mEE.E,,u,EE,..,,..Eh, S#4y A U UI U E U IU IEE HiE U3@EEE U Eneibgv Ser*tor Maiiaj.arleiiwt Assist ;!il( ho>glAill 3OiA I¶¶3 Nepal Energy Efficiency and Fuel Substitution in Industries: An Agenda for Action Report No. 158193 JOINT UNDP / WORLD BANK ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAMME (ESMAP) PURPOSE The Joint UNDP/World Bank Energy Sector Management Assistance Programme (ESMAP) was launched in 1983 to complement the Energy Assessment Programme, established three years earlier. ESMAP's original purpose was to implement key recommendations of the Energy Assessment reports and ensure that proposed investments in the energy sector represented the most efficient use of scarce domestic and external resources. In 1990, an international Commission addressed ESMAP's role for the 1990s and, noting the vital role of adequate and affordable energy in economic growth, concluded that the Programme should intensify its efforts to assist developing countries to manage their energy sectors more effectively. The Commission also recommended that ESMAP concentrate on making long-term efforts in a smaller number of countries. The Commission's report was endorsed at ESMAP's November 1990 Annual Meeting and prompted an extensive reorganization and reorientation of the Programme. Today, ESMAP is conducting Energy Assessments, performing preinvestmnent and prefeasibility work, and providing institutional and policy advice in selected developing countries. Through these efforts, ESMAP aims to assist governments, donors, and potential investors in identifying, funding, and implementing economically and environmentally sound energy strategies. GOVERNANCE AND OPERATIONS ESMAP is governed by a Consultative Group (ESMAP CG), composed of representatives of the UNDP and World Bank, the governments and institutions providing financial support, and representatives of the recipients of ESMAP's assistance. The ESMAP CG is chaired by the World Bank's Vice President, Finance and Private Sector Development, and advised by a Technical Advisory Group (TAG) of independent energy experts that reviews the Programme's strategic agenda, its work program, and other issues. ESMAP is staffed by a cadre of engineers, energy planners and economists from the Industry and Energy Department of the World Bank. The Director of this Department is also the Manager of ESMAP, responsible for administering the Programme. FUNDING ESMAP is a cooperative effort supported by the World Bank, UNDP and other United Nations agencies, the European Community, Organization of American States (OAS), Latin American Energy Organization (OLADE), and countries including Australia, Belgium, Canada, Denmark, Germany, Finland, France, Iceland, Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Sweden, Switzerland, the United Kingdom, and the United States. FURTHER INFORMATION For further information or copies of completed ESMAP reports, cointact: ESMAP cdo Industry and Energy Department The World Bank 1818 H Street N.W. Washington, D.C. 20433 U.S.A. CONFIDENTIAL Report No. 158/93 NEPAL ENERGY EFFICIENCY AND FUEL SUBSTITUTION IN INDUSTRIES An Agenda For Action ACTIVITY COMPLETION REPORT JUNE 1993 Power Development, Efficiency, and Household Fuels Division Industry and Energy Department World Bank Washington, DC 20433 FISCAL YEAR July 16 to July 15 CURRENCY EQUIVALENT Currency Unit = Nepalese Rupee (NRs.) I Nepalese Rupee (NRs.) = 100 Nepalese Paise I US Dollar = NRs. 43.00 (April 1992) ENERGY CONVERSION FACIORS I GWh I million kWh 1 GWh 3600 GJ 1 GJ 1 million kJ I kCal 4.2 kJ ABBREVIATIONS AND ACRONYMS ATF Aviation Turbo Fuel BT Bull's Trench Kiln CGC Credit Guarantee Corporation FO Fuel (fumace) Oil FNCCI Federation of Nepalese Chambers of Commerce and Industry FIDOL Factory Inspectorate of Departnent of labor HMG/N His Majesty's Government of Nepal HSD High Speed Diesel IOE Institute of Engineering LDO Light Diesel Oil LPG Liquid Petroleum Gas MOI Ministry of Industry MS Motor Spirit (Gasoline) NIEMP National Industrial Energy Management Program NEA Nepal Electricity Authority NOC Nepal Oil Company NPC National Planning Commission NCL Nepal Coal Limited PCBI Private Commercial Banking Institutions SKO Kerosene TCN Timber Corporation of Nepal WECS Water and Energy Commission Secretariat VSBK Vertical Shaft Brick Kiln CONTENTS EXECUTIVE SUMMARY .................................. i I. Introduction ........................................ . 1 A. Background .................................... 1 Energy Efficiency Initiatives ...................... ..2 Request for ESMAP Assistance ...................... 3 B. Objectives and Scope of Activity ....................... 4 C. Counterparts for Study ............................. 4 D. Conduct of Study ................................. 5 II. Energy Prices and Economic Costs of Supply .................... 7 A. Introduction .........7.. .. .................. . 7 B. Electricity ..................................... 7 C. Petroleum and Coal ............................... 8 D. Fuelwood ..................................... 10 E. Prices of Rice Husks ..................... ...... 12 mI. Rationalizing Use of Imported Energy ......................... 14 A. Introduction .................................... 14 B. Fuels Choices for Industrial Process Heat .................. 14 Choice Between Fuel Oil and Ocher Petroleum Products ... .... 14 Choice Between Fuel Oil and Coal .................... 15 Rice Husk As Substitute Industrial Fuel. ................. 16 C. Fuel Choices for Transportation ........................ 19 IV. Defining Benchmarks For Industrial Energy Efficiency .. ........... 21 A. Industrial Uses of Energy ............................ 21 B. Boiler Efficiency Improvement ......................... 22 C. Other Prospective Areas for Efficiency Improvements ... 25 Furnace and Kilns .............................. 25 Industrial Cogeneration ............... 26 V. Electricity Conservation in Commercial Sector . 28 A. Background .............. ................. 28 B. Lighting Efficiency Improvement in Commercial Buildings ... .... 30 C. Analysis of Energy Efficient Lighting Retrofit Options .... ...... 31 D. Assessing Financial Returns of Retrofit Schemes ... 34 VI. Options for Brick Production ....................................... 36 A. Introduction ......... 36 B. Overview of Brick Production Systems ............................ 36 Existing Kilns ........................................... 36 Technology Transfer From China ............................. 38 C. Comparative Economics of Brick Production Systems .................. 39 EXECUTIVE SUMMARY A. Purpose 1. The purpose of this ESMAP Activity Completion Report is to present a concise synthesis of the findings and conclusions of the Nepal Energy Efficiency and Fuel Substitution Study. The study was conducted by the joint UNDP/World Bank Energy Sector Management Assistance Program (ESMAP), working in collaboration with the Water and Energy Commission Secretariat (WECS) and the Ministry of Industry (MOI). The report focuses primarily on issues and options for the industrial and commercial sectors, and concludes with the proposed MOI Action Plan to launch the National Industrial Energy Management Program (NIEMP) using funds to be made available under the IDA Credit for the Nepal Power Sector Efficiency Project. B. Backgmund 2. In 1989, as part of the preparations for 11MG/N's Eighth Five Year Plan, the WECS proposed a series of measures to improve energy efficiency in the economy and encourage the substitution of imported fossil fuels with indigenous energy resources. The majority of the proposed measures were directed primarily at industrial consumers and therefore a comprehensive proposal was made for the creation of a NIEMP of similar scope to other, more established national programs in the region (e.g., in Thailand and Pakistan). 3. The 1MG/N endorsed the proposal to establish a NIEMP, and approached the World Bank for financial and technical assistance to launch the program. In 1991, following consultations with 1MG/N, the World Bank agreed to embark on a program of energy assistance to Nepal under which: (a) technical assistance would be provided under ESMAP to conduct a study on "Energy Efficiency and Fuel Substitution" to define the more practical and cost effective measures to disseminate under the NIEMP; and (b) World Bank/IDA Operations would allocate financing for the prospective follow-up activities on industrial energy efficiency within the framework of the proposed Nepal Power Sector Efficiency Project which, by then, was at an advanced stage of preparation. C. Objectives and Scope of Study 4. The principal objective of this ESMAP study was to assist the HMG/N to critically evaluate options for rationalizing energy use in key consuming sectors of the economy, and to develop a coherent strategy for the proposed NIEMP. 5. The study was structured to: (a) assess the degree to which the HMGlN's existing energy pricing policy supported or undermined economic and financial incentives for the rational use of energy by key energy consuming sectors, (b) develop case studies which, - ii - in tum, would be applied as benchmarks for designing plant-specific action under the proposed NIEMP to improve energy efficiency and/or promote fuel substitution in the industrial sector; (c) evaluate the economics applying energy efficiency and fuel substitution measures on a large scale to reduce the fuelwood-use intensity of brick production in kilns (including options to substitute fuelwood with coal) and, if necessary, to establish benchmarks for follow-up action under the NIEMP to disseminate the appropriate technical package(s); (d) justify ea:h of the prospective components of the NIEMP, taking into account current and emerging HMG/N policies conceming energy and industrial development, pollution abatemenit and environmental improvement, and so on; (e) recommend ways to effectively apply available financing from the recently approved IDA credit to establish local capacity to implement energy efficiency improvements in the industrial sector, and also promote rational energy use practices in all sectors. 6. The ESMAP study' took the following approach: (a) existing energy prices were compared with estimates of the economic costs of energy supply to key consuming sectors; and (b) a number of specific situations were investigated in which it had appeared that distortions in energy prices was a major factor that had led consumers (e.g., in the industry and transport sectors) to adopt economically inefficient energy use practices. It is expected that some of the problems identified could effectively be mitigated through appropriate changes in an energy pricing policy tat the HMG/N intends to make following the conclusion of the ongoing ADB-funded energy pricing study.? This activity was executed by an ESMAP Team which comprise: Messrs. Amarquaye Annar (Senior Energy Planner, World Bank) the Team L-eader; Kapil Thukral (Energy Economist, Consultant), Kazem Alavi (Energy Specialist, Consultant), Bjom Backstrom (Industrial Engineer, Consultant), Markku Satuli (Industrial Economist, Consultant), John Haldane (Building Energy Consultant), and Shakti P. Shrestra (Management Consultant). Mr. Pinij Gritiyaransan, Executive Director of the Energy Conservation Center of Thailand was an Adviser to the ESMAP team and hosted the study tour by the Nepalese counterparts to Thailand. This report was prepared by Messrs. Arnar and Thukral. Mr. Alavi superviscd the fieldwork which was conducted by Messrs. Backstrom, Haldane, Satuli, and Shrcstra. Ms. Deborah Mellman provided wordprocessing support. FINNIDA provided ESMAP with the funding for the study. 2 In late 1991, prior to the beginning of the ESMAP study, the 11MG/N, with funding from the Asian Development Bank (ADB), commissioned an international consulting firm to execute a study on "Equitable and Efficient Energy Pricing Policies" for Nepal. The HMG/N's plans were to use the results of the study as the basis to define comprehensive reforms in its energy pricing policy. The WECS informed ESMAP that the results of the energy pncing study would be available by the end of June 1992, and therefore could be used to "fine-tune' the analyses of the impact of prospective measures to promote energy efficiency and fuel substitution. Unfortunately, the energy pricing study was not completed on schedule; by August 1992, when the ESMAP team completed the final mission to Nepal, a draft report on the energy pricing study had not been submitted by the consultants to the WECS. - iii - Stmctum of Report The main text of the report is structured as follows: Chapter 1: Introduces the study, reviews the background, objectives, and scope of the study. Chapter II: Compares the economic costs of supplying the main forms of energy to key cconomic sectors, with existing encrgy prices. Major distortions betwocn prices and the economic costs of supply are highlighted. Chapter III: Reviews specific situations for which the existing energy price distortions have led industrial consumers to adopt economically inefficient fuel choices. For example, the effects of existing distortions of petroleum pricing structure are reviewed for selected cases in the industrial and transport sectors. Chapter IV: Reviews the results of fieldworzk (energy surveys and audits) that were conducted in order to develop case studies that define benchmarks for energy efficiency improvements in selected industrial processes, such as boilers, kilns/fumaces, and cogeneration units. Chapter V: Reviews context and scope for electricity conservation in the commercial sector. Taking into account that lighting is in large part responsible for the significantly high daily peak demand for electricity in the NEA grid, an assessment is made of the scope for, and economic viability of, applying lighting efficiency measures in commercial buildings such as tourist hotels. Chapter VI: Evaluates the technical and economic viability of an altemative brick production technology from China which has the potential to reduce the intensity of fuelwood use in this industrial sub- Box 1 - iv - D. Main Findings Raftionalizing Use of Imported Fuels (Chapter III) 7. The mid-1993 increases in the selling prices of petroleum products has narrowed the gap with economic costs of supply. Nevertheless, the pricing structure for petroleum products incorporates severe distortions which reflect the substantial levels of cross- subsidization between diesel, kerosene, and motor-spirit (MS) or gasoline. For example, because of taxes imposed by HMGIN to raise revenue for the national budget, MS is priced at more than 270 percent of the economic costs of supply. By contrast, the price of kerosene (SKO) is about 15 percent below the economic costs of supply, diesel is at par with the cost of supply, and furnace oil (FO) and light diesel oil (LDO) are priced above the costs of supply. 8. For industnr, thu principal fuel for stearn generation is FO. The fieldwork revealed that there is widespread use of other higher-value petroleum products such as high-speed diesel (HSD) and SKO. Such practices are economically inefficient for the country and need to be curtailed. The investigations revealed that a growing number of industries use SKO for steam generation because at current prices, the price per unit of heating value of SKO is about the same as that for FO. Although the price per unit of heating value for HSD is about 20 percent higher than that for FO, its use as a fuel in industrial boilers and furnaces appears to have become more widespread because compared to FO, there are fewer bottlenecks in the supply of HSD. By contrast, industries currently use LDO only in relatively small quantities because the equivalent price of LDO is about 37 percent higher than FO. 9. Although from an energy equivalency standpoint, the price of coal (i.e., in heating value terms of GJ per tonne at the consumer end) is competitive with that for FO, coal is not the preferred fuel for industrial process heating applications because the efficiency of coal-fired boilers tend to be relatively lower than the efficiency of boilers that are fired by liquid fuels. Moreover, when extemalities such as environmental costs associated with the use of the two fuels are considered -- in addition to ash disposal problems and particulate emissions since coal use entails relatively high gaseous emissionh -- there are not compelling reasons to promote coal as a substitute for petroleum. 10. The use of rice husks in small-scale industry began on a large scale when a substitute was needed for fuelwood in the worst affected areas such as the Kathmandu Valley. Lately, there has also been a strong trend towaids more widespread use by industry of rice husks to substitute petroleum fuels such as HSD in smaller-sized boilers (i.e., 3 tonnes steam per hour or less). An obvious benefit of increasing the use of rice husk -- a locally available biomass resource -- is that it reduces the vulnerability of Nepalese industry to disruptions in imported fuels (coal and petroleum products). In reviewing the economics of substituting HDS with rice husks in small-sized boilers, it is v - clear that it would be cost-effective to substitute HSD with rice husk even if rice husk prices were to increase from the present levels of between NRs. 150-1200/tonne to as high as NRs. 1500/tonne. Moreover, the economic cost of saving HSD fuel by retrofitting boilers to use rice husks (i.e., computed on life-cycle costing basis for different hours of operation per year) would be consistently lower than the equivalent costs of importing the HSD. Therefore, there may be justification for the HMG/N to take steps to assist industries to convert HSD-fired (as well as SKO-fired and LDO-fired) boilers to rice husk, preferably by retrofitting with fluidized bed combustors. Nevertheless, there are other issues, primarily environmental concerns, land availability, and uncertainties about the supply of rice husk that may pose constraints to more widespread use of rice husks. 11. For transportation, the most adverse impact of the distortion in the petroleum pricing structure is that some private operators of cars, taxis, and two/three wheelers regularly mix SKO into MS, the aim apparently is to reduce the fuel costs of running their vehicles. This practice is illegal, leading to incomplete combustion in the vehicle engines which further lowers the fuel efficiency of vehicles, and is recognized to be the leading source of air pollution in Kathmandu. Benchmarks for Industrial Eneigy Efficiency (Chapter IV) 12. In order to be cost-effective and commercially viable over the Dong-run, programs to promote energy efficiency in Nepal's relatively small industrial sector need to concentrate available resources on measures that would be replicable acrocs the sector, thereby expanding the target group for dissemination activities. Accordingly, the objective of the field investigations by the ESMAP team were to ascertain the technical and economic scope for energy efficiency improvements for the common items of plant operations (e.g., industrial boilers, kilns/fumaces, etc.) in manufacturing industries. 