_^ Q w . _ _~~~~~~~ '9X ' '..E Z' 0 > . . X o.-~~~ S;f1 I .' Q r ................ " q5 >0) 8 q .'.ge~~~ ¾. 0 - * ,'>f .1 0f ., .. 4 . a , >>2, * t ff~ w *~I JOINT DNDP / WORLD vANK ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAMME (ESMAP) PURPOSE The Joint UNDPlWorld Bank Energy Sector Management Assistance Programme (ESMAP) was launched in 1983 to complement the Energy Assessment Programme, established three years earlier. ESMAP's original purpose was to implement key recommendations of the Energy Assessment reports and ensure that proposed investments in the energy sector represented the most efficient use of scarce domestic and external resources. In 1990, an international Commission addressed ESMAP's role for the 1990s and, noting the vital role of adequate and affordable energy in economic growth, concluded that the Programme should intensify its efforts to assist developing countries to manage their energy sectors more effectively. The Commission also recommended that ESMAP concentrate on making long-term efforts in a smaller number of countries. The Commission's report was endorsed at ESMAP's November 1990 Annual Meeting and prompted an extensive reorganization and reorientation of the Programme. Today, ESMAP is conducting Energy Assessments, performing preinvestment and prefeasibility work, and providing institutional and policy advice in selected developing countries. Through these efforts, ESMAP aims to assist governments, donors, and potential investors in identifying, funding, and implementing economically and envir3nmentally sound energy strategies. GOVERNANCE AND OPERATIONS ESMAP is governed by a Consultative Group (ESMAP CG), composed of representatives of the UNDP and World Bank, the governments and institutions providing financial support, and representatives of the recipients of ESMAP's assistance. The ESMAP CG is chaired by the World Bank's Vice President, Finance and Private Sector Development, and advised by a Technical Advisory Group (TAG) of independent energy experts that reviews the Programme's strategic agenda, its work program, and other issues. ESMAP is staffed by a cadre of engineers, energy planners and economists from the Industry and Energy Department of the World Bank. The Director of this Department is also the Manager of ESMAP, responsible for administering the Programme. FUNDING ESMAP is a cooperative effort supported by the World Bank, UNDP and other United Nations agencies, the European Community, Organization of American States (OAS), Latin American Energy Organization (OLADE), and countries including Australia, Belgium, Canada, Denmark, Germany, Finland, France, Iceland, Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Sweden, Switzerland, the United Kingdom, and the United States. FURTHER INFORMATION For further information or copies of completed ESMAP reports, contact: ESMAP c/o Industry and Energy Department The World Bank 1818 H Street N.W. Washington, D.C. 20433 U.S.A. Vietnam Rural and Household Energy Issues and Options January 1994 Abbreviations and Acronyms ESCAP Economic and Social Cozmission for Asia and the Pacific (UN) EHV Exta High Voltage ESMAP Enagy Sector M Assisance Program FAO Food and Agrculture Ornizaion (UN) GDP Gross Domestc Product HCMC Ho Chi Miuh City LPG Liqueod Perolem Gas LSS Liing Standas Survey LV Low Voltg LRMC Log Run Margnl Cost MV Medium Volta4 MVAR Megavolt ampera rtve NRECA Nadonal Rumal Eleci Coopertive Association ODA Ovesaa Devopment Aid PCI Power Company 1 PC2 Power Company 2 .C3 Por Company 3 RE Rurl Eectrificati RWEDP Regional Wood Energy Developmntu Progrm SIDA Swedislh ntraiona Devloment Agec TFAP Tropical Forety Acto Program UNCDF Unied Naons Capital D eveopm Fund UNDP United Nations Devdopment Progam USAID United Staes Age for Iternation Dveopment VBA Vietm Bank of APrulu WFP World Food Progrm Currency Equivalents Ihe Vietnamese currency is the Dong. The exchange rate used in this i:port is US$1 = 10,000 Dong. Weights and Measures Gj Gigajo ile (109 joules) GWh Gigawatt-hour (1,000,000 kilowatt-hours) ha hectare kgoe kllogram of oil equivalent kIOE thousand tons of oil equivalent kV Kilovolt (1,000 volts (V)) kVA Kilovolt-ampere (1,000 volt-amperes (VA)) kW kllowatt kWh kilowatt-hour (1,000 watt-hours) I liter m meter (39.37 inches (in)) MW Megawatt (1OOO kdlowatts (kW) =1 million Watts) MWh Meawatt-hour (1,000 kilowatt-hours) m3 Cubic meter (1.31 cubic years = 35.35 cubic feet) MJ Megajoule (106 joles) mtoe million tons of oil equivalent MW Megawatt t Ton (1,000 kilograms (kg) - 2,200 lbs) IPA tons per annum W Watt Table of Contents FOREWORD EXECUTIVESU M M.ARY ...................................................................... i I ntrokdu cti on ....................................... l4Fue Iad and te Populadon .......................................................I Changing Pamterns xnerg DIemand ...........................2 ......2 The Household Sector. Ulan and Rual GrowthTrends ............. ........4 EL HOUSEHOLD ENERGY DEMAND) PATlI SER .S...... .................. 6 I n tro d u cti o n ¢ ~~~~~~~~~~~~... 6 IntoduMcan age......t.wihl.p . .ed.CookSteP. ..................... 11 "xtngReidencea Sector.Energy.Demand.................................... 137 ;t;.tcY Imlzplicatlionls ofl3Hosedhold EiberqgyTlrran sition ....s.................... 13 mlU ENIERGY FROBI 4S IN TlHE RED) RIVRM DELTA ...... *..... ............... 15 Introduction ........o ...o................... 15 Patterns of Fuel Use and Energy Expenditure................................... 15 Issues Rlteud to Extendsive Uws of Ag Reddues .20 IV. ISSJES IN RIURAi3L ERGY SIUPPL'Y . 3.................................... Introduction........................................................................... 23 Issues Related E n e rnjo Spl Oations............................. ..... 23 'V~~~~~~~~~~~~~~~~2 'Q,nstemr IR:aints toRu:hAnrEletrutSpply optio n 3....I...........................37 RURti o Plannin .............................................. .... 35. 40 Establishing A famework for Rural E.lectrifcation..43 VL CONCLUIONS AND REabMEAND AIIONS ..................47 Rural Electriftcation ..................................49 Hoselituti Eonal rradItional Fuels.......................... . ANNEXES I. IDesfioniwls ofS Uriban anld IRur ........................................ S53 IL Enei Taxes and Subsidies ........................................................... 55 11. Previous Household Eneg Studis: T heBasis for Cuirent Policy ............. 58 - 2 - IV. 1992 Survey of Households in the, Red Rb'r Delta ................................. 60 V 1993 Living Standa ds Survey: Fuel Choice and Expendin re ..................... 65 'VI Estimates of Residential Fuel Consumption ........................................... 68 VII Estimates of Land Use and Biomass Supply ...................................... 70 VmI Energy Issues in Rurl Industry ....................................................... 76 IX. Da River Wate Catchment Area P roject ............ 78 X. Participants in Rural Electrification Process ...... 81 XI. Comparative Effiencies of Vietnamese and currently installed Chinese cxnnaers004. ......... 8 2 XH3C. Ecdity Tariffr ...................................... 83 X iII Regionalos f o r Rnfo Prntects ......................... 84 MAP IBRD 251 47 Administrative Map of Vietnam, August 1993 FOREWORD This report is one of the outputs of a technical assistance project in Vietnam executed by the joint World Bank1UNDP Energy Sector Management Programme (ESMAP) and financed by tlie Swedish lnteatonal Development Authorty (SIDA). Aside from eamining in greater depth rural and household energy issues to complement the World Bans Energy Sector nestment and Policy Review, the projeet also conducted two trainh g activities for local energy and power sector planner, one on the use of the WASP model and the other on oil and gAs reserve evaluaton and management. A survey of household energy consumption in some parts )f the Red River Delta as well as a survey of energy prices in Hanoi, Danang and Ho Chi Mih City we executed jointly with staff of the Energy nstitte in mid-1992, enabling hands- training in energ survey design and methods. Finally, the project supported the travel to Washington of three semor Govrnuent staff to participate in the review of the sector report drat The study benefited immensely from the support of the Energy Institute, who provided valuable background materials and general assistance dunng the course of the study. Aside from Dr. Iran Quoc Cuon& Director, Eurgy Istitute staff who provided technical ce'itributions icluded First Deputy Director Dang Ngoc Tung, Dr. Phan Van Thah, Mr. Nguyen Duy Thong and Mr. Vu Van Thai. The World BanIc/ESMAP team consisted of Ernesto Terado (task manager), Noureddine Berrah, Winston Hay and Fredric Jouve (rural electrification); Paul Ryan, Keith Openshaw, Kevin Fitzgerald (household energy and traditional fuels), Voravate Tuntivate (survey metodlogy), Michel Del Buono and Jakob Grosen (macroeconomic issues). Tam Quan Le also contributed to the rural electrification analysis. The final report was written by Emesto Terrado, Kevin Fitzgerald, Keith Opensbaw and Wnston Hay. EXECUTIVE SUMMARY 1. VietWam's transfornuiion to a market-orientd economy has slowly improved macroeconomic conditions and achieved a certain degree of economic stability in the country. To sustain economic growth, the recendy completed World Bank rvw of Vietnams energy sector has identified key policy reforms and investments that need to be made in the oil and gas, coal and electicity subsectors. Issues related to hhold enery consumption and traditional fels were fiond to be much barder to analyze because of the lack of reliable data, the dymic nature of household energy emand and the fact that the issues stae not only ene but agriculture, forestry and enwomnent, as well. Neverdteless, there is no question that they deserve equal attention because of the stridkng dominance of household demand and biomass fuel supplies in the overal energy balaume, a csequenc of te still highly rual nature of thi emy. 2. The principal objectve of thepresent study is to examune i greater detail issues related to traditional fuels, mral electrification and energy consumption pattems in bouseholds and mral industries and, as appropriate, to provide the Government with specific on policies, progms and oder i vnions dtat could edfctely address them. HOOUSEHOLD ENERGYDE:lAD PA TT ER NS 3. Due to its geogaphy and history, Vietnam comprises divere living envronments which differ substantially with respect to agro-ecological conditios, resource endowments and socio- ecomomic strucures. Consequently, rural and residential energy usage pattes differ substantially across agro-ecological zones. Table 1 below, prepared from prelhmary rers of the 1993 Living Standars Survey, pernits usefil analysis of the distinct pattems of enery consumption between urban and rural areu of the various ag-ecological regions: Table 1. VietnIm 1992iay Cooking Fudel), Electrificatin ates and Engy ires (%) )ural Urban AgroeoloPaRgon North Ri Hano Centrat Me North R HaOi Cal Me Ho Rie Avg O2) Rive ko Chi De& Del Dela Ddea Mlnh Pimary Cooking Fuel Leaves, Straw, etc. 49.1 98.5 70.0 60.2 7.8 17.7 3.3 17.7 Wood 49.7 1.0 8.7 39.8 90.7 51.0 38.3 12.5 51.0 98.4 30.2 Charcoal 1.0 2.1 13.5 40.6 Coal (3) 1.2 0.5 20.7 25.0 55.0 53.1 13.6 Kerosene 0.5 4.2 3.3 15.6 4.2 28.1 Electricity 0.7 18.8 1.6 1.0 Electic Connection 36A 72.2 95.3 21A 16.6 89.6 100.0 100 89.6 67.7 100 Enery Expeditures (- _Total Budget 2.2 3.5 5.6 3.1 2.7 10.0 11.2 6.9 10.0 4A 11.0 Sou s: Preliminary returns from 1993 Living Standards Survey. (I nhis only provides an indication of Primwy Cooking Fel at the time of th survey. It do not give infomation on the importance of other fuels. For example, in rual areas except the Mekong Delta, leaves and straw are given as the primary fuels but leaves and straw may be nearly as important in most of these areas, and more so just before havest when crop residues are scarce. This could explain why crop residues appear to be so dominant in the preliinay returns of the Living Standards Swvey. It is possible that the fmnal analysis of the Survey may yield a somewhat different picture. Regional Differences 4. Rural Household Fuel Usage. Reflecting the degree of stress placed on the agiiculural and forest resource bases across the country, the data indicate that rural households use leaves, grass and crop residues as the prmaiy cooking fuel in all regions except the Mekong Delta. Shortages of immediately accessible fuelwood are prevalent for rural people in the North and cental regions, and especially in the Red River Delta. Only in the North does wood play an equal role to forms of biomass lower on the fuel ladder. In a notable excep-ion, rural cooking fuel usage patters in the Mekong Delta are domirated by f-elwood. Tlis result appears to indicate that there is no problem with wood supply in the Mekong Delta, a finding supportcd by field visits to rural households in the area. S. Data gathered in this study seem to indicate that substantially more rral households are comected to electric ervice than esimated by official figures, up to about 35 percent nationwide as opposed to the 14 per uiiuiai esimate. This discrepancy is probably due a gross underestbmaton of multiple coimections in the official tally and diffeet definitions ustd for "rural" and "urban". 