Zambia - Urban household energy strategy

LN I L L:L E3zEl E ED E3EJl LILJLJ El m0El DEIDEH EL XuEl El4ElE I~~~~J~~/ 0 ~ ~ ~ ~ ~ ~ ~ ~ 2E 0& It  ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM PURPOSE The World Bank/UNDP/Bilateral Aid Energy Sector Management Assistance Program 'ESMAP) was launched in 1983 to complement the Energy Assessment Program which had been established three years earlier. The Assessment Program was designed to identffy the most serious energy problems facing some 70 developing countries and to propose remedial action. ESMAP was conceived, in part, as a preinvestment facility to help implement recommendations made during the cburse of assessment. Today ESMAP is carrying out preinvestment and prefeasibility activities in about 60 countries and is providing a wide range of institutional and policy advice. The program plays a significant role in the overall intemational effort to provide technical assistance to the energy sector of developing countries. It attempts to strengthen the impact of bilateral and multilateral resources and private sector investment The findings and recommendations emerging from ESMAP country activities provide govemments, donors, and potential investors with the information needed to identify economically and environmentally sound energy projects and to accelerate their preparation and imp ementation. ESMAP's policy and research work analyzing cross-country trends and issues in specific energy subsectors make an important contribution in highlighting criical problems and suggesting solutions. ESMAPs operational activities are managed by three units within the Energy Strategy Management and Assessment Division of the Industry and Energy Department at the World Bank. - The Enerav Effidency and Sy Unit engages in energy assessments addressing institutional, financial, and policy issues, design of sector strategies, the strengthening of energy sector enterprises and sector management, the defining of investment programs, efficiency improvements in energy supply, and energy use, training and research. - The Household and Renewable Energy Unit addresses technical, economic, financial, institutional and policy issues in the areas of energy use by urban and rural households and small industries, and includes tradiional and modem fuel supplies, prefeasibility studies, pilot activities, technology assessments, seminars and workshops, and policy and research work. - Th e Natura Gas Develooent Unit addresses gas issues and promotes the development and use of natural gas in developing countriesthrough preinvestment work, formulating natural gas development and related environmental strategies, and research. FUNDING The ESMAP Program is a major intemational effort supported by the World Bank, the United Nations Development Programme, and Bilateral Aid from a number of countries induding Australia, Belgium, Canada, Denmark, Finland, France, Iceland, Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Sweden, Switzerland, the United Kingdom, and the United States. FURTHER INFORMATION For further information or copies of the completed ESMAP reports listed at the end of this document, contact: Energy Strategy Management OR Division for Global and Interregional and Assessment Division Programmes Industry and Energy Department United Nations Development Programme The World Bank One United Nations Plaza 1818 H Street N.W. New York, NY 10017 Washington, D.C. USA 20433 USA  ZAMBIA URBAN HOUSEHOLD ENERGY STRATEY AUGUST 1990 Household Energy Unit Industry and Energy Department The World Bank Washington, D.C., U.S.A. This document has restricted distribution. Its contents may not be disclosed without authorization from the Government, the World Bank, or the UNDP.  ACRONYMS AND ABBIRINATIONS BCA Biomass Catchment Area CH Contract Haulier CSO Central Statistical Office DOE Department of Energy, Ministry of Power Transport and Communication ESMAP Joint UNDP/World Bank Energy Sector Management Assistance Program FD Forestry Department, Ministry of Lands and Natural Resources FE Foreign Exchange FOB Free oti Board (Ship) CDP Gross Domestic Product MLNR Ministry of Lands and Natural Resources NCSR National Council for Scientific Research OER Official Exchange Rate PV Present Value SADCC Southern Africa Development Coordination Conference SEA Standard Enumeration Area TAZARA Tanzania/Zambia Railways UNDP United Nations Development Program WB International Bank for Reconstruction and Development - The World Bank ZESCO Zambia Electrical Supply Corporation Ltd. ZR Zambia Railways a annum a.d. air dry (15% moisture content dry basis) Cn Charcoal CR Crop residues Elec. Electricity FW Fuelwood b.d. bone dry (0% moisture content) GWh Gigowatt hour ha hectare J Joule - standard unit of energy km kilometer km2 square kilometer M million m3 cubic meter MW megawatt MC db moisture content dry basis mm millimeters t metric ton TOE metric ton of oil equivalent tpa metric tons per annum WF Woodfuel (fuelwood and charcoal)  EXChANCE RATES There has been a considerable devaluation of the kwacha during the project's lifetim.e. The following are the exchange rates for specific time periods: To November 1988 ZK 7.86 = US$1 December 1988 to June 1989 ZK10.00 = US$1 July 1989 ZK16.00 = US$1 Since July 1989 there were gradual unannounced devaluations. In October 1989 ZK18.50 = US$1 By February 1990 ZK24.00 = US$1 In April 1990 Window 1 ZK26.65 - US$1 Window 2 ZK40.00 - US$1 The shadow exchange rate used in this report is: ZK25.00 = US$1 ENERGY CONVERSION FACTORS Wood charcoal 31.00 GJ/Ton SI moisture content dry basis, (mcdb) 3% ash content and fully carbonized Firewood 16.00 GJ/Ton 15% moisture content dry basis, 1% ash Crop residues (Average) 13.70 GJ/Ton Average: 70% bagasse and 30% maize stalks Bagasse: 15% mcdb, 10% ash: 13.40 GJI/t. Maize stalks: 15% mcdb, 5% ash: 14.30 GJ/t. Coal 5% mcdb, 18% ash content 25.60 GJ/Ton Kerosene with a weight of 0.796 ton per m3 43.34 GJ/T n 34.50 GJ/m Electricity 3.60 TJ/GWh 3.60 GJ/MWh Ton of Oil Equivalent (TOE) 42.74 GJ 1 Petajoule (PJ) 23400 TOE 1 Exa-joule (EJ) = 1018 joules 1 Gigajoule (GJ) = 109 joules 1 Petajoule (PJ) = 1015 joules 1 Megajoule (MJ) = 106 joules 1 Terajoule (TJ) = 1012 joules 1 kilojoule (kJ) = 103 joules 1 Square kilometer 100 ha. (247 acres) 1 Cubic met r 35.3 cubic f 3et 1 Stacked m' (300 kgs wood bone dry (b.d.) 0.55 solid m 3 1 Solid m3 (55J kgs wood b.d.) 1.82 stacked m3 1 Cord (900 kgs wood b.d.) 3.00 stacked m All tons are metric measure of 1000 kgs.  