Infrastructure management contracts

This report from the UK think tank Chatham House looks at improving energy asset management in displacement settings.

Building and maintaining electricity infrastructure to power offices, businesses, households and other operations in displacement settings is difficult. It is especially challenging for the Office of the United Nations High Commissioner for Refugees (UNHCR) and its partner agencies, because supplying electricity is not their core business. Private-sector companies exist that are willing and able to develop infrastructure management contracts to provide energy as a service in displacement settings. However, institutional barriers within humanitarian agencies persist, with short budgeting cycles in particular preventing humanitarian agencies from entering into the sorts of long-term service agreements required by the private sector.

A number of options exist to leverage the expertise of the private sector through ‘public–private partnership’ (P3) structures. Such mechanisms can promote more efficient management of infrastructure by drawing on private-sector experience and expertise, incentivizing appropriate risk-sharing and providing options to leverage private capital in project development. Field work from the Kalobeyei settlement in Kenya suggests that a solar/diesel hybrid mini-grid solution was the most economical option to power camp services and infrastructure there. Compared to distributed diesel generation, the annual savings in operating costs were estimated at $49,880, with the additional investment paid back within 3.6 years. Humanitarian agencies need to be willing to change their policies to enable long-term service agreements.

Alternatively (or, more likely, in conjunction with this option), financial mechanisms such as partial risk guarantees need to be developed to offset some of the risks. This change will need high-level support from donors and humanitarian agencies. Once the first infrastructure management contracts can be signed and tested in displacement locations (through the use of donor funding or otherwise) and associated data collected, it will ease the way for future investments in these types of projects.

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