6. Urban Household Fuel Usage. The transition from traditional rural fuels to coventional fuels as a function of urban living conditions can be seen clearly in Table 1. Though some urban households still use sawdr.s, husk or agricultural residues as their principal fuel in the centmal (and possibly north) provincial urban centers, the bulk of cooking srices are provided by fuelwood. Perhaps a reflection of an abundant biomass resource endowment, wood is aLmost universally chosen as the pnmary cooking fuel in the provincial urban ce4ters of the Mekong Delta. The transion into coal in the north and charcoal in cetal tonsas t cleary evident In urban areas of the Red River Delta outside of Hanoi, wood is still a major fuel, but has been displaced by coal as the prinay cooking fuel of most households. Traditional fuels have been alnost entirely displaced in Hanoi by coal, kerose and, notably, electricity. 7. Electricity was the major cooking fuel in Hanoi city in 1989. Tbis is not surprising given universal access to electricity, the convenience of cooking with electricity, and the low electricity tafiffi at the time. Presently, coal is the dwapest cookinj fuel and appears to be making a major penetration in the residential sector market in Hanoi. Most bousehold coal in Hanoi is consumed as briquettes and coal patties. In Danang city, fuelwood is the dominant household fuel marketed. Mot of the fuelwood for sale in the city comes by boat through a lage wholesale marker at the port. According to the traders, roughly 70 percent of the wood comes from plantations with the rest coming from natual standing forests. 8. Not unlike their rual neighbors, over 60 percent of urban households in the Mekong Delta collect fuelwood . This indicates that urban households throughout the delta are at an early stage in the urban fuel transition: biomass fuels are plentiful and immediately accessible for collection. The woodfuels trade to supply urban households in provincial towns of the Mekong Delts does not appear to be nearly as substantial as the woodfuels trade to meet urban demand in the Red River Delta, central regions, and in Ho Chi Minh City where over 80 percent of urban households that use fuelwood purchase it. Urban households in the Mekong Delta appear to spend little on fuels, largely a benefit they obtain by collecting woodfuels from the accessible woody biomass resource base. Thi economic benefit is appropriate as long as this usage pattem is not depleting the resource base. Though the impact of urban fuelwood use in the Mekong Delta cannot be determined from existing data, the evidence that most households gaher their fuelwood is no cause iii for alarm. Conversely, tle impact on the resource base of the substantial trade in fuelwood and charcoal for the metropolitan area of Ho Chi Minh City shoild be investigated. 9. In Ho Chi Minh Cty, the tsition towards modemi fuels is relively moro advanced than in other urban areas of the Mekong Delta. Unlike the situation in the North, coal plays little role as a household fuel in the south. Purthennore, crop residues are only used to a limited extent. Most households in HCMC have access to electricity. For cooking, households use fuelwood and charcoal, kerosene, some electricity, and LPG has recently been introduced. Many households have installed cooldng facilities for different fuels which gives them the option to choose between, for example, electricity, botded gas or fuelwood, depding on relative prices and availability. I). HCMC has an exteitsive woodfuels supply system, run entirely by private business. The traders report that for many years the ormary fuelwood supply sources were natural forests of neighboring provinces Dong Nai, Tay Ninh, and Song Be. Now much of this resource has been depleted and most wood comes from Thuan Jai and Lam Dong, about 150 Iom from te city, and fom other provmces even further distnt in the Northeast of the Mekong Delta Region. Various gades of charcoal are produced in Can Ro Duyen Hai District only 30 km from the city, in the mangrove areas of the Mekong Delta further south, and in the neighboring provinces of Thuan Hai, Lam Dong, and other areas in the Southern Hi,dghlns 150 Ian and further from the city. The coal market in the city is .small. It is not possible with edsting information to establish a causal .elationship between woodfuels use in Ho Cli Minh City and forest degrdation in neighboring provies. However, the evidence reported by fuelwood traFds indicates that the forest resource in the Northast of the Mekong Delta Region is being mined. ENERGYPROBLEMS THERED RWIR DELTA 11. The Red River Deha is the most iensely pouated and intensively cultivated region of Vietnam. The widespread use of rice straw for fuel has caused concern that continued practice nay lead to severe depletion of soil nutrients. In addition, there is serious concernt that dmnd for wood by rural households in small towns in the delta may be mining the modest forest resouces in the immediate area and neighboring North Midlands provinces. Patterns of Fuel Use and Energy Expenditures 12. Figure 1, obtned from results of special surveys conducted by this study in 12 towns and 4 villages in the delta, shows the average anount of various fuels ccnsumed by each major end-use in sample households in delta villages and toWns. Cooking end-uses dominate in village housebolds, where straw and stalks are the major fiue, and in small town households, where fuelwood and coal are used in roughly equal proportion. In village households, the practice of boiling plant stalks, other residues, and rice as fodder for pigs uses almost as much energy as cooking household meals. Household enterprises are the second major end-use of enery in small town households - a demand met mosty by coal. 13. The share of cookdng energy delivered to the pan by each fuel for householdb in villages and in small towns is displayed in Figure 2. The transition from traditional to comventional fuels as a function of mcome and location is eident. Over oneoalf of the cookig energy needs of Willage households is met by rice straw and other agricual residues, but coal is making major inroads in hiuger income village hoLieholds. Fuelwood which is partly gaffiered appears to be a transition fuel between rice straw which is entirely gathered and coal wbich is entirely purchased. Of the 60 iv percent of village households that use fuelwood, 40 percent gather it themselves and over half of those who gather flielwood obtain it from their own land or common land very close to home. Households in small towns purchase almost zll of their fuel. Rice stamw is a significant cooking fuel only in the poorest households. Coal and purchased wood provide the bulk of cooking services in small towns. Even electicity has born to be used for boiling water in electric kettles and cooking on hot plates in walthier town households. Figune 1. Red River Delta: PFtel Use by End-Use (koecapmonth) Villages Small Towns 7 1 A . cooking pig food fro lightingbusinoss cooking pig food fire lightingbusiness starting starting U straw & stalks U hflwood E coal El kerosene a eloctricity Source: 1992 Rural Energy Surve in the Red River Delta. 14. Fron the survey results, the end-use costs of purchased cooking fuels in villages and towns of the Red Rhvr Delta were estim and are presented in Table 2. Table 2. End-Use Prices of Cooking Fuels Priem (Do(iveredMJ Village Town Coal 26 33 Wood 77 99 Krosene 18S 177 Electrity 236 229 Source: 1992 Rural Eneir Suvey in the Red River Delta. Coal is substantially cheaper tha any other purchased fuel on an end-ue basis: 1/3 the cost of wod; 1/7 the cost of kerosene; and 1/9 the cost of electricity. With hese eadsfing fuel prices, it is not sutprising that coal has displaced fuelwood as the second most important cookmng fuel in Willagc and is the dommant cookig fuel in small towns where almost all fuels are purchased. The rively high prie of wood reflects its scarcity and indicates that hes small towns are weJl advanced in the transition to convenonal fuels. If ftis indication is correct, the she of end-use cookig services provied by coal can be acpecte to increase as wood becoms incrasgly scarce and incomes rise, perdaps even displacing crop residues as the most important cookig fuel v for village households. At existing prices, neither kerosene nor electricity can be expected to be adopted as important fuel for cooking at any time in the near future in the delta. Figure 2. Red River Delta: Fuel Shares of Delivered Cooking Energy by Income Quintile Vages SnImlToiM 100%/* .m: Or w Owmdlhghc bw veddtfi*-ig kcmsene .--i. m dcDiid moal 8 ftiheood U stiuw low lvw-niddlehigh- high low lowi-niddl6high- hg Did aid nid Mid- Source: 1992 Rural Energy Survey in the ed River Delta. Extensive Use of Agricultural Residues 15. Indicative estimates of fuel use by rural households in the Red River Delta implied by the survey show that only 40 percent of total annual rice straw production is being used as a fuel in household stoves. Far from placing excessive demands on the agricultural resource base, this pattern of usage may be an integral component of a sustainable production relationship that has been in practice for centuries in the Red River Delta. Anecdotal evidence indicates that rice straw has been used as a fuel in nrual homes of the Red River Delta for many centuries and that much of the ash is returned to the field as a fertilizer. Hence, it appears that at the implied levels of usage, crop residues are supplied on a sustainable basis and provide coolkng services to households that would otherwise require a substitute fuel. 16. While the above discussion may allay concern over depletion of paddy soils due to the use of rice straw as a household fuel, the analysis indicates that concern over depletion of the modest forest resources of the delta and neighboring North Midlands provinces may be warnted. Estimates of fuelwood consumption in urban and rual households of the Red River Delta substantally exceed estimates of annual woody biomass yield in the delta and North Midlands combined (See Chapter 4, Table 4.4). vi ISSUES INRUURA L ENERGYSUPPLY Woodfuel Supply: Review of the Data 17. On the basis of previous work, the present study made estfimates of the growing stock and yield of woody biomass on all types of land formations in the country.I These esfimates, sumnmaized in Table 3 below, show that nearly 85 percmt of the growing stock and 50 percent of the annual yield originate in the natural forests. 