Social Enterpreneur - Tri Mumpuni

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Around 75 million people in Indonesia still live without electricity. Small-scale, or “micro,” hydropower generation has been proposed and experimented with for many years, and although the technology works well, financial and regulatory obstacles have always limited its potential as a large-scale solution. By creating economic incentives and financing programs to unlock the power of hydro, Tri Mumpuni is helping rural Indonesia to realize its best chance at a reliable power supply.

The New Idea

To Mumpuni the key to bring about rural electrification lies in the nature of a system that is community based, of sustainability depends heavily upon the community ownership of the system. It allows the community to have an equity funding over the system, able to make decisions for the system design, operation and maintenance and to develop rural programs benefiting from the revenue. All of these endeavors are made possible through local cooperative mechanism Mumpuni has introduced. In the Cinta Mekar village where this model is first piloted, for example, the community has gained some income. Not only that it made around 620 households or 3,000 people hooked up to the electricity. It could furthermore stimulate economic activities that create employment and facilitate other social activities. With the system in place, it has been able to give an economic incentives for the private sector as well as the rural community. Thus it makes the system profitable and feasible for private investment.

Besides the off-grid system being locally owned, the sustainability of the system is nevertheless, very much influenced by the external wider mechanism. Mumpuni has been able to connect the community-based off-grid system to the state-owned electricity company, PLN’s, grid. The inter-connection is very crucial if the community power business is to survive when the utility comes and thus has to compete with the subsidized electricity service. With the co-generation system, the community is now able to sell the power supply to the PLN and gain revenue from the deal. This business arrangement model has therefore attracted the private investment to join in. Mumpuni with her organization IBEKA, facilitated a local business partner and the community of Cinta Mekar of West Java to pilot a public-private partnership model where both provide the equity funding for the system.

The provision of rural MHP plants has now turned to become an economic investment activity. The model has made the United Nations Economic Commission for Asia and the Pacific (UNESCAP) support and take it as the brainchild of UNESCAP Public Private Partnership model in the Asia Pacific region. Financial barriers to develop the MHP system has therefore been removed. However, the viability for the system to spread to the national scale has been in the availability of private investments and for this a legal framework should be in place. Mumpuni has therefore been working on lobbying to different government ministries for the establishment of rural electricity finance institution.


The Problem

Despite the capacity of natural resources for hydro power, 35 percent of Indonesia’s population who live mostly in rural areas still live without electricity. To feed the demand mega hydro power supply infrastructures have been constructed, however, resulted in high social costs. The land where people live and make a living has to be sacrificed. Human rights are violated over corrupted financial land compensation and poorly implemented resettlement programs. Environmentally, the system damages the ecosystem. Nonetheless, the government have also tried to provide the power supply by constructing the MHP plants. Regrettably only a few could sustain due to a top-down approach, poor construction and maintenance. So far out of 56 government projects there are 45 failed and 11 partial successes and failures. In addition, there is no local or outside economic incentive to make the system work.

In remote areas there are local initiatives to set up an off-grid system using the micro-hydro power technology. The local investment is returned by the fee the users pay to the community investors. In many cases, however, this kind of businesses are endangered by having the utility coming to the village and undersell the electricity. The users will most likely shift to subscribe the subsidized electricity. Under such a competition this has made the initial investment become very risky. With an unprotected mechanism, the business is impossible to attract private investment. The business would fail in an overnight if the utility comes.

Nevertheless, when these barriers are removed Indonesia is still facing the challenges to finance, promote and spread the MPH system to many who are still under supply. The government, under the ministry of energy and mineral resources, has initiated a policy for renewable energy development and energy conservation since December 2003. However, the policy has not yet been fully implemented, nor has it given a significant impact to the people. The state-owned electricity company is unable to reach the rural people due to lack of financial capability. There has no major public institution to play a key role on this matter or work with the private sector for the up-scaling industry.


