Campaign for the Elimination of Kerosene in Haiti

My organization, MicamaSoley, has been importing and distributing solar lamps in Haiti for a little over five years.  I have partnered with several NGOs to channel these lamps through existing networks.   Fonkoze, the largest MFI in Haiti, has given me access to their credit customers.  I work with CARE and their Village Savings and Loan Associations as well as smaller projects with other organizations.  We have been selling Lighting Global approved products starting with Barefoot Power then adding d.light and Omnivoltaic.  There are some other players in the market; Total has a program in Haiti working with Entrepreneurs du Monde selling Green Light Planet and there are some other NGOs such as Earth Spark International selling Barefoot Power and Nokero.  Digicel, the biggest local phone company, is also trying to develop, with d.light, an electricity-as-service program with technology similar to M-KOPA in Kenya.  There have been some give-away programs, especially immediately, after the earthquake but most of the principal players are trying to develop a sustainable market where customers pay market prices for the lamps and all the importing and distributing costs as well as taxes come out of the price of the lamp with hopefully, eventually, a reasonable profit for everyone in the supply chain.   These three principal importers have sold something like 150,000 solar lamps in Haiti, with current sales something less than 40,000 units a year. These are respectable numbers for a population of 10,000,000 but nowhere near the tipping point required for solar to become the default choice for off-grid lighting.

 A few years ago the World Bank opened a line of credit for Haiti to improve access to energy.  In the beginning this was mostly to go towards rehabilitating and extending the grid with some money for providing solar street lights in off-grid locations.   There has been some work on this but it hasn’t been happening as fast as everyone would like.  In November there was a workshop held in Haiti so that the Hatian Govt., the World Bank, the Inter-American Development Bank, as well as NGOs and the private sector could look at the situation and consider some alternatives to improve access to energy.  Basically there are three alternatives;

  • Extending the Grid
  • Mini-Grids
  • Stand-alone systems, going all the way down to solar lamps

There is a lot of public money being thrown at the first two options but I was asked how the World Bank’s program could help us out with solar lamps.  Of the three options, stand-alone systems is the only one that pays any taxes.  Electricite d’Haiti, because of its inefficiencies, requires annual subsidies of a couple of hundred million dollars every year.  Mini-Grids require initial subsidies of $1,000 + per household to start and they have yet to be proven in Haiti where stealing electricity is the national sport.  To level the playing field I thought of eliminating the taxes on solar lamps and other stand-alone systems as a way of giving our sector a push, but eliminating taxes is very complicated and requires an act of parliament which would probably be un-obtainable.  One possible way to effectively eliminate the taxes would be to set up a subsidy that is, more or less, equivalent to the taxes.

I have been working on a proposal that boils down to a US$2 subsidy on lamps that provide light only, a $5 subsidy on lamps that can also charge a phone and a $20 subsidy on small home systems with a minimum of 3 lamps.  All of these subsidies can be immediately paid for out of the Customs Duties and Value Added Taxes on the same products which would continue to be paid.  Every $1.00 of subsidy should result in lowering the price of the product by about $1.50.  Since the World Bank is involved these subsidies would only be applied to Lighting Global products.  If we make this subsidy temporary (say 4 years with another 2 years at half subsidy) this would give our sector some breathing space to make a push to expand the market so that when the subsidy falls away that we are somewhere on the other side of that tipping point and have enough volume to finally become profitable.  At that point the Haitian Govt., in addition to improving the lives of millions of Haitians, will have replaced the market of kerosene; which traditionally was subsidized, with a solar market; which will generate interesting tax revenues.

I think this should be a reasonable proposal and I am working with the other importers to improve it but the reason I am making this post is to ask for help from the Luminanet community. 

  • Can people give me examples of other countries that have government programs to promote solar lamps describing how these programs work?
  • Can someone come up with suggestions on how to encourage bigger stand-alone systems?  This should be something simple and not involve eliminating taxes, it should consider systems for sale as well as electricity-as-a-service systems.
  • I would like to come up with a graph showing the level of subsidies on kerosene over the past five years in Haiti.  I have been trying to get this information out of the Govt. but it is not easy.  Does anyone have historical costs of kerosene CIF in the Caribbean?  I can get historical prices at the pump in Haiti.
  • Does anyone have any other information or suggestions that would be useful in convincing the Haitian Govt. of our case?

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Comment by Gary Zhang on February 5, 2015 at 9:51pm

A good perceptive article about elimination of kerosene in Haiti based on practical experience.

Comment by Salvatore Chester on January 30, 2015 at 2:29am

Great article Tom. 

In response to your very last question, I would suggest the Haitian Govt. to simply drawing some lessons from  relevant experiences in : East Africa, Bangladesh, India... (for example). 

Keep it up!

https://www.facebook.com/groups/TEA.ethiopia/

Comment by Evan Mills on January 29, 2015 at 10:34pm

Sounds like a great initiative.

My new report on kerosene subsidies in the West African context may have some useful info in it for you.

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