18. Tne supply sources for urban households and the non-household sectors are medium diameter trees, logging waste and wood industry residues which mainly come from the forests and plantations not more than 100 kilometers from the demand centers. It is estimated that commercial or traded woodfuel accounts for about one-tird of wood enery demand, but it is concentrated in small supply zones which may be being over-cut. Table 3. Vieta Estimated Growin Stock and Amual Yield for A.ove Grond Woody Biomass Ara WoodfbrFue&vdand st amualyeld Loand tj (000 ha) Lo tonsL (00 town) Agrltrl inad 6,016 ll,S62 1,544 Natural forest 8,687 465,384 18,616 Planations 628 16,157 4,039 Deaded for4st 9,750 36,858 9,214 Miscollaneous 6,634 18,955 4,739 Urban &Roads 1,326 1,894 190 Total 33,041 550,809 38,342 *oiu: Misin Estimates. Deoresttion Issues 19. Over the last 50 years the area of natual forest has been reduced by more than thirteen milion hecares, from 22 million ba. to 8.7 million ba. In the same period, 600,000 ba. of plantaio bave bee established, bringing the net loss of forest lands to nearly thirteen million hectares. If it is assumed that defoation is confined to the loss of S million hectares over the last balf century, then the cause of this debore on could be attdbuted to agricultual clearing, for the population has growm by 50 million during that period and each person consmes crops from at about 0.25 ha. to survive. Again, many areas of firest were affected by the spraying of herbicides during the last war in the 1960s and 1970s and many are recorded as still being steile. It is possible that some of these lands and others that may have been classifsed as degraded forest land bave sufficiently recovred to be now classified as forests. Clarification of these issues is required for bere an acrate estimation of wood supplies can be made. 20. The annual susinable yields of woody biomass, crop residues and other fonns of biomass in each regon of Vietnam were esimated for this study (Annex VI[). These supply esimates are cnpared against existing regional consumption patterns (esimated in Annex VI). lTe mults (see Chapter 4, Table 4.4) indicate that for the country as a whole, sustainable supply appears to be in I See Annex VII for a miew of pris estimates and the assumptions used her vii excess of demand. Howevr, the North Midlan and the Red River Delta regions may have consideable deficits. It is in these northerm regions wher an invetoy of tree resource is most urgently required, coupled with a demand survey. Also, there are areas in te Northern Highland region where the forest capital is probably being extracted, such as in the Hoa Bih cachmt area that supplies wood to Hanoi and Vandien. In the souterm regions, the critical areas where the tree capital is most under stress are the Mekong Delta and norteast of the Melkg Delta. Areas in the Mekong Delta, particularly te coasl mangrve and Melaleuca fores are being harvested and are possibly being over-cut to meet urban and export pulpwood demand. 21. The woody biomass imbalance indicated in Table 4.4 for the Mekong Delta is strildng. Given that wood is the most common cooking fuel in rumal and urban areas throughout the delta and that most nurl households gather their wood, it may be tbatinhe Mekong Delta and in other regions, there are considerably more trees outside of the forest than has been assumed in te estites used here. Assessing the Impact of Plantation Prog.ams 22. Vietnam has had a very ambitious plaation program nce rew-unification of the country in 1975. However, the success of the program has been somewhat patchy, because of lack of maintenance, poor soils, wrong speies or variety choice, lack of sdills and poor motivation in the population. Over one million hecaes of block planations were planted bewee 1975 and 1989, but only about 600,000 ha. were considered successfully established.2 Notwithsan this record, given the rapid deforestion rate in Vietnam, fte consensus is that plantation effot should be exanded and innovaive methods for providing incives to tree planters developed The most successffil programs, such as those of e World Food Progmme (WFP), bave been attache to discrete projects or where there was emphasis on providing incenives to manage thb planttion after the trees have been planted. 23. Table 4.4 indicated some of the wood short areas, such as in both dehas and in midlands areas around Hanoi and Hb Chi Mih City. This is where further plantaion efforts sbould be concetated. Other priorities should be areas of degraded land that form the water catcbment of river systems with actual or potential hydro energy projects on them, including the cachment area for the Da river that comprises 2.7 million ha. within four prowvmces of north-westn Vietnam. The protection of this catchment area is vital to safeguarding the massi invesmaent in the Hoa Bmh hydro electrc plant. Tree plantig initiaves, especially in the context of agro-forestry, would not only provide watershed protection but could also meet some of the market sbortfalls for wood products in the North Midlands and Red River Delta regions. 24. While tree plting efforts continue to be important, enphasis should also be placed on increased stocking and improved management of existing forests, plantations and scattered tree resources, and ensuring that there is or will be a market for the trees that have been planted already. 2 Tropical Forestry Action Plan, May 1992. vii Issues Related to Other Rural Energy Supply Options 25. Agricultural Residues. The estinated production of crop residues of 44 million tons (37 million tons in wood equivalent terms) is just slightly more than the estimated annual production of woody biomass (35 million tons). While this indicates a considerable potential for using crop residues as fuel, these residues are usually more bulky than wood and on average contain 15 percent less energy per unit weight. Tberefore, they are commonly consumed very close to the supply source. A national surplus of residues, for example, is not relevant to a localid scarcity of fuels in the Red River Delta due to transport constraints. While densification may address the transport problem, it ads to the final cost of the fuel. Experience in other developing countries indicates that densified residues have never achieved significaut commercialization and widespread use. The extensive use of agricultural residues, particularly lice straw, in Vietnam's rural areas shown by the survey data clearly indicate acute scarcity of wood in those areas rather than a preference for residues. 26. fail The demand for coal in the residential and industrial sectors is expected to increase between 4 and 6 peent per year and it is anlicipated that the demand for "rural" coal in the northern areas will increase on a similar scale. Although the increased use of cool in households is ivitable, there are a nunber of drawbacks to using this fuel. First it is difficult to light, and like biomass, it is hard to control the heat output in a domestic stove. Once lit, the tendency is to keep the stove burning all day, damping it down when not in use. However, this action produces excess carbon monoxide which is a highly toxic gas, can be fatal for humans and other animals, and gram for gram is about six times more barmful as a "greenhouse" gas than carbon dioxide. Of greater envonmtal concern are the low height particulate emissions from burning coal in an open domstic stove. Technologies to improve combustion efficiencies of coal stoves and reduce emissions should be investigated. 27. Renewable . Vietnam has a small ongoing program for renewable energy development, mainly carried out by the Energy Institute, the Energy Center of Power Company 2 (PC2) and some universities. Wind applications that are designed to serve a niche market in remote areas appear to be gaining some commercial acceptance and should be encouraged. The Institute of Energy, the Energy Center and the other agen .es engaged in renewable energy development should review the results of their work so far, with a view to clarifying goals, prioritizing the work program in the medium term and redirecting some of the staff and resources to activities that have more immediate relevance. Two progmms would appear to have the highest priority, namely: mini- and micro-hydro and improved stove design and dissemination. If bilateral fimancing can be obtained, the potential for photovoltaic applications should also be investigated. The small hydro group should build internal skills to assess rural demand for electricity and incorporate demand in site selection procedures. In addition, the unit should concentrate on training end-users in operations and management of small hydro stations. The improved cook stoves program should begin to pursue commercialization steps more actively. RURAL ELECTRIFICATION 28. Rural electrification growth from 1975-1990 is summarized in Table 4. Although these official figures appear to indicate that considerable progress has been made in rural electrification in recent years, a closer look at investment statistics for the three power companies during those years indicates that the electrification effort mostly involved connecting households in areas already ix covered by the medium voltage network rather than extension of service to originally unelectrified areas. Table 4. Rural Electrification Growth, 1975-1990 Year Inigaioa Rural Indudries Rul ToWa Peretag of Eledrified Rural PuWps (OGWh) Households Nalional Demand Populdionfloba (OWh) (owb) (Owh) Rual Popuato 1975 1V9 30 37 186 8.5% 2.5% 1985 223 75 75 373 9.7% 5.5% 1989 329 141 150 620 10.9% 11% 1990 398 210 192 800 12.8% 13.9% Somrce: The Energ lIstitute (1991) and mission imates. 29. When new medium voltage lines are built, the first priority is still the connection of inigation/drainage pumps to the grid m order to extend cultivated areas and increase their productivity. Connection of households and rural industries remams a by-product of this man line of development. An exception is the supply to mountain regions where, for social and political reasons, the Govenmment places importance on connecting households. 30. The most recent activities in rumral electrification were the launching of pilot rual electrification projects in the last S years, 8 in the North of Vietnam, one in the center (a sub- district in the Highlands), and one in the South (Song Be District in Long An province). The pilot projects were idenied and recommended by the provincial authonties and evaluated at the Central Government level. The main criterion appears to be that at least 50 percent of households in the concerned community were willing to pay the required contribution (household contributicz covers the cost of the low voltage system, the line to the house, internal wiring and meter). Overall, however, only 40 percent of the physical and fiancial targets have been met, mainly because of lack of funds. These pilot projects represent the major investnents in nral electrification in recent years, but it is likely they will not be repeted. In the future, potential consumers will be required to pay the full cost. Constraints to Rural Electrificatiou 31. Supply Shortages and Power Losses. For the South and Central regions, it is clear that a successful rural electrification program cannot be implemented before the current severe supply problems are solved. The construction of a long extra high voltage (EHV) line that would connect the Northem grid, with surplus generating capacity, to the shortage-constaned regions of the Center and the South should be a major step in this direction. 