Cambodia - From Labourer to Entrepreneur: Private Sector Development in the rural energy sector in Cambodia
Primary thematic focus: Sub-national capacity development: local solutions, national strengths
In a Nutshell:
Mrs Heang built biodegester: “because I trust the company’s owner who lives nearby. Previously only the Province had spare parts, which took much time. I get benefits from the biodigester like gas for cooking, and slurry to fertilise my plantations.” There are already 21 local biodigester construction companies.
The domestic energy sector in Cambodia represents about 80% of total energy demand. Most households still rely on fuel wood and other biomass for cooking (85%), and half of rural households use lead acid batteries for electricity. Grid electricity access is limited to Phnom Penh and some municipalities for just 15% of the Cambodian households. High reliance on fuel wood impacts health (indoor air pollution), poverty (time gathering fuel wood, medical expenses) and environment (deforestation). In 2006, the Government of Cambodia, with support from SNV, established the National Biodigester Programme (NBP) with the aim to create a sustainable biodigester sector. SNV’s experience shows a viable renewable energy sector consists of a wide range of functions, such as promotion, marketing, financing, construction & after-sales service, operation & maintenance, extension, monitoring & quality control, R&D and programme management. Initially, Provincial Programme Offices (PBPOs) were responsible for plant construction, managed the masons, and enforced quality control: clearly a conflict of interest. In 2008, NBP recognised that privatisation was needed to create a viable sector.
A private sector development team (PSD) was established to design an applicable biodigester business model, identify enabling market conditions and roles of key actors, design system processes, assess resource and skill requirements, system integration and alignments, and ongoing support to create a viable sector. Pricing is the main factor that impacts farmer decision to invest in a biodigester, so the PSD team developed an effective pricing model. NBP provides $150 subsidy per constructed plant. This investment subsidy creates a tool for NBP to enforce quality standards for information dissemination, construction and after-sales service. Quality standards control is organised via PBPOs. NBP partners with micro finance institutions and banks to channel this subsidy to farmers. Farmers can also get a loan for a biodigester construction plan under favourable conditions. Through the establishment of Biodigester Construction Companies (BCCs), the long-term demand for marketing, construction and after-sales service is covered. Locating a BCC close to clients facilitates vital contacts through all the sales, construction and operation processes. Companies are grown by investing in outstanding masons. NBP outsourced their selection, training and coaching.
With support from SNV, the Cambodian Indian Entrepreneurship Development Centre (CIEDC) grows BCCs. CIEDC’s services are designed and customised so that masons come to understand the biodigester construction market environment, and prepare themselves to enter the market with biodigester construction and after sale services. After company establishment, CIEDC staff makes regular coaching visits. During privatisation meetings the opportunity to start a BCC is discussed. The company’s owners are selected amongst outstanding NBP certified masons, with a critical entrepreneurial mindset to grow the business. Applicants are tested and interviewed, and candidates who passed this stage are scored against performance feedback from the NBP’s technical supervisors who have been working with them. The selected masons were trained using the Operational Manual designed by the PSD team on how to start and operate a biodigester construction business. BCCs then receive monthly on-the-job coaching and mentoring, to correct themselves while operating the business. They also learn for best practices and experiences of other BCCs through monthly sessions designed by the coaches. So far, twenty BCCs were established in 4 pilot provinces. To increase the chances of success, pilot provinces have a very good biodigester potential, the technology is already well established, and the BCC gets a one-year monopoly for plan construction in one district. Full cooperation of stakeholders, such as the PBPOs, is ensured.
Results and Critical Factors:
Presently, there are 21 biodigester construction companies. They are operating where they reside to ensure effective services to farmers. Each company has recruited certified masons, skilled and unskilled labourers to offer pre and after sales biodigester construction services. The one-year construction monopoly in a district allows companies to concentrate on learning. The BCCs get well equipped and confident to run the business in a competitive environment. There is clear evidence that the company’s owners are motivated and working hard to satisfy customers and create local wealth. With this obvious commitment by rural entrepreneurs, Cambodia’s biodigester sector stands an excellent chance of being sustainable and viable in the long run. Quality of the BCC services is monitored by the regulatory body, the Provincial Biodigester Programme Office (PBPO), based in the provincial department of agriculture. PBPO supervisors perform quality monitoring at the beginning of plant construction and at plant completion, to ensure plants comply with the standards set by NBP. The BCCs successfully established 5000 quality plants, of which some 1000 plants constructed within 3 months. SNV identified and empowered key partners in the chain such as the company capacity builder CIEDC, micro finance institutions AMRET and PRASAC who offer loans to farmer customers, market partner CEDAC, raw material producers, and so on.
Most importantly, the NBP now recognise private sector involvement as the way forward to long-term sector development. There is a strong demand for private construction company development, using this model, in the remaining programme provinces. Rural BCCs create income and employment. The local companies have already created hundreds of jobs for the rural poor. Moreover, biodigesters reduce carbon dioxide emission and deforestation, save women’s time, and improve family health. The technology thus enhances the wellbeing of rural communities and alleviates poverty. “With the biodigester my fuel wood expenditure has reduced by 60%,” says Mr Oum Theoun. He continues, “there are slurry buyers offering 37-50 USD per cow coach, but I do not sell because I need it to fertilise my plantation”.
Name of Primary Contact Person: Lam Saoleng
Title of Primary Contact Person: Programme Coordinator National Biodigester Programme
City: Phnom Penh