Socio-

economic
Impact
Assessment
of MHPs in
villages of
Gilgit
Baltistan and
Chitral
TABLE OF CONTENTS:

EXECUTIVE SUMMARY

SECTION I: SOCIOECONOMIC IMPACT ASSESSMENT—EFFORTS OF AKRSP IN ACCESS TO ENERGY (CASE STUDIES OF MICRO
HYDEL PLANTS (MHPS) 1

A. Qualitative Data Conversion for the Ease of Visualization 1

B. Village Profile 1

C. Social Impact of Access to Electricity in Shogore, Borth and Khot 4

D. Economic Impact of Access to Electricity in Shogore, Borth and Khot 4

E. Understanding the Socio-Economic Impact in the Light of Better Infrastructure and Quality of Electricity 7

SECTION II: ENERGY TRANSITION VISION FOR GBC – THE VISION 11

A. Recommendations: A Way Forward 11

B. Adapting the PT Model – Reenergizing GBC 14

LIST OF ANNEXURES:

Annexure 1 Scoring Mechanism: Overall Score of Social Impact of Access to Electricity ....................................................................................... 18

Annexure 2 Scoring Mechanism: Overall Score of Economical Impact of Access to Electricity .............................................................................. 19

Annexure 3 Scoring Mechanism: Overall Score of Quality and Supply of Electricity ............................................................................................... 20

Annexure 4 Scoring Mechanism: Overall Score of Years of Provision x Quality and Supply of Electricity and Socio-Economic Impact ................ 20
LIST OF FIGURES:

Figure 1 Social Infrastructure in Borth, Shogore and Khot ......................................................................................................................................... 3

Figure 2 Demographics of Borth, Shogore and Khot .................................................................................................................................................. 3

Figure 3 Economic Infrastructure in Borth, Shogore and Khot ................................................................................................................................... 3

Figure 4 Overall Score of Economic Impact of Access to Electricity .......................................................................................................................... 6

Figure 5 Overall Score of Socio-Economic of Access to Electricity ............................................................................................................................ 6

Figure 6 Overall Score of Impact of Access to Electricity on Economic Inputs .......................................................................................................... 6

Figure 7 Overall Score of Impact of Access to Electricity on Economic Outputs ....................................................................................................... 6

Figure 8 Overall Score of Social Impact of Access to Electricity ................................................................................................................................ 6

Figure 9 Effect of Quality & Supply of Electricity on Socio-Economic Impact ............................................................................................................ 9

Figure 10 Years of Provision of Electricity times Quality of Electricity and Socio-Economic Impact.......................................................................... 9

Figure 11 Existing Energy Demand Market and Grid Network Map of Pakistan ...................................................................................................... 12

LIST OF TABLES

Table 1 Future Scalable Models for Rural Electrification .......................................................................................................................................... 16

Table 2 BCG Matrix for Scalable Electrification Models ........................................................................................................................................... 17

LISTS OF ACRONYMS:

