- ~~~ 2 r~C' 1- -,/ Y' World Bank/UN DP/Bilateral Aid Energy Sector Management Assistance Program Activity Completion Fieport No. 110/90 Country: CAPE VIRDE Activity: uosoLD-i=a sTAEG sTUy FEDRUARY 1990 Report of the Worid Bank/UNDP/BlIateral Aid Enegy Sector , Management Assistance Program This document has a restricted distribution. Its contents may not be disclosed vWithout authorization from the Government, the World Bank or the UNDP. ENERGY SECTOR MANAGEMENT ASS ISTANCE PRGRAM PLOSE The World Bank/UNDP/Bilateral Aid Energy Sector Management Assistance Program (ESMAP) was launched In 1983 to complement the Energy Assessment Program which had been established three years earlier. The Assessment Program was designed to identify the most serious energy problems facing some 70 developing countries and to propose remedial action. ESMAP was conceived, in part, as a preinvestment facility to help Implement recommendations made-during the course of assessment. Today ESMAP Is carrying out preinvestment and prefeasibility activities In about 60 countries and is providing a wide range of institutional and policy advice. The program plays a significant role In the overall international effort to provide technical assistance to the energy sector of developing countries. It attempts to strengthen the impact of bilateral and multilateral resources and private sector Investment. The findings and recommendations emerging from ESNAP country activities -provide governments, donors, and potential investors with the information needed to Identify economically and environmentally sound energy projects and to accelerate their preparation and implementation. ESMAP's policy and research work analyzing cross-country trends and Issues in specific energy subsectors make an important contribution In highlighting critical problems and suggesting solutions. ESt4AP's operational activities are managed by three units within the Energy Strategy Management and Assessment Division of the Industry and Energy Department at the WoHld Bank. - The Energy Efficiency and Strategy Unit engages In energy assessments addressing institutional, financial, and policy Issues, design of sector strategies, the strengthening of energy sector enterprises and sector management, the defining of investment programs, efficiency Improvements in energy supply, and energy use, training and research. - The Household and Renewable Energy Unit addresses technical, economic, fInancial, institutional and policy Issues In the areas of energy use by urban and rural households and small industries, and includer; traditional and modern fuel supplies, prefeasibility studies, pilot activities, recht,4logy assessments, seminars and workshops, and policy and research work. - The Natural Gas Development Unit addresses gas issues and promotes the development and use of natural gas In developitg countries through preinvestment work, formulating natural gas development and related environmental strategies, and research. FUNDING The ESMAP Program is a major International effort supported by the World Bank, the United Nations Development Programme, and Bilateral Aid from a number of countries intludirg Australia, Belgium, Canada, Denmark, 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 the completed ESMAP reports listed at the end of this document, contact: - Energy Strategy Management OR Division for Global and Interregional and Assessment Division Programmes Industry and Energy Department United Nations Development Programme The World Bank One United Nations Plaza 1818 H Street N.W. New York, NY 10017 Washington, D.C. USA 20433 USA CAPE VERDE HOUSEHOLD ENERGY STRATEGY STUDY FEBRUARY 1990 ACRONYMS AND ABBREVIATIONS Acronyms UNDP United Nations Development Programme ESMAP Energy Sector Management Assistance Program MDRP Ministry of Rural Development and Fisheries DGE Directorate General of Energy MIE Ministry of Industry and Energy DFS Directorate uf Forestry Services MPC Ministry of Planning and Cooperation MTCT Ministry of Transportation, Trade and Tourism ENACOL Companhia Nacional de Combustiveis e Lubrificantes DCSFEA Directorate of Soil Conservation, Afforescation and Agricultural Engeneering OMcv Organization of Women of Cape Verde AAN Association of Friends and Nature INIT National Institute for Technological Research FAO Food and Agriculture Organization (United Nations) MSTAS Ministry of Health, Labor and Social Affairs Abbreviations toe tonne of oil equivalent GDP Gross Domestic Product MCal megacalorie kg kilogram m meter cm centimeter PND National Development Plan tonne metric tonne LPG Liquid Propane Gas lt litre CIF Cost Insurance and Freight MWh megawatt per hour MW megawatt kW kilowatt kWh kilowatt per hour US$ U.S. Dollar TABLE OF CONTENTS Page I. EXECUTIVE SUMAARY .................................... II.* INTRODUCTION .... ................ ............ .......... ........ 1 III. CAPE VERDE: THE GENERAL SETTING ....................... 3 3 Pouain................... .... .............. ............ .. ... 3 The Economic 3..................................... 3 The Energy Sector....................................... 4 The Institutional Structure of the Energy Sector.. 5 Current Energy Sector Policies, Programs and Projects .......................... 5 IV. HOUSEHOLD EN ERGY 7 Household Characteristics 7 Household Energy Use 8 Cookingoo****eo****oooot*.e 8 L i g h t i n g ~~~~~~~~~~~~12 Water Heatinge a t i n8.. ..o....o . .......... .. .. .. 15 Other Uses of Energy........ ........o............ 15 V. HOUSEHOLD ENERGY RESOURCES..oo.... 18 Firewoodesosoo*oooooos*#**oos 18 Overview. ............ .,...- .... 9699 18 supply 18 Supply/Demand Trendsr e n ds......o...o......e.... 19 pricing. . . ............... ...................... 22 Required Actionson....0......... 999999999999999 25 Charcoal....ooa rcoo........oalo. ............o ... 25 Overview....9.. ....................... ~ 25 Supply System.s te.m..... ...............o.. . 26 Prices.................... ...oo.......o... ... 26 Required Actions t in.9.99....... s 26 28 Overviewo e rvooi**,,,,,,,,#,,oooooew,,,oooooo... 28 Supply Sytem 28 Demand T r e n d s 29 P r i c i n g ~~~~~~~~~~~29 Required Actins. 29 K e r o s e n e ~~~~~~~~~~~32 Overview.999....9. ........... .................. 32 Supply Sytem 33 Demand Tr en.ooo ..9....9.9.... .............. 33 Pricing. . . ............... ~ 99999 33 Required Actins. 36 Electric P o w er.o..... o... ... oo...... o....e.. ... 36 Overview. ................. ..................... 36 Supply .................................. ...... 37 Supply/Demand Trends................. .......... 37 37 Required Actions ............................... 37 Animal, Agricultural and Industrial Residues...... 39 Required Actions...... . .................. ...... 40 VI. TOWARDS A HOUSEHOLD ENERGY STRATEGY ...................* 41 O,verview o o o * * * o o o ................e.................... 41 Basic Principles of the Strategy.................. 43 Specific Strategy Objectives and Targets etso...... 43 Components of the Strategy........................ 46 The Program for Controlling Forest Biomass Supplies..... ..... . . ... .............. . . .... 46 The Inter-Fuel Substitution Programg..... 49 Programs for the Rationalization of Household Energy Dmm a n d 51 Fuel and Electric Power Pricing Policies******* 53 Strategy Implementation......... ................. 54 Expected Outcome ................................. 57 1 Economic and Demographic Statistics................... 73 2 Energy Sector Statistics ....................... ... 75 3 Energy Sector Investment Program (1986-1990).......... 77 4.1 Characteristics and Energy Use Patterns of the Household Sector (statistics)............... 79 4.2 Household Cooking Stoves Study (1988)................. 87 5.1 Selected Information on Firewood Supply/Demand _ssues .... ....... .................................... 110 5.2 Selected Information of Charcoal Supply/Demand 116 5.3 Selected Information of LPG Supply/Demand Issues...... 118 5.4 Selected Information of Kerosene Supply/Demand Issues...... ............... . .... ................ 125 5.5 Selected Information of Electricity Supply/Demand Issues...... .......... .. . .. .................. ... 129 5.6 Selected Information of Residues Supply/Demand 132 6.1 Strategy Implementation: "Strategy Coordination C o m m i t t e e".... ......... 134 6.2 Strategy Implementation: "Technical Executive C o m m i r t e e " ~~~~~~~~~135 6.3 Inter-Fuel Substitution Model (scenario B output tablss ) 138 TABLES 4.1 Estimated Distribution of Residential Energy Consumption by Type of Use (1988)..*..4.00... 9 4.2 Estimated Total Use of Cooking Fuel (1988) .......****e*****^**** 11 4.3 Estimated Consumption og Firewood, LPG and Kerosene by Type of Cooking Fuel (1988).*.*. 13 4.4 Comparative Cost Analysis for Different Type of Domestic Fuel s 14 4.5 Estimated Hot Water Usage (1988)8...... ............." 16 4.6 Estimated Iron Usage (1988) ....................... 17 5.1 Potential Supply and Expected Demand of Firewood (1988-2010).. .*.e...*... .*.*.. .*.***. 20 5.2 Price Structure of Wood Marketed by MDRP on the Island of Santiago (Aug. 1988)..*******..*... 23 5.3 Household Interfuel Substitution Analysis: Firewood and other Domestic Fuels at Market Prices t ............. . ....... ... 24 5.4 Household Interfuel Substitution Analysis: Charcoal Parity to Firewood Market Prices (1988) ...... .................... . .... 27 5.5 Estimated LPG Consumption (1979-83/1985-88) ............*0vv*000*0000000*00000#0 30 5.6 Kerosene Consumption Estimates (1979-83/1985-88)o.o.ooooooo..o**0s¢¢0*0*X0**00#000000 34 5.7 Household Interfuel Substitution Analysis: Firewood, LPG and Charcoal Parity to Kerosene at Market Prices (1988) oo**oo*o*****.o. ooo 35 5.8 Production and Usage of Eletra's System (1986)..*..*ooo ..****..oo.ooo...*******.o.. o 38 6.1 Household Energy Strategy Results Su-mmary (Scenario A) .....................a .....a .. 58 6.2 Household Energy Strategy Results S-ummary (Scenario B) ............... .. ......0 .. 58 6.3 Household Energy Strategy Results Summary (Scenario C) o. .oo*****.. ***.*. .****..... . 59 6.4 Household Energy Strategy Results Summary (Scenario D)ooo).. ....................... . 59 6.5 Annual Variation Between "Base" Case and Scenarios B, C and D *o*oo*.....oo.oo...oo..oo.. 63 6.6 Simplified Economic Analysis Scenario - A: "Base" oeo.....oo...o...o...o.o...e... 67 6.7 Simplified Economic Analysis Scenario - B: 0% LPG Growth/Unlimited Kerosene ..... 68 6.8 Simplified Economic Analysis Scenario - C: 5% LPG Growth Urban + Peri-Urban/ 0% LPG Rural/Unlimited Kerosene .................... 69 6.9 Simplified Economic Analysis Scenario - D: Unlimited LPG Growth/Kerosene Current Trend (-1OX P/YR) ........070 FIGURES 5.1 Potential Firewood Supply and Demand (1988-2010) ....................................... 21 5.2 Families Expected to Use LPG as the Principal Fuel (1988-2010) .....*............. 31 6.1 Number of Families that Consume Firewood (1990-1999) ............................... 45 6.2 Evolution of Firewood Consumption (1990-1999) ................................... 45 6.3 Number of Families that Consume Residues (1990-1999) ........ .............................. 47 6.4 Evolution of Residues Consumption (1990-1999) ................................... 47 6.5 Number of Families that Consume Kerosene (1990-1999) ........*....................... 61 6.6 Evolution of Kerosene Consumption (1990-1999) ................... .... ................ 61 6.7 Number of Families that Consume LPG (1990-1999) .......................... 62 6.8 Evolution of LPG Consumption (1990-1999) ....................................... 62 6.9 Household Inter-Fuel Substitution Strategy Analysis - Base Case Scenario (Business as Usual) (1990-1999) ..... ............... 64 6.10 Household Inter-Fuel Substitution Strategy Analysis - Policy Scenario "B" (1990-1999) 64 6.11 Household Inter-Fuel Substitution Strategy Analysis - Policy Scenario "C" (1990-1999) 65 6.12 Household Inter-Fuel Substitution Strategy Analysis - Policy Scenario "D" (1990-1999) 65 6.13 Value of Household Energy Consumption (1990-1999) ....... ........ ............. 71 6.14 Net Benefits of the Alternative Strategy (1990-2010) ............................... 71 6.15 Requirement of Improved Kerosene Stoves (1990-1999) ..... .......... ........... ....... 72 6.16 Requirement of Improved LPG Stoves (1990-1999) ....................................... 72 I. EXCUTIVE SUMMARY Global Context 1.1 In 1984, a technical mission from the Energy Department of the World Bank undertook a global energy sector assessment in Cape Verde, ("Cape Verde: Problems and Issues in the Energy Sector"). Given the scarcity of forest resources along the country, and the expectation of a continuous increase in the demand for household biomass fuels over time, that mission recommended that an in-depth study should be carried out focussing on the household sector. More specifically, it was recommended that the study should look into the energy demand patterns of the household sector and the problems and opportunities of its associated fuel supply systems, and elaborate a strategy for the technical and economic rationalization of the household sector's energy demand-supply systems. 1.2 Following the recommendation of the 1984 energy assessment, in 1988, the World Bank/UNDP/Bilateral Aid Energy Sector Management Assistance Program (ESMAP), with financing from the Danish Government, undertook the proposed study as a technical assistance project to the Government of Cape Verde. This document presents the findings of the in- depth household energy assessment undertaken by ESMAP, and a household energy management strategy proposal. The Issues in the Household Energy Sector 1.3 The energy sector is characterized by a dependence on imported petroleum fuels and a large demand for biomass energy resources, principally firewood. Total annual energy consumption in the country is estimated at 68,081 TOE. Out of that total, firewood represents 34.2% and other biomass fuels 3.2%. The household sector is responsible for close to 51% (34,733 TOE) of the final domestic energy consumption, and is the principal consumer of biomass fuels, in particular, firewood and animal residues which are used as cooking fuels. Within the household sector biomass fuels account for some 24,760 TOE (71.3%) of the total sub-sectorial consumption, petroleum fuels for 8,706 TOE (25.1%), and electricity (thermal) for 1,267 TOE (3.6%). 1.4 The consumption of biomass fuels (firewood and charcoal) and to some degree animal and agricultural residues, creates an excessive pressure over the limited forest reserves, the soils, and the ecosystem. The existing forest stock is not able to meet the present and/or projected demand for biomass fuels if rational and sustainable resource exploitation management practices are strictly followed. Secondary and scrub vegetation is scarce and should not continue to be used as household fuel. Close to 50% of the families that utilize firewood as a cooking fuel collect it on their own, thus being responsible for the uncontrolled extraction of close to 30,000 tons of wood per year. 1.5 The firewood demand trends identified by this study are somewhat different to those foreseen in the 1984 study in that it is now estimated that the majority of Cape Verdean families could be utilizing Liquid Propage Gas - ii - (LPG) as their principal household fuel within the next 15 to 20 years. LPG is currently used as primary fuel by close to 42% of the families country-wide. This notwithstanding, it is still desirable to accelerate the inter-fuel substitution process as a means of avoiding the further and cumulative predation of the country's limited forest resources and of its ecosystem. Kerosene and LPG are the only viable household fuel options available to the country in the short-to-medium term. 1.6 The kerosene and LPG supply systems are run by ENACOL (national Petroleum Corporation) and Shell Cabo Verde. Both companies operate efficiently under competitive market rules, and have the financial and technical capability to expand the supply of petroleum fuels. Electricity expansion as a primary household fuel nation-wide is not a feasible option. 1.7 At the current market prices for fuels, which cover all direct factor costs and incorporate no subsidies, kerosene constitutes the cheapest commercial household fuel in the country. This suggests that the substitution of the biomass fuels by kerosene would be more economically advantageous than the acceleration of the LPG penetration. However, Kerosene is prefered to firewood. LPG is by far the preferred domestic fuel in all segments of the population. Towards an Integrated Household Energy Strategy 1.8 The principal activities undertaken as part of this study included: a detailed household energy survey; a series of fuel specific supply assessments; economic, social, legal and institutional analyses; and, a household stoves study. Thus, a large volume of quantitative and qualitative information was assembled, and utilized to elaborate the household energy strategy proposal. The final strategy proposal incorporates specific complementary actions in nine areas, which are: (a) the nation-wide substitution of firewood as )rinciRal household fuel by kerosene and/or LPG at full economic cost price levels; (b) the substitution among low income eroup of animal. agricultural. and industrial residues as household fuels through the implementation of controlled community-based firewood and charcoal supply programs at subsidized prices; (c) the reduction of the autonomous and uncontrolled firewood collection Rractices through the implementation of: i) rural and semi-urban social forestry programs; ii) "work for fuel" community level programs; and, iii) community-based forest control and protection programs; (d) the optimization of the systems su22lying getroleum to households through: i) the reduction of the losses incurred in the distribution and commercialization of petroleum fuels; and ii) the rational expansion of the kerosene -- and to a lesser extent LPG -- distribution and commercialization systems; * iii - (e) the rationalization and control of the exDloitation of forest-based biomass energv resources through: i) the implementation of adequate norms and procedures for the exploitation and commercialization of firewood and charcoal; ii) the preparation and legal implementation of a long term national reforestation program based on island modules; iii) the revision (based on the present study and any other subsequent sectorial asse&awsnrs) of the "Forestry Law Proposal" prepared by the Ministry of Rural Development and Fisheries (MDRP) in 1985, and its subsequent legal approval and implementation; and, iv) the definition and implementation of a national and island specific forestry resource exploitation and conservation strategy. (f) the economic optimization of the supply of household fuels and the reduction of households fuel extenditures through the revision of the current fuels price structures and the elimination of non-factor cost margins; (g) the rationalization of the household enerev demand through the implementation of: i) community education and campaign programs oriented towards reducing household energy consumption patterns; and ii) a nation-wide improved stove program oriented toward increasing the end-use efficiency of the household cooking fuels; (h) increasing the research. analysis. p'anning and Rolicy making capabilities in the energy sector, particularly in the household sub-sector, through: i) the creation of a permanent working group (Household Energy Unit) with international technical assistance at the Directorate General of Energy of the Ministry of Industry and Energy (DGE-MIE), with the specific tasks of advising the DGE-MIE on household energy issues and providing the orientation and inter-ministerial coordination neicessary for the implementation of the household energy strategy oeing proposed; ii) institutional strengthening of the DGE- MIE by means of providing training programs and opportunities to its professional staff; and iii) the implementation of energy statistics and information collection systems and the creation of a national energy data bank; (i) increasing the research. analysis. Rlanning and policy makine capabilities in the forestry sector. snecifically in the area of forest-based biomass energy resources, through: i) the creation of a permanent working group (Biomass Energy Unit) with international technical assistance at the Directorate of Forestry Services of the Ministry of Ruril Development and Fisheries (DFS-MDRP), with the specific tasks of advising the DFS-MDRP on forest- based biomass fuel management issues, undertake technical sectorial studies, and coordinate the implementation of the national improve household stove program being proposed within the strategy; ii) institutional strengthening of the DFS-MDRP by means - iv - of providing training programs and opportunities to its professional and technical staff; iii) the execution of a national forest resource inventory; and, iv) the creation of a national forestry resources data bank. 1.9 Based on the analysis of the potential firewood supply, it was concluded that the household inter-fuel substitution component of the strategy would have to be based on the definition of specific firewood and residues consumption reduction targets for the period 1990-99, a context within which different kerosene and/or LPG substitution scenarios would then be evaluated. The definition cf the reduction targets in firewood and residues consumption was carried out with the participation of the relevant ministries (MDRP and MIE), and resulted in the following proposals: (a) a nation-wide aggregate reduction in the consumption of firewood to 70% of the respectively expected consumption level by the year 1992, to 50 % by 1994, to 30% by 1996, and to 20% by 1999. This aggregate reduction scheme was calculated on the basis of differentiated reduction target for the urban, peri- urban and rural areas of the country. (b) a nation-wide aggregate reduction in the consumption of residues to close to 50% of the respectively expected consumption level by 1992, to 30% by 1993, to 20% by 1994, to 10% by 1995, and to 0% by 1996, thereby totally eliminating the consumption of residues as household fuels. This aggregate reduction scheme was also calculated based on differentiated urban, semi-urban, and rural targets. 1.10 Once those firewood and residues consumption reduction targets were set 12 alternative inter-fuel substitution scenarios were developed and analyzed. The final inter-fuel substitution scenarios given detailed consideration within the strategy proposal are: (a) Scenario 'A": "base case" (business as usual); (b) Scenario "B": a firewood for kerosene substitution policy, maintaining LPG at its present levels of consumption; (c) Scenario "C": a firewood for kerosene and LPG substitution policy, restricting, however, the expansion of LPG in the rural areas to the rate of expected demographic growth (0.5%/year), and in the urban and semi-urban areas to 5% over the expected respective demographic growth; and, (d) Scenario ID": a firewood for LPG substitution policy, maintaining kerosene within its current trend of 10% decrease per year. 1.11 The analysis of the selected substitution scenarios concluded that, given the possibility of expanding the supply of both kerosene and LPG, the most economical alternative for the country would be to substitute biomass fuels -- and partially residues -- with keroeene. In comparative terms the - V . total cost of substituting firewood with kerosene over the 10-year period of the strategy (1990-99) would be approximately three quarters of the cost of utilizing LPG. A simplified economic analysis at a 10% annual discount rate indicates that the "base case" would have a net present value (NPV) of ECV -45 million (US$ -643,000), Scenario "B" (kerosene substitution) would have a NPV of ECV 10.5 million (US$ 150,000), Scenario "C" (kerosene/LPG) would have a NPV of ECV 9.7 million (US$ 140,000), and Scenario "D" (LPG) would have a NPV of ECV 8.4 million (US$ 120,000). 1.12 The total cost of implementing the proposed strategy over its 10- year period (1990-99) is estimated between ECV 7,875 million (US$ 112.5 million) and ECV 9,835 million (US$ 140.5 million), depending on the specific substitution policy adopted from within the different proposed scenarios. Of that total between ECV 7,150 million (US$ 102.1 million) and ECV 9,000 million (US$ 128.6 million), or 90% of the total cost, would correspond to petroleum and biomass fuel costs, which would be financed through direct consumer purchases under full cost recovery pricin.g Between ECV 470 (US$ 6.7 million) and ECV 510 million (US$ 7.3 million), equivalent to close to 5.5% of the total, would need to be allocated to the importation of improved kerosene and/or LPG stoves and the local production of improved firewood and charcoal stoves. Within that an initial non-refundable donor contribution of ECV 70.4 million (US$ 1 million) would be required to set up a stove importation/ production and consumer purchase credit fund. Due to the economic situation of the country, and its limited repayment capability, the rest of the costs of the implementation of the strategy, close to ECV 400 million (US$ 5.7 million), would have to be obtain through non-refundable donor contributions covering the 10-year strategy period. The breakdown of those costs would be approximately ECV 85 million (US$ 1.2 million) for social afforestation programs, forestry sector studies, and community extension and support programs; ECV 125 million (US$ 1.8 million) for energy sector studies and extension programs; and, ECV 200 million (US$ 2.8 million) for institutional development and technical assistance. Currernt Status and Pending Actions 1.13 Although in terms of economic cost kerosene constitutes the most attractive substitdtion option to firewood, it is necessary to evaluate that result in the light of broader social and political interestr in the country given that LPG is strongly favored as a household fuel over kerosene at all levels and in all groups of the society and Government. In that sense, but now being armed with specific policy recommendations, and having the necessary data and information on their implicit trade-offs, it will be up to the Government to decide on the ultimate course of action to follow. 1.14 Once a course of action has been chosen by the Government of Cape Verde, it will be necessary to initiate the procurement of the necessary donor contributions and sources of technical assistance for the implementation of the proposed strategy. - 1 - II. IITRODUCTION 2.1 In 1984, a technical mission from the World Bank's Industry and Energy Department carried out an energy sector assessment in Cape Verde. 