Niger - Issues and options in the energy sector

Report No. 4642-NIR Niger: Issues and Options in the Energy Sector May 1984 Report of the joint UNDP/World Bank Energy Sector Assessment Program This document has a restricted distribution. its contents may not be disclosed without authorization from the Government, the UNDP or the World Bank.  JOINT UNDP/WORLD BANK ENERGY SECTOR ASSESSMENT PROGRAM REPORTS ALREADY ISSUED Country Date No. Indonesia November 1981 3542-IND Mauritius December 1981 3510-MAS Kenya May 1982 3800-KE Sri Lanka May 1982 3794-CE *Zimbabwe June 1982 3765-ZIM Haiti June 1982 3672-HA Papua New Guinea June 1982 3882-PNG Burundi June 1982 3778-BU Rwanda June 1982 3779-RW Malawi August 1982 3903-MAL Bangladesh October 1982 3873-BD Zambia January 1982 4110-ZA Turkey March 1983 3877-TU Bolivia April 1983 4213-BO Fiji June 1983 4462-FIJ Solomon Islands June 1983 4404-SOL Senegal July 1983 4182-SE Uganda July 1983 4453-UG Sudan JulY 1983 4511-SU Nigeria August 1983 4440-UNI Nepal August 1983 4474-NEP Gambia November 1983 4743-GM Peru January 1984 4677-PE Costa Rica January 1984 4655-CR Lesotho January 1984 4676-LSO Seychelles January 1984 4693-SEY Morocco March 1984 4157-MOR .,  FOR OFFICIAL USE ONLY Report No. 4642-NIR NIGER ISSUES AND OPTIONS IN THE ENERGY SECTOR May 1984 This is one of a series of reports of the Joint UNDP/World Bank Energy Sector Assessment Program. Finance for this work has been provided, in part, by the UNDP Energy Account, and the work has been carried out by the World Bank. This report has a restricted distribution. Its contents may not be disclosed without authorization from the Government, the UNDP or the World Bank.  I  ABSTRACT Niger's foremost energy problem stems from the fact that the net renewable supply of fuelwood meets only about 35% of total fuelwood demand. This massive overexploitation of the natural forest cover causes desertification, which is of grave concern in a country where only 12% of the land is arable. Possible solutions to the crisis include refores- tation and improved forest management, the scope for both of which is limited; dissemination of an improved cooking stove in urban and peri- urban areas; promotion of kerosene for cooking; and replacing fuelwood with domestic lignite, the quantities available and the quality of which need to be ascertained. Given its landlocked position, Niger also faces a high energy import bill. To reduce it, the country can: ensure conti- nued oil exploration and, in particular, appraisal of the recent, limited finds in the Southeast; evaluate its lignite resources and establish pri- orities for their use; and conserve energy in transport and air condi- tioning. In the power subsector, the key issue is the development of integrated power system planning. With respect to energy pricing, the Government's policy of pricing electricity to reflect the long run mar- ginal cost of power supply needs to be pursued, and fuelwood needs to be properly priced to stimulate the use of improved stoves and substitute fuels. Finally, the extreme scarcity of qualified manpower in Niger is the main constraint to planning and operational work. The problem can be alleviated by technical assistance and training, which are needed most urgently at the subsector level, but also for overall energy planning.   CURRENCY EQUIVALENTS US$1.00 = CFA Franc 335 This was the exchange rate at the time of the mission. It is the rate used in the report, unless otherwise stated, in which case the rates are as follows: 1978 US$1.00 = 225.6 CFAF 1979 US$1.00 = 212.7 CFAF 1980 US$1.00 = 211.3 CFAF 1981 US$1.00 = 271.7 CFAF 1982 US$1.00 = 327.6 CFAF 1983 US$1.00 = 345.0 CFAF CONVERSION FACTORS General Units 1 kilocalorie (kcal) = 3.968 British thermal units (Btu) = 4,187 joules 1 tonne of crude oil equivalent (toe) = 10.2 million kcal I barrel (bbl) = 42 U.S. gallons = 159.0 litres Conversion Factors by Fuel Unless otherwise noted, electricity is converted to toe in this report at the weighted 1981 average rate of fuel consumption of Niger's gas oil burning plants, about 265 toe/GWh. Fuel tonne/mi kcal/kg toe/tonne Anou Araren coal 1/ laboratory analysis value - 3,600 0.353 value used in this report - 2,315 0.227 Lignite - 4,000 0.392 Groundnut Shell Briquettes - 4,500 0.441 Fuelwood 0.450 4,500 0.441 Charcoal - 7,800 0.765 Butane - - 1.05 Gasoline Premium 0.734 - 1.03 Regular 0.722 - 1.03 Aviation Gasoline - - 1.03 Jet Fuel 0.790 - 1.02 Kerosene 0.790 - 1.01 Gas Oil 0.830 - 1.00 Fuel Oil - - 0.96 1/ The calorific value of coal used in this report was arrived at by setting the toe value of the 65,502 tonnes of coal burned in 1981 in the SONICHAR power plant equal to the thermal replacement value (i.e. at 265 toe/GWh) of the electricity thereby produced, taking into account the 257 toe of gas oil also burned to fire up the coal- burning boilers. Source: SONICHAR, SONIDEP, SONARA, and Bank mission estimates.  ABBREVIATIONS AND ACRONYMS AFN Association des Femmes du Niger AGRHYMET Center for Applied Agriculture and Hydrological Meteorology BDRN Banque de Developpement de la Republique du Niger CCCE Caisse Centrale de Coop6ration Economique CIDA Canadian International Development Agency CILSS Comite Permanent Inter-6tats de Lutte contre la S6ch6resse au Sahel COMINAK Compagnie Miniere d'Akouta CSPPN Caisse de Stabilisation et de P6requation des Prix du Niger CWS Church World Service DE Directorate of Energy FAC Fonds d'Aide et de Cooperation (France) FAO Food and Agriculture Organization of the United Nations GERDAT Groupement d'Etude et de Recherche pour le Developpement de l'Agronomie Tropicale GPP Groupe des Professionels du Petrole GWh gigawatthour IDA International Development Association INRAN Institut National de la Recherche Agronomique au Niger KDA Kandadji Dam Authority KfW Kreditanstalt fur Wiederaufbau kV kilovolt kW kilowatt kWh kilowatthour LPG liquified petroleum gas (propane and butane) LRMC long-run marginal cost MCT Ministry of Commerce and Transport MMI Ministry of Mines and Industry MPW Ministry of Public Works MW megawatt NEPA Nigerien Electric Power Authority NIGELEC Societe Nigerienne d'Electricite NIGERGAZ Soci6te Nigerienne du Gaz ONAREM Office National des Recherches Minieres ONERSOL Office National de l'Energie Solaire SNTN Soci6te Nationale des Transports du Niger SOMAIR Soci6te Miniere de l'Air SONARA Societ6 Nigerienne de Commercialisation de l'Arachide SONICHAR Societe Nigerienne des Charbons d'Anou-Araren SONIDEP Societe Nig6rienne des Produits Petroliers toe tonne of oil equivalent tpa tonne per annum UNCC Union Nigerienne de Credit et de Cooperation UNSO United Nations Sudano-Sahelian Office WMO World Meteorological Organization This report is based on the findings of an energy assessment mission which visited Niger in October-November, 1982, a progress review mission which took place in January, 1983, and a mission which discussed the draft re- port with the Government in December, 1983. Mission members included: Messrs. J. Schmedtje (Economist, Mission Leader), N. King (Research Assis- tant), M. Wilton (Civil Engineer), W. Schiebel (Coal and Lignite Consul- tant), R. Edwards (Renewable Energy Consultant), J. Gorse (Forestry Spe- cialist), and J. Rochet (Petroleum Geologist). Mr. M. Petcu, the UNSO Resident Energy Adviser to the Government of Niger, also participated ful- Ly in the mission (Energy Institutions, Energy Conservation). The mission gratefully acknowledges the support in its field work of Mr. M. Gervais, the World Bank Resident Representativ/e in Niamev, Niger.  Table of Contents Page ISSUES AND RECOMMENDATIONS .................................... i-xiii I. ENERGY IN THE ECONOMY ................... 1 The Economy . . I Energy in the Economy .. 2 Fuelwood Crisis . . 2 Import Dependence .. 2 Energy Consumption Trends . . 3 Overview ........................ 3 Commercial Energy Consumption and GDP . . 4 Overview of Energy Resources . . 5 Uranium .. 5 Coal and Lignite . . 6 Petroleum . . 6 Hydropower . . 6 Fuelwood . . 6 Biomass Other Than Wood . . 7 Solar and Wind Energy, Small Hydro . . 7 II. FUELiOOD ............................................... 8 Fuelwood Resources .. 8 Fuelwood Consumption .. 9 Main Forestry Sector Constraints . . 10 Increasing Fuelwood Supply . . 13 Conservation .. 16 Substitution .. 17 Forestry Sector Institutions . . 18 Manpower Issues and Training Needs in the Forestry Sector .................................... 18 III. PETROLEUM .............................................. 20 Consumption of Petroleum Products . . 20 Projected Petroleum Product Consumption . . 22 Petroleum Product Supply . . 23 Petroleum Exploration .. 24 IV. COAL AND LIGNITE .. 27 Exploration and Reserves .. 27 Current Uses .. 27 Prospective Uses .. 28 V. RENEWABLE ENERGY ....................................... 31 Solar Energy ......................................... 31 Biomass Other Than Wood .............................. 34 Groundnut Shell Briquettes ......................... 34 Other Crop Residues and Animal Wastes .............. 35 Wind, SmaLl Hydro .................................... 36 The Organizational Framework for Renewable Energy Activities .................................. 36  Page VI. ELECTRIC POWER SUBSECTOR DEVELOPMENT ................... 38 Growth of Demand ..................................... 38 Demand Projections ................................... 39 Electricity Supply ................................... 40 Supply: Options for Expansion ........................ 42 Hydro Resources .................................... 42 Power Planning ..................................... 44 Organization of the Power Subsector .................. 46 Manpower Issues and Training Needs ................... 48 VII. DEMAND MANAGEMENT: CONSERVATION & ENERGY PRICING ....... 49 Conservation ......................................... 49 Transport .......................................... 49 Buildings .......................................... 50 Energy Prices and Taxes .............................. 52 Petroleum Products ................................. 52 Electricity ........................................ 54 Fuelwood and Charcoal .............................. 54 Comparative Energy Prices .......................... 55 VIII. ENERGY PLANNING, INVESTMENT, AND TECHNICAL ASSISTANCE ................................... 58 Energy Sector Planning ............................... 58 Energy Investment .................................... 59 Past Investment .................................... 59 Investment Requirements ............................ 60 Technical Assistance Needs ........................... 62 The Need for Action .................................. 64 TABLES 1.1 Energy and the Balance of Trade, 1978-82 ................. 3 1.2 Pattern of Net Domestic Energy Consumption by Sector, 1981 .. 4 1.3 Commercial Energy Consumption and GDP, 1976-82. . 5 2.1 Evolution of Natural Forest Cover and Fuelwood Supply Based on Current Trends, 1980-2015 . .10 2.2 Fuelwood Resources, Consumption and Needs Based on Current Trends, 1980-2015 . .11 2.3 Mission Proposals on Cumulative Objectives for Fuelwood Production from Plantations and Improved Forest Management in 2000 and 2015 . .14 2.4 Mission Proposals for Meeting Projected Fuelwood Demand in 2000 and 2015 . .15 3.1 Consumption of Petroleum Products 1973-82. 21 3.2 Petroleum Product Consumption, 1982-90 . . 23 6.1 Gross Electricity Demand, 1974-82 . .39 6.2 Projections of Gross Electricity Consumption, 1980-90 . .40 6.3 Hydro Resources .. 43  Page 7.1 Structure of Retail Prices for PetroLeum Products in Niamey, March 1983 .................................. 53 7.2 Permit Fees and Retail Prices for Fuelwood and Charcoal ...... 55 7.3 Retail Prices of Different Fuels per Useful kWh .......... 57 8.1 Total Energy Investment, 1979-81 ......................... 60 8.2 Proposed Public Investment in the Interim Plan, 1984-85 ................................................ 61 ANNEXES 1.1 National Energy Balance, 1981 ............................ 66 2.1 Mean Annual Increment and Net Available Increment of Fuelwood in 1980 by Type of Forest Cover and Geographic Zone ........................................ 67 2.2 Indicative Cost Estimate of the Niger Energy Sector Mission's Proposal for Fuelwood Plantations and Improved Forest Management ............................. 68 2.3 Indicative Cost Estimate of a Five-Year Complementary Forestry Training Program .............................. 69 3.1 A Preliminary Assessment of the Technical Assistance and Training Requirements of the Ministry of Mines and Industry for Coordinating Oil and Gas Exploration ........................................ 70 4.1 Lignite Exploration Programs ............................. 71 4.2 Job Description for the Technical Adviser on Coal and Lignite ............................................ 73 5.1 Energy Potentially Available from Crop Residues, 1979/80 ................................................ 74 5.2 Energy Potentially Available from Animal Waste, 1981 ..... 75 5.3 Production and Transportation Costs of Groundnut Shell Briquettes ............................. 76 6.1 Gross Electricity Consumption, 1963-82 ................... 77 6.2 Electricity Produced and Sold by Voltage Level, for all of NIGELEC, 1974-82 ............................ 78 6.3 NIGELEC: Generation, Sales and Losses by Load Center 1977-80 ................................................ 79 7.1 SNTN: Specific Fuel Consumption, October 1977-September 1981 ............................ 80 7.2 Hydrocarbons Price Structure in Niamey in March 1983 (Shipped through Benin) ................................ 81 7.3 NIGELEC's Current Electricity Rates for Public Power Supply ........................................... 82 7.4 Electricity Pricing: Reference Tariff Structure Computed from Marginal Cost Estimates for 1985-90 83  Page 8.1 Technical Assistance in Energy Planning: Job Description for the Technical Advisor .................. 