Gilgit Baltistan GB

Gilgit Baltistan and Chitral GBC

Azad Jammu and Kashmir AJ&K

Union Councils UC

Mega Watt MW

Water and Power Department WAPD

Agha Khan Rural Support Programme AKRSP

Sarhad Rural Support Programme SRSP

Pakistan Poverty Alleviation Fund PPAF

Pakistan Energy Development Organization PEDO

Government of Pakistan GoP

Micro Hydel Plants MHP

Securities and Exchange Commission of Pakistan SECP

Focus Group Discussion FGD

Village Organization VO

Local Support Organization LSO

Household HH

Total Population TP

Missing Energy Millions MEMs

Sustainable Development Goal SDG

Distributed Generation DG

United States Dollar USD

New Energy Finance NEF

Levelized Cost of Electricity LCOE

Generation Company GENCO

Distribution Company DISCO

Pakistan Electric Power Company PEPCO

Generation Company GENCO

Independent Power Producer IPP

Water and Power Development Authority WAPDA

Executive Summary
To meet the energy needs of people in remote and under-
served valleys of Gilgit Baltistan (GB) and Chitral, Agha Khan
Rural Support Programme (AKRSP) introduced “GBC-
Priority Valleys Programme” in 2016. Under the Priority
Valleys Programme, micro-hydels are constructed for
targeted communities while solar home solutions are
provided to poor households in areas where the construction
of MHPs is not feasible. As part of this initiative, seven micro-
hydels projects and one solar project was recently
completed.
The “Socio-Economic Impact Assessment of Access to
Electricity in Villages of Gilgit Baltistan and Chitral” project
was initiated to assess the impact of provision of energy on
the livelihood and living conditions of the beneficiaries of the
Priority Valleys Programme. The aim of the study was to
analyze the success and overall impact of energy projects
from the community’s perspective and help the relevant
stakeholders in maximizing the impact on the targeted
communities.
For the impact survey study, four projects located in various
areas of Gilgit Baltistan and Chitral were selected.
Unfortunately, impact study of one project located in Broghol,
Chitral was not conducted due to security limitations and
challenges of obtaining the No Objection Certificate (NOC).
Focus Group Discussions (FGDs) were conducted in all
targeted villages of Gilgit Baltistan and Chitral. These FGDs
were based on detailed coded questionnaires, which were
developed on the basis of similar global and regional impact
studies. Furthermore, a unique methodology for scoring
mechanism was introduced for the better visualization of the
qualitative data. Based on the adopted methodology, the
targeted villages were then analyzed to gather the socio-
economic impact of the provision of energy at household,
community and small-scale enterprises level.
The impact study found that the villages with better social and
economic infrastructure experienced significant development
after the provision of energy in terms of living conditions,
education, health, security and livelihoods. Whereas, villages
with poor social and economic infrastructure did not
experience any significant socio-economic impact.
Section I: Socioeconomic Impact
Assessment—Efforts of AKRSP in
Access to Energy (Case Studies of
Micro Hydel Plants (MHPs)
Under the GBC-Priority Valleys Programme, Micro-Hydels
are being constructed to meet the energy needs of the target
communities. In areas, where MHP construction is not
feasible, solar solutions are being provided to poor and ultra-
poor households. The objective of this study revolved around
assessing the impact of electricity provision, due to
construction of MHPs and solar energy solutions, on
household and community level—as this would help
analyzing the success and overall impact of the energy
projects from community perspective and will enable better
decision making in improvement of program for a maximum
impact on the target communities.
Among the nine micro-hydro projects, seven have been
completed—amongst which location of four of them lies
outside the seven priority valleys. The three completed
projects within the priority valleys include: Borth in Immit
(300kW); Khot (100kW); and Rech (50kW). The Rech project
included rehabilitation of an existing non-functional MHP,
involving 60 beneficiary households. The remaining two
MHPs have been tentatively selected for the study along with
beneficiaries of Solar Energy Systems (SES). For the impact
study, the following MHPs and SESs were selected:
i. Pyakheen – Boaq, Immit valley – 15 households
(Solar Project) + (Broghol optional but may not be accessible
due to NOC)
ii. Mogh (Pameer Cluster Utility Company, Garam
chashma) – MHP completed 500kW – 900 to 1000
beneficiary households
iii. Begusht (Al-Karim Cluster, Garam Chashma, -
MHP completed 500kW – 900 to 1000 households
iv. Borth, Immit Valley – MHP completed: 300kW –
600 households
In order to determine the impact of energy provision, an in-
depth questionnaire was drafted around the following
thematic areas:
A. Qualitative Data Conversion for The Ease
of Visualization
The qualitative data of each thematic section of socio-
economic impact questionnaire is converted into quantitative
data through assigning numerical values to responses and
available options for individual questions. For example, yes
and no is denoted with 1 and 0 and similarly answers with
low, medium and high options are denoted with 3, 6 and 9.
In case of Social Impact, the inputs of each question
associated with social indicators, are converted into
numerical values. Once the data was compiled, the values
were added to get a cumulative score of each indicator.
These scores were added to get an overall score of social
impact for a single village.
Similar scoring mechanism is adopted for economic impact
with an overall score being assigned to each village.
Details about the conversion and scoring mechanism are
attached in Annexure 1, 2, 3 and 4.
Following the conversion of data, in-depth analysis of each
thematic section is conducted and results of which are
mentioned in the following sections.
B. Village Profile
The village profiling is performed to understand the socio-
economic conditions of the communities before going into the
impact assessment of access to electricity.
Demographics: Demographics of all three villages in
mentioned in Figure 02. In term of population, Shogore has
total of 10,500 inhabitants, followed by Khot with total
population of 4,200 people and Borth with just 352 people.
As shown in Figure 02, Borth has the highest percentage of
male population as compared to rest of the two villages
whereas Shogore has the highest percentage of female
population. Khot has the highest percentage of youngsters
compared to Borth and Shogore.
1|Page
Social indicators: Social indicators include HH incomes,
occupations, percentage of skilled and unskilled workers and
number of households headed by women. The analysis
shows that the HH income of Borth is highest among all the
villages and Khot has lowest HH income in the pool. Survey
data showed that percentage of skilled and unskilled workers
are same in all three villages i.e. only 30 percent of the
population is made up of skilled workers.

Infrastructure: The economic development of a society

depends on the existence of a well-integrated social and
economic infrastructure. These physical assets enable the
provision of goods and services and thus increase the quality
of life.

Social Infrastructure of all three villages is shown in Figure

01. Health facility is available in all three villages. Chashma
water is used for drinking purpose and there is no water
purification system available in any village. Road
infrastructure is mostly poor in all villages as roads are
Kacha. HH infrastructure is better in Borth compared to other
villages as most houses in this said village are Neem Kacha.
Access to information includes availability/connectivity of
Mobile/TV/Internet/Radio. Shogore and Khot has access to
TV/Radio whereas Borth only has radio coverage. All three
villages are deprived of internal connectivity. Pit Latrines are
used in all three villages as a main sewage system. In terms
of availability of the education facility, Shogore has scored
highest as it has secondary level school while the remaining
two villages only have primary level schools.