13. The most significant potential for saving energy was found to exist in the improvement of the operation efficiency of steam boilers. Presently, many boilers are operated allowing high amounts of excess air into the combustion chamber. Many boilers also had very high flue gas temperatures, which points to the possibility to install extra heat recovery equipment. This would reduce specific fuel consumption per steam output. 14. During July/August 1992, the ESMAP team conducted energy audits of four industries to determine the scope for saving energy through the application of "housekeeping" measures on boilers. Such "housekeeping measures" include plugging leaks in existing steam generation and distribution systems, de-scaling boilers, improving insulation of pipes, tuning burners (i.e., adjusting air/fuel ratios to provide for more efficient combustion), and so on. Case Studies on seven boilers are presented in the main text, they indicate that the value of projected savings would be in the order of 10 percent of current fuel use in the boilers. The main conclusion is that there is significant scope for replicating "housekeeping" measures and minor retrofit measures (e.g., * vi - instrumentation) on boiler and steam systems, such as tuning boilers by adjusting fuel-air mixtures so as to enhance combustion efficiency, dc-scaling boilers, using thermal insulation on boilers, servicing and repairing steam distribution and condensate return systems, and installing instrumentation. The measures would require relatively minor capital expenditures by plant owners (i.e., can be accomplished out of operating and maintenance budgets), yield significant retums and, equally important, provide plant owners with quick payback on investment. 15. In addition to boiler users, the fieldwork investigated the scope for energy savings in kilns and furnaces. However, because the available data was sketchy on the operations of the kilns and furnaces that were investigated during the fieldwork, tl. ESMAP team was not able to develop specific measures to improve energy efficiency. Nevertheless, in the case of the Hetauda Cement Industries Ltd., there was adequate data on the operations of the kiln to enable a preliminary review to be conducted. The ESMAP team concluded that the specific coal consumption level could be reduced from 4300 to 3200 M per tonne of output; similarly, electricity use could be reduced from 163 to 88 kWh per year. In current prices for coal and electricity, the value of the potential energy savings for the company would be about NRs. 31 million per year (US$0.7 million per year). Further efforts to identify and implement measures to improve energy efficiency in kilns/fumaces should be undertaken as part of the proposed follow-up actions under the NIEMP. Scope for Electicity Conservation (Chapter V) 16. Despite recent increases in tariffs, the level of electricity prices is, at present, considerably lower than the economic costs of supply, and the structure of electricity tariffs do not reflect the cost of supply either at the different voltage levels, or at peak and off-peak periods. Moreover, the level of losses on the supply-side (i.e., transmission and distribution in the grid) are unacceptably high. Hence, top priority should be accorded to the Nepal Electrical Authority's (NEA) plans under the recently approved Power Sector Efficiency Project to reduce such losses through a vigorous and systematic program. Nevertheless, as power system losses are brought under control and the level and structure of NEA tariffs are adjusted to reflect economic cost of supply principles, there should be a parallel effort to identify and field test specific measures to upgrade the efficiency of electricity use in the country. Accordingly, the report includes a preliminary assessment of the scope and feasibility of applying energy efficient lighting systems to curtail the growth of the relatively high peak power demand in the NEA grid. Commercial building consumers of NEA, such as tourist hotels, may be good prospects for a pilot scheme to demonstrate the scope for cost effective electricity conservation through lighting efficiency improvements. - vii - Energy Efficiency in Bnick Pmduction (Chapter VI) 17. The production of fired bricks in Nepal consumes large amounts of fuelwood and coal. The operations of this industry is recognized as one of the major causes for the depletion of natural forests in the Terai, as well as of smoke emissions which have led to acute air pollution problems in the Kathmandu Valley. 18. Recently, the Ceramics Promotion Project (CPP), which is being undertaken jointly by HMG/N and the GTZ of Germany, took the initiative to arrange the transfer of innovative Vertical Shaft Brick Kiln (VSBK) technology from China to Nepal. The VSBK was considered to be an attractive option because of its relative energy efficiency compared to the conventional Bull's Trench (BT) kiln that dominates production in Nepal; the VSBK consumes about 250 kCal per kilogram of bricks compared to about 400 kCal per kilogram of bricks for the BT kiln. Moreover, the VSBK is virtually smokeless and, according to GTZ, can be operated all the year round, even during the rainy season. 19. As a first step in transferring the VSBK technology to Nepal, the CPP assisted a private enterprise near Kathmandu to establish a pilot operation which has now been maintained for over a year. The pilot operation has stimulated interest in the valley about the potential impact the VSBK could make by displacing the BT kiln, and thereby significantly alleviating the constraints on the industry due to the dwindling supply of fuelwood. With the concurrence of the WECS, the ESMAP team collaborated with GT7Z and local consultants to dete.mine whether proposals to accelerate the dissemination of the VSBK technology in the country would be justified on technical and economic grounds. 20. The analysis compared the operations of the BT kiln with six different configurations of the VSBK. The analysis confirmed that compared to the overall economic cost of brick production using a BT kiln (NRs. 1123/ fired-brick), the overall economic cost of producing bricks using the VSBK varies from NRs. 1.161 fired-brick (manual operations in dry season only) to NRs. 1.73! fired-brick (semi-mechanized operations all the year round). Significantly, the results of the analysis also indicate that due to additional investments in storage facilities, the coz_ of operating a VSBK on a year-round basis (i.e., 300 days) would be higher than that for operating it only during the dry season (i.e, 150 days operation). 21. Taking into account the substantial fuel savings that would be achieved with the VSBK compared to the BT kiln, and also the concomitant environmental benefits in terms of reduced loss of forest area and reduced gaseous emissions, there is justification for continuing the R&D effort began under the CPP. Emphasis should be shifted to cost reduction with the objective of making year-round production of hollow bricks with the VSBK economically attractive (from the national economic perspective) and commercially viable for the local entrepreneurs. It may, nevertheless, be premature to embark on an - viii - accelerated program to disseminate and commercialize the use of the VSBK. Such an effort can only be justified as part of a strategy that explicitly takes into account the environmental benefits of promoting its use, particularly in the Kathmandu Valley area. E. Agenda for Follow-Up 22. The World Bank/IDA has allocated over US$2.9 million under a component of the ongoing Nepal Power Sector Efficiency Project (IDA Credit 2347-NEP) to finance the initial phase of the NIEMP. Accordingly, the MOI's agenda for following up on the findings and recommendations of this study relates directly to the goals and targets set for the Industrial Energy Management (IEM) component of that project. Strategic Considerations 23. When the proposals to establish the NIEMP were originally formulated by the WECS and the MOI in 1990,3 the primary objective was to establish the national framework for the follow-up to the UNESCAP/UNIDO regional initiative on industrial energy efficiency (i.e., under REDP), and to incorporate industrial energy efficiency improvement program into the HMG/N's Eighth Five Year Plan. At that time, the 11MG/N's strategic developmental objectives placed emphasis on: (a) creating a positive international trade balance in energy, (b) improving the overall productivity and international competitiveness of local industry, and (c) reducing the vulnerability of the country to disruptions in the supply of imported petroleum products. The latter objective emanated primarily from HMG/N's desire to limit the impact of the T & T impasse with India. 24. Since then, the T & T impasse with India has been resolved, and the 11MG/N has introduced a new set of policies to create an enabling environment for industrial development (Box 3). The HMG/N's strategic agenda is shifting to accommodate the growing importance of issues conceming environmental sustainability at all levels of the economy.4 In particular, there is a broad consensus in HMG/N that the Kathmandu Valley's environment is deteriorating rapidly, and that energy/environmental interactions are the cause of some of the more acute environmental problems. 25. Hence, the original proposal to establish the NIEMP has been combined with other MOI initiatives on industrial pollution control to establish the National Industrial Energy Management and Pollution Control Program (NIEMPCP). With the additional impetus provided by the NIEVPCP, there is a growing expectation in the HMG/N that "Proposal For Undcrtaking An Energy Management Program For The Industrial Sector In Nepal". draft prepared by the MOI and the WECS, November 1990. 4 See report on 'Environmeatal Problems of Urbanization and Industrialization: The Existing Situation and Future Direction", submitted to UNDP by Environmental Management Action Group (1992). - Ix - Industrial Policy and Eney Efficiency The HMG/N has introduced a new Industrial Policy which is designed to create an enabling environment for the private sector to assume the leading role in industrial developmcnt. The main thrust of the new policy is to shift the country's industrial developmcnt regime from an inward to outward-looking strategy, thereby improving the competitiivness of local industry. To facilitatc this adjustment in policy, the Government plans to: (i) privatize most of the existing public sector manufacturing industries and shut down unviable ones, (ii) rationalize the structure of industrial incentives and eliminate cost plus pricing mechanisms, and (iii) remove cumbersome administrative controls and simplify procedures. These reforms arc expected to improve the chances of- success of the NIEMP, especially if greater emphasis is placed on involving the private sector in the delivery of energy efficiency services, etc. Box 2 the proposed follow-up activities, in conjunction with the IDA-financed Nepal Power Sector Efficiency Project, would provide a firmer basis for determining the extent to which measures to improve energy efficiency and promote the use of "cleaner" fue[s would be cost-effective relative to other forms of abatement measures, such as installing air pollution control devices.5 Moreover, in the medium- to long-term, as the HMG/N prepares for the proposed Environmental Improvement Project for Nepal,6 the expectation is that the pilot activities to be executed by the MOI under the Nepal Power Sector Efficiency Project would be the vehicle for testing and demonstrating specific measures that would eventually be incorporated into the "Energy Efficiency and Industrial Waste Abatement" component of the proposed Environmental Improvement Project for Nepal. Objecfives of IEM Component 26. The primary objectives of the IEM Program are: (a) to establish an Energy Management Services Unit under the auspices of the MOI for the purposes of providing advisory and outreach services to assist local industrial and commercial enterprises to implement commercially and environmentally sound investments to improve the efficiency This would apply to the UNIDOIUNDP-sponsored project on 'Industrial Pollution Control Management Strategy for Nepal", and also to the proposed Air Quality Stategy and Inveshnent Piugnim which, as part of MEIP Asia Regional Program, aims to assist HMGtN to develop air quality assessment models, identify appropriate standards and cmissions levels, develop cross-sectional least-cost strategy and prepare an action program and cstimated investment levels. The project would, inter alia, be designed to provide assistance to industries in the form of loan funds, directed grants, measures [or small industries, fiscal measures, stronger enforcement and community/NGO pressure, to give advice to industries. Industrial Energy Efficiency and Pollution Control The results of field investigations in Nepal by HMG/N agencies, assisted by several bilateral, multilateral devclopment organizations, indicate that the main sources of air pollution cmissions in the valley arc cncrgy rclated and, in addition to cxcessive exhaust gases from all types of urban road vehicles, can be traced to: (i) emissions from industrial stacks and chimneys in the vallcy, especially the 150 brick kilns that rely on fuelwood and coal, a cement plant, and several small and medium scale plants (i.e, exhaust gases from inefficient boilers and/or furnaces); and (ii) emissions by small diesel gensets which are increasingly becoming a neccssity for commercial cnterprises (e.g., tourist hotels) in the face of recurrent NBA power supply dismptions in recent years. Box 3 of energy use, especially regarding the use of fossil fuels which are imported; (b) to promote private sector participation in delivenrng energy management services (i.e., to perform key diagnostic and design tasks, maintenance services, etc.) to industrial and commercial enterprises; and (c) to assist a network of public institutions, including the Institute of Engineering (IOE), to establish and/or upgrade their respective in-house capabilities to provide training and outreach services to support energy efficiency improvements by industrial and commercial enterprises. Cow Sub-Prgnrms of the IEM Component 27. Institutional Development and Local Capacity Building. A key objective of the IEM component is the institutional development of the EMSU. Specifically, the EMSU would be provided with technical assistance: (a) to establish and maintain training and outreach support on industrial energy management, in collaboration with IOE; (b) to upgrade the capacity of the existing Management Information System on the Industrial Sector, created originally under a UNDP/UNIDO-funded project; (c) to develop expertise of the concerned MOI/EMSU staff on energy management topics, including study tours to gain first-hand experience of similar industrial energy management programs in other countries of the Asian region; and (d) to upgrade and expand the MOI Library/Information Center to incorporate materials and subscriptions on energy management in industry and commercial sectors, worldwide. 28. In order to achieve sustainable impact of the IEM component, the EMSU plans to emphasize the training and outreach elements of the program. Key goals are to establish an outreach facility in collaboration with the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), and also to build up the capacity of the Institute of Engineering to maintain training activities. - xi - 29. Training Activities: The EMSU plans to designate the IOE as a counterpart agency for training activities that are to be designed and conducted under the IEM component. Specifically, as part of the contractual provisions for "transfer of know-how to counterparts", EMSU would make arrangemernts for intemational consultants to assist the IOE to develop an in-house capability to conduct training and orientation programs for: (i) prospective energy auditors that are affiliated with existing engineering consultancy firms; (ii) technicians to upgrade the capabilities of plant operation and maintenance personnel (e.g., boiler and steam system operators, plant electricians, etc.) to perform according to minimum standards for energy efficiency; and (iii) owners and managers of industrial and commercial enterprises. A key goal is to develop core group of private engineering consultant firms who would provide energy management services, on cost- recovery basis, to prospective industrial and commercial sector clients of the EEM component. It is envisaged that, after completing training and certification activities, the successful professionals would be certified and/or pre-qualified to provide services to private sector and autonomous public sector enterprises under the IEM component. 30. Outreach Activities: The MOI expects that capital expenditures to implement energy efficiency measures would be mobilized by the industries themselves. To complement such efforts, as part of the activities to be funded by the IEM component, the MOI plans to establish and manage a Central Outreach Facility to stimulate private sector involvement in activities and thereby lay the foundation for sustaining the industrial energy efficiency activities beyond the closing date of the PSEP. In line with this goal, all the specialized equipment and diagnostic tools that would be procured by EMSU for use in performing the energy management services (e.g., energy audits) would be retained at the proposed Central Outreach Facility. 