32. For all regions, costly technical and non-technical losses in electricity distribution, and end-use inefficiencies in both urban and rural areas should first be remedied. These losses exacerbate the poor financial position of the power companies and reduce the amount of funds available for new investnents, including rural electrification. Inefficiencies on the distribution side include low system power factor, transformer inefficiencies and poor quality of cables. x 33. The biggest contributors to inefficiencies on the end-use side are electric motors, which are manufactured locally and designed to comply with a power factor requirement of 0.7 at nominal output, and electric pumps for irrigation and drainage that represent a major load in rural areas (about 50%). The typical efficiency of the irrigation pumps at nominal output is said to be 80 percent. In all the sites visited, the pumps were oversized compared to the head they supply. 34. In some places, such as certain areas of Haiphong, the high level of fiaud and theft has led to losses above 40 percent. Non-technical losses should be given major attention by the power companies, since the motivation for fraud will increase in the cmng years with the planned increases in tariffs and consumption levels. A major contributing factor is that most of the installed meters are inaccurate and unreliable, causing significant revenue losses to the power companies. It is estimated that some 300,000 meters per year would be needed to equip newly connected customers and gradually replace the old meters. This would cost approximately US$10 million annually. 35. Institutional Cons Although the provincial authorities are consulted by the Central Government in the design stage of the projects, final decisions regarding nual electrification nvestments remain cmalized, often leading to rigidities in the technical appraches, delays in decision making and low motivation at the local level. Responsibilities for planning are split among several government agencies, leading to lack of unifrity in technical standards and project evaluation criteria. The reglatory framework for rural electrification is not clearly defined: ownership of systs (networks andtor generating equipment) built with private financing or mixed public and private fiancing is not clear. No general procedure is followed for tariff setting in cooperatives or in privately-owned isolated networks, which would be a fundamtl step to ensure protection of the end-users and fair returns on investments for the financiers. These and cument laws restricting the right to produce electricity for the public grid to the three power compnies limit the likelihood of increased involvement of private financing in rural electrification schemes. 36. Scarcity of Fmancing. Lack of financing is a general constait on the hree regional power companies. TMis has limited the development of supply sources, notably in the South and Centr, and the rehabilitation of transmission and distribution networks all over the country. The bulk of financing resources in the subsector is now earmad for the 1500 kan 500 kV transmission line, due to be commissioned in 1994. The estimated cost of the interconnction project has been revised upward from $220 million to $520 million. In light of this development, the ?mount of money available for rehabilitation of existing networks and extension of electricity services in suburban areas would be very limited. Rural Electrification Planning 37. Electrification Targets. The official targets for electrification for the coning years remain ambitious, aiming at an average of 300,000 new household connections per year (see Table 5). These targets will be increasingly difficult to meet since the easiest parts have been or are already being done. xi Table 5. Rural Electrification Targets 1990 (achieved) 1995 (planned) 2000 (planned) Rural Population with Electicity 13.9% 25% 35% (perceat) Rural Population with Eectricity 7.26 14.25 21.93 (million) Supply to lIrigation and R2al 660 1118 1464 Industzy (GWflyer) Supply to Households (GWWyear) 340 1000 1700 Source: TheEnergyInstitute(1991). 38. Investment Reauirement. edicativ estimates of the investment necessary to clectrify 80 percent of the rual populaton in the (i) Red River Delta, (ii) Mekong Delta and (iii) center-south coastl areas (near Da Nang and Hue) bave been made by te present study This 80 percent trget would be reached if all 300,000 new rural household connections per year were concenttatd in th three areas over a 12 year period. These ar were selected for analysis because ey are the regions where electrification by extension of the regional grids is likely to be the most enomic alteative, population densities are high, and he regons' economies are the most likely to benefit strongly from the availability of electricity. Investment needs are likely to exceed US3 billion for the distibution networks alone, broken down into about US$1.9 billion for MV systems and US$1.3 billion for LV systems. The regional breakdown would be about US$350 million for the Red River Delta region, US$2.1 billion for the Mekong Delta and US$850 million for the Central region. An investnt program of this manitude would lead to an ovrall electrification rate of about 40 percent, co ponding roughly to the plans pread by the Ministry of Enegy. 39. Given the supply shortges and system losses, ins"tional constraints and scarcity of inancing presented above, the manitude of the investmn required to extend electricity service to 300,000 new rural households each year indicates that it is very unlikely that official targets will be met It points to the imperative of exploring innovative finncing arnanmens that involve private capital participation. A bright side is that poteial electricity cwsu s appear willing to pay the high costs of nrual electrical service. Presly, electricity end-users often pay more than the official tariff and even more ta the marinal cost because of the common practice of resale of electricity in both urban and rural areas. Establishing a Framework for Rural Electrification 40. Rural Electrification Model. As mentioned earlier, pilot RE. projects based on joint publc/private financial participation have been promoted by the Goverme in recent years. However, there have also been a number of successful projects based on cooperatives. Unlike the nonnal experience in the U.S., these cooperatives are not specifically electric cooperatives, but most ofen agricultural, exteing heir activities to provide odter services of benefit to their members. Some version of this system could be made the model for an expanded rural electrification program. 41. Instituonal Coordination. The bulk of the planning. design decision-making and operations should be dcenalized. To take advantage of the =nmumity-based struchtres, the xii Provincial authorities should be allowed to play a major role in screening sites, coordinating feasibility studies, defining institutional/financing schemes and supervising implementation. 42. Since it is clear that financing the program through public funds alone will not be feasible, an enabling environment must be provided to maximize private financing participation. This will be achieved oniy if there is a clear and stable regulatory framework and assurance of fair returns on investments through transparent tariff setting rules. The regulatory framework must set: (i) clear and appropriate rules on private generation and distribution, system ownership and tariff setting, (ii) standardized planning and selection methodologies and (iii) technical standards adapted to the rural environment. 43. Technical Standards. The optimal design of rural systems is typically a trade-off betwveen cost and system performance, including quality and reliability of supply. There is a wide range of design options to reduce the cost of rural extensions while maintaining quality and reliability of supply at acceptable standards. Economic options for reducing costs should be analyzed at the national level and guidelines should be established (cable sizes, standard transformer sizes, pole- mounted transfbmers, 35/15 or 35/0.4 transformation, construction of single-phase extensions, wood poles, etc.). 44. Screg of Projects. To ensure optimal use of finds that the Goverment may finally decide to devote to rural electrification, the screening of proposed projects should follow a uniform national procedure, developed by considering locally validated data. Guidelines should therefre be prepared for each province to review potetal rural electrification projects in the near to medium term, for instance, over the next 10 years. 45. The screening process at the national level should allow fte central Government to prioritiz the overall group of RE. projects and prepare a medium term (5 to 10 years) national rural electrificatioinvesent program. Province-based agencies would then be given the responsibility for implementing te various cmponens of the master plan, including involvement of private investors. At the national and provncial levels, care should be taken to coordiate, such actions with similar plans developed for infrastructure or agriculture projects. CONCL USIONS AND RECOMMEDATIIONS 46. Some of the problems that emerge in the present analysis are due to the excessive use of biomass fuels. Others are due to the inevitable "household energy transition' that occurs as a result of moderization, urbanization and general economic growth. As households increasingly purchase most of their fuels, income, prices and distribution policies largely determine residental fuel choice and use. The resulting demand mix can severely strain the supply system for certain fiels or put the poor at a disadvantage. Household Energy and Traditional Fuels 47. The problematic situation in the Red River Delta and the measures that are indicated by analysis of the available data exemplify the type of policies that Govemment must consider for the subsector nationwide. 48. EkM the heavy use of wood in the towns of the delta over the decades has apparenty contributed significantly to the denudation of the imediaten landscape and, as wood sources shiftd xiii fartier into the highlands, has contributed to the serious erosion of watershed areas, including those protecting the Hoa Binh reservoir. If it goes unchecked& this trend can lead to severe wood supply shortages, degradation of the highland areas, and a shortened life of the hydroelectic power plant. The solution not only involves the obvious and necessary reforestation of the catchment area but requires an understanding of the likely shifts in hen ihold fuel choices in the delta towns. 49. Establishing multipurpose tree plantations in tie low lying areas near heavy population concenations of the North Midlands and Red River Delta regions plus densely populated areas of Hoa Binh province will be direcdy relevant to addressing the above issue. It is Mo -Iended that a project along this line be given high priority in the immediate term. The project, with the combined objectives of watershed protection and epansion of fuelwood supplies, could initdally cover about 575,000 hectares in the provinces of Hoa Binh, Yen Bai and Son La at an estimated cost of $30 million spread over 10 years (see Annex IX ). The mian efforts will be to get more agr-forestry trees on-farm and to plant multipurpose trees in degraded forest land. Tbis will complement or could be made an itegral part of a comprehensive watershed managemt project already proposed by the Tropical Frestry Action Plan, covering 4.7 million hectres in six warshed areas. 