Economic Infrastructure of the three villages is shown in

Figure 03. The figure depicts that Shogore has the highest
number of Sawmill/stone workshops and general stores,
followed by Khot and then Borth. Moreover, a small industry
is also present in Shogore.

It is evident from above mentioned data that Shogore has

better social and economic infrastructures as compared to
Borth and Khot.

2|Page
Figure 2 Demographics of Borth, Shogore and Khot Figure 1 Social Infrastructure in Borth, Shogore and Khot

Demographics (in percent of total Social Infrastructure

population)
Borth Shogore Khot
Borth Shogore Khot
Males
60 Drinking Water
9
40 Availability of Road
6
Health Facility Infrastructure
20
3
0
0
Education HH
Facility Infrastructure
Youngsters Females

Sewrage Access to
System Information

Figure 3 Economic Infrastructure in Borth, Shogore and Khot

Economic Infrastructure

Borth Shogore Khot

General stores
9

3
Commercial Sawmills/Stone
0
Centers workshops

Small Industry

3|Page
C. Social Impact of Access to Electricity in Access to electricity also has a very profound effect on
education i.e. due to provision of electricity the study hours
Shogore, Borth And Khot
and school enrollments has been increased in all three
Social Impact of access to electricity is assessed by using villages. Moreover, level of education is also increased in
following social indicators: Shogore as compared to other villages.

a) Healthcare D. Economic Impact of Access to Electricity in

b) Education Shogore, Borth And Khot
c) Public Health (Drinking Water)
d) Capacity Building of Community Economic impact is further classified into two sub section:
e) Community Life and Security
1. Impact on Economic Inputs
For better understanding and visualization, the inputs of each 2. Impact on Economic Outputs
question which are associated with abovementioned social
indicators are converted in the numerical values. Once the Economic input includes but is not limited to; a) production
data was compiled, the values were added to get a hours b) business engagements c) time efficiency.
cumulative number for each indicator. At the end, score of
each indicator was added to find an overall Social Impact Impact of MHP on economic inputs were assessed using
score of each village. Figure 08 depicts the social impact these parameters and represented in Figure 05 using the
score of all three villages. same scoring mechanism as discussed earlier.

Immit Valley— A Case for Rekindling Education According the Figure 05, the impact of
access to electricity on economic inputs
The Borth village in the Immit Valley, which is a difficult terrain to access, not only because of
is highest in Shogore followed by Borth
its rugged landscape but also because of its proximity to the Wakhan strip which presents other
limitations such as security and restricted movement, monitored by the army. The MHP and then Khot. As per the respondents;
installed here by the AKRSP is of 400kW capacity, catering to seven villages. Initially planned the production hours, business
to cater to the entire Immit valley but there have been several issues associated with this MHP. engagements and time efficiency has
As per plan, more villages were covered but the reality its generation capacity is less, which is increased significantly after the
attributed to the placement of the MHP at an ‘not-ideal’ site. Another better site has been provision of electricity in Shogore.
identified with better generation potential, which could also offer opportunities for employment
for the local community. What could be said to be the primary cause of the shortage in
While, respondents from Khot
generation is the scarcity of water during winter months and the Immit Nullah is described as a mentioned that MHP didn’t have any
more ideal site. As a result of this weakness in the area, nearby villages are not satisfied as noticeable impact on business
their needs are not being met, hence they are being catered for by the Immit valley MHP. engagement.
But it’s not all despair and disappointment, and for the seven villages which are receiving In Figure 07, overall score of impact of
power, they are making the most of it, in a unique kind of way. They have rekindled the hope
access to electricity on Economic
of education, students are getting more hours of study, which has resulted in double shifts at
the local school, businesses have gained several hours more of operating timings, and the outputs is shown. Economic output
community has more time to assemble and interact, all they claim, thanks to the MHP. So much includes but limited to following
so, even health standards are claimed to have improved, expenditure on kerosene oil (wood is parameters: a) Effect on HH expenses
scarce in winter) has also come down for the villagers which has had an impact on the b) Increase in business value c) Jobs
environment in the area, largely because of less smoke from burning oil.
created d) Adopting new technology e)
Other commercial activities have also benefitted from the availability of electricity even though Migration for employment f) Return of
not much heavy machinery is being used, except for a flourmill. But education has been the migrants and g) Relocation from other
biggest winner with night/evening shifts in full swing and an early learning childhood school villages.
under construction. The people of the valley are hopeful despite the poverty, hopeful that with
more educated people in the area, more opportunities will arise for employment, not only from Impact on economic output was
within the community, but through other donor funding for the expansion of electricity provision. evaluated using aforementioned
parameters and visually represented in
Figure 07 using same scoring mechanism. Figure clearly
The figure clearly demonstrates that the social impact of illustrates that the provision of electricity has substantial
MHP in Shogore village is far more prominent than on Borth impact on economic outputs in Borth closely followed by
and Khot. As per the survey, cost of medical services has Shogore and lastly, Khot.
been decreased and fewer illnesses are recorded after the
provision of electricity.