TABLE OF CONTENITS Page No. Is IMTODWUCTION. d. ................as......*a............. . 1 * o o II. EXECUTIVE SUMMARY .... .... ...... ........c. 3 Economic Background.................................. 3 Energy Resources.......... ..........e....*. ......... 3 Woodfuel and Household Energy Issues................ 4 Study Findings. ...... ............*..... 4 Urban Household Energy Strategy..................... 8 Recommendations....... o .......................o.... 10 Biomass Managemente............................... 10 Charcoal Productiono............................... 12 Woodfuel Transportation........................... 13 Energy Conservation0........................... 13 Urban Substitution. ........*...e................... 13 Institutional Strengthening....................... 14 Project Proposals............ ......................* 14 III* BACKGROUND ........* -.e*o***o*oeo*oo**oe** 15 General D 15 The Country.................. ............ .........o 15 Population..........o.............................. 15 Economy..... .....o. *000***** .................. 16 Development Priorities............................ 18 Energy Situationo.................................... 18 SuPply ..................*000C 0*C.***0 *.0.0.......O 18 Energy Demand...................................... 19 Woodfuel and Household Energy Issues.............. 20 Project Implementation............................ 22 IV. SUPPLY OF ENERGY...................................... 24 1. TRADITIONAL FUELS....... ............. 24 A. BIOMASS RESOURCES ............................. 24 Introduction eoo*.oo****o.*.................0.O 24 Woodland Assessment in Areas Serving Urban Centers ....... ~ .0.0................................ 025 Measurement of Growing Stock and Annual Yield... 25 Resource Payments and Taxes..................... 30 Management of Woodfuel Areas.................... 32 Ron-woody Biomass..............*OS000.... 32 B. CHARCOAL PRODUCTION .................e.......... 34 Charcoal Production Techniques .................. 34 C: TRANSPORTATION AND DISTRIBUTION OF WOODFUELS.. 35  2. CONVENTIONAL FUELS ................... ........... 37 Electricity ....s, .........*............. .... ... ... 37 Production ........ *oo.o* ................. ....... 37 37 Cnupin......... ................... ................ 38 Petroleum Products..o d u c ts. .. . . . ..... .... 39 40 3. POTENTIAL SUPPLY OF ENERCY.................Y... 41 V. EMN 42 Household and Related Non-Household Demand***..***** 42 42 Economic and Socio-Demographic Aspects.ects....... 42 Energy Balance for Urban Households.... 43 Major Determinants of Energy Pattern te rn.......... 45 Cooking Practices and Eating Habitsb............... 48 Fuel Prices and Cooking Css t s 49 Introduction***o***.******ooeeo****oo*******oooo*o 49 Prices and Cooking Costs for Different Fuels..s... 51 Chrcah a rc***eoso oalo****ooe* 51 Electricity............ ; ... X................ 53 K veroseneooooo*****o#eeo**woo 56 Relative Costs of Cooking with Different Fuels...... 57 posts to Consumers.n................... .. . .s . 57 Relative Economic Costs.....o s ts........e....... 58 Conclusions*os*****o*oe*eo*eo*o 61 C h a r c o s l ~~~~~~~~~~61 Electricity...... r i ciot y ........ ............. 62 Keroseneooo*****ooeo*****teo 63 Coal........... ....... -......... -........... .... 63 VI. FUTURE DEMAND AND SUPPLY ..... U .PL........... 64 Energy Demand Forecasting for Urban Households.....s 64 Method and Assumptions............... .........o:: 64 65 Supply Constraints 68 Foreign Exchange..a ng.o *..* ......e. . .. 68 Transport Constraints 73 Organizational Constraints ........... ... . ........ 74 VII. STRATEGY AND RECOMMENDATIONS................ 76 Introduction ........^.............. 76 Urban Household Energy Strategy..................... 76 Recommendatiotsoatiooo.*oooo*ooo,,ooo*ooooo,o**.oons 78 Biomass Management......m 78 Charcoal Production..... ........... ....... ... 82 Energy Conservation..... ............. ........ 85 Woodfuel Transportation.e**o **......*.* * ******** 87 Substitution*ooo*oooo***oooooooooo*ooooooo*ooooo** 88  Strengthening of Institutions..................... 89 The Energy Department...... ..... 89 Central Statistical Office....................... 90 Zambia Electricity 8upply Corporation.... .e*.*.... 90 The Forestry Department...... ............. ...... 91 VIII. PROJECT PROPOSALS ... .......... ........... 93 Background ....****......oo..........o............oo.. 93 Supply of Traditional Puels......................... 93 Biomass Resources.............. 9.9.9.9 ....... .... 93 Charcoal Productiono......... *...................o 94 Transportation and Distribution.................... 94 Supply Constraints 99999909999990 ................ ... 95 Biomass ......... ................ ............. 95 End Use Efficiency. 99**999940.0*9999*9999*999 999 9999 96 Organizatioaal Constraints . 97 Project Proposals .9..o.o..........e*o.****.* 9o9909999 97 Referenceso....................... 9999.9999o99...... 98 TABLES 2.1 Zambia: 1988 Potential Annual Supply of Energy from Existing Systems with an Estimate Demand ..99099.... 