1/ According to that study the energy consumption of the household sector fluctuated around 50,000 TOE per year, it represented 60% of total annual domestic consumption, and about 95% of it (47,500 TOE) corresponded to biomass energy resources, mainly firewood. That same study also estimated that Cape Verde did seem to have the forest resources necessary to meet future expected firewood demand. A recommendation of that as to the need to undertake a more in-depth study of the household energy sector in order to better review its specific problems and opportunities. 2.2 At the request of the Government of Cape Verde, the recommended study was undertaken in 1988 by the World Bank/UNDP/Bilateral Aid Energy Management Assistance Program (ESMAP) with funding from the Government of Denmark. The present document is the final report of the Cape Verde Household Energy Strategy Project, executed between March and August 1988. 2.3 The Study's main objective was to develop an integrated household energy strategy that would simultaneously optimize the structure and operation of the energy supply systems and rationalize household energy consumption methods and patterns. The training of Cape Verdean personnel in all the technical aspects of the work, and institutional strengthening in the counterpart agencies, also constituted important objectives of the project. In addition to the elaboration of the final strategy contained in this report, the following intermediary products were generated during the project: (a) a household energy consumption survey (760 households/5 islands); (b) a study of the supply system of petroleum products used in the household sector; (c) a study of the existing household cooking equipment, and the development and testing of improved woodstoves; (d) a dissemination and marketing study of improved firewood and kerosene stoves; and, (e) a study of the charcoal production system. 2.4 The main field mission of the project was completed in five months by a multidisciplinary team of specialists consisting of ESMAP staff and consultants, closely cooperating with various Government agencies. The CaRe Verde: Issues and Options in the Energy Sector, August 1984, UNDP/World Bank, Washington, DC (Report No. 5073-CV). - 2 - Directorate General of Energy of the Ministry of Industry and Energy (MI8-DGE, the official counterpart agency), the Directorate of Forestry Services of the Ministry of Rural Development and Fishing (MDRP-DSF), and the United Nations Development Program (UNDP) in Cape Verde, played a critical role in the design, planning and implementation of the project. 2/ In addition to these agencies, other government biureaus and non-government organizations greatly contributed to the project in different specific areas of work. Among those, key contributors were the Directorate General of Statistics of the Ministry of Planning and Cooperation (MPC-DGE), the Ministry of Transportation, Trade and Tourism (MTCT), the Organization of Women of Cape Verde (OMCV), and the Secretariats of State and the Government Delegations of several of the islands. 2/ The overall project was supervised by Willem Floor (Task Manager) with assistance from Josephine Arpaillange (Research Assistant). The field mission consisted of Boris.E. Utria (Mission Leader/economist), Pedro V. Pinheiro (petroleum engineer), Paul Bussman and Hugh Stiles (stove technology specialists), Phillipe Durand (survey specialist), and Emilia Venetsanou (sociologist). Local support to the project was provided by Antao Fortes (National Counterpart Coordinator, MIE) and Alice Mascarenhas (Program Officer, UNDP). This report was prepared by Boris E. Utria, based on the documentation prepared by the various consultants participating in field work from March to August 1988. Carolina Rodriguez provided translating and editing assistance in the preparation of the original Portuguese version of the report. Ralph Pemberton translated the original Portuguese manuscript. -3 - III. CAPE VERDE: THE GENERAL SETTING Qqographv 3.1 Cape Verde is situated in the Atlantic Ocean 650 km due West off the coast of Senegal (West Africa). It comprises 10pain islands, nine of which are inhabited, and has a total area of 4,033 km . The country has an arid and semiarid tropical climate, an average temperature of 24 C, and an average annual rainfall of less than 500 mm. The rainy season lasts from two to three months at the most. Although rainfall over the last two years has been higher than in previous years, Cape Verde has been affected by drought since 1967. Several of the islands are almost completely desert, and lack even underground water. In general, areas of vegetative and/or forest cover are located at altitudes over 600 m above sea level. All existing forests are the result of reforestation programs, mostly implemented since the country's independence in 1975. PoRulation 3.3 The resident population in 1988 was estimated at about 364,890 inhabitants. More than half live on the island of Santiago (188,580 inhabitants). The combined populations of the two main urban centers, Praia and Mindelo, total 108,000. Of the total population, 56% is rural, 32% urban and 12% semi-urban. Four of the nine inhabited islands (Santiago, Sao Vicente, Santo Antao and Fogo) account for 90% of the total population. The sex structure is 46.4% male and 53.6% female, and the age structure consists of four main groups: from 0 to 14 years (45.7%), from 15 to 29 years (30.2%), from 30 to 50 years (11.9%), and 50 years and over (12.2%). The average family size is five persons. 3.4 The Ministry of Planning and Cooperation (MPC) calculates an average population growth rate of 2.24% for the period from 1985 to 1990. It is also eatimated that, in the same period, the semi-urban and urban population will increase at average rates of 10.6% and 6.6% respectively, and that the rural population will remain at current levels. MPC projects that the total population by the year 2000 will be 489,350, with 210,420 (43%) in rural areas, 185,950 (38%) in urban areas and 92,980 (19%) in semi-urban areas. The Economic Position 3.5 Cape Verde's economy lacks diversification, has a poor natural resource endowment, and is highly dependent on emigrants' remittances and donations from the international community. In 1985, the unemployment rate for the economically active population was 25.2%. The 1986 per capita GNP is calculated to have been US$570.0. The main economic activities (providing about 60% of GDP) are commerce, transportation and public utilities. These are followed by construction, industry, agriculture, fishing and manufacturing. . 4 - 3.7 The balance of payments has been characterized by a trade deficit (about 60% of GDP), the current real rate of economic growth is estimated at 6% per year, and more than 50% of the fiscal budget comes from nonreimbursable donations. The Energy Sector 3.11 The energy sector is characterized by a dependence on imported petroleum products and by a large demand for biomass energy resources (principally firewood). Energy supply and demand are served by both a commercial market and a subsistence system. The productive sectors of the econiomy and two thirds of households participate in the commercial energy market, which includes petroleum products, electric power and forest biomass (wood and charcoal). The subsistence energy system consists of a large majority of rural and semi-urban dwellers who --whether or not they participate in the commercial energy market -- gather wood and agricultural and industrial residues on their own account. 3.13 In parallel to the domestic markets, there is an external market which entails the sale (i.e. re-export) of petroleum products to foreign air transportation and shipping companies. In 1987, this market accounted for 75.3% (111,612 t) of total imported petroleum products (148,104 t). Over the last few years, re-exported petroleum products have averaged about 32% of GDP. 3.14 Internal energy consumption has gradually increased over the last 10 years. Total final energy consumption for 1988 was 68,081 TOE. Of that total, petroleum products (excluding consumption for electric power generation) constituted 58.8% (42,631 TOE), firewood 34.2% (23,290 TOE), other biomass 3.2% (2,160 TOE), and electric power 3.8% (2,600 TOE). The main final internal consumers are households (51%), water desalination (27.6%), transportation (17.1%) and industry (4.3%). 3.15 In 1984, petroleum product imports for domestic consumption totaled ECV 840.3 million (US$12 million) at current CIF prices. This is equivalent to 12% of the country's total imports. More current data on the specific costs of petroleum product imports are not available. While domestic consumption of petroleum products has gradually increased, the re-export market has markedly declined as a result of the falloff in air traffic at Sal airport. 3.16 The country's firewood and charcoal supplies are limited both in aggregate terms and - - principally - - in terms of their location with respect to the consumption centers. Between 1975 (independence) and 1987, about 26,616 ha have been reforested (i.e. 11.8 million trees have been planted). In spite of this considerable effort, and the existence of particular areas that now have an established forest stock, there are still insufficient forest resources at a national level to supply current and projected firewood demand in a sustainable manner. -5 - Institutional Structure of the Energy Sector 3.17 The institutional structure of Cape Verde's energy sector is relatively complex, there being in practice no single government agency managing the sector as a whole. The Ministry of Industry and Energy (MIE), the Ministry of Transportation, Trade and Tourism (MTCT) and the Ministry of Rural Development and Fisheries (MDRP) supervise electric power, petroleum products, and biomass energy resources, respectively. 3.18 Ministry of Industry and Energy (MIE): MIE consists of six different units, among which the Directorate General of Energy (MIE-DGE) is responsible for all activities relating to energy and water desalination. While in theory MIE is responsible for planning, coordinating and monitoring all energy development efforts, in practice its sphere of action has been limited to the electric power subsector. There are two reasons for this. First, both petroleum products and biomass resources are under the jurisdiction of other ministries. Second, MIE has insufficient budget appropriations and professional staff to participate more dynamically in the sector as a whole. Although its statutes call for a larger agency, MIE-DGE consists of only two intermediate-level engineers ("Tecnicos Superiores") who report directly to the Minister. MIE-DGE has no research or technical support staff of its own, and depends for such activities on MIE's Office of Studies and Planning and the Ministry's general administrative staff. 3.21 Ministry of Transportation. Trade and Tourism (MTCT): Through the Directorate General of Trade (Direcao Geral do Comercio: MTCT-DGC) MTCT supervises the importing and domestic and external marketing of petroleum products, and superintends ENACOL (Companhia Nacional de Combustiveis e Lubrificantes) and Shell Cabo Verde. This is so because petroleum products re-exports account for close to 32% of GDP, and are thus considered priority trade items. 3.22 Ministry of Rural Development and Fisheries (MDRP): MRDP is one of the largest agencies in the government structure, with a permanent staff of about 250. It is divided into seven main technical units, and has operational branches on seven of the country's islands. Among those units, the Directorate of Soil Conservation, Afforestation and Agricultural Engineering (MDRP-DCSFEA) is responsible for coordinating all soil conservation and forest management activities, thus being the unit responsible for supervising forest biomass energy resources. MDRP-DCSFEA is also responsible for experimental programs relating to nonconventional energy sources (basically wind energy), and for preparing and implementing programs relating to improved wood and charcoal stoves. MDRP-DCSFEA is divided into a Directorate of Rural Engineering (Direcao de Engenharia Rural) and a Directorate of Forestry Services (Direcao de Servicos Florestais). Current Energv Sector Policies. Programs and Projects 3.24 Government Policies: There is no national energy master plan or program for the energy sector in Cape Verde. Instead, there are policy - 6 - guidelines and specific programs and projects relating to both energy subsectors and particular geographical areas. The Second National Development Plan (II PND 1985-90) calls for: (i) satisfying energy needs, meeting costs and ensuring an acceptable level of energy security, so that socioeconomic development will be stimulated; (ii) developing the country's endogenous energy potential; and, (iii) encouraging energy savings in all sectors. 3.25 As regards petroleum products, standing policy calls for: (i) reducing the impact of international and domestic transportation costs on internal fuel prices; and, (ii) maintaining internal market price stability. 3.26 In electric power, the II PND calls for: (i) minimizing the economic cost of energy through a rational utilization of equipment and the introduction of new generation technologies; (ii) rehabilitating existing electric power plants and networks in order to increase the reliability of supply and reduce losses to technically acceptable parameters (12%-15%); (iii) supplying electric power to all the most important secondary centers in the country, at prices and reliability standards that will permit plans for economic and social development to be implemented in a coordinated manner; and, (iv) promoting the subsector's financial reorganization. 3.27 Standing policy for biomass energy resources calls for: (i) increasing the supply of firewood by continuing reforestation efforts, together with the protection and development of afforested areas, and the establishment of controlled marketing channels for firewood; (ii) reducing the consumption of biomass other than firewood (i.e. residues) through its substitution either by firewood or petroleum products (i.e. kerosene and/or LPG); and, (iii) increasing the efficiency of firewood use, either by improving fuel quality and/or by using more efficient stoves. 3.28 For nonconventional energy sources, the existing policy guidelines are limited to proposing the examination of the possible applications of wind energy in power generation, water desalinition, and refrigeration; and, the identification of other potential alternative sources of energy and their respective application possibilities. 3.29 Government Programs and Projects: Estimated investment in energy programs and projects under the II PND (1986-90) totals ECV 2.425 billion (about US$34.6 million). Because of the institutional structure, planned investments in the energy sector do not include allocations for reforestation. The latter totals ECV 928 million (about US$12.8 million), and is regarded as part of the Government's rural development program. - 7 - IV. HOUSEHOLD ENERGY 4.1 This Chapter presents a summary of the prinicipal characteris- tics of the household sector and its energy use patterns. Data presented herein was produced through the household energy survey and the study of household stoves that were executed as part of the ESIIAP study. I/ It is important to note that the actual household energy use patterns in Cape Verde are not homogeneous, there being at times considerable quantitative and qualitative differences from one island to another for the same socioeconomic or environment type groups. Annex 4.1 presents selected statistical tables on the characteristics and energy use patterns of the household sector. Household Characteristics 4.2 Women are the heads of about 30% of the families. In spite of these household having lower income levels than households formed by couples, the energy consumption patterns are not particularly different from those of other households at the same socioeconomic levels. 4.3 Cape Verde has relatively high levels of illiteracy: 70% in the rural areas and 44 % in the urban and semi-urban areas. Illiteracy rates average 44% nationwide. 4.4 Among rural households, 85% are at the "medium-low" income level and are essentially part of economic subsistence systems. A/ 75% of rural families work in agriculture. About half the households in the population live in semi- urban areas. Half of these work in agriculture Of urban households, 40% are also at the medium-low level. 4.5 The number of households with fixed monthly incomes is quite large: 68% in urban areas, 62% in semi-urban areas and 43% in rural areas. Half of urban families and more than half of semi-urban families fall into the monthly income category ranging from ECV 5,000 to ECV 15,000, this being from two to three times the minimum wage. For a more detailed discussion of the survey, see Strategies Energetigues dans le Secteur Residentiel - Enquftes Consomat_eurs, ESMAP, Washington,/DC, October 1988. For a discussion on the Household Stove Study see Annex 4.2. i/ The classification which was adopted for family income levels was actually based on the combination of several factors that affect a family's socioeconomic condition: "Medium-Low" for monthly incomes of less than ECV 5,000; "Medium" for incomes from ECV 5,000 to ECV 15,000; and, "Medium-High" for incomes exceeding ECV 15,000. - 8 - 4.6 The average monthly food cost is ECV 11,650 in urban areas, ECV 7,500 in semi-urban areas, and ECV 6,550 in rural areas. Fuel and electric power costs are 19.6%, 25.1% and 15% respectively of food expenditures. 4.7 Less than half thb households are connected to the water supply system, and only two thirds have electric power. 45% of rural families consider fuel supplies to be an important problem. That perception is shared by only 8% of urban households. LPG consumers tend not to regard fuel supply as a problem. Household Energv Use 4.8 Total household energy consumption in 1988 was 35,160 TOE. The household activity consuming most energy is cooking (82.4%), followed by water heating (8.5%), clothes ironing (4.8%) and lighting (4.3%). The breakdown by fuel of aggregate household consumption is as follows: firewood and charcoal, 64.3%; LPG, 16.1%; kerosene, 8.7%; various forms of residues 6.1%; electric power, 4.8%. 4.9 The main fuels used in cooking are wood (68.7%) and LPG (18.6%). Agricultural, animal - and marginally industrial - residues (7.4%) and kerosene (5.2%) are used to a lesser degree. Outside the electrified areas, kerosene is used for lighting. The predominant fuels used for water heating are wood (90%) and LPG (9%). Charcoal and electric power are used for clothes ironing. Table 4.1 presents an estimate of the composition of total fuel consumption, and the relationship of the various fuels to household energy uses. Cooking 4.10 Dietary Habits. Dietary habits vary considerably according to the socioeconomic positions of families and their geographical environments (e.g. island, urban area, etc.). The traditional dish of Cape Verde (cachupa) is made with maize, beans, and meat or fish, and it requires between 2.5 and 4 hours of cooking, depending on the fuel utilized. 60% of families consume it at least three times a week. 4.11 Eguioment and Utensils. Most firewood cooking is done on "three stone" fires. Metal firewood stoves are rarely used. The most common type of LPG stove is the traditional one-burner CAMPING GAS. Other more sophisticated models of LPG stoves, ranging from two-burner models to 4- burner/oven model are also used. The type of LPG stove used by a household is directly correlated to its income level. The principal Kerosene stove marketed in Cape Verde is the PRIMUS model. Kerosene wick stoves are not very common. Annex 4.2 presents a summary of the Household Stove Study. 4.12 About 75% of families regularly use cylindrical pots for preparing food. 27% of the household utilize the caLdeirao (a round caldron with legs) either exclusively or in parallel to pots. Cooking food is systematically done with the pots covered. TABLE 4.1 CAPE VERDE: ESTIKATED DISTRIBUTION OF RESIDENTIAL ENERGY CONSUMPTION BY TYPE OF USE (1988) (BASIS: TOE) Use Wood (%) Residues (%) Kerosene (%) LPG (%) Power (%) Total (.%) Cooking 19900 88.0 2160 100.0 1500 49.2 5400 95.2 - - 28960 82.4 Lighting 0 0.0 0 0.0 1520 49.8 0 0.0 1520 4.3 Water heating 2700 12.0 0 0.0 30 1.0 270 4.8 3000 8.5 Ironing and appliances 0 0.0 0 0.0 0 0.0 0 0.0 1680 100.0 1680 4.8 Total 22600 100.0 2160 100.0 3050 100.0 5670 100.0 1680 100.0 35160 100.0 Source: The World Bank / Household Energy Survey, 1988. - 10 - 4.13 Euel1s. Table 4.2 presents the estimated use of cooking fuels by primary and secondary function and by type of geographical environment. Except for a few rural families living in extreme poverty, practically all households use more than one fuel for cooking. At national level, Firewood and LPG are practically always the primary fuels used, wood being the principal one in the rural areas (76%), and LPG in the urban areas (79%) and semi-urban areas (63%). 4.14 LPG is the primary or secondary fuel for 91% of urban families, 84% of semi-urban families, and 43% of rural families. A total of 68% of the families surveyed use LPG, indicating the considerable market penetration of this fuel. 4.15 In rural areas, 88% of families use wood as their principal fuel. At the same time, 43% of families combine the use of wood with agricultural and/or animal residues. At national level, 60% of families use firewood. 4.16 20% of the urban households use kerosene for cooking, whereas in 67% of the households that use firewood, kerosene is used for firestarting. It is only in the island of Maio that charcoal constitutes an important secondary fuel (37% of households). 4.17 The examination of correlations between main characteristics of families and their patterns of energy consumption revealed the following interesting points: (a) the socioeconomic level of families strongly influences fuel use. All households using residues belong to the "medium-low" income category. 83% of firewood users and 79% of kerosene consumers are also in the "Medium-low" category. In the "medium" income category, 71% of families use LPG, and only 25% use firewood; (b) there is a positive correlation between the use of firewood and the preparation of cachupa (the traditional dish) every day: 77% of households that use firewood prepare it at least once a day, whereas 60% of LPG users prepare it once a week; (c) illiterate and older housewifes tend to cook with firewood: 78% of illiterate housewifes cook with firewood, and 57% of housewifes that use firewood are over 40 years of age; (d) households that consume only firewood and that consume both firewood and LPG behave similarly with regard to their methods of obtaining wood: 50% buy it and 50% collect it. This indicates that, as income levels rise, part of the increase is used to buy LPG and not to buy firewood; TABLE 4.2 CAPE VERDE: ESTIMATED TOTAL USE OF COOKING FUEL (1988) (Percent) Primary Fuel Primary or Secondary Fuel Area Firevood LPG Kerosene Residues Others Firewood LPG Kerosene Residues Others Urban 13.5 79.1 7.4 0 0 26.2 91.0 20.1 0 3.7 Semi-Urban 31.6 62.5 5.3 0 0.6 50.0 84.2 11.8 7.2 9.9 Rural 76.3 16.3 3.6 3.9 0 87.6 43.1 8.3 42.8 0.6 TOTAL 47.1 45.8 5.2 1.8 0.1 60.6 66.8 12.8 21.9 3.4 Source: The World Bank/ Household Energy Survey, 1988. * 12 - (e) Family size is a determining factor with respect to the choice of cooking fuels. While larger families tend to use firewood more frequently, households consuming LPG are generally smaller than the national average of five persons; and, (f) LPG is the preferred fuel for the population as a whole, followed in order of preference by kerosene, firewood and charcoal. Agricultural, animal and industrial residues are used and accepted only out of necessity. 4.18 Energy Consumption. Table 4.3 presents a summary of the patterns of firewood, LPG and kerosene consumption for household cooking (1988). Consumption of firewood as a principal fuel average 0.76 kg per person per day (150 kg per month per household). When firewood is used to complement LPG, average consumption is 0.31 kg per person per day. When firewood is used to complement kerosene, consumption averaged 0.85 kg per person per day. 4.19 When LPG is used as the only fuel for cooking, estimated average consumption is 0.094 kg per person per day. When LPG is the primary fuel, but is combined with other fuels, estimated consumption average 0.086 kg per person per day. When LPG is used as a secondary fuel, average consumption is 0.04 kg per person per day. When kerosene is the primary fuel, average consumption for cooking is 0.20 1 per person per day, and when used as a secondary fuel it averages 0.10 1 per person per day. 4.20 When residues are used as the primary fuel, consumption is equal to that of firewood when used as a primary fuel in rural areas, in weight equivalent. When residues are used as a secondary fuel, consumption is 20% in weight equivalent of firewood consumption. 4.21 Cooking Costs. Table 4.4 shows a comparative summary of costs for the various stove/fuel combinations currently in use. The PRIMUS stove/kerosene combination is the most efficient of the options currently in use, with an annual cost of only ECV 4,458 for a consumption level of 780 Hcal. For that same level of consumption, the cosq.. of the three-stone wood fire is FCV 7,691 per year, with ECV 8,650 per year for a CAMPING GAS stove using LPG and ECV 9,953 per year for charcoal, (see Annex 4.2). Lighting W 4.22 Households with stable power supplies (35.4% of the sample) regularly use electricity for lighting, with a maximum consumption for that 5-1 For a detailed discussion of lighting energy in various developing countries, see Domestic Lightin , R. van der Plas, World Bank, PPR Working Papers No. 68, November 1988. - 13 - TABLE A. a CAPE VERDE: ESTIMATED CONSUMPTION OF FIREWOOD. LPG AND KERQAENE BY TYPE OF COOKING FUEL (19881 (1) Cooking Firewood LPG Petroleum (2) Fuel kg/pop/day kg/pop/day lt/pop/day Firewood 0.76 Alone 0.81 - 0.044 + LPG 0.72 0.036 0.032 + Petroleum 0.52 - 0.16 + Residues 0.82 - 0.023 LPG - 0.086 - Alone - 0.094 0.032 + Firewood 0.31 0.072 0.035 + Petroleum - 0.066 0.10 + Charcoal - 0.100 0.031 Petroleum - - 0.23 Alone - - 0.19 + Firewood 0.85 - 0.21 + Gas - 0.045 0.26 Residues - - Alone - - 0.023 + Firewood 0.15 - 0.031 + LPG - 0.016 0.022 Notes: (1) Number of cases equals 752. (2) Includes usage for ilumination. Source: The World Bank/ Household Energy Survey, 1988. TABLE 4.4 CAPE VERDE: COMPARATIVE COST ANALYSIS FOR DIFFERENT TYPES OF DOMESTIC FUELS (1 (Base: 780 Mcal/year) Firewood Primus Camping 3 Stones (2) Charcoal Kerosene Gaz Cooker Stove (3 kgs)(3) 1. FUELS 1.1 Consumer Price 6.00 (kg) 25.00 (kg) 32.50 (it) 63.15 1.2 Caloric power Mcal/kg 4.00 6.69 10.27 10.92 1.3 Equipment efficiency 15.0 (%) 30.0 (%) 63.0 (%) 55.0 (%) 1.4 Useful Energy Mcal/kg 0.60 2.00 6.47 6.00 1.5 Consumer Price ECV$/Mcal 9.86 12.43 5.02 10.52 1.6 Energy cost/year 7.691 9.700 3.915 8.205 2. STOVE 2.1 Stove cost --- 500 1.350 680 2.2 Life time N.A. 3 5 3 2.3 Amortization (rate 15%) --- 253 543 345 2.4 Gas bottle finan.cost --- --- 100 2.5 Stove cost/year --- 253 543 445 3. TOTAL COST (Energy+Stove) 7.691 9.953 4.458 8,650 4 * RELATIVE COST - Firewood (3 stones) 1.00.0(%) 129.4 (%) 58.0 (%) 112.5 (%) Notes : (1) Unit = ECV$. (2) Air dried firewood (Hs = 18%). (3) ENACOL Burner. Source: The World Bank/ Improved Stoves Study, 1988. 