4|Page
Overall economic impact of provision of electricity is
represented in Figure 06. It’s clear from the shown figure that
the Borth has secured highest score followed by Shogore
and Khot has experienced the least economic impact of
access of electricity.

Unexplored SME Potential of Shogore – A Promising Future

The Shogore Valley MHP installed by the AKRSP is a 500 KW unit which caters to 1500 households or 4
cluster of 24 villages. The MHP as it stands, faces some issues such as inadequate transformers. A single
25kVA transformer is insufficient for the load and cannot withstand any commercial activity. As with some
MHPs in the region, the Shoghore valley MHP also suffers from insufficient water supply during the winter
months, despite an increasing demand for electricity in the area but a poor T&D infrastructure, with
unprotected lines, poles subject to erosion due to land sliding has not been able to keep up with the demand.

The brighter side of things however in the Shogore cluster is that a somewhat stable supply of electricity with
less fluctuation and a stable constant voltage has brought with it the promise of entrepreneurship and
commercial enterprise. The Injigan Stone Carving Enterprise, set up by a young group comprising of 5
male and 2 female entrepreneurs are positive and hopeful of changing the future of their community by
bringing economic prosperity to the area through their ambitious vision, which they hope will materialize as
the provision of electricity improves further and they are able to expand their operations to include small scale
marble cutting and polishing, graduating to a larger scale with the stabilization of electric supply. Prior to the
provision of stable supply of electricity, the Injigan Stone Carving Enterprise was not able to function effectively
as their machinery did not operate with the weak and low voltage of electricity. Now, they are operating 9
single standalone units used in the cutting and carving, polishing and finishing of the stones from a crude
stone to a semi-precious quality product. The enterprise was faced with delivery lapses, unable to meet large
orders in the past, primarily due to weak power supply, but have now taken of, with a vision to soar to new
heights and also diversify into marble production on a larger scale. This vision however requires an increased
supply of electricity in the region for their heavy-duty machinery to operate.

The Shogore cluster of villages also boasted a very well-organized management structure for the operation
and maintenance of its MHP unit, with the Karimabad Area Development Organization (KADO), a local support
organization extending services to community members. MHP committees are manned with a member from
each of the VOs of the area and a convener from each cluster, affiliated with KADO. Customers can acquire
prepaid meters from the KADO office. Old metered connections are billed on a monthly basis. The Shoghore
Cluster MHP is also plagued with transmission and distribution problems, commonly in winter due to snowfall
and the familiar beat of collapsing poles and lines under the weight of snow or erosion of poles due to land
sliding. The Shoghore cluster of valleys being catered by the AKRSP MHP are all linked, i.e. the 1500
households in the vicinity will get affected one way or another if the transmission breaks down in any particular
village. The community is well educated, and with the support of KADO are well mobilized to participate in the
development of their communities.

5|Page
Figure 8 Overall Score of Social Impact of Access to Electricity Figure 6 Overall Score of Impact of Access to Electricity on Figure 7 Overall Score of Impact of Access to Electricity on
Economic Inputs Economic Outputs

Overall Score of Social Impact of Access Overall Score of Impact of Access to Overall Score of Impact of Access to
to Electricity Electricity on Economic Inputs Electricity on Economic Outputs
Borth Borth Borth
14 3 6
13 2 4
12 1 2

11 0 0

Khot Shogore Khot Shogore Khot Shogore

Figure 4 Overall Score of Economic Impact of Access to Electricity Figure 5 Overall Score of Socio-Economic of Access to Electricity

Overall Score of Economic Impact of Socio-economic Impact of Access to Electricity

Access to Electricity
Economic Impact of Acess to Electricity Social Impact of Access of Electricity
Borth
10 Borth
15 13
8
12
6 9
9
4
6
2
3
0 0

5 12 5 14
Khot Shogore Khot Shogore
8

6|Page
An overall, socio-economic impact score is represented in
Figure 04. As per the shown figure access to electricity has
highest social impact in Shogore village. Where, highest
economic impact was recorded in Borth village. Overall
scores show that both of these villages have noticeable
socio-economic impact due to the provision of electricity and
Khot has least socio-economic impact compared to both
villages.
E. Understanding the Socio-Economic Impact
in The Light of Better Infrastructure and Quality
of Electricity
Providing of electricity is just not enough as access to
electricity doesn’t guarantee significant impact on lives of
communities unless prerequisites like better social and
economic infrastructures and reliable, uninterrupted and
sufficient supply of electricity is already in place.
reliable, sufficient and uninterrupted supply of electricity has
shown noticeable social and economic development. For
example, energy indicator of Shogore is highest among rest
of the villages as a result its inhabitants are more engaged in
commercial activities i.e. it has highest number of
sawmills/stone workshops and general stores as compared
to Borth and Khot.
Secondly, years of provision of electricity is also a key factor
while analyzing the socio-economic impact of electrification.
Figure 10 represents a link between years of provision of
reliable and sufficient electricity with socio-economic impact.
The data clearly shows that villages with higher years of
provision of reliable electricity have experienced higher
socio-economic development. For example, Shogore has a
reliable electricity supply since past 2.5 years, longer than
Borth and Khot, which in return has a positive impact on
socio-economic lives of the community.