5 2.2 Zambia: 1988 Estimated Urban Household Energy Use*.... 6 2.3 Estimated Economic Cost of Cooking with Different Fuels - March 1989 Prices............................ 6 2.4 The Estimated Consumption of Energy in 1988-2000 and the Foreign Exchange Cost of Providing this Energy...* 7 3.1 Sectoral Controbution to Gross Domestic Product 1977 Constant Prices................ 16 3.2 Energy Supply and Consumption by Energy Source in 1988 ......... 19 3.3 Final Energy Consumption by Sector in 1988............. 20 4.1 Extent of Eight Major Vegetation Types in Zambia*....,,. 24 4.2 Land Classification for the Biomass Catchment Areas.... 27 4.3 Natural Vegetation Clearance in the Biomass Catchment Areas ........ 28 4.4 Area, Standing Stock and Annual Increment of Unused Woodland in the Biomass Catchment Areas of the Copperbelt and Lusaka......................... 29 4.5 Zambia: 1987 Estimation of Crop Residues and Dung Productiono.....................9................o....... 33 4.6 Zambia: 1988 Installed Power Capacity and Estimated Firm Energy Capability ................... 0.0 38 4.7 Zambia: 1988 Potential Supply of Energy with an Estimate of Demando ........... oo***60**00*0*00*...... 41 5.1 Zambia: 1988 Energy Balance for Urban Householdso....... 44 5.2 Price of Different Fuels at three Specific Periodso..... 51 5.3 Costs to Users of Electric Cooking..................... 54 5.4 The Ratio Between Costs Paid by Consumers and Economic Costs for Electric Cooking.................. 56  5.5 Consumer Cooking Cost per Cigajoule with Different Fuels at three Specific Periods...................... 58 5.6 Estimated Economic Costs of Cooking with Different Fuels (March 1989 Prices) ....................... 59 5.7 The Share of Foreign exchange of the Cost of Cooking with Various Ful.. 60 5.8 Relative Economic Costs Paid by Consumers for Cooking with Different Ese l s 61 6.1 Forecast of Electrified Household in 1995 and 2000..... 65 6.2 Zambia 1988: Estimated U'rban Household Energy Con s u m p t i on.. ... .... . ..... .......... .. ......... ..... 67 6.3 Forecast of 1995 Urban Household Energy Consumption.... 67 6.4 Forecast of 2000 Urban Household Energy Consumption....* 68 6.5 Urban Households Total Energy Consumption 1988-2000 in Standard Energy Units............................. 68 6.6a The Estimated Consumption of Energy in 1988, 2000; 1988-2000 and the Foreign Exchange Cost of Providing this Energy: with No Stove and Woodfuel Transportation Initiatives................... ........ 69 6.6b The Estimated Consumption of Energy in 1988, 2000; 1988-2000 and the Foreign Exchange Cost of Providing this Energy: with Stove and Woodfuel Transportation Initiatives........................... 70 6.7 Foreign Exchange Cost per Unit of Energy for Different Energy Types in the Year 2000........................ 71 6.8 Cumulative Charcoal Saving and Saving by the Year 2000 for Various Efficiencies and Production of Improved Charcoal Stoveso............................. 73 8.1 Project Proposals.................................... .. 97 1. Woodland Assessment in Areas Serving Urban Centres ..... 99 2. Charcoal Production, Transportation and vistribution ......... ,. ~~109 3. Household Energy Demand ......................... ... .... 120 4. The Costs of Electric Cooking: Costs Paid by Consumers and the Financial and Economic Costs of Supply (March 1989 Prices)........................ 128 5. The Costs of Kerosene Cooking: Costs Paid by Consumers and the Financial and Economic Costs of Supply (March 1989 Prices)........................ 133 6. The Costs of Charcoal Cooking: Costs Paid by Consumers and the Financial and Economic Costs of Supply (March 1989 Prices)........................ 135 7. Foreign Exchange Costs........... ............ .......... 138 8. Improved Stove Program .....0. do.@............e..... 143 9. Project Proposals............................... ....... 146 NAP IBRD 16370 - ZAMBIA: Forest Estate, Urban Population Distribution in "Line of Rail" Districts  I. INTPODUCTION 1.1 This report outlines the first detailed study and comprehensive energy strategy for the urban household sector in Zambia. It identifies an urban household energy sector investment program for the period 1990- 1995, reflecting the current economic situation, the condition of the energy supply systems, the most pressing neLds of the consumers, the need for foreign exchange saving, the use of renewable indigenous resources, and the boosting of rural employment. The report also recommends a set of energy policies and technical assistance activities designed to facilitate the achievement of the urban household energy strategy's objectives. 1.2 This report is part of an overall energy sector strategy program undertaken by the Government of Zambia and the UNDP/World Bank, Energy Sector Management Assistance Program (ESMAP). Three previous studies have been produced namely The Energy Sector Strategy, Activity Completion Report, ACR No. 094/88, Power Subsector Efficiency Study, ACR No. 093/88, and Energy Sector Institutional Review, ACR No. 060/86. All these reports are related to the same issue, namely the preparation of a comprehensive energy strategy for Zambia. 