31. In order to facilitate their entry by local engineering firms into the market for such energy services, and furthermore to ensure greater utilization of the instruments for outreach activities, the EMSU plans to lease the instruments to the qualified firms- Larger industries would be given the option of purchasing the instruments and tools to support their own efforts to implement and monitor in-plant energy savings plans. Furthermore, to ensure the sustainability of the Outreach Facility, the MOI and the FNCCI are exploring the feasibility of establishing a 'Revolving Fund" into which revenues accruing from the use of the instruments and tools would be paid. 32. Energy Audits and Pilot Demonstration Schemes. To initiate such schemes, which would be the main field operations of the IEM component, the MOIIEMSU are in an advanced stage of preparing implementation plans for pilot schemes in three areas requested by the FNCCI and the Hotel Association of Nepal (HAN): a. Boiler and Steam System Efficiency Improvement The goal would be to establish and run the scheme as a pioneer effort to eventually provide full- fledged energy services to industries. The FNCCI is cooperating with the MOI on this initiative, which has good prospects for replication nationwide because it would focus primarily on "housekeeping" measures and minor - Xii - retrofit measures (e.g., instrumentation) on boiler and steam systems, such as tuning boilers by adjusting fuel-air mixtures so as to enhance combustion efficiency, de-scaling boilers, using thermal insulation on boilers, servicing and repairing steam distribution and condensate return systems, and installing instrumentation. It is projected that the implementation of such measures would yield high returns in the near- term, require relatively minor capital expenditures by plant owners (i.e., can be accomplished out of operating and maintenance budgets), and also serve as the framework within which capacity-building activities can be nurtured. The target for the IEM component is to cover up to 70 of the estimated 200 plus industrial boiler systems in Nepal; b. Hotel Ughting Systems Efficiency Audits and Retrfit Design. In parallel with the above pilot scheme, the MOI and the HAN have agreed to cooperate on the proposed pilot scheme which is to assist hotel owners and management by performing lighting efficiency audits of between 10 to 15 of the large hotels in the Kathmandu area, and as necessary, extending the assistance to cover the design of retrofit schemes. Specifically, EMSU would arrange for an intemational consultant to conduct professional lighting design audits at the designated hotels, and after discussing and agreeing with the hotel owners on the results, design retrofit measures (i.e., introduction of energy efficiency lighting fixtures, increased use of daylight, etc.) that would reduce electricity use for lighting while maintaining or upgrading the quality of lighting in the hotels. The assistance for each hotel would include prepanrng and justifying specific investment/financing proposals for the retrofit measures; and C. Electricity Load MNagement Scheme for Industries. Due to a shortfall in power supply capability in the national grid which is expected to continue until the commissioning of the proposed Arun hydropower facility, NEA has initiated a load shedding program for which most industries would, on average, have had to accommodate power cuts of at least two hours duration each day. Furthermore, the reliability of power supply (i.e, voltage fluctuations, frequency variations, etc.) has deteriorated considerably leading to significant damage to electrically-driven equipment (e.g., motor drives are frequently burnt out). The FNCCI has requested the MOI to take action urgently to assist its working out alternatives to alleviate the costs of the outages, including establishing a systematic and comprehensive load management program. If necessary, a contingency power curtailment plan of action could also be put into place. The MOI proposes to develop a pilot scheme to determine the scope for re-scheduling industrial loads on a plant-specific basis, and, with the active involvement of the FNCCI and NEA, to develop a plan of action to mitigate the adverse effects of NEA load shedding. - xiii - F. MOI Pmgnim Implementation Plan Organizational Stmctunm 33. Steering Committee for IEM Component: The MOI proposes to establish a Steering Committee (SC) under the Chairmanship of the Secretary, MOI, to monitor the implementation of all activities under the IEM component. The membership of the SC would comprise representatives of the FNCCI, the HAN, the National Planning Commission (NPC), and the NEA. As necessary, Sub-Committees would be created to monitor the implementation of specific pilot demonstration schemes. 34. The MOI proposes as well to designate the Joint Secretary, MOI, to take on the responsibility as the National Program Director for the activities on industrial energy efficiency and pollution control, including the IEM component. The National Program Director would also take on the duties as Member/Secretary of the SC, and additionally supervise the work of the Energy Management Services Unit (EMSU). 35. MOI/Energy Management Services Unit: A Senior Staff Engineer who is to be appointed by the MOI to head the EMSU would be designated as the Pgram Coordinator for the IEM component. It is envisaged that the primary responsibilities of the Program Coordinator would be to: (a) supervise and coordinate assignments to be carried out by intemational and local consultants; (b) to collaborate with HMG/N agencies, such as the Factory Inspectorate, Department of Labor (FIDOL), the NEA, and public sector institutions, such as the IOE, to achieve the institutional development and capacity-building goals of the program; and (c) to network on a day-to-day working level basis with key stakeholder organizations in the private sector, such as the FNCCI, to implement the pilot demonstration schemes. Budget under IEM Component of PSEP 36. The budget for the IEM component is the equivalent of US$2.6 million plus contingencies.7 Tentatively, the breakdown of projected expenditures for the above implementation plan is estimated as follows: 7 The funding for the NIEMP will be provided through the IDA credit for the Power Sector Efficiency Project. In 1992 prices, the total budgeted amount for the NIEMP is about US$3.3 million, including US$2.6 million as the foreign exchange component and US$0.4 million (NRs. 17 million) as the local currency contribution of the HMG/N. The agreement between the [MG/N and the World Bank stipulates that the component will be managed by a Project Implementation Unit (PIU) in the HMG/N's Ministry of Industry. - xiv - IEM Sub-Componenl/Activity Inputs US$ million US$ million (m/m) (Local) (Foreign) (a) Institutional Development (EMSU) 0.100 0.150 (b) Training Activities 15 0.100 0.050 (c) Pilot Demonstation Schemes 60 0.250 1.250 (d) Instruments, Equipment, Tools 0.500 (e) Outreach Materials 0.100 0.050 (f) Miscellaneous Sludics/Surveys 5 0.050 0.600 2.000 Price Contingency 0.060 0.200 0.660 2.200 Table 1 G. Conclusions 37. The study and the proposed MOI action plan provide a systematic framework within which the NIEMP would be launched using available financing from the IDA credit for the Power Sector Efficiency Project. Moreover, the study highlights issues and options which need further consideration by HMG/N within the broader objectives for environmental improvement in the country. 1. Introduction A. Backgmund 1.1 Nepal is a small country with a population of almost 20 million and a per capita income of about US$170, one of the lowest in the world The country faces formidable development challenges which are compounded by its remoteness and landlocked position. Fuelwood is the traditional source of energy, but extensive deforestation in the low-lying regions of the country (i.e., the Terai) has accentuated the gap between demand and a sustainable supply of fuelwood. Only about 12 percent of energy consumption in the country is monetized. Between 1980/81 and 1987/88, the consumption of commercial energy (i.e., electricity, petroleum products, coal) increased at 8 percent per year compared to an annual G.DP growth of 4.7 percent; the relatively high elasticity of demand for commercial energy, and the required expenditure to import petroleum products and coal from India has placed a strain on the country's resources. For example, during the 1980s petroleum imports alone accounted for 29-53 percent of foreign exchange earned from Nepal's commodity exports. 1.2 Key components of the country's development strategy for the long term is to efficiently expand hydroelectric generation capacity to meet Nepal's internal energy needs, and through power exports to India, to mobilize financial resources to be applied to the broader developmental needs in all sectors.4 However, due to the slow progress in expanding hydroelectric capacity and the interconnected grid system, the HMG/N recognizes that trend points towards net increases in energy imports in the future; power shortages are projected to occur in the mid-1990s, and fossil-fuel power plant capacity may need to be expanded. 1.3 In September 1989, the Water and Energy Commission Secretariat (WECS) and the National Planning Commission (NPC) joindy organized a National Workshop to "review energy issues and options for the Eighth Five Year Plan". The objective of the workshop was to bring together agencies and departments of the H1MG/N in order to: a. Discuss the critical policy issues and options related to each energy subsector, taking into consideration HMG/N's broader policy objectives and priorities for national development, especially the "Basic Needs Program" and "Decentralization Policy"; b. Review current projections which highlight the rapidly widening gap between the future energy supply and demand in Nepal, identify practical options for closing the energy supply gap; and Nepal has vast hydropower resources which are estimated at 83,000 MW; the economically exploitable potential is 25,000 MW, of which about 20,000 MW has been investigated. Only 237 MW of this potential has been developed. c. Identify a common approach and framework for strengthening coordination among HMGJN line ministries and agencies in planning and implementing national energy policies, strategies and programs. 1.4 A broad consensus emerged among Works;hop participants that in order to redress the growing imbalance between monetized energy supply and demand, the HMG/N would need to place greater emphasis than hitherto on pursuing a range of energy demand management options. The primary goals would be to (a) curtail the growth in demand for imported fossil fuels (i.e., petroleum products and coal) by eliminating wastage through greater efficiency of end-use; and (b) lay the basis for substitution with indigenous fuels so as to minimize the growth in demand for imported fossil fuels. Moreover, the Workshop concluded that although reforms in energy pricing policy would be necessary to achieve the energy demand management goals, such reforms may not by themselves be sufficient to effect changes (i.e., in patterns and practices in the use of energy) at a scale that would alleviate the energy supply gap in the short- to medium-term. Therefore, a more proactive and comprehensive strategy and program were needed to achieve concrete results. Enegy Efficiency Inidiatives 1.5 The initial involvement of the HMG/N in programs to promote greater efficiency of energy use in the economy began in 1985 as part of a UNESCAP/lJNIDO-sponsored Regional Energy Development Project (REDP). The project was implemented from August 1985 through July 1986, and concentrated on the industrial sector. During that year, the Ministry of Industry (MOI), which had been designated as the HlMG/N's lead implementing agency for the project, consulted with managers of designated industrial enterprises to review the scope for promoting energy conservation, organized an Energy Conservation Workshop in September 1985 to provide orientation and training to managers and engineering personnel on energy auditing techniques and procedures, and assisted 10 enterprises to identify low-cost measures to improve energy efficiency at the plant level. To conclude the project, a second Workshop was convened in July 1986 to review the experiences in Nepal under the project, to identify barriers to improving energy efficiency in industrial enterprises, and to develop an agenda for follow-up actions at the national level. 1.6 In addition to the lack of an organizational framework for the promotion and coordination of industrial energy rationalization activities, the Workshop participants identified the following barriers to improving energy efficiency at the plant level: (a) the lack of awareness on the part of plant owners, managers, and technical personnel about specific options to improve energy efficiency; (b) the lack of local expertise to assist the industries to identify, evaluate the cost-effectiveness of, and implement measures to improve energy efficiency; (c) the inadequacy of existing framework of fiscal and financial incentives to support energy efficiency improvement schemes such as retrofit -3- measures; aid (d) the lack of awareness of and access to energy efficiency equipment on the part of local equipment suppliers. 1.7 Subsequenily in 1989, the WECS prepared a background paper for the National Workshop to "review energy issues and options for the Eighth Five Year Plan" which identified a series of pricing and non-pricing measures that could be introduced to improve energy ffficiency in the economy, and also to encourage the substitution of imported fossil fuels with indigenous energy resources. The majority of the proposed measures were to be directed primarily at industrial consumers. Other measures were proposed to demonstrate options for the commercial, urban residential, and transportation sectors, such as schemes (a) to encourage more widespread use of energy efficient appliances and lighting systems in urban households and commercial establishments; and (b) to introduce mandatory standards, supported by engine tune-up services at a network of workshops, to upgrade the fuel efficiency of the vehicle fleet. 1.8 In the aftermath of the National Workshop, the WECS collaborated with the MOI to prepare a proposal to establish a National Industrial Energy Management Program (NIEMP). The proposal5 was to set up a program along similar lines as adopted for other national programs in the region (e.g., in Thailand and Pakistan). It was envisaged that the main industrial energy efficiency activities would take the form of (a) workshops to increase awareness of and disseminate information on industrial energy efficiency matters; (b) training and certification of local managers, engineering personnel, and consultants on energy auditing techniques as well as on in-plant energy management procedures, etc.; (c) energy audit services to assist industries to identify and evaluate specific measures and investment to improve energy efficiency; (d) specialized engineering design services to assist industries to implement energy efficiency retrofit schemes; and (e) supply project appraisal services to assist industries to secure financing for schemes. Request for ESMAP Assistance 1.9 The proposal to establish the NIEMP was endorsed by the HMG/N. Subsequently, the HMG/N approached the World Bank to provide financial and technical assistance to design and launch the program. 1.10 Following consultations with HMG/N, the World Bank agreed to embark on a program of energy assistance to Nepal under which (a) technical assistance would be provided under the UNDP/World Bank Energy Sector Management Assistance Program (ESMAP) to conduct a study on "Energy Efficiency and Fuel Substitution Options"; and (b) World Bank/IDA Operations would provide financing for the follow-up activities as 'Proposal For Undertaking An Energy management Program For The Industrial Sector In Nepal" (discussion draft), prepared by Ministry of Indust"y and Water and Energy Commission Secretariat, November 1990. - 4 - a component of a proposed Nepal Power Sector Efficiency Project which, by then, was under preparation. B. Objectives and Scope of Activity 1.11 The principal objective of this study was to assist the HMG/N to critically evaluate options for rationalizing energy use in key consuming sectors of the economy, and to develop a coherent strategy to translate the findings in terms of energy efficiency and fuel substitution options into an achievable targets for the NIEMP. It was also envisaged that the study would, in part, lay the basis for more comprehensive work to formulate a full- fledged national strategy for the country. 1.12 Accordingly, the study was structured to: a. Assess the degree to which the HMG/N's existing energy pricing policy supported or undermined economic and financial incentives for the rational use of energy by key energy consuming sectors; b. Develop case studies which, in tum, would be applied as benchmarks for designing plant-specific action under the proposed NIEMP to improve energy efficiency and/or promote fuel substitution in the industrial sector; c. Evaluate the economics applying energy efficiency and fuel substitution measures on a large scale to reduce the fuelwood use intensity of brick production in kilns (i.e., including options to substitute fuelwood with coal) and, if necessary, to establish benchmarks for follow-up action under the NIEMP to disseminate the appropriate technical package(s); d. Re-establish the justification for each of the core components of the proposed NIEMP, taking into account current and emerging HMGJN policies concerning energy and industrial development, pollution abatement and environmental improvement, and so on; e. Recommend ways to effectively apply available financing from the recently approved IDA credit to establish local capacity to implement energy efficiency improvements in the industrial sector, and also promote rational energy use practices in all sectors. C. Counterpars for Study 1-13 The principal counterpart agency for HMGJN was the WECS. Other concerned HMG/N agencies which actively participated in the study included the Ministry of - 5 - Industry (MOI), the Factory Inspectorate of the Department of Labor (FIDOL) and the Institute of Engineering (IOE). Other HMG/N agencies and organizations that were consulted during the study include the National Planning Commission (NPC), the Ministry of Finance, the Nepal Electricity Authority (NEA), the Nepal Oil Company (NOC), the Nepal Rastra Bank, the Nepal Transport Company (NTC), the Credit Guarantee Corporation and the Nepal Industrial Development Corporation (NIDC). Officials of private sector bodies such as the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), and representatives of various local engineering firms were also consulted. D. Conduct of Study 1.14 Due to unforeseen delays in securing funding for the study, ESMAP and the WECS were only able to initiate the actual fieldwork in March 1992. By then, the HMG/N, with funding from the Asian Development Bank (ADB), had commissioned an international consulting firm to execute a comprehensive "Study on Equitable and Efficient Energy Pricing Policies". The HMG/N's goal was to use the results of the study as the basis for reforming its energy pricing policy. Accordingly, to avoid duplication of effort with the ADB funded study, it was agreed that the work program for the ESMAP study would be restructured into two phases. 1.15 The first phase was designed to focus more intensively on evaluating the technical and economic feasibility of a variety of non-pricing measures that could be applied to rationalize patterns of energy use in the key consuming sectors. In addition, the first phase included a review to ascertain the extent to which existing distortions in energy prices undermine economic and financial incentives to rationalize energy use through energy efficiency improvements and/or substitution of imported hydrocarbon fuels with indigenous energy supplies. 1.16 From the beginning of April 1992 until the end of June 1992, the ESMAP team completed a comprehensive analysis of the economic costs of supplying the various forms of monetized energy to the main economic sectors in Nepal, and compared the results with the existing energy prices. In parallel, the ESMAP tearn and the 11MG/N counterparts evaluated the available data and information and conducted field investigations to assess the technical and economic feasibility of a variety of non-pricing measures that had previously been identified by the WECS as means to promote more efficient and rational use of energy in key consuming sectors. The focus was on consumer segments that were experiencing high growth rates in energy demand (i.e., modem industrial enterprises, brick production industry, commercial establishments and road transport). In addition, case studies were developed to highlight energy saving measures for common items of industrial plant operations (i.e., boilers, kilns/furnaces, etc.) and fuelwood substitution in brick production. - 6 - 1.17 During the month of June 1992, the HG/N counterparts travelled to Thailand for a study tour hosted by the Energy Conservation Center of Thailand (ECCT). Meetings and visits to industrial energy efficiency schemes were arranged for the HMG/N counterparts who gained a first-hand appreciation of the program in Thailand, particularly the policy objectives and goals, scope of the program, the perspectives and roles of key organizations that are involved, the achievements and lessons gained over the past decade, and the ECCT's plans for the future. 