phase: UMN, 1988. have tremendously reduced the drudgery of the people, in
2. For post-electrification phase: BPC, 2003. particular in the hills, where water-carrying alone was a
Notes 7-8 hour task for each family every day. Now this has
1. Includes only milling been reduced to around a half an hour’s work each day.
2. Power supplied by Nepal Electricity Authority (NEA), so the post-electrification data With the time saved, farmers in the hills now can devote
includes only the small portion of the area adjoining Darsingdahathum. more time to farming (agriculture and animal husbandry)

32 Energy for Sustainable Development ! Volume X No. 3 ! September 2006

 Articles
and leisure. This technological intervention has tremen-
dously helped them realize the significance of well-being
formerly not available to them.
8.9. Milling
A limited milling service was available along the roadside
in the pre-electrification period. After electrification a
great number of mills have been established even in the
hill areas. De-husking and grinding is usually a woman’s
job in Nepalese society and takes 2-3 hours daily, most
often before dawn. Interestingly, even after mechaniza-
tion, taking grain to the mill for processing is still a
women’s activity. Eight out of every ten customers are
women.
8.10. Medical and education services
This is another important social sector in which the ap-
plication of electricity can improve the quality of services
to the local people cost-effectively, through provision of
services such as laboratory examination, X-ray and vac-
cination. These services have been well established in the
locality, as there are two private medical services in Ga-
lyang Bazaar and another government-owned health cen-
tre in a nearby village. These modern health services are
an extension of previous medical services in the area. This
has tremendously reduced costs and the need for local
people to visit other towns, either Pokhara, some 80 km
east, or Tansen, another hill town 60 km west.
The use of electricity in the schools has enabled the
use of computers, particularly in the private schools, and
audio tapes, in all schools, for the higher grades. Using
computers would not have been possible in schools if
there had been no regular supply of electricity. In addition,
other enhanced facilities including fans and lights in the
classrooms make them more comfortable for the students.
Interaction with the local schoolteachers and household
interviews reveal that educational attainment has been
greater because electricity allows more time for reading
and homework. However, there have been cases of stu-
dents not doing their homework in time because of over-
indulgence in watching television.
9. Discussion of the link between electricity and
livelihood
No one wishes to have electricity for itself but people
want it for what it can do [Lamech and O’Sullivan, 2002].
Given the people’s desire for electricity, electrification in
villages and small townships was not specifically guided
by the linkage with livelihood. However, the outcomes
envisaged in formulating the project have embodied the
essential elements of better livelihood, such as more in-
come through the creation of varieties of small industries
and increased well-being by having access to a modern
form of energy at the household and community levels.
More sustainable use of natural resources is also encour-
aged by efforts to promote low-wattage cooking devices
and substitution of fossil fuel. Characteristic features of
sustainable livelihoods include fundamental outcomes
such as: more income, increased well-being, reduced vul-
nerability, improved food security, and sustainable use of
natural resources.
Energy for Sustainable Development
Electrification can enable livelihood diversification ba-
sically in two ways. One is that it can stimulate employ-
ment, thereby generating income with which people can
build assets, and the other is that it enables people to
utilize their surplus resources through the entrepreneurial
activities that become possible through electrification. The
most conspicuous outcome of the intervention of electric-
ity can be seen in the growth of enterprises and most
strikingly in the dairy sector which has enabled the people
of this area to generate a regular cash flow which has
tremendously helped to build financial capital. The emerg-
ing ubiquity of credit and saving schemes in the study
areas can be attributed to regular access to cash generated
by surplus milk. For the rich and middle-income farmers
gains from selling milk have been the means of accumu-
lating further stock of capital in the form of land and
investment. The rise in income from the sale of milk has
enabled the poor farmers to pay for electricity.
The emergence of other industries and businesses has
provided a wide range of services such as milling, creat-
ing employment, using local resources and fostering local
entrepreneurship. Women and children have mostly bene-
fited from the milling service because it releases them
from arduous household chores and they have been able
to divert the time saved to leisure (time for TV, social
gathering and participation), looking after their families
better and engaging in income-earning activities whenever
the possibility arises. Given the nature of the geographical
differences in Nepal, people living in the ridges of hills
have been disadvantaged with regard to basic amenities,
for example, safe and regular drinking water. Electric lift
drinking water has to a large extent facilitated overcoming
the physical drudgery of fetching water, which requires
spending much time in a difficult hilly terrain and mo-
nopolises much of one’s productive day.
It is important to identify the outcomes that are inde-
pendent of and those that are dependent on the provision
of electricity for the enhanced livelihood. From the dis-
cussion above it appears that some of the activities are
entirely dependent on regular electricity while for others
it is more beneficial than other fuels. Comfort and hap-
piness, indicators of the general well-being of a society,
have been enhanced in the sense that people have good
lighting and less drudgery. Growth of enterprises in the
area, creating employment and enabling beneficial use of
resources at their disposal, can be attributed to the provi-
sion of electricity.
10. Conclusions
Activities people undertake and services available in the
locality have a link with their livelihoods, opening up op-
portunities and choices. The opportunities created were
not the result of mere electrification, but reflect the sup-
portive and complementary mechanisms built into the
AHREC. These mechanisms included enterprise support
packages, information, awareness-raising, and efforts to
link with various service delivery institutions over the last
few years. Even though concerted efforts of rural enter-
prise creation in the field are no longer going on, the
! Volume X No. 3 ! September 2006 33
 Articles
previous work of the EDP under the BPC has created a
foundation on which people can now build different ac-
tivities. People who want specific information can either
visit the power company or take advice from existing en-
trepreneurs. The establishment of small industries, farm-
ers’ ability to sell their agricultural produce and increasing
awareness of enhancing financial capital have contributed
to enhancing the rural economy. Most importantly, despite
its hilly terrain, the area is fortunate to have a good road
network, namely, a highway passing through the district
and the recent development of rural roads along the Kali
Gandaki river valley. While electrification programmes are
gathering momentum in Nepal, it seems imperative that they
are integrated with supportive mechanisms focused on end-
use promotion. These mechanisms facilitate use of scarce
resources like electricity for productive gains; they also help
to mitigate the low load factor which burdens Nepal’s power
sector. Perhaps these mechanisms can be created and imple-
mented in coordination with utilities, various government
agencies and non-governmental organizations working in the
electrification areas, because no single entity can handle the
wide array of possibilities that are likely to emerge in the
post-electrification period. People need to be encouraged
with support mechanisms and by minimizing institutional
barriers. Barnes [1988] writes that rural electrification pro-
grammes (even) in the United States were accompanied by
intensive information programmes identifying the potential
uses of electricity. Electricity left to grow in isolation or on
its own in rural areas does not bring constructive results but
drains the rural economy instead. Perhaps, this should be
the lesson for all electric end-use promoters, utilities and
government institutions in Nepal to orient policy towards
livelihood improvement.
Notes
1. BPC has been privatized since January, 2003.
2. Bailey [1987] indicates that sample sizes for social research depend upon the nature
of population and purpose of the study and further emphasizes that 30 cases is minimum
for statistical data analysis.
3. In purposive sampling, a researcher deliberately selects the subjects with a belief that
it will be a representative sample [Gray, 2004]. Purposive sampling is also known as
judgemental sampling.
4. The low-lying southern belt adjoining India’s Gangetic plain.
5. Firewood means the same thing as fuel-wood.
6. A colder climate requires more biomass-burning and also implies more enclosed houses.
7. According to DfID, there are five types of assets: physical, financial, social, natural and
human [Carney, 1998].
8. The only true urban area of Nepal, by the criterion of population greater than 100,000,
is the capital city Kathmandu [Nafziger, 1990, p. 7]. Waling is, however, a rural township
with a business centre. This township would qualify for status of a municipality on the
grounds of its population but some adjoining roadside villages have been annexed to
legitimize its municipality status regardless of the required physical infrastructure. To
the author it seems that if this kind of annexation is applied universally, no village in
Nepal will remain a village. Politically, a village development committee (VDC) is an
administrative unit of not more than 10,000 population.
9. Typical Nepali kachchi rural households are not partitioned into rooms, so they can be
considered “one spacious room”.
10. This figure is based on our observation during the study in 2003. According to CBS
[1997], the average daily wage rate for rural Nepal was Rs. 40 and 74 for agricultural
and non-agricultural work respectively.
11. This figure has been derived on the basis of the present tariff structures of the NEA
and BPC which are Rs. 6.8 and 1.7 per kWh of energy use besides other charges such
as meter rental.
12. For iron fabrication and allied activities.
34 Energy for Sustainable Development
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International Energy Initiative and its mission