15 - purpose of 20 kWh per month and a costs of about ECV 250.00. Kerosene is the primary lighting fuel in 91% of the households without electricity, LPG in 3.9%, and candles in 1.0%. 4.23 A secondary lighting fuel is used in 51.3% of households. This is kerosene in 40% of cases, candles in 49%, and LPG in 6%. Kerosene lighting requires from 4 1 to 6 1 of fuel per month. The maximum cost is ECV 200.00 per month, which is comparable to that of electricity, although the quality is greatly inferior. 4.24 Of electrified households, 53% use only incandescent lighting, 7.5% only fluorescent lighting, and the remaining 39.5% use both types. Water Heating 4.25 Water is heated in more than half of the country's households every day for the preparation of coffee and other hot drinks. in contrast, in one fourth of households water is not heated for any purpose. The average volume of water heated in households where water is heated daily is 2.6 1 per day in rural areas and 4.0 1 per day in urban and semi-urban areas. The daily heating of between 4 1 and 6 1 of water at 60 C requires an approximate monthly consumption of 1 kg of LPG (CAMPING GAS) or 11 kg of firewood (using a three-stone fire). This is about 6% of an average household's fuels consumption. Table 4.5 summarizes water heating patterns by type of area, frequency, quantity of water, and fuel. Other Uses of Energy 4.26 Clothes ironing is done in almost all urban and peri-urban households, and in about three fourths of rural households. Were power is available, electric iron are normally utilized. Most non-electrified households utilize charcoal. Table 4.6 shows that electric irons are used in all households with electricity, even though charcoal irons are more economical. Utilization of household appliances (e.g. refrigerators, blenders, etc.) is limited to electrified areas, and only battery-powered recreational appliances are used outside those areas. In 30% of the households battery powered radios are used daily. - 16 - TABLE 4.5 CAPE VERDE: ESTIMATED HOT WATER USAGE (1988) Semi- Urban Urban Rural Total Frequency of usage (%) Every day 54.9 49.7 51.8 52.6 Frequently 29.9 19.0 20.4 23.2 .Never 15.2 31.3 27.8 24.2 Daily quantity (lt) (*) 3.7 4.3 2.6 3.3 Energy source (%) Gas 82.7 70.5 31.7 57.3 Firewood 6.3 21.0 65.3 35.7 Petroleum 8.2 7.5 3.0 5.8 Electricity 2.9 1.0 0 1.2 (*) For hoseholds that use hot water daily. Source: The World Bank/ Household Energy Survey, 1988. - 17 - TABLE 4.6 CAPE VERDE: ESTIMATED IRON USAGE (1988) Semi- Urban Urban Rural Total Users (%) 95.9 94.1 74.4 85.3 Energy source (%) Electricity 64.2 53.5 4.0 36.7 Ch.arc-a 19.6 44.4 86.0 52.8 Firewood 16.2 2.1 10.0 10.5 Weekly hours 3.5 2.5 2.1 2.7 Source: The World Bank/ Household Energy Survey, 1988. - 18 - V. HOUSEHOLD ENERGY RESOURCES 5.1 This chapter presents the principal trends and issues related to the supply of household fuels in Cape Verde. In doing so, it provides for each fuel, a brief overview, and information on the characteristics of the supply system, any relevant supply/demand trends, pricing, and required actions. Annexes 5.1 through 5.6 present selected additional information for each fuel. Firewood Overview 5.2 Cape Verde's firewood supply system is composed of forest resources and scattered secondary and scrub vegetation, both of which are very limited as a result of poor and severely eroded (eolic) soils, extreme arid tropical climatic conditions, inadequate rainfall, and lack of ground water supplies. Standing forest stocks are essentially the product of Government and private reforestation efforts since 1975. The recent 15-year drought seriously affected growth of reforested areas and further reduced the availability of all vegetation types in most islands on the country. 5.3 While secondary and scrub vegetation has historically played an essential role in the supply of household fuels, little information is available on its configuration or volume at present. Technical and political consensus exists in the country as to the need to substitute household energy use of all biomass other than plantation firewood. Firewood supplies, however, are estimated to fall short of current and expected demand if total biomass consumption is to come from existing and grojected glantations under sustainable management practices. The critical role of plantations in terms of conservation and watershed rehabilitation does not allow for other than sustainable resource management, thereby implying the need to accelerate household biomass fuels substitution. Household inter- fuel substitution has already been taking place, first from biomass to kerosene and then from kerosene to LPG. Nevertheless, large segments of the population still depend on biomass fuels for their daily cooking needs. SUpOlYX 5.4 About 90% of the existing reforested areas are the outcome of the Government reforestation program implemented since the country became independent in 1975. Government data indicate that 39,553 ha were reforested between independence and 1987, with about 17.9 million plants, most being legumes (Prosopis juliflora), some cypress (Cupressus sempervirens) and some Eucalyptus spp. The survival rate of the plantations has been estimated at about 70%. Of the area planted, 30% is in the uplands, and 70% in lowland and semiarid areas. The purpose of the upland reforestation is watershed regulation and to develop process wood (const-uction materials, etc.), whereas the main aim in lowland areas is soil conservation, with the - 19 - production of firewood and fodder as a secondary objective. Thus, current firewood plantations are estimated to cover some 21,930 ha, most of which are yet to achieve maturity. SupDlR/Demand Trends 5.5 The long-term potential production of existing firewood plantations cannot be accurately assessed because of: (i) the lack of specific data on forest yields for the various species (currently assumed at 1 t/ha/year), and on the plantations' capacity to survive in the country's poor ecological conditions; (ii) the irregularity with which the refo-'estation campaigns have been implemented; (iii) the lack of data on harvesting from the plantations established prior to 1980 (i.e. those that have reached maturity, as defined by MDRP); and, (iv) the lack of data on unofficial (illegal) extraction of firewood from plantation areas. On the other hand, potential additional supplies in the form of wood thinnings and sawmill cut-off coming from logging operations in the highlands, can reasonably be expected to provide some firewood for household consumption. How much wood becomes available from such source still remains to be estimated as up to now highland plantations have never been exploited, nor it is clear at what level they will be. 5.6 Table 5.1 and Figure 5.1 present a simplified firewood supply/demand scenario for the period 1988-2010, based on the following hypotheses (see Annex 5.1): (a) firewood consumers include all households that use wood either as their primary fuel (together with residues, LPG or kerosene) or as a secondary fuel (as a complement to LPG or kerosene) and all households that consume animal, agricultural or industrial residues; (b) 690 TOE were added to total household demand for the base year (1988), in order to allow for the firewood demand in the commercial sector; (c) demographic growth was set at an annual national average rate of 2.8% for the period 1986-2000; (obs: Data provided by HPC after the completion of all the models suggests that population growth should be around 2.24%). (d) the number of households using firewood for cooking was assumed to decline by 3% per year as the result of spontaneous inter-fuel substitution; (e) demand was projected assuming the introduction of 20,000 improved stoves per year (25% efficiency), resulting in an aggregate 20% reduction in firewood consumption, but broken down between 1990 (10%) and 1991 (10%); - 20 - Table 5.1: CAPE VERDE: POTENTIAL SUPPLY AND EXPECTED OEMAND OF FIREWOOD (1988-2010) 1/ Gross Gross Mean Firewood Flnal Potential Potential Potential Demand Annual Exploltat. Exploltat. Explitat. Household Balance (Air dried; 2/ & Commer. Year Tons/year) (TEP/year) (TEP/year) (TEP/year) (TEP/year) 1988 5,687 2,104 2,240 23,250 (21,010) 1989 11,321 4,189 4,258 23,227 (18,969) 1990 41,066 15,194 6,387 20,952 (14,565) 1991 20,082 7,430 7,909 18,912 (11,002) 1992 19,159 7,089 8,516 18,898 (10,382) 193 15,712 5,814 10,539 18,886 (8,347) 1994 28,338 10,485 11,156 18,873 (7,717) 1995 36,483 13,499 12,774 18,862 (6,088) 1996 38,710 14,323 13,839 18,851 (5,013) 1997 36,529 13,516 14,387 18,841 (4,454) 1998 32,475 12,016 14,903 18,832 (3,929) 1999 43,652 16,151 15,435 18,824 (3,388) 2000 40,883 15,127 16,103 18,816 (2,713) 2001 56,206 20,796 16,117 18,809 (2,693) 2002 54,697 20,238 16,111 18,803 (2,692) 2003 37,632 13,924 15,009 18,798 (3,788) 2004 37,632 13,924 14,815 18,793 (3,979) 2005 37,632 13,924 14,477 18,790 (4,313) 2006 31,987 11,83% 13,306 18,787 (5,481) 2007 31,987 11,835 12,774 18,786 (6,012) 2008 31,987 11,835 12,668 18,785 (6,118) 2009 31,987 11,835 12,599 18,786 (6,187) 2010 31,987 11,835 12,599 18,787 (1,188) 1/ Annex 5.1 presents the methodology utilized to produce these data. 2/ Calculated based on a mean curve and adjusted at the same level of the expected mean annual potential supply. - 21 - Figure 5.1 CAPE VERDE: POTENTIAL FIREWOOD SUPPLY AND DEMAND (1988-2010) 20- 13~ 1 c w ~ s id DR R I 0 A~~ 0 -20 198890 95 2000 5 0l Y EARS C DEMAND . SUPPLY * S/D BALANCE - 22 - (f) all wood supplies are to come from lowlands firewood plantations, as no reliable data on secondary and scrub vegetation exists and it is Government policy to eliminate its household uses; (g) forest biomass supply was projected on the basis of a 3 kg per year increase in air dried wood (18%) per plant (for Prosopis iuliflora), a 70% survival rate, and a median curve supply adjustment over a 16-year harvesting plan with three cutting cycles (6-5-5), the first two consisting of 40% of the grown biomass, and the final one consisting of clear felling; and, (h) from 1988 to 2000, it has been assumed that the reforestation rate will be the same as for the 1986-90 II PND period (i.e. 4,000 ha per year, equivalent to 1.6 million plants). 5.7 As regards hypothesis (g), it must be pointed out that the coefficients used correspond to estimated averages of potential yields, and are based on the best data available. MDRP has been experimenting with some 30 other species but concrete results are yet not available. Once such data is available MDRP will be in a position to recalculate the projection presented herein. Also, the proposed MDRP harvesting plan has not been finalized. MDRP is strongly urged to reconcider its proposed clear-felling option in favor of a more sustained harvesting system. Doing so will reduce the of firewood, but in turn should help conserve the fragile forest stock. 5.8 As shown by Table 5.1 and Figure 5.1, above, in the 1988-95 period (which covers the remainder of the II PND and the whole period of the III PND) the potential average firewood supply will be 7,972 TOE (21,525 t) and the average demand will be 20,232 TOE (54,681 t), with a resulting average negative balance of 12,260 TOE (33,135 t). This means that 60.6% of the average annual demand over the period will not be met. Considering now the period 1988-2010, it stands that there would be an average annual firewood deficit of 7,175 TOE (19,392 t). Pricing 5.9 Firewood prices are not uniform throughout the islands, differing mainly as a result of the various marketing patterns. This is especially the case when it is marketed by small-scale private retailers. Prices at MDRP outlets range from ECV 3.00 per kg for small pieces to ECV 6.00 per kg for wood usually between 5 cm and 10 cm in diameter. According to recent calculations done by MDRP and FAO, the official grice of firewood on Santiago (EVC 6.00 Rer kg) reflects the economic cost of wood produced in the southern Sao Felipe lowlands and best represents the economic cost of firewood for the country as a whole. Table 5.2 shows the price structure for MDRP wood on Santiago. The costs shown in Table 5.2 are relatively high compared with other countries in the Sahel. That difference is attributed to high transportation costs, low labor productivity (100 kg per person/day), and low soil productivity (1 t/ha/year). - 23 - TABLE 5.2: PRICE STRUCTURE OF WOOD MARKETED BY MDRP ON THE ISLAND OF SANTIAGO (AUGUST 1988) ECV per Kg Component Planting 1.92 32 Materials 0.50 8 Wages 1.75 30 Transportation 1.32 22 Administration 0.51 8 Selling Price 6.00 100 Source: MDRP 5.10 Economic Costs. Although the price of ECV 6.00 per kg of firewood includes all direct production costs, it does not include the opportunity cost of the funds allocated to reforestation, nor of the standing forest resources in terms of their potential externalities (soil conservation, erosion control, watershed regulation, production of fodder for livestock, socio-cultural benefits, etc.). MDRP argues that financial costs are not taken into consideration because all the funding applied towards reforestation has been received by Cape Verde as donations (which could only be used for that purpose). The externalities are not considered in the price structure because it has not been possible to compute an actual value for them, other than in an arbitrary fashion. Under those circumstances it is argued that, doing so would unjustifiably force either a price increase or the declaration of a subsidy (implicit), both which would go against current Government energy pricing policy. It is clear that the pricing mechanisms of forest conservation policy is yet to be better understood. 5.11 Cost comparison between fuels. Table 5.3 presents the cost (i.e. value) of supplying firewood for household cooking at its present demand level, compared with the cost of supplying the equivalent volume of energy through LPG, kerosene and charcoal, all of which are considered at official market prices. It is important to note that the cost of supplying firewood presented in Table 5.3 does not take into account the fact that about 50% of consumers gather their own wood rather than buying it, which was done in order to account for the economic value of the self-harvested firewood. That is regardless whether the firewood is commercially transacted it does have an economic value which cannot be overlooked. 5.12 As shown by Table 5.3, in terms of the economic cost of fuels, supplying wood to households is only less expensive than supplying charcoal. Kerosene and, to a lesser degree, LPG are more economical alternatives. At this level of demand, substituting kerosene for firewood would produce savings of about ECV 136.3 million, since the cost of kerosene is rather less - 24 - TABLE 5 CAPE VERDE: HOUSEHOLD INTERFUEL SUBSTITUTION ANALYSIS: FIREWOOD AND OTHER DOMESTIC FUELS AT MARKET PRICES (1988) FIREWOOD LPG KEROSENE CHARCOAL : :…--… Price p/kg.:(l) 6.00 63.16 44.00 25.00 : :…--… Param.Price:(2) 6.00000 63.15790 44.00000 25.00000 : :----- - Change % :(3) 0.00 0.00 0.00 0.00 : :-… Vol./unit : 60,972 5,645 5,215 16,835 : : Vol/TOE : 22,559 6,153 5,371 11,280 : …-- :VALUE(ECV$'000) 365,829.5 356,499.5 229,453.8 420,885.9 : … … SUBSTITUTION BENEFITS (ECV$'000/year) FIREWOOD LPG KEROSENE CHARCOAL - : FIREWOOD: * 9,330.0 136,375.6 (55,056.4) : LPG: (9,330.0) * 127,045.7 (64,386.4) : KEROSENE: (136,375.6) (127,045.7) * (191,432.1) : CHARCOAL: 55,056.4 64,386.4 191,432.1 * : Notes: (1) Market price. (2) Parametric price. (3) Percentage change between market price and parametric price. - 25- than two thirds of the cost of firewood. Using LPG instead of wood would save ECV 9.3 million. Replacing firewood by charcoal at its current price would result in an additional cost of ECV 55 million. It must be noted that, although the energy yields of the fuels and various types of stove have been taken into account, these calculations only include the cost of the fuels disregarding the costs of purchasing stoves, which were considered in Chapter IV (see para. 4.21, Table 4.4). RMtred Actions 5.13 In view of the current situation, it is clear that Cape Verde needs to undertake two parallel courses of action, which are (i) the gradual substitution of woodfuels as household fuels (plantation firewood and secondary and scrub vegetation); and (ii) increasing their end-use efficiency. In summary form, the principal specific required actions are: (a) promotion of the substitution of commercial firewood for kerosene and/or LPG, through the expansion of the kerosene and LPG supply systems (fuels and stoves) at non-subsidized prices; (b) p-omotion of the reduction of autonomous and unorganized harvesting/collection of woodfuels by rural and semi-urban households, through the creation of community fuelwood lots and community-based forest conservation and protection programs; (c) an increase in the end-use efficiency of woodfuels in the household sector through the nation-wide promotion of improved firewood stoves and cooking practices; and, (d) revision of the forestry sector's institutional, legal and policy frameworks in order to improve and/or create the necessary conditions for the implementation of points (a) and (b), above. Charcoal Overvie 5.14 Cape Verde does not have a widespread tradition of charcoal production and/or utilization. Current production is limited to small scale and experimental operations and is priced at non-competitive levels with other available household fuels. Charcoal is consumed by bakeries and other such enterprises and, marginally, by the household sector. charcoal, however, could become a viable household fuel alternative for isolated communities in islands where little or no firewood is available. Due to the limited stock of forest resources in the country, large scale utilization of charcoal does not appear to be feasible. - 26 - 5.15 Except on the island of Maio where the government runs an experimental charcoal production project with FAO support, charcoal in Cape Verde is produced and marketed on a small scale. Charcoal is usually produced either by MDRP itself or by private organizations which own plantations (as in the case of the Associacao de Amigos da Natureza, in Mindelo). Estimated maximum charcoal production potential in the country is 10 t per month (80.4 TOE per year). 5.16 Although the wood-to-charcoal transformation process consumes about 50% of the wood's energy content, that of the resulting charcoal is double the energy content of wood on a weight basis. Charcoal gives a higher energy yield for its specific weight than firewood, which should be reflected in lower transportation costs per unit of energy. The conversion of wood into charcoal also avoids the loss of resources which normally result from the biological decomposition of the wood. For the consumer, charcoal is easier to transport, can be bought in small quantities, and is easy to use. Given the predominance Prosopis juliflora trees within the existing forest stocks, which are very suitable for charcoal production, charcoal could be used to supply isolated small rural communities in islands where little or no firewood is available. Prices 5.17 The current official market price of charcoal is ECV 25.00 per kg. Table 5.4 presents a charcoal-to-firewood parity price analysis for a maximum market of 120 t per year (the likely level for charcoal in the foreseeable future). Table 5.4 shows that in order to be competitive with firewood, charcoal would have to be sold at approximately ECV 21.80 per kg. At that parity price, which would be 13% lower than the current level, the selling price would still incorporate a ECV 4.93 margin per kg. (see Annex 5.2). Required Actions 5.18 In order to further consider the possibility to utilize charcoal on a small scale for isolated rural communities, that being the only recommended use over and above its current applications, the following actions would be required: (a) Production: Identification and introduction of quality control mechanisms, together with calculation of total potential output; (b) Transportation: Review of transportation charges for charcoal, and design of a low-cost shipping system that could itself use charcoal as a fuel; - 27 - TABLE- 5, 4 CAPE VERDE: HOUSEHOLD INTERFUEL SUBSTITUTION ANALYSIS: CHARCOAL PARITY TO FIREWOOD MARKET PRICES (1988) FIREWOOD LPG KEROSENE CHARCOAL : : ……--------… : Price p/kg.:(l) 6.00 63.16 44.00 25.00 : Param.Price:(2) 6.00000 63.15790 44.00000 21.72975 : : Change % :(3) 0.00 0.00 0.00 -13.08 : :…--… : Vol./unit : 436 40 37 120 : ;-… : Vol/TOE : 161 44 38 81 : …:-… : VALUE (ECV$1000) 2,617.7 2,550.9 1,641.8 2,617.7 : …-- SUBSTI-IUTION BENEFITS (ECV$'000/YEAR) FIREWOOD LPG KEROSENE CHARCOAL FIREWOOD: * 66.8 975.8 (0.0) : : s :LSPG: (66.8) * 909.1 (66.8) : KEROSENE: (975.8) (909.1) * (975.8) : CHARCOAL: 0.0 66.8 975.8 * : Notes: (1) Market price. (2) Parametric price. (3) Percentage change between market price and parametric price. - 28 - (c) Marketnin: Review of the price structure, and design of charcoal promotion mechanisms; and, (e) End-use: Design and promotion of improved charcoal stoves and cooking practices. Overview 5.19 The LPG supply system in Cape Verde operates efficiently and has the capability of expanding the current volume of operation in response to increases in the demand. LPG is the preferred household fuel for the majority of the population, and is currently utilized as a primary or secondary fuel by close to 68% of the households. Further penetration of LPG is essentially limited by income factors, since most of the household that could afford the cost of the necessary stoves and the regular cash outlays for the fuel are already utilizing it to some extent. LPG penetration is expected to continue but at slower rates than in the past. The main thrust of Government LPG policy is to promote the substitution for biomass fuels at stable and non-subsidized prices. 3uRRlv Svstem 5.20 LPG is imported and marketed by the two oil companies operating in the country, ENACOL and Shell Cabo Verde, under the supervision of MTCT (the Ministry of Transportation, Trade and Tourism). Although ENACOL is a Government enterprise, both companies function under competitive terms, thus resulting in an efficient operation of the sector. 5.21 LPG is imported in bulk in volumes ranging from 1,200 t to 1,400 t. It is shipped to Cape Verde in 3,000-ton tankers and unloaded on the island of Santiago at the ENACOL storage facility and filling plant in Praia. The plant has a capacity of 1,400 t, and is connected by a pipeline system to the port of Praia, which serves the tankers. The ENACOL plant, which is modern and safe, cost ECV 315 million (US$4.5 million). It is calculated that the operation of the plant has reduced the import cost of LPG by about US$200 per t. 5.22 LPG is marketed in bottles of various sizes. The most popular has a capacity of 2.85 kg (referred to as "CAMPING GAS" or the "3-kg bottle"), followed by the 12.5-kg bottle. The total stock of 2.85-kg bottles in the country is estimated at 120,000 units, with 91.7% belonging to Shell and 8.3% to ENACOL. The 55-kg cylinders are not for household consumption, and are used only in bakeries, hospitals, hotels and restaurants. Both ENACOL and Shell maintain a fairly complete system of wholesale and retail agents throughout the country, and the survey data confirmed the existence of LPG outlets even in remote rural areas. - 29 - Demand Trends 5.23 The LPG market has grown rapidly since 1984/85, when ENACOL's new filling plant came into operation and Shell introduced the 2.85 kg bottles. LPG consumption for 1988 was estimated at 5.2 thousand t. Table 5.5 shows LPG consumption for the period 1979-83/1985-88. As can be seen in this table, LPG consumption from 1979 to 1983 increased at a rate of only 1.2%. No data are available for 1984, but it is estimated that consumption increased 92% between 1983 and 1985 and 66.5% between 1985 and 1988. From 1979 to 1988, the estimated rate of increase in LPG consumption was 224%. 