50. Sd, the extesive use of rice straw and other agrcutural residues in vilages in the Red River Delta has raised questions about environmental sustainability and household welfare. Crop residues, almost enrely collected, account for about half of cooking energy in these households-a figure that seems alarmngly high-and ieflects ready availabilty and much lower average cash incomes compared to households in the towns. The present study concludes, with some caveas (see Chapter 3, paras 12-14), hat the prctice is probably sustainable and that no direct interventions to curtail rice straw use need be made. However, the larer issue of a deteriorating quality of life of households in these villages remains and must be addressed. In the energy transition "lader", the shift to crop residues-which are bulky, inconvenient, and need coinuous tending of fires- represent a descent, as residues have never been a fuel of choice but of necessity in all parts of the world. It is clear that Govermnt policy must be to encouage a shift to affordable, bighe grade fuel substitutes. 51. The surveys confirm that coal is already the next most used fuel in village households in the delta (30% of cookdng share) and appears to be the most suitable substtute to crop residues in this conext. Thus, programs that facilimte the distribution of coal in the Red River Delta (e.g., improved transport infrastnuetre) would benefit households of both villages and tons. Since coal price is already low, no other intervetion would be needed. Hower, considering the expected increase in coal consumption not only in the delta but in other northern parts of Vietnam in the medium term, efforts must be directed at further enhancing consumer acceptance and alleviaig adverse environmental impacts. This means improving the quality of the briquttes by way of reduced smoke, increased heating value and ease of lighting. It is d that ewert technical assistance be provided to both large-scale and informal sector makers of coal briquettes to improve their production methods. 52. In the Mekong Delta and areas to the northeast, estimates made in this study (Chapter 4, Table 4.4) indicate the possibility that the wood resource base is being mined, with demand in excess of two times the sustiable supply. In contast to the Red Rive Delta, wood is the principal cooking fuel in both ual and urban households of the delta, including Ho Chi Minh City that has an extensive commercial woodfuels madret Wood trades in HCMC report that most of the wood supply to the city now comes from provinces 150 km away to the northeast and that the sources of supply have shifted outward substantially over the past ten years. Survey data sugges xiv that a large part of household woodfuels in the delta are still being collected. Therefore, there may be more trees outside the forests (in private lands, for example) than is normally assumed, in the Mekong Delta and possibly in other regions, as well. Due to the prominent role of woodfuiels in the energy economy of the south, it is recommended that high priority be given to the conduct of surveys and inventories to establish reliable infonnation on sustainability of the resource, with particular attention to detemining the quantity of sustainable woody biomass supply outside the fwests. 53. For the nation as a whole, woodfuiels already constitute over a third of all traded energy and must be considered an important commercial fuel. The woodfuel industry is a significant source of employment, especially in rural areas. Trading and distribution of woodfuels appear to be working efficiently and pnces are wholly market detemiined. Government intervention in the sector does not appear to be needed and in fact has the pottal to be disruptive. Ihe role of Government should be merely to monitor the sector to ensure that ovemll operations adhere to the objective of resource sustainabilit,v. 54. Except for electricity taridffs which are sti below marginal costs, the prices of major household fuels do not appear to be distorted by subsidies. There are a few specific cases that may need to be re-exmined. As one element in the rural energy supply policy, approximaty 200,000 tons of coal fmes are distributed annually at subsidized prices to villages in mountainous areas of 13 prowvines with the objective of protet highland forests from excssive fuelwood demand This policy costs the govne about US$1 million annually. Though the estimates made by the present study are veiy roug, they indicate that there is no fi*elwood deficit in the Norther or Southn Highlands. If this is cnfirmed, the policy may be havimg the effect of discourgg the production and use of woodfufes which, for convenice and reasons, is a better fuie. ,It is reconmnwdt that this policy be reviewed. 55. Ttere is a potentialy importat role for improved cook stoves programs as a demand management tool for woodfiels. However, the only way to make a dent in wood consumption is to deploy large volumes of improved stovs, especially in resource stessed areas. It is that the Govemmets improved cook doves program be expanded and re-direed along commrcial ines, initially targeting niddle cls bousholds in urban areas. Efforts must also be dircted at improving the efficiency and emission characteristics of coal stoves. 56. With a few notable exceptions, renewable energy technologies sil have a long way to go in Vietnam before widespread, practical applications become a reality. More attention shouFl be given by the Goement to prioritization of its research and development projects, and lessons must be drawn from more extensive expenence in other counties in this field. Household biogas systems, for example, have not proved to be economic in many countries and are largely impractical as an energy supply option. Wmd and photovltaic technologies, on the other band, may find economic "niche" applications and should be encourged where consumers are willing to pay the price. Wthin the Govemens reewable energy development program, i is recommende that the highest pnority be directed at mini/micro hydro developmntm and deploymen and at photovoltic system applications for nrual areas. Rural Electrification 57. The first priority of rural electification in Vietnam remain te connection of irratondraiage pumps to the grid in order to expand cultivated areas and increase teir xv productivity. This is an tmportt program and should be continued. Extending coInections to househols and rural industries is alo a worthy goal for Vitam over the coming yXa, despite the burden on public finances which would resul. Several Important preparatory Investments, actions and studies, hower, must be made before a major, properly-pbased rural electriffcation plan can be implemented. 58. There are two major prerequisite investmns, both also cited by the Energy Sector Investment and Policy Review report. E&, supply conditions in the South and Central regionw must be improved, since no rural electrfication program can be implemented if adequate supply is not secured. The EHV line now being instlled should help to overcome the currnt capacity and ener shortfall, but rhabilitation of existing thermal units and timely constuction of new capacity would also be required. ScoAnds the existing MV and LV system must be rehabilitated, to improve operftional efficiency and quality of service to the consumers. The actvity should give priority to installation of capaitors on feeders with igh reactive power demands, and reconductoring of heavily loaded feers. hese ivme should be accorded the highest priority. 59. Three important activities must first be implemented Eia, non-tecbnical losses in seriously affbcted areas, such as Haiphong, must be reduced. This will require the launchng of an inpection progam of individual consumer in xstion, with prioriy being given to lager consumers. A comprehensive program to replace defective meters, should be developed and implemeted. Secnd. national planing guideline and standards for distribution systems dsunld be developed. Application of such standards, along with loss reduction and improvement of the quality of supply, are necessary to achieve optimum system efficiency. Ibid, the Govenmnt must develop and establish a policy on rual electrfication which will allow rational and consistent poritization of rural electrification projects on a nationwide basis. The policy sbould define (a) appropriate regulatory and institutional fiameworks; (b) methodologies for forecasting and eonomic evaluation of alternative supply locations and options; and (c) tecbhical standards of design, conuction and operation. 60. As an himdiate step, it is r d that extenal tectoical assistance be sought to: (i) conduct loss reduction studies, and (ii) to help develop a coherent rural electrification policy. lle studies should be conducted not only for their specific outputs but also to help develop local planning capabilities. Insfitutional Coordination 61. The broad institutional reforms proposed for the energy sector by the World Bank's Energy Sector Review, including the stgthenng of the Energy Institute, also will benefit the progrms identified for the rural and household energy subsectors. Two supporting recommendations specfic to the subsectors should additionally be considered. Eirs given the importance of biomass energy to energy planning and the cross-sectoral nature of the issues associated with it, there may be need for special coordination, through a conmmittee, of activities and responsibilities of the various ministries involved in this field, namely, energy, agriculture and forestry. Each of these agencies deal with separate aspects of biomass production and utilization, and a case can be made for a more coordinated planning and monitoring of activities in this area. For example, the recmm ended comprehensive inventory of supply and demand for woodfiuels in households and rural industries and the periodic monitoring of the situation in highly stressed areas, cannot be effectively carried out by just one of these agencies. xvi 62. SwndA the ministrieo of energy, water resources and agriculture have interrelated interests and responsibilities for rural electrification. lherefore, a future comprehensive rural electification program would be more effectively coordinated by an inter-minister body, perhaps a "Rural Electrification Comnittee", rar than by a line agency direcfly attached to one of the ministries. This body should be given the responsibility of developig guidelines and regulations for the program, and preparing inputs to the Government's budget planning process for electrification. 1. OVERVIEW Introduction 1. Since the adoption of the policy of "renovation" (doi moi) in 1986, Vietam's centrally planned economy is undergoing a gradual transfonnation to a more decentralized market-oriented structure. The reform programs have improved macroeconomic conditions and helped achieve a certaini degree of economic stability. For the remaning part of the 1990s, growth in real G3oss Domestic Product (GDP) is projected within a range of 5 to 10 percent per year, with the higher growth rates occurring if the US embargo is lifted, official development assistance and foreign investment inflows expand, and the reform program is consolidated and further stengthned. Rapid development of the energy sector is recognized as key to economic recovery and growth. he World Bank recently conducted an Energy Sector Investment and Policy Review to assist Vietnam in ;dentifying ivestment priorities and policy reform needed in the petroleum, coal, and power sectors. Although issues in the uwal and household energy sectors were recognized as significant, tiey were only broadly addressed in that study. 