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Member Spotlight – March 2016 | Energy Access Practitioner Network

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Member Spotlight – March 2016

Paving the way for energy entrepreneurs in North East India
Surabhi Rajagopal, SELCO Foundation

What began in 2012 as an attempt by a young college graduate to set up a small solar shop in his home state of Manipur in North East India has slowly grown into a medium-sized enterprise serving more than 500 rural households in one of the toughest regions in the country. Devakishor, together with other colleagues, established Mangaal Sustainable Solutions as a for-profit organization seeking to meet the needs of remote, rural communities in Manipur where more than 40% of rural households continue to be un-electrified (Source: 2011, Census of India, Sources of Lighting).

The SELCO Incubation Center was also established in 2012 with the aim to inspire young enterprises around India to solve issues of energy poverty.  The Center spearheads SELCO’s efforts towards improving the ecosystem for energy access across India. The ecosystem broadly includes technology innovation, entrepreneurship and skill development, financing for end users and entrepreneurs, and policy and regulations. The Center focuses on facilitating local energy entrepreneurship by replicating processes from models similar to SELCO India. Over the last three years, the Center has incubated more than eight medium sized enterprises, 50+ small entrepreneurs and over 200 micro-entrepreneurs, with a primary focus on the state of Odisha and others in the North-East of India. Devakishor and Mangaal were part of its second round of incubation.

Selco Foundation

Mangaal Branch Office

Previously neglected in terms of socio-economic development, the India’s North-East states suffer from abject poverty and limitations on essential services due to remoteness, ethnic conflicts, and other issues. The region lacks  energy access services, as well as the supporting ecosystem required for business models to be implemented and local entrepreneurship to be developed. On the positive side, the entrepreneurial talent and gender sensitivity in the region would provide a good foundation to create opportunities around solving the critical challenges in the region.

An enterprise like Mangaal, based in Manipur, faces a number of location-specific challenges that have a direct impact on business development and growth. Some of these include:

  • Logistical hurdles with product supply consistency due to regular blockades and a geographical terrain that is hard to navigate
  • Limited number of product suppliers in the region
  • Lack of end-user and small enterprise financing options
  • Limited expertise within the region around issues of regulation and taxation specific to the off-grid energy sector
  • Diversity in terms of language, culture, and traditions among the many tribes across the region.

Mangaal has sought to address these challenges through various means. Given differences in language and customs in each district and among tribes, their recent expansion to the district of Churchandpur in Manipur – barely 60km from their main office in the State capital, Imphal – required a new team consisting of individuals from the local villages. Similarly, system sales, servicing and collections are being undertaken with the support of a local community-based organization. Representation through such a local organization provides Mangaal a recognizable name and face in areas where operating directly would have been inhibited by tribe and language barriers.

While both rural and commercial banks are present in the state of Manipur, albeit with more branches in the valley districts compared to the hill regions, there is still an extremely low appetite for lending, particularly to rural communities. To address the risk perception among various financial institutions, Mangaal created a revolving fund through a local non-government organization (NGO) to finance their systems. The NGO introduces the end users to Mangaal and facilitates collections. These collections go back into the revolving fund to finance new end-users of solar energy systems, while the NGO is compensated for its transaction costs. Eventually, the learning from this experiment will be shared with other banks in the region to further increase the lending portfolio for end-users.

Mangaal is also planning to piggyback on existing mechanisms such as Marup, an informal savings system popular in the region. In Marup, 10-12 individuals get together informally to save a certain amount on a monthly basis for a specific purpose. Every month, one individual is able to access a large lump sum from the central pool. A ‘Solar Marup’ is being explored to help households purchase energy solutions.