To understand said phenomenon, an energy Indicator is
introduced here. Said indicator is comprises of two sub
themes a) Quality of electricity b) Supply of electricity. Quality
of electricity discusses topics like loading and sufficiency of
installed MHP. Whereas, supply incorporates topics like
presence of voltage fluctuation in the system and its
frequency.
Below figure show the overall score of each village in term of
energy indicator.
Finally, it is observed that villages with better social and
economic infrastructures will have higher socio-economic
impact of electrification as compared to villages with poor
infrastructure. Shogore has better social and economic
infrastructures compared to rest of the sample villages and
thus it had a better chance to improve both socially and
economically. On the contrary, Khot has poor infrastructures
and thus socio-economic impact of access to electricity is not
very visible in this village.

Overall Quality and Supply of Electricity

Borth
12
8
4
0

Khot Shogore

The shown figure clearly demonstrates that Shogore has a

better quality and supply of electricity as compared to Borth
and Khot. Moreover, better energy indicator means better
chance for a community to adopt new technologies and thus
increases the probability to involve in commercial activities.

Impact of reliable and uninterrupted supply of electricity on

socio-economic development of a community is shown in
Figure 09. It is evident from the figure that the villages with
Khot Valley— An Upgrade with Technical Gaps

The Khot valley is a beautiful yet difficult to access terrain, placed high in the mountains with an uneven, bumpy, windy and at times dangerous
dirt track which shows some semblance to a road that may have existed a long time ago. The small community of Khot Payeen has had access
to electricity for a little over a year now, since the local MHP, installed in 1996 by the AKRSP, received an upgrade in 2018. While the current
MHP with a capacity of 100 KW supplies to 450 households in the area, it is insufficient to fulfill the needs of the entire community which comprises
of 600 households. Therefore, in addition to the AKRSP, the community has come together and installed a smaller 50 KW MHP which caters to
the needs of the remaining 150 households which are not catered for by the AKRSP MHP.

The AKRSP MHP that was upgraded now has a single transformer of 125kVA as opposed to the previous MHP which had 5 25kVA transformers.
The new MHP has also been supported with a 100kVA generator, however, there is no provision for backup. Furthermore, the villagers also listed
several complaints – pointing out to inadequate water flow, due to land sliding, there is frequent sediment deposition in the narrow channel of the
MHP.

While the local community appreciates the provision of electricity, they are somewhat disappointed also because the technical upgrade was not
sufficient. The infrastructure supporting the MHP according to the villagers is not appropriate, pointing out that new transmission lines were
installed, however the spacing between transmission line poles is more than it should be hence increased lag cause the wires to collapse or often
cross and short during the winter season with snowfall. Further still, there appear to be signs of displeasure amongst community members over
having to share their power supply with another village organization in the vicinity.

Villagers also noted that there was a great desire from the community to increase the level of engagement in commercial and business activities
since they were benefitting from the impact of energy provision in their area, however because of a weak T&D infrastructure with inadequate lines,
some even suggesting that contractors employed for setting up transmission infrastructure, deployed sub-standard quality of wires using bad
materials and in some cases, suggestions of outright corruption.

On the part of the community, there is a keen willingness to pay for electricity, even at higher costs, provided the stability of transmission and
generally the strength or voltage is better, since current indicators suggest that the power is not strong enough to operate heavier machinery. The
villagers of the Khot valley are enthusiastic and motivated to ensure the sustainability of their MHP and are very well organized, largely owing to
the efforts of AKRSP in community mobilization. The Khot Valley MHP is supervised by a representative committee comprising of a member from
each of the VOs in the area, which is headed by a President and a Manager for day to day operations, meter reading and bill collection.

The villagers also boasted an Audit and a Project Committee, bill collection on a regular basis on the 1st of every month, with a virtually 0 default
rate on bill collection. All monies collected are deposited in a cluster bank account as ‘community funds. The Khot valley cluster of villages had
an impressive saving of PKR1 million from proceeds of bill collection which was available and accessible to the community as required.
 Figure 9 Effect of Quality & Supply of Electricity on Socio-Economic Impact

Effect of Quality & Supply of Electricity on Socio-Economic Impact

Borth
16

12

8
Qlty&supply of Electricity
4
Economic Impact of Acess to
0
Electricity
Social Impact of Access of
Electricity
Khot Shogore

Figure 10 Years of Provision of Electricity times Quality of Electricity and Socio-Economic Impact