1.3 This report draws on just over a year's field work in Zambia collecting information on urban household energy supply and demand. A number of surveys were undertaken to collect baseline data on biomass supply, charcoal production, transport and marketing, urban household energy demand, substitution possibilities and energy conservation. With the results of the surveys at hand a strategy was formulated, policy options outlined and an action plan proposed. The major part of the report was drafted in Zambia by a joint team of Zambian energy planners, biomass and charcoal experts and ESMAP staff. Further work was undertaken at the World Bank in Washingt'n, principally to condense the wealth of material generated into this report. The Zambian team members were drawn from the Department of Energy of the Ministry of Power, Transport and Communications, the University of Zambia, the Forestry Department of the Ministry of Land and Natural Resources, the Central Statistical Bureau, the Zambian Electricity Supply Company, and enumerators, supervisors, data entry people etc. from various agencies. There was also a project working group consisting of representatives of all institutions involved in urban household energy which advised the project team and helped develop policy recommendations. This group also provided a basis for future coordination of policy measures amongst interested parties. 1.4 The Zambian team was led by Mr. Dominic Mbewe, Director of the Department of Energy. Mr. Silvester Hibajene, a household and renewable energy specialist, frow the Departrment of Energy was seconded to the project for its lifetime and acted as project coordinator. Professor Emmanuel N. Chidumayo from the University of Zambia was the biomass specialist and coordinator of the .harcoal production study. The World  - 2 - ESMAP field manager was Dr. Axedine Ouerghi, Mr. Keith Openshaw was the task manager and Mr. Robert P. Taylor was the energy and substitution economist. Ms. Yeshimebet Confa (Secretary) was responsible for the word processing in Washington, D.C. 1.5 The team members wish to express their gratitude to the other team members such as supervisors, field assistants, enumerators, the charcoal production teams, data processors, secretaries and members of the working group without whom this study would not have been possible. A final thanks must be given to the householders, woodfuel traders aud transporters, food shop owners and charcoalers who gave of their time to answer questions and provide information about the production and consumption of energy.  - 3 - II, EXECUTIVE SUMMARY Economic Background 2.1 Copper mining has dominated the economy of Zambia for the last half century. This caused a large population shift from rural to urban areas and now about 40% of the population is urbanized (3.0 million), most of these people living along the line of rail between Lusaka and the Copperbelt. From 1975 there was a persistent decline in the world copper price, over 60% in real terms, and this was coupled with a one-third drop in output resulting in a substantial fall in foreign exchange earnings. 2.2 Over the last decade Gross Domestic Product (GDP) has been growing at a slower rate than population increase, thus the average per capita income has been declining and this has affected all sectors of the economy including the energy sector. The development priorities of the government are to reduce dependency on copper, give high priority to rural development and to promote growth from the country's own resources. Energy Resources 2.3 Zambia is well endowed with energy resources. Its woodlands have a standing stock of about 4.3 billion tons of wood (69,000 !.J) giving an annual sustainable production of about 130 million tons (2080 PJ). The hydropower potential is estimated to be 4000 MW, equivalent to about 84 PJ per year, assuming 16 hrs/day of production, and proven coal reserves exceed 30 million t (768 PJ). Petroleum products are the only imported energy forms which in 1986 amounted to some 0.55 million tons (24 PJ). 2.4 Total energy consumption in 1988 is approximately 5.13 million tons of oil equivalent (219 PJ) of which woodfuel accounted for 64% (fuelwood 38%, charcoal wood 26%); this is a fraction of indigenous woodland resources. Electricity accounts for 12%, petroleum products for 11%, coal for 71 and crop residues 6% of consumption. The rural and urban household sectors are the largest consumers of energy, accounting for nearly 601 of final consumption. Woodfuel meets about 89% of this demand, making woodfuel the dominant household energy fuel. The urban household sector is the third most important sector accounting for 15% of energy consumption. Rural households account for 43%, the copper mines 18%, industry 12X and agriculture, government and transport the remaining 12%.  - 4 - Woodfuel and Household Energy Issues 2.5 Desiite woodfuel being the dominant energy form and in spite of the household sector being the main end use sector, little attentioni has been paid to this fuel or this sector. This could be because the fuel is produced by the informal sector using national resources and it fulfills the short term requirements of the houseaold sector. It is a vital fuel for the urban poor and a source of revenue for the rural poor. The principal question is what is the appropriate role of woodfuel in meeting urban household energy needs over the long term? 2.6 Charcoal production puts pressure on wood resources close to large (urban) demand centers and it was thought that this use was leading to wholesale woodland destruction. Because of this, proposals have been made for peri-urban plantations to substitute other fuels for wood and to introduce conservation measures. However, there has been no real assessment of the supply/demand picture for urban areas. Hence the reason for the present study, which sets out to examine: (a) the biomass resource near urban centers and its use; (b) charcoal production, transport and marketing and its dynamics; (c) the energy demand patterns of urban households and the non- household energy consumption that affects the former; (d) the cost of alternative forms of houseiiild energy, both in economic and financial terms; (e) the costs and benefits to the country of various inter-fuel substitution possibilities; and (f) the cost and benefits of (woodfuel) conservation options. Study Findings 2.7 The study found that: (a) Zambia in general and the household sector in particular rely principally on an indigenous fuel that can meet demand nearly indefinitely if the resource base is protected and properly managed, and if substantial areas of woodlands are not cut down for agricultural development (Table 2.1) (b) The greatest depletion of woodland resources is caused by agricultutral clearing and not by cutting trees for fuelwood, poles and sawlogs. Most areas cleared for woodfuel production regenerate. However, if properly managed these areas would give a greater production of desired species in a shorter time period.  -5- (c) The per hectare standing stock and annual yield of cord wood on measured plots is higher and in some cases considerably higher than previous estimates. (d) Charcoal production employs about 41,000 people in its manufacture, a further 3500 in transportation and 1000 in marketing. Marketed fuelwood employs about 5000 in manufacture, distribution and trading, so over 50,000 people depend on woodfuel for their livelihood, the bulk being rurally based. (e) The transport and distribution of woodfuels are relatively inefficient due to poor organization of the producers, bad bush roads, (many of which are impassable during the rains) and unreliable vehicles. Training for producers and improvement in key bush roads could lead to a more reliable all year round supply and lower transport costs. (f) The shortages of charcoal supply during the rains lead to price increases, up to three times the normal price. These increases place a heavy burden on the low income households who spend about one fifth of their income on charcoal. (g) Charcoal is the dominant urban household fuel accounting for 58% of final energy demand, fuelwood is second at 26%, electricity accounts for 7%, crop residues 4% and kerosene 5% of demand. Cooking is the dominant end use (Table 2.2). Table 2.1: ZAMBIA: 1988 POTENTIAL ANNUAL SUPPLY OF ENERGY FROM EXISTING SYSTEMS WITH AN ESTIMATE OF DEMAND a/ i988 Ratio: Annual Diemand Supply to Energy type Units Quantity PJ's Pi'S Demand (a 1) Crop residues/Dung Mil. t. (air dry) 3.10 42.98 13.72 3,1 Wood Mil. t. (air dry) 130.00 2080.00 162.35 12.8 Coal Mill. ' 0.70 17.92 14.61 1,2 Petroleum products Mil. t. 1.10 47.01 24.25 1.9 Electricity GWh 9875.00 35.55 25.45 1.4 a/ Detailed explanation In Table 4.7  - 6 - Table 2.2: Zambia 1988: Estimated Urban Household Energy Use Fuel TOE (PJ) % End 'Jse TOE (PJ) % Charcoal 372,060 (15.90) 58 Cooking 316,570 (13.53) 50 Firewood 167,850 (7.17) 26 Water heating 100,000 (4.30) 16 Crop residues 21,490 (0.92) 4 Space heating 138,840 (5.93) 22 Electricity 44,920 (1.92) 7 Ironing 39,450 (1.69) 6 Kerosene 33,730 (1.44) 5 Lighting 27,090 (1.16) 4 Miscellaneous 17,600 (0.74) 2 Total 640,050 (27.35) 100 640,050 (27.35) 100 (h) The use of woodfuel for cooking and other uses of the stove such as water and space heating, account for nearly 80X of total urban household energy consumption. An improvement in this end use efficiency could have a significant positive Impact on the househo'd budget. 5i) One fallacy that should be cleared up is that electrification will avoid deforestation. Besides the fact that the use of wood for energy is not the main cause of deforestation, the study found that, in electrified houses, electricity is not the principal cooking fuel; it is mainly an enhancing and illuminating fuel not a substitution fuel for wood. 5j) In economic terms and especialLy foreign exchange terms, woodfuels are the cheapest fuels, even taking into account the relative inefficiency of the cooking stoves and the relative expensive distribution costs. (Table 2.3). Table 2.3: ESTIMATED ECONOMIC COST OF COOMING WITH DIFFERENT FUELS MARCH 1989 PRICES Kwacha per Gigajoule of Useful Energy Assumed value of foreign exchange ZK25/USS Cooking Economic Fuels efficiency (%) value (ZK) Charcoal 15 - 30 290 - 145 Kerosene 35 - 50 610 - 430 Electricity: Home with connection 60 - 75 285 - 230 Home requiring connection 60 - 75 460 - 370  -7- (k) The bulk of urban 'Iousehold electricity is used by the upper and middle income groups. The price of electricity paid by these groups is about half its economic cost. (1) Up to the year 2000, if there are successful initiatives in woodfuel distribution and conservation, th. saving in foreign exchange could be of the order of US$33 million. This is many times more than the foreign exchange required to undertake such initiatives. (Table 2.4). Table 2.4: THE ESTIMATED CONSUMPTION OF ENERGY IN 1988 - 2000; AND THE FOREIGN EXCHANGE COST Of PROVIDING THIS ENERGY a/ Improved stove and transportation initiatives (a) Not Undertaken (b) Undertaken Saving 1988-2000 1988-2000 1908 - 2000 Consumption FE Cost Consumption FE Cost Consumption FE Cost Fuel PJ Mkill USS s Pi 5 Mill USS % Pi Mill U5$ ElectrI- city 32.29 7 100 23 32.29 8 100 26 - - Kerosene 24.49 6 157 37 24.49 6 157 40 - - Charcoal 265.89 59 144 34 247.16 58 115 29 18.73 29 Fuelwood 112.26 25 24 6 104.59 25 20 5 7.67 4 Crop resid. 14.80 3 0 0 14.80 3 - - TOTAL 449.73 100 425 100 423.33 100 392 100 a/ The value of the dollar Is constant 1988 terms; for more details see Table 6.6. (m) Even though electricity and kerosene account for under 15Z of urban household energy demand, they require about 60% of the foreign exchange spent on urban energy production and distribution (Table 2.4). In spite of taking end use efficiency into consideration these fuels are between 1.4 and five times more expensive in terms of foreign exchange than charcoal. (n) There is a charge for wood raw material (stumpage fees) for trees on public lands and a tax on some forest products (removal fees) such as charcoal. The fees do not vary according to distance from the market. The stumpage fee 3n traded wood for fuel ranges from ZK13.9 to ZK1.7 per solid m , depending oi the unit of purchase, the average charge being ZK4.8 per m . The removal fee (tax) on charcoal is ZKO.5 per bag. These fees are less than 5% of the selling price of fuelwood and charcoal and are insufficient to induce private individuals to invest in tree planting.  - 8 - (o) The collection rate evea on the existing stumpage fees is poor. In 1987, fees and taxes on forest products from public lands amounted to ZK2.8 million. If fees and taxes could have been collected from charcoal and traded fuelwood supplying urban areas only, they would have brought in about ZK20 million from stumpage fees and ZK6 million in charcoal removal tax. (p) The collection rate is low because transport and fuel are lacking, there are poor incentives, inadequate equipment, poor pay and too few people in the field. The budget for the forest service in 1987 was ZK20 million; this has to increase to improve the collection of revenue. Given proper facilities, incentives and more realistic stumpage fees the income from stumpage should more than cover expenditure of all forest service operations. (q) There is a substantial trade in fuelwood and charcoal for the urban household sector. This is worth in the region of US$65 million (Kwacha 1300 million) per year at present. Very little of this money is captured by the growers of the resource. Yet if there is an equitable distribution of woodfuel revenues, there should be sufficient money to finance the forest service and to encourage private individuals to manage existing tree resources and to invest in tree planting. (r) The bulk of urban people will rely on woodfuel as their principal energy source for many years to come. This should be viewed as an opportunity for the governme:nt to improve its supply, year round availability, end use efficiency, relative price and thus its overall attractiveness as a fuel. Urban Household Energy Strategy 2.8 The proposed strategy follows directly from the above findings namely: (a) To ensure that the competing uses of land are assessed in economic and sustainable terms. There are enough areas of woodlands within Zambia both to meet the agricultural expansion plans and the requirements for tree products if the respective needs are properly assessed and adequately planned for by competent land use planners. (b) To ensure a sustainable supply of woodfuel by reserving sufficient areas of woodlands within economic transport distances of the demand centers and managing these resources properly. The btudy indicated that there are adequate areas of appropriate woodlands to meet future demand, especially urban demand, but only if they are properly managed and only if they  -9 - are not looked on as unlimited reserves for agricultural production. Trees should be considered renewable rather than mineable assets and their management undertaken jointly by the forest service and rural people. (c) To encourage private individuals mainly to manage existin, tree resources but also to plant trees for commercial purposes. The principal means of encouragement will be through the price mechanism for the wood raw material - that is, increasing the price of wood sufficiently to induce private individuals to grow and manage trees. The price of wood should also be such as to make the forest service self sufficient if efficiently organized. A second way to encourage people to plant and tend trees is with training and extension efforts. (d) To improve the collection of fees from the sale of tree products from public land; this could be done by providing adequate transport and through an incentive scheme with the collectors of the fees receiving a percentage of the income. (e) To uplift the status of the charcoal producers by recognizing their importance as a major energy producer, providing them with training, market intelligence, access to improved tools, and social services, encouraging them to organize themselves into groups to improve production and marketing of the product and giving them access to loans, etc. (f) Coupled with the above, woodfuel transport and distribution could be improved by improving key bush roads, better utilizing the existing transport fleet, and the establishment of charcoal stores in towns and on surfaced roads or at rail depots. (g) To develop and commercialize cheap, efficient, locally produced or assembled stoves, particularly charcoal and electric. In the case of charcoal stoves, the goal should be to increase the efficiency to at least 25% and for electric rings to lower the cost and make spare parts easily obtainable. (h) To increase the price of fuels to at least their economic cost and to ensure that this price is adjusted when necessarv to account for inflation and the economic value of foeeign exchange. (i) As with woodfuel, the metering, billing and cash collection of electricity supply is poor, particularly at the honsehold level. This could be improve, by providing incentives to meter readers, reducing illegal connections and improving payments. At the same time, the reliability of supply and voltage stability should be improved considerably.  - 10 - (j) To monitor the supply, demand and price of energy so that energy accounting, planning and development can be based on a sound footing. To do this the Department of Energy and other related bodies should be strengthened. Recommendations 2.9 The ten point proposal for Zambia's urban household energy strategy has been outlined above. Such a strategy should satisfy demand for energy at the least economic cost, in a way that is consistent with national development priorities using the available resources. 2.10 This strategy should bear in mind the principal constraint of limited investment resources, both domestic and external. Therefore, the energy strategy seeks to minimize investment requirements by emphasizing improvement in resource management and existing capacity utilization and efficiency. 