1.18 It was previously envisaged that the results of the proposed "Study on Equitable and Efficient Energy Pricing Policies" would be available by the end of June 1992. The second phase of the ESMAP study was therefore designed to assist the WECS (a) to evaluate the recommendations for energy pricing policy reforms in terms of the impact on strengthening or weakening incentives for energy efficiency and fuel substitution; and (b) to prepare and justify a Five-Year Plan of Action to promote energy efficiency and fuel substitution in key sectors. Hence, the second phase was scheduled to begin in July 1992, assuming that by then, ESMAP would have been provided with the findings and recommendations of the energy pricing study. 1.19 Unfortunately, the ADB-funded energy pricing study was not completed by the scheduled June 1992; a draft report was eventually issued in late November 1992. Hence, on completing phase one, the ESMAP tean redirected the main thrust of the study to address the more specific tasks of identifying and evaluating critical issues for implementing the proposed NIEMP, such as the organizational structure, industrial targets for intervention, allocation of available financing to program components, capacity building requirements within the key HMG/N agencies, and linkages with the private sector. 1.20 Accordingly, during the final leg of fieldwork in August 1992, the ESMAP team concentrated on reviewing and restructuring the components of the NIEMP, taking into account the results of the case studies, the lessons and experiences gained from industrial energy efficiency programs in the region and the viewpoints of stakeholder groups (i.e., including private entrepreneurs, managers of industrial plant, experts from local institutions, the FNCCI, etc.). IL Energy Puices and Economic Costs of Supply A. Intmducdon 2.1 The ESMAP study began with a review of existing prices and the economic costs of supplying energy in various forms to the key economic sectors. The primary aim was to ascertain the extent to which the existing distortions between energy prices and the economic costs of supply have undermined any incentives consumers may have to use energy efficiently and/or make rational choices conceming substitution between imported and indigenous fuels. 2.2 The results of the analyses are summarized in this Chapter. The full details of the analysis performed by the ESMAP team are presented in the Technical Supplement on the "Analysis of Energy Prices and the Economic Costs of Supply". In the next Chapter, the analyses are extended to draw preliminary conclusions on the extent to which HMG/N's existing energy pricing policy may have led consumers in key sectors, such as industry and transport, to adopt patterns of energy use which are uneconomic for the country and counterproductive from an energy efficiency standpoint. B. Electicity 2.3 The 1MG/N's long-term goals for energy development include developing hydropower prospects in a manner that would minimize adverse environmental impacts and aggressively extending electricity supply to all segments of the population. The plans for hydropower development have so far received World Bank support in the form of six credits, two of which aim to accelerate the preparation of large projects that would increase generation capacity by 13,000-16,000 MW; a new loan is under preparation to extend the capacity of the Arun Scheme. As previously indicated, progress in expanding capacity has been slow. Recently, with the objective of increasing the pace of hydropower development, the E1MG/N issued now policy guidelines which were designed in part to provide incentives and guarantees to encourage private sector participation in hydropower development. 2.4 In 1988, the World Bank prepared a comprehensive power sector review' which outlined specific recommendations to the EMG/N regarding: (a) least-cost development of the power system for both domestic and export markets; (b) power tariff reform to improve the financial vLability of the utility and to mobilize resources for the program; and (c) improvement of the operational efficiency of the Nepal Electricity Authority (NEA). The World Bank's recommendations have been accepted in principle by the HMG/N and specific measures to address them are being taken as part of the recently 6 Nepal: Power Sector Efficiency Pruiect World Bank Staff Appraisal Report (dated Februay 27, 1992). -8- approved Nepal Power Sector Efficiency Project. RaIto c CA Liii" Ic hUG 'hi 2.5 Despite the mid-1993 increases in electricity tariffs, l'it the level of electricity prices is, at present, considerably lower than the economic costs of supply and the structure of electricity tariffs do not reflect 4i the cost of supply either at the different voltage levels or at peak and off-peak periods ~ (Figure 2.1). Consequently, the ESMAP team concluded that there is no real incentive II i I,su IzL, I lUi CiW tIClUI KCILI for any of NEA's consumer NEA (IIsfcm tl (lIegii categories to take measures to A,1,s.m ;; twill4,III k IC t,tIs conserve and/or improve the eMficiency of electricity use Figure 2 1 Electricity Supply from National rid Analysis of NEA Mofrloses oncaue s ly-side Pricing Stucture for Nonresidential Consumers of losses on the supply-side (i.e., transmission and distribution in the grid) are unacceptably high, top priority should be accorded to the NEA's plans under the recently approved Power Sector Efficiency Project to reduce such losses through a vigorous and systematic program. Until such time that power system losses are brought under control and the level and structure of NEA tariffs are adjusted to reflect economic cost of supply principles, there will not be a significant scope for sustaining measures to upgrade the efficiency of electricity use in the country. C. Petmleum and Coal 2.6 Although petroleum and coal imports have become increasingly important in meeting the energy requirements of the expanding modern industrial, transport, and commercial sectors of Nepal's economy,' their consumption -- as a percentage of overall energy requirements in the country -- still remains small. Specifically in 1990/91, the most recent year for which complete data are available, the total petroleum consumption was estimated at about 226,200 tonnes, 80 percent of which comprised high-speed-diesel (HSD) and standard-kerosene-oil (SKO). Motor-spirits (MS) and aviation-turbine-fuel According to the WECS, petroleum products account for 3-4 percent of Lhe total energy consumption in the country, and the major petroleum-consuming sectors are transport (53 percent) and industry (26 percent). Coal is consumed almost exclusively by industry. -9- (ATF), which are used exclusively in the transport sector, accounted for about 14 percent of the total consumption of petroleum fuels. The balance consisted of industrial fuels such as furnace oil (FO) and light-diesel-oil (LDO), and liquified petroleum gas (LPG), which is used primarily in commercial establishments and the residential sector. 2.7 On the same basis in 1990/91, the estimated total coal consumption was 105,000 tonnes. The major coal users are the cement industries (37,000 tonnes/year) and brick producers (46,000 tonnesJyear); other industries consume about 19,000 tonnes, and the balance is used by residential/commercial consumers in parts of the Terai region that border India (i.e., Birganj, Biratnagar, Nepalganj, etc.). Estimating The Economic Costs of Sunulvina Coal and Petroleum Products Prices of imported coal and petroleum products at selected locations in Nepal were investigated and compared to estimates of the economic costs for making these fuels available at the same locations in Nepal, taking into account the price huild-up for distributing the fuels in bulk to several industrial and urban locations. For purposes of economic costing, the foreign exchange rate is taken at NRs 42.7AJS$. The Nepalese energy sector organizations, however, pay their Indian counterparts in Indian currency. The exchange rate between the two currencies is fixed at NRs 1.65fIRs. For economic cost calculations, this is shadow-priced at 1.1 times the official exchange rate, to reflect the extent to which the currency is overvalued. The economic cost of transporting the fuels between any two locations was estimated based on the Nepal Transport Model, which is presented in the Technical Supplement. Other financial cost/price components are converted to economic costs as follows: (a) all tax and duty components of the fiuel price build-up are removed; (b) all other financial costs incurred in Nepalese currency are multiplied by the standard conversion factor (SCF) of 0.9; (c) the shadow wage rate factor for unskiBed labor is taken at 0.75; and (d) the opportunity cost of capital (or the social discount rate) is taken at 10 percent per year. Source: "Nepal Energy Efficiency and Fuel Substitution Study", ESMAP Activity Completion Report: Technical Supplement Box 4 - 10 - 2.8 The results of the analyses are depicted in Figures 2.2 and 2.3 below. The results confirm that: a. The recent increases in the selling prices of imported petroleum products have narrowed the gap with economic costs of supply. However, the existing pricing structure incorporates severe distortions relative to import costs due primarily to the substantial levels of cross-subsidization between diesel, kerosene (SKO), and motor-spirit or gasoline. The distortions are most pronounced for MS which, because of taxes imposed by HMG/N to raise revenue for the national budget, is priced at more than 270 percent of the economic costs of supply. By contrast, the price of SKO is about 15 percent below economic costs of supply. The adverse effects of the distortion between prices for MS and SKO are highlighted in the next Chapter; and b. Although coal prices are set to reflect the full costs of importing supplies from India, there are wide variations in quality of shipments which are not accounted for in the existing pricing structure for the different types of coal on the market. Overall, coal prices are marginally lower than the economic costs of supply to the main consuming areas such as the Kathmandu Valley (4-5 percent lower), Birgunj industial zone (4-6 percent lower), and the Biratnagar area (3-4 percent lower). The main distortion occurs because imports of lower quality coal (i.e., high sulphur and volatile mater content) from Assam is priced 10-20 percent higher than the superior quality coal (i.e., sulphur content of less than I percent, ash plus moisture content of less than 30 percent, and low volatility) from Raniganj. D. Fuelwood 2.9 Although fuelwood supply to urban areas in Nepal is commercialized, the study found that existing fuelwood price levels in the main markets are well below economic costs of supply, except perhaps in the Kathmandu valley area -- and then only in the winter months. Until recently, the Timber Corporation of Nepal (TCN), the only authorized agency for the extraction of forest products, set the price of commercially marketed fuelwood based on levels that had the prior approval of the HMG/N cabinet. However, because of the recurring financial losses in fuelwood operations, the TCN is now allowed to set its prices by auctioning fuelwood to private dealers. 2.10 Unauthorized extraction of fuelwood is common. The main actors are "back- loaders" who typically are professional wood-cutters and hill migrants who become actively involved in supplementing supplies to the urban fuelwood markets. The fuelwood they collect is transported to urban areas on animal-carts, tmcks or buses that are carrying other freight or passengers, but which have extra room to accommodate small quantities - 11 - of fuelwood (the so-called "silent" travellers). These back-loaders sell it to big/intermediary depots who resell it to private depots. In addition, in the Katmandu Valley area, fuelwood is also brought in by local resident back-loaders. 2.11 Although actual prices for fuelwood prices in the markets include a significant profit margin for dealers and other actors in the supply chain (along with expenses incurred in felling trees, as well as cutting, splitting, collecting and transporting wood), they generally fall short of levels that would be commensurate with the economic costs of supply through afforestation. On the basis of expenditures incurred on the Sagarnat Forestry Development Project (SFDP)' and its estimated anmual fuelwood yields, economic costs of afforestation are estimated at NRs. 3.37/kg of fuelwood. The economic costs of supplying wood to the Kathmandu Valley area are based on the present costs for felling, cutting, splitting, collecting and transporting it from Hetauda and Butwal (about NRs. 1.08/kg and NRs. 1.17/kg respectively). As the economic costs of these activities would be the same for the SFDP, the total economic costs of fuelwood in the Kaimandu Valley area come to approximately NRs. 4.50/kg. NRWine .sfsic NRt l p IThI-ualioI ~ m. ICai ii Samul s011 u11r11 11. Ia., Cmii a1 Simp1 11'ly 1v1 20~~~~~~~~~~ FO 50 Hf lDO 4 IIgst lasSI AsiTe I Stl 0 510 859 10D0 MS5 SamrcalTypm el1F1,1 Type 61 feel bas toiii Aeismi 5? prices Iii VA tiii 'SZ ii SIIMA P tsLim ales Figure 2.2 Imported Petroleun Fuels: Comparison Figure 2.3 Imported Coal: Comparison of Prices of Prices & Economic Costs of Supply & Economic Costs of Supply 2.12 Comparatively, the price of fuelwood at private depots in the Kathmandu Valley area is now reported to vary between NRs. 3 and NRs 4/kg (or more), depending on the The SFDP comprises the afforestation of 10,000 lTectares of land area in the Janakpur Forest Division of the Central Terai. - 12 - season (Figure 2.4). Fuelwood prices are relatively high in winter months and approach economic cost levels, not only because of an increase in household demand (for space- heating in addition to cooking) but also because the brick and tile kilns go into production. In the Biratnagar area, fuelwood prices are reported to be relatively low, varying between NRs. 1.50/kg (for low-grade wood) and NRs. 2/kg (for high quality wood). E. Prices of Ricehusks Etl IFE LI.. I MP itg I 2.13 In Nepal, the supply of ricehusks for use as an industrial fuel is _ obtained as a by-product of the operations of the following types of rice-mills. (a) Huller Mills, which '. produce the by-product in the form of mixed ricehusks and bran; (b) Cellar Mills, which produce separately 2 ricehusk (26-28 percent) and bran (7-8 E sFij casi et supil percent) as by-products; and (c) Par- .lt c. | tl Boiling Mlills, whose net ricehusk Oil ,tise lalsa. production is 5-10 percent of the rice .L .lN Aucliam P1icm milled Part of the ricehusk that is I = v File plect produced in par-boiling mills is used in- t e lime plant to generate steam for milling F 5 b Incus activities. upiltr mhms Apuil 12 Figure 2.4 Fuelwood Prices in Kathmandu Valley: 2.14 By contrast, ricehusks are also Comparison with Costs of Supply from Sagamath produced as a by-product of household Forestry Dev- Plantation - SFDP processing activities. However, the bulk of those supplies is used to meet rural household energy requirements, including animal feed. 2.15 There appears to be a considerable surplus of ricehusks in the Terai regions. However, it is reported that ricehusk is not easily available in the immediate vicinity of major industrial locations in the Terai (in Morang, Sunsari, ihapa districts in the eastem Terai; Dhanusha, Mohattari, Bara, Parsa, Chitwan districts in the central Terai; Nawalparasi, Rupendhehi, Kapilbastu districts in the westem Terai); and in the Kathmandu valley area (i.e., the Central Hill region). 2.16 In 1989/90 (the most recent year for which data were available), nearly 220,000 tonnes of ricehusk (about 40 percent of total output) was produced by rice mills. The WECS has estimated that industrial demand for ricehusk in 1991/92 was of the order of - 13 - 26,000 tonnes in Eastern Terai; 37,000 tonnes in central Terai; about 20,000 tonnes in Kathmandu Valley (Central Hill Region); and 9000 tonnes in the westem Terai. 2.17 Currently, the prices Pi i, Rs.p [ I zelwoad q paid by industries for / ricehusks vary substantially across regions and reflect I both the demand situation as well as the prices of EMI alternative fuels (Figure 2.5). 1' For examnple, with the rapid 1.4 increases in ricehusk demand _ in the Kathmandu valLey area, the price of ricehusks , , , A lT have risen from NRs. 3- lKcalrta 5/sack to NRs. 12/sack; each h1, ,. a15 ""'r hr1G sack weighs approximately it': II: s 13a Ict P It uIIrkg Fd Ii 17 kg. Some of the carpet Figure 2.5 Ricehusks Use as Industrial Fuel Representative Prices in wool-dyeing units arrange Nepal for shipments of ricehusk from areas as far as Bhairahawa -- in which case such enterprises pay as much as NRs. 20/sack (approximately NRs. 1.20/kg) for the fuel. Similarly, in areas like Biratnagar and Janakpur, the price of ricehusks has tended to follow that of fuelwood and is reported to be NRs. 5-6/sack (approximately NRs. 0.30-0.35/kg). By contrast, in the western Terai region where the fuelwood supply and demand situation is not strained, the price of ricehusks remains relatively low, at NRs 2.50-3/sack (approximately NRs. 0.15-0.l8/kg). 2.18 In the Kathmandu Valley where the fuelwood price is rapidly approaching the estimated economic cost of supply (i.e., NRs. 4.50 per kg.), ihe equivalent economic cost of supplying ricehusk as a substitute fuel is estimated to be NRs. 3.86/kg; this assumes parity with fuelwood, after factoring in differences in calorific values for fuelwood (3500 kCal/lkg) and ricehusk (3000 kCal/kg), respectively. IIL Rationalizing Use of Imported Eneigy. A. Intrduction 3.1 Due in large part to the existing distortions between the economic costs of supply of imported energy and the level and structure of existing prices for both imported and indigenous energy in Nepal, various categories of energy consumers in Nepal are resorting to uneconomic uses of imported fuels. Such practices lead to a considerable waste of the country's resources and unnecessarily inflates the demand for some petroleum products (e.g., SKO). 