The Strategy

To build a community ownership model Mumpuni applies some principles as to ensure technical and social sustainability of the system. Through the establishment of a community cooperative, many of the systems she helped construct are still up and running. Some have even become fully owned by the community cooperatives, some are still shared with the private investors. For this, Mumpuni empowered the community to be able to manage the system technically, environmentally, financially and socially sustainably. Long before the community gains any profits from the power system, Mumpuni helped them plan the funding of the system, the organization to construct and maintain the system, and set prioritized beneficiaries to be served when the system is on operation. In Cinta Mekar for instance, a public meeting was set to identify the poorest group in the community. They indicated that people having no land, no capital, no regular jobs and cannot afford higher education are prioritized to be assisted. Now the community has received a gross monthly income of approximately 31 million rupiahs (US$3,300). This revenue is divided equally with the business partner after deducting for the system operation and maintenance. The money is then used for scholarships for all children to go to school, emergency health fund and a health facility, seed money for farmers so that they can escape from the money lenders and for other income generating activities. With this model, Mumpuni has now been able to facilitate more than sixty rural communities across Indonesia to gain access and control of their electricity.

To Mumpuni, in developing micro-hydro power plant as local businesses all regulatory barriers have to be removed. She learned from other countries that a co-generation system is possible. It was in 1999, after having tried for several years she was finally able to make an off-grid - on-grid inter-connection system. However, the agreement was only limited to all off-grid systems that Ibeka has facilitated. In 2002, following a continuous lobbying Mumpuni has successfully enacted a government degree on interconnection. The regulation is set for the utility’s obligation to buy all small scale power and in 2004 they have to buy all medium-voltage co-generation. To ensure that the deals of the inter-connection fair enough to the community cooperatives, Mumpuni sits on committees and commissions to set tariff policies and push the utility for transparency.

Mumpuni sees a vast demand for rural electrification throughout Indonesia. She has developed the Pro-Poor Public Private Partnership model for rural electrification and made the UNESCAP provide the equity funding for the community. With this model she has made a joint venture between a community cooperative and a private investor feasible. Nonetheless, developing a partnership model is not enough. More importantly is the legal framework in which the model can work, spread and grow. Mumpuni and her allies have strived to ensure the availability of laws and regulations. She has been lobbying different ministries for the establishment of a public finance institution of US$ 30 million investment has already been made available by the Japan Overseas Development Agency (JPIC). Alas, the process has to be on hold awaiting for the ministry of finance’s approval. She also established a centre of excellence for people to learn about a MHP system for rural development. Through her training programs, Mumpuni has helped to educate many local government officials and developed the centre in international scale to serve the Asia Pacific region. Mumpuni also made different arrangements for the wealthy people to provide small scale funds for tiny villages. Mumpuni’s vision is that once the micro hydro is spreading she wants to focus on developing rural entrepreneurship impacted from the rural electrification.


The Person

For more than ten years Mumpuni has dedicated her life to bringing about change for rural communities. Her will to dedicate her life for marginal groups has been nurtured since her childhood. Mumpuni was influenced by her mother and learned the values of caring from her. Her mother always had little Mumpuni accompany her social activities when she went to different villages to care for sick people. Her house was always used as the centre for community activities from literacy programs to posyandu service for primary health care, for example. Despite her mother’s limited education, Mumpuni admires her a lot as the inspiration for her life.

She spent her teenage years with the family of Soepardjo Rustam, the former minister of internal affairs. She was very much influenced by the family. From them she learned to work directly with the poor in rural areas. After winning a scientific paper competition in 1982 she was offered to study in the Institute of Agriculture Bogor by the former rector of the institute. Her wish was actually to become a doctor but she failed in the selection process and decided upon studying agriculture instead. To her, her life path has been set up since then. In her final year of university she was given an opportunity by a New York based organization to work with fish farmer families in North Sumatra to generate income. She continued to work for rural communities in an integrated rural women and the environment program together with her professor from IPB. After she finished her university she joined UNDP and became the manager of the low cost housing for the urban poor program. All of these experiences have given her a path in learning how to develop a community based model.

It was her husband, an activist in the micro hydro power movement, who reminded her to return to the rural region and develop rural electrification. They both then shared their expertise in technical, social and economic aspects of the system. In 1992, Mumpuni was moved by a farmer who died of a heart attack when his micro hydro power business collapsed after state power company entered his village, offering subsidized rates as part of a political program. She realized that co-generation would be crucial to a sustainable rural electricity movement. For the next seven years she lobbied tirelessly with three successive energy ministers to allow small electricity producers to sell back into the grid, and in the meanwhile focused her efforts on developing a few small hydro projects. When she finally won her first concession in the co-generation campaign, in 2000, she set up Ibeka and devoted herself full-time to developing the micro hydro industry.

source :Ashoka: Innovators for the Public