2. Examination of these issues is highly important in Vietnam as the country is still basically a rural society. Rural dwellers comprise 80 percent of the population and are heavily dependent on wood and other biomass fuels. Wood is a major fuel even in the urban areas, especially in the South and central regions. The rapid dechne in forest cover, due priarily to clearing for agriculture, may lead to severe supply constraints for rural and urban households. Official figures indicate that only 14 percent of rural households have access to electricity, although this varies widely by region. Technical and financing constraints bamper the pursuit of a mrual electrification program ta would contribute to rural econonuc development. The caases of deforestation and the options facing households are difficult to analyze because of the bighly dynamic nature of household energy demand and a general lack of reliable data on traditional fuel supplies and consumption trends. The present study is designed to complement the Energy Sector Investment and Policy Review by analyzing rural and household energy supply and usage in more detail, idetfying priority issues and recommending appropriate policy options and investments. The Land and Population 3. Vietnam is among the poorest countries in Asia. GDP per capita is roughly US$200, although many social indicators correspond to those of countries with a much higher per capita GDP. The 1989 Population Census found that 88 percent of the population of 64.8 million aged 10 years and above are literate, life expectancy at birth is about 65 years, and the infant mortality rate is about 44 per thousand. 4. The total land area of Vietnm is 33 million hectares of which about 7 to 14 million hectares are covered with forest (detailed land use classifications are presented in Chapter 4). The population is growing at about 2.1 percent per year and is projected to reach 70 million in 1993. The population growth rate has been reduced from about 3 percent per year in the 1970s. Vietnan is the third most densely populated country in Southeast Asia with an average density of 195 persons per kan2. Population densities vary widely across regions with highest densities in the Red River Delta (784 persons/kn`2) followed by the Mekong River Delta (359 persons/kn2) and the Southeast (333 persons/km2). Population density in the Central Highlands was only 45 persons/km2 in 1989 but is growing rapidly at more than 5 percent per year as a result of Government resettlement programs and in-migration. Due to its geography and history, Vieuam 2 comprises divers living enviromnents which differ substantially with respect to ago.ecologi.4 condition, resource endowments and socio-economnic stmctures. Consequently, rral and residential energy usage patterns differ substantially across agro-ecological zones. Changing Patterns of Energy Demand 5. The transfomaton process that the country is undergoing is causing sweeping social and economic changes in the cities and te countiyside, where new opportumities for income generation are opening up to households, cooperatives and enterprises, and increased expectations associated with modernzation are raising new demands on the infastructure and energy delivy systms. The changes most likely to affect rural and household energy demand patterns are those occuning in the agricultural, industrial and household sectors. Agriculture 6. Although agriculture is likely to grow at a relatively high rate, by the year 2000 its share in GDP and employment are projected to be substantialy lower than today. Agricultural gmwth will mainly come from increased commercializion and specialization With fmias having the freedom to pursue any profitable activity they wish, the dominance of rice is likely to be reduced while production of bigher 'alue crops and products wil increase. Production increasingly wil be commercialized. While production in the past laWgely was directed at satisfying subsistence needs and Government requrements, fiamers will in the future produce for the market Commercialization of the production systems will have the consequence that the agricultural sector will bave less capacity to absorb surplus labor than in the past through underemployment in the coUlective production system. A major out-migration from agriculture is therfore likely which ncreases the need for employment generation in mral industries and in urban areas. 7. These changes in the agricultural sector will affect energy demand and supply. First, the market-onentation will result in increased demand for transport to bring produce to market. Secondly, mechanization of production methods uill occur as a natural result of specializtion. These two trends will increase demand ir rural areas for oil products. 8. Third, investments in irrigation systems are likely to increase as a result of introduction of improved incentives. This uill raise ural electricity demand for inigation pumps. Furtherore, future demand growth is likely to require a more individualized distribution networc. In the past under the collective production system, farmes within a luge area applied the same production methods and crop pattems (in the delta regions, mainly for rice). Irrigation systes could therefore be designed with one large pumping station serving a unifom irrigation need within a large area Under the household production system, crop pattems are likely to be more diversified and the irrigation systems will have to be adapted to serve differing needs of the fams. This may call for many smaller pumps and more distribution points in the rural distribution netwozrk It is noteworthy that electricity consumption of the agricultural sector (for irigation) experienced an average annual increase of 15 percent between 1985 and 1990, despite a general shortage of generating capacity and a limited distribution network in rural areas. This rapid demand growth is expected to continue and may even accelerate in response to structural changes in agriculture. Rural Industries 9. As a consequence of the reform program, the structure of Vietnam's industrial sector is likely to undergo a major transformation during the 1990s. The past inward-looldng strategy 3 emphasizing heavy industries has been replaced with an emphasis on the production of light consumer goods and export oriented ndustries. Although the state owned heavy industries will continue to grow at a high rate to satisfy the materials requirements of expanding light industries and the service sector (steel and cement for building construction), their share of total industrial output is likely fall significantly by the year 2000. By the end of the decade the industrial sector may be characterized by: (i) some large scale heavy industries-partly state owned; (ii) a number of export processing zones with light industries producing consumer goods for export; (iii) a number of mediumn/large scale consumer industries producing for the domestc market, and (iv) thousands of small scale nterprises in rural and urban areas producing mainly for nearby local markets. Adequate statistics on the small-scale enterprises sub-sector are not available but observation and other informal evidence indicates that it is groig rapidly, especially in the South. 10. It is Govermnent policy to increase income and employment opportunities in rural areas through promotion of cooperative, private, and household owned and operated rral industies. Decree N,%. 10, recognizing the rural household as the key economic unit, has stimulated investents in a number of small scale rural industries. A primary means of rural industrialiation m Vietam will be private and cooperative investments in small scale industies. The main role of Government in this situation will be to facilitate the development of these ventures through provision of essental infiastructure and credit. 11. Rural enterprises in Vietnam are disadvantaged compared to urban entetprises in tems of access to credit, markets and basic infrastructure. A recent sample survey3 found that 95 percent of urban enterprises had electricity compared to only 58 percent of the mrual enterprises. Electicity supply is generally much better in the Northan in the South. Furthermore, the unreliable public supply in the South forces many enterprises to invest in their own generators, if they can afford it. The survey found that enterprises having electricity were more mechanizd, and had a hiugher value added per worker and a healthier financil position than enterprises without electricity. Many enterprises without electricity, using hand tools only, were financially very weak and produced a value added so low that it did not contibute in any significant way to raising incomes. 12. Inent in rural electrification will contribute to the development of rural industries. However, electrfication is not sufficient in itself to ensure their success. Many rural enterprises with electricity also have a low level of technology and mechaization primarily due to shortage of invesment funds. Most rural enterprises are today established frm savings of the household or the cooperative whereas credit from fte banldng system plays a negligible role. This suggests that the benefits of future rural electrification programs can be greatly enhanced if they are combined with credit programs in support of rural enteprise development 13. A significant number of small-scale, mainly informal rural industries will continue to be major consumens of biomass fuels and coal rather than electricity. These include mineral based industries (brick and tile makin& lime burning, ceramics, etc.) and those that process food and agricultura products. The expansion of the economy is likely to increase energy demand of these industries X, as of 1990, already used as much energy as the formal industrial sector (see Annex 8). The upsurge in building construction in the last few years, for example, has rapidly increased the demand for bricks and consequeny the energy consumption of the rural brickworks. It will be 3 Small Enterprises in Vietnam, ILO/ARTEP, September 1992. 4 important to ensure that the intensive use of woodfuels and coal by these industries do not lead to supply constraints and environmental problems in the future. The Household Sector: Urban and Rural Growth Trends 14. The 1989 Populatiots Census enumerated 12.9 niillion households with an average household size of 4.84 - down from 5.22 in 1979. The n-mber of households increased at an annual average rate of 3.09 percent between 1979 and 1989, while total population increased at an average annual rate of 2.28 percent. The mid-range population prejection predicts that the number of households will double (reaching 25.8 million) over the 25 year period ending in 2014. 15. This development in household size and numbers has a number of implications on household energy demand. First, the demand for connecting to the public e xtricity grid will grow much faster than the population (other factors kept constant). Secondly, since smaller households tend to favor modern fuels for cooking, the projected trend in household size and numbers will stimulate the transition towards modem fuels. 