5.24 The widespread use of LPG is practically irreversible. LPG has easily penetrated the market and, unless purposely restricted, its use is expected to continue to increase gradually. A likely medium-term estimate (i.e. five years) of the rate of firewood substitution by LPG is between 10% and 15% of households currently consuming firewood. Figure 5.2 presents three projections of changes in the number of families using LPG as their primary fuel. These projections are based on an optimistic estimate of a 5.5% per year increase, a moderate estimate of 3.5% per year, and a conservative estimate of 2.0% per year (all in addition to the current population growth rate). Pricing 5.25 LPG in Cape Verde is not subsidized, and retails at ECV 63.15 per kg when sold in the 2.85 kg bottles, and at ECV 56.00 when sold in the 12.5 kg or 55 kg bottles, (see Annex 5.3). Current LPG price structures and levels were established when the ENACOL plant in Praia came into operation. Although the structure's formulation is fairly simple, it includes all necessary items regarding taxes, amortization and maintenance, etc. In addition to those items it also includes a variable component (the contribution to the National Development Fund - NDF) which stabilizes the market price. I/ With the exception of some remote areas, that the official consumer price appears in fact to be applied throughout the country. Reguired Actions 5.26 Within the competitive market framework in which both oil comparnies operate, and given the strong private sector initiative at the distribution and retail levels, it is expected that most required actions concerning the expansion of the LPG market in Cape Verde will not require major Government intervention. In fact, other than for setting macroeconomic if For reasons outside the control of the mission or MIE it was not possible to obtain from MTCT the complete price structure for either LPG or kerosene, nor of up-dated information on their import costs. That situation effectively prevented the mission from being able to undertake more complete price and economic cost analysis than that presented here. - 30 - TABLE 5.5 CAPE VERDE: ESTIMATED LPG CONSUMPTION (1979-83/1985-881 Year Consumption Annual Period volume rate of rate of ('000 T) change(%) change (%) 1979 1,600 - 1980 1,137 - 29.0 1981 1,420 + 25.0 1982 1,542 + 8.6 1983 1,619 + 5.0 + 1.2 1985 3,117 + 92.0 (1) 1986 4,061 + 30.3 1987 4,238 + 4.4 1988 (2) 5,191 + 21.6 + 66.5 Notes : (1) 1983 to 1985 change; 1984 data non-available. (2) estimate based on the first trimester, which historically corresponds to 23% of total annual consumption. Source: Mission estimates based on data provided by the NTCT. - 31 - Figure 5.2 CAPE VERDE: FAMILIES EXPECTED TO USE LPG AS THE PRINCIPAL FUEL (1988-2010) 100- 90- 80- 0 c~7 co~ 60i 0~ 5 40 198890 95 2000 5 10 YEARS a FAM + FAM/LPG-1 v FAM/LPG-2 & FAM/LPG-3 - 32 - and pricing policy guidelines, the only area which requires direct Government participation will be the creation of a revolving credit fund for the importation and commercialization of LPG stoves. As discussed above, the principal demand constraint to the expansion of the LPG market is the cash cost of the stoves. According to the household survey and the stove study done during the project, the most efficient way of overcoming that constraint will be setting up a credit fund, either to retailers or directly to consumers, so that stove purchases can be made on the basis of credit. 5.27 On the supply side, the principal issues requiring attention are the following: (a) the expansion of ENACOL's final production capacity (i.e. bottle filling and containers) and 2.85 kg bottle stock: Enacol's plant has now exceeded the operating level planned for its fifth year (1,000 kg per hour). ENACOL is already negotiating with sources of financing and international technical assistance, with a view to undertaking such expansion. It is estimated that ENACOL will have to invest about ECV 36.4 million (US$520,000) to install a filling carrousel for 12.85-kg bottles, expand its output capacity to 2,000 kg per hour, and obtain some 30,000 additional 2.85-kg bottles. After the proposed expansion, the company will be operating at twice its original capacity; and, (b) the modification and improvement of the lower-priced LPG stoves (CAMPING GAS): both, to increase the efficiency of current LPG consumption, and to promote its further penetration, it will be necessary to: (i) improve the range of flame control in order to reduce current waste of fuel- (ii) inLroduce of a more stable tripod or pot support device in order to reduce food wastes and accidental burning; and, (iii) re-design of the control knobs (now too close to the burners) in order to prevent further lack of control over flame power. Kerosene Qyervi 5.28 The kerosene supply system in Cape Verde is capable of meeting a much larger demand than that called for by current household demand. Kerosene consumption, however, has been shrinking systematically in recent years. As a result of its reduced demand, the internal retail network of fuel and stoves has also shrunk. Although LPG is the preferred household fuel in Cape Verde, kerosene is the most economic household fuel available, and it would be preferred to firewood if adequate supplies of low-prices stoves were available. No kerosene promotion policies are in force, other than the sector's policies relating to price stability, contributions to the National Development Fund (NDF), and Government non-intervention in the operations of ENACOL and Shell. - 33 - Supply System 5.29 kerosene is imported and marketed by ENACOL and Shell. Kerosene is imported mainly to serve the aviation industry (international and domestic), household consumption accounting for only about 3.7% of imports. 92.8% is consumed by foreign airlines (i.e. in the form of re-exports), and 3.5% by the domestic airline (TACV). Because of that, and due to the reduction in air traffic through the island of Sal in the last years, the potential supply of kerosene as household fuel is practically unlimited. 5.30 Kerosene is delivered to Cape Verde via the island of Sal at the Shell storage station. The total jet fuel storage capacity in Sal is 32,000 t, 12,000 t (38%) of which belongs to Shell and 20,000 t (62%) to ENACOL. Thereafter, the product is shipped to the other islands in 1,000 1 and 3,000 1 containers and in 200 1 drums. Final sale is done by small variety stores in non-standardized bottles, cans, etc. Demand Trends 5.31 Specifically, the kerosene market declined since 1984/85, when ENACOL's new LPG filling plant came into operation and Shell introduced 2.85-kg LPG bottles. Table 5.6 shows estimated kerosene consumption over the period 1979-83/1985-88. Kerosene consumption declined from 5.4 million t in 1979 to 4.6 million t in 1983, a fall of 15%. No data are available on kerosene consumption in 1984, but it is estimated that between 1983 and 1985 it fell to 3.5 million t (23.3%). From 1985 to 1988, consumption again fell by 21.4% to 2.8 million t in 1988. From 1979 to 1988, there was an estimated aggregate 49% decline in the market. The decline of kerosene on the household market was not the result of supply constraints, but of changes in the demand due to inter-fuel substitution in favor of LPG. Pricing 5.32 The final selling price of kerosene includes practically the same components as the price of LPG, with the contribution to the National Development Fund also serving as a price stabilizer. Kerosene is not subsidized, yet, since it is imported in large quantities for the aviation industry, the product is available on the domestic market at a very low cost. The price of kerosene in Cape Verde is among the lowest in the Sahel region. Kerosene retails at ECV 32.50 per liter (equivalent to ECV 44.00 per kg) (see Annex 5.4). 5.33 Kerosene has a lower cost than firewood, LPG or charcoal. Notwithstanding, in the absence of precise information regarding its price structure, no formal proposal can be made at this point, regarding pricing strategies for optimizing the economic berefits of its use. Table 5.7 shows the parity prices at which firewood, LPG and charcoal would have to be marketed in order to obtain the same level of economic benefits resulting from the use of kerosene in meeting current demand for biomass fuels and residues. - 34 - TABLE 5. 6 CAPE VERDE: XEROSENE CONSUMPTION ESTIMATES (1979-83/1985-88 Year Consumption Annual Period volume rate of rate of ('000 TM) change(%) change (%) 1979 5,479 - 1980 5,314 - 3.0 1981 4,512 - 15.1 1982 4,595 + 1.8 1983 4,641 + 1.0 + 15.3 1985 3,562 (1) - 23.3 (1) 1986 3,089 - 13.3 1987 2,728 - 11.7 1988 (2) 2,800 + 2.6 + 21.4 Notes : (1) 1983-1985 change; 1984 data non-available. (2) Estimate based on first trimester, which historically has represented 23% of total consumption. Source: Estimates based on data provided by the NTCT. - 35 - TABLE 5.7 CAPE VERDE: HOUSEHOLD INTERFUEL SUBSTITUTION ANALYSIS: FIREWOOD. LPG AND CHARCOAL PARITY TO KEROSENE AT MARUT PRICES (19881 ---------------------------------------------------------------__ FIREWOOD LPG KEROSENE CHARCOAL : : Price p/kg.:(l) 6.00 63.16 44.00 25.00 : :-… : Param.Price:(2) 3.76329 40.65034 44.00000 13.62922 : … : Change % :(3) -37.28 -35.64 0.00 -45.48 : :-… Vol./unit : 60,971 5,645 5,215 16,835 : :-… : Vol/TOP : 22,559 6,153 5,371 11,280 : VALUE(ECV$'000) 229,451.6 229,451.7 229,451.6 229,451.6 : :-… SUBSTITUTION BENEFITS (ECV$'000/year) FIREWOOD LPG KEROSENE CHARCOAL : : : FIREWOOD: * (0.0) 0.0 (0.0) : LPG: 0.0 * 0.0 0.0 : KEROSENE: (0.0) (0.0) * (0.0) : CHARCOAL: 0.0 (0.0) 0.0 * ----------------------------------------------------------------- Notes: (1) Market price. (2) Parametric price. (3) Percentage change between market price and parametric price. - 36 - Reauirad Actions 5.34 As discussed above, the gross supply of kerosene is practically unlimited, and the principal constraint to the expansion of its use rests in the market's preference for LPG as a commercial household fuel. If how- ever, kerosene is to be actively promoted now as a substitute for woodfuels then some moderate investment will be required in the distribution system given that little has been done since 1985 to maintain the retail distribu- tion system serving final consumers. In principle, such investments should be undertaken directly by the private sector, although given the poor market trend of the product and the natural high-risk perception associated to investing in it, the Government might have to lead the sector's rehabilita- tion efforts. Specifically, investments will be required for marketing and fuel promotion, and for the installation of hand-pumps to transfer it from the 200 1. drums to bottles or cans in the small variety stores which normally commercialize kerosene. In parallel to that, however, both ENACOL and SHELL should be required to expand their intermediary level distribution flows, and install kerosene pumps in all existing gasoline stations. 5.35 As in the case of the LPG, and even more so, the most critical issues that will require the participation of the Government will be to set-up a revolving credit system for the purchase (importation) and sale of kerosene stoves. During the preparation of this study, the different stoves that were available in the local markets were examined, together with several types of 'improved" kerosene stove. That assessment concluded that the performance and design of the PRIMUS (the main type of kerosene stove marketed in the country) are fairly well adapted to the needs and dietary habits of the people of Cape Verde, but that there where as well other stove options, such as PET (Eindhoven University, prototype model) and the SUPERIOR (Colombia) which offers sufficient advantages, as to merit their future dissemination in Cape Verde. (For a detailed discussion of the stove study and its results see Annex 4.2). Electric Power Overview 5.36 Power generation in Cape Verde is concentrated in the urban areas, and consumption is limited to high income households, the productive and service sectors, and water desalination. The geographical characteristics of Cape Verde, and the spatial dispersion of its population make it very difficult to economically increase the supply of power outside those urban areas. In the Cape Verdean context electricity does not constitute a viable cooking fuel alternative, since its only economic household applications are lighting and the operation of appliances. As such, residential electrification alone does not constitute a priority in as far as the government's investment program. On the other hand, current Government policy calls for the rehabilitation of existing plants, the expansion of supply in main urban areas, and the electrification of selected secondary urban centers with economic growth potential. Wind and combined - 37 - wind/diesel generation technologies seem to have considerable potential in Cape Verde, but ongoing research efforts have failed to produced sufficient information upon which to promote specific investment. Supply System 5.37 Although Electra (Empresa Publica de Electricidade e Agua) was established to supply electricity and water throughout the country, so far it has provided services only from thermal plants in the cities of Praia and Mindelo, and on the island of Sal. Electric power generation in the other main urban centers on the various islands is done by the local municipalities through the use of independent diesel generators. Through out the country there are also a number of small-scale independent systems that are privately owned. Table 5.8 shows power production and use within the Electra system for 1986. In that year, Electra's installed capacity was 13 MW, equivalent to 95% of the country's total capacity. Table 5.8 shows that the volume of power billed to consumers (household, commercial and industrial) was less than 70% (Mindelo) of total power generated (25,978.2 MWh). At the same time, losses totalled 16.3% in Mindelo, 24.9% in Praia and 18.3% in Sal. On the island of Sal, 35.6% of the generated power was used for water desalination. Supply/Demand Trends 5.38 Households already connected to the grid, or to independent systems operated by municipalities and/or private owners, must be regarded as established consumers. The population groups currently without power supply fall into two categories: (i) households located within areas or centers of potential consumption, and already included in existing expansion plans; and (ii) households located in areas of low aggregate demand, and which have no possibility to receive electricity in the foreseeable future. The latter group actually constitutes the majority of the country's population. At the same time, because of the spatial distribution of the productive activities in the country, there are no obvious opportunities for combining residential supply with supplies to new economic enterprises that would have an economically viable electricity demand. Tariffs 5.39 Electricity tariffs are based on an oRerating cost recovery system. with no explicit subsidiei. Electra charges two industrial tariffs and one residential tariff. The residential tariff is based on two ranges of consumption, with different prices based on a progressive formula (ECV 14.00 per KWh up to 40/kWh per month, and ECV 17.00 per KWh over 40 kWh per month). These residential tariffs, are high compared with other countries in the region, (see Annex 5.5). Reguired Actions 5.40 The development of the electricity sector has been the subject of several studies. The principal issues and required actions have already TABLE 5.8 CAPE VERDE: PRODUCTION AND USAGE OF ELECTRA'S SYSTEM (19862 MINDEIW PRAIA SAL KWh % MWh % KWh % Production 14,040.6 100.0 9,503.5 97,7 2,434.1 100.0 Purchases (*) - - 225.3 2.3 - - Disposable Energy 14,040.6 100.0 9,728.8 100.0 2,434.1 100.0 Internal Consumption 1,044.8 7.4 422.3 4.4 20.8 0.9 Desalination 330.1 2.3 - - 867.6 35.6 Consumers 9,911.6 70.6 6,665.8 68.7 1,023.6 42.1 Public Ilumination 470.0 3.4 196.2 2.0 77.2 3.1 Losses 2,284.1 16.3 2,424.5 24.9 444.9 18.3 Total 14,040.6 100.0 9,728.8 100.0 2,434.1 100.0 Notes : (*) Energy debited to the electric network by the INIT's eolic-generators. Source: SNEDE, Plano de viabilizacao da ELECTRA, Volume I Diagnostico da situacao, Cape Verde, 1987. - 39 - been identified and efforts are being conducted by the Government, with international technical and financial assistance, in order to implement the necessary programs and projects in the sector. Within those, the rehabilitation of existing plants and networks in order to increase supply reliability and reduce losses to technically acceptabl', parameters (i.e. between 12% and 15%), and promoting the subsector's financial reorganization are among the government's top priorities. Total investments in the subsector for the period 1986-90 are expected to reach ECV 1,526 million (US$ 21.8 million). 5.41 Among other financing obtained for the sector, the Government of Cape Verde recently signed an Agreement with the World Bank which will provide about ECV 161 million (US$2.3 million) for the technical rehabilitation of existing installations and for institution building in Electra. Further World Bank financing will be used to prepare tariff studies and an electrification master plan. This work is intended to lead to the preparation of an overall investment plan that will be included in the III PND (1991-95). Animal. Agricultural and Industrial Residues 5.42 There is no organized system for gathering and/or marketing animal, agricultural or industrial residues, whereby each individual household that utilizes these resources has to make arrangements for obtaining them. The principal issues with respect to the household use of residues as fuels refers to considerations of quality of life and health standards. Residues are utilized as a last resort by lower income households with direct repercussions on the dietary habits, which are already inadequate by income factors. In addition to that, the use of some residues -- mainly industrial (plastic bottles, etc.) -- poses potential health hazards to urban 'ower income families. The current Government policy on the use of residues is limited to agricultural and animal residues. According to the II PND, the government expects to "reduce the consumption of all biomass other than firewood, through its substitution for firewood or petroleum products (i.e. kerosene and LPG)." At present, however, no specific proposal or actions have been taken in order to pursue that policy. 5.43 The actual supply of residues in Cape Verde can only be estimated on the basis of theoretical assumptions regarding volume and energy potential. In the case of animal residues, it is plausible to estimate potential supplies by using data on livestock numbers. In the case of agri- cultural residues, is practically impossible to calculate potential supplies because of the wide variations in agricultural production and energy content of feedstocks. The supply of industrial residues is totally random. 5.44 From the survey data, it was estimated that total residues consumption in 1988 was of the order of 8,640 t, equivalent to 2,160 TOE, assuming an energy equivalence of 0.25 TOE per gross ton. The entire volume is used for cooking. Some 1,290 households use residues as their only fuel, and another 11,952 use it as a secondary fuel. All the families using - 40 - residues as their only fuel live in rural areas. Only 10% of rural families and 7.3% of semi-urban families use residues as a secondary fuel. Reguired Actions 5.45 In accordance with Government policy the use of all biomass other than firewood is to be substituted. In order to reduce and eventually eliminate the use of all residues, and until a substantial elevation in income levels occurs, the Government will have to create alternative fuel supply options under conditions and/or grices which are accessible to lower income households. Not doing that will force people to continue to use residues for lack of a viable fuel alternative. Unless the cost of producing and distributing fuels to those lower income house-hold can be reduced, the Government most likely will have to implement a policy of targeted subsidized fuel prices and additional incentives. The promotion of imported kerosene and/or LPG for these group of consumers at subsidized prices should not be regarded as a viable option. In that context, the required actions are similar to those proposed earlier for the reduction of the autonomous consumption of firewood: (a) to promote the reduction of use of agricultural, animal and industrial residues by the lower income households, through the creation of community fuelwood lots, community-based "ener:y for work" type programs, and the supply of charcoal at subsidized prices. (b) to explore the possibility to produce charcoal at lower than current costs, and utilize it for supplying fuel to isolated rural communities at subsidized prices where ecological conditions do not allow for the creation of firewood lots. (c) to promote the creation of rural community associations through which to channel financial resources, extension work, and rural development programs. 5.46 With regards to the eventual need to implement some fuel price subsidy program it is important to bear in mind that given the small size of the target group (see para. 5.44), the over-all program should not represent a substantial financial burden to the Government. Furthermore, utilizing biomass fuels as opposed to imported fuels would allow for the implementation of a subsidy program that is based on reduced local currency revenues and not expenditure of foreign exchange. With regards to the issues of program targeting and of avoidance of leakages of such a subsidy policy, it stands that the close community-type structure of Cape Verde's rural and semi-rural population, and their spatial distribution, make it very possible to implement controlled extension and price support programs, as illustrated by the many activities that are regularly undertaken by the Organization of women of Cape Verde (OMCV). - 41- VI. TOWARDS A HOUSEHOLD ENERGY STRATEGY 6.1 This chapter presents a proposal for a 10-year household energy development strategy for Cape Verde, highlighting its basic principles, objectives and goals, components, implementation procedures, and expected results. Overvie 6.2 Based on the various studies done in the course of preparing the present household energy strategy, it was concluded that it would be desirable to promote the further substitution of firewood as a household fuel. That conclusion was supported not only by the identification of current and expected firewood supply/demand deficits, but by need to step-up forest conservation and protection efforts for economic, social and ecologic reasons, and by the population's aspirations of having access to more efficient and convenient household fuels (i.e. kerosene and LPG). 6.3 Both kerosene and LPG have a Rotential supply that surpasses projected demand. and are more econemical and efficient than firewood. At current economic and market prices. however, kerosene would be a cheaper fuel alternative to firewood than LPG. While that suggests that promoting firewood substitution by kerosene would be a better policy than accelerating the penetration of LPG, the latter is widely preferred by all segments and at all levels of the population. There being a strong social preference, and almost a cultural pressure, most households that could afford switching to LPG have already done so. At present, kerosene is not widely used by low-income households because of the high cost and relative unavailability of suitable stoves. 6.4 The electric power supply in Cape Verde is socially limited, with users constituting less than 31.4% of the total population and being practically circumscribed to the urban centers and some semi-urban areas. Given the state of the economy, residential and rural electrification expansion should not be regarded as an economic priority, but as a long-term social goal. 6.5 Within that context, nine complementary areas of action were identified in order to address in economical, social and ecological terms the principal problems and opportunities in the household energy sector in the next 10 to 15 years. In and of themselves, these nine areas constitute the overall objectives and mechanisms for the proposed strategy: (a) nation-wide substitution of commercial firewood as a household fuel by kerosene and/or LPG at full economic cost recovery pricing levels; (b) substitution of animal, agricultural and industrial residues as household fuels among low-income socio-economic groups by implementing a program of controlled supply of firewood and/or charcoal at subsidized prices; - 42- (c) reduction of the autonomous and unorganized harvesting of firewood by rural households, through: (i) the establishment of rural and semi-urban forest resource exploitation/conservation community associations; (ii) the design and implementation of community-based "work for energy" programs; and, (iii) identification and implementation mechanisms for controlling and safeguarding existing forest resources, with the participation of local communities; (d) optimization of the household energy supply systems, through: (i) the reduction of distribution and marketing losses in the case of petroleum products, and transmission losses in the case of electric power; (ii) a rational expansion of the kerosene and LPG distribution and marketing systems; (e) rationalization and control of the woodfuels supplv system, through: (i) implementation of regulations and procedures for the extraction and marketing of firewood and charcoal; (ii) preparation and legislative approval of a long-term reforestation plan at national and island levels; (iii) review of the Forestry Bill prepared by MDRP in 1985, and subsequent legislative approval and implementation; (iv) definition and implementation of a forest resource extraction and conservation strategy at national and island level; and, (v) establishment of systems for controlling firewood exploitation; (f) economic optimization of household energy supply and reductions in the costs of fuels to households, through a review of their various cost structures and current market prices and tariffs; (g) rationalization of household energy demand, through (i) the optimization of the population's energy consumption patterns; and, (ii) increasing the end-use efficiency of the various cooking fuels (improved stoves); (h) increase the Government's capacity for research. analysis and energy planning. garticularly at the household level, through (i) the establishment of a permanent working group ("Household Energy Unit") at the Directorate General of Energy of the Ministry of Industry and Energy (DGE/MIE), to advise the Directorate on household energy planning and provide technical guidance and inter-ministerial coordination in the implementation of the proposed strategy; (ii) institution building for the DGE/MIE, and training for its personnel; and, (iii) the implementation of a nationwide energy statistics collection system, and establishment of a national energy database; (i) increase the forestry research. study and Rlanning cacacitv. Rarticularly as regards forest biomass energy, through: (i) the establishment of a permanent working group ("Biomass Energy Unit") at the Directorate of Forestry Services of the Ministry of Rural . 