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Box 3: Rural Electrification In many developing countries, governments often have required public utilities to extend the grid to rural areas - without having tariff structures or collection ability to recover service costs. Rural electrification has thus often been implicitly or explicitly subsidized by urban electricity customers or by transfers from the national treasury. In some countries, grid extension has been closely associated with local politics, either in terms of promises made before elections to electrify, or even votes being delivered in exchange for electrification. Some utilities are reluctant to give up their political power, even though they lose money on every kilowatt-hour provided to rural customers. (Some industrial countries have also historically subsidized rural electricity services.) Because the ability to raise capital is limited, extension of the grid has proceeded slowly. |