3.2 This Chapter reviews a number of specific situations in Nepal that were investigated by the ESMAP team. It appears that pricing distortions are a major factor in encouraging economically inefficient pattems of energy use in industry and transport and, hence, pricing reforms are a necessary component of strategies to rationalize energy use in those sectors. The example of transportation is highlighted not only because of the implications for energy efficiency strategy work, but, more importantly, because air pollution from vehicles has contributed significantly to the deterioration of the environment in the Kathmandu Valley. B. Fuels Choices for Industial Pnocess Heat 3.3 The principal fuels that are used for process heating by industries in Nepal comprise petroleum fuels, wood and coal. The use of agricultural residues is on the increase in industries located in or adjacent to the main rice producing areas. In addition to F0, the other higher-value petroleum products such as HSD, SKO, and, to a limited extent, LDO, are used as boiler fuels. Of fte three types of steam and slack coal that are imported for industrial use, the coal from the Raniganj mine is considered to be of superior quality due to its characteristics (gross calorific value of 21.8-22.6 MIkg, sulphur content of less than 1 percent, ash plus moisture content of less than 30 percent, and low presence of volatile matter). Nevertheless, although coal imports from other mines in Assam are of lower quality (i.e., they have a high sulphur and volatile matter content), they are priced at 10-20 percent more than Raniganj coal. Choice Between Fuel Oil and Other Petrleum Products 3.4 The analysis of relative economic costs of supply and the prices of available fuels for industrial process heating applications are shown on Figure 3.1. 3.5 Because of the subsidy on SKO, the prices per unit of heating value of SKO and FO are about the same, which has prompted certain industrial units to use SKO for steam generation. - 15 - 3.6 Similarly, although the price IGH per unit of heating value for HSD is 1 5 l about 20 percent higher than that for m I FO, its use as a fuel in industrial EM Lpii boilers and furnaces appears to be A widespread. This is probably because E there are fewer bottlenecks in the supply of HSD compared to FO. By A E contrast, the equivalent price of LDO I1 !._ * is about 37 percent higher than FO, i ¢ * , , E hence, LDO is used by industry only , s e WII in relatively small quantities.9 | I ' I | ' i I 3.7 If the price structure for all petroleum products were to be I0 III M li 'I rationalized to reflect economic costs C , , * i g| r1i 1 u of supply, the premium fuels (i.e., 0I , I I .1i EI 1 I SKO, HSD and LDO) would cost 63- o - - - - - I _ 66 percent more than FO, which Fa SKO H50 LO la1iS1 Rai.Si D-bad would reduce the incentive for JASguSl. 19 2 pitItsl industries to use the fuels for low value-added operations such as process Figure 3.1 Fuels for Industrial Boilers: heating. Therefore, although the Prices vs. Economic Costs of Supply August 1992 increase in SKO and HSD prices is a step in the right direction, further increases may be necessary to remove the incentive for their use as fuel for boilers and furnaces. Choice Between Fuel Oil and Coal 3.8 The economic cost of supplying FO and the price per unit of heating value is compared with the equivalents for both steam and slack coal from Raniganj, and for coals from Dhanbad (Figure 3.1). Although the values for FO are consistently higher than for coal, a variety of factors mitigate against coal use, such as the deterioration in coal quality while en route from the respective collieries in India (particularly for Raniganj coals) into Nepal, and the actual prices and costs of supply in heating value termns (i.e., GJ per tonne at the consumer end) may not be significantly higher than that for FO. Further, because the efficiency of coal-fired boilers tends to be relatively lower than te efficiency of boilers that are fired by liquid fuels, it may be that the economic costs of using either the Raniganj and Dhanbad coals could exceed the equivalent costs for FO. The comparison tilts furither in favor of FO if extemalities such as environmental costs associated with the 9 In I990/91, LDO accounted for only about 1% of the total tonnage of petroleum imports. - 16 - use of the two fuels are considered -- in addition to ash disposal problems and particulate emissions, coal use entails relatively high gaseous emissions. Ricehusk As Substitute Industrial Fuel 3.9 The use of ricehusks in industry began on a large scale when a substitute was needed for fuelwood. According to the WECS, in some areas such as the Kathmandu Valley, the demand for ricehusks by the carpet wool-dyeing industry has risen considerably in the past two to three years. Lately, there has also been a strong trend towards the use of ricehusks to substitute petroleum fuels such as HSD in smaller-sized boilers. About 80 of the estimated 220 industrial boilers in operation in Nepal are reported to be operating on ricehusk, and there appears to be considerable scope for a further increase in the level of industrial use of ricehusk for steam generation. An obvious benefit of increasing the use of ricehusk -- a locally available biomass resource -- is that it reduces the vulnerability of Nepalese industry to disruptions in imported fuels (coal and petroleum products). 3.10 The economics of converting a small (2 tph) boiler,'0 which operates at 74 percent using HSD, to ricehusks was evaluated based on the following three technical options and the assumption that the boiler-load factor would be 50 percent at 3600 hours operation per year: (a) Replacing the RSD-fired boiler with another of the same capacity which would be fired with ricehusk. This would, in addition to the boiler, require an investment of NRs. 2.75 million," including a furnace, a pneumatic spreader, a pneumatic conveyor, a roofed and walled area for storing ricehusks, heat recovery and water softening equipment, a dust collector, a flue gas duct and stack, and instrumentation for monitoring boiler performance. The overall efficiency would be 68 percent; (b) Retrofit the existing oil-fired boiler with a fluidized bed combustor (FBC) for the ricehusks. This would require an investment of NRs. 1.63 million and would raise efficiency to 76 percent; and (c) Retrofit the existing oil-fired boiler with a sliding grate combustor (SLGC) for the ricehusks. This would require an investment of NRs. 1.3 million, but efficiency would be 68 percent. According to FIDOL, this is the average size of boilers in operation in Nepal. " On the basis of firm quotations received by Nepal Vegetable Ghce Industries Ltd. (which is planning to install a ricehusk-fired boiler system), the total expenditure for a 3 tph assembly comes to NRs. 3.30 million. - 17 - CCD as % ol Cos ClB Replace Boilei , ^ n~~~~~~~~~~~eliolti Iac ~~-s110%e sG 100% 90% 1200 1500 ll00 2100 2400 2700 3000 3300 360U 3900 4200 4501 hours ape ralion per year 3 la iles s learm per koi I boiler, CCD is item. o iE51 at cserviug diesel CDS i sc ie. csI oIl si ppijiog diesel Figure 3.2 Fuel Substitution in Industrial Boilers: Economics of HSD/Ricehusks Substitutes 3.11 The analysis confirns, in general, that it would be cost-effective to substitute HSD with ricehusk even if ricehusk pnrces were to increase from the present levels of between NRs. 150-1200/tonne to as high as NRs. 1500/tonne. Moreover, as shown in Figure 3.2, the economic costs of saving HSD fuel by retrofitting boilers to use ricehusks (i.e., computed on life-cycle costing basis for different hours of operation per year) would be consistently lower than the equivalent costs of importing the HSD. For the boiler replacement option, the high investment is justified only if the new boiler is used for at least 2100 hours/year at 50 percent load factor. The analysis shows that a concerted effort should be made to convert HSD-fired (as well as SKO-fired and LDO-fired) boilers to ricehusk,'2 preferably by retrofitting a fluidized bed combustor - provided, of course, environmental concems, land availability and ricehusk supply do not pose overriding constraints. 3.12 The Nepal Vegetable Ghee Ltd., Hetauda presented plans to convert one of the 3 tph oil-fired boilers to use ricehusks. The economic viability of the company's proposal was evaiuated as follows. The present diesel-fired boiler working with an average load 12 These are normally small boilers of 3 tph capacity or less. - 18 - of 50 percent and an average efficiency of 74 percent, using 600,000 liters diesel oil annually at a price of NRs. 9.8 per liter and annual fuel costs of Rs. 5.8 million would be replaced by a new ricehusk-fired boiler of the same capacity and load factor. Boiler efficiency would drop to 68 percent and husk consumption would be 1600 tonnes annually at a price of Rs. 750 per tonne, including transport and unloading, making fuel costs Rs. 1.2 million per year. Total investment costs based on firm quotations were about Rs. 3.3 million, including boiler, fumace, pneumatic spreader, pneumatic conveyor, roofed and walled ricehusk storage area, heat recovery, dust collector, flue gas duct and stack, feedwater softening, instrumentation and operator training. Excluding capital costs, the payback period of this project was only nine months. 3.13 From the above assessment of the economics of converting boilers to operate on ricehusks, and also from the preliminary assessment of the ricehusks supply and demand situation in different regions of the country, it would appear a prioi that: a. Ricehusks should be promoted as a boiler fuel in the Terai region where its availability is not likely to be a serious constraint (i.e., in most regions except the Kathmandu Valley), where industrial establishments have adequate land area available to them for stocking ricehusk, and where gaseous emissions and slurry disposal are not much problem;'3 b. In the Kathmandu Valley area, FO may be preferred as a boiler fuel. The major reasons would be lack of land area for dumping ash and the already strained air quality situation. 3.14 Nevertheless, prior to launching any major programs of assistance on this option, it would be useful to conduct a comprehensive survey of ricehusk availability in the Terai region, particularly in and around the industrial areas of (a) Morang, Sunsari, Jhapa in eastem Terai; (b) Dhanusha, Mohattari, Bara, Parsa, Chitwan in central Terai; and (c) Nawalparasi, Rupendhehi, Kapilbastu in westem Terai. Particular emphasis will need to be given to rice cultivation and the share processed in the mills (as against private -- mostly rural -- households); ricehusk obtained from huller mills, cellar mills and parboiling mills; ricehusk transportation distance from rice mill site to industrial units in different areas; and ricehusk price at rice mill gate and at industrial unit site. This study will also examine recent trends in ricehusk demand/availability and price situation and assess their outlook in the short- and medium-terms. 1 In general, additional ash/slurry that will be generated from the ricehusk-fired boilers can bc used either to fill pot-holes on the national highways and other roads, and/or mixed with cement (up to 5%). - 19 - C Fuel Choices for Tinsportalion 3.15 The pricing increases of p11(1 miII 5? Puce IRuieSI !?I August have substantially changed so c e I.I pi1 the price-to-cost differential for MS, HSD, and SKO. Specifically, the CcsIllPiie iL ele INsR. pci liltIl HSD price is now about three le percent lower than the economic costs of supply. The SKO price still continues to be subsidized, but to a lesser extent (about 15 percent 7l; compared to the previous study level of 25-35 percent). The distortion 15;. between the prices of MS and HSD/SKO have worsened, as shown I10 in Figure 3.3. Although HSD and SKO prices have moved closer 5. towards the economic cost of supply levels, the MS price has moved further away, and is now over 270 HSD MS StO percent higher. i eel type Nil: s it 5 i is I IIg I si s vehicles 3.16 Mechanized, private modes of a i multi MS road passenger transport in the urban Figure 3.3 Pricing Structure for Transport Fuels (Analysis centers of Nepal comprise cars, vans, ror Kathmandu Area) jeeps, and two- and three-wheelers. Due to poor traffic and road conditions in the urban centers, poor vehicle maintenance practices, and the vintage of the existing vehicle fleet, the fuel efficiency of vehicles are generally sub-standard. The present pricing structure for MS, SKO, HSD appears also to have provided an incentive for private automobile operators of cars, taxis, and two/three wheelers to regularly mix SKO with MS; the aim apparently is to reduce the fuel costs of running their vehicles. This practice is illegal, leading to incomplete combustion in the vehicle engines which further lowers the fuel efficiency of vehicles, and is recognized to be the leading source of air pollution in Kathmandu. 3.17 The practice can most effectively be curtailed by reducing the price differential between SKO and MS. Another way of curbing the adulteration of MS with SKO would be to add color dyes in SKO. However, this would entail additional costs for importing the dyes as well as mixing and packaging, and the extent to which this would inhibit the use of SKO in private vehicles is also uncertain," particularly in view of the rather weak enforcement mechanisms that are presently in place. " The extent to which mixing takes place at gas stations or by vehicle ownerstoperators themselves is not known. - 20 - 3.18 Other non-pricing measures that, when introduced as part of transport sector development strategies, would help improve the macro-environment for increased fuel efficiency in vehicles include: a. Lowering the high duty/tax rates on vehicles and spare parts which deter the purchase of new passenger vehicles that are more fuel efficient; b. Improving the network of vehicle maintenance facilities in the country and the introduction and enforcement of mandatory performance standards for vehicles; and c. Improving traffic management and upgrading road conditions. 3.19 Although the consideration of such measures would go beyond the purview of the energy sector agencies, it is important that such issues and possible interventions are comprehensively addressed as part of the HMG/N's proposed Environmental Action Plan and, in particular, considered as a possible element of the evolving strategy to improve the environment in the Kathmandu Valley. IV. Defining Benchmarts For Industuial Enerj Efficiency 4.1 In order to be cost-effective and commercially viable over the long-run, programs such as the NIEMP, which aim to promote energy efficiency in Nepal's relatively small industrial sector, need to concentrate available resources on measures that would be replicable across the sector, thereby expanding the target group for dissemination activities. This Chapter presents the results of field investigations that were conducted to ascertain the technical and economic scope for energy efficiency improvements for the common items of plan: operations (e.g., industrial boilers, kilnslfurnaces, etc.) in manufacturing industries, except brick production (Chapter IV). The findings are presented in the form of Case Studies which define some benchmarks and/or guidelines that the MOI and other concemed organizations could apply to establish realistic targets and/or standards to aim for in terms of improving in-plant performance through the housekeeping measures as opposed to major investments in retrofits and replacement of capital equipment. A. Industdial Uses of Energy 4.2 According to the MOI, there are approx;mately 38,000 industrial es Molot olives 3011ei5 enterprises in Nepal. Out of this, 23 traditional industries account for about 1111 29,000. Although the number of . modem industrial establishments is is about 9,000, there are only about 170 ESA industries with fixed capital above Rs. 3 million which are classified by the Figure 4.1 NEPAL: Industrial Energy Consumption by MOI as medium or large industries. Main End-Uscs in Plant The distribution of industrial energy consumption by end-use in the factories surveyed by ESMAP reflects the general trend that was observed by the WECS for the industrial sector overall. The charts in Figure 4.1 indicate the relative importance of boilers in terms of identifying targets for energy savings in industry. Boilers are more flexible in terms of fuel use and therefore would be good targets for investigating fuel substitution possibilities. Apart from boilers, other process heating operations such as furnaces, kilns and electricity may, on a plant-by-plant basis (e.g., major consuming units with cogeneration potential, etc.), offer good possibilities for energy saving as well. 4.3 Based on the experience gained in other similar programs in the region, it would appear that the most appropriate strategy would focus on the use of relatively simple housekeeping measures to improve energy use efficiency in a cross-section of manufacturing plants in the sector. Such "housekeeping measures" include plugging leaks in existing steam generation and distribution systems, descaling boilers, improving - 22 - insulation of pipes, tuning burners (i.e.. adjusting air/fuel ratios to provide for more efficient combustion), proper handling and storage of fuels (e.g., coal), and so on. B. Boiler Efficiency Impwvement 4.4 Based on the observations BhI Mgl Bflgit I1 made during the factory visits, it 140. / E ,. would appear that the most significant I 09'111tiieAl potential for saving energy would exist __ ____n___ ___ in the improvement of the operation efficiency of steam boilers. Presently, many boilers are operated allowing :v1:m. I''l high amounts of excess air into the combustion chamber. Many boilers 20 also had very high flue gas Fe,,uII itAI Rice Husk Wil I logass temperatures, which points to the PIig", l, Bo lie I F . tl possibility to install extra heat "'t'l'''l'' recove. This would Figure 4.2 Industrial Roilers in Nepal: recovery equipment. ~Location &E Type of Fuel Used reduce specific fuel consumption per steam output. In addition to boiler users, there are some individual major energy consumers whose specific consumption of fuel in kilns and furnaces, as well as of electricity, considerably exceeds reference values of well-operated plants. Although the share of energy, generally speaking, is very low in the operation costs of the industries in Nepal, there are industries where it may be important to the financial viability of the enterprise. 4.5 During the first half of the fieldwork in April 1992, a preliminary survey of boilers, kilns and other industrial unit operations was conducted (Figure 4.2). The survey found that the efficiency levels of boilers varied from a low of 37.3 percent (averaged over two boilers: 0.3 tonnes steam per hour (tph) and 1.8 tph capacity; PO-fired; Hulas Steel Industries (Pvt.) Ltd.) to 74.6 percent (averaged over three boilers: 10 tph, 10 tph and 8 tph capacity; HSD-, LDO- and SKO-fired; Shree Banshidhar Ind. Ltd.).`5 Among the causes for poor boiler efficiencies was the high incidence of unscheduled downtime )f industrial plants; a significant tartion of the total downtime is due to a lack of energy supplies.'6 Of the 20 industrial units cov_ ed in the survey, 12 had steam generation boilers. Boiler fuel input and efficiency data were gathered through a questionnaire in all the industrial units. In some enterprises, steam boilers were tested for flue gas temperature, oxygen concentration in the fuel/air input mixture, etc., in order to make an independent assessment of boiler efficiencies. 