16. Urbanization has been subject to different trends over the last 20 years. During the war, people in the southern provinces moved to the cities to avoid the fighting and to earn a living while people in the North migrted to rural areas to escape the bombing. Consequently, at the end of the war, the urban population constituted about 3! percent of total population in the South and roughly 12 percent in the North. After re-unification, people were repatriated to the rural areas and the urban population declined in absolute and relative terms, to 19.2 percent in 1979. During the 1980s, the "natural" urbanization trend was counteracted by Government resettlement programs moving people from large cities and the densely populated plains to the central highlands and the southeast. As a consequence, the proportion of urban population increased only slightly to 20.1 percent in 1989. The major migration trends during the 1980s included a net out-migration from the Red River Delta (including Hanoi) and from the Central Coast into the Central Highlands, the Southeast and Ho Chi Minh City (HCMC)4. 17. Although Government will continue its policy to counteract a large inflow to the major cities such as Hanoi and HCMC, the economic reform program will tend to enforce the fictors that encourage migration to urban areas. An increasing number of resource-poor rural households are likely to be further marginalized and will have to seek employment in urban areas where the major part of services sector development and investments in light labor intensive !ndustries is expected. In face of this trend, the Government plans to establish several urban growth centers as alternatives to Hanoi and HCMC. The share of the population living in urban areas is expected to increase significantly during the 1990s, reaching 30 percent by the tum of the century. As urban dwellers meet more of their energy needs with modern fuels, increased urbanizaton will enhance the transition to modem fuels. 18. The socio-economic conditions of rural households have been subject to dramatic changes over the last 50 years. Land reforns during 1953-1957 returned land to peasants and resulted in a major increase in agricultural production. Collectivization was started in 1958 in the North and in 1976 after reunification in the South. Collectivization involved a departure from a thousand year old tradition where the family was the key economic unit in the rural society. Cooperatives were established in the form of production brigades where the management had power to control and 4 VVietmam Population Census - 1989, Detailed Analysis of Sample Results, Chapter S. S allecate the household's labor and production. Collectivization met with a number of problems in the South. In 1981 a first step in the direction of recognizing the househol. as the key economic unit was taken with Party decree No. 100 on family output contracts. This had initially a positive impact but full recognition of the fanily household as the key economic unit was only achieved in 1988 with Politburo Resolution No. 10 which reduced the cooperative to a service unit supporting its fanmer members with inputs, advice, etc. 19. The recognition of the household as the key econonic unit, with freedom to pursue any profitable activity, has stimulated an increase in agricultural production and investments in rural industries. However, it has also resulted in increased social differentiation and its consequent impact on the type of fuels used (purchased or collected, traditional or modem) by the distinct household groups. This differentiation is likely to become even more pronounced during the 1990s, as more and more of the better-off rural households become involved in the market economy and develop cash incomes, while resource-poor households become more marginalized. The extent of this phenomenon varies markedly by regions in Vietnam. The dynamics of the energy transition of households, its regional variations and its policy implications are examined in Chapter 2. 6 II. HOUSEHOLD ENERGY DEMAND PATTERNS Introduction 1. The composition of sectoral energy demand has been estimated fot Vietnam. As shown in Table 2.1, the residential sector consumes over 80 percent of final energy in the country and traditional fuels account for over 80 percent of final energy consumption. While this aggregate data lighlight the dominant role of households and traditional fuels in the overall energy economy, it does not provide information on patterns and trends in energy consumption that could guide policies to protect the resource base and ensure continued supplies of affordable fuel to the residential sector. Using new evidence and the results of previous studies conducted by the Ministry of Energy between 1987-90, this chapter presents a first attempt to examine regional variations in household fuel use patterns on a more than anecdotal basis5. The analyses examine differences between fuel use in rural and urban households as distinct groups, and then focus on emerging patterns in the major cities of Hanoi, Ho Chi Minh City and Danang, where the transition to modem fuels is relatively advanced and provides insight into the dynamics of interfuel substitution. Table 2.1. Vietam 1990 Fin Energy Consumption by Sector (OM TOE) (1) B2ect,cZiy Petroteum Coa (2) Subtotal Charcoal Fuelwood CropRe Subtotal Total Trnsport 4 1,001 23 1,028 0 0 0 0 1,028 industry 240 1,006 893 2,139 2 715 357 1,074 3,213 Service etc. 51 380 53 484 14 46 0 60 544 Household (3) 230 224 767 1,221 372 9,531 9,952 19,870 21,091 Total 525 2,611 1,736 4,872 388 10,292 10,309 21,004 25,876 Notw. (1) Does not include losses in power generation, transmission & distribution, petrleum distribution, or transfomation of wood into charcoal. (2) There is wide variation in heating values between the types of coal taded in Vietnam Total coal consumption by end-use sectors in 1990 was 2.55 million tons with an average heating value of 28.8 MJ/kg. Consistent estmates of the quantity and energy content of fmes, coal slumy, and power sation ash that is sold for household and small scale industial use are not available. It is reported that a substantial amount of coal ash (with 70%/e carbon content) frim power stations is sold to make briquets. High carbon content in ash indicates that power station coal fired boilers must be very inefficient (3) Includes fuels used for boiling pig food. Sourca: World Bank 1992 Annex 1.02 and see mission estimates for resideial biomass fues Annex VL Table 3 (adjusted for 1990 by taWng 96% of '92 figures). 2. The main source of new data for the present report is the Ling Stndards Survey (LSS) now being conducted by the General Statistical Office. The LSS collects detailed income and expendire infonnation from households in a random sample of urban and rural communes nationwide. Since only 20 percent of the sawple communes had reported by the tie of this writing; the preliminary data can not yet be fonnally enealized to the population of any region or to the nation. Nevertheless, these are the only randomly obtained data available on fuel choice and expenditures at the household level across the diverse agro-ecological zones in Vietnam and the indicative results appear to be consistent with anecdotal evidence and ohr sources of information. Findings based on the partial sample results are sumnmazed in Table 2.2. They permit a 5 Limitations on resources and time did not permit the conduct of a national survey during this ESMAP study, although a focussed survey was done in some parts of the Red Rivet Delta in recognition of the severity of the situation in that area. The analyses drew subtanally from the results of past studies by the Energy Institute that are descnbed in Annex m. 7 preliminay analysis of the distinct pattems of energy consumption between urban and mral areas of the various aro-ecological regions. Table 2.2. Vietam 1992 Pimary Cooking Fuel, Electification Rates, and Ene xpeditues (%) Rural Urban Agrowolocal Region North Rd Hano Central Me North Red Hanoi Central Me Ho (1) River kong (2) Riwr kOng Chi _Dela Delta Ddla Delta Mlnh Primary Cooking Fuel Leaves, Staw, etc. 49.1 98.5 70.0 60.2 7.8 17.7 3.3 17.7 Wood 49.7 1.0 8.7 39.8 90.7 51.0 38.3 12.5 51.0 98.4 30.2 Charcoal 1.0 2.1 13.5 40.6 Coal (3) 1.2 0.5 20.7 25.0 55.0 53.1 13.6 Irosene 0.5 4.2 3.3 15.6 4.2 28.1 Electricity 0.7 18.8 1.6 1.0 Elecric Comnecion 36.4 72.2 95.3 21A 16.6 89.6 100.0 100 89.6 67.7 100 Ene Exediturs t% of Total Budget) 2.2 3.5 5.6 3.1 2.7 10.0 11.2 6.9 10.0 4.4 11.0 Notes: (1) See notes to Table 2, Annex V for a listing of provices in each agro-ecological region (2) No urban clusters are reported in the Nort lighlands or North Midlands in this early return fiom the Living Standards Survey (these pelmnry results are based on early rets of only 20% of sample clusters). The figur in this table for uban households in the North are based on the fuel use pattes of urban Cental households with an appropriate modification for the split bdween coal and charcoal. (3) Coal or charcoal was one category in the Living Standards Survey. This table assumes that households using coal or charcoal as a prmary cookiQ fuel in the north use mostly coal, in the South use mostly charcoal, and in the central regions are evenly split Source. Amnex V based on preliminary reuns from the 1993 Living Standards Suvey. Regional Differences Rural Household Fuel Usage 3. Reflecting the degree of stress placed on the agricultural and forest resource bases across the country, the data indicate that mrrl households use leaves, grass and crop residues as the primary cooking fuel in all regions except the Mekong Delta. Shortages of immediately accessible fuelwood are prevalent for rural people in the North and cenral regions, and especially in the Red River Delta. Only in the North does wood play an equal role to forms of biomass lower on the fuel ladder. In a notable exception, mral cooking fuel usage patterns in the Mekong Delta are dominated by fuelwood. 'This result appears to indicate that there is no problem with wood supply in the area, a finding supported by field visits to rural households. 4. If the early patterns reported in Table 2.2 are any indication, it appears that substantially more rural households are connected to electric service than estdmated by official figures. Over the nation as a whole, these returns indicate that roughly 35 percent of rural households have electric service as opposed to the 14 percent official estimate. Electric service appears to have reached almost every rural home in and around Hanoi and to have made substantial penetration throughout the Red River Delta. Northern Highlands and North Midlands are mid-way through the process of rural electrification. The share of rural households with electric service drops off dramatically in the service areas of PC3 and PC2, in the Central, Southern, and Mekong Delta provinces. The percent of rural households that share their electric meter with at least one other household appears to be substantial, ranging from 12 percent in the Mekong Delta to 50 percent in cental regions (see 8 Annex V, Tablt 2). Shared metering may be one factor in explaining the divergence between official estimates of rural electrification and the substantially higher rates implied by these preliminary figures. Another factor may be the different definitions used for rural and urban areas. 5. The data indicate that rual households spend only a small fraction of their household budgets on fuels, suggesting that most fuel is collected. Low fuel expenditures by rural households in the Mekong Delta is notable: even with very high wood use, it appears that much of this wood is collected from the household's own sources. Over 80 percent of the households sampled in the Mekong Delta that use fuelwood report that they collect their wood. A similar share of rural households that use fuelwood in the North and central regions gather their own fuelwood (see Annex V, Table 2). Urban Household Fuel Usage 6. The transition from traditional rural fuels to conventional fuels as a function of urban living conditions can be seen clearly in Table 2.2. Though some urban households still use sawdust, husk, or agricultural residues as their principal fuel in the cental (and possibly North) provincial urban centers, the bulk of cooking services are provided by fuelwood. The transition to coal in the North and charcoal in central towns is clearly evident. Perhaps a reflection of an abundant biomass resource endowment, wood is almost universally chosen as the primary cooking fuel in the provincial urban centers of the Mekong Delta. The bul I of cooking services in Ho Chi Minh City are met by wood, charcoal, and kerosene, each supplying roughly one third. In urban areas of the Red River Delta outside of Hanoi, wood is stWI a major fuel but has been displaced by coal as the primary cooking fuel of most households. Traditional fuels have been almost entdrely displaced in Hanoi by coal, kerosene and, notably, electricity. 