43- Development and Fisheries (DSF/MDRP), to advise the Directorate on household energy, carry out technical studies, and coordinate the implementation a national improved wood and charcoal stove program; (ii) institution building and professional and technical staff training at the DSF/MDRP; (iii) the execution of a national inventory of existing forest resources; (iv) the establishment of a national forest resources database; and, (v) the preparation of periodic small-scale surveys on household energy consumption. Basic Principles of the Strategy 6.6 Based on the characteristics of the household energy sector and of the main factors affecting the behavior of households with respect to energy, and considering the country's economic and institutional setting, the proposed strategy was designed and will have to be implemented taking into consideration the following basic principles: (a) to offer consumers the broadest choice of fuels, without this requiring large-scale investments to increase the energy supply infrastructure in the short term; (b) to seek alternative energy systems and fuels that are of lowest economic cost to the country, and implement these through the most cost effective options available to the country; (c) to give priority to short and medium-term actions to replace firewood as a household fuel, in order to prevent the cumulative destruction of the country's forest resources; (d) to obtain the largest possible participation on the part of the community and the private sector in implementing the strategy; (e) to maintain prices of petroleum fuels and electricity at their respective economic cost levels; and, (g) to establish a woodfuels pricing policy that fully covers production, extraction and distribution costs, plus their opportunity cost with regard to ecological conservation and the generation of other potential economic and social benefits, yet, allowing for strictly explicit price subsidy programs for low income groups. Specific Strategy Objectives and Targets 6.7 Based on the fact that the critical issue within the strategy was the preparation of a firewood and residues substitution program, and that the supply of kerosene and LPG is practically unlimited with respect to the demand, the prenaration of the strategy followed the principle of first setting the specific objectives and targets in terms of the reduction of firewood and residues consumption, to then examine different possible - 44- kerosene and LPG substitution options. The implementation schedule of the strategy proposal covers a period of 10 years, beginning in 1990. The following are the specific targets oA the proposed strategy: (a) Reduction in the consumption of firewood: At national level: a reduction in aggregate firewood consumption by 1992 (i.e. yEiar 3) to about 70% of expected consumption according to the "base" scenario (business as usual), to 50% by 1994 (year 5), 30% by 1996 (year 7), and 20% by 1999 (year 10). In the rural areas: reduction in firewood consumption, compared with each previous year's level, of 10% in 1990, 1991 and 1992, an annual reduction of 15% from 1993 to 1997, and reductions of 20% in 1998 and 1999. In the semi-urban areas: a reduction in firewood consumption, compared with each previous year's level, of 20% in 1990, 25% per year in 1991 and 1992, 30% in 1993, 40% in 1994, 55% in 1995, with an end to consumption (100%) in 1996. In the urban areas: a reduction in firewood consumption, compared with each previous year's level, of 25% in 1990, just over 30% per year in 1991 and 1992, 55% in 1993, and an end to consumption (100%) in 1994. Figures 6.1 and 6.2 show the relationship between the "base" scenario (business as usual) and the plan for reducing aggregate firewood consumption proposed for the strategy, in terms of the number of consumer households and levels of consumption (in tons). (b) Reduction in the consumption of residues: At national level: a reduction in aggregate consumption of residues by 1992 (i.e. year 3) to about 50% of expected consumption according to the "base" scenario, to 30% by 1993 (year 4), 20% by 1994 (year 5), 10% by 1995 (year 6), and 0% by 1996 (year 7). In the rural areas: a reduction in residues consumption, compared with each previous year's level, of 20% in 1990, 25% per year in 1991 and 1992, 30% in 1993, 40% in 1994, 55% in 1995, ending consumption (100%) in 1996. In the semi-urban areas: a reduction in residues consumption, compared with each previous year's level, of 25% in 1990, just over 30% per year in 1991 and 1992, 55% in 1993, with an end to consumption (100%) in 1994. In the urban areas: the household survey indicated that neither agricultural nor animal residues are utilized in the urban areas. - 45 - Figure P.- CAPE YERDE: NUMBER OF FAMILIES THAT CONSUME FIREWOOD (1990-1999) 40 35 0OJ 30X L& 25 o 205 150 5 1990 91 92 93 94 95 96 97 98 99 YEARS B BASE + STRATEG .@ Figure 6.2 CAPE VERDE: EYOLUTION OF FIREWOOD CONSUMPTION (1990-1999) 60 50 3 0X 40. 0 3 0 10- 1990 91 92 93 94 95 96 97 98 99 YEARS o BASE + STRATEGY ^ 46- Figures 6.3 and 6.4 show the relationship between the "base" scenario (business as usual) and the plar. for reducing aggregate residues consumption proposed for the strategy, in terms of the number of consumer households and levels of consumption (in tons). 2mponents of the Strategy 6.8 The strategy consists of three types of elements acting in an integrated and complementary manner. These elements are: the mechanisms for managing and orienting energy supplies; the mechanisms for managing and orienting energy demand, and the institutional and community elements and/or agents participating in the promotion and implementation of the strategy. Within this frame of reference, the main components of the strategy are described below, although not necessarily in the order stated above. The Program for Controll;nz Forest Biomass Supplies 6.9 Within the overall strategy approach, the reduction in firewood and residues consumption would result from the simultaneous implementation of mechanisms for reducing commercial firewood supply, mechanisus for controlling unorganized autonomous harvesting, systems for supplying firewood at reduced prices to low-income groups, and an increase in the supply of alternative fuels and the necessary stoves. The implementation of these mechanisms and measures will require considerable coordination among the various institutions participating in the strategy, and particularly close coordination between those institutions and the rural and semi-urban communities. 6.10 The reduction and reorientation of commercial firewood SUnRlY: In accordance with the strategy's objectives of reduciug the consumption of firewood, the Biomass Energy Unit to be established in DSF-MDRP should prepare a plan for the gradual reduction of firewood marketing in MDRP's urban and semi-urban outlets, and develop a marketing system mainly intended to serve ruzal areas. At the same time, a survey will have to be made of private outlets, also establishing mechanisms for reorienting their supplies. The necessary control and supervision plans must also be studied and proposed, allowing always for the participation in such plans of the communities located close to existing plantations, and ensuring that the measures adopted do not require costly supervision mechanisms in the part of the Government. In the medium term, and as kerosene and LPG progressively penetrate the rural markets, the schedule for reducing commercial firewood supplies to these markets sh_ould be studied. 6.11 As regards the commercial sector (i.e. bakeries, hotels, small-scale ceramic manufacturers, etc.), a system of "captive" sales will have to be designed and implemented, with MDRP or private producers/- extractors acting as the regular firewood supplier. Commercial consumers must make regular purchases and periodically submit receipts proving their purchases from the established agents. Because these commercial consumers are limited in numbers and their demand is comparatively inelastic, implementation of such a system should not be particularly difficult, - 47 Figure 6.3 CAPE YERDE: NUMBER OF FAMILIES THAT CONSUME RESIDUES (1990-1999) 16_ 1,4 14 ! a ° 12, X lo-: 0 8- 0 6- on 4 4 2 0' 1990 91 92 93 94 95 96 97 98 99 YEARS o BASE + STRATEGY Figure 6.4 CAPE YERDE: EYOLUTION OF RESIDUE; CONSUMPTION (1990-1999) 5, 4- 0 3 I-~~2 1 X 0~~ 0 I I I . 1990 91 92 93 94 95 96 97 98 99 YEARS 0 BASE + STRATEGY - 48- especially if, in return, the firewood suppliers (i.e. MDRP or private producers/extractors) guarantee the fuel's supply and quality. Commercial consumers operating on a family scale (e.g. domestic bakeries, confectioners, etc.) should participate in the organized retail markets, together with other families. 6.12 The same system as outlined in para.6.19, above, should apply to commercial consumers of charcoal (e.g. restaurants, small-scale manufacturers, etc.). 6.13 Establishment of rural and semi-urban associations for autonomous firewood extraction. The establishment among rural and semi-urban communities of associations for firewood extraction is a critical and sine gua non condition to reducing uncontrolled autonomous firewood and residues exploitation. Such practices account for about 50% (30,000 t) of total firewood consumption and 100% of total residues consumption. As it turns out, autonomous collection of firewood is presumably done from dead branches and discharged cuttings through-out the rural areas, however, the country's forest system simply does not have the capability to generate 30,000 t/year of dead branches and/or cuttings. Consequently, it is clear that such autonomous collection is being done illegally from MDRP reserves and/or private properties, and that it is only through the implementation of systems guaranteeing proper access to firewood - - and potentially to charcoal - - that uncontrolled collection will be reduced. Likewise, it is the only way in which individuals which now collect their own firewood will be willing to participate in the implementation of a system for the control and rationalization of the extraction of forest resources. The Biomass Energy Unit to be established in DSF-MDRP will have to study this issue in detail and propose to MDRP the specific components and mechanisms necessary for implementing the proposed programs. The work of the Unit, which should begin immediately after its establishment in 1990, should include the preparation of strategies for establishing community associations in each different island. The program should be carried-out at an island level, on a three islands per year basis. The islands should be selected in an order of priority determined according to their level of firewood and residues consumption. In the first year of the strategy, program implementation should be completed on at least one island, with implementation on three islands per year from the second year of the strategy onwards. These strategies should include -- but not be restricted to -- the following: - establishment of the proposed associations, based on particular geographical regions in each island; - participation by the households in those areas as members of the community associations; - direct firewood extraction by the families within those geographical areas; - payment by each household of a fixed monthly rate ("stumpage fee") for the firewood consumed; - 49- establishment of a system by which the community association can collect these rates; establishment of a system by which part of the rate is retained by the community association (as an incentive), the rest being transferred to MDRP. 6.14 An essential item yet to be established is the grice of firewood under these community exploitation schemes. The price must obviously be set at a level appropriate to the socio-economic circumstances of the community in question. Nevertheless, it is suggested that, as far as possible, the minimum price level should be the economic cost of replacing and maintaining the forest resources in natura. In this context, possible "firewood for work" schemes should not be disregarded, these being comparable to the "food for work" programs nowadays known practically through-out the world. 6.15 The preliminary financial plan proposed for the strategy implementation includes a variable amount of 1% of the total annual value of the fuel substitution program for financing the establishment of community firewood extraction associations. For the strategy's initial year (1990), that fund should total some ECV 7.5 million. Because of the expected increase in aggregate household energy consumption during the implementation period of the strategy -- and, consequently, of the fuel substitution program -- the variable fund for the community associations should progressively increase each year. In principle, this financing should be used for buying firewood harvesting tools, establishing purchase cooperatives in the community associations (i.e. for obtaining improved woodstoves, food, seed and other products to encourage participation in the associations), purchasing charcoal in areas where forest resources are inadequate, and, among other purposes to be determined, establishing new community plantations. 6.16 Review and updating of the proposed Forestry Law: During 1990, the Forestry Bill prepared by MDRP in 1985 (but not yet approved) should be reviewed in order to update it with the principles, regulations and mechanisms that will be necessary for the implementation of the household energy strategy as it related to the utilization of woodfuels. The Int.er-Fuel Substitution Program 6.17 The supply of kerosene and LPG as alternatives to biomass fuels is the most dynamic and well-founded component in the strategy. The Government's policy of nonintervention in the commercial operations of ENACOL and Shell has had very positive results, whereby the sector currently possesses the technical, management and financial capacity for increasing kerosene and LPG supplies with comparative ease. At the same time, and because of the price structures for kerosene and LPG, any required expansion could and should be undertaken as a private-sector operation (even though ENACOL is a government enterprise). - 50- 6.18 Recognizing, however, the quantitative and qualitative differences associated to the substitution of firewood by kerosene or LPG, and of the inherent trade-off between chosing a least-cost option as opposed to a more socially desirable one (and thus perhaps more likely to succeed), the inter-fuel substitution program of the strategy was design based on three alternative scenarios to the base case (business as usual). These three scenarios were selected in collaboration with Government officials from an original set of about 12 options, and their implementation is considered to be perfectly viable. The scenarios selected are: (a) "BASE" SCENARIO: Projection of current position and trends, without the implementation of any strategy. (b) "S-B" SCENARIO: Projection of a substitution policy in which commercially purchased firewood is replaced exclusively by kerosene, with LPG consumption remaining unchanged at its current level. In this case, kerosene would not only replace firewood, but would also cover any and all increases in aggregate demand resulting from the population growth expected over the strategy's implementation period. (c) "S-C' SCENARIO: Projection of a substitution policy in which commercially purchased firewood is replaced by both kerosene and LPG. In this case, LPG use is expected to increase in rural areas by a margin equivalent to the population growth rate (0.5% per year), and in urban and semi-urban areas by a margin of 5% above the population growth rates. Kerosene has been regarded as a second-priority fuel, with LPG catering for new demand until it achieves its maximum supply level under this plan for limited expansion. (d) 'S-D" SCENARIO: Projection of a substitution policy in which commercially purchased firewood is replaced exclusively by LPG. In this case, kerosene consumption, in practical terms, was allowed to follow its current trend (i.e. a reduction of approximately 10% per year). 6.19 While considering the above proposed scenarios, it is important to bear in mind that they constitute a technical recommendation of the project team and that, as such, it will be up to the various Ministries responsible for energy and economic development planning in the country to reach a consensus on the specific one to be implemented. 6.20 At present, the retail distribution system for kerosene and LPG also follows a private-sector pattern. Although the current system is adequate to cover the existing market, it will have to be expanded to meet the demand resulting from implementation of the strategy. This is particularly true if kerosene is to be promoted as the principal substitute for firewood. Because this is a private-sector market, this expansion should not generate major cost to the Government, and should be self-financing. Consequently, the Government's role should not go beyond the policy level promotion of these tperations and the extension of commercial rated loans to - 51- small-scale retailers for expanding their activities and/or establishing new sales outlets. The expansion of the kerosene and/or LPG retail network will have to be carefully coordinated with the strategy programs for reducing and reorienting the firewood marketing flows. 6.21 In the context presented above, the main strategy component relating to kerosene and LPG supply is the setting of market shares and/or rates of increase for kerosene and LPG. Although in principle setting such quotas or rates of increase would constitute a form of government intervention in the sector, this would not be the case, because it is the purpose of the companies themselves to serve the market, and the quotas or rates of increase should be presented to them as indicative targets. However, the mere increased supply of these alternative fuels will not result in an immediate substitution of firewood, since it will also be necessary to increase the supply of the necessary stoves and LPG containers at appropriate prices. 6.22 A final issue -- although one that is no less important -- is the preparation of a study to identify mechanisms and systems for reducing losses in the petroleum products distribution system, (i.e. from reception to shipment to small-scale retailers). This study should be undertaken by the Ministry of Transportation, Trade and Tourism, which supervises the oil companies operating in the country. At MTCT's request, however, the Household Energy Unit of DGE-MIE could as well take responsibility for executing or supervising such a study. Programs for the Rationalization of Household Energy Demand 6.23 The proposed strategy contains three types of specific actions for rationalizing household energy demand. These are: the introduction of improved woodstoves and high- efficiency kerosene and LPG stoves; the design and implementation of extension/education programs to provide instruction on energy conservation techniques in cooking; end, the introduction of more efficient lighting equipment and lamps. 6.24 As a result of the project's study on improved stoves, several models of improved woodstove were designed, constructed and tested. After laboratory tests and trials involving the cooking of the typical dish (cachupa), two particular sizes of stoves were selected for dissemination throughout the country. Possible local production of the stoves was studied, and it was concluded that they could be manufactured in Cape Verde at a cost of about ECV/280 per unit, the useful life of this type of stove being just over one year. The cost included all production costs at commercial level and the investment necessary for increasing production capacity at the plants identified for producing che stoves. Refer to Annex 4.2 for the technical specifications of the woodstoves selected, the cost structure for producing it in Cape Verde, and the technical appraisal sheets for the various stoves tested. 6.25 The strategy proposes the implementation of an improved woodstove production/dissemination program starting on 1990 (year 1), and achieving by 1992 (year 3) an annual aggregate 10% reduction in the consumption of _ J&, _ firewood. This reduction would be obtained from the increased efficiency in the end-use of firewood for cooking. The Biomass Energy Unit to be established at the DSF-MDRP should be responsible for preparing in detail and coordinating the implementation of this program. An important target of the stove program will be that of producing sufficient stoves per year to meet the country's needs -- the program should serve at least 50% of the users in 1990/91, and 100% from 1992 onwards (year 3). Priority in the dissemination process should be given to rural areas. 6.26 Promotion of kerosene and/or LPG use will also depend on implementation of a stove import program and, in the medium term, the possible local production of the necessary LPG and kerosene stoves. In the case of LPG promotion, it seems clear that the supply of stoves would not be a great problem, although the introduction of the technical modifications referred to in the discussion on LPG in the previous Chapter (see para. 5.27.b) should be a prerequisite for further stove dissemination. The cost of LPG stoves varies greatly, depending on type and degree of complexity, but in calculating costs for the purposes of the strategy an average of ECV 1,200 was used. The cost of obtaining the necessary LPG bottles was also taken into account, together with the costs of expanding the production system (i.e. bottle filling) and the distribution systems. 6.27 As regards the promotion of kerosene, the question of stoves has yet to be better defined. The PRIMUS stove is already established in the local markets and, based on the stove study that was done, was found to have one of the best energy efficiency rates vis-a-vis local cooking practices. Nevertheless, the suitability of stoves other than the PRIMUS and the other stoves tested during the project must be further ascertained (refer to Annex 4.2). One other stove, which was introduced in the latter stages of the project on an experimental basis, but which appears to be highly efficient and very marketable in Cape Verde is the SUPERIOR stove (Colombia). Its average cost is ECV 1,000, and in principle it is entirely suitable for dissemination in the country. In addition, its construction and the type of materials used would make it possible in the medium term to manufacture it locally. If kerosene were to replace firewood on a large scale, the annual demand for stoves would be sufficiently large to ensure the economies of scale necessary for local production. The kerosene and LPG stove program should be prepared in detail and coordinated by the Household Energy Unit to be established at the DGE-MIE as of 1990. 6.28 The preliminary financial plan proposed for the implementation of the strategy includes a fixed amount to be set aside during the first two years (in accordance with the final scenario selected) that would be equivalent to the total cost of producing and/or importing the necessary firewood, charcoal, kerosene and LPG stoves. In principle, this financing should be used as a revolving credit facility to import and/or manufacture stoves, providing a rapid dissemination start-up. If the three scenarios considered are averaged, the amount would total some ECV 32 million in 1990, and ECV 40 million in 1991. It should be emphasized that various marketing systems must be studied for the different stoves. Among other points, and considering the socio-economic circumstances of the target population, - 53- programs for selling stoves on credit and/or by advanced installment pavments will have to be considered. 6.29 A relatively important component of the strategy will be the design, preparation and implementation of a nation-wide extension and education program for instructing the population in energy-saving techniques and methods of cooking. The program should be prepared in detail and implemented by the Household Energy Unit/DGE-MIE and the Biomass Energy Unit/DSF-MDRP, working jointly, with the participation of the Directorate of Rural Extension and of associations such as the Organization of Women of Cape Verde (OMCV) and other community organizations in the country. 6.30 As regards lighting, it needs to be stated that through out the project, priority was given to cooking activities vis-a-vis lighting due to their greater importance in social, economic and energy terms for the household sector. For this reason, and because electric power and lighting are tho responsibility of MIE, which was the project's counterpart Ministry, little emphasis was placed on identifying specific actions to be taken in this regard, rather concentrating efforts in activities complementing and not supplementing the work of the Ministry. Nevertheless, the strategy proposes promoting the use of kerosene and LPG hand lamps in areas without an electric power supply, together with the use of more efficient household electric lamps and equipment, such as fluorescent lighting and low- consumption household appliances. A program for promoting the conservation of electric power and extending the benefits of lighting to non-electrified rural and semi-urban communities should be prepared by the Directorate General of Energy (MIE) in 1990. Fuel and Electric Power Pricing Policies 6.31 The fuel pricing policies to be followed during the implementation of the strategy will be a critical factor in allowing for the achievement of its proposed objectives. This is particularly true in the case of the firewood that is to be sold through the community associations, and in the case of the kerosene and LPG. There are certain specific points, however, that must be thoroughly discussed internally within the Government since they are not only essential to the selection of the specific strategy to be implemented, but could also provide new scenarios resulting in even greater benefits for the country. The following are three key areas where discussion is needed: (a) The specific economic value attributable to forest resources and their conservation. It is suggested that in discussing this point the present ecological and social importance, and the theoretical potential for increasing agricultural output capacity in the long term, of the forest resources should be considered. (b) The selling price of firewood. This will have to take into account of firewood to be sold on the commercial market and firewood marketed at subsidized prices through the community forestry programs. - 54- (c) The oricing policy for LPG and kerosene. Under the current policy, these prices include surcharges (i.e. the contribution to the National Development Fund) in addition to their real economic costs. The option of totally or partially reducing this surcharge for a specific period should be studied, the purpose being to provide a greater incentive for firewood and residues substitution. Alternatively, if kerosene is regarded as a more suitable substitute for biomass, the possibility of reducing the price of kerosene and offsetting the impact on the surcharge by raising that of LPG should be examined. A further option to be studied is to co-finance the improved stove program of the strategy by increasing the LPG price. 