16 Due to high downtime, the warm-up time of boilers is a significant proportion of their total operating time -- which leads to high consumption levels. - 23 - 4.6 Subsequently, for the second half of the fieldwork in July/August 1992, the main activity was to conduct follow-up boiler efficiency audits to determine how much fuel would be saved by introducing operational adjustments and minor repairs (i.e., housekeeping measures) to boiler systems at selected plants. The aim was to determine the amount of fuel that could be saved by ensuring that each boiler would be operated up to design standards; no structural modifications and/or additions (i.e., retrofitting with auxiliary equipment) were considered.'7 The purpose was to establish practical benchmarks that could be used at a later stage by the MOI and other concemed HMGIN agencies (e.g., FIDOL) to monitor the performance of other boilers in the country. 4.7 The audits were conducted at the following enterprises: a. The Nepal Vegetable Ghee (Pvt.) Ltd., located in the Hetauda Industrial District. Capacity utilization at the plant is currently 56 percent and process steam requirements are supplied by one of the two installed boilers (the capacity of each is three tph); b. The Hetauda Textile Industries Ltd., which is located in the same district, is a large public sector enterprise. The plant processes imported and local cotton into finished fabrics and is currently operating at 40-50 percent capacity. Process steam is supplied by two out of the three installed boilers (each boiler can produce three tph); c. The Nepal Breweries (Pvt.) Ltd. produces beer, soda and mineral water. Capacity utilization is 70 percent, and process steam requirements are supplied by three small, diesel-fired boilers (the capacities of the boilers are 2.3 tph, 2 tph and 1.5 tph, respectively); and d. Hulas Steel Industries Ltd. produces galvanized steel sheets and pipes. Capacity utilization is 33 percent, and process steam requirements are met by two fuel oil-fired boilers (the capacities of the boilers are 1.5 tph and 0.3 tph, respectively). 4.8 Case studies were developed based on the operations of the above seven boilers. The aim was to define the scope for saving fuel by restricting the intervention to "housekeeping measures" and, where necessary, by installing the proper insbrumentation.1 17 These estimated potential efficiencies take into account the boiler configuration (fire-tube or water- tube design), capacity (tonnes per hour steam) and type of fuel and fuel feed (solid or liquid). Is For the four industrial enterprises covered in detail by ESMAP, instmentation was available for all boilers only for measuring steam pressure (as it is compulsory to obtain a certificate for operating the boiler) and fuel flow rates (as fuel use is the most expensive operating cost parameter). Steam pressure wa& measured in 56 percent of the boilers, flue gas temperature in 33 - 24 - The results are summarized below (and also in Figure 4.3) for each of the six boilers in operation at the four plants. Boiler No. I: This boiler was installed at the Nepal Vegetable Ghee (Pvt.) Ltd. It was designed to operate on fuel oil and produce steam at three tph. The audit found that the boiler was operating at 1.4 tph (appmximately 48.5 percent heat load). Instrumentation was poor; the boiler was not equipped with instrumentation to measure steam flow, feedwater flow, or flue temperature. Moreover, it was being fired with HSD instead of fuel oil. The audit revealed that the boiler was operating at 74 percent efficiency compared to the design efficiency level of 82 percent. By applying housekeeping measures, installing the full complement of instruments and using fuel oil instead of HSD, it was estimated that boiler efficiency could be raised to design specifications, thereby reducing fuel consumption by 60 m3 per annum or 10 percent of the annual fuel expenditure for steam generation. Boiler No. 2: This boiler is one of three installed at the Nepal Brewery Co. (Pvt.) Ltd- It was designed to operate on fuel oil and produce two tph steam but was found to be operating at about 1.4 tph (77 percent heat load). It was not equipped with instruments to measure and monitor steam flow, feedwater flow and temperature. The audit found that it was operating at 72 percent efficiency compared ta a design specification of 82 percent Hence, by applying housekeeping measures and installing the full complement of instruments, it was estimated that boiler efficiency could be raised to design specifications, thereby reducing fuel consumption by 42 m3 per annum or 12 percent of the annual fuel expenditure for steam generation. Boiler No. 3: This boiler is another of the three installed at the Nepal Brewery Co. (Pvt.) Ltd. It was designed to operate on diesel oil (LDO/HSD) and has the capacity to produce 1.5 tph steam. It was found to be operating at about 0.9 tph (61 percent heat load). It also was not equipped with instruments to measure and monitor steam flow, feedwater flow and temperature. In contrast to Boiler No. 2, the audit found that it was operating at 70 percent efficiency which was close to the design specification of 72 percent. Hence, the scope for savings by applying housekeeping measures and installing the full complement of instruments, would be only about 8.6 m3 per annum or three percent of the annual fuel expenditure for steam generation. percent, feedwater temperature in 22 percent and steam flow in 20 percent No instrumentation was installed for measuring feedwater flow, condensate temperature, condensate flow and oxygen content in the flue gases. AU these measurements may not be required at all times for small boilers, but there is scope for improving the performance of large boilers when such instrumentation is either missing, or does not work when installed. - 25 - Boiler Nos. 4 and 5: These two boilers are installed at the Hetauda Textile Ind. Ltd. They both were designed to operate o., fuel oil and produce steam at 6.5 tph. The audit found that both boilers were operating at 2.5 tph (approximately 40.5 percent heat load). Instrumentation was generally good; the boilers were not equipped with instrumentation to measure feedwater flow and temperature. They were also being fired with HSD instead of fuel oil. The audit revealed that the boilers were operating at 77 percent efficiency compared to the design specification of 84 percent. Hence, by applying housekeeping measures and installing the full complement of instruments, and also by using fuel oil instead of HSD, it was estimated that the efficiency of each boiler could be raised to design specifications, thereby reducing fuel consumption for each boiler by 85 m3 per annum or about 8.5 percent of the annual fuel expenditure for steam generation. Boiler No. 6: This boiler is one of two installed at the Hulas Steel Ind. (Pvt) Ltd. It was designed to operate on diesel oil and to produce 0.3 tph steam but was found to be operating at about 0.14 tph (50 percent heat load). It was equipped with instruments to measure only the steam pressure and fuel flow. The audit found that it was operating at 73 percent efficiency compared to a design specification of 79 percent. Hence, the scope for savings by applying housekeeping measures would be only about 2.8 m3 per annum or seven percent of the annual fuel expenditure for steam generation. Boiler No. 7: This boiler is another one of the two installed at the Hulas Steel Ind. (Pvt.) Ltd. It was designed to operate on fuel oil and has the capacity to produce 1.5 tph steam. It was found to be operating at about 1.3 tph (over 95 percent heat load). It also was equipped with instruments to measure and monitor only steam pressure and fuel flow. In contrast to the other boiler, the audit found that it was operating at 75.4 percent efficiency but by applying housekeeping measures and installing the appropriate complement of instruments, could operate at the design specifications of 86 percent. The resulting reduction in fuel consumption would be 54.5 m3 per annum or 12 percent of the annual fuel expenditure for steam generation. C. Other Pmspective Aeas for Efficiency Irpmvements Fumace and Ilins 4.9 Furnaces and kilns account for about 23 percent of energy use by industries. Seven of the 20 industries surveyed during the fieldwork were equipped with kilns and/or fumaces. In general, data on the operations of the kilns was poor. However, adequate data was available from the Hetauda Cement Industries Ltd., which operates a large coal- fired kiln. The kiln consumes about 21,000 tonnes of coal per annum to convert some - 26 - Cost at Fuel [IRs mill ouly I 10- 1 0 1 _ EM Bo iler I Ite C os ts o a :Vale @ F i e Its la Yed 6 4 3 2 Dl 8 4 BS B 2I 030 Bo ilei C la ss f1i a l ion B as is.~ emaetIy auaditIs to detIin e koas eteepiog me as ures to im p rove eierjy elltieacy oat boilers Figure 4.3 Industrial Energy Efficiency Case Study: Boiler Energy Savings from Housekeeping Measures 180,000 tonnes of limestone, iron ore and gypsum into about 110,000 tonnes of clinker. The kiln also requires 0.6 GWh per annum of electricity to operate its moving parts. The preliminary audit indicates that there is scope to reduce the specific coal consumption level from 4300 to 3200 MJ per tonne of output; similarly, electricity use could be reduced from 163 to 88 kWh per year (Figures 4.4 and 4.5). In current prices for coal and electricity, the value of the energy saving would be about Rs. 31 million per year (US$0.7 million per year). Industuial Cogeneration 4.10 According to surveys by the WECS, the bulk of electricity use in industrial enterprises is to operate motors and motor drives (i.e., motors associated with the operation of compressors, pumps, fans, conveyor belts, etc.). In the textile subsector, this accounts for about 33 percent of total energy use; similarly in the sugar plants, motor dnrves account for 10 percent of total energy requirements. Although there is scope for applying power factor correction measures in several of the plants, especially those using electric furnaces and kilns, because of the low electricity tariffs, the payback on other measures to conserve electricity would be poor. - 27 - 5 ol .saf of ... t iput &.....1138sle 01 oulpoil 20 *11," 1 stified 4. _ ._ _ 1- _ . = -5 , S p specilic Coo cool. Spualo U c Coal. ft :r C'>'rm ROGNT ad.1 to 01DC,, ,,,, aiult u"uhnoe" le ,usse Owly A 11...gy f or I... 91 1-9 1'.1 elt I. 111u u1 1.s E I iI mIsHtII @1-1 I111 .1 1; I1 1 0 I| 1 Figure 4.4 Industrial Energy Efficiency Case Figure 4.5 Industrial Energy Efficiency Case Study: Study: Energy Savings Potential of Coal-Fired Estimated Value of Potential Energy Savings Kiln at Hetauda Cement Lnd. Ltd. 4.11 The scope for expanding the cogeneration capacity of the Birgunj Sugar Plant to 4 MW was assessed. The plant is currently equipped with a 1.6 MW steam turbine which was installed in 1976. At present, the plant works 24 hours/day for about 200 days/year. It takes in 230,000 tonnes of sugarcane annually and produces about 20,000 tonnes of refined sugar; the production of bagasse (a by-product) is about 80,000 tonnesfyear. The intention is to fire bagasse in a cogeneration powerhouse, to make the plant nearly self- sufficient in electricity.'9 With the four MW back-pressure turbo-generator, the excess power is estimated to be 2.5 MW (excess electricity of 12 GWh over the factory's operating time per year), which could be sold to NEA. As the turbo-generator entails an investment of NRs 50 million and the power tariffs are low (marginal energy rate of NRs. 1.85/kWh for MV industrial consumers), and because the figures given above represent maximum potentials, a detailed feasibility study is required. 19 If the boiler efficiency (presently about 44 percent) could be raised to 65 percent (through housekeeping measures), the clectricity output would increase by 4.7 GWh for the same amount of bagassc burncd. V. Electricity Conservation A. Backgnound 5.1 Data provided to ESMAP by the NEA indicates that lighting accounts for a major share of electricity consumption in the evening. The evening peak demand in NEA's interconnected system is some 50 MW to 60 MW higher than the moming peak demand, as presented in the load curves for two representative days in summer and winter months20 (Figure 5.1). This difference between the morning and evening peak demands is significant because the system-wide maximum annual peak (which occurs in the winter months) is of the order of 200-220 MW only. SIslem load IMW 2 5 D 2lI' - X - -- -- - - E - I 2 3 4 5 i 7 1 11 1 2 H 1 6 li I D 22 24 lime cI Da! (lIoar S a Ii et: N E h Figure 5.1 System Load Curves for NEA (Seasonal Variations of Daily Peaks) In the summer months (May through October), electricity demand is significantly lower than in the winter months (November through April). The sununer months also correspond to a period when the cost of power generation is relatively low. - 29 - 5.2 Even if new generating capacity is added as per the least-cost expansion program," power shortages are projected in the 1990s. According to the load forecast for the NEA's interconnected system (which corresponds to the least-cost expansion program), the load factor is expected to increase from the present level of about 50 percent to about 60 percent by the year 2000. Power shortages will of course be less if a vigorous load management program is pursued. 5.3 In 1990/91, under the IDA-funded Pancheswar Technical Assistance Project (Credit 1902-NEP), the NEA had been assisted by Electricity de France Intemational to conduct a "Study of Electricity Load Management Options".22 The study identified and investigated the costs, benefits, and potential impacts of a number of measures, the most prospective of which were: a. The introduction of Time of Day (TOD) electricity pricing to encourage industrial consumers to shift operations away from the daily peak demand period; and b. The promotion of high efficiency lighting options, primarily the compact fluorescent lamps, to induce electricity conservation and thereby reduce peak demand in the g.id, especially in the evenings. 5.4 With regards to electricity conservation through lighting efficiency improvements, the NEA/EdF study concluded that the total potential was of the order of a 25 MW reduction in peak demand in the NEA grid; due, however, to low prices and other technical/market impediments, the study projected that even if the NEA mounted a five- year promotional program to disseminated compact fluorescent lamps (CFL), it was unlikely that the actual reduction in demand exceed about 1.5 MW. A key impediment was identified as the lack of incentives, given the low level of electricity tariffs, for consumers to realize adequate paybacks from investing in energy efficiency improvements. 5.5 The level of electricity prices has not been increased by a significant amount since the completion of that study. Electricity tariffs continue to be maintained at levels that are considerably lower than the economic costs of supply, and the structure of electricity tariffs do not reflect the cost of supply either at the different voltage levels, or at peak and off-peak periods. Consequently, with the possible exception of commercial consumers, 21 Includes the commissioning of five 25 MW GTs: two to come on-stream in 1999/2000, and one each in 1997(98,2000/01 and 2005106. Also includes the commissioning of Arun III in two phases (each of 201 MW) in 2001/02 and 2006/07 respectively. 22 "Study of Load Management Options", Final Report by NEA/DCS Commercial Deparitnent and Electricity de France International (dated January 1991). - 30 - electricity prices do not as yet provide any incentive for any other NEA consumer categories to take measures to conserve and/or improve the efficiency of electricity use 5.6 This chapter presents ESMAP's assessment of the economics and financial costs and benefits of promoting the use of high efficiency lighting systems as an electricity conservation measure in Nepal. Specific options for reducing the lighting load, including both improvements in lighting design, as well as replacement of existing hardware (lamps and ballasts) with high-efficiency ones are evaluated. B. Lighting Efficiency Impmrvement in Conmercial Buildings 5.7 The commercial/services sector in Nepal is considered to be a prime target for initial efforts by the HMG/N and NEA to promote electricity conservation to complement distribution system loss reduction, and load management measures. This is because: a. The consumers in this sector are charged the highest tariffs by NEA. Specifically, MV consumers pay an average tariff which is about 59 percent of the LRMC of supply (the highest for any category). The average tariff for MV non-commercial consumers (hospitals etc.) is almost as high, at over 57 percent of the LRMC. Likewise, average tariffs for LV commercial and non-commercial consumers (at 52.5 percent and 46.6 percent of the LRMC respectively) are also significantly higher than for other LV consumers. b. The sector has fairly strong technical and managerial capacity to address such measures -- all major commercial/services institutions (such as hotels, shopping malls, hospitals, universities etc-) are staffed with building engineers and technicians who can participate in the implementation of energy conservation programs in their respective enterprises; and c. The sector are among NEA's largest consumers. NEA's 43 largest consumers (which include 20 hotels) account for about 3.9 percent of NEA's energy requirement;,3 and their combined contracted demand equals nearly 7 percent of the system peak demand.24 23 Energy requirement includes exports to India, sales within Nepal, total technical and non-technical losses and auxiliary consumption in power stations. 24 Data for contracted maximum demand only is available. With the present metering system, it is not possible to measure either a consumer's actual maximum demand or its power consumption at the time of the system peak. - 31 - 5.8 There is no firm data on the electricity end-use pattem of the commercial/services sector is not systematically compiled by NEA. The available information indicates that lighting accounts for a major share of electricity use. Moreover, a sample survey conducted by the ESMAP team indicated that lighting accounts for 26 percent of total electricity consumption of 4/5-star hotels, over 47 percent in 2/3-star hotels, 62 percent in shopping centers and nearly 50 percent in service institutions. 25 As a large proportion of electric lights are in use during evening hours (6-10 PM), it is clear that the share of lighting during those hours could be even higher (Figures 5.2 and 5.3). 0 BITWi ico,e 1000 wttslitcld OIt. DiscO 1RW N. Lei Fiatls I% 10 250 .l Sz^l =14LS ec- S 200.