Years of Provision of Electricity x Qlty of Elect and Socio-Economic Impact

Borth
25

20

15
Years of Provision of
Electricity X Quality & Supply 10
of Elect.
5
Economic Impact of Acess to
Electricity 0

Social Impact of Access of

Electricity
Khot Shogore
 Section II:
Energy
Transition
Vision for
Gilgit
Baltistan and
Chitral —The
Vision
 of energy reaches the consumer due to the transmission and
Section II: Energy Transition Vision for distribution losses. Connecting the Grid is not only obsolete,
GBC – Ten Year’s Vision but it also leads to power sector debt, and is also expensive
and will take too much time. A recent AFD study3 in Pakistan
A. Recommendations: A Way Forward also proved that distributed generation has a competitive
levelized cost of electricity (LCOE)—hence emphasizing on
Paidartwanai’s Distributed Localized the fact that Pakistan’s current 20th century centralized
Generation Model system cannot even service the latent on-grid demand, let
alone supply the latent MEMs.
The Missing Energy Millions (MEM) Dilemma: Energy
access is the core for rural economic development. No water, Mini-grids—The Right Answer? Mini-grids more affordable
sanitation, health, education, agriculture, industry, security, on the average for peri urban and rural communities, as
or development is possible without basic access to energy. observed below.
As seen in Figure 11 below, we see that off- and end-of-grid
Pakistan is unserved, and the grid is supplying to the visible
demand only. 70 million rural Pakistanis are not grid
connected while 75 million urban and rural grid connected
Pakistanis face daily 12 hours of rotational blackouts. It is
alarming to see that more than 140 million Pakistanis are
directly and indirectly impacted—which makes 1/10th of the
total Missing Energy Millions (MEMs)1.

Demystifying Pakistan’s Energy Crisis—Grid cannot

take on more electricity: Global policy makers predict that
meeting the 7th Sustainable Development Goal (SDG)
(Affordable & Clean Energy) is now only possible through
Distributed Generation (DG) relying on localized grids.
Bloomberg New Energy Finance (NEF) estimates that micro
grids relying on solar alone will be a USD 64bil market by
2030. Source: Kuungana Advisory

Case in point: China. Using MHPs, mini-grids, other

renewables, and other off-grid technology is how China
electrified its villages with million plus population even in the
remotest villages. The cost of grid extension in western or
north-western China has been reported to range between
$5000 and $12,750 per kilometer, making the option
uneconomic to reach the population in these areas4.

Grid Losses imply that ¾ to ½ energy generated gets to

consumers—yet recovery has to be full. If we study the case
of the GENCOs and DISCOs under PEPCO2, we see that
from the energy generation to its distribution, there is a 3
percent transmission loss and 20 percent distribution losses
in the power by the time it reaches the consumer. In simpler
terms: if 1kW of energy is originally generated, only 0.776 kW

1 IEA Statistics, OECD, NEPRA, IFC 3 AFD Feasibility for RE Credit Facility
2 State of Industry Report 2015 by NEPRA 4 Zhang and Kumar (2011)

11 | P a g e
Figure 11 Existing Energy Demand Market and Grid Network Map of Pakistan

12 | P a g e
Rural Electrification began in the Maoist Era of Central
Planning from 1949-1977, which later evolved into an era
of market reform in 1978, till 1997. This was considered to
be a subsequent move towards a dynamic market
economy from 1997 till date. China relied on three specific
approaches for the rural electrification reform: a) small-
and micro-hydro in high hydro potential areas; b) mini-
grids and village networks using renewable energies were
developed in areas with “clustered households and
township infrastructure5” c) Other off-grid technology
options in remote areas.

Mini-Grids in Pakistan: About 50 MW of MGs are

already being dotted around Pakistan. PPAF (13,780
kW) financed and electrified 38,015 HHs [benefitted over
Paidartwanai proposes a Mini-Grids pooling facility—
250,544 villagers]—many through SRSP and AKRSP.
where PT and communities and RSPs will: a) own all
SRSP has initiated 190 micro hydro schemes mainly with
assets real estate, equipment… b) own all debts and
financial support of the European Union to produce over
operate all mini-grids.
19,000 kW of electricity benefitting over 500,000 people.
Operational and under construction MHPs by AKRSP with
PT will be further broken down into an operating company
total generating capacity of 15,900 kW [benefitting over
and property company: OpCo leases assets from AssetCo
32,000 HHs]. However, it is pertinent to note here that the
and makes money by operating all mini-grids; AssetCo
Communities cannot do this alone—scale is needed.
owns all assets and liabilities and makes money by
Communities and utilities are trying to operate and
leasing assets to OpCo.
maintain and improve themselves. They need soft and
hard skills for this, in addition to access to finance and
technology. AKRSP is helping, but in doing so it’s focus is
shifting from the core task of improving social capital and
renewing and improving social contracts. It is not efficient
for AKRSP to develop a full-scale operation,
management, and improvement capacity for all these
utilities in-house. Improving energy access in these areas
is the need of the hour and communities and AKRSP
cannot do this alone. This is where Paidartwanai comes
in.