2.11 To achieve this strategy, recommendations are made both on the supply and demand side and on the organization and strengthening of institutions. Because this study has shown that woodfuel is and will remain the most important household fuel and is the fuel with the least economic cost, most emphasis is placed on the growing, production, distribution and marketing of this renewable resource. Also because this resource is generally used in a very inefficient way, improvement of end- use efficiency must be given equal priority. 2.12 Appropriate fuel choice requires a sound pricing policy reflecting the costs to the nation, especially scarce foreign exchange. To undertake such policy initiatives will require trained manpower at all levels and a full commitment on behalf of government and industry. 2.13 The following recommendations, while listed separately, must be implemented together. Unless they are, a vital link in the chain will be missing. Biomass Management 2.14 Woodlands do and will supply the bulk of forest products to the people of Zambia and the best way to ensure their survival is by actively managing them. Therefore, the government should establish a Miombo Woodland Monitoring and Management Unit within the Forestry Department, MLNR, to help improve the management of woodlands and elevate their importance. Sufficient areas of woodlands should be reserved to ensure a perpetual supply of woody material especially fuel, for the country. 2.15 Woodland clearing for agriculture is the principal cause of deforestation. Much of the wood resource cleared in this process is burnt in situ. The government should include long term land use planning  - 11 - in the remit of the land use planning division of the Ministry of Agriculture and Co-operatives to ensure that woodlands are put to their most sustainable and economic use. This division should ensure, where possible, the timely use of trees on land to be cleared. 2.16 The present payment system for wood raw material from public lands is weak and needs improving by putting more trained people in the field with adequate resources and sufficient incentives. This is a first priority, becaase less than ten percent of existing fees are collected and retired to government. 2.17 However, there is a strong case for increasing the resource charge (stumpage fee) for government owned wood raw material to about ten percent of product price to cover the economic cost of growing woodland trees. This should be sufficient to pay for proper management and to finance an efficient forest service. Such fees should set a standard for charges to be levied by the private sector thus encouraging private individuals to plant and/or tend trees. A review of the fee structure should be undertaken immediately and its imposition and adjustment be divorced from government control. At present the Forestry Department (FD) has to seek cabinet approval for fee changes and this may take up to seven years. The FD should be able to increase fees without cabinet approval and be governed by market forces such as the price of alternative fuels. The strengthening of the fee collection system is paramount in ensuring that the forest service will have sufficient funds to cover its expenses. Coupled to this, is the proposal to establish a revolving fund from fee collection which will be kept by the forest service to finance itself. 2.18 The tasks of such a Miombo Woodland Monitoring and Management Unit would be to: (a) Check and map all areas of woodlands noting their present condition and possible future status; (b) In coordination with the Land Use Planning Section of the Ministry of Agriculture, list in order of priority areas that should be reserved for water catchment, wood and other resources production, species protection, agricultural production, etc.; (c) Establish permanent and temporary management plots to measure and monitor tree growth and woodland production; (d) Draw up management plans for the areas that will remain under woodlands; (e) Meet with local people and decide who will manage the woodlands;  - 12 - (f) Organise training courses and train extension workers from forestry a.i agriculture to teach woodland management; (g) Recruit and train people to undertake the various tasks; (h) Draw up plans for the woodland resources that are going to be cleared owing to a change of land use; (i) Establish stumpage fees that are to be charged by the forest service. Ideally these fees should decrease with increasing distance from the market and vary according to end use. Such fees should set a standard for charges to be levied by private individuals on trees they manage; (j) Establish sets of rules concerning resource payments, rewards and penalties; (k) Start pilot projects to test management practices and fee collection systems; (g) Ensure that there are sufficient resources available to undertake the tasks; (m) Modify management and fee collection schemes as a result of pilot study experiences; and (n) Put into operation the modified schemes on areas designated for management. CharcoaL Production 2.19 Charcoal is the second largest source of energy supply in Zambia today, firewood being the first. These two woodfuels are obtained from indigenous resources which if properly managed, can last indefinitely. It is the government's interest to encourage the use of charcoal, for in economic terms it is the cheapest purchased urban household fuel. It also requires very little foreign exchange to market it and provides considerable rural employment. 2.20 First and foremost the status of the charcoal producers should be improved. Basic services should be provided for them, and they should receive courses and on-the-job training to improve their skills, both on the production side and in the management of the resource. 