6.32 With respect to this last point, its important to clarify that the project team did not include these possible price changes among the scenarios studied because it was not possible to obtain the necessary information on the price structures for LPG and kerosene or on the current size of their contributions to the National Development Fund. 6.33 As regards a possible increase in LPG prices to finance kerosene or biomass fuels, it should be noted that, although this would constitute an inter-consumer subsidy, it would clearly provide a mechanism for transferring income to the less privileged socio-economic groups. At the same time, the feasibility of price changes within the margins constituted by the contributions to the National Development Fund would depend on whether the current margins were to be 3% or 30% of the final price. In such a case, it should be kept in mind that, from the point of view of social equity, the loss of revenue to the National Development Fund resulting from a temporary reduction in contributions could be considerably offset by the direct benefit received by consumers gaining access to more efficient fuels and by the country achieving its objective of conserving its forest resources. Once again it should be noted that the project team would have liked to study this issue in depth, but the lack of data made this impossible. 6.34 Finally, and with respect to electricity prices, a study for the financial rehabilitation of Electra is being initiated with World Bank financing, which, among other issues, will review the current tariff system. Within that effort an important point to be examined is the regressive nature of the existing tariffs structure (i.e. proportionally Lower rates at higher levels of consumption), which results in that low income households are being unecessarily marginalized from the service, at no benefit to Electra, while idle capacity exists in the system. Strategy Implementation 6.35 In light of the complex institutional structure of the energy sector (see paras. 3.17 - 3.23), the need to carry out activities on the various islands, and the need to coordinate activities among the various social and economic groups (i.e. income groups, the Government, commerce, industry, etc.), it will be necessary to establish a Strategy Coordination Committee to assume the overall inter-ministerial coordination and - 55- supervision of the strategy implementation, (see Annez 6.1) and a technical Exec1tive Committee to be responsible for the implementation of the strategy. (see Annex 6.2) The structure and function of these bodies should be within the following guidelines: (a) Strategy Coordination Committee Committee Functions. As principal responsibilities this body should be in charge of: (i) defining and/or ruling on all policy related matters of the strategy; (ii) and supervising the implementation of the strategy, ensuring the implementation and completion of all its proposed tasks (studies, programs, projects, etc.); and, (iii) coordinating inter-ministerial activities and relations, ensuring the maintenance of a collaborative environment. additionally, the Committee should review and approve the annual budget for the implementation of the strategy which the Technical Executive Committee will prepare. Committee Members. Members for the Committee should be drawn from the same Ministries and national organizations which participated in the Coordination Committee of the ESMAP strategy study, (Annex 6.1). (b) Technical Executive Committf.% - Committee Structure. This *oonmittee should be formed by the Household Energy Unit/DGE-MIE (leader unit) and the Biomass Energy Unit/DSF-MDRP proposed within the strategy (described bellow). Committee functions. The committee should be responsible for the actual implementation of the strategy, which includes the technical preparation, implementation and monitoring of all the components of the strategy. In addition to that the committee should be responsible for preparing and submitting to the Strategy Coordination Committee policy recommendations, operating guidelines, and annual buLlets and execution plans, and manage, through the Household Energy Unit/DGE- MIE and the Biomass Energy Unit/DSF-MDRP, all the technical and logistical components of the implementation of the strategy. Within this Committee, the Household Energy Unit/DGE-IE and the Biomass Energy UnitIDSF-MDRP have the following structure and principal functions: Household Energy Unit/DGE-MIE: this Unit constitutes a permanent (long-term, full-time) working group at the Directorate General of Energy of the Ministry of Industry and Energy (DGE/MIE), responsible for: (i) executing all the non-forest-related components of the strategy; (ii) advising DGE/MIE on household energy planning; (iii) implementing and running an energy data collection and data bank system; and, (iv) providing institutional building assistance to DGE/MIE, and training for its personnel on energy planning matters. The creation of this Unit should be a pre-condition to the initiation of the strategy implementation. - 56- The Unit should be formed by 4 persons (1 high level local or expatriate staff, 1 research assistant level staff, and two support staff), and it should be in place prior to the initiation of the strategy implementation activities (see Annex 6.2). Biomass Energy Unit/DSF-MDRP: this Unit constitutes a permanent (long-term, full-time) working group at the Directorate of Forestry Services of the Ministry of Rural Development and Fisheries (DSF/MDRP), responsible for: (i) executing all the forest-related components of the strategy; (ii) advising DSF/MDRP on household energy issues as it relates to forest resources; (iii) doing out technical studies, and coordinating the implementation a national improved wood and charcoal stove program; (iv) executing a national inventory of existing forest resources; (v) establishment of a national forest resources database; and, (vi) providing DSF/MDRP with institution building support, and professional and technical staff training. The Unit should be formed by 4 persons (1 high level local or expatriate staff, 1 research assistant level staff, and two support staff), and it should be in place prior to the initiation of the strategy implementation activities (see Annex 6.2). 6.36 Financing for the establishment of these units is included in the economic analysis calculations under the heading "Financial/ Operational/Administrative Costs," and constitutes a traction of the total cost of the fuel substitution program. For the strategy's initial year (1990), this will total about E5V 24 million, (US$342,857, equivalent to 3%) depending on the scenario adopted. Due to the country's limited resources with regard to financing and personnel, the strategy should be implemented as an international technical assistance Droiect, with financing provided either from a single source or by the integration of various parallel sources. 6.37 In addition to the hiring of staff for the Household Energy Unit and the Biomass Energy Unit, the implementation of the strategy will require the short-term participation of a number of other specialists (consultants) to perform specific research and technical assistance work. The financial resources for hiring these specialists is included in the preliminary strategy budget within the relevant activity lines. 6.38 The total cost of the proposed strategy over its 10-year period (1990-99) is expected to be between ECV $ 7,875 million and ECV $ 9,835 million, depending on the specific substitution policy adopted from within the three proposed scenarios. Of that total between ECV $ 7,150 million and ECV $ 9,000 million (approximately 90%) would correspond to petroleum and biomass fuel costs, which would be financed through direct consumer purchases under full cost recovery pricing. Between ECV $ 470 and ECV$ 510 million (approximately 5.5%) would need to be allocated to the importation of improved kerosene and/or LPG stoves and the local production of improved firewood and charcoal stoves, within which an initial non-refundable donor contribution of ECV $ 70.4 million (14.6%) would be required to set up a stove importation/production and consumer purchase credit fund. Due to the . 57- economic situation of the country, and its limited repayment capability, the rest of the costs of the implementation of the strategy, close to ECV $ 400 million, would have to be obtain through donor contributions on a grant basis. The breakdown of those costs would be approximately ECV $ 85 million for social afforestation programs, forestry sector studies, and community extension and support programs; ECV $ 125 million for energy sector studies and extension programs; and, ECV $ 200 million for institutional development and technical assistance. Expected Outcome 6.39 For the purposes of analyzing the inter-fuel substitution scenarios, a computerized parametric simulation model was prepared covering the 1990-99 period (Annex 6.3). Through the inclusion of an economic analysis module, and a module for calculating the number and cost of the wood, kerosene and LPG stoves necessary for each of the scenarios, the model permitted the project team to design and assess more than 10 alternative inter-fuel substitution scenarios for the composition of the strategy. 6.40 Tables 6.1 through 6.4 summarize the main variables examined in the projection of the proposed scenarios. As regards the expected outcome of the basic policy for reducing firewood and residues consumption, it can be seen that the expected level of firewood consumption by 1999 in the substitution scenarios is about 20% of the estimated theoretical potential supply for 1999 shown in Table 5.1 and Figure 5.2 (Chapter V', and 20% of the expected consumption shown in the "base" scenario (see Table 6.1). Compared with the "base" scenario (in which firewood and residues use would increase to 51,832 t and 4,623 t respectively by 1999), the consumption reduction policy would produce a total consumption for the same year of only 9,352 t of firewood. The Tables indicate that the number of households consuming firewood would be reduced from 33,309 in 1999 in the "base" scenario to 6,157 in the same year in the substitution scenarios. 6.41 Figures 6.5 and 6.6 show kerosene consumption according to the various scenarios in terms of th, number of households consuming the fuel either as a primary or secondary source of energy, and of consumption in tons from 1990 to 1999. These Figures show that, depending on the particular scenario, kerosene use can range from 9,667 t consumed by about 81,800 families in 1999 (scenario B) to 4,900 t consumed by 50,270 families (scenario C), or even decline to only 231 t per year consumed by 2,260 families. 6.42 Figures 6.7 and 6.8 show LPG consumption in the various scenarios in terms of the number of households consuming it as either a primary or secondary fuel, and consumption in tons from 1990 to 1999. Depending on the particular scenario selected, LPG is capable of taking over practically the whole household market by 1999. Its market position ranges from 15,720 t in 1999 (scenario D) down to 5,753 t in the scenario calling for kerosene promotion (scenario B). It is interesting to note that, because of its present prominent position, changes in expected consumption of LPG are not as market as in the case of kerosene. - 58 - T A B L E 6.1 CP ERGE: HOUSEHOLO ENERGY STRATEGY RESULTS SUnnRRY now SCEIIIO - R: "5E* "m W (t10 X): (*45.3) 1990 1991 1992 1993 1994 1995 1996 199 1999 1999 TOTAL TEP 29724 29946 30192 30464 30764 31092 31450 31038 32257 32711 KEP/FMIILY 480.3 471.6 463.1 454.8 446.9 439.1 431.? 424.5 417.5 410.9 TOTAL IFSP (ECVU% liairs) *763 *$78 *014 $840 $9e $897 $927 $958 $991 *1,025 ECV$Ufa.ily $12,330 $12,406 $12,477 *12,544 $12,607 $12,667 $12,723 *12,776 $12,826 *12,973 NPI (10 Z): ($455.5) ($424.7) (*415.0) ($405.4) (*395.7) (*396.1) (*376.5) ($367.0) (*357.4) ($347.9) Firewood Households 36,996 36,406 36,003 35,545 35,113 34,705 34,321 33,961 33,624 33,3D9 Firewood stoves 36,996 36,496 36,003 35,545 35,113 34,705 34,321 33,961 33,624 33,309 Firewood consumption 1000 - ICIt Improved Cooking Habits The frt column of tho table shows the prices of the stoves as quoted and dbscussed in section 3. The second column gives the estimated life- time of the stoves, which was used to calculate the yearly annuity charges at an interest rate of 15% (column 3). Columns 5, 6 and 7 present the savings which are feasible with the different stoves. Column 5 shows the onergy savings which have been measured during the cachupa tests (section 5.3). Combining these data with the fuel prices of column 4 gives the fuel savings money-wise (column 6), whilst column 7 shows the specific saving which is defined as the money saved per kilogram of cachups cooked. Finally, the last column of the table shows the quantity of cachupa which has to be cooked anually to break even. This column is in fact the yearly annuity charges divided by the monetary savings per kilogram of cachupa cooked, columns 3 and 7 respectively. The table shows that L improving the cooking habits must be an important aspect of all work geared to the introduction of bettr stoves. As in most onergy conservation progrmmes, changing people's attitudes towards the use of energy pays off immediately. However, experience has shown that the obvious is not the asiest to achieve. - 107 - Annex 4.2 Page 21 of 23 ii. tho dissemination of improved stoves s the next bast option. The investment is braking-even even at a high stove price of 600 Esc and a short life time of one year. ili the relative succoss of the dissemination of the Sunflower in the past can be imagined. The stov i relatively cheap and is very fuel efflcient Th sow showed that the fuel effiiey i due to the stove's capacity to poduce a low power during immering However, the maximum power output s also lw which makes the stove very slow and I-uited to short cooking processes (ri, fh, atc). iv. the Pet stove is the last stove in the table that aves energy compared with the open fire. However, as was statod in section 5.2, aU kerosene wick stoves (the Pet stove included) suffered from the extreme wind conditions Cap Vorde. When cooking i done in a place not wO ptocted frm wind (as prei"meary dat suggst is often the case) then the kerosene wick stove option must be ommited. v. th resmults obtained with the Thomas Cup 36 ar disatous In 1987 the stove was used for the first time in a CISS country (Burkina Fso) by Sulilatu (1988) He oadored the stove fom Indones on the bas of reslts obtaid with small versions, without prior testing. The stv now proves to be usls. vi. the ga stoves are energy efficient but do noo sme money. The main problem with the stoves thdr poor contl mehanis The table does not explain the succesful introduction of ga stoves. However, two raons are put forew"r i People ar win to pay a high price for a clean fuel. ii. Te wood prices normally quoted, ae tese at the gato of the forestry centres and do not reflct trUnsport and distribution cos. Consequently the consumer usually pays a hiOh prce. Table 20 was repeated to got an idea of the effect of the wood prce to consum The wood pric wa changod p iy to the level at which the different stoves showed positiv money savings (column 6 of table 20). The results are given in table 21. Table 21: Wood price at which stoves show positive cash savings. Stove Wood Prico Esc/kg Enacol Small 9.0 Cuena 11.0 Sunflower 4.0 Thomas Cup 36 12.5 Pet stove 5.5 The Enacol Small (Feu-R), which is the most common as stoV, shows positive savings when the wood price becomes higher than 9.0 Esc/kg. At present, the aveagep wood price is 6 Esc/k4, which would mean that people should be willing to pay an extra 3 Esc/k for wood distribution and truasport. The results obtained so far suggest that improved wood stoves can play - 108 - Annex 4.2 Page 22 of 23 an important role. That is why the calculations of table 20 wero abo rBpeted for wood stove price of 400 Esc, 600 Esc and 900 Esc. In the calculations the wood price was aain chaned pam trically to determine at what price the pas and kerosae soves became competitive. The raults are sho In table 22. Table 22: Wood prics at which stoves become competitiv with the Improved woodstove S-S-5 S-S-S 400 Esec 600 Eso 900 Elc Wood Price Esc/kg Enacol Smal 13.5 11.5 10.5 Carena 230.0 20.0 16.0 Sunflower 10.5 6.7 5.3 Thomas Cup >30.0 >30.0 3,30.0 Pot stove >30.0 28.0 16.0 The table shows that, at the present price, the woodstoves can compete with the Enacol Smal even when the stove cts 900 Eec. In view of the above it is proposed: h to study the possibilities for the promotion of dietry and cooking habits which consume ls energy. i. to peparoe a wood stove project which has the following elements: - close collabortion with the forestry service - combined sales of stoves ad wood - improving the wood distribution - focussin on the rural areas - staring with a simple multi-pan stove (S-S-S) - studying the possibilities for coemic stove production ii to improve the eisting pas bumen and presurizd keroene stoves in terms of their control mechanisms. iv. to study whether the newly developed pressurized kerosene stoves, the IBE model in Burkina Faso (Yameogo 1988) and the Superior model in Colombia (Wittkowsky 1987) are suitable for diseminationin Cape Verde. - 109 - Referoeces Denoird, J-P., 1988 Pannex 4.2 Peonl communicatos Page 23 of 23 Busuan, P., and Visser, P., 1986 Stoves for the UNSO/NER ptoject, report prepaed for the UNSO/NTER fuslwood substution project in Nigr, Edhoven Univity of Technology, Eiudhovon Du_as , P., Visr, P., and Sagen, E., 1987, on the design of high power kerosene soves repon prepared for the World bank, Eindhoven Universty of Tochology, Endoven DelepeleIreG., oL aL 1981, A woodatove compeadium, Woodburnin Stov Group, Elndhb0e Durad, P., 1988, Cape Verde mission report, report to be published FAO 1983 Simple tochnologis for making charcoal, FAO, Rome *ajo, M, and Kossack, L, 1986 Enuete - Suivi, Projet Foyer AMeores DM-GTZ, Niasey Gonrt, A.-C., 1988 Le Foyes Ameliores en republique du Cap Vert, Sevice Formaio et Vulgbatlo SNF, Praia Krishna Prd, K., Sangen, E.. ad Vbser, P., M985 Woodbuning Cookstoves, in: Advances in Het Traffc?, Hatme JP., an Irvine, T.F. (eds.), Academic Press, New York. Pinkeiro, P., 198, Cape Verde mission report, report to be published Vorbhart, P., 1983, On desisning stoves, in Wood heat for cookinag, Krishn PMad and Vertha (eds), Indan Academy of Scieace, Bangalore Verhat, P., 1981, Os designing stoves, inw A woodstove compondium, Woodburnn Stove Group, Eindhoven Sepp, C., Bussmann P. and Sopp, D.-S., A one pot motal stove for Upper Volta, Bois de Fou informations, Aix en Provence Seelnck, T., Yameogo, 0. and Fall, S., 1985 Prorm me national de diffusion m;ave de foyors amelores au Cap Vert C115S, Ouagadougou Sftmogel, S., 1983, Programe regional Foyen Ameliores, report praed for CILB, ociation Bois de Fsu, Aix on Provence Wittkowsksky, A., et al., 1987, Tess von petroleumhorden, lIBA, Bronme University, Brfene World ank, 1985, Test rsult on kerosene and other stve for dovloping outris, World lank, Wahington, 1985 Yamogo, G., (1988) Peronl Comunictions - 110 - Annex 5.1 Page 1 of 6 ANNBE 5.1: Selented Information on Firewood SnDply/Dema_nd Tnen 1. Potential firewood production is limited to the reforested areas and to a number of scattered areas of secondary vegetation. About 90% of the existing reforested areas are the outcome of the government reforestation program implemented since the country became independent in 1975. Of the 39,553 ha planted, most of which has Prosoais juliflora, 30% is in the uplands, and 70X in lowland and semiarid areas. Table 1 shows the geographical distribution of the reforestation program in terms of trees originally planted per island, and plants actually available for firewood extraction. The difference between those two are: first, the survival rate (70%); and, second, the area of allowed use for f_rewood extraction (exclusively lowland). 2. The long-term potential yield of existing plantations cannot be accurately assessed, because of the lack of specific data on forest yields for the various species, on their annual growth rates, and even on the plantations capacity for survival in the country's poor ecological conditions. Similarly, the potential annual supply of firewood can only be estimated because of the irregularity with which the reforestation took place in first place, and the lack of data on harvesting from the plantations established prior-to 1980 (i.e. those that hare reached maturity, as defined by MDRP). If the MDRP's extraotion schedule for the various plantations is followed, the potential annual firewood supply over the next 10 years could change significantly, rising from about 5,700 t in 1988 to 41,000 t in 1990, deolining to 15,700 t in 1993, and stabilizing thereafter (until 1998) at between 28,000 t and 32,000 t (see Figure 1). Moreover, if calculated on the basis of the forest resources theoretically available to date (see Table 1), and assuming that reforestation will continue at the rate of 1.6 million plants per year between 1988 and 2,000; that a considerable portion of the pre-1980 plantations has not yet been used; and, that plantations can be operated with more flexibility than was originally planned, then, average firewood supply from 1989 to 2002 could total between 20,000 t and 30,000 t per year. This would be equivalent to between 7,400 TOE and 11,100 TOE per year, which at best would cover less than 50% of the 1988 household firewood demand (22,800 TOE). If the demand from commercial sector enterprises such as bakeries, hotels, etc. (690 TOE in 1988) is added to this, it is olear that there is a structural deficit in the firewood supply-and-demand system. 3. The most organized firewood production, distribution and marketing systems operate on the main islands, and so far their purpose has been to supply wood to TAILE 1 CAPE VERDEs REFLORESrArioN SOUCEI ANO POTENTIRL BIOmRSS ENER6V SUPPLY CaSvS-87- CI) REFLORESTATION SJEN INFENENTED PER ISLAND CS PLATS) ISLAND 19?5 1976 1977 1978 1979 1980 1981 1982 1983 1984 190S 1S86 1987 SARTIAGO 637000 29483 29483 29483 298991 781375 775750 S39802 930715 1273800 860700 1830331 143886? "MlO 75000 933 933 933 50400 40000 44000 36400 22850 42000 41000 3W366 81604 FOGO 500000 49083 49083 "9095 2462S0 37891? 304108 190100 274964 2BS2Q0 401700 375000 51S400 hR"*V 15000 9093 S083 9083 13450 11950 0 20000 3996 23500 2a05 t32640 2369t9 STo.ANTRO 324000 51333 51333 51333 31000 20500 44500 168000 0 270000 117900 261000 256596 S.NICOLRU 79500 29328 29328 29329 50369 65021 45550 15164 10696 67200 36109 61001 93320 BUR VISTR 0 60000 60000 60000 130800 130800 17200 1OSOO0 0 30400 33500 61000 1039 S.VICENTE 0 20000 20000 20000 20000 20000 20000 60000 175O0 11000 153700 10333 9381 SAL 0 0 0 0 0 0 0 0 0 0 0 0 003 TorAL 1829500 249244 249244 249244 842260 1449363 1251100 1139266 2254721 2003100 181?703 2043670 2742572 RCTUFL REFLOREStATION / S OF SURVIVING PLANTS PER ISLANO (3) (2) (2) (2) ISLAND 197S 1976 1977 1978 1979 1980 191 1982 1983 1904 195 19S1 1987 SR"ETIA 410130 144? 1444? 1444? 146506 38874 380118 264503 407050 624162 421743 896062 705045 PRIO 36750 45? 457 457 21696 19600 21560 17836 11197 20580 20090 42319 42164 FOSO 245000 24051 24051 24051 120663 185169 149013 93394 134732 139?48 236033 183750 252546 BRRVR 7350 4451 4451 4451 6591 585 0 S800 19598 11515 13767 64994 1170S5 STo.RNTRO 158760 25153 25153 25153 15190 10043 21805 82320 0 132300 87171 137690 125732 S.NICOLAU 38465 14371 14371 14371 21681 32252 22320 757? 9161 32928 17693 29890 45272 8O0 VISTA 0 29400 29400 29400 64092 64092 8420 53410 0 14896 16415 39830 50572 S.VICENTE 0 9800 9800 9800 9 9S00 9800 29400 330?5 5390 77713 5063 4597 SAL 0 0 0 0 0 0 0 0 0 0 0 0 393 TorRL 896455 122130 122130 122130 422217 710188 613043 558240 614813 981519 890674 1393398 1343860 Not.s: (1) bwnex 5.1 present tUe nothodology utilized to produce these data. (2) rhe data that enasts on reflorestation present the years 1986-7@ as a singlo Jata point. For the sake of si.ip1icity this table assuns an equal break-down of the nureber of plants reflorested in thos. three years. (3) Stock estinated based on: a) T0 of the reflorostd area caen be potontially espliotod for ne-rgy purposes; and b) tho survival rate of the plantations is of 70X (from the original planted voluro). Source: The Norld Bank. Calculated based on infornation provided bg hRP. 0. - 112 - Annex 5.1 Page 3 of 6 the large urban centers. Such systems are found on the islands of Santiago and Santo Antao and in the oity of Mindelo (Sao Vioente). 4. The TIland of Sntiato: Almost all the firewood used on Santiago oomes from MDRP plantations and is marketed in the following three ways: (i) sold ready out or as standing timber to private intermediaries; (ii) sold directly to consumers through mobile sales outlets (i.e. MDRP truoks); (iii) sold through permanent marketing outlets in Vila Nova and Sao Felipe, about 30 km from the plantations. Figure 1 CAPE YERDE: POTENTIAL FIREWOOD SUPPLY IN TONS AND TOE (1988-2018) 50- 40 Ic 38B 0 ~ 2 20- 198890 95 2008 5 10 YEARS O TONS + TOE - 113 - Annex 5.1 Page 4 of 6 5. Data on firewood marketing in Santiago indicate that in 1987 the Sao/Felipe outlet sold 200 t of wood and 10 t of charcoal and that the Vila Nova outlet sold 55 t of wood and 12/t of charcoal. This volume covers only a fraction of the actual market demand on Santiago. 6. In 1987, MDRP established an experimental firewood harvesting and marketing system on Santiago, in cooperation with the Organization of Women of Cape Verde (OMCV). Organized groups of local women became responsible for wood harvesting and marketing, paying MDRP ECV 3.00 per kg. Everything indicates that organizational problems in the transportation system (which affected sales capapoity and, therefore, the flow of income to women) led to the abandonment of the experiment. In accordance with MDRP's current cost structure, the price of EVC 3.00 per kg covers only the growing and extraction costs. However, MDRP's policy on the subject has been to cover only its direct costs, since the original reforestation program was financed by external donations. 7. The Island of Santo Antao: On Santo Antao, firewood comes from the MDRP plantations on the eastern plateau (900 ha) and is marketed through five outlets near the plantations. In 1984, about 450 t were sold, an amount calculated to be only 5X of local demand for the year (Eastern Plateau and Alta hira). Nevertheless, the purpose of most of the reforestation on Santo Antao is to produce process wood. As of 1989, when the first equipment for industrial wood extraction is expected to be installed, firewood production will become marginal and sporadic. 