Paidartwanai (PT)—The First Mover in the Off-grid

National Energy Supply Company: PT is the answer to
the need for a commercial aggregator of distributed
generation assets that would centrally perform the role of
WAPDA, GENCOs, IPPs and DISCOs in the off-grid
space.
Paidartwanai and the GBC-localized Distribution
Model:
Improving the households’ ability to pay requires an
area/village growth approach: a) There is a dire need to
uplift lives and finances of households. There are two
parts to this equation. b) ensuring communities
understand externalities of not paying for clean energy—
to unhinge available but untapped ability to pay amongst
existing users—this requires a revision of the social
contract between AKRSP and the communities. c)
Increasing the overall financial wealth of the communities

5 Zhang and Kumar (2011)

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thereby enabling them to pay for increasing energy use as
commerce increases. An area/village growth approach is
needed to kindle this second part.
Aggregation and scale will bring procurement efficiencies
and ensure social and environmental safeguards: a) Bulk
procurement for all utilities will enhance the quality and
lower the cost of procurements. Overall it will enhance the
bargaining power with vendors and ensures reliability of
supply. Need for this was evident when visiting the various
utilities in GBC, especially in the larger utilities. b) Social
and environmental Safeguards – Designing,
implementing, ensuring, and monitoring environmental
and social safeguards across a group of utilities by a
management company centralizes responsibility, creates
harmonization, and enables better monitoring and
reporting where required by financiers and other
stakeholders.
Enabling better R&D, tech diffusion, and financing
modalities: a) Collective management and linkages will
enable better technology diffusion [much required],
improvement and harmonization of designs [thereby cost
efficiencies], improved and harmonized delivery of utilities
[construction and supervision], and centralized collection
of analysis of data leading to improved research and
development. Site visits verified that designs and
construction standards have a great deal of headroom for
improvement and so does bringing in new solutions and
technologies. b) Utilities are struggling to make ends
meet—the few that are trying. An umbrella operating and
owning company will improve financial management, help
restructure current financial portfolios, improve access to
and utilization of finance, allow for blended finance to be
mobilized, the ability to provide targeted subsidies to
deserving households, and increase returns to owners
[including communities and AKRSP]. Community
ownership will enable marketing of innovative financial
instruments to donors and commercial entities alike.
Mitigating risks and ensuring an area/village growth
approach, bringing real return to communities: a)
Centralize management of utilities will better manage risks
relating to natural and man-made disasters. Risk
mitigation strategies allowing for uninterrupted energy
access cannot be done at single utility level and need
scale. b) A holding company can connect the proverbial
dots across the various local utility catchment areas and
strategize with local communities and AKRSP how to
better approach area/village growth with a view to
increasing the financial strength of the communities.
• The scale of the company can better attract local and
regional and global value and supply chains—both in
and out bound. Raising capital for these strategies
will be easier.
• The holding company can assist the communities to
start in this area/village-based growth by developing
the utilities-based ABC models as a first
demonstration step.
• The scale and collective financial pool will enable
communities to see returns on their investments
[their in-kind and cash contributions, their timely
payment of bills]. With AKRSP at the core of this
company, assisting in revising the social contract to
improve recoveries and their levels, the community
can start feeling the rise of their savings as the
company prospers.
B. Adapting the PT Model – Reenergizing
GBC
Energy access is the core for rural economic development
and the provision of clean and affordable energy is
achievable through Distributed Generation relying on
localized grids.
Rural Energy Scale up Models for the electrification of
rural areas: The concept of the electrification of rural areas
through Distributed Generation using localized grids is
budding in Pakistan and stakeholders like PPAF are
working towards adopting different energy models through
which access to electricity is ensured in areas where grid
penetration is weak either because of geographical
limitations or low energy consumptions.
To achieve such goals, Paidartwanai (PT) conducted a
research study for PPAF, where Off Grid Rural Energy
Scale up Models for the electrification of rural areas were
recommended—which are not just limited to Pakistan but
applicable globally. As per the study, different Scalable
Off-Grid Rural Electrification options were proposed
based on the feasibility of type of financing, business
model, design and O&M management against various
combinations of village characteristics. These scaleup
models are represented in Table 01 in detail.
The ranking of the scalable options is also shown in Table
02, as a BCG matrix with likelihood of success on the
horizontal axis and availability of the model on the vertical
axis. The BCG matrix is helpful in determining the projects
which are likely to succeed and easier to implement given
the existing market conditions and vice versa.
Cluster Based Utilities: Based on the likelihood to success
of Scalable rural electrification models it is recommend
that the Cluster Utilities based energy models are most
viable for reenergizing GBC.
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These Utilities can be based on UC level like in Hunza and
Phander, places with greater tourism footprint or areas
with substantial LSO based Saving Groups.

An example of K-Electric: K-Electric is a private utility

company operating in Karachi, which not only generates
its own electricity but also transmits and distributes
electricity to the consumers. Contrary to K-Electric,
Cluster based Utilities will be owned by locals as assets
of local communities. Furthermore, locals can also
proactively participate in O&M activities under the
supervision of technical experts.

