Austria offers Vt 107.3 million for rural electrification project on two islands

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At a signing ceremony on the margins of the recent UN Climate Change Conference in Marrakesh, the Austrian Federal Ministry for Agriculture, Forestry, Environment and  Water Management and the Ministry of Climate Change of Vanuatu signed a funding agreement amounting to Vt 107.3 million (US$1 million) to electrify rural areas.

The Nationally Appropriate Mitigation Action (NAMA) on “Rural Electrification in Vanuatu” aims to boost sustainable income generation through access to clean energy for Vanuatu’ rural areas in the aftermath of Cyclone Pam. They aim for a careful balance between stimulating local, inclusive economic growth and helping to rebuild the human, natural, physical, financial, and social assets of the affected population.

Through the support of the Austrian government, the first investments will focus on extending access to clean energy through micro-grids and grid extensions in rural areas. The agreement will also fund capacity building for Vanuatu’s institutions to establish an adequate framework for the implementation of the NAMA. The project will include the following three components:

  • Investment into 1-2 grid extensions for two islands
  • Investment into 1 micro-grid in one community
  • Capacity-building to provide the framework for NAMA implementation

Rural electrification is a key priority for the Republic of Vanuatu. Only one third of Vanuatu’s households have access to electricity, most of which are connected to the government regulated grid in the two main urban areas, Port Vila and Luganville. In rural areas, however, where 75% of Vanuatu’s households are located, energy poverty is even more pronounced: there, only one sixth of the households and less than half of the schools have access to electricity.  With an overall electrification rate of just 17% in rural areas, Vanuatu has therefore about the same level of rural electrification as the most underdeveloped countries of Sub-Saharan Africa.

vanuatuAccess to energy, which is a critical condition for economic growth, has become even more pressing as Vanuatu is still suffering from the devastating effects of Cyclone Pam in 2015, which led to a staggering drop of 50% in its GDP.

The project will be implemented by the Ministry of Climate Change (MCC) of the Government of Vanuatu. The MCC will supervise the preparation and implementation of the investment activities, supervise the disbursement of funds and carry out capacity-building activities.

The specific costs for the grid extensions and mini-grids will be investigated in a feasibility study expected to be carried out in Q1/2017 and supported by UNDP, but which are expected to not exceed the overall budget of USD 1M.