Energy is of critical importance to development, economic growth, balance of payments, peace, na-
tional and regional environmental protection and the global climate. The efficient production and use
of energy in an environmentally sound way is essential to tackling these concerns and defining a path
to sustainable development based on equity, empowerment (self-reliance), environmental harmony and
economic efficiency.
Since no international institution had as its sole objective the promotion of the efficient production and
use of energy, a new International Energy Initiative (IEI) was established in September 1991. IEI is
a small, independent, international, non-governmental, public-purpose organization. It is a South-North
partnership, Southern-conceived, led and located. It networks with those concerned with energy. IEI’s
mission is Information, Training, Analysis, Advocacy and Action (INTAAACT) and the systems integra-
tion of these components. IEI’s objective is to promote – initiate, strengthen and advance – the efficient
production and use of energy for sustainable development.
IEI’s strategy is:
focusing on developing countries;
disseminating the new approach to energy, in which the level of energy services is taken as
the measure of development, rather than the magnitude of energy consumption and supply;
increasing energy services through a rationally determined mix of “hardware” – “cleaner” cen-
tralized/decentralized sources of energy and end-use efficiency measures;
addressing the “software” issues – policies, institutions, financing, and management involved in
the implementation of such a “hardware” mix;
providing rigorous assessments and promoting the dissemination of emerging technologies of
end-use efficiency improvement and of decentralized renewable sources (including modern
biomass-based technologies);
initiating and strengthening technological capability in energy analysis, planning and implemen-
tation in developing countries; and
promoting the improvement of existing energy institutions and efforts and the design of new
ones.
Find out more about IEI on the Internet at www.ieiglobal.org.

Energy for Sustainable Development ! Volume X No. 3 ! September 2006 35