84 8.2 NIGELEC, Investment Program, Formulated in July 1982 ..... 85 8.3 Outline of an Indicative National Energy Balance for 1990 ....................................... 86 MAPS IBRD 17253: Energy Resources and Infrastructure in 1982 IBRD 16937: Fuelwood Availability  ISSUES AND RECOMMENDATIONS Main Problems 1. One of the least developed countries in the world, Niger has a very low consumption of energy, about 180 kgoe per capita a year. Like other low income countries, Niger faces a double energy crisis: overex- ploitation of its meager fuelwood resources which, given the predomin- antly rural nature of the economy, provide four-fifths of the country's gross energy supply (mostly for cooking), and a rising energy import bill. Because its territory is 75% desert, with only 12% of the land considered arable, and given the increasing desertification due to the destruction of the natural forest cover, the fuelwood crisis is actually the more serious of the two. A third major problem is the backlog in integrated power system planning in a country with very limited electri- fication. Energy Resources 2. Niger's greatest potential source of energy is uranium, of which it is the fourth largest producer in the world, with a production of 4,370 tonnes (1981) and reasonably assured reserves of about 160,000 tonnes. However, the small size of the foreseeable power demand offers no encouragement for the development of nuclear power, and uranium will probably remain Niger's principal export commodity. 3. The Anou-Araren coal deposits in the north of the country con- sist of about 9.4 million tonnes at 3,650 kcal/kg, and are now being used exclusively to generate power for the nearby uranium mines. A recent discovery near Solomi, about 30 km north of Anou-Araren, could indicate a significant deposit of higher quality coal (7000 kcal/kg). There have been various indications of lignite deposits further south, the most promising of which (near Tahoua) has probable reserves evaluated at 2.6 million tonnes, with a calorific value of 4,000 kcal/kg. 4. Although the significance of a recent oil discovery in the Agadem basin in the east is still being evaluated, it seems possible that reserves may be large enough to warrant development, at least for the domestic market. 5. Niger's hydro resources are concentrated in the River Niger and its tributaries, where an estimated 2,090 GWh for an average hydrological year could be developed at three sites: Kandadji, W, and Dyodyonga. However, about 830 GWh of this total depends on international agreements and therefore would not be exclusively for Niger's use.  - 1.1 - 6. As for wood, Niger's natural forest cover is estimated on the order of 15 million hectares, limited in the main to the southern part of the country. Because much of the wood i3 located far from centers of consumption, only 1.4 of the 4.2 million m of the mean annual increment in 1980 are estimated to have been available. 7. In 1979/80, Niger produced an estimated theoretical maximum energy potential of 2.2 million toe in crop residues and animal waste, but because of competing uses and technical, economic, and social con- straints, less than 5% of this amount could have been used for energy conversion. 8. Solar energy is abundant in Niger. In the south, the average total radiation is 6 kWh/m2/day (an average of about 200 kgoe/m2/year), the average daily duration of sunlight varying from 8.5 to 9.5 hours. However, the only current uses of solar energy are for telecommunications in isolated areas and heating water, so that its contribution to meeting Niger's energy needs is minimal. Wind resources are very poor in Niger, and the potential for small hydro development is insignificant. Alleviating the Fuelwood Shortage: Household Energy Strategies 9. On a country-wide basis fuelwood demand and supply are roughly in balance at present. However, the total net available increment of fuelwood (1.4 million m3) accounts for only about 35% of fuelwood demand (4.1 million m3). The result is a massive overexploitation of the forest cover in those areas near the centers of consumption. The growing scarc- ity and rising prices of fuelwood mean that many poor urban dwellers can- not afford more than one warm meal a day. Moreover, the overexploitation is causing a decline in soil fertility and desertification, which will result in heavy losses in agricultural production. If current trends persist, Niger's already large fuelwood deficit in and around the areas of consumption will more than double by the year 2000. 10. There are several options for tackling the fuelwood crisis, among them: (a) increasing the supply of wood by reforestation and especially by improved forest management; (b) increasing the amount of useful energy derived from wood by the widespread dissemination of im- proved cooking stoves; and (c) substituting other sources of energy for fuelwood. 11. Although increasing the supply of fuelwood should be vigorously pursued, the scope for it is limited by several constraints to forest development: (a) poor soils, limited rainfall, and a lack of forestry technical packages well-adapted to marginal lands in these arid and semi- arid zones with only one peak of rainfall; (b) the difficulty of protect- ing the natural forest cover from overuse (too much cutting, clearing, grazing, burning, etc.); and (c) a difficulty in obtaining full and sus- tained governmental commitment and popular participation, although some  - Liii - progress in this regard is being made. Adding the maximum new fuelwood supplies which realistically could be obtained by reforestation and improved forest management (Table 2.3 and Annex 2.2) to the projected net available supply of fuelwood from existing resources will meet only about 30% of the demand in the year 2000 based on current per capita consump- tion. The other 70% therefore will have to be either eliminated or sub- stituted for by using improved woodstoves or cooking with alternative fuels in order to avoid having to change eating habits (Table 2.4). 12. Many different groups in Niger are attempting to develop and disseminate an improved woodstove in rural as well as urban areas. Efforts have been directed toward a fixed cement or banco stove. The most effective improved stove procedure for reducing the demand for wood in the short term is to focus on developing an appropriate stove model to disseminate to carefully selected groups in urban and peri-urban areas, where the fuelwood shortage is most acutely felt. To this end, it is essential to come up with a wood-burning stove that is portable, provides a significant increase in end-use efficiency over current cooking methods, is inexpensive, and, to the extent possible, is suitable for charcoal, groundnut shell briquettes, and perhaps lignite. The Upper Volta portable metal fuelwood stove would appear to meet most of these criteria (para 2.20). 13. Possible substitutes for fuelwood include: charcoal produced in Niger, domestic coal and lignite, imported kerosene and butane, electri- city, locally produced groundnut shell briquettes, and solar energy. Because the main urban areas can still obtain firewood from within a radius of 100 km, only minimal amounts of charcoal are produced and con- sumed. The ever increasing fuelwood demand from the main population cen- ters and the resulting destruction of the forest cover around them mean that fuelwood supplies will require increasingly longer truck hauls. The production and marketing of charcoal might therefore appear attractive. However, wood from the natural forest of Niger does not lend itself well to charcoal production, and the ecologicalLy detrimental consequences of using large amounts of wood to produce charcoal poses a significant problem. 14. The Anou-Araren coal presents serious difficulties in that, in addition to the high cost of transporting it to populated areas, it re- quires pre-coking to eliminate noxious tar fumes. In the absence of data on the coal of Solomi, it is not yet possible to determine its possible uses, from an economic point of view. However, preliminary combustion tests, in appropriate stoves, of briquettes made from this coal, have produced positive resuLts from a technical point of view. The Government of Niger has requested technical assistance from the Government of Japan in evaluating the workable deposits and in defining the technology for preparing and using this coal, principally for residential needs. The limited testing to date indicates that the Tahoua lignite is well suited as a fuelwood substitute, having no aetrimental tar content. The prob- able lignite reserves could suppLy 20% of the cooking needs of all the families in Niger for about eight vears. but more information is needed  - iv - on the quantities available, the quality of the lignite, and likely consumer acceptance before its potential as a fuelwood substitute can be properly assessed. 15. Taking end-use efficiencies into account, the price of kerosene for cooking, whether subsidized or not, compares favorably with the cur- rent market price for fuelwood, even though the latter is well below the wood's economic cost in most areas. However, there is a need for a simple, inexpensive kerosene stove (e.g. the Indian Nutan model) which is better adapted to traditional Nigerien cooking than the models now avail- able. Because of the high cost of butane and electricity, and of the equipment involved, they must be ruled out as cooking fuels for the majority of Nigeriens. 16. Groundnut shell briquettes hold promise as a fuelwood substi- tute, but only on a much more reduced scale than kerosene and, potenti- ally, lignite. Had all the groundnut shells from the 1980/81 growing season been compacted into briquettes, the 17,000 toe made available would have come to no more than 2% of the total 1981 consumption of fuel- wood for the country as a whole. However, 17,000 toe would have amounted to a significant 35% of fuelwood consumption in the city of Niamey for the same year. Groundnut shells thus could help alleviate the fuelwood shortage where it is the most critical. As for solar energy, a cooker well enough adapted to traditional cooking methods to gain popular acceptance has not yet been devised. Recommendations 17. Given the limits to increasing the supply of wood, relief of the fuelwood crisis can most readily be obtained by improved cooking stoves, while at the moment the most promising substitutes are kerosene, lignite, and, to a minor extent, groundnut shell briquettes. 1/ The mission therefore recommends that the following actions be undertaken si- multaneously, all of which are of the highest priority but have been ranked in terms of decreasing short term practical importance: (a) Concerning improved stoves: (i) Centralization of efforts concerning improved stoves within the Directorate of Energy (DE) of the Ministry of Mines and Industry. The DE should closely monitor national and in- ternational developments in this area with a view to evolv- ing a policy and a pLan of action for producing and dissem- inating appropriate models of improved stoves (para 2.21). 1/ The pricing study recommended beLow (para. 33) would help determine the least-cost substitutes on an econom,- basis.  v (ii) Dissemination on an experimental basis in Niamey of an adapted model of the metal stove which recently has been successfully introduced in Ouagadougou (para 12). This project should benefit from the equipment of the labora- tories of ONERSOL for testing and modifying improved stoves. The woodstove experts whose services will be required under this project could also provide assistance to the DE in managing the tasks described in (i) above. (b) Concerning lignite: (i) A systematic drilling program to firm up lignite reserves at Tahoua, and a reconnaissance program, with possible sub- sequent exploration, in the Filingue area. Estimated cost: US$850,000. (ii) Combustion tests of the Tahoua lignite to determine the quantities required for preparing typical Migerien meals. These tests should be integrated with the development of a suitable stove for lignite. (iii) Depending on the results of (i) and (ii), studies of the demand for lignite as a fuelwood substitute and in industry and power generation, in order to estimate the scale of mining operations and therefore the mining costs (para 4.10). (c) In evaluating the workable reserves of the Solomi coal and de- fining the technology for preparing and using this resource (para 14), ensuring that the costs of coal production, trans- port, preparation, and utilization (e.g. the cost of producing stoves for residential use) are analyzed as a function of a study of the demand for this coal as a substitute for wood or for use by industry (para 4.10). (d) Promotion of kerosene as a cooking fuel by either acquiring a suitable existing design, or designing and then disseminating a kerosene stove suited to traditional cooking. The DE should serve as focal point in this effort and turn to the labora- tories of ONERSOL for research work on these stoves (para 3.5). (e) Pursuit of the tree planting and improved forestry management objectives outlined in Table 2.3. Estimated cost: about US$9 million p.a. from 1984 through 1988, and US$10 million p.a. from 1989 through 2018. Such a long-term forestry effort would require a specific complementary forestry training program (para 2.17). (f) Investigation of new forestry technical packages which are well adapted to marginal Lands in arid and semi-arid zones (para 2.17).  - vi- (g) A study to determine a specific action program to promote the use of groundnut shell briquettes for residential needs. The study should be carried out in parallel with the design of an improved stove suitable for both these briquettes and wood (para 5.17). Reducing the Energy Import Bill 18. Until early 1981, Niger depended entirely on imports, not only of petroleum products but also of electricity from Nigeria, to supply its commercial energy needs. Since then, domestic coal has substituted for gas oil in generating power for the uranium mines, which saved, on a calorific basis, the equivalent of about 20% of Niger's total petroleum product consumption in 1982. However, given Niger's landlocked position and the resulting high cost of petroleum products (US$54 per bbl in Niamey in 1982, net of taxes and distributors' margin), total energy im- ports in 1982 still amounted to 18% of the merchandise import bill and nearly 31% of merchandise export revenues. Options for reducing the energy import bill consist of substituting domestic resources and/or cheaper imported alternatives for imported energy, and conservation. 19. With respect to substitution, the main possibilities are: oil from the Agadem basin; Anou-Araren and Solomi coal; Tahoua lignite; hydropower, both Nigerien and as electricity imported from Nigeria; and groundnut shells. From present indications, it seems unlikely that the most recent Agaden permit oil find by the SNEA/EXXON/TEXACO consortium would warrant an export project, but it may be of great value, subject to an economic study, for exploitation for the domestic market. The Govern- ment will need to determine what strategy to adopt for further petroleum exploration and development, particularly in view of the fact that the consortium's obligations under the present contract have been fulfilled, and this could lead to a halt in further exploration. 20. More Anou-Araren coal cannot be used for power generation than is currently burned to meet the demand in the adjacent uranium mines and nearby towns of Arlit and Agadez because of the coal deposit's great distance from other centers of power demand. Other possibilities for substituting this coal for petroleum products do not exist at this time because of the coal's excessive ash content and the high cost of trans- porting it to potential consumers in the south of the country, even though it may be possible to reduce the transport cost by carrying the coal in trucks otherwise making empty return trips to the south. As for the Solomi coal, additional information is needed on its volume, quality and cost of exploitation before its uses as a substitute for petroleum products in industry or power generation can be evaluated. A preliminary analysis of the Tahoua lignite suggests that it is probably suitable for use in the cement industry, among others, as a substitute for gas oil to produce process heat, as well as for power generation. In addition, given large enough reserves it would cost only about 40% as much as gas  - vii - oil c.i.f. Niamey. Although of lower quality than the Solomi coal, the Tahoua lignite lies close to the region where electricity demand grows fastest, and therefore its use for power generation should receive pri- ority attention. However, more needs to be known about the quantities and the quality (especially with respect to combustion for cooking) of the lignite before setting priorities for its use as a gas oil or fuel- wood substitute. 21. Power imports from Nigeria, currently priced at USq4.5 per kWh and accounting for about 75% of Niger's non-mining supply of electricity, are in themselves substituting for very costly fuel at diesel generation plants (at USA11.0 per kWh). As long as secondary energy supplied by Nigeria remains cheaper than any domestic alternative, it is an element to be considered in assessing Niger's own limited hydro potential. A study taking all the relevant alternatives of supply into account in a least-cost system expansion plan has recently begun under an IDA Power Credit. 22. In calorific terms, the 1980/81 cost of groundnut shell bri- quettes c.i.f. Niamey amounted to about 40% of that of gas oil. These briquettes have displaced gas oil in industry in the past, but this has been discontinued. The company marketing these briquettes, SONARA, is having great difficulty convincing industrial enterprises to substitute these briquettes for gas oil, largely because they consider the supply of briquettes unreliable. Therefore, it seems appropriate to concentrate on using these briquettes for residential needs (paras 16 and 17(g)). An improved stove which is suitable for both wood and briquettes will have to be developed to alleviate householders' fears of an unreliable supply of briquettes. 23. The Agadem oil deposits, the Tahoua lignite and the Solomi coal deserve the greatest attention as possible substitutes for imported pe- troleum products. With respect to national energy resources in general and Niger's hydro potential in particular, it should be remembered that their development does not always improve the country's balance of pay- ments. In the case of the power plant which burns Anou-Araren coal, for example, savings on the displaced gas oil amount to only CFAF 2.5 billion p.a., compared to debt service payments of about CFAF 4.5 billion p.a. up to at least 1990. 24. Given the small size of Niger's manufacturing sector, the prime areas for conserving imported energy are transport and air conditioning, particularly of office buildings. The largest transport enterprise, the Societe Nationale des Transport de Niger (SNTN), has already reduced its fuel consumption per kilometer by 22% over a four year period, mainly by training in fuel efficient driving. The Ministry of Public Works and the other 400 transport operators in Niger also need to train their drivers in fuel efficiency. 25. Office air conditioning accounts for about 25% of electricity consumption in Niamey. Significant energy savings (25-30%) have been  - viii - achieved by equipping new public sector buildings with modern central air conditioning; further gains could be made by enforcing energy efficient design and building standards in future construction. Substantial energy savings remain to be realized in old public buildings with room air conditioning units by means of the measures recommended below. Recommendations 26. As part of a plan of action to reduce Niger's energy import bill, the mission recommends (in addition to the lignite exploration programs specified in para 17) the following: (a) The Government's continued urgent consideration of: (i) the feasibility of appraising and producing the Sokhor find, keep- ing in mind the desirability of proceeding rapidly with such a project to avoid rig mobilization costs (US$10 million); and (ii) determination of a strategy for petroleum exploration and development. The Bank's Petroleum Projects Division concerned is in touch with the Government on both of these points (para 3.13). (b) Combustion tests to determine the potential for using lignite in industry and power generation (para 4.10). (c) As mentioned in para 17(c), an analysis of the cost of produc- ing Solomi coal in relation to the demand for its use in indus- try and power generation (para 4.10). (d) Institution of a course in fuel-efficient driving techniques open to any driver interested in taking it. This course might be incorporated in the program of the driver training center which is to be established in the Ministry of Public Works under the upcoming IDA Fourth Highway Project (para 7.4). (e) For conservation in buildings: (i) ensuring that energy efficient design and building guide- lines are followed (para 7.9); (ii) simple insulation measures ensuring tight closing of win- dows and doors, to be undertaken without delay in all pub- lic buildings as appropriate, once the typical cost and related conservation benefits have been established (para 7.8); (iii) institution of office temperature norms and their control (para 7.8); and (iv) replacement of worn out air conditioners by more energy efficient models and introduction of air coolers based on the evaporation of water. A pilot project involving  ix - selected public buildings in Niamey should be considered to test the suitability and effectiveness of these more effi- cient models and air coolers. A prefeasibility study initiated by the mission has been carried out by the Minis- try of Public Works in cooperation with the Directorate of Energy. Estimated cost: CFAF 100 million (US$300,000), not counting the cost of new air conditioners (CFAF 297 mil- lion) to replace existing ones (para 7.8). Other measures of less urgency: initiation of a research program to study the economic feasibility of mini-photovoltaic systems in isolated centers (para 5.6); evaluation by the Ministry of Mines and Industry of the potential for energy economies in industry (para 7.9); and Government relaxation of the prescribed level of stocks of petroleum products to an equivalent of 30 days of consumption, instead of investing in additional storage capacity and acquiring the supplementary stocks (para 3.8). Electric Power Subsector Development 27. Because the existing interconnection with Nigeria will be fully utilized for capacity imports by 1984 and for energy imports by 1992, the main issue in the development of the power subsector is power supply planning for the Niger Valley. The supply problems of the remaining load centers do, however, deserve careful consideration because it is the isolated centers that will require increasing quantities of imported gas oil. 28. With respect to the supply of the Niger Valley, NIGELEC's short-term planning (to about 1989) appears sound, based as it is on the maintenance of sufficient thermal capacity in Niamey to cover the peak, while taking maximum advantage of the interconnection contract with Nigeria to import energy and save fuel expenses. For some time, longer- term planning has been tailored around the assumed commissioning date of the Kandadji hydro-scheme. Other possibilities are the W run-of-river hydro project, the Dyodyonga storage project on the border with Benin, and an expanded interconnection with Nigeria for importing secondary energy and, eventually, seasonal power interchange. All available op- tions ought to be examined to arrive at a least cost program of develop- ment. 29. As for the secondary load centers, clusters of small towns and villages should gradually be connected by transmission lines and serviced from one efficient diesel plant. Although the least cost solution may be connection by 20 kV lines, from a longer term perspective it may be pre- ferable to build 66 kV lines initially operated at 20 kV, with substa- tions of 1,000-2,000 kVA. 30. The power system development study, recently begun under an IDA Power Credit, will examine the various options and their possible  combinations with a view to evolving a comprehensive power sector devel- opment program to 2020 for the Niger Valley and to 1990 for the secondary centers. Energy Prices and Taxes 31. The level and structure of current prices for petroleum pro- ducts in Niger provide the right signals for promoting their efficient energy use. Regarding the electricity tariff, its level and structure were revised in October 1983 to reflect the long run marginal cost (LRMC) of power supply in Niger. Based on an all-diesel investment program for 1985-90, a recent tariff study has developed a "reference" electricity tariff reflecting the estimated LRMC as tempered by considerations of social, financial and administrative expediency (Annex 7.4). The new tariff consists of a fixed component calculated by making an adjustment to the "reference"t tariff to permit financial equilibrium of NIGELEC, and a variable component which represents the cost of fuel and the power im- ported from Nigeria. The Government thus has integrated the "reference" tariff into the current tariff, the latter being subject to modification at the request of NIGELEC from time to time as its financial position may require. The mission supports the recent tariff revision and the pursuit of the Government's policy of electricity pricing to approach long run marginal cost. 32. With respect to fuelwood, its economic cost is reflected by both the cost of reforestation and the cost of deforestation and ensuing desertification. Estimates of this economic cost are certain to show that it is well above the current market prices, high as these may seem, particularly to urban consumers. In addition, as the owner and operator of the national forests, the Government is entitled to a stumpage fee to capture some or all of the excess profits (economic rent) realized by the private operators supplying fuelwood. The second IDA-assisted forestry project (Credit NIR 226) provides for studies of the organization of the fuelwood market and of appropriate prices and stumpage fees for fuelwood from plantations and natural forests which reflect its economic cost. The Credit Agreement stipulates that such prices and fees be established by the end of 1983. Proper economic pricing of fuelwood is the basic prerequisite for conserving it through improved cooking stoves and the use of less costly substitutes, both of which are the prime responses to Niger's fuelwood crisis. Recommendations 33. The mission recommends: (a) Establishment of appropriate fuelwood prices and stumpage fees by end 1984 (para 7.19).  - xi - (b) Once combustion tests on the Tahoua lignite have been carried out, a comprehensive study should be made of comparative energy prices reflecting economic cost with particular reference to providing energy in urban areas, especially with respect to fuelwood substitution (para 7.22). Institutional Issues 34. The extreme scarcity of qualified manpower in Niger is the main constraint to planning and operational work, both at the subsector level and for the energy sector as a whole. 35. In the forestry subsector, the Directorate of Forestry and Fauna suffers from limited forestry planning and inventory control. In addition, there is a need for a more organized exploitation of fuelwood resources. With respect to renewable energy other than wood, the prin- cipal institutional weaknesses are a lack of overall planning due to the multiplicity of organizations involved, and a lack of economic analysis and market studies. 