Bringing Light to Rio's Slums

Bringing Light to Rio's slums
MIGA-backed power project tackles outages and safety hazards

September 11, 2001— Power outages, fire, electrocution,unfulfilled economic opportunities...These are the unfortunate facts of life for residents of Rocinha, one of Latin America's largest and oldest slums, where a lack of electricity and illegal connections affect life at the most basic lel. There's no one answer to the problem, but a concerted effort to deal with infrastructural inadequacies, provide essential services at low cost, and educate residents about proper power United Statesge is making inroads, here and in other slums in Rio de Janeiro.

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The service is being provided by Light Serviços de Electricidade SA, Rio's main power provider, as part of an ongoing program to upgrade the city's electricity transmission and distributio systems. The latest effort falls under a $200 million non-shareholder loan made by Citibank NA on behalf of a syndicate of banks, a portion which is covered against the risks of transfer restriction and expropriation by a MIGA guarantee. The project is especially timely, given Brazil's current energy crisis.

Rocinha resident Sandra, with sons (l-r) Zé Carlos, and Julio, 8, says power shortages are an everyday event	A special program, supported by MIGA, is dealing not only with Brazil's power crisis but also the basic energy issues that plague the city's slums, including in Rocinha, pictured here

The Drought  With one of the most extensive river networks in the world, Brazil obtains more than 90 percent of its electricity from dams, and has invested little in alternative sources of energy. The current drought is creating one of the worst power shortages the country has faced in decades. Lights on streets, in offices, and homes are dimmed or switched off as Brazilians rally, in the face of penalties, to reduce power consumption by 20 percent.

The crisis has mobilized Light to launch a massive energy conservation campaign to teach people ways to save energy and cut costs. The messaging is important to all Brazilians, who have been asked to reduce power consumption by 20 percent until the rains replenish dwindling water supplies. "The power crisis is changing people's habits," says Vasco Barcellos, head of Investor Relations at Light. "It is imposing certain limits, but people know it's better than having blackouts, which would be pretty traumatic."

For residents of Rocinha, where a lack of a electricity affects lives at the most basic level, this is not an unusual hardship. Here, Light is taking its campaign one step farther, dealing with infrastructural inadequacies in addition to educating residents about proper power United Statesge.

Serving Low-income Clients  In September 1997, Light created the Program for Normalization of Informal Areas. PRONAI, as it's called, aims to provide safe, legal power connections in the city's "favelas" (slums) and other low-income communities by establishing and upgrading power networks, and by installing transformers and meters. Educational activities are a fundamental component. But the program doesn't just provide a steady, safe source of power for favela residents; it also documents proof of residence, necessary for getting a phone and establishing credit, in addition to other benefits.

The recent power crunch has added a new urgency to the program, which in 2000 reached out to about 150,000 new low-income clients. By 2005, Light expects the PRONAI program to be operational in 728 slums and 594 low-income communities and "irregular" areas—those with unregistered connections or "doctored" meters—adding some 176,000 new clients.

Brzil's favelas are rife with safety hazards, including electrocution, that stem from illegal power connections known as "gatos"	"Light Agents" gather in local NGO Rocinha XXI to discuss their work programs

Program coordinator Marcia de Moraes Coutinho, with 20 years of experience working in the favelas, moves confidently along the winding streets and paths of Rocinha. The slum is home to 25,000 families, whose average income is R$200 a month. Set against the breathtaking backdrop of Rio's famous camel-hump mountains are ramshackle homes built wherever there is a patch of land or anything stable enough to anchor a foundation. Plastic tubing carries water along rooftops, criss-crossing the bundles of wires, or "gatos," that run haywire throughout the community as they carry sporadic electricity, often illegally, into the dwellings.

The PRONAI program, begun last year in Rocinha, picks up on work supported by the World Bank in the early 1980s to bring power to the favela. Coutinho says the program is really three-pronged, aiming to "normalize" transmission lines and connections, remove safety risks, and educate people about safe power use and conservation.

"People don't know the power lines are dangerous," she says. "They build their houses too close together, which makes it impossible for a fire truck to get through when there is a fire caused by the lines. Just the other day, 200 houses burned down in one of the local favelas." Another real danger is electrocution, which is a fact of life in the slums. "A simple, cheap solution might turn out to be very expensive," she says.

As in the other 250 favelas that Light has already tackled—usually those with the most egregious infrastructure problems—the Rocinha program works hand-in-hand with local nongovernmental organizations to make sure people understand what the effort entails and to get their buy-in. Local students, usualn their teens, are trained to be "Light Agents," who reinforce the message by going door-to-door and talking with each family. They also make presentations and hold community meetings, in addition to taking stock of the current situation, which is important in determining what steps the company needs to take.

In its latest endeavor, PRONAI is working with Rocinha XXI, a growing NGO in the foothills of the slum. At the top of a narrow stairway, a long white room is filled with young people sporting green and white Light T-shirts. Among them is Déo Pessoa, a 29-year-old field assistant. Pessoa knows a lot about Rocinha. He grew up there. His father was president of the municipality. His parents, who have since moved, lived there since the 1970.

"We have it in our blood," Pessoa says, whose job it is to help explain the program to local residents. It's not too hard of a sell, he says: "The people here want the program. They know it's for the betterment of the community. There's a great need here for this type of service. Since I was little, I've witnessed the community's economic and social development. Light is a private business, but it gives us a good, essential product."

Local resident Sandra, 33, who runs a small grocery shop overlooking a sharp precipice, agrees. A lifetime resident of Rocinha, she says the program is "legal," using a play on words to say it is literally legal as well as "cool." "With a meter and connections," she says, "we will not have problems with power shortages. Now things will be better."

After the company installs the power network, each resident is connected to the service and a meter is installed. For low-income residents, the connection costs about $30, providing a 42 percent discount for low-income clients. Light has a microfinance program that allows residents to make 24 payments of R$3 to cover the expense. "It takes each neighborhood about five years to generate a profit," Coutinho says.

The setup is a major change for residents, about half of whom are estimated to be siphoning off power illegally. "Stealing power in Brazil is a socially acceptable crime," says Coutinho. "It's very easy to doctor meters. Of course it's illegal to steal power, and we could ask for three years of back-payment, but PRONAI wipes the slate clean." For Light, the main benefit is that the program will help reduce power losses.

New meters with special locks installed by Light technicians are expected to deter energy theft	A local climbs the steep hillside on his way home, a piece of wire in hand

To Coutinho, the effort boils down to something very human: "People need to live in better conditions. This program brings electricity into homes, on a steady basis, which makes life easier and safer. It plays an important role in helping the local economy, by allowing cottage industries, such as seamstresses, to work at home, and giving them the address that is needed to get credit. It also gives them a sense of citizenship."

The program takes good corporate citizenship to another level, donating furniture and equipment, and funding language, computer, and college preparatory training in local community centers. The college entry training is going strong. In its first year, 60 students passed the test. Last year that number was 240, for an average of 80 percent getting into university, including some of the most competitive.

A measure of success of any effort is whether it is good enough to be replicated elsewhere. PRONAI's development impact has been so significant that it is being extended to another 500 or so favelas in Rio alone, and even into other states.

MIGA, a member of the World Bank Group, promotes foreign direct investment into emerging economies to improve people's lives and reduce poverty. The agency does this through its investment guarantee (insurance) program, encouraging investors to venture into the world's poorest countries where perceptions of noncommercial risk often inhibit investment, and through its investment marketing and dispute mediation services, helping countries improve their investment climates and know-how for attracting new business.

Thanks also to Dorst MediaWorks for providing pro bono post-production services.