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 Table 1 Future Scalable Models for Rural Electrification

Options Finance Design Model O&M

Village Profile 1: Low Income-Densely Populated-Cluster of Villages
A1 MG All grant Mini-grid PAYG PA+LC
B1 MG PPP+PA Mini grid Postpaid PA+LC
C1 MG MFI+LC Mini-grid PAYG LC
D1 MG MFI+LC Minigrid PAYG PA+LC
E1 CG Govt Central Grid Postpaid DISCOs
F1 MG PPP+LC Mini-grid Postpaid PA+LC
Village Profile 2: Relatively High Income-Densely Populated-Cluster of Villages
A2 MG PPP+LC Mini-grid PAYG PA+LC
B2 MG All grant Mini-grid Post Paid PA
C2 MG MFI +LC Minigrid Postpaid PA
D2 MG Govt Central Grid Postpaid DISCOs
Village Profile 3: Low Income-Sparsely Populated-Single Village
A3 MG All grant SHS PAYG PA
B3 MG PPP +LC Mini-grid Postpaid PA+LC
C3 SH MFI +LC SHS PAYG PA+LC
D3 SH PPP+PA SHS Rent to own PA
Village Profile 4: Relatively High Income-Sparsely Populated-Single Village
A4 SH MFI +LC SHS Rent to own PA+LC
B4 MG PPP +PA Minigrid PAYG PA
C4 MG All grant Mini-grid Postpaid LC
D4 SH PPP+LC SHS PAYG PA
E4 CG Govt Central Grid Postpaid DISCOs

Where:
List of Codes Abbreviations
PPP Public Private Partnership
PA Private Sector
LC Local Community
MFI Microfinance Institutions
SHS Solar House Solutions
DISCO Distribution Company

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Table 2 BCG Matrix for Scalable Electrification Models

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Annexures
Annexure 1 Scoring Mechanism: Overall Score of Social Impact of Access to Electricity

Indicators Variables Borth Shogore Khot

Increase in illnesses (Y/N) 1 1 1

Healthcare
Cost of Medical Services (Increased/Decreased) 1 1 1
Overall Score 2 2 2

Increase in Study hours (Increased/Decreased) 1 1 1

Increase in enrollments (Increased/Decreased) 1 1 1

Education Increase in literacy (Y/N) 1 1 1
Cost of education (Increased/Decreased) 0 0 0
Level of education (Increased/Decreased) 0 1 0
Overall Score 3 4 3
Social Impact of Access to Improved water supply (Y/N) 0 0 1
Electricity Public Health (Drinking Water) Impact on cost of drinking water (Y/N) 1 1 0
Overall Score 1 1 1
Training (Y/N) 1 0 0
O&M of MHP (Y/N) 1 0 1
Capacity Building of Community
Established Organization for Tariff Mechanism 1 1 1

Overall Score 3 1 2
Local issues Problems with bill collection(Y/N) 0 1 0
Level of pride (Y/N) 1 1 1
Distinguished village (Y/N) 1 1 1
Community life and Security
Change in everyday needs (Y/N) 1 1 1
Travel Security during Night (Y/N) 0 1 0

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 Leisure Time (Y/N) 1 1 1
Overall Score 4 5 4
Overall Score of Social Impact 13 14 12

Annexure 2 Scoring Mechanism: Overall Score of Economical Impact of Access to Electricity

Indicators Variables Borth Shogore Khot

Production Hours (Increased/Decreased) 1 1 1
Business Engagement (Increased/Decreased) 1 1 0
Economic Inputs
Time efficiency (Increased/Decreased) 1 1 1
Overall Score 3 3 2
Economical Effect on HH expenses (Increased/Decreased) 1 1 1
Impact of
Access to Increase in Business Value (Y/N) 1 1 0
Electricity Jobs created (Y/N) 1 1 1
New Technology adopting (Y/N) 0 0 1
Economic Outputs
Migration for employment (Y/N) 1 1 0
Return of Migrants (Y/N) 1 1 0
Relocation from other villages (Y/N) 1 0 0
Overall Score 6 5 3

Indicators Borth Shogore Khot

Economic Impact Inputs 3 3 2
Economical Impact of
Access to Electricity Economic Impact Outputs 6 5 3

Overall Score of Economical Impact 9 8 5

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Annexure 3 Scoring Mechanism: Overall Score of Quality and Supply of Electricity

Variables Borth Shogore Khot

Loadshedding (Y/N) 0 1 0
Quality of Electricity Sufficiency of MHP (Y/N) 1 1 0
Overall Score 1 2 0
Quality and
Supply of Frequency of Voltage Fluctuations
6 9 6
Electricity (Low/Medium/High)
Supply of Electricity
Voltage Fluctuations (Y/N) 1 1 0
Overall Score 7 10 6
Overall Score of Quality and
8 12 6
Supply of Electricity

Annexure 4 Scoring Mechanism: Overall Score of Years of Provision x Quality and Supply of Electricity and
Socio-Economic Impact

Overall Scores
Indicators
Borth Shogore Khot
Years of Provision of Electricity X Quality &
16 24 6
Supply of Elect.
Economic Impact of Access to Electricity 9 8 5
Social Impact of Access of Electricity 13 14 12

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