36. In the petroleum subsector, the Directorate of Energy (DE) lacks the staff and equipment to fulfill its role of acquiring, under- standing, and storing the information generated by foreign exploration companies. This is particularly important because the Government may need to promote the areas in question in the future. 37. The three main institutional issues in the power subsector are: (a) the lack of a single agency responsible for overall, long-term power planning; (b) the usefulness of a concession system whereby the State plays a dual role as the authority supervising the management of the electricity concession and, since it owns 90% of NIGELEC's capital, that of the agency being supervised; and (c) the increasing subsidization by NIGELEC's power subsector activities of the company's operation of water supply systems. 38. Given the manpower shortage even at the subsector level and the fact that seven ministries and at least as many operating agencies are directly concerned with energy in Niger, the sector lacks an integrated, overall approach to the country's energy probLems. Moreover, no Govern- ment agency has responsibility for energy conservation in general. The Directorate of Energy (DE) within the Ministry of Mines and Industry (MMI) is responsible for the formulation of national energy policies in accordance with Government objectives, but, in addition to its staff con- straints, its position in the Government does not give it the necessary authority to coordinate energy sector activities.  - xii - Recommendations 39. The mission recommends: (a) Strengthening overall energy planning by appointing an energy economist experienced in general energy supply and demand studies, pricing analyses, optimization techniques, and financ- ing as Energy Adviser to the Ministry of Mines and Industry. (Estimated cost of the economist's services for two years: US$290,000). Excluding the hydrocarbons and coal unit, the DE should focus exclusively on formulating and coordinating national energy policy (para 8.5). (b) Government examination of the possibility of launching as soon as possible a forestry training program which would complement the planting and improved forest management objectives outlined in Table 2.3. Annex 2.3 gives a preliminary outline of such a program, which would cost about US$1.5 million over five years (para 2.28). (c) Expansion of the scope of ONERSOL's work. ONERSOL should take the lead in formulating an overall strategy for developing Niger's renewable energy resources and coordinate the activi- ties of the agencies already involved in this field. The mission supports the proposal already made by the Directorate of Energy to the Ministry of Higher Education and Scientific Research, the supervisory Ministry of ONERSOL, to broaden ONERSOL's field of activity as indicated above. Once the exact role of ONERSOL has been determined by the Government, it will be necessary to define technical assistance in terms of train- ing and equipment required by ONERSOL to manage its work program. (d) Assistance in oil and gas exploration to the DE's hydrocarbons and coal unit, which, according to a preliminary evaluation, would involve: (i) assistance for retrieval and storage of data, including new equipment; (ii) collaboration of expatriate experts with staff of the hydrocarbons and coal unit on well defined specific problems; (iii) assistance in revising the petroleum law and agreements; and (iv) training of Nigeriens in geology, geophysics, economics, and engineering. Estimated cost: about US$1 million over three to four years (para 3.15). (e) Strengthening the capacity of the DE's hydrocarbons and coal unit to coordinate the overall development of the coal/lignite sector by retaining the services of a visiting coal/lignite specialist. Estimated cost: US2 10,000 over three years (para 4.12). (f) The establishment of a process and the capability for inte- grated power system pLanning (para 6.32). The undertaking of a  - x11i1 - power system development study (para 6.24) and an institutional study of the power sector (para 6.30) under the IDA Power Credit (para 6.24) represent the first steps toward setting up such a planning process and capability. The mission also supports the current examination, under an IDA Water Supply Project (Credit 1309-NIR), of the problem of subsidization of water supply by NICELEC's power subsector activities, with a view to establishing in due course a separate water supply entity, thus freeing NIGELEC to concentrate on power supply. (g) Creation of a special energy conservation unit within the Con- struction Directorate of the Ministry of Public Works, especi- ally to implement the conservation measures recommended in para 26(e) above. Setting up such a conservation unit will require equipment (including vehicles), the services of an expatriate specialist for two years, and the training of Nigerien person- nel in air-conditioning engineering. Estimated cost: about US$125,000 (para 7.9). Other equally important but less urgent recommendations relating to energy sector institutions include: (a) Government encouragement for setting up private organizations for the transport of fuelwood while in- creasing Government control over the wood supply chain, including trans- port (para 2.25); and (b) pursuit of current efforts, under the IDA Power Credit, to come up with a staff development plan for NIGELEC (para 6.32).   I. ENERGY IN THE ECONOMY The Economy 1.1 Landlocked in the Sahel and with a population of 5.8 million, Niger is one of the least developed countries in the world. Its terri- tory (1,267,000 km 2) is mainly desert (75%); only 12% of the land is considered arable, and only 2.5% is actually under cultivation, with soil fertility low and declining. Rainfall is low and irregular, resulting in periodic droughts. Per capita income was estimated at US$330 in 1980 and, with population growing at 2.8% p.a., has actually declined over the past decade, despite the short-lived uranium boom. The present adult literacy rate is 8% and life expectancy at birth 43 years. The urban population accounts for only 10% of the total but is rapidly growing, especially in Niamey. Sixteen percent of the rural population is nomadic. 1.2 Niger's natural resource base is both limited and geographic- ally unbalanced. Scarce water supplies limit agriculture to the Niger Valley and the zone along the Nigerian frontier where 90% of the popula- tion lives. The rich uranium deposits discovered in the 1960s, coal and some small tin deposits are all located in the north central desert re- gion, 600-800 km away from the heavily populated areas. Iron ore depo- sits have been discovered near Say, 50 km southeast of Niamey, with prob- able reserves of 51-53% grade iron estimated at 650 million tonnes. Far- ther downstream on the Niger Valley, especially in the so-called W Parc region bordering Upper Volta and Benin, phosphate rock holds promise for development. Identified reserves amount to 500 million tonnes. However, exploitation of these low value/high volume mineral resources is impeded by Niger's landlocked position. The nearest ports in Benin and Nigeria are more than 800 km away. In 1979 and again in 1982, small quantities of petroleum were discovered in the Agadem rift basin close to the Chad border. Evaluation of these finds and follow-up action is in progress. 1.3 Economic activity consists mainly in subsistence agriculture with emphasis on millet/sorghum and livestock production. In 1981, rural sector activities accounted for 49% of GDP, whereas energy intensive sectors such as mining contributed 10%, construction 6%, transport 4% and manufacturing industry 1%; the rest was provided by government and other services. The Government's goal of food self-sufficiency, with little industrial development planned, will reinforce this economic structure. 1.4 Recent economic growth has been marked by two major overlapping events: (a) the Sahel drought of 1973-74, resulting in heavy losses to agriculture and livestock and a declining economy; and (b) the start-up of uranium mining in 1971, and the rapid expansion of this industry until 1981 when it contributed 70% of export earnings and an important share of government revenues. The recovery from the drought was speeded up by the return of favorable weather conditions and government policies aimed at  2. - rapid restoration of the cattle population and food self-sufficiency. Given the remote location of the uranium deposits, the mining industry has remained an economic enclave in the desert with linkage effects limited mainly to the power, construction and transport industries. Reflecting these developments, real GDP growth turned again positive in 1976 and accelerated from 3.5% in 1977 to 13.6% in 1979. However, in the wake of the second large rise in oil prices in 1979-80 and the ensuing world economic recession, the growth rate dropped to 5% in 1980 and close to zero in 1982. Energy in the Economy 1.5 Like other low-income countries, Niger faces a two-pronged energy crisis: a rising energy import bill and overexploitation of its meager fuelwood resources. Because of its potentially disastrous conse- quences, the fuelwood crisis is actually the more serious problem of the two. Fuelwood Crisis 1.6 Reflecting the predominantly rural nature of Niger's economy, fuelwood provides four-fifths of the country's gross energy supply, most- ly for cooking needs. Rising with population growth, fuelwood consump- tion is rapidly depleting the sparse forest cover. As a result, fuelwood is becoming increasingly scarce and expensive so that less well-off urban dwellers can afford only one warm meal a day. Moreover, soil fertility is declining and land erosion has become a serious problem, aggravating the threat of further desertification. Import Dependence 1.7 Until early 1981, Niger depended entirely on imports to supply its commercial energy needs. Since then domestic coal has been substi- tuted for diesel oil in the generation of power for the uranium mines, but the petroleum import bill has kept rising, though at a lower rate. In addition to petroleum products, Niger imports electricity from Nigeria to supply the bulk of its public system (non-mining) demand. 1.8 Energy import dependence in 1982 amounted to 18% of the mer- chandise import bill and nearly 31% of non-energy merchandise export revenues including uranium 1/ (Table 1.1). These percentages have more than doubled since 1978, the increase in part reflecting the 1980-82 devaluation of the CFAF vis-a-vis the US dollar by about 35%. In fact, the 1980-82 rise in the value of petroleum product imports masks a de- l/ As it is not used for energy production in Niger, uranium is treated here as a non-energy commodity.  - 3 - cline in the volume of these imports as indicated by the corresponding figures of their consumption (Table 3.1). The future cost of electricity imports is bound to at least double once the recently concluded (10/82) tariff increase with Nigeria has become effective. The previous contract expired on September 30, 1981. Table 1.1: ENERGY AND THE BALANCE OF TRADE, 1978-82 (Billions of current CFAF) 1978 1979 1980 1981 1982 1. Petroleum Product Imports 9.8 16.8 32.6 36.8 38.4 2. Petroleum Product Re-exports - 1.1 1.3 2.0 2.4 2.9 3. Net Petroleum Product Imports 8.7 15.5 30.6 34.4 35.5 4. Electricity Imports 0.3 0.3 0.5 0.9 1.1 5. Total Energy Imports 9.0 15.8 31.1 35.3 36.6 6. Merchandise Imports c.i.f. 103.3 140.1 171.6 189.8 202.5 7. Non-Energy Merchandise Exports f.o.b. 62.8 100.2 123.0 132.2 119.7 (5) as a % of (6) 8.7 11.3 18.1 18.6 18.1 (5) as a % of (7) 14.3 15.8 25.3 26.7 30.6 Memory Item: Rate of Exchange CFAF/US$ 225.6 212.7 211.3 271.7 327.6 a/ Estimated jet fuel sales to international air carriers. Source: IMF staff estimates, NIGELEC, SONIDEP and GPP data. Energy Consumption Trends Overview 1.9 Data on energy consumption in Niger are fragmentary and incon- sistent. Total gross energy consumption 2/ in 1981 is estimated at 1,030,000 toe (Annex 1.1), or about 180 kgoe/capita, one of the lowest levels in the world. Of this, 81.5% consisted of fuelwood, 14.1% petrol- eum products, 3.0% electricity and 1.4% coal. All of the coal was con- verted into electricity, as was one-fifth (in the form of gas oil) of the petroleum products. 2/ Excluding jet fuel sold to international air carriers.  - 4 - Table 1.2: PATTERN OF NET DEMESTIC ENERGY CONSUMPTION BY SECTOR, 1981 (Percent) Total Petroleum Commercial Total Sector Products Electricity Energy Energy b Mining 16.05 42.52 20.22 2.87 Industry & Construction 30.68 14.96 28.20 12.83 Transport 48.37 0.79 40.88 5.81 Public Administration 0.03 14.57 2.32 0.33 Households/Residential 4.01 20.86 6.66 77.91 Agriculture/Commerce! Other 0.86 6.30 1.72 0.25 TOTAL 100.00 100.00 100.00 100.00 Total (toe) 115,529 21,590 a/ 137,119 964,277 Note: The figures indicate direct, final consumption, net of all conver- sion losses and, in the case of electricity, of transmission and distribution losses as well. a/ Calculated at the maximum theoretical heating value of electricity, 85 toe/GWh. b/ Includes fuelwood (estimated at 824,615 toe), charcoal (estimated at 2,425 toe), and groundnut shells (about 118 toe). Source: National Energy Balance (Annex 1.1). 1.10 Net energy consumption by sector (Table 1.2) reflects the pre- dominant role of fuelwood; its almost exclusive domestic/residential use makes this sector account for 78% of the total net consumption. The balance went mainly into industry and construction (13%), transport (6%) and mining (3%). 