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Development assistance to clean energy has yielded few results

​Norwegian development assistance to clean energy has not lead to a noticeable increase in power generation and has done little to improve living conditions for the poor in the priority countries for such support.  – Major changes are needed in the Ministry of Foreign Affairs’ use of policy instruments, if the objectives set by the Storting is to be achieved, says Auditor General Per-Kristian Foss.

Published 6/25/2014 11:00 AM

Document 3:12 (2013–2014) The Office of the Auditor General’s investigation of Norwegian development assistance to clean energy was presented to the Storting on 25 June 2014. During the period 2000–2013, just over NOK 12 billion has been allocated for assistance to clean energy. The audit shows that this has not led to the expected results in power generation and poverty reduction.

– We see that our embassies in partner countries often lack analyses of what measures have the best effect in each country. The Ministry of Foreign Affairs needs a significantly improved basis for decisions, in order to manage the assistance more effectively, says Foss.

The Office of the Auditor General’s audit mainly covers development assistance to seven partner countries that are prioritised in the Ministry of Foreign Affairs’ Clean Energy for Development Initiative. This initiative supports power and grid development as well as capacity building in institutions, and its objective is to improve living conditions for the poor and create economic growth.

The audit shows that few poor households have gained access to electricity. Nor has grid development in poor areas led to more jobs, as the Ministry of Foreign Affairs had expected.

– Norwegian development assistance has a paramount goal of reducing poverty, and access to energy at an affordable price is a key part of this. The way assistance to clean energy is designed at the present, it might take a very long time before the effects reach the poor, says Foss.

The Office of the Auditor General recommends the Ministry of Foreign Affairs to consider how new renewable energy, such as solar or wind power, may be utilised better to increase power generation and reach more poor households.

Major investments are needed to increase power generation. The Norwegian Investment Fund for Developing Countries (Norfund), has through its investments provided nearly half or all Norwegian assistance to clean energy since 2007. However, Norfund has invested very little in the seven priority partner countries during this period.

– The audit shows that Norfund, which is to become even more important in Norwegian development assistance, so far has had little success in triggering private investments in these countries. We recommend that the Ministry consider alternative measures to trigger private investments in clean energy in countries that have weak framework conditions for business and industry, says Auditor General Foss.

The Minister of Foreign Affairs agrees that there is a need to supplement with other measures in order to reach the poorest people. The Minister says that work is now being done to identify financial instruments that will encourage more private investments.

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