8. So far, wood has been sold by width, at prices ranging from ECV 5.00 for the widest wood (2rimairah) to ECV 4.00 for medium width wood (a.teunda) and ECV 3.00 per kilo for the narrowest wood (terceira). Once again, the price of ECV 3.00 per kg reflects the harvesting cost but not the planting cost. In the case of MDRP plantations on privately owned land, MDRP receives 80% of the output, while the landowners keep the remaining 20%. 9. The Citv of Mindelo: In Mindelo, firewood is produced and marketed by the Association of Friends of Nature (AAN), which was established in 1977 by employees of Shell Cabo Verde. Supported by Shell during the initial years of their operations, AAN implemented a program for planting 50,000 plants per year (about 180 ha). So far AAN has reforested about 1,000 ha on the outskirts of Mindelo. 10. The firewood marketed is produced by cutting the established trees (Prosopie juliflora) and is sold in two categories: thin (ECV 4.00 per kg) and thick (8CV 5.00 per kg). Thin wood is sold to intermediaries or else directly to consumers. Thick wood is sold mainly to bakeries in Hindelo. - 114 - Annex 5.1 Page 5 of 6 Small amounts are turned into charcoal and sold directly to oonsumers (ECV 45.00 per kg). Baoh year AAN markets about 800 t of thick wood, 150 t of thin wood, and 3.5 t of charooal. The total annual value of sales is ECV 4.8 million. 11. The survey data indioate that households obtain wood by buying it, gathering it themselves, or by a combination of the two. 48X of families using firewood gather all the wood they consume, and 40X of families buy all their firewood (certainly a very high peroentage). Only 11X of families obtain wood by both buying it and gathering it for themselves. On average, two hours per day are spent gathering firewood. The time neoessary varies from one area to another, and even exceeds three hours in rural areas of Santiago. 12. Table 2 summarizes the methods used by households to obtain wood, according to their principal fuel. It should be noted that the average oonsumption of families obtaining wood exclusively by buying it (100 kg per month) is smaller than that of families that gather it or both gather and buy it. The average cost to some families that buy wood is comparable to the cost they would incur by consuming LPG, so that between lOX and 15% of the current firewood consumers could actually afford LPG as a substitute in the short/medium term, if not for the cost of the necessary stoves. TMLL CAPE VERne: METHODS OF FIREWOOD OBTENTMIO (An I of Houusehold') (*) Main Bought Bought/ Collected/Collected Total Fuel Firewood Collected Bought Firewood 24.8 7.7 1.8 41.4 75.7 LPG 14.0 0.9 0.5 4.6 20.0 Petroleum 1.8 0 0 0.5 2.3 Residues 0 0 0 2.0 2.0 Total 40.6 8.8 2.3 48.5 100.0 (*) 458 hoseholds that use firewood (8OX). Annex 5.1 - 115 - Page 6 of 6 13. 38X of families that buy wood do so at MDRP outlets, 34X buy it from oommercial intermediaries, and 30X buy it directly from small landowners. The largest proportions of the population buying firewood at MDRP outlets are on the islands of Santiago and Maio. 14. Overall, 20% of families gather wood in reforested areas, 34X on land belonging to others (principally government-owned land), and 48X on their own land. Although it is forbidden, about 30% of families gathering firewood on Santiago do so in MDRP reforested areas. These data show clearly that existing harvesting regulations and prooedures are not always observed. Both firewood cutting and transportation require advance authorization from MDRP, and the applicant is required to prove the origin and legal ownership of the wood to be extracted and/or transported. - 116 - Annex 5.2 Page 1 of 2 ANNEX 5.2: Salootad Tnorgration on Charnoal Snnn lvlD on Imn=m The 1Mai Charctoal Produotion Rxnerienaa 1. Except on the island of Maio, charcoal in Cape Verde is produced and marketed on a small soale. Estimated oharcoal output, excluding the Maio project, is less than 15 t per year (10.5 TOE). 2. Because of the considerable stock of PrOap.ia8 i.liflor.L trees in the island of Maio, MDRP decided in 1980 to launch a charcoal-producing project in Calheta. In addition to serving a small local market, the project was to supply the island of Santiago. It operated from August 1984 to August 1986, when production ceased because charcoal failed to penetrate the market. As a result, large quantities of charcoal were accumulated on Maio (100 t). Currently, HDRP is again beginning to operate the proJect, in oooperation with FAO. During its first period of operation, the projeot produced an average of about 12 t per month, with a total output of about 280 t. 3. Charcoal production was based on independent groups of small-scale producers, who sold the charcoal to the Calheta center in sealed bags. This system, which included payment based on quantity and not quality, ocused various problems, the main difficulty being the laok of any quality standards. The reactivated proJect should produce 60 t per year, using only Subri Fosse furnaces. 4. Transportation of the charcoal to the island of Santiago was another important problem. Shipping charcoal to the port of Praia presented considerable difficulties because insufficient vessels were available and the cost was very high because it was regarded as a dirty cargo. In theory, the lack of vessels has already been overcome, and a shipping system using sealed metal containers has also been implemented, so that the transportation cost should be reduced to the considerably lower rate applied to clean cargoes. 5. The failure of the penetration of the charcoal can be directly attributed to its high final selling price (Haio ECV 20.00 per kg; elsewhere ECV 25.00 per kg) and to marketing problems. At this price levels, and in light of the absence of any long standing tradition of household charcoal consumption, it could not compete with the other fuels available. Even on the island of Maio, where the market price is lower than in Praia charooal did not have the expected market penetration. On Haio, charcoal consumption averages only 0.5 kg per person per month, and in fact it is used only in the rainy season. - 117 - Annex 5.2 Page 2 of 2 8. MDRP ourrently believes that once these problems have been overcome, partioularly the transportation difficulties, charcoal will become a profitable and attractive fuel alternative. No precise information is available regarding the breakdown of potential consumers, but MDRP believes that the fuel's main application would be in the oommercial sector. Obviously, the acceptance of charcoal among household users will depend on its final price, and whether other alternative fuels are available where charcoal is sold, and at what prices. Price Structure 7. Table 1 shows the price structures for the islands of Maio and Santiago. Everything in this Table suggests that, because of MDRP's prico policy, oharcoal is marketed at prices higher than its economic production costs (28X higher in Maio and lSX higher in Santiago). PRICE STRUCTURE OF CHARCOAL ON THE ISLAS OE MAIO AND SANTTAQQ: AUGUST 1988 (*) Cost (ECV 2AX kgl Cost of wood 9.10 Materials and equipment 1.10 Labor 3.70 Local transportation 0.50 Margin 5.60 (**) Selling price on Maio 20.00 Transportation from Maio to Santiago 2.50 Margin 2.50 (**) Selling price on Santiago 25.00 (*) Prepared based on data provide by Ms. Isabel Spencer B., "Relatorio das Atividades Desenvolvidas en 1987", MDRP/DSF/DURF, January 1988, and J. Lejeune and G. Pletinckx, Elan dExploitation des Aneiennas Plantations au Nord du Centre de Calheta", 1987, FAO GCP/CVI/015/BEL. (**) Although MDRP's oharcoal price policy is based on this cost structure, it has not been possible to determine how the margins are applied. - 118 - Annex 5.3 Page 1 of 7 UNNEZ 5.3: Seleoted rmation on_LP Snnply/Deud Tmmuma Oneration of the LPG, Seat=r 1. LPG is imported and marketed by the two oil companies operating in the country, ENACOL (Empresa Naoional de Combust6veis e Lubrificantes) and Shell Cabo Verde. MTCT (the Ministry of Transportation, Trade and Tourism) is responsible for supervising these companies. 2. Since 1985, ENACOL has coordinated LPG imports. LPG procurement is organized through international competitive bidding, with the two companies selecting possible suppliers and submitting their procurement proposals to MTCT's Regional Directorate of Trade. If the proposed prices are within the levels projected in the companies annual operating plan presented to MTCT at the beginning of each period, approval is practically automatic. ENACOL is required to obtain a letter of credit from the Banco de Cabo Verde (Bank of Cape Verde, which acts as both, the central bank, and the only commercial bank in operation in the country) in order to obtain foreign exchange for the purchase operations. Shell does not need a letter of credit because it has a foreign exchange account outside the country and arranges procurements direotly through Shell international. Once these steps have been taken, the imports are arranged. When the imports have been concluded, the companies prepare their respective price structures and submit them to MTCT, and it is only then that MTCT studies the purchases in detail. 3. The volume of LPG imports is calculated according to sales over previous periods, and in accordance with planned and/or expected market increases. For all practical purposes, ENACOL and Shell are the agencies that make the projections and decisions on developments in the sector. MTCT, as the supervisory ministry, restricts itself to inspecting the companies commercial operations, and does not engage in energy planning. 4. It must be emphasized that ENACOL has performed well in its LPG procurement and purchasing operations. Since its LPG storage and filling plant in Praia came into operation, ENACOL has imported the fuel for both companies. During this period, whenever ENACOL has opened competitive bidding for LPG procurement, at least seven potential suppliers have participated, including Shell International. So far, on 13 occasions when competitive bidding has taken place, ENACOL has obtained more favorable prices than those offered by Shell. - 119 - Annex 5.3 Page 2 of 7 5. Both ENACOL and Shell possess the personnel and expertise neoessary for carrying out procurement operations and for monitoring prices on the international market, and have considerable management capacity. At the same time, the competition between them (even though ENACOL is a government enterprise) has produced the conditions necessary for the efficient operation of the sector. 6. LPG is imported in bulk in volumes ranging from 1,200 t to 1,400 t. It is shipped to Cape Verde in 3,000-ton tankers and unloaded on the island of Santiago at the ENACOL storage faoility and filling plant in Praia. The plant has a oapacity of 1,400 t, and is connected by a pipeline system to the port of Praia, which serves the tankers. 7. The ENACOL plant (which is modern and safe) costed ECV 315 million (US$4.5 million) and came into operation in 1985. Although the construotion was financed by a ooncessional loan from the Government of the Federal Republic of Germany, the Government of Cape Verde was wise enough to onlend the funds to ENACOL on commercial terms, thus obliging it to operate on strictly market terms. This has produced excellent results in all aspects. 8. Bottling is carried out in two stages, with LPG delivered in bottles to final consumers and transported in containers to Mindelo, where the two companies have smaller bottle-filling plants. For transporting LPG and other products, the companies each use small chartered vessels that are specially equipped. Technioally, this system of using small vessels could be improved, particularly if the two companies pooled their transportation. However, the economic benefit of doing so has not yet been considered worthwhile. The bottles and containers are stored in the companies own facilities on the various islands. ENACOL possesses and operates large-capacity storage facilities in the cities of Praia and Mindelo and on the island of Sal, with smaller storage facilities on the other islands, except for Brava and Maio, to which LPG is shipped in bottles directly from Praia. Shell also has LPG storage facilities in Praia, Mindelo and on Sal. On the other islands, Shell uses storage facilities belonging to its local retail agents. 9. The two oompanies internal distribution of LPG is similar, although Shell has operated in the eountry for a longer period and has a better structured distribution system than ENACOL. Figure I shows the pattern of internal LPG distribution for the two companies. Both ENACOL and Shell maintain a fairly complete system of wholesale and retail agents throughout the country, and the survey data confirmed the existenoe of LPG outlets even in remote rural areas. Figure 2 presents the distribution of the LPG market by islands in 1987. - 120 - Annex 5.3 - ~~~~~Page 3 of 7 FI13URE I |j Cape Verde: LPG3 Distribution System TNTERNATIONAL MARKET SHELL ENACOL _RAIA _ PRAIA S|VICENTE S.VICENTE SAL I I L =,SAL WHOLESALE LESALE _ AGENTS; . A 1AGENTS RETAIL AGENTS RETAIL AGENTS Consumers Consumer Annex 5.3 121- Page 4 of 7 Figure 2 CAPE VERDE: LPG MA RKET PER ISLAND (1987) re:. 'a-VisXta" i St*. WtAS _E¢m - 122 - Annex 5.3 Page 5 of 7 rigce Struature and IssueR 10. Current LPG price structures and levels were established when the ENACOL plant in Praia came into operation (1984/85). Although the structure's formulation is fairly simple, it includes all necessary items regarding taxes, amortization and maintenance of the LPG plant, amortization and maintenance of the bottles, the financial cost of inventories, distribution costs, payments to commercial agents, profit margins for companies, and a variable component (the oontribution to the National Development Fund) which stabilizes the market price. Table 1 shows the main components of the LPG market price structure, as established by MTCT. As regards actual LPG market prices, everything suggests that the official consumer price is in fact applied, except in the case of some small-scale retailers in isolated areas, whose transportation and marketing costs are obviously higher than those of retailers in more central locations. 11. Formation of the final selling price takes into account the cost differential between LPG on Santiago and on other islands. The calculation is weighted according to the various levels of consumption. The contribution to the National Development Fund is a variable levy consisting of the difference between the decreed selling price and the average weighted costs of the product as supplied to intermediaries, including their margins. In this way, the contribution to the National Development Fund also serves to stabilize the price of the product. Although it has not been necessary, it can also serve as a subsidy if costs exceed the official selling price. 12. It must be emphasized that in Cape Verde L.G is not aublhidiz.d; on the contrary, it has actually contributed to the government budget (by way of the contributions to the National Development Fund). For example, ENACOL's contributions in the first half of 1987 (levied on sales of the various fuels) totaled ECV 40 million (US$571,428). More specific data on this contribution are not available. 13. In regional terms, LPG prices in Cape Verde are among the lowest in the Sahel area. Table 2 shows LPG prices in various countries of the region. 14. Although it is not part of government policy to change LPG or kerosene prios, Table 3 presents the parity prices for other fuels with respect to the current LPG price. Annex 5.3 - 123 - Page 6 of 7 OFFICIAL LPG PRICE STRUCTURE: AUGUST I1a 1 J( ). RCV pe r kg Comnaowexk CIP cost variable (2) Losses in transit and during discharge 1.50 Struotural oosts 2.75 Bottle maintenance 10.17 Distribution costs 6.00 Amortization of installations N.A. Losses during distribution 2.OX Interest 12.0X (3) Market ng units: (bottl'js) 2.85 kg 12.5 kg 55.0 kg Selling price per unit 180 700 3,080 Final price per kg 63,158 (4) 56.00 58.00 (1) Because of the format in which the MTCT data were furnished, it has been impossible to identify all elements in the price structure. For example, one unidentified component is the contribution to the National Development Fund. Although it is not officially a factor in determining the selling price, it constitutes the difference between the current costs for each import and the selling price. It should be noted that since domestic selling prices were set (January 1984) LPG prices on the international market have declined steadily, gradually increasing this variable component. (2) Depending on each import. (3) Applied to 75 of the value of the product, over six months. (4) Note that the price of LPG in 2.85-kg units is higher than for 12.5-kg and 55-kg units. - 124 - Annex 5.3 Page 7 of 7 LPG P!RICK TN THE SAH4ULTAN ANDQ SUB-SAHIAN REGIONS (3 IGs aOTTLK) Countries Local currenoy US o,nts/LT unit/LT Cape Verde 83.13 85.30 Mauritania 80.00 79.50 (*) Senegal 120.00 42.10 (*) Mali 357.00 138.40 Burkina Faso 330.00 115.80 Niger 378.00 131.90 Togo 350.00 122.80 Ivory Cost 400.00 140.35 Exchange: 1 USD 3CV* 70.30 Oughyas 75.50 CFA* 285.00 **) Subsidized prices. CAPR VKRDK: HOUSE1HOLD IWTKRPURL SUB3STITUTIONf ANIALYSIS: PTIRvanOO KKROSRNK AND CHARCOAL. EARTTY TO LPGl AT MARIKET PRICKS (1988) ---------------------------------------------------------------__ FIREWOOD LPG KEROSENE CHARCOAL ----------------------------------------------------- - --- - -- - Prio p/kg.: 8.00 83.18 44.00 25.00 ----------------------------------------____-_------- ----- - -- - Param.Price: 5.84898 83.15790 88.38223 21.17554 : ---------------------------------------------------------- ----- Change X : -2.55 0.00 55.37 -15.30 Vol./unit : 80,971 5,845 5,215 16,835 Vol/TOP : 22,559 8,153 5,371 11,280 -- - - - - -- - - - - -- - - ------- - - - -- - - - -- - - - - VALUE(ECV$000) 358,498.0 356,488.1 358,498.0 358,498.0 SUBSTITUTION BENEFITS (ECV*'000/year) FIREWOOD LPG KEROSENE CHARCOAL :~~~~------ ------- --------- ----------: FIREWOOD: * (0.0) 0.0 0.0 LPG: 0.0 * 0.0 0.0 KEROSENE: (0.0) (0.0) * 0.0 : CHARCOAL: (0.0) (0.0) (0.0) * …-------------------------n-------------------------------------- - 125 - Annex 5.4 Page 1 of 4 ANNEX 5.4: _limted atinn nn Ogaration of the naotnr 1. In Cape Verde, kerosene is imported and marketed by ENACOL and Shell. The mechanisms for importing kerosene are similar to those for LPG. The only basio difference is that LPG is predominantly a household fuel. Kerosene is imported and handled mainly to serve the aviation industry (both international and domestic), household consumption accounting for only about 3.7X of imports. 92.8Z is consumed by foreign airlines (i.e. in the form of re-exports), and 3.5X by the domestic airline (TACV). 2. ENACOL and Shell determine the quantities to be purchased and the procurement conditions to be applied on the international market. In contrast to LPG, kerosene is imported separately by eaoh of the companies. Moreover, eaoh one decides its own price for sales to the aviation industry. This is because of the companies need to maintain the greatest possible flexibility in competing for air traffic against other airports in the region. The consumer price for household kerosene is determined by the government. 3. Kerosene is delivered to Cape Verde via the island of Sal (at Palmeira). Here, the situation arising in the case of ENACOL's LPG plant in Praia is reversed; i.e. although both companies possess storage facilities, the equipment and installations for transferring the fuel from the ships to the storage faoilities belongs to Shell. The total Jet fuel storage capacity in Palmeira is 32,000 t, of which Shell possesses 12,000 t (38X), and BUACOL 20,000 t (82X). Kerosene is also stored in 200-1 drums. Kerosene storage capacity on Santiago totals 1,500 t. On the other islands, kerosene and other liquid products are stored in 200-1 drums, and in 1,000-1 and 3,000-1 containers. 4. Kerosene is transported among the islands in the same vessels used for LPG, and the intermediate and final distribution systems for kerosene are often but not always the same as those used for marketing LPG. Figure 1 shows the kerosene market distribution by islands in 1987. prie. StruEture and ITane. 5. In Cape Verde, kerosene is not subhidezed. A single formula is used to establish the price structure of all liquid fuels. Basically, it includes: the cost of the product on delivery to the ENACOL and Shell storage facilities (including taxes, port charges, insurance, etc.); storage costs, equipment amortization, and handling by the Annex 5.4 -126- Page 2 of 4 Fi&gre 1 CAPE VERDE: KEROSENE MARKET-PER ISLAND (1987) SlAtiage b,ava 4x U' - ~ ~~~~ ~ Xv £ S. Nlicol >} 24 / Bo Vista Nabo - 127- Annex5.4 Page 3 of 4 oompanies; the oompanies margins; internal transportation to distributors/retailers; ountributions to the National Development Fund; and, the retailers' margins. Table 1 shows the main components of the selling price of kerosene on the domestic market, acoording to MTCT. Formation of the final selling price of kerosene includes practically the same components as the price of LPG, with the contribution to the National Development Fund also serving to stabilize the price of kerosene. OFFICIAL KEROSRNE PRTCE STRUCTURE: AUGUST 1A8B (1) ECV prexkg Comgonenxt CIF cost variable (2) Losses in transit and during discharge 0.05% (CIF) Struotural costs 1.50 Handling in installations 0.50 Amortization of installations 0.50 Delivery cost 1.00 Losses during distribution 2.0% Interest 12.0% (3) Cost of drums variable (4) Final price: per t 44,000.00 per ig 44.00 per 1 32.50 (5) (1) As in the case of LPG, the format of the MTCT data make it impossible to identify all the elements in the price structure (see Table 5.9). In the case of kerosene, these components also include the contribution to the National Development Fund. Since the domestic selling price was set (April 1985), international kerosene prices have steadily declined, gradually increasing this contribution to the National Development Fund. (2) Depending on each import. (3) Applied to 75% of the value of the product, over six months. (4) Depending on the volume of kerosene marketed. (5) Price at retail market level. - 128 - Annex 5.4 Page 4 of 4 S. In regional terms (as in the case of LPG), kerosene prices in Cape Verde are among the lowest in the Sahel. Table 2 shows kerosene prices in various Sahelian oountries. Because of the country's geographical looation, which enables it to obtain fuel at low cost, and mainly because kerosene is imported in large quantities for the aviation industry, the product is available on the domestic market at a very low cost. TABLI2 KEROSENE PRICES IN THE SHELIAN AND SUB-SAHELIAN REGIONS Countries Local currency US oents/ LT unit/LT Cape Verde 32.50 46.23 Mauritania 25.00 33.11 Senegal 185.00 84.90 Mali 200.00 70.17 Burkina Paso 160.00 58.14 Niger 150.00 52.60 Togo 135.00 47.38 Ivory Cost 200.00 70.17 Exchange: 1 USD - EVC$ 70.30 Oughyas 75.50 CFA$ 285.00 - 129 - Annex 5.5 -129- ~~~~Pagel1of 3 £131 5. elected fawtinn an Nlmatriolt Tariffs and the anst Strnntunr 1. Electricity tariffs are based on an operating cost recovery system, with no explicit subsidies. Electra charges two industrial tariffs and one residential tariff. The residential tariff is based on two ranges of consumption, with different pricAs based on a progressive formula (up to 40/kWh per month, end over 40 kWh per month). Table 1 shows Eleotra's electricity tariffs as of August 1988. TARBLI CAPE VERDE: ELECTRA'S POWER TARIFFS (AUGUST 1988 ) Capacity Energy Load Load Type of Consumer (CV$/KW)(US$/KW) (CV$/KWh)(US*/KWh) Industry and Government medium tension 135.00 1.92 10.80 0.154 low tension 95.00 1.35 12.50 0.178 Residential And Comero (*) Up to 40 KWh/month 14.00 0.200 More than 40 KWh/month 17.00 0.242 Note: _ The minimum monthly consumption is 10 KWh. Fonte: MIR. 2. With regard to Table 1 it should be noted that, although the costs of the fuels (i.e. fuel oil and gasoil) used in electric power generation have declined in recent years, electricity tariffs, and particularly the residential tariff, are high compared with other countries in the region. Obviously, these tariffs reflect generating costs (in whioh the high level of transmission losses plays a significant role) and the operating features of the system, which is characterized by a low load factor (about 4,000 hours per year). Non-Rlentra Pnwer GenertiLnn 5. Table 2 presents an estimate for 1984 of total installed oapacity in the munioipal and privately owned plants outside the Electra system. Annex 5.5 - 130 - Page 2 of 3 CAPE VERDE: SUMMARY (OP MON-ELECTRA RLECTRTCTTY PRODUCERS (t19B4 Location Production Consumption Number of (kwh) (kwh) Consumers Santa Catarina 185,200 113,200 297 Tarrafal 68,800 27,800 153 Pedra Badejo 20,100 N.A. N.A. S. Domingos 17,800 10,000 35 Santa iaria 174,800 131,900 170 Ribeira Brava 197,000 113,800 370 Mosteiros 8,400 3,880 39 S. Filipe 484,300 294,500 407 Ponta do Sol 46,800 24,100 138 Ribeira Grande 111,300 80,500 279 Porto Novo 143,400 92,000 280 Sal Rei 81,300 N.A. N.A. Vila do Maio 41,500 28,300 107 Total 1,708,100 917,580 2,275 Note : N.A. = Data not available Source: MIE. Qovernment Invaetment Program 3. Under the II PND, 83% of total energy sector investments will go to the power sector. From 1988 to 1988, the Government implemented a series of electrification proJects in secondary oenters and increased installed capacity in Praia and Mindelo. Table 3 shows details of the specific programs and projcts for the sector included in II PND. 4. Among other financing obtained for the sector, the Government of Cape Verde recently signed an Agreement with the World Bank which will provide about ECV 181 million (US$2.3 million) for the technical rehabilitation of existing installations and for institution building in Electra. Further World Bank finanoing will be used to prepare tariff studies and an electrification master plan. Water desalination is of vital importance to the seotor. Some of the tariff studies to be prepared under the Government of Cape Verde/World Bank program will address desalinization cost and pricing issues, which currently receive sizable indirect subsidies. Annex 5.5 - 131- Page 3 of 3 Table 3 CAPE VRE: PLA1 INESTNENTS FOR THE ELECTRIC SECTOR (9e6-1990) (In sillions of ECYS) ELECTRIC SECTOR 1986 1987 1988 1989 1990 TOTAL TOTAL 309 204.5 325.5 524 163 1526 INSTITUTIONAL PROORMS 0 9 15.5 10 0 34.5 uZzavaZZURUZZ =g~uas.. m:na a=8 aah ms Rehabilitation of ELECTRA 9 9 Iplemno tation of ELECTRA'5 inforation system 10 10 20 Strengthening of ELECTRAS tKhnical capabilitie 5.5 5.5 URIN CENTERS ELECTRICITY 230 109.5 244 319 135 1036.5 ELECTRIFICATION - PRAIA 145 48 94 93 50 430 Electritication - PRAIA lst taos 145 48 193 Electrification - MAIA 2nd fate 74 15 89 lpleentation definition -PRAIA 3rd fase 20 78 50 148 ELECTRICITY NINDELO 20 0 120 175 85 400 Reinforcetmnt of the installed capacity-lIINDELO 60 60 NT network-NINDELO 20 0 120 30 170 BT network-KINOEL0 85 85 170 ELECTRICITY AND MATER - SAL 65 61.5 30 50 0 206.5 Reinforcement of the installed water capacity-SAL 30 50 80 Water adduction and eIlctricity - SANTA MARIA 65 61.5 126.5 ELECTRIFICATION - SECOIDARY CENTERS 79 86 66 196 28 455 ._ __ _- ---- _ - _- Desalination for SAL REI 12 32 44 Rchab. Rural electric centers 18 36 54 Electrification -SANTO ANTAO 66 14 80 Electrification - TARRAFAL S. NICOLAU 0 Electrification - STO ANTAO 47 28 75 Electrification - R. BRAVA 22 22 Reinforcewnt rural electrification - SANTIA60 40 10 48 106 Reinforcemnt electrification - F080 8 22 30 Reinforcmunt eIlctrification - 8RAWA 20 29 Reinforcomnt electrification - VILA DO MAID 15 15 Sorces 11 National Deelopent Plan. - 132 - Annex 5.6 Page 1 of 2 AN11 5.8: Selected lnratinn an Rg&idUM SnRn lZDamand T_ sen The Supply System 1. The only way that total supply oan be estimated is on the basis of theoretioal assumptions regarding volume and energy potential. In the case of animal residues, it is plausible to estimate potential supplies by using data on livestock numbers. In the case of agricultural residues, on the other hand, it is practically impossible to calculate potential supplies because of the wide variations in production both in seasonal terms and from one year to another. Similarly, the energy content of agricultural residues widely varies according to crop configuration, quality, humidity, etc. The supply of industrial residues is totally random. Table 1 shows estimates of potential animal residues supply in 1988, by island. qovernment PoliQies; Trgnds and IssueA 2. There are no policies, programs or projects on the use of animal, agricultural or industrial residues as energy resources. The only reference to residues is contained in the II PED, which proposes "reduoing the consumption of biomass other than firewood, through the substitution of firewood or petroleum products (i.e. kerosene and LPG)." However, Since there is no reference to any mechanism for achieving this proposed substitution nor anybody working towards that goal, and since the use of residues is a oonsequence of the socioeconomic conditions of the households consuming it, it is not likely that there will be any spontaneous change in the consumption of residues within the foreseable future in the country. 