1.11 The picture is different for the sectoral distribution of net commercial energy consumption. Transport took the lion's share - 41% of the total and 48% of (directly consumed) petroleum products, followed by industry and construction (28% and 31%). Mining stands out as the big- gest electricity consumer (43%) and ranks third in total commercial energy consumption (20%). The relatively high electricity consumption of households (21%) and public administration (15%) reflects the widespread use of air conditioning, particularly in Niamey. Commercial Energy Consumption and CDP 1.12 Commercial energy consumption grew much faster than real GDP during the period under review (Table 1.3). Its implied elasticity with  5- respect to total GDP was 2.6 between 1976-79, at the height of the uranium boom, and 3.6 over the following three years when GDP growth decelerated to almost zero in 1982. Since mining has provided the engine of growth, a more useful relationship is the elasticity of commercial energy consumption with respect to modern sector GDP only. This is estimated at the much lower figure of about 1.5. The fact remains, however, that over the 1976-82 period commercial energy intensity has increased by two-thirds, from 0.38 to 0.63 toe per million CFAF of total GDP. Even more significantly, commercial energy intensity kept rising while GDP/capita was actually declining (1979-1982). The same phenomenon is observed as well in other developing countries at similar income levels, e.g. Senegal. Table 1.3: COMMERCIAL ENERGY CONSUMPTION a' AND GDP, 1976-82 Growth Rate % p.a. 1976 1979 1982 b/ 1976-1979 1979-1982 Total Consumption, '000 toe 91.5 164.4 208.2 21.8 8.2 Consumption per capita, kgoe 19.3 31.9 35.9 18.2 4.0 CDP (billion CFAF, 1976) 241.2 307.1 329.0 c/ 8.4 2.3 GDP per capita ('000 CFAF, 1976) 51.0 59.5 56.7 5.3 (1.6) Energy per million CFAF of GDP, toe 0.38 0.54 0.63 12.4 5.3 a/ Gross consumption, i.e. including conversion losses in power genera- tion as well as transmission and distribution losses. Electricity calculated at thermal equivalent value of 265 toe/GWh. Excludes butane and jet fuel, which is sold to international air carriers. b/ Extrapolated from data through September 1982. c/ IMF staff estimate. Source: Ministere du Plan, GPP, NIGELEC, SONICHAR. Overview of Energy Resources Uranium 1.13 Niger's present known energy resources are dominated by ura- nium, of which it is one of the largest exporters in the world. Sizable uranium ore deposits exist in the northern part of the country, on the southern and western borders of the Air Massif (IBRD Map 17253). Lesser discoveries were made in the northeastern Djado region. Most ores grade  -6- 3 kg of uranium per tonne. The Nigerien yellowcake (uranium oxide U3 08) contains about 70% uranium metal. Production began in 1971 and output expanded from 450 tonnes of uranium equivalent in that year to 4,370 tonnes in 1981. Reasonably assured reserves are estimated at 160,000 tonnes, with an additional 53,000 tonnes of probable reserves. Although uranium, when measured in terms of burn-up rates of nuclear reactors, represents Niger's largest source of energy, the small size of the fore- seeable power demand offers no encouragement for development of nuclear power, and uranium will probably remain Niger's principal export commod- ity. Coal and Lignite 1.14 The Anou-Araren coal deposits in the north of the country con- sist of about 9.4 million tonnes at 3,650 kcal/kg (3.4 million toe). The coal is being used exclusively (at the current rate of 100,000 to 200,000 tpa) in a 32 MW power plant which supplies the nearby uranium mines and adjacent areas. A recent discovery near Solomi, about 30 km north of Anou-Araren, could indicate a significant deposit of higher quality coal (7000 kcal/kg). There have been various indications of lignite deposits in the south, the most promising of which has a resource potential tenta- tively evaluated at 2.6 million tonnes, with a calorific value of 4,000 kcal/kg (1 million toe in all). Petroleum 1.15 No commercial discoveries of petroleum have occurred in Niger as yet. However, petroleum exploration has intensified in recent years, with encouraging finds in the Agadem basin (250 km from the border of Chad). The reserves are being evaluated to determine their production possibilities. Hydropower 1.16 The hydro resources of the country are concentrated in the southwestern part where the Niger River traverses about 420 km of Nigerien territory. The potential for hydro power development is limited. Two sites, Kandadji and W, are estimated to have a combined annual energy capability of 1,250 GWh (330,000 toe) for an average hydro- logical year. Subject to international agreements (with Mali and Benin, respectively) a second stage of Kandadji could add another 750 GWh (199,000 toe), and on the international stretch of the Mekrou tributary another site (Dyodyonga) could be developed with an annual output of 80 GWh (21,000 toe). Fuelwood 1.17 In 1980, given the lack of precise data, the FAO estimated Niger's natural forest cover, which is limited mostly to the southern part of the country, at 15.1 million hectares (ha). The net available increment of fuelwood in the same year amounted to 0.09m3/ha which gives  - 7 - a total net available increment of 1.4 million m3 (280,000 toe). This, however, was only about 35% of fuelwood consumption (825,000 toe). Biomass Other Than Wood 1.18 In 1979/80, Niger produced crop residues and animal waste with an estimated theoretical maximum energy potential of 2.2 million toe but, because of competing uses as well as technical, economic, and social con- straints, only a very small fraction (i.e. probably less than 5%) of this figure could have been used for energy conversion. Other than the un- known amounts of crop residues and dung burned for cooking in areas of severe fuelwood shortages, the largest quantity of biomass energy pro- duced and consumed in 1980 and 1981 was in the form of groundnut shell briquettes. In 1980/81, 336 tonnes of briquettes (148 toe) were pro- duced. This constitutes less than one percent of the overall theoretical groundnut shell potential which in the same season could have produced about 39,000 tonnes of briquettes (17,000 toe). Solar and Wind Energy, Small Hydro 1.19 Solar insolation is excellent in Niger. In the southern part of the country, average values of total (direct and diffuse) radiation on a horizontal surface range from 5.6 to 6.3 kWh/m2/day (i.e. 170 to 200 kgoe/m2/yr), and the average daily duration of sunlight varies between 8.5 and 9.5 hours. 1.20 Niger's wind resource is very poor; maximum wind speeds only reach 3.9 m/s, at Tahoua. Similarly, the small hydro resource also seems to have a limited potential.  -8- II. FUELWOOD 2.1 In tackling Niger's fuelwood crisis (para 1.6), a concerted effort is needed both to increase the supply of fuelwood and to reduce the demand for it. Increasing the fuelwood supply means better manage- ment of the natural forest cover and reafforestation, the scope for which, however, is limited in Niger and which anyway has a long gestation period; importing charcoal does not seem to be a viable alternative. Re- ducing the demand for fuelwood, on the other hand, can be achieved through an array of measures, foremost among which are conservation through improved fuelwood stoves, and substitution of other energy re- sources. The demand side offers the most scope for substantially reliev- ing the fuelwood crisis. Fuelwood Resources 2.2 In the absence of precise data, a recent FAO report 3/ has tentatively estimated Niger's total forest cover in 1980 to be 15.1 mil- lion hectares, of which (in million hectares) 5.5 are tree savannas, 3.0 bush fallows, 3.0 sylvo-agricultural formations, 2.1 woodlands and savanna woodlands, and 1.5 shrub savannas. Included in these 15.1 mil- lion hectares are: (a) one million ha of forest and fauna reserves, parks, and controlled forestry areas in proportions of 20% forest re- serves to 80% fauna reserves; and (b) some 20,000 equivalent ha of forest plantations, mostly for fuelwood and building poles. Population growth is seriously encroaching upon and threatening many of these reserves. 2.3 Forests in Niger are not dense areas of trees but are rather dispersed tree formations. Moreover, most of these forests belong to "agropastoral" or "sylvopastoral" formations which produce little fuel- wood and few building poles. Most of the fuelwood resource potential exists in the narrow, rain-fed strip of the southern part of the country, stretching from west to east below the northern limit of cultivation. The FAO estimates the total mean annual increment to have been 4,200,000 equivalent m3 of roundwood (1,890,000 tonnes) in 1980. In terms of a national average, that amounts to a growth of 0.28 m3 of roundwood per hectare of natural forest cover a year. However, given the overexploita- tion of the natural forest cover around populated areas, much of Niger's remaining fuelwood resources are at such great distances from consumers that access to them is becoming more and more difficult. Therefore, in 1980 only 1,400,000 mi , or 33% of the mean annual increment, is con- sidered actually to have been available. Given this total net available increment, the average net available increment of fuelwood per hectare of 3/ M. N. Keita, Availability of Fuelwood in the Sahel (Present Position and Prospects), FAO, Rome, .982.  - 9 - natural forest cover was only 0.09 m3 of roundwood a year in the same year. About 10% of this amount would be used for building poles. 4/ Annex 2.1 provides a breakdown of the total mean annual increment and the net available increment of fuetwood in 1980 by type of forest cover and geographic zone (see also IBRD map 16937). Fuelwood Consumption 2.4 There are no accurate data on woodfuels consumption in Niger. What is certain is that very little wood is consumed in the form of char- coal because the main urban areas can still obtain firewood from within a radius of 100 km, so that only minimal amounts of charcoal are produced and consumed, mostly for ironing and making tea. However, given the ever increasing fuelwood demand from the main population centers, the irre- mediable destruction of the fragile forest cover around these centers means that fuelwood supplies will require increasingly long truck hauls. Charcoal is less expensive than wood to transport on a calorific basis because the heating potential of charcoal by volume is higher than that of wood, and volume rather than weight determines transport cost. Even though charcoal production and marketing might prove to be economically feasible, such a course of action is hardly indicated since wood from the natural forest of Niger does not lend itself well to charcoal production, using large amounts of wood to produce charcoal poses an ecological danger, and Niger has no expertise in large-scale charcoal manufacturing. 2.5 According to the 1981 CILSS/OECD Report, 5/ the average per capita consumption of woodfuels, including cooking and heating, amount to an estimated 0.9 kg of dried wood per day, or about 0.75 equivalent m of roundwood per year. Based on this assrmption, the total fuelwood con- sumption reached 4.1 million equivalent m of roundwood in 1980, of which 0.8 million m3 (20%) was consumed in the urban areas and 3.3 million m3 (80%) in the rural areas. This total consumption comes to nearly three times the net available increment of fuelwood (1.4 million m3) in the same year. 2.6 The FAO estimates 0.60 equivalent m3 of roundwood per capita per year to be the amount of fuelwood needed for cooking and heating, or about 20% less than actually seems to be consumed in Niger. But even on this basis, 72% of the population faced an acute scarcity of fuelwood in 1980, 24% a deficit, and 4% a prospective deficit. Moreover, the conti- nuing depletion of the accessible forest cover is causing a decline in 4/ As this percentage falls within the margin of error of these produc- tion estimates, no special alLowance for building poles is made in the totals. 5/ Forestry Sector Analysis and Proposals: Niger, CILSS/OECD, 1981.  - 10 - soil fertility, and desertification will intensify, resulting in heavy losses in agricultural production. 2.7 Unless prompt action is taken both to protect and develop the natural forest cover and to change current patterns of fuelwood use, the total net available increment of fuelwood per year will decline to 1.0 million m3 by 2000, almost 30% less than in 1980 (Table 2.1). Table 2.1: EVOLUTION OF NATURAL FOREST COVER AND FUELWOOD SUPPLY BASED ON CURRENT TRENDS, 1980-2015 a/ 1980 Index 2000 Index 2015 Index Woodlands and savannas (000 ha) 9,100 100 6,900 76 5,300 58 Bush fallows (000 ha) 3,000 100 2,800 93 2,600 87 Sylvo-agricultural formations (000 ha) 3,000 100 5,000 167 6,600 220 Total natural forest cover (000 ha) 15,100 100 14,700 97 14,500 96 Mean annual increment per ha (m3/yr.) 0.28 100 0.22 79 0.18 64 Net available increment per ha (m3/yr.) b/ 0.09 100 0.07 78 0.07 78 Total mean annual increment (000 m ) 4,200 100 3,200 76 2,600 62 Total, net available increment (000 m ) b/ 1,400 100 1,000 71 1,000 71 a/ i.e. with no effort to develop fuelwood resources and no change in fuelwood consumption per capita from the 1980 rate. b/ i.e. the amount of the mean annual increment that is accessible. Source: FAO. 2.8 This means that Niger's already large fuelwood deficit will more than double by the year 2000 (Table 2.2). Main Forestry Sector Constraints 2.9 The main constraints to forestry development are: (a) poor soils, limited rainfall, and a lack of forestry technical packages well-adapted to marginal lands in these arid and semi- arid zones with only one peak of rainfall;  - 11 - Table 2.2: FUELWOOD RESOURCES, CONSUMPTION AND NEEDS BASED ON CURRENT TRENDS, 1980-2015 al ('000 m3) Actual Projected 1980 2000 2015 A. Total, net available increment b/ 1,400 1,000 1,000 B. Total consumption (at 0.75 m3/capita/year) 4,100 7,200 10,900 Deficit (A - B) 2,700 6,200 9,900 C. Total needs (at 0.60 m3/capita/year) 3,300 5,800 8,700 Deficit (A - C) 1,900 4,800 7,700 a/ i.e. no protection or development of the forest cover and no change in fuelwood consumption. Based on a growth rate of about 2.8% p.a., the population figures used to calculate consumption and needs have been rounded off to 5.5, 9.6 and 14.5 million inhabitants in 1980, 2000 and 2015, respectively. b/ i.e. total accessible mean annual increment. Source: CILSS/OECD and FAO. (b) the difficulty of preventing the natural forest cover from overuse (too much cutting, clearing, grazing, burning, etc.); (c) a difficulty in obtaining full and sustained governmental com- mitment and popular participation. Recent initiatives show an increased awareness of the problem by both the Government and the people, and indicate progress in this regard. 