2.21 Also, because shortages occur every year during tie rainy season, strategic supplies should be built up by traders and producers to counter these shortages; again, access roads could and should be improved to mitigate these shortages and to reduce transport costs. The abolishing of gazetted charcoal prices has removed one large obstacle to building up stocks.  - 13 - 2.22 The government should encourage the charcoal producers to form active producer organizations so that it can channel help through these organizations. The proposed Miombo Monitoring and Management Unit under the FD, MLNR, should have a charcoal production section to provide training in woodland management, the use and maintenance of correct tools and ways of improving charcoal production, transport and marketing. Charcoal production is a large business (currently about 16 million bags are produced annually) so this industry, by paying a realistic fee for the wood raw material could provide a considerable amount of revenue to the forest service, the principal managers of the wood resource, as well as encouraging villages to manage woodlands and plant trees. Woodfuel Transportation 2.23 The transportation of woodfuel and in particular charcoal is relatively disorganized and expensive, because of poor bush roads, dilapidated vehicles and poor organization. T,le government should improve selected bush roads, help charcoal associations establish stores on accessible roads, look into ways of reducing transport costs and encourage competition between all transport sectors. In order to pay for these services, the removal fee 1/ on charcoal should be enforced and possibly revised and a similar fee should be imposed for firewood. Energy Conservation 2.24 Cooking is the principal end-use of household energy and together with water heating on the stove, accounts for about 66% of household energy use. The efficiency of charcoal and firewood stoves are low and kerosene moderately low. The cost of kerosene and in particular electric stoves are high. More efficient woodfuel stoves are commercially produced in other countries, as are cheaper electrical units. The greatest saving of energy should result from concentrating on this end use. Therefore a stove unit under the National Council for Scientific Research should be established in cooperation with artisans and industry, to design and market improved stoves, (especially fuelwood and charcoal stoves), to assist industry in production techniques, and to monitor the industry to ensure that quality is maintained. Urban Substitution 2.25 In terms of the overall costs to the country, charcoal is the most economic fuel, but for those who can afford it, electricity may be preferred because of convenience. Where families already have electricity, the use of inexpensive hot plates will cost the nation about 1/ The removal fee which at present is ZK 0.50 per bag is a tax on charcoal and should be paid before charcoal is removed from the woodlands. This tax is in addition to the charge for the wood raw material (stumpage fee).  - 14 - the same as cooking with charcoal. However, the economic costs of cooking with electricity are higher than the consumer now pays. Thus people should not be prevented from substituting a more convenient fuel such as electricity for a less convenient fuel such as charcoal, but they should pay the full economic cost for the fuel. Therefore, the substitution of electricity (and kerosene) for charcoal should not be artificially encouraged but cheaper electrical hot plates and kerosene stoves should be an aim of the stove unit. The price of kerosene has now been raised to cover its economic cost and the same should happen to electricity. Institutional Strengthening 2.26 The Energy Department has built up expertise and experience in survey work, energy accounting, monitoring of energy prices and energy flows. However, it needs continued support to enable it to carry on with this work and supply support to other government departments, Zambia Electricity Supply Corporation (ZESCO), the coal mines, and the refinery on matters concerning energy policy and planning. Therefore, the Department should be strengthened by recruiting more professional staff. It should undertake surveys to monitor the supply, demand and prices of fuels, chair an Energy Planning Committee, provide training courses to staff and other interested parties and liaise with the Southern Africa Development Coordination Conference (SADCC) Energy and Forestry Units. Not only should the Energy Department be strengthened, but other institutions such as the Forestry Department, the Central Statistical Office (CSO) and ZESCO must be strengthened as well. ZESCO needs to improve the reliability and stability of supply and its metering, billing and collection. The Forestry Department has to improve its woodland management and collection of resource fees and the CSO should improve its data collection and analysis capabilities. Project Proposals 2.27 In order to undertake the above strategy and recommendations, the Government of Zambia will need help. A list of project proposals has been drawn up which are described in Annex 9. To the extent possible, this is a package of pilot projects which should be pursued concurrently, as the various proposals are interrelated. Preliminary estimates of costs have been prepared for all but one of the proposals and are as follows:  - 15 - III. BACKGROUND General Description The Country 3.1 Zambia is a landlocked country in southern central Africa and shares common borders with Angola, Botswana, Malawi, Mozambique, NaTibia, Tanzania, Zaire and Zimbabwe. The total area is about 753,000 km most of which is high plateau ranging in altitude from 1,000 to 1,500 meters above sea level. 3.2 The country lies between 8