__ &W% _. -; Ih*Z '^''0 , . .0 -m Lvi ANN 8HC mL 9HP KiN 051 M.L H:l l Motel iut sawf _bwnw --31X: tEmS uwy Figulre 5.2 Electricityr Use for Lighting by Howels in Figure 5.3 Eilectricity Use by Hotels rn KZathmandu Katmrandu C. Analysis of Ene rg Efficient Lighting Retndit Options 5.9 At present} the available lighting hardware on the market in Nepal is inefficient, out-dated and sub-standard. ESMAP carried out field measurements and performnance tests .of existing incandescent lamps, and fluorescent lamps with ballasts; incandescent lamps of various ratings (25, 40, 60, 75, 100 and 150 wafts) are most readily available, as well as fluorescent lamps (36 and 40 watts) which are fitted with conventional electro-miagnetic ballasts (i.e., poor power factor). All the hardware had excessively high losses -- in some cases, losses were about 200 percent higher tan would be expected even for equipment of standard design and manufacture. Despite recent initiatives by a manufacturer based in India, more hardware for energy efficient lighting, such as dimmers, efficient lamps, luminaires and electronic ballasts were not readily available on the market in Nepal. 5.10 As part of the fieldwork, ESMAP analyzed the economics of replacing existing lighting systems with energy efficient options. Life cycle costs of commonly used incandescent and fluorescent lamps (with normal power factor ballasts) were compared X5 The share of electricity used for air-conditioning is still relatively small. Load shedding in recent months has prompted hotels, restaurants and other establishments to diversify their fuel mix for cooking, space-heating and water-beating. - 32 - to high efficiency lamps, primarily those that generically are known as CFLs. The comparative analysis assumed that the light output (lumens) of the alternative (new) lighting hardware would not be significantly different from that of the existing hardware to be replaced. In particular, the economic viability of the ffollowing retrofit options were evaluated: a. 40-watt incandescent lamp vs. PL-9 CFL with 3 watts rapid start HPF ballast (PL9/60); b. 75-watt incandescent lamp vs. SL-1 8 CFL with integrated pre-heat ballast (SL18175); and c. 100-watt incandescent lamp vs. PLC*20 CFL with integrated electronic ballast (PLC*20/100). Assumptions for Economic Analysis The base-case economic analysis is based on the following major scenario assumptions for lighting applications in commercial buildings: (i) lights are used for 2080 hours/year (40 hourslweek, 52 weeks/year); (ii) toe technical T&D losses for supply to MV consumers are six percent of grss generation; (iii) plant availability factor is taken at a very high level of 70 percent; (iv) the LRMC of electricity supply at the LV level is NRs 5.896/kWh, reflecting the least-cost expansion plan for the NEA's interconnected system; (v) the investment cost of generating capacity (ICGC) is taken at NRs 50,0001kW; and (vi) the peak coincidence factor for lighting is taken at 80 percent. Other key technical specifications for te lighting hardware, such as economic life (number of hours of use) and prices of both conventional and new hardware are as summarized in the Working Paper. Box 5.1 5.11 The results of the analysis, presented in Figures 5.4 and 5.5 below, indicate comparatively how: (i) the economic cost of conserving electricity (CCE) relates to the LRMC for increasing electricity supplies; and (ii) the cost of avoided peak installed capacity (CAPIC)26 relates to the investment cost of (new) generating capacity (ICGC). 26 CCE is the ratio of net annual cost of new lighting technology (annualized cost of new lighting technology less the avoided cost of conventional technology) to annual electricity saved at the generation end. CAPIC is the ratio of present value of net annual cost of new lighting technology (over the economic life of peak generating capacity) to the supplier's avoided peak. The units for CCE and CAPIC are NRs/kWh and NRs/kW respectively. - 33 - As should be expected, the CCE drops as the duration of lighting use increases from 1040 hourstyear (20 hours/ week) to 6240 hours/year (120 hours/week). Significantly, the CCE remains below the LRMC of generation even when lighting is used for only 20 hours/week for all new lighting hardware under consideration. Additionally, Figure 5.6 indicates that CAPIC remains below ICGC for all cases if the annual lighting requirements do not exceed 5200 hours (100 hours/week). This indicates economical viability of all new lighting hardware, within a wide range of annual utilization levels (corresponding to between approximately 30 hours/week and 100 hours/week). P10 %4; P2 33aE40 %cl LRM0 00- 7 51371 80 1L. 00 -- - 000 20 ……25 0 10 20 30 40 50 60 70 10 15 20 2 30 35 40 45 S0 55 6o Houra/mek ol Ughilng Hornseaek of Lighilag CaCtI NRt. S0,0I pe kw LRUI LV lentl Is NRb. U.IBIL8W Figure 5.4 Economic Analysis of Energy Efficient Figure 5.5 Economic Analysis of Energy Lighting Options Efficient Lighting Options 5.12 Further, the analysis was extended to evaluate the financial viability of the above options for substituting conventional lighting by energy efficient CFLs (para 3.09). Specifically, the Net Annual Benefit (NAB) of the substitutions are analyzed from the perspective of NEA commercial and/or residential consumers." 5.13 As presented in Figures 5.7 and 5.8, the financial returns are good for energy efficient lighting retrofit measures by commercial consumers. The returns are not positive for residential consumers; the net annual benefits for commercial consumers improve with 27 The NAB to the consumer is the value of electricity saved annually plus the avoided annual cost of conventional light minus the annualized cost ofTfhe new lighting hardware. NAB for the utility is the avoided expenditure on generation less loss of revenue from decreased sales. - 34 - the increase in the hours of lighting use. For example, the financial returns for commercial consumers would be realized only if the hours of lighting use exceed 40 hours per week. D. Assessing Financial Retums of Retmfit Schemes Assumptions for Financial Analysis Basc case fimancial analysis computations arc based on the following: (i) a discount ratc of 18 pcrecnt per annum (which is the commercial Icnding rate for banks); (ii) the transportation cost from Calcutta to Kalhmandu is 10 percent of CIF Calcutta pricc. About half of this is incurrcd up to the Ncpal-India border (the border price is therefore 5 percent more than CIF Calcutta price). Customs duty and sales tax are levied on the border price. The basic customs duty on all lighting hardware is 20 percent of the border price. For lighling hardware imported from India, only the basic customs duty is levied; for imports from elsewhere, there is an additional customs duty of 15 pcrcent. Sales tax rate is 15 percent of the landcd cost; (iii) a further mark- up of 20 percent for all new lighting hardware gives its pricc in Kathmandu. The mark-up for all conventional lighting hardware is 10 percent; (iv) a marginal tariff rate of NRs 2.95/kWh is used. This is the present energy rate charged by NEA to all MV commercial and non-commercial consumers; and (v) lights are used for 2080 Box 5.2 5.14 In practice, large commercial/service sector consumers would invest in various types of lamps depending on the needs in different parts of their buildings (for task lighting, general lighting etc.) and, hence, the financial benefits of implementing an entire package of retrofits would need to be carefully considered. 5.15 In particular, the consumers that may realize some financial benefits by carrying out retrofits with efficient lighting hardware include: a. Large hotel establishments, which should be the primary target group for implementing a lighting efficiency program; and b. Shopping centers, where the present lighting levels are considered to be excessive. 5.16 For some categories of commercial consumers, especially the tourist sector that enjoy significant fiscal incentives from the 1HMG/N, such as customs duties waivers, reduced sales tax and tariffs, the estimated payback period for the two case studies is -35 - Nft.yuai savings lhashl 1Na11111djymai sFvImf a11iall H-8111J7 1.9-41, 5a pi, - 21- - - - - 0 10 20 30 40 SO060 70 Kuviaj4suk ol UghIImg Hou,sIvaak al Ugidlg NMATIiM *11 Nm. tS85 pal 8W NA Tarull at NR. 3.1 aptr iw tar tuldealid 1LY camslmi lor Comiclahl ILM coasumrar Figure 5.6 Assessment of Consumers Net Annual Figure 5.7 Assessment of Consumergs Net Annual Benefit from Energy Efficient Lighting Retrofit Bencfit from Energy Efficient Lighting Retrofit estimated to range between two to four years. Accordingly, the MOI and the HAN have agreed to cooperate on the proposed pilot scheme which is to assist hotel owners and management by performing lighting efficiency audits of between 10 to 15 of the large hotels in the Kathmandu area and, as necessary, extending the assistance to cover the design of retrofit schemes. Specifically, under the proposed NEMP, the MOI proposes to procure the services of an international consultant to conduct professional lighting design audits at the designated hotels. After reaching agreement with the hotel owners on the diagnosis and recommendations for design retrofit measures (i.e., introduction of energy efficiency lighting fixtures, increased use of daylight, etc.) that would reduce electricity use for lighting while maintaining or upgradng the quality of lighting in the hotels, the assistance would be extended to preparing and justifying hotel-specific investment/financing proposals for the retrofit measures. VL Opfions for Bnick Pmduction A. Intrmducfion 6.1 The production of fired bricks in Nepal accounts for a large share of fuelwood and coal consumption by industry. Moreover, the industry's demand for fuelwood is one of the major causes for the depletion of natural forests in the Terai, and brick kiln emissions which have contributed significantly to the worsening air pollution problem in the Kathmandu Valley. 6.2 The WECS and other HMGIN agencies are concemed about the adverse impact of the brick production industry from both perspectives and are exploring options to reduce fuelwood demand by improving fuel efficiency and/or substituting fuelwood with other fuels such as coal. This Chapter presents the findings of the ESMAP team concerning the technical and economic scope for reducing the adverse energy efficiency and environmental effects of brick production in the country. It addresses the issues of reducing the intensity of fuelwood use for brick production in Nepal by introducing an altemative kiln technology from China that could be promoted as a replacement for conventional kilns. The economics of producing bricks with a range of technically viable configurations of the new technology are evaluated. B. Ovemew of Bnick Pmduction Systems Existing Kilns 6.3 Brick production in Nepal depends almost exclusively on the use of Bull's Trench (BT) kiln technology. Currently, BT kilns or "Chimney Bhatta" account for over 96 percent of the total brick production. Other technologies' widespread use are (a) the traditional clamp kiln of "Thado Bhatta"; and (b) the semi-mechanized Hoffinan kiln or "Chinese Bhatta". The production characteristics of the two main configurations of the BT kilns are reviewed in Box 6.1. 6.4 The annual fuel consumption profile of 27 BT kilns was analyzed to establish the estimate of the specific fuel consumption. A variety of fuels are used in BT kilns. The annual fuel consumption of the average kiln (producing 2.57 million bricks ner year) comprised about 97 tonnes of wood, 295 tonnes of imported coal (from Jndia,, i9 tonnes of Nepalese "mud coal", 17 tonnes of rice husk, 57 tonnes of sawdust, 2.3 tonnes of scrap tires, 10 tonnes of oil-cake, less than one tonne of fruit-seeds and a small amount of SKO. The available data on energy used per production of fired-brick varies widely, but averages out to about 800 kCal/brick or 400 kCal/kg (a brick weighs approximately 2 kg). 6.5 By comparison, the traditional system is the clamp kiln which, although not capital-intensive, is not energy efficient and produces bricks of variable quality (i.e., the quality of bricks varies with the position at which the bricks are placed in the kiln). On - 37 - Configurations' of the Bull's Trcnch Kiln The BT kilns are operated as one of the following two conrigurations (a) The brick production capacity per round of a two-chimncy BT kiln varies between 300,000 and 500,000; the number of rounds fired per scason is between 5 and 10. It is assuming that. on thc average, the production capacity of a two-chimney BT kiln is about 400,000 bricks per round of firing, each kiln is fired sevcn rounds are pc: scason (vear), and each round lasts 23 days. Thereforc, on the avcrage, 2.8 million bricks arc produccd per scason, which lasts about 150 days/year; or (b) By contrast, the average production capacity of a one-chimney BT kiln is about 240,000 bricks per round. As seven rounds are fired per season (year), the average annual production level would be about 1.68 million bricks. There are approximately 300 registered BT kilns in the Kathmandu Valley area, 80 percent of which have two chimneys, and the remaining 20 percent have one chimney. As according to GTZ, only about 50 percent of the registered BT kilns in the Kathmandu valley area were in actual operation in 1991/92, the total brick production from BT kilns in the Kadhmandu valley comes to about 390 million. The total number of BT kilns registered in the entire country is 2000. Assuming that the proportion of one-chimney to two-chimney kilns is the same as in the Kathmandu Valley (i.e., 20:80 ratio), and the proportion of kilns in actual production is also 50 percent, then it is estimated that the total annual production of all BT kilns in Nepal would be of the order of 2590 million. The Hoffman kilns are much more energy efficient but are capital-intensive. Hence their use is restricted to larger companies; of the 12 semi-mechanized brick production operations which currently use Hoffman kilns in Nepal, ten are privately owned. On average, each of the privately owned Hoffman kiln operations produces about 10 million bricks annually. The other two are much larger, publicly owned enterprises which have a combined annual production capacity of 45 million bricks. Capacity utilization in these larger operations has remained low for a variety of reasons, the most important being that kiln operations have to be shut down at least 120 days during the annual rainy season. Total production from Hoffman kilns in Box 6.1 average, the traditional kilns can be operated for about 150 days each year and consume close to 500 kCal per Kg. of bricks; the available data indicates that the specific fuel consumption is about 410 kCal/kg (Figure 6.1). However, since the traditional kilns yield - 38 - low quality bricks (in terms of Li . 11(ls1 nit I "redness"), GTZ estimates, taking brick losses and poor quality into - 3 account, that the specific fuel _ ,I consumption would be in the region of 500 kCaUkg." Technology TrAnsfer Fmm China m 6.6 Recently, the Ceramics I , I itI Huln oaI Promotion Project (CPP), which is ullot I[irn l§ sI I 7H - being undertaIcn jointly by IEil;l Isiu,siIl 5g 0O 4I ZOO HMG/N and the GTZ of Germany, ,, ,,l .119,,, , l,, lp el BIt Kil1 took the initiative to arrange the Figure 6.1 Production of Fired Bricks in Nepal transfer of innovative kiln technology from China to Nepal. The Vertical Shaft Brick (VSBK) kiln was considered to be an attractive option because it is energy efficient (i.e, requires 245 Kcal per kg. of bricks) and is much less capital-intensive than the Hoffman kiln. As a first step in transferring the VSBK technology to Nepal, the CPP assisted a private enterprise near Kathxnandu to establish a pilot operation which has now been maintained for over a year. 6.7 The pilot Table6.1 operation has stimulated interest in the Terai about the ANNUAL FUEL CONSUMPTION OF VSB KILN potential impact the VSBK could make by displacing the BT kiln, Option I II III IV V VI an d th ereby significantly alleviating ITye of Solid Solid Solid Solid Hollow Hollow the constraints on the Brick industry due to the Brick Manual Manual Semi- Semi- Semi- Semi- dwindling supply of Formation mech. mech. mech. mech. fuelwood. Another No. of 300 150 300 150 300 150 advantage of the VSBK days/year that had been indicated Operation by GTZ, was that the Wood 5 5 5 5 5 5 kiln could be operated (tonnes) all year round, even _ , . _ during the rainy season. With the concurrence of the WECS, the ESMAP team collaborated with GTZ and local 2B In 1991/92, the total production from traditional kilns was estimated Lo be about I0 million bricks. - 39 - consultants to determine whether proposals to accelerate the dissemination of the VSBK technology in the country would be justified on technical and economic grounds. The analysis compared the operations of the BT kiln with six different configurations of the VSBK. The results of the analysis are summarized below. 6.8 The fuel consumption profiles of the six configurations of VSBK, each of which would produce 2.8 million bricks per year, are presented in Table 6.1. Four of the configurations would support year-round (300 days/year) operations, and two would not operate during the rainy season (150 days/year). Similarly, four configurations would produce solid bricks, and two, hollow bricks. The option of using a semi-mechanized process (i.e., an extruder for the bricks) was also considered. The VSB kilns would rely mostly on coal-dust, although a small quantity of wood and liquid fuels (SKOIHSD) are also used. C. Comparaive Economics of BTick Pmduction Systems 6.9 The analysis included a breakdown of costs according to capital expenditure (in economic terms), fuel, labor and other variable expenses. Compared to NRs. 0.76 per fired brick, the fuel costs of the VSBK operations varies from a low of NRs. 0.49/fired-brick for Options I and II (manual brick formation; solid bricks) to a high of NRs. 0.64/fired- brick in Options Im and IV (semi-mechanized brick formation; solid bricks). The fuel costs Options V and VI (semi-mechanized brick formation; hollow bricks) are estimated at NRs. 0.59/fired-brick (Table 6.1). 6.10 The overall economic cost of brick production using aBT kiln is NRs. 1.23/ fired- brick. The overall economic costs of producing bricks using the VSBK varies from NRs. 1.161 fired-brick (Option II) to NRs. 1.73/ fired-brick (Option III). Only in one case, Option II, does the cost of production with VSB kilns fall below that for a BT kiln (i-e., when the VSBK plant operates throughout the year and produces solid bricks and has a manual brick formation process). Significantly, the analysis (Figure 6.2 and Table 6.2) indicates that the costs of operating a VSB kiln on a year-round basis (i.e., 300 days) are higher than of operating it only during the dry season (i.e., 150 days operation). This is due largely to: a. The larger land area requirements (about 5 hectares in the former, compared to 2.5 hectares in the latter); and b. Additional costs of constructing a storage shed for protecting bricks from rain. - 40 - I Capilal Cshs f Eaerqy Coils ta3lc Coils 1 olbe; Vaiiihie Coiis % BT M5 6K I v S K 11 v 5B [- III V S K- IV SK - V v B- V I K ln C onlIguialion Soiuce: ESMAP amallsis ol 1lol piodmilica Coils pet bilri Figure 6.2 Breakdown of Annualized Production Costs: Bull Trench vs. Vertical Shaft Kilns 6.11 Therefore, it appears that the costs incurred at the margin (on additional land area plus storage shed) for making the VSBK-produced bricks all year round, do not yield adequate economic benefits. Against this background, it would be better to use VSB kilns for producing fired-bricks only for 150 days/year. 6.12 On the basis of the above analysis, it is clear that: a. The energy intensity of the VSB kiln is less than that of a BT kiln, no matter what configuration is adopted (i.e., production of solid or hollow bricks for 150 or 300 days per year, and use of manual or semi- mechanized processed for brick formation); b. The use of the VSB kilns would lead to a reduction in fuelwood demand, if coal-dust or steam/slack coal supplies were to be made available in sufficient quantities; and c. On the basis of the economic costs, the VSB kiln would only be competitive with the BT kiln if it is configured to produce only solid bnrcks for 150 days/year, and if manual process is used to form the bricks. 