Notes from the classroom: Exploring the role of energy infrastructure in health care delivery

Dateline: mid-March 2012
Location: MIT Sloan
By: MIT Sloan ghdLAB students

What would your life be like without a refrigerator, or a stovetop, or somewhere to charge your cell phone? Sitting in Cambridge, Massachusetts it is practically impossible to imagine. While talk of an energy crisis peppers our discussions, our electrified homes and gadgets are dead giveaways that we are energy rich. We have long since climbed up the “energy ladder” moving away from traditional wood stoves and candles to gas or electric stoves and compact fluorescent light bulbs, but in many parts of the world, this journey has yet to take place.

The energy ladder

In Mozambique, the country where our ghdLAB team will spend SIP and spring break, only 8% of the population had access to electricity as of 2008. In rural areas biomass fuels, including wood, charcoal, dung, and agricultural waste, are used for practically all cooking and heating. While wood fires may conjure up nostalgic memories of fireplaces and marshmallows, consider this: the World Health Organization estimates that exposure to indoor air pollution from burned biomass is responsible for nearly two million deaths from cancer, respiratory infections and lung diseases every year. Access to clean, safe energy is not just a convenience issue; it is a health issue.

In addition to the direct disease burden caused by a lack of access to modern energy sources, poor energy infrastructure has multiple effects on health system capacity. Without reliable energy, rural health clinics are unable to properly store vaccines that require refrigeration, sterilize equipment that require heat, or even have light to treat emergencies at night. In a 2003 assessment, VillageReach, our ghdLAB partner, sought to quantify part of this problem. They found that vaccination rates in two of Mozambique’s northern provinces were a measly 68.9 and 54.6 percent largely due to vaccine stock outs. Fast-forward almost a decade and in 2010 those rates had climbed to 91.9 and 78.1 percent.

VillageReach achieved these results by strengthening the health system’s capacity to run a dedicated logistics system, which includes a well-functioning cold chain for vaccines. In areas where rural electricity is an oxymoron, where did the energy to power these refrigerated supply chains come from? The answer is VidaGas, a liquid propane gas (LPG) distributor, established by VillageReach as a social enterprise to serve rural health clinics.

For 10 years, VidaGas has imported and distributed reliable supplies of LPG to health clinics across all of Northern Mozambique to run gas-powered refrigerators, sterilizers, lights, and stoves. Over time, it has expanded its customer base to provide LPG to hundreds of other government, commercial, and residential customers as well, empowering (quite literally) thousands of Mozambicans to begin their climb up the energy ladder.

Energy infrastructure that is so crucial to provide basic health services is also a catalyst for other positive benefits across society. As we prepare for our travel to Northern Mozambique, the VillageReach team has posed a question to us: What are the strategic opportunities for VidaGas to continue to grow and what are positive social impacts that would result from this growth?

We are about to become part of the story of a small energy company that has struggled to create a profitable business providing critical infrastructure support to the health sector and beyond. As we work alongside the management team to define VidaGas’ long-term growth strategy, we will learn a great deal about how the company’s values and commitment to social impact are embedded into their decision-making. And perhaps most importantly, we will learn how business principles from our MBA can be used effectively to create positive Alexandra Fallon

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