3. Another important issue is the effect on health of using certain forms of industrial residues. During the survey and its related field work, it was observed that low- income families in peri-urban areas -- and, to a lesser degree, rural areas -- regularly use plastic bottles and other chemical materials as cooking fuels. The health effects of this practice should certainly be studied as soon as possible. If such practices Pre found to present serious health hazards, it will be necessary for the Government to devise and implement some means to stoping it in the near future. In doing so, however, it will be necessary to remembered that the use of such industrial residues cannot be forbidden without viable alternatives being provided. - 133 - Annex 5.6 Page 2 of 2 ?ABIZ-L CAPE VERDE: ESTIMATED AVAILARLE ANIMAL RESIDUE PER ISLAND (1Q8l). Island Weighted Population Residues (*) (Cattle heads) (Ton.Firewood equiv./year) Boavista 1,817 1,363 Brava 1,818 1,364 Fogo 6,771 5,078 Maio 2,308 1,730 Sal N.A. N.A. Santiago 24,470 18,353 Santo Antao 7,312 5,484 Sao Nicolau 3,427 2,570 Sao Vicente 1,429 1,072 Total 49,349 37,012 Notes (*) Based on an efficiency of .25 TOE per ton. Source: MDRP. - 134 - Annex 6.1 Page 1 of 1 £1111 0.1: strat_ay C nat-int 1. The implementation of the proposed strategy will require the active partioipation of a number of Government, non-governmental, and private sector entities. In that sense, the execution of the Household Energy Strategy Study served as an institutional coordination exercise for the implementation of the strategy. From that experience it is strongly recommended that a Strategy Coordination Committee be formed with the participation of at least the same entities which formed the Coordination Committee of the study. In doing so, however, a chronogram for meetings and a clear hierarchy struoture within the Committee members should be established from the out-set. The entities that participated in the study were the following: - Ministry of Industry and Energy (MIE) - the Directorate General of Energy - Ministry of Rural Development and Fisheries (MDRP) - the Directorate of Forestry Services - the Directorate of Rural Extension - the Council for Studies and Planning - Ministry of Transportation, Trade and Tourism (MTCT) - the Regional Directorate of Trade - Ministry of Planning and Cooperation (MPC) - the Directorate General of Planning - the Directorate General of Statistics - Ministry of Health, Labor and Social Affairs (MSTAS) - Organization of Women of Cape Verde (OMCV) - National Institute of Technological Research (INIT) - ENACOL - Shell Cabo Verde. 2. It is also recommended that ENACOL, Shell Cabo Verde, and the Women Association of Cape Verde (OMCV) be required to assume active responsibility within the Strategy Coordination Committee. - 135 - Annex 6.2 Page 1 of 3 ANNII B.2: StrAage lostinn C ttem 1. This committee should be formed by the Household Energy Unit/DGE-MIE (leader unit) and the Biomass Energy Unit/DSF-MDRP proposed within the strategy: (a) Household Energv Unit/DOR-M1: this Unit constitutes a permanent (long-term, full-time) working group at the Directorate General of Energy of the Ministry of Industry and Energy (DGE/MIE), responsible for: (i) executing all the non-forest-related oomponents of the strategy; (ii) advising DGE/MIE on household energy planning; (iii) implementing and running an energy data collection and data bank system; and, (iv) providing institutional building assistance to DGE/MIE, and training for its personnel on energy planning matters. The creation of this Unit should be a pre-condition to the initiation of the strategy implementation. The Unit should be formed by 4 persons (1 high level local or expatriate staff, 1 research assistant level staff, and two support staff), and it should be in place prior to the initiation of the strategy implementation activities (b) iinma. Energy Unit/DSF-MDRP: this Unit oonstitutes a permanent (long-term, full-time) working group at the Directorate of Forestry Services of the Ministry of Rural Development and Fisheries (DSF/MDRP), responsible for: (i) executing all the forest-related components of the strategy; (ii) advising DSF/MDRP on household energy issues as it relates to forest resources; (iii) doing out technical studies, and coordinating the implementation a national improved wood and charcoal stove program; (iv) executing a national inventory of existing forest resouroes; (v) establishment of a national forest resources database; and, (vi) providing DSF/MDRP with institution building support, and professional and technical staff training. The Unit should be formed by 4 persons (1 high level local or expatriate staff, 1 research assistant level staff, and two support staff), and it should be in plaoe prior to the initiation of the strategy implementation activities 2. Finanoing for the establishment of these units is included in the economic analysis caloulations under the heading "Finanoial/Operational/Administrative Costs," and constitutes olose to 2X of the total Cost of the fuel substitution program. For the strategy's initial year (1990), and for the years 1994 (year 5) and 1998 (year 9) this will be of close to 3X (ECV 22 - 24 million), to account for the initial installation of the respective offices and, subsequently for the necessary equipment replacement and/or up-grading. Table 1 presents a preliminary budget for the first year of operation of these units. Table 2 presents a - 136 - Annex 6.2 Page 2 of 3 preliminary budget for the regular yearly operation of the units. The items included in these budget statements represent the minimum operating budgets, which are expected to be complemented with operational funds from the different specific aotivities to be undertaken during the strategy implementation, for example, the improved stoves program, or the rural community fuelwood program. The staff included in these units is also considered as the minimum onre tAff that should participate in the implementation of the strategy. Additional staff should be provided by the Government as official counterpart staff. Due to the country's limited resources with regard to financing and personnel, the strategy should be implemented as an international teahmical aiaitan.a rojaeot, with financing provided either from a single source or by the integration of various parallel sources. TABLE 1 Iunrnetationn ndgelt ror, the H rnieeld and iagam Rnergv Unit8 (1 90) (*) (US$ dollars) Resources HEU/DGE-MIE BEU/DFS-MDRP (1 four wheel vehicle 20,000 20,000 (2) 250 cc trail motorcycles 5,000 (1) complete IBM/AT-compatible personal desk-top computer 5,000 5,000 (1) IBM compatible portable computer 4,000 4,000 (1) typewriter machines 2,000 2,000 (1) photocopy machine 5,000 5,000 Cartographic Equipment & Supplies 5,000 Office Furniture 10,000 10,000 Contingencies 10,000 10,000 ------------------------------------------------------------- Sub-totals per Unit 58,000 86,000 ------------------------------------------------------------- Total 122,000 --------------------------------------------_----_---------_- Note: (*) The offioes of the two Units to be created will operate directly with the respective Ministries, thus requiring the assignment of office space within the respective premises at the cost of the Government. Annex 6.2 - 137 - Page 3 of 3 TABLE 2 Annnal Oneratinf Budgtet frar the ilonehold and Roan. Knerg Unitg (1990) (US$ dollars) Resources HEU/DGE-MIE BEU/DFS-MDRP ----------------------------------------------------__------- (1) High Level Staff (*) 60,000 60,000 (1 Research Assistant 15,000 15,000 (2) Support Staff (**) 15,000 15,000 Office Supplies 5,000 5,000 Local Travel/Transportation 5,000 5,000 Communications 5,000 5,000 Contingencies 5,000 5,000 ------------------------------------------------------------- Sub-totals per Unit 110,000 110,000 ------------------------------------------------------------- Total 220,000 ------------------------------------------------------------- Notes: (*) local or expatriate 10-15 vear experience level professional. (**) secretary and Driver - 138 - ,Annex 6.3 * am I 8 9 9 2 1 9 8 9 10 19 19 page 1 o t~~~~~~~~~I im lm8 I"I lm M 1991 t9 lbs I"? Me l197s9 9 it) * 90946*00 a 364,190 375,130 381,711, 39 k,6 4017,32 419,202 4,9910 443U,7 45, 448417 40,95 40 1,1 a a Fallust a 20,013 0M,109 u2,02 63,963 61,073 17,13 9,1 71,42 73,483 1,51 1,077 791863 a w4af a 205,10 Ro0;m 207,702 200001 20,941 211,035 211 213,28 214,421 215,52 2,l09 21,8I2 a Fuatllosa a 33,147 33,323 33,500 33,679 33 ,28 34 038 34,1 9 3,4 01 0 4,14 34,0 13,90 3,w a t lIla ta a U lWIOta.) 76.20 a 2122 24601 Z225M 20396 136 10745 63109 11555 90 04 660 16 a lco lto.1 0.146 s a45, 4,40 38,219 3,60131 26 2,10 16,169 11,063 13I5S5 10,960 8,60 t 114vof.) 3.0 sa 1293 1207 106 783 59 411 25 111 0 0 0 0a I 061ossIM.) 0.1052 a 811 004 450 4914 37 263 15 12 10 40)4 40) 40111 I ~~~~~~~~~~~I KL M ftl oe.) e S.3 s o. M e. US e. ue.o M o. 29 oo 3M o o9 l. lo0.o ue.o Me o 3oo a a a o4ota .) 1.30 a 540 6075 60 375 07 67 6071 "Iu2 1,0607 7 6S075 005% 6151 a lcs,Astu.)0.037 a 892S 71,00 1,003 1,003 1,003 1,3 1,003 lI,t7t 12,4034 12,1003 1,00 1,003 a a 14 u.l 0..01 7 a 1 2 16 569 917 1,33 1,9 21 25 2 3 3 3 a a totlsa 100.00 t 100.0 100.0 100,0 100.0 100.0 160.0 100.0 100.0 100.0 100.0 100. 100.0 a aMM:4810 a144,640 47,77 50,906 130,621 7,794 614,679 64,05,12 34,910 174,469 179,08 17,567 905,6106a a Fulllasa a ~10,7,23 79,704 6,10211 079 92,322 93,9312 10,18 511,2761,01 12,401 13,602 19,4,13 I ............................ 1,1a1I1 aa.) 3 1.a0 220 236 2046 16704 136 104 69 35 01 01 0 0t LMfu Icbr O.OIU t 7g63 1et7 n17z 1571 ts7 tt7l 1517 tS757 t571 isil nsl 15 . a caulto.) 0.01654o 4,936 4,697 3,021 3,150 32,40 1,03 1,214 6392 41 40) 40) 3l2a3 I aIt_6 tn.) 0.00. 0 12 0 05 402 0M 0 0m 0" 10 05 05 l10a 1 lCCOAumt..) 0 Oa36 05 0 08 05 100 10 09N 0,6 0, 0,1 0,2 0:6 a atO44 a a C 10M. 631 a 464,9 34943 4994 4994o 499,24 4994M 429945 4994% 499467 49940 4994 4994 a4 a loom 603.14 703 0 t 1,057 05,70 6357 857t Ion 057o 0o57 u 1o7 8n5 65i7: a oio lts.) 1.30 a 363 410 1032 201 2065 I69 441 4 119124 72 7a7 8646 9539 a a ihustu.) 0 a 4 6 210 37 513 70 061 1,04 51,26 1,40 15 1, a I0.14143 I a2.2 a_. t * a t aa1,4a.0 119, 635 07 13,2 136 1 6 5149075 1576 ,3 1,071 1, 10 , a Itcuu.tm.) 0.111l1 a 3,44 3,235 2,410 1,750 1,24 Ul3 4I) 41) 41) (1) 41) 41 a4coawtom.) $t Oa36 0 0 0 0 0 O 0 0 0 Oa aUlUf i 7910.a 113 15717 11717 11717 11717 11717 1717 1717 11717 105717 11717 15717a a lcOebintO.) 0.01703 a 2,987 3,213 3,213 3,213 3,213 3,213 3,213 3,233 3,213 3,213 3,213 3,213a a _13040 faar.) 7.4 a 136 1230t 2580 402 535 077 8320 940 10136 1171 124 14233 a a 4c,intmte.l 0.0156 2 a e 21 23 8 54 1,403 1,26 1,15 1,76 1,97 2,193 2,424 2,t464 a CMOE til 364,090 374,063 36,665 393,72 404,251 415,283 426,645 430,96 45167 465,t001 47t,96 493,634 a a Pasllasat a 3061 00,33 61,80 63S ,103 63,202 6696 4 ,846 70,661 72,8n0 75,000 77,235 79,622a a 1160(8lasir.) 51.0 a 30037 29610 26412 23401 20770 11351 14203 111 986 0@52 400 1481 ae a 4 mltm.) a 538 29 64139 39500 35139S27660 2299 927 1100 13504 1093 6609 aESIIUSlOfas.) 2.a 1293 1287 1036 763 591 41? 252 115 0 0 0 Ga$ aUU4fua.l 41.8a 24500 26707 26787 2678J7 26787 26767 3477 277 2 678 26XX7 a787 2677 6787a a 106134 las.) 5.0 a 2944 264 7007 1233 17046 22423 27604 31987 361tt 3976 4362 47354 a a l4 m t00.) a 507 416 1202 209 2069 37U4 463 570 tOt0 64t 7349 782 a a a~~~~~~ a total.X 100.0 a 100.0 100.0 100.0 100.0 100. 100o.0 100. 160o.0 100.0 100.8 100. 10o.0 a Vin 31 Ea0 -t oo qn q* av ii5 a -°°--52 2 t op a «o s £XX i o §n g o Xi o_ o ig ix Ts ._ - lai on ias° 2 fn ~~~~t ;°° s oso o§i #t°° F$ tS E#o nS tX §N §g ~~~~~~~~~~~~~~~t t !o SW x f oo gB a # il f Jg ~ ~ - iR xi ° R 3 0¢03 t ZsF£|a |! I Lgti a2 it - °' 32 -° j Le x°§_ St5 o § g|Z*-" ~ ~ i * 8S i *z n* g , X c- s§ |t [ gii t; ~ ~ ~ ~ ~ S ---------__ __________.._ __ ___ ______ ___ i _:° X ^ 2z ° | i °B°°_22s a A V a S,aSn B i fi;_ _ _S_t | D "sD ls| i13 } }|~ |l l }i| i|,mg7s}l 1~~~ . .: . a Is Er-a - 140 - Co Annex 6.3 la& 3 oT 5 1 2 3 4 5 6 7 9 9 to 11 12 i tm tw IWO IM IM AM 19" I"S MA I"? 19" 19" 3490 U0219 ut"l utm 34,748 114,90 35,1191 -- - --------- -it,, 4= 47179 4017 UM 33251 am no lilts 16M 14421 libis 9334, lemift w 20 243 2" m 162 130 IIII 101 p lo 56: wimulto) 4860 4841 3M 2947 ZM 1370 930 433 0 0 0 0 (C"110161 0 0 0 0 0 0 0 0 0 a 0 0 1 Lm fuel ttit 133 134 1378 1378 1370 1378 1378 1370 IV1 IM 1379: 3 Ic"llft 1 79 p v 9 v 0 v v p p v V 9EIRSISR01 I M 214 151 IM It" 2241 Ml 3136 $494 3752 4043 42891: (C"210,61 I to 9 33 0 75 120 138 154 163 lis to totaL TV 2o,342 2oom isim tiom woo a,m imit ajm ion tems 9,%b 9,sr VALWOU14,61 m 0 364 3a sit 347 345 343 Ul M M 332 3 4 s 6 7 8 9 to it 12 Ml-am, 190 to 1190 I"I I"2 I"3 19" I"s 19% I"? 19% 19" 7'm 7,10 0,211 0,149 9,322 919n 10,3i3 II,V& 12,014 L2,80 13,60 14,03 LM Ito) 50 60 "II WA =6 23" 15% 023 0 0 0 0 faftift 33 u 30 24 24 14 to 5 (0) to) 10) 1011 11310110(t4a) 0 0 0 0 0 0 0 0 0 0 0 0 (C",Wbj 4 0 0 0 0 0 0 0 0 0 0 0 L" ltoof , on 939 939 9" t" "9 "9 m m 939 9" 90 33 a a Al Al 61 61 Al 41 41 611 97 M 48 689 102 1111 IUO 1603 1174 ItA 2130.: 4 4 12 21 30 0 30 0 it X lb " I wit TIP 3,209 3,373 3,170 3,040 2,978 2,8H 2,01 2,ni 2,07 2,8n 3,060 3,260 94 101 103 106 III I0 10 126 IU 139 147 I9 1 2 3 4 I a 9 10 it 12 IM IM 19" It" t"l I"3 19" I"S 19% I"? IM tt" Faillm 18,474 I9,X4 20,110 31,076 n,022 ZI,011 24,044 25,124 26,M V,431 20,662 29,90 ----------------- LM (too) 4M 4520 3419 20 IM I" -1 -1 -1 -1 -1 -11 (0$810161 29 27 21 13 to 5 (0) lo) (01 lo) (0) MI 11310001006) 0 0 0 0 0 ,0 0 0 0 0 0 0 0 0 0 0 0 0 0 a 0 a 0 0 LPG Ito) U37 340 3412 3412 3412 3412 U12 34U 3412 3432 3412 U12 I" 2u 216 zu nb 216 216 216 216 U& 216 216 400 Ut 00 100 1303 lUb IM M9 2441 26" Mc IM to 16 29 44 17 72 v 97 la$ 119 130 142 3 MAL TV 5,60 $,?A$ S,674 3,60 2,703 5,721 3,79 5,"4 6,241 6,410 6,?d -;, 0-" (C"11016) 24S M 266 VA 203 M 303 U3 323 331 346 M 1 2 1 4 3 6 7 8 9 10 It 12 co vm I" I" 1990 I"I 1992 1993 1994 IM I"6 I"7 IM 19" 8 SM N= 61022 6w am im 681146 IM 7m no "M 790 Wm (to.) 8 38313 Sng 4MI Ann 382% 3U" NO MU 16861 14421 1160 "32 (whirs ni w 2" m 2110 in 140 In lot v To 56 (TVI 210 ZIM MIS I"93 1410 IIM till 7m 6m WU 4m 340 IMDAOS (too.) 40 4M V02 2"? 2226 1570 9W 433 0 0 0 0 (CMWI 0 4 0 0 0 A 0 0 0 0 0 if&) In? ini 915 m M I" - 210 10. a 0 0 0 LPS (tn.) US 57" U" ST" 17" 170 VO 3749 570 VO U" 510 (Cwhwl 332 363 363 363 363 363 363 U3 363 US $63 363 tt[P) SM am 6a 6m 6m UM am 6m 6266 hu UM am I [am* (to.) m 6a U" V43 30 4760 IOU 6m na Om Om 96n tgvkwo 32 n is In IU 210 M I" 332 362 S" 426 (TV) M IN 1749 20 SM 4911 60 fift IM SW 92U "U TOTAL TIP VW M21 VI* 2M 24M 2VP MU M" M" M74 1"" (911181n) YU M M 743 M M Tio M M 212 M PS - 141 - Annex 6.3 Page 4 of 5 IIULO DE CALCULO 00 PROMI E FOUSES 198 9M 19 19 1991 19M 1993 1994 1995 19 19" 199 LEN/III fW.: Proto 380 37533 33234 28952 2534 20824 16473 1344 11101 94 7645 4157 fqlg"anom 33234 2892 2 20824 164 3 1364 11101 9494 7645 657 (CV t ilho) 280 9 8 7 6 5 4 3 3 2 2 RESIO/I fa".: 14741 It*4 11831 82 6735 471 2774 2U4 0 0 0 0 LP8II fat.: 37014 40614 40616 4061 40616 40616 40616 40416 40616 4061 40616 40616 foqouslauo: 13539 13539 13539 13539 13539 13539 13539 13539 13539 1353 (CY I oilbal) 1200 16 16 16 16 1l 16 14 16 16 16 KEIIEI/ fat. 7207 6U4 15995 2549 34009 43274 52401 59709 66 71508 76783 8186 fohge/osm : 72m 17651 8340 17263 2479 15667 24189 31451 20942 29271 (CVY S SIWS) 1000 9 18 8 17 27 16 24 32 21 29 CisTO W PRUS. FOES CV S illovs)s 34 42 32 39 48 36 44 51 39 47 ltJCOEFICIENTES DE PRECO POR TOtELADAtSS 8 t EVMUCIO O CKIoUiVEIS PRItWlO E ECIMRIAS I I 1 1990 191 1M 3 1m4 1M 199 199 1998 199 I LfIHS 400 t000 6000 6000 6000 6000 600 64000 6000 40 4000 2 2 LP8 63200 63200 a32004320063200 6320 6 03200 43200 63200 32006320: t 44440 00 44000 uoo 4400 u400e 440 044 0 44000 4400 44000 44000 CtIEFICIENttES 8UAIS PA PECCAO * URNA P8ERI-U EIIa L tOTOACL P AM 114,540 44,80 205,510 364,890 I CRESC.9ElO.s 4.49 6.55 0.532 2.814 s a I TAN.fAIILIAs 6.2 6.2 6.2 6.2 C tOEFlClIf ES DE tMNVER8A0 A TEP: S I LEIII 0.37 118UO3: 0.25 a s LP8 1.09 s Kum$113: 1.03 s 2 2 - 142 - Annex 6.3 Page 5 of 5 SSSCOEFICIENTES DE DE AND.AI I t i 1 EVOLUCAO W ONBJSTI'AIS K IS ION I I I a lffl lSSO1989 10 9 1" 9I93 I94 1995 1996 1997 19 19 8 t~~~~~~ - ---------------- - ---- - - -..... - --__-__ - -- -- -- _______.._ A IURAL L t LEII -2.0 -10.0 -10.0 -10.0 -15.0 -15.0 -15.0 -15.0 -15.0 -20.0 -20.0 a K RE$IOUS -1.0 -20.0 -25.0 -25.0 -30.0 -40.0 -55.0 -100.6 0.0 0.0 0.0 a t a LPG 1000.0 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 a KEROSEIE -10.0 259.2 66.5 35.8 34.7 22.4 15.9 11.8 8.7 9.0 6.8 a t ~~~~~~~~~~- - - - -- - - - - - - --- -... ----.................... - _.__._._ PIRI-URUANOa a * LE -3.0 -20.0 -25.0 -25.0 -30.0 -40.0 -55.0 -106.6 0.0 0.0 0.0 t * RESIUOS -6.0 -25.0 -33.3 -33.3 -50.0 -106.6 0.0 0.0 0.0 0.0 0.0 LPS 1000.0 -6.6 -6.6 -6.6 -6.6 -6.6 -6.6 -6.6 -6.6 -6.6 -6.6 a . _ . ..…...... a KEIOSENE -10.0 238.6 78.4 42.3 31.4 25.7 21.0 16.5 11.2 10.7 10.3 -__…- ………- - - s--- a URDANGa a I_ -10.0 -25.0 -33.3 -33.3 -50.0 -104.6 0.0 0.0 0.0 0.0 0.0 a RESIDlOI -6.0 -25.0 -33.3 -50.0 -104.6 0.0 0.0 0.0 0.0 0.0 0.0 * LPG 1000.0 -4.5 -4.5 -4.5 -4.5 -4.5 -4.5 -4.5 -4.5 -4.5 -4.5 a KEROE -10.0 109.7 56.0 33.0 26.5 22.9 13.0 12.0 11.2 10.5 9.9 a *8 I EVOLUCO DOS COIIOSTIVEIS SECUNDARIDS I I I 199 1990 1991 1992 1993 194 1995 196 199 lf 1998 1 a RURALa *a a LPAlA -2.0 -10.0 -10.0 -10.0 -15.0 -15.0 -15.0 -15.0 -15.0 -20.0 -20.0 R fSIOS -1.0 -20.0 -25.0 -25.0 -30.0 -40.0 -55.0 -100.6 0.0 0.0 0.0 t LPI 1000.0 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0,5 KEROSENE -10.0 223.6 69.2 31.9 23.3 17.7 12.8 9.7 1.9 2.0 1.8 a a PERJPM8IAND3 a LEIA -3.0 -20.0 -25.0 -25.0 -30.0 -40.0 -55.0 -106.6 0.0 0.0 0.0 J REIJIUDS -6.0 -25.0 -33.3 -33.3 -50.0 -106.6 0.0 0.0 0.0 0.0 0.0 a a LPS 1000.0 -6.6 -6.6 -6.6 -6.6 -6.b -6.6 -6.6 -6.6 -6.6 -6.6 J a KEROSENE -10.0 160.8 69.7 37.4 29.1 25.0 17.2 15.7 8.6 8.5 8.3 t URIA NG a a ILOW -10.0 -25.0 -33.3 -33.3 -50.0 -104.6 0.0 0.0 0.0 0.0 0.0 a a 1EI10009 -6.0 -25.0 -33.3 -50.0 -104.6 0.0 0.0 0.0 0.0 0.0 0.0 a a U8 1000.0 -4.5 -4.5 -4.5 -4.5 -4.5 -4.5 -4.5 -4.5 -4.5 -4.5 a a 15EIIE1 -10.0 44.1 33.4 20.8 18.8 17.9 6.4 6.3 6.2 6.1 6.0 a a 1;989 1990 19l9 I192 193 1994 1995 1996 19 IM 1M a MENEGY SECTOR MANAGEMENT ASSISTANCE PROGRAM Activities Completed Country Project Date Number ENERGY EFFICIEICY AND STRATEGY Africa Regional Participants' Reports - Regional Power Seminar on Reducing Electric System Losses in Africa 8/88 087/88 Bangladesh Power System Efficiency Study 2/85 031/85 Botswana Pump Electrification Prefeasibility Study 1/86 047/86 Review of Electricity Service Connection Policy 7/87 071/87 Tuli Block Farms Electrification Prefeasibility Study 7/87 072/87 Burkina Technical Assistance Program 3/86 052/86 Burundi Presentation of Energy Projects for the Fourth Five-Year Plan (1983-1987) 5/85 036/85 Review of Petroleum Import and Distribution Arrangements 1/84 012/84 Burundi /Rwanda/Zaire Evaluation de l'Energie des Pays des Grands Lacs (EGL) 2/89 098/89 Congo Power Development Plan 2/90 106/90 Costa Rica Recommended Technical Assistance Projects 11/84 027/84 Ethiopia Power System Efficiency Study 10/85 045/85 The Gambia Petroleum Supply Management Assistance 4/85 035/85 Ghana Energy Rationalization in the Industrial Sector of Ghana 6/88 084/88 Guinea- Recommended Technical Assistance Bissau Projects in the Electric Power Sector 4/85 033/85 Management Options for the Electric Power and Water Supply Subsectors 9/89 100/89 Indonesia Energy Efficiency Improvement in the Brick, Tile and Lime Industries on Java 4/87 067/87 Power Generation Efficiency Study 2/86 050/86 Diesel Generation Efficiency Improvement Study 12/88 095/88 Jamaica Petroleum Procurement, Refining, and Distribution 11/86 061/86 Kenya Power System Efficiency Report 3/84 014/84 Liberia Power System Efficiency Study 12/87 081/87 Recommended Technical Assistance Projects 6/85 038/85 Madagascar Power System Efficiency Study 12/87 075/87 Malaysia Sabah Power System Efficiency Study 3/87 068/87 Mauritius Power System Efficiency Study 5/87 070/87 Panama Power System Loss Reduction Study 6/83 004/83 Papua New Energy Sector Institutional Review: Proposals Guinea for Strengthening the Department of Minerals and Energy 10/84 023/84 Power Tariff Study 10/84 024/84 Senegal Assistance Given for Preparation of Documents for Energy Sector Donors' Meeting 4/86 056/86 Seychelles Electric Power System Efficiency Study 8/84 021/84 Sri Lanka Power System Loss Reduction Study 7/83 007/83 Syria Electric Power Efficiency Study 9/88 089/88 Energy Efficiency in the Cement Industry 7/89 099/89 ENERGY SECTOR IWUUWEIT ASSISTANCE PROGRAM Activities Completed Country Project Date Number ENERGY EFFICIENCY AND STRATEGY (Continued) Sudan Power System Efficiency Study 6/84 018/84 Management Assistance to the Ministry of Energy and Mining 5/83 003/83 Togo Power System Efficiency Study 12/87 078/87 Uganda Energy Efficiency in Tobacco Curing Industry 2/86 049/86 Institutional Strengthening in the Energy Sector 1/85 029/85 Power System Efficiency Study 12/88 092/88 Zambia Energy Sector Institutional Review 11/86 060/86 Energy Sector Strategy 12/88 094/88 Power System Efficiency Study 12/88 093/88 Zimbabwe Petroleum Supply Management Assistance 2/90 109/90 Power Sector Management Assistance Project: Background, Objectives, and Work Plan 4/85 034/85 Power System Loss Reduction Study 6/83 005/83 OUSEHOD, RURAL, AND REWABLE ERGY Burundi Peat Utilization Project 11/85 046/85 Improved Charcoal Cookstove Strategy 9/85 042/85 China Country-Level Rural Energy Assessments: A Joint Study of ESMAP and Chinese Experts 5/89 101/89 Fuelwood Development Conservation Project 12/89 105/89 Costa Rica Forest Residues Utilization Study, Volumes I-II 2/90 108/90 C8te Improved Biomass Utilization--Pilot Projects d'Ivoire Using Agro-Industrial Residues 4/87 069/87 Ethiopia Agricultural Residue Briquetting: Pilot Project 12/86 062/86 Bagasse Study 12/86 063/86 The Gambia Solar Water Heating Retrofit Project 2/85 030/85 Solar Photovoltaic Applications 3/85 032/85 Ghana Sawmill Residues Utilization Study, Vol. I & II 10/88 074/87 Global Proceedings of the ESMAP Eastern & Southern Africa Household Energy Planning Seminar 6/88 085/88 India Opportunities for Commercialization of Non-Conventional Energy Systems 11/88 091/88 Indonesia Household Energy Strategy Study 2/90 107/90 Jamaica FIDCO Sawmill Residues Utilization Study 9/88 088/88 Charcoal Production Project 9/88 090/88 Kenya Solar Water Heating Study 2/87 066/87 Urban Woodfuel Development 10/87 076/87 Malawi Technical Assistance to Improve the Efficiency of Puelwood Use in the Tobacco Industry 11/83 009/83 Mauritius Bagasse Power Potential 10/87 077/87 Niger Household Energy Conservation and Substitution 12/87 082/87 Improved Stoves Project 12/87 080/87 Pakistan Assessment of Photovoltaic Programs, Applications and Markets 10/89 103/89 Peru Proposal for a Stove Dissemination Program in the Sierra 2/87 064/87 ENERGY SECTOR rANAGMET ASSISTANCE PFROCRA Activities Completed Country Project Date Number HOUSEHOLD, RURAL, AND RENEWABLE ENERGY (Continued) Rwanda Improved Charcoal Cookstove Strategy 8/86 059/86 Improved Charcoal Production Techniques 2/87 065/87 Senegal Industrial Energy Conservation Project 6/85 037/85 Urban Household Energy Strategy 2/89 096/89 Sri Lanka Industrial Energy Conservation: Feasibility Studies for Selected Industries 3/86 054/86 Sudan Wood Energy/Forestry Project 4/88 073/88 Tanzania Woodfuel/Forestry Project 8/88 086/88 Small-Holder Tobacco Curing Efficiency Project 5/89 102/89 Thailand Accelerated Dissemination of Improved Stoves and Charcoal Kilns 9/87 079/87 Rural Energy Issues and Options 9/85 044/85 Northeast Region Village Forestry and Woodfuel Pre-Investment Study 2/88 083/88 Togo Wood Recovery in the Nangbeto Lake 4/86 055/86 Uganda Fuelwood/Forestry Feasibility Study 3/86 053/86 Energy Efficiency Improvement in the Brick and Tile Industry 2/89 097/89