6.13 Nevertheless, it may very well be that entrepreneurs prefer Option I to Option II since it would require a relatively low investment to set up. The risk of operations may - 41 - be reduced because the entrepreneur would need to invest in three shafts in Option I compared to six shafts in Option II. The incremental capital cost of three additional shafts in Option II is higher than the additional capital investment required for constructing the storage shed in Option I. However, there would be higher recurrent costs in Option I due to larger land rental requirements. Table 6.2 ECONOMIC COST OF BRICK PRODUCTION OPTIONS I II III IV V VI Economic Costs/Year ('000 NRs) Fixed Costs 173 210 441 478 441 478 Energy Costs 1376 1376 1795 1795 1663 1663 Manpower Costs 911 860 1047 996 1047 996 Other Costs 1478 814 1561 897 1561 897 Total 3938 3260 4845 4166 4712 4034 Total Econ. Cost per Brick (NRs) 1.41 1.16 1.73 1.49 1.68 1.44 Note: Econ. Cost of production for BT kiln is NRs. 1.23 per brick. 6.14 Taking into account the substantial fuel savings tat would be achieved with the VSB kiln (in both Options I and II) compared to the BT kiln, and also the concomitant environmental benefits in terms of reduced loss of forest area and reduced gaseous emissions, there is justification for continuing the R&D effort began under the CPP. Emphasis should be shifted to cost reduction with the objective of making year-round production of hollow bricks with the VSB kiln economically attractive (from the national economic perspective) and commercially viable for the local entrepreneurs. 6.15 It may, nevertheless, be premature to embark on an accelerated program to disseminate and commercialize the use of the VSB kiln. Such an effort can only be justified as part of a strategy that explicitly takes into account the environmental benefits of promoting its use, particularly in the Kathmandu Valley area. Joint UNDP/lWorld Baiik ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAMME (ESMAI) LIST OF REPORTS ON COMPLETED ACTMVITIES Region/Counuy Acdvity/Reponl TWd Date Namber SUB-SAHARAN AFRICA (AFR) Africa Regional Anglophone Africa Household Energy Workshop (English) 07/88 085/88 Regional Power Seminar on Reducing Electric Power System Louses in Africa (English) 08/88 087/88 Institutional Evaluation of EGL (English) 02/89 098/89 Biomass Mapping Regional Workshops (English - Out of Print) 05/89 - Francophone Household Energy Workshop (French) 08/89 103/89 Interafrican Electrical Enginering College: Proposals for Short- and Long-Term Development (English) 03/90 112/90 Biomass Assessment and Mapping (English - Out of Print) 03/90 - Angola Energy Assessment (English and Portuguese) 05/89 4708-ANG power Rehabilitation and Technical Assistance (English) 10/91 142/91 Benin Energy Assessment (English and French) 06/85 5222-BEN Botswana Energy Assessment (English) 09/84 4998-BT Pm Electrification Prefiasibiliry Study (English) 01/86 047/86 Review of Electricity Service Conection Policy (English) 07/87 071/87 Tuli Block Farms Electrification Study (English) 07/87 072/87 Household Energy Issues Study (English - Out of Print) 02/88 - Urban Household Engy Strategy Study (English) 05/91 132/91 Burkina Paso Energy Assessment (English and French) 01/86 5730-BUR Technical Assistance Program (English) 03/86 052/86 Urban Household Energy Strategy Study (English and French) 06/91 134191 Buumndi Energy Assessment (English) 06/82 3778-BU Petroleum Supply Management (English) 01/84 012/84 Status Report (English and French) 02/84 011/84 Presentation of Energy Projects for the Fourth Five-Year Plan (1983-1987) (English and French) 05/85 036/85 Improved Charcoal Cookstove Strategy (English and French) 09/85 042/85 Peat Utilization Project (English) 11/85 046/85 Energy Assessment (English and French) 01/92 9215-BU Cape Verde Energy Assessment (English and Portuguese) 08/84 5073-CV Household Energy Strategy Study (English) 02/90 110/90 Central Afican Republic Energy Assessement (French) 08/92 9898-CAR Comoros Energy Assessment (English and French) 01/88 7104-COM Congo Energy Assessment (English) 01/88 6420-COB Power Development Plan (English and French) 03/90 106/90 C6te d'lvoire Energy Assessment (English and French) 04/85 5250-NVC improved Biomass Utilization (English and French) 04/87 069/87 Power System Efficiency Study (Out of Print) 12/87 - Power Sector Efficiency Study (French) 02/92 140/91 Ethiopia Energy Assessment (English) 07/84 4741-ET Power System Efficiency Study (English) 10/85 045/85 RegionCowuty ActivityReport Title Date Nwuber Ethiopia Agricultural Residue Briqueling Pilot Project (English) 12/86 062/86 Bagasse Study (English) 12186 063/86 Cooking Efficiency Project (English) 12187 - Gabon Energy Assessment (English) 07188 6915-GA .ae Gambia Energy Assessment (English) 11/83 4743GM Solar Water Heating Retrofit Project (English) 02185 030/85 Solar Photovoltaic Applications (English) 03185 032/85 Petroleum Supply Management Assistance (English) 04/85 035/85 Ghana Energy Assessment (English) 11/86 6234-OH Energy Rationalization in the Industrial Sector (English) 06188 084/88 Sawmill Residues Utilization Study (English) 11188 074/87 Guinea Energy Assessment (Out of Print) 11/86 6137-GUI Gum*ea-Bissau Energy Assessment (English and Portuguese) 08/84 5083-GUB Recommended Technical Assistance Projects (English & Portuguese) 04/85 033/85 Management Options for the Electric Power and Water Supply Subsectors (English) 02/90 100/90 Power and Water Institutional Restructring (French) 04191 118/91 Kenya Energy Assessment (English) 05/82 3800-KE Power System Efficienq Study (English) 03/84 014/84 Status Report (English) 05184 016184 Coal Conversion Action Plan (English - Out of Print) 02187 - Solar Water Heatin Study (English) 02187 066/87 Peri-Urban Woodfuel Development (English) 10/87 076/87 Power Master Plan (English - Out of Print) 11187 - Lesotho Energy Assessment (English) 01/84 4676-LSO Liberia Energy Asment (English) 12/84 5279-LBR Recommended Technical Assistance Ptojects (English) 06/85 038/85 Power System Efficiency Study (English) 12187 081/87 Madagascar Energy Assessment (English) 01/87 5700-MAG Power System Efficiency Study (English and French) 12/87 075187 Malawi Energy Assessment (English) 08/82 3903-MAL Technical Assistance to Improve the Efficiency of Fuelwood Use in the Tobacco Industry (English) 11/83 009/83 Status Report (English) 01/84 013/84 Mali Energy Assessment (English and French) 11/91 8423-MLI Household Energy Strategy (English and French) 03/92 147/92 Islamic Republic of Mauritania Energy Assessment (English and French) 04(85 5224-MAU Household Energy Strategy Study (English and French) 07(9O 123/90 Mauritius Energy Assessment (Englishl) 12(81 3510-MAS Status Report (English) 10183 008/83 Power System Efficiency Audit (English) 05t87 070/87 Bagasse Power Potential (English) 10/87 077/87 Mozambique Energy Assessment (English) 01(87 6128-MOZ Household Electricity Utilization Study (English) 03/90 113/90 Namibia Energy Assessment (English) 03/93 11320-NAM Region/Cownty Ac; *yv/Report rale Date Number Niger Energy Assessment (French) 05184 46f42-NIR Status Report (English and French) 02/86 051186 Improved Stoves Project (English and French) 12/87 080187 Household Energy Conservation and Substitution (English and French) 01188 082188 Nigeria Energy Assessment (English) 08183 4440-UNI Energy Assessment (English) 07/93 11672-UNI Rwanda Energy Assessment (English) 06/82 3779-RW Energy Assessment (English and French) 07/91 8017-RW Status Report (English and French) 05/84 017/84 Improved Charcoal Cookstove Strategy (English and French) 08/86 059/86 Improved Charcoal Production Techniques (English and French) 02/87 065/87 Commercialization of Improved Charcoal Stoves and Carbonization Techniques Mid-Term Progress Report (English and French) 12191 141/91 SADCC SADCC Regional Sector: Regional Capacity-Building Program for Energy Surveys and Policy Analysis (English) 11/91 -- Sao Tome and Principe Energy Assessmem (English) 10/85 5803-STP Senegal Energy Assessment (English) 07/83 4182-SE Status Report (English and French) 10/84 025/84 Industrial Energy Conservation Study (English) 05185 037185 Preparatory Assistance for Donor Meeting (English and French) 04186 056186 Urban Household Energy Strategy (English) 02/89 096/89 Seychelles Energy Assessment (English) 01/84 4693-SEY Electric Power System Efficiency Study (English) 08/84 021/84 Sierra Leone Enegy Assessment (English) 10/87 6597-SL Somalia Energy Assessment (English) 12/85 5796-SO Sudan Mogemen Assistance to the Ministry of Eoergy and Mining 05/83 003183 Enegy Assessment (English) 07/83 4511-SU Power System Efficiency Study (English) 06/84 018/84 Status Report (English) 11/84 026/84 Wood Energy/Forestry Feasibility (English - Out of Print) 07/87 073187 Swailamd Energy Assessment (English) 02/87 6262-SW Tanzania Energy Assessment (English) 11/84 4969-TA Peri-Urban Woodfuels Feasibility Study (English) 08/88 086/88 Tobacco Curing Efficiency Study (English) 05/89 102189 Remote Sensing and Mapping of Woodlands (English) 06/90 - Industrial Energy Efficiency Technical Assistance (English - Out of Print) 08/90 122/90 Togo Energy Assessment (English) 06/85 5221-TO Wood Recovery in the Nangbeto Lake (English and French) 04/86 055/86 Power Efficiency improvement (English and French) 12/87 078/87 Uganda Energy Assessment (English) 07/83 4453-UG Status Report (English) 08/84 020/84 Institutional Review of the Energy Sector (English) 01/85 029/85 Energy Efficiecy in Tobacco Curing industry (English) 02/86 049/86 Fuelwood/Forestry Feasibility Study (English) 03/86 053/86 Region/Cournuy Acaivity/Report Title Date Number Uganda Power System Efficiency Study (English) 12/88 092188 Energy Efficiency Improvement in the Brick and Tile Industry (English) 02189 097189 Tobacco Curing Pilot Project (English - Out of Print) 03189 UNDP Terminal Report Zaire Energy Assessment (English) 05/86 5837-ZR Zambia Energy Assessment (English) 01/83 4110-ZA Status Report (English) 08/85 039/85 Energy Sector Institutional Review (English) 11/86 060/86 Power Subsector Efficiency Study (English) 02189 093/88 Energy Strategy Study (English) 02/89 094/88 Urban Household Energy Strategy Studv (English) 08/90 121/90 Zimbabwe Energy Assessment (English) 06/82 3765-ZIM Power System Efficiency Study (English) 06/83 005/83 Status Report (English) 08/84 019/84 Power Sector Management Assistance Project (English) 04/85 034/85 Petroleum Management Assistance (English) 12/89 109/89 Power Sector Management [stitution Building (English - Out of Print) 09/89 - Charcoal Utilization Prefeasibility Study (English) 06/90 119/90 Integrated Energy Strategy Evaluation (English) 01/92 8768-ZIM EAST ASIA AND PACIFC (EAP) Asia Regional Pacific Household and Rural Energy Seminar (English) 11/90 - China County-Level Rural Energy Assessments (English) 05/89 101/89 Fuelwood Forestry Preinvestment Study (English) 12/89 105/89 Fiji Energy Assessment (English) 06/83 4462-FlI Indonesia Energy Assessment (English) 11/81 3543-IND Status Report (English) 09/84 022/84 Power Generation Efficiency Stady (English) 02/86 050/86 Energy Efficiency in the Brick, Tile and Lime Industries (English) 04/87 067/87 Diesel Generating Plant Efficiency Study (English) 12/88 095/88 Urban Household Energy Strategy Study (English) 02/90 107/90 Biomass Gasifier Preinvestment Study Vols. I & II (English) 12/90 124/90 Lao PDR Urban Electricity Demand Assessment Study (English) 03/93 154/93 Malaysia Sabah Power System Efficiency Study (English) 03/87 068/87. Gas Utilization Study (English) 09/91 9645-MA Myanmar Energy Assessment (English) 06/85 5416-BA Papua New Guinea Energy Assessment (English) 06/82 3882-PNG Status Report (English) 07/83 006/83 Energy Strategy Paper (English - Out of Print) - -- Institutional Review in the Energy Sector (English) 10/84 023/84 Power Tariff Study (English) 10/84 024/84 RegionICountsy Activily/Report Title Date Number Philippines Commercial Potential for Powcr Production from Agricultural Residues (English) 12193 157/93 Solomon Islands Energy Assessment (English) 06/83 4404-SOL Energy Assessment (English) 01/92 979/SOL South Pacific Petroleum Transport in the South Pacific (English-Out of Print) 05/86 -- Thailand Energy Assessment (English) 09/85 5793-TH Rural Energy Issues and Options (English - Out of Print) 09185 044/85 Accelerated Dissemination of Improved Stoves and Charcoal Kilns (English - Out of Print) 09/87 079/87 Northeast Region Village Forestry and Woodfuels Preinvestment Study (English) 02188 083/88 Impact of Lower Oil Prices (English) 08/88 -- Coal Development and Utilization Study (English) 10/89 -- Tonga Energy Assessment (English) 06/85 5498-TON Vanuatu Energy Assessment (English) 06185 5577-VA Western Samoa Energy Assessment (English) 06185 5497-WSO SOUTH ASIA (SAS) Bangladesh Energy Assessment (English) 10/82 3873-BD Priority Investment Program 05/83 002/83 Status Report (English) 04/84 015184 Power System Efficiency Study (English) 02/85 031/85 Small Scale Uses of Gas Prefeasibiliry Study (English - (Out of Print) 12/88 -- India Opportunities for Commercialization of Nonconventional Energy Systems (English) 11/88 091/88 Maharashura Bagasse Energy Efficiency Project (English) 05/91 120/91 Mini-Hydro Development on Irrigation Dams and Canal Drops Vols. L, II and III (English) 07/91 139/91 WindFarm Pre-Investment Study (English) 12/92 150/92 Nepal Energy Assessment (English) 08/83 4474-NEP Status Report (English) 01/85 028/84 Energy Efficieny & Fuel Substitution in Industries (English) 06193 158/93 Pakistan Household Energy Assessment (English - Out of Print) 05188 - Assessment of Photovoltaic Programs, Applications, and Markets (English) 10/89 103/89 Sri Lanka Energy Assessment (English) 05/82 3792-CE Power System Loss Reduction Study (English) 07/83 007/83 Status Report (English) 01/84 010/84 Industrial Enegy Conservation Study (English) 03/86 054186 Region/Country Aclivity/Reporl Title Date Number EUROPE AND CENTRAL ASIA (ECA) Eastem Europe The Future of Natural Gas in Eastern Europe (English) 08192 149192 Poland Energy Sector Restructuring Program Vols. 1-V (English) 01193 153/93 Portugal Energy Assessment (English) 04184 4824-PO Turkey Energy Assessment (English) 03183 3877-TU MIDDLE EAST AND NORTH AFRICA (MNA) Moroco Energy Assessment (English and French) 03/84 4157-MOR Status Report (English and French) 01/86 048/86 Syria Energy Assessment (English) 05/86 5822-SYR Electric Power Efficiency Study (English) 09/88 089188 Energy Efficiency Improvement in the Cement Sector (English) 04/89 099/89 Energy Efficiency Improvement in the Fertilizer Sector(English) 06/90 115/90 Tunisia Fuel Substitution (English and French) 03/90 -- Power Efficiency Study (English and French) 02/92 136/91 Energy Management Strategy in the Residential and Tertiary Sectors (English) 04/92 146/92 Yemen Energy Assessment (English) 12/84 4892-YAR Energy Investment Priorities (English - Out of Print) 02187 6376-YAR Household Energy Strategy Study Phase I (English) 03/91 126/91 LATIN AMERICA AND THE CARIBBEAN (LAC) LAC Regional Regional Seminar on Electric Power System Loss Reduction in the Caribbean (English) 07/89 - Bolivia Energy Assessment (English) 04/83 4213-BO National Energy Plan (English) 12/87 -- National Energy Plan (Spamish) 08/91 131191 La Paz Private Power Technical Assistance (English) 11/90 111)90 Natural Gas Distribution: Economics and Regulation (English) 03/92 125/92 Prefeasibilit Evaluation Rural Electrification and Demand Assessment (English and Spanish) 04/91 129/91 Private Power Generation and Transmission (English) 01/92 137/91 Chile Energy Sector Review (English - Out of Print) 08188 7129-CH Colombia Energy Strategy Paper (English) 12/86 - Costa Rica Energy Assessment (English and Spanish) 01/84 4655-CR Recommended Technical Assistance Projects (English) 11184 027/84 Forest Residues Utilization Study (English and Spanish) 02/90 108/90 Dominican Republic Energy Assessment (English) 05/91 8234-DO Ecuador Energy Assessment (Spanish) 12/85 5865-EC Energy Strategy Phase I (Spanish) 07188 -- Energy Strategy (English) 04/91 Private Minihydropower Development Study (English) 11/92 Region/Coeury ActivityReroMf Ytle Date Number Guatemala Issues and Options in the Energy Sector (English) 09/93 12160-CU Haiti Energy Assessment (English and French) 06/82 3672-HA Status Report (English and French) 08/85 041185 Household Energy Strategy (English and Frcnch) 12/91 143/91 Honduras Energy Assessment (English) 08/87 6476-HO Petroleum Supply Management (English) 03/91 128/91 Jamaica Energy Assessment (English) 04/85 5466-JM Petroleum Procurement, Refining, and Distribution Study (English) 11(86 061/86 Energy Efficiency Building Code Phase I (English-Out of Print) 03(8B -- Energy Efficiency Standards and Labels Phase I (English - Out of Print) 03/88 -- Management Information System Phase I (English - Out of Print) 03/88 Charcoal Production Project (English) 09/88 090188 FIDCO Sawmill Residues Utilization Study (English) 09/88 088/88 Energy Sector Strategy and Investment Planning Study (English) 07/92 135192 Mexico Improved Charcoal Production Within Forest Management for the State of Veracruz (English and Spanish) 08/91 138191 Panama Power System Efficiency Study (English - Out of Print) 06/83 004/83 Paraguay Energy Assessment (English) 10/84 5145-PA Recommended Technical Assistance Projects (English- (Out of Print) 09185 - Status Report (English and Spanish) 09/85 043/85 Peru Energy Assessment (English) 01184 4677-PE Status Report (English - Out of Print) 08/85 040/85 Proposal for a Stove Dissemination Program in the Sierra (English and Spanish) 02/87 064/87 Energy Strategy (English and Spanish) 12/90 - Saint Lucia Energy Assessment (English) 09/84 5111-SLU St. Vincent and the Grenadines Energy Assessment (English) 09/84 5103-STV Trinidad and Tobago Energy Assessment (English - Out of Print) 12/85 5930-TR GLOBAL Energy End Use Efficiency: Research and Strategy (English - Out of Print) 11/89 -- Guidelines for Utility Customer Management and Metering (English and Spanish) 07/91 -- Women and Energy--A Resource Guide The International Network: Policies and Experience (English) 04190 -- Assessment of Personal Computer Models for Energy Planning in Developing Countries (English) 10/91 -- Long-Term Gas Contracts Principles and Applications (English) 02/93 152/93 Comparative Behavior of Firms Under Public and Private Ownership (English) 05(93 155193 12/13/93 rmr EB,m BED!' a ai m L.4 I