We provide three suggestive lessons:
- MHPs can have important implications for municipal finance. The economic activity they generate when they function well can be an important source of municipal revenue. On the other hand, when they break down those benefits cease. If MHPs do not have sufficient reserves to pay for repairs and turn to the municipality for financial assistance, they can become a drain on municipal finances. We have provided a description of the key challenges bearing on MHPs sustained functioning.
- Some stakeholders are interested in commercializing MHPs. Pricing and the enforcement of payment are serious current challenges for many MHPs, which in turn has implications for their capacity to invest in maintenance. In many cases, prices are too low to support sustained functioning, non-payment is a problem, and sanctioning non-paying households or businesses is difficult. This suggests that steps toward commercialization of MHPs should be done with caution and account for such challenges. An alternative governance model that relies on community participation faces challenges of its own, but it is encouraging to see generally high levels of community participation in MHP decision-making and maintenance.
- A great deal of attention and money has been spent building MHPs. The government and donors should pay attention to the local conditions that lend themselves to their successful, sustainable maintenance and governance. We hope to have provided some important insights into those conditions with our significant data collection effort.
See more details in “Local Governance, Electricity Provision and Decentralization in Nepal”