2.10 With most of the country receiving less than 400 mm of rain per year and with rainfall being erratic, forestry in Niger technically is severeLy limited. Because only 12% of the land is considered arable, forestry plantations compete directly with agriculture for good soils. Agrarian as well as livestock pressures on land in the southern rain-fed belt mean that all forestry plantations need to be efficiently fenced and guarded, an expensive undertaking. Due to the lack of a productive tech- nical package, initial results from ongoing projects show that for the average hectase of rain-fed tree plantations the expected pro Iuction is only 2 to 3 m per year for well managed plantations and 1-2 m per year for rural woodlots. There is, however, the possibility of producing wood under irrigation (pure stand plantations, tree plantations within irri- gated agricultural perimeters, i.e. hedges, wind breaks, groves, thick- ets, ....) which, if feasible, would play a significant role in allevi- ating the continued devastation of the fragile forest cover. The feasi- bility of such plantations is being determined under the second  - 12 - IDA/FAC/CCCE forestry project. Without prejudging the outcome, one can already say that pure stand plantations are very costly and the scope for tree plantations within irrigated agricultural perimeters, while yielding good results, is limited. 2.11 Competition for the scarce land resources leads directly to the overuse of the natural forest which constitutes the second main con- straint to forestry development. Better management of the forest cover would mainly imply protection against over-cutting, over-grazing, over- clearing, and uncontrolled bush fires. Under the best conditions, with effective participation of the rural population and herders, the produc- tion from better managed natural forests may be expected to increase by two-thirds, from the current average of 0.30 m3 /ha/year to 0.50 m3/ha/year. 2.12 The final major obstacle to improving Niger's wood resources was, until recently, the lack of popular as well as governmental support. This lack of support stemmed from the competition for resources between agriculture, pastoralism, and forestry. In the eyes of the Government and of the people, short-term gains such as an increase in the production of food crops and livestock frequently outweighed the benefits to be ob- tained in the medium to long term from forestry development programs. Moreover, forestry programs implemented to date have not gained popular support, partly because they were conceived without taking into account the need for individual participation by the rural population and partly because the population did not feel as seriously threatened as it does now. However, the difficulty posed by the lack of support is now being resolved as is evidenced by the Government's public awareness efforts, e.g. its proclamation of the year 1984 as the Year of Reforestation, and by linking the National Holiday of August 3 to the National Holiday of the Tree. 2.13 The sensitization of the population needs to be increased for its participation to become more significant. Nevertheless, there are indications that the local population is interested in growing trees. The results of tests in the Majjia Valley have convinced some farmers that wind breaks can increase millet yields by about 20-30%. Farmers are also aware that Gao trees (Acacia Albida) that have traditionally played a fertilizing role for millet land are being cut for wood, threatening to reduce cereal yields, and they have expressed interest in learning more about selective protection of natural regeneration for Gao trees and other local tree species. The national forestry code specifies certain tree species as protected but does not discourage the planting or pro- tection of these species by individuals who can eventually exploit them. As part of its responsibilities, the project unit of the second IDA/FAC/CCCE forestry project is to work through the Directorate of Forestry and Fauna to educate forestry staff and the rural population on the proper interpretation of the forestry code. The first reconnaissance study planned for the rural forestry component of the project aims at locating areas suitable for tree planting either on an individual or family basis, but with the understanding that the trees planted would be  - 13 - the personal property of those who planted them and that project exten- sion staff stand ready to give technical advice on planting and tree maintenance to all families willing to plant. Increasing Fuelwood Supply 2.14 Since the 1973/74 drought, the Government has recognized the need to protect the remaining forest cover, to develop a sustained supply of fuelwood, and to promote wood substitutes and a better use of wood. In general terms, this translates into a Government strategy of: (a) building up forestry institutions through training; (b) establishing fast growing tree plantations and improving the management of the natural forest cover; (c) encouraging the participation of the rural population in reafforestation; and (d) supporting research into improved forestry technical packages and efficient uses of wood. In practice, however, there has not been an adequate allocation of Government funds, and there- fore of equipment or operating supplies to the Directorate of Forestry and Fauna. As it is busy implementing current projects, the Directorate of Forestry and Fauna has not been able to work on inventory control or planning. There is therefore no detailed forestry master plan. 2.15 After taking into account the results of ongoing projects, par- ticularly with respect to expanding the implementation arm of the Directorate of Forestry and Fauna, the mission considers the indicative objectives presented in Table 2.3 for maximum national production from plantations and improved forest management through 2015 to be realistic. According to these estimates, the fuelwood production in the year 2000 from "industrial" irrigated tree plantations, which could all be on the more economic bottom lands, would only contribute about 3% of Niamey's projected fuelwood demand of 750,000 m3 for that year (based on an average population growth rate in Niamey of about 6% from 1982 to 2000). However, if the absorptive capacity of the Directorate of Forestry and Fauna could be further increased to handle 10,000 rather than 2,000 ha of bottom land plantations by the year 2000, the production from these areas close to Niamey would account for almost 15% of the city's projected demand. Given the competing uses for land in Niger, a program is urgently needed to maximize production from plantations as well as to improve management of the natural forest cover. This will require a comprehensive approach which takes into account the interaction of forestry, agriculture, and pastoralism (agro-sylvo-pastoralism). For example, more intensive livestock and agricultural practices promoted through well balanced and operationally integrated schemes would help reduce the damage to the fragile natural forest cover. Such an approach will require a great deal of goodwill and coordination between herders, farmers, and various Government agencies.  - 14 - Table 2.3: MISSION PROP9SALS ON CUMULATIVE OBJECTIVES FOR FUELWOOD PRODUCTION a FROM PLANTATIONS AND IMPROVED FOREST MANAGEMENT IN 2000 AND 2015 2000 2015 Annual Annual Annual Annual Total Produc- Pro- Total Produc- Pro- Area tivity duction Area tivity duction (000 ha) (m3/ha) (000 m3) (000 ha) (m3/ha) (000 m3) State-managed "industrial" irrigated tree plantations 2 15.0 30 5 15.0 75 Tree plantations within irri- gated agricul ur4l perimeters c/ d 2 10.0 20 5 10.0 50 State-managed rain-fed tree plantations 40 2.5 100 60 2.5 150 Rural rain-fed tree plantations - 100 1.5 150 150 1.5 225 Subtotal tree plantations 144 2.1 300 220 2.3 500 Better management of natural forest cover 2,000 0.5 1,000 4,000 0.5 2,000 Total annual production 1,300 2,500 a/ i.e. incLuding wood for building poles (about 10% of the total). b/ i.e. planting on terraces and bottom lands. c/ Hedges, wind breaks, groves, thickets, ... d/ Total area planted listed in terms of equivalent hectares. Source: Bank staff 2.16 Adding the maximum possible "new" fuelwood supplies to the pro- jected net available supply of fuelwood from existing resources, and com- paring the result with the projected demand calculated on the basis of 0.75 m3/capita/year shows that by the year 2000 Niger will have to either eliminate or substitute for about 70% of its fuelwood demand by using im- proved woodstoves or cboking with alternative fuels (Table 2.4). In terms of the more conservative FAO estimate of fuelwood needs at 0.60 m /capita/year, about 60% of these projected needs would have to be met through conservation and substitution. Recommendations 2.17 Excluding any actions with respect to conservation of and sub- stitution for fuelwood discussed below, the mission recommends that the Government commit itself to:  - 15 - Table 2.4: MISSION PROPOSALS FOR MEETING PROJECTED FUELWOOD DEMAND IN 2000 AND 2015 Actual Projected 1980 2000 2015 (000 m3) (%) (000 m3) (%) (000 m3) (%) Demand with no change a/ 4,100 100 7,200 100 10,900 100 Available resources 14 with no change - 1,400 34 1,000 14 1,000 9 Tree plantations c/ - - 300 4 500 5 Better management of cI natural forest cover c - - 1,000 14 2,000 18 Better use of wood, use of substitutes - - - 4,900 68 7,400 68 Overcutting of accessible forest cover 2,700 66 - - - - a/ At 0.75 m3lcapita/year. b/ i.e. total accessible mean annual increment. c/ Negligible in 1980. d/ Does not apply in 1980. Source: CILSS/OECD and Bank staff. (a) pursuing the planting and improved management objectives out- lined in Table 2.3 and described in greater detail in Annex 2.2. The planting program should include a vigorous forestry extension effort to help establish individual or family wood- lots in order to secure the support of the rural population, while the program for better management of the natural forest cover should be based on the agro-sylvo-pastoral approach referred to in para 2.15. As shown in Annex 2.2, the estimated costs of these planting and improved management proposals, excluding complementary forestry training and extension work, amount to about US$9 million (1982) p.a. from 1984 through 1988, and US$10 million p.a. from 1989 through 2018. Presently the Directorate of Forestry and Fauna can handle about US$5 million worth of work per year. A long-term forestry effort would therefore require a specific complementary forestry training program (para 2.27). (b) investigating new forestry technical packages which are well adapted to marginal lands in arid and semi-arid zones for local and exotic tree species by experimentation with vegetative multiplication, mycorrhiza, and symbiotic microorganisms, such as rhizobia and frankia.  - 16 - Conservation 2.18 Substantial savings of fuelwood could be achieved by the early introduction of an improved fuelwood stove which ideally also would handle fuelwood substitutes. Many different groups in Niger are attempt- ing to develop and disseminate a woodstove that is more energy efficient than the widely used three stone fire and the junk metal stove ("foyer malgache") which is employed mostly in urban areas. These organizations include the Church World Service (CWS), the Young Farmers' Training Cen- ter (Centre de Formation des Jeunes Agriculteurs, CFJA), the Nigerien farmers' cooperative organization (Union Nigerienne de Credit et de Coop- eration, UNCC), the Association of Nigerien Women (Association des Femmes du Niger, AFN), the U.S. Peace Corps, the French Volunteer Association (Association Francaise des Volantaires du Progres, AFVP), two Catholic Church groups in the Tapis Vert project, UNSO, and CILSS. All of the efforts to date have been on a test basis, with the actual building of stoves and the training of people in their construction limited to a very small scale. The AFN-CWS project, designed to closely monitor the acceptability of the cement "Kaya" model in Niamey, has been the largest one, producing 800 stoves. 2.19 The European Economic Community (EEC) and UNSO are proposing two additional improved stove projects. The EEC project involves the construction and dissemination of 6,000 clay ("banco") stoves over three years in Niamey, Maradi and Zinder. Under its Preliminary Plan of Im- proving Wood Stoves in Niger, UNSO proposes to build 100 demonstration stoves for use in medical centers, schools, maternities, etc. in the provinces of Zinder, Maradi, Dosso and Tahoua, and to ensure construction and monitoring of 260 stoves to be placed with families where their op- eration has the best chance of success. There is evidence of a growing consensus among the organizations involved on the need for overall coor- dination of the various improved woodstove efforts. Another means of promoting fuelwood conservation, and one which does not seem to have been pursued in Niger, is teaching more fuel efficient ways of cooking with the traditional three stone fire. Proper use of the open fire can in- crease its thermal efficiency from 8% to 15%. 2.20 The mission considers that the most expedient procedure for re- ducing the demand for wood by means of improved woodstoves is to focus on developing appropriate stove models for dissemination to carefully selected groups in urban and peri-urban areas. In these areas, the lack of fuelwood poses the most severe problem because there are no readily available, inexpensive substitutes. In contrast, rural areas have crop residues and animal wastes which can be burned (although this practice should be avoided because it reduces soil fertility). The improved stove models should: (a) be portable enough to appeal to renters; (b) provide at least a 30-50% increase in end-use efficiency over the prevailing method of cooking (three stone fire or foyer malgache) in these urban and peri-urban areas; (c) be able to be manufactured locally; (d) be cheap enough so that, for a certain efficiency level, their use leads to  - 17 - significant cash savings in buying wood; (e) be socially acceptable, which should be greatly facilitated by the financial savings they pro- vide; and (f) be designed for wood but, if possible, be suitable also for charcoal, groundnut shell briquettes, and perhaps lignite. The Upper Volta portable metal fuelwood stove which recently was introduced suc- cessfully in the Ouagadougou market place, would appear to meet most, of these criteria. Its end-use efficiency is reported to be 25-30% (com- pared to an efficiency of about 19% for the "banco" stove and 15% for the three stone fire). It is manufactured locally from scrap metal and reportedly sells at about CFAF 1,000 (about US$3 equivalent) without subsidy. Recommendations 2.21 The mission recommends: (a) Centralization of efforts concerning improved wood stoves with- in the Directorate of Energy (DE) of the Ministry of Mines and Industry. The DE should closely monitor developments in this area at the national level and keep itself informed of progress of similar efforts on the international plane with a view to evolving a policy and a plan of action for producing and dis- seminating appropriate models of improved stoves. (b) Dissemination on an experimental basis in Niamey of a version of the "Ouaga stove" mentioned above. This would involve the careful selection of a target group of people likely to be interested in using an improved stove, closely monitoring the use by this group of an "Ouaga" type stove and modifications of this stove in light of the experience gained. This would allow gradual increases in the scale of production and marketing for models which already have received consumer acceptance. This experimental project should benefit from the equipment of the laboratories of ONERSOL for testing and modifying the parti- cular stove model distributed. The woodstove experts for this project could also provide assistance to the DE in managing the tasks described in (a) above. Substitution 2.22 Possible substitutes for fuelwood include charcoal, coal, lig- nite, biomass other than wood, solar energy, petroleum products, and electricity. Substitution of the first four would be greatly facilitated by the dissemination of a multi-fuel stove as discussed above. Also, as discussed above (para 2.4), charcoal production in Niger would require further study. The potential of the other substitutes for meeting cooking needs is analyzed in subsequent chapters.  - 18 - Forestry Sector Institutions 2.23 Organized into eight field districts, the Directorate of For- estry and Fauna (Direction des for&ts et de la faune) of the Ministry of Hydraulics and of the Environment manages Niger's natural forest cover. Forestry research forms part of the activities of Niger's agricultural research institute, INRAN, which reports to the Ministry of Higher Edu- cation and Scientific Research. Under the second IDA/FAC/CCCE forestry project, the forestry research division of the institute will work on seedling production, soil requirements for forestry, establishing tree plantations, improving the naturaL forest cover and tree plantations, im- proving planting stock, and forestry economics. 2.24 Exploitation of the forest cover for fuelwood in Niger does not take place on an organized basis; it is commercialized mainly for urban consumption. The commercial setup involves gathering the fuelwood, transporting it, and the reselling of it by retailers. The Directorate of Forestry and Fauna theoretically controls the entire wood supply chain, from production to final sale. Because of manpower constraints, the Directorate, in fact, controls mainly the transport phase, as people who want to sell wood must first obtain a permit from the Directorate of Forestry and Fauna. The price of the permit is fixed on a monthly basis according to the means of transportation involved, whether donkey, camel, pick-up, or truck. In practice, this is difficult to police. However, the receding forest cover around major population centers has led to an increasing use of trucks by wood sellers, and this improves the chances for better Directorate of Forestry control. Recommendation 2.25 The mission recommends that the Government pay much greater attention to controlling the wood supply chain, provided that, because of its very high costs, the transport phase remain private, subject to control by the Directorate of Forestry and Fauna. It would even be appropriate for the Government to encourage the setting up of private organizations for the transport of fuelwood. Besides facilitating the Directorate's control over fuelwood exploitation, notably through the policing of permits, an efficiently organized transport system would increase the amount of the mean annual increment of wood that is acces- sible. Manpower Issues and Training Needs in the Forestry Sector 2.26 Given the magnitude of Niger's forestry problems, the Direc- torate of Forestry and Fauna, with a total staff of 301 in 1981, remains understaffed even in spite of recent improvements. There is little plan- ning and inventory control, and the situation is made worse by an inade- quate allocation of funds, equipment, and operating supplies from the  - 19 - Government budget. As a result, the Directorate cannot fulfill a large part of its responsibilities, such as providing the necessary reaffor- estation or erosion control programs on a significant scale. Two current projects are designed to improve the situation by providing operational inputs, training, vehicles, and equipment: the second IDA/FAC/CCCE for- estry project and the USAID forestry and land use planning project, which in particular is trying to build up an inventory control unit within the Directorate. 2.27 Senior forestry officers (level A), until recently have been trained abroad (nine in 1981), but in the future they will be trained at the agronomy school (Ecole Superieure d'Agronomie) in Niamey. An in- stitute for rural development (Institut Pratique de D6veloppement Rural) at Kolo provides education for level B and C staff, but there is no for- mal training for level D personnel, who are supposed to learn on the job, although they are the executing agents. Forestry education curricula should place greater emphasis on reafforestation and natural forest man- agement, and field staff should be provided-with refresher courses in these areas. In addition, junior level staff lack minimum training in forestry techniques. The second IDA/FAC/CCCE forestry project is addres- sing these needs by establishing a small training center in Niamey to provide regular training courses for field forestry staff, especially level D. However, given the magnitude of training needs in forestry, a long-term commitment to develop forest resources as recommended by the mission would require a specific complementary forestry training program. As a rough estimate, the Directorate of Forestry and Fauna would need to appoint about five new level A, ten new level B, and fifteen new level C staff every year until 1990. Recommendation 2.28 The mission recommends that the Government, in pursuing the planting and improved forest management objectives proposed in para 2.17, closely consider the need to launch, as soon as feasible, the complemen- tary forestry training program mentioned above. Such a program would cost roughly US$1.5 million to run for five years, as shown on an indi- cative basis in Annex 2.3. Preparation and feasibility studies would need to be carried out to define such a program more precisely.  - 20 - III. PETROLEUM Consumption of Petroleum Products 3.1 The consumption of petroleum products more than doubled between 1973 and 1980 and then declined by 5.2% p.a. in the following two years (Table 3.1). Most of the increase occurred between 1976 and 1980, at an annual rate of nearly 15%, reflecting the uranium boom. The subsequent decline was due to the substitution of domestic coal for gas oil in supplying power to the mining district during 1981/82. As a result, gas/diesel oil consumption dropped by 11% p.a. The consumption of gas- oline, on the other hand, continued to rise unabated, even though the second drastic world price increase in 1979/80 was immediately passed on to consumers. Much the same goes for kerosene, whose retail price has remained above its import level even despite subsidization (see para 7.12). Again, because of the substitution of coal for gas oil, there was some change in product composition away from the heavy preponderance of gas/diesel oil, which dropped from its peak of 74% of total consumption in 1980 to 64% in 1982. As a corollary, the share of gasoline rose from 23% to 32% over the same period, and kerosene increased from 3% to 4%. Gas oil was preferred over the less expensive fuel oil because individual consumers consider the quantities they need too small to justify the cost of maintaining the fuel oil's viscosity at a useable level. 3.2 Of the approximate 145,000 toe of petroleum products consumed in 1981, 6/ transport accounted for 39%, power generation 20%, construc- tion (mainly roads) 19%, mining (excavation equipment) 13%, industry only 5%, households 3%, and other sectors the remaining 1% (Annex 1.1). 3.3 Niger consumes very small amounts of butane and kerosene for household purposes (Table 3.1). Detailed information on their consump- tion is lacking but, on a calorific basis, the estimated total amount of both fuels used for cooking and lighting comes to less than 1% of Niger's household consumption of wood. Almost exclusively an urban fuel, butane is used for cooking in higher income households, including those of min- ing personnel, in Government residences, and also in hotels. The total amount consumed for this purpose has remained constant at about 400 toe (380 tonnes) p.a. In terms of fuel end-use efficiencies, butane by it- self costs, at a subsidized price, about the same amount to cook with as fuelwood burned by the three stone method (Table 7.3). However, the least expensive equipment for cooking with butane retails for about 15,000 CFAF (US$45) in Niamey and the deposit on the bottle comes to about 6,000 CFAF (US$18). These costs, together with the unfamiliarity of handling a highly flammable material, prevent the majority of families from using butane for cooking. 6/ Includes gas oil for power generation and butane, but excludes reex- ported jet fuel.  Table 3.1: CONSUMPTION OF PETROLEUM PRODUCTS, 1973-1982 al 1973 1976 1979 1980 1981 1982 bl Tooo 000 T TO000 '000 Z 000 tGrowth Rate % p.a. toe share toe toe toe share toe toe share 1973-76 1976-80 1980-82 Gasoline 19.2 (26.2) 22.2 31.8 35.2 (22.7) 40.6 44.6 (32.1) 5.0 12.2 12.6 Aviation Gasoline 0.5 (0.7) 2.3 2.4 1.3 (0.8) 0.7 0.5 (0.2) 66.3 -13.3 -38.0 Kerosene 2.8 (3.8) 3.4 4.2 4.2 (2.7) 4.5 5.0 (3.6) 6.7 5.4 9.1 Gas/Dieiel Oil _ 50.7 (69.3) 60.8 105.2 114.1 (73.7) 98.9 88.9 (64.0) 6.2 17.0 -11.7 TOTAL 73.2 (100.0) 88.7 143.6 154.8 (100.0) 144.7 139.0 (100.0) 6.6 14.9 -5.2 a! Total consumption, including for power generation. Excludes jet fuel (re-exported), butane (e.g. 471 toe in 1981), and petroleum products for non-energy uses. b/ Extrapolated from data for January to September 1982. c/ Includes small amounts of fuel oil (e.g. 600 toe in 1973 and 3500 toe in 1982). Source: GPP  - 22 - 3.4 As for kerosene, most of the 4,460 toe (4,415 tonnes) consumed in 1981 was for lighting. The consumption of kerosene did increase by about 7% a year between 1973 and 1982, but again not for cooking, al- though on that score, even at an unsubsidized price, it compares more favorably with fuelwood than butane does (para 7.21). Simple kerosene stoves are now available in Niamey for 5000 CFAF (US$15). However, these stoves are not well adapted to traditional Nigerien cooking, not being strong enough to heat large pots. More solid, multi-wick kerosene stoves do exist elsewhere, for example, the Indian "Nutan" model, which has a calorific efficiency of about 36%. Because of its lower cost, greater ease of distribution and use, and the fact that it already is widely con- sumed for lighting, kerosene holds more promise as a fuelwood substitute than does butane. Substituting kerosene for fuelwood would add only mar- ginally to the energy import bill. If, for example, 40% of the popula- tion in Maradi, Niamey, Tahoua, and Zinder in 1982 had cooked exclusively with kerosene on a stove such as the Nutan, the country's net energy import bill would have increased only by an estimated 3%. 7/ Recommendation 3.5 Because of the severity of the fuelwood shortage and the need for immediate substitutes, the mission recommends that kerosene be pro- moted as a cooking fuel. To this end, the design for a kerosene stove suited to traditional cooking methods needs to be either acquired or developed, and then imported or produced locally, for example, by the newly created SONIEN (para 5.2). As a promotional measure, such a stove might initially be sold at a subsidized price, depending on the results of the study of comparative energy prices recommended in para 7.22. Projected Petroleum Product Consumption 3.6 Given the Government's emphasis on self-sufficiency in food and the absence of any plans for a major development of industry, the future consumption of petroleum products in Niger will depend primarily on the development of uranium production, directly and through its linkage effects on other sectors of the economy. At present, uranium production is expected to resume its upward trend by 1985, with a third mine coming on stream in 1986. In addition, some independent growth of gas oil con- sumption for thermal power generation will occur, particularly in the isolated provincial centers and as a result of planned capacity additions at Goudel in 1984 and 1986 (para 6.10). Accordingly, total petroleum 7/ Based on a per capita wood consumption of .75 m3/year, cooking on a three stone fire (8% efficiency); populations of 61.4, 351.45, 39.9, and 78.1 thousand people; and c.i.f. prices of 123.14, 117.78, 126.6 and 123.14 CFAF/liter for Maradi, Niamey, Tahoua, and Zinder, re- spectively.  - 23 - product consumption is projected to grow by 2.4% a year during the 1982- 1985 period, and by 5.3% a year from 1985-1990 (Table 3.2). These pro- jections include substitution of kerosene to meet fuelwood for the cook- ing needs of 15% of the populations of Maradi, Niamey, Tahoua, and Zinder in 1985 and 40% of the populations of these cities in 1990, but do not allow for a planned 300,000 tpa cement plant whose economic justification is doubtful at this stage. Table 3.2: PETROLEUM PRODUCT CONSUMPTION, 1982-90 ('000 toe) 1982 Growth Rate, % p.a. (Provisional) 1985 1990 1982-85 1985-90 Gasoline 45.1 51.6 61.3 4.6 3.5 Kerosene 5.0 8.5- 17.3 a! 19.3 15.3 Gas/Diesel Oil 85.4 85.5 186.8 b/ 0.0 16.9 Fuel Oil 3.5 3.8 4.5 2.8 3.5 Total 139.0 149.4 193.5 2.4 5.3 a/ Allows for substitution of kerosene for fuelwood in cooking by 15% of the population of Maradi, Niamey, Tahoua, and Zinder in 1985 and 40% of the populations of these cities in 1990, assuming: (1) a total population for these cities of 564,100 in 1983, with a growth rate of about 6.3% for 1983-1990; (2) a per capita wood consumption of .75 m3/year, cooking on a three stone fire (8% efficiency); and (3) use of a kerosene stove with 36% efficiency. b/ Of which 106,800 toe for power generation; allows for 10,000 toe for the third uranium mine (SMTT) as from 1986. Source: GPP and Bank staff estimates. Petroleum Product Supply 3.7 The Ministry of Commerce and Transport (MCT) supervises the im- portation, distribution, and pricing of petroleum products. The para- statal company SONIDEP has the monopoly on importing all petroleum pro- ducts except for fuel oil and butane. SONIDEP buys in the international market, although state-to-state agreements involving purchases of crude to be processed elsewhere have been known in the past. Since the commis- sioning in 1981 of the Kaduna refinery in northern Nigeria, increasing quantities of product imports have been supplied by that refinery; the balance -- again mainly of Nigerian (Port Harcourt refinery) origin -- continues to come in through the port of Cotonou in Benin. Cotonou sup- plies the western (Niamey) part of Niger, Kaduna/Kano the eastern part  - 24 - (Maradi, Zinder), the dividing line between the two supply areas depend- ing on relative transport cost. Other possible sources of supply include Togo (via the established supply route to Upper Volta) and Algeria. The Government of Niger has set a requirement for stocks of petroleum pro- ducts equal to 72 days' worth of average consumption. The current stock- ing capacity amounts to 30 to 35 days' worth. Recommendation 3.8 In spite of Niger's landlocked position, its supply of petro- leum products supply is assured by a number of possible sources. The mission therefore recommends that the Government lower the requirement for stocks to cover 30 days' demand, rather than invest in expanding the stocking capacity and acquiring the extra supplies themselves. 3.9 SONIDEP supplies the network for distributing petroleum pro- ducts in Niger, which consists of Total, Shell, BP, Mobil and Texaco. These companies, which together form GPP (Groupment Professional du Petrole), themselves import most of the small amounts of fuel oil con- sumed (about 2,800 toe in 1981), while another private company, NIGERGAZ, imports and distributes the insignificant quantities of butane consumed (about 500 toe in 1981). The MCT authorizes other imports of petroleum products by private companies, but only to supply isolated areas or, in the case of fuel oil, to directly meet the company's own needs. Petroleum Exploration 3.10 The surface geology, geophysics, and drilling to date have de- monstrated the presence of various rift basins in Niger of different sizes, depth, and sedimentary fill. The largest and deepest of all these rifts is the Agadem basin which extends over a length of 600 km in the east of the country, with an overall width of nearly 300 km. A consider- able thickness of sediments, in excess of 6,000 m, has accumulated in the central part of the basin. There are several other rift basins, includ- ing the Bilma basin in the northeast, but they are smaller and shallower than the Agadem basin. 3.11 Exploration to date has focused on the Agadem basin in the southeast which offers possibilities for discovering hydrocarbons. The SNEA/EXXON/TEXACO consortium now holds the Agadem permit (about 100,000 km2) where two wells, Madama and Yogou 1 (drilled in 1975 and 1979/80 respectively), gave oil flows. Test results of Yogou 1, however, sug- gested the presence of only small reserves - 1 to 2 million barrels, with 300 to 600 bpd producible for a few years - too little to justify ap- praisal or development in such a remote area. Continued exploration by the consortium led to a new find in the same basin in the Sokhor area towards the end of 1982. By April 1983, three wells were drilled, one of which was dry while the other two produced good quality oil (API 340). Present indications make it unlikely that this discovery would warrant an  - 25 - export project. It may nevertheless be of great value in exploitation for the domestic market. However, the extent of the reserves would need to be confirmed by drilling at least two appraisal wells. Also, an eco- nomic study will have to be carried out to determine the feasibility of developing this discovery. To examine possible refinery options, the study will have to evaluate the market for the domestic oil produced, particularly with respect to the use of fuel oil in power generation. 3.12 From what is known to date, Niger in general and the Agadem basin in particular offer possibilities for further discovery of oil re- serves and therefore more exploration is warranted. The Agadem permit expires in early 1985 and it is possible that the present consortium (SNEA, EXXON, TEXACO) or some of its members may wish to renew the con- tract for at least another three years. Negotiations are under way with the consortium, and the Government has indicated that the drilling of two, and possibly three, appraisal wells immediately on the Sokhor struc- ture would be a prerequisite to renewing the permit. To help the Govern- ment promote and accelerate exploration, an advance from a World Bank Project Preparation Facility will finance: (a) a technical/economic study of the feasibility of developing the Sokhor discovery, including a brief review of the discovery; (b) assistance to the Government in its current negotiations with the oil industry; (c) an evaluation of the technical assistance needs of the sector, including the need for and cost of providing experts, equip- ment, and training; and (d) an evaluation of the need for and cost of an independent evalu- ation of the petroleum potential of Niger that would serve as a basis for developing an exploration promotion strategy. Recommendations 3.13 In view of the high cost of imported petroleum products in Niamey, 8/ the mission supports the Government's urgent consideration of: (a) the feasibility of appraising and producing the Sokhor find; (b) the desirability of proceeding rapidly with such a project so that the Government could avoid mobilization and demobilization costs of rig (US$10 million); and 8/ Equivalent in 1982 to US$54 per bbl, net of taxes and distributor's margins.  - 26- (c) determining a strategy for petroleum exploration and develop- ment. 3.14 The hydrocarbons and coal unit of the Directorate of Energy (DE) of the Ministry of Mines and Industry coordinates oil and gas explo- ration in Niger. Given the recent developments in the sector, it would be to the advantage of this unit to obtain technical assistance to ensure the successful outcome of its work. The exploration that already has been carried out and probably will be carried out in the coming years by foreign companies requires that the information be properly acquired, understood, and stored by the Government. This information can then be used as a basis for making the independent evaluation of Niger's petro- leum potential referred to in para 3.12. Recommendation 3.15 As mentioned above, a World Bank Project Preparation Facility will evaluate the technical assistance needs of the petroleum sector in Niger. A preliminary assessment indicates that to fulfill its role, the DE will require: (a) assistance for retrieval and storage of data, in- cluding new equipment; (b) collaboration of expatriate experts with staff of the hydrocarbons and coal unit on specific well-defined problems; (c) assistance in revising the petroleum law and agreements; and (d) training of Nigeriens in geology, geophysics, economics, and engin- eering, i.e. two technicians each year for a period of six months each. As shown in Annex 3.1, the total estimated cost of such a three or four year program comes to about US$1 million. The staff of the DE which will have benefitted from this assistance would form the nucleus of a future national oil company, if such a company proves necessary. The cost of the program does not cover a general geological and geophysical evalu- ation of the basins which would still be necessary before 1985 to give the Government the basic knowledge to develop its future strategies.  - 27 - IV. COAL AND LIGNITE Exploration and Reserves 4.1 There has been no systematic exploration for coal or lignite in Niger, as the known deposits were discovered while searching for uranium and water. Coal and lignite exploration falls within the activities of the wholly Government-owned Office National des Recherces Minieres (ONAREM), which is supervised by the Ministry of Mines and Industry, but in practice ONAREM's work in this area has been very limited. 4.2 Coal deposits exist approximately 180 km south of the uranium mines near Anou-Araren, about 1,000 km northeast of Niamey. Measured and indicated reserves amount to 6.4 million tonnes, possible reserves 3.0 million tonnes. The coal is sub-bituminous, with an average ash content of 51% and a calorific value of 3,650 kcal/kg. The total reserves there- fore add up to 3.4 million toe. Coal also has been discovered recently in seams of five to eight meters thick near Solomi, about 30 km north of Anou-Araren. Not enough information is available yet to estimate the size of the resource, but based on the samples taken to date, it is of much higher quality (7000 kcal/kg, ash content 14%) than the Anou-Araren coal. 4.3 Numerous isolated lignite discoveries have been made in Niger (e.g. southeast of Tahoua, north of Zinder), but the most promising one is located northwest of Tahoua, about 300 km northeast of Niamey, near Salkadamma. A first evaluation based on limited data suggests probable reserves of 2.6 million tonnes of (average) 30% ash content and 4,000 kcal/kg (one million toe). Additional exploration appears likely to locate further reserves. Of the other lignite discoveries, the indica- tions near Filingue, about 200 km northeast of Niamey, particularly appear to warrant systematic investigation. Current Uses 4.4 The only current use of coal or lignite in Niger is the burning of the Anou-Araren coal to supply power to the nearby uranium mines. The recently constructed 2 x 18.8 MW (gross) power plant can serve the needs of four uranium mines, the known coal reserves being sufficient to support at least a 30-year operation. The SONICHAR company, of which the Government owns about 68% of the capital, mines the coal, produces elec- tricity at the mine, and sells it wholesale to the power company NIGELEC for transmission and distribution to the uranium mining companies and to the surrounding areas.  - 28 - 4.5 The Anou-Araren coal has substituted for the imported gas oil otherwise burned by the mining companies to generate their own electri- city. At the (estimated) 1982 level of SONICHAR's power generation, the import savings amounted to about 26,000 toe, or about 20% of Niger's total petroleum product consumption in that year. These savings will increase if and when uranium production resumes its upward movement. Un- fortunately, with the recent decline in both mining activities and real petroleum prices, the very costly investment in SONICHAR's coal-fired power plant has turned out to be uneconomic, though it appeared justified when the investment decision was taken. In terms of foreign exchange, SONICHAR's debt service is expected to roughly offset savings on the oil import bill at least until 1990. Prospective Uses 4.6 There are no uses for Anou-Araren coal in industry at this time. The coal is not suitable for use in Niger's cement factory or for generating industrial process heat in general because of its excessive ash content and the high cost of transporting it to potential consumers in the south of the country. Although these transport costs might be re- duced by using the spare capacity of the 95% of the trucks returning empty from the uranium mines (para 7.5), the ash content would still present a significant problem. For household cooking with this coal, there is an additional difficulty in that burning it releases noxious tar fumes, ruling out its use in closed rooms. Pre-coking would eliminate the contaminating tar contents but also raise the coal's ignition tem- perature to more than 1000