7. Urban households appear to spend a strildngly large share of their household budgets on fuels. As the figures reported in Table 2.3 are averages, the cost of fuels may represent a severe financial burden to the urban poor in most areas of Vietnam. Tbis is important as one goal of fuel pricing policy is to reduce the financial burden of energy use on poor urban households. 8. Hanoi and the Mekong Delta provide notable exceptions to these tight financial constraints on urban households. This is due to primarily the low cost of the principal urban cooking fuels used in each area: coal in Hanoi and fuelwood in the Mekong Delta. As the prices of these fuels are not explicitly controlled by government, they reflect market conditions. Coal prices were decontrolled as of 1988. Since then production levels have dropped dramatically reflecting mainly diminished demand from the coal-fired power sector as new hydro-power capacity from Hoa Binh came on line. Current production levels are roughly 4 million tons per anumn while instaled capacity is close to 10 million TPA. As a result, prices on the type of coal used in households (mostly fines that are shaped into briquettes and patties) have remained low since 1988, benefiting urban households in the North and the Red River Delta. 9. Not unlike their rural neighbors, over 60 percent of urban households in the Mekong Delta collect fuclwood (see Annex V, Table 2). This indicates that urban households throughout the delta are at an early stage in the urban fuel transition: biomass fuels are plentiful and inmmediately accessible for collection. The woodfuels trade for supply of urban households in provincial towns of the Mekong Delta does not appear to be nearly as substantial as the woodfuels trade for urban demand in the Red River Delta, central regions, and in Ho Chi Minh City where over 80 percent of urban households that use fuclw ood purchase it. Urban households in the Mekong Delta appear to 9 spend little on fuels, largely a benefit they obtain by collecting woodfuels from the accessible woody biomass resource base. This economic benefit is appropriate as long as this usage pattern is not depleting the resource base. nTough the impact of urban fuelwood use in the Mekong Delta camot be detennined from existng data, the evidence that most housebolds gather their fuielwood is no cause for alarn. Conversely, the impact on the resource base of the substfial trade in fuelwood and charcoal for the metropolitan area of Ho Chi Mih City should be investigated. Fuel Use In Hanoi 10. The situation in Hanoi was examined by two Govemment surveys in the past: i) a survey of nearly 10,000 households and household enterprises in Hanoi city conducted in late 1989; and ii) surveys of households and household enterprises in all 12 major toums in Hanoi province were conducted fom 1985 through 1989. Note that these towns had at least 10,000 residents and are fomally classified as urban (see Annex 1). Survey results are available only in the hiugy summarzed form presented in Table 2.3. While crop residues and coal provided the bulk of cooking services to small town households in Hanoi province, electricity was the major cooking fuel in Hanoi city in 1989. This is not surprising given the universal peneation of electricity, the convenience of cooking with electricity, and the low electricity tariffs at the time. What i surprising is the small share of cooking services provided by coal in Hanoi city, since it was the cheapest cooking fuel. However, until January, 1989, electricity was even cheaper than the end-of- the-year price in Table 2.3 and since the choice of cooking fuel is a long-erm decision, these cooking fuel shares also reflect relative fuel prices in 1987 and 1988. If the cooking fuel shares of households in Hanoi city and the major towns in the province are weighted by populations, the cookig fuel shares that result show that coal provided 41 percent, while electicity provided 21 percent and kerosene 11 percent of cooldng energy demand in urban households of Hanoi pri in 1989. The more recent evidence presented above indicates that in response to electricity price increases and low coal prices, coal has continued to penetrate the urban residential marke in Hanoi province. Table 2.3. Hanoi: 1989 Household/Sevice Cooking Fuel Use Fuel Total Units Delivered Cookng Pice Prce CookingFuel Cooking EnervyShate (Dong/unit) (Dong/ Use Ene, M f)/)) delwedrMd) Major Towns in Hanoi Province Crop Residues 400,000 Tons 648,000 35.2% Fuelwood 36,550 Tons 99,416 5.4% Coal 198,800 Toas 1,005,928 54.6% Kerosene (1) 4,198 m3 66,111 3.6% Electricity (1) 9,185 MWh 23,146 1.3% Hanoi Cit Fuelwood 2,362 Tons 6,426 0.9% 250 91.9 Coal 16,435 Tons 83,160 11.1% 55 10.9 Kerosene 11,948 113 188,179 25.2% 667 42.3 Electricity 186,038 MWh 468,816 62.8% 41-82-120 16.25 -47.5 (1) Quantities of kerosenc and electricity for small town households are total non-lighting fuel use for households/ service. Source: Total coot-ing fucl use and fuel prices from Sectoral Energy Demand in Vietnam, June 1992. 10 Fuel Use in Ho Chi Mnh Cty 11. In Ho Chi Minh City, the transition towards modem fuels is relatively advanced. Unlike the situation in the North, coal plays little role as a household fuel in the South. Furthermore, crop residues are only used to a limited extet Most households in HCMC have access to electricity. For cooking, households use fuelwood and clarcoal, kerosene, some electricity, and LPG has recenly been introduced. Many households have installed cooking facilities for different fuels which gives them the option to choose between, for example, electricity, gas or fuelwood depending on relative prices and availability. LPG was recently introduced to the market in HCMC and has within a short time gained some popularity. The LPG which is being marketed at present is imported. In the future the South plans to have its own production of LPG based on gas from off- shore oil fields. This domestic supply is expected to bring down prices and increase consumption so that LPG may become a major household fuel. A gas pipeline from the Bach Ho oil field to HCMC is at present under construction and a LPG plant is plamed for completion in 1995. The high rate of increase in population and per capita incomes will contnbute to a further rapid transition towards modem fuels by HCMC households. Household EnergyMarkets 12. To gain insight into sources of supply and retail prices of fuels for households in major urban areas, fiel merchants in Hanoi, Danang and TIo Chi Mmih City were surveyed in 1993. Table 2.4 summarizes the findings on market prices as well as the calculated cost to households on end-use basis. 13. In Hanoi, coal emerges as the cheapest cooking fuel and appears to be making a major penetrtion in the residential sector market. Most household coal in Hanoi is consumed as briquettes coal patties. Sources of fuelwood for urban markets in Hanoi province are examined in Chapter 3. In Danang city, fuelwood is the dominant household fuel marketed. Most of the fuelwood for sale in the city comes by boat through alarge wholesale market at the porL According to the traders, roughly 70 percent of the wood comes from plantations with the rest coming from natural standing forests. The main wood supply sources are the distrcts of Thani Binh, Dai Loc and Chu Lai from 45 to 90 km from Danang. Charcoal is reportedly produced in Phu Khanh and Quy Nhon provinces 350 km south of Danang on the coast Coal briquettes, made and distributed by the Central Region Coal Company, were itroduced only four years ago in Danang and their use is increasing rapidly, especially since the most recent electricity price increase in 1992. Coal traded in Danang is brought by boat from Quang Ninh in the North and by truck from Nong Son mine about 85 km from the city. 14. In Ho Chi Minh City, fuelwood, charcoal and kerosene are the principal cooking fuels marketed. HCMC has an extensive woodfuels supply system, run entirely by private business. There are fuelwood traders in every district of the city and a large wholesale market at the harbor. The traders report that for many years the prinmay fuelwood supply sources were natural forests of neighboring provinces Dong Nai, Tay Ninh, and Song Be. Now much of this resource has been depleted and most wood comes from Thuan Hai and Lam Dong, about 150 km from the city, and from other provinces even further distant in the Northeast of the Mekong Delta Regions6. Greater distances have led to increasing fuelwood prices and a consequent fall in demand. Another reason for substitution out of wood is that it is not a convenient fuel for kitchens in the moden, multi- 6 Ho Chi Minh City Fuelwood Market Survey, Inditute of Energy, December, 1992. 11 story, multiple family buildings that are becoming more common in Ho Chi Minh City. Spot sample surveys show that wood is still the major household cooking fuel in the city, but it is not as dominant as it once was. Various grades of charcoal art produced in Can Ro Duyen Hai District only 30 km from the city, in the mangrove areas of the Mekong Delta further south, and in the neighboring provinces of Thuan Hai, Lam Dong, and other areas in the Southern Higblands 150 km and further from the city. The coal market in the city is snall even though coal is the lowest cost cooking fuel on an end-use basis. Table 2.4. End-use Prces of Cooking Fuels in Major Urban Areas Hanoi Danang Ho Chi Minh City Prices per unit Fuelwood (kg) 310 280 340 Charcoal (kg) 1,100 1,450 Coal fines(kg) 170 280 240 Coal Briquette (kg) 250 375 340 Keosene (1) 3,100 2,450 2,400 LPO(kg) 10,000 Electricity (kWh) 450 450 450 PrlcnlDele{wredMA Fuehlwood 114 103 126 Charcoal 147 193 Coal fines 34 55 47 Coal Briquette 63 95 86 Keosene 197 156 152 LPG 362 Electricity 179 179 179 Conversiom ctors used furelwood 16MiIkg @ 17%/ stove efficiency charcoa 30MMtg @25%f; coal fines 23MY @ 22%4 coal briqete 18W/kg @ 22%; kaeosme 3S M7i/iter 45%; LPG 46M/kg @ 60%; eectridty 3.6 MI/kWh @ 7O%e Source: 1993 Survey of Fuel Mairets in Mjor Urban Areas. 15. According to market prices in early 1993, wood is slightly higer priced in Ho Chi Mih City than in Hanoi and Danang. This reflects the fact that it is transported over longer disnces than wood for Danang and may also include an income effict on piices as people with ber incomes in Ho Chi Mini City may be willing to pay higher prices for a fuel they value. Fuelwood prices have risen to the point tt the avera retail fuelwood price is now more ftan tvice the price of coal on an end-use basis. Despite this derential, the coal madrkt in the city is small. As readily accessible natual stands are depleted and fielwood prices rise even firer, kerosene (a conveient fuel for urban cooking) and coal (the cheapest fuel) can be expected to become inportant household fuels in the city. It is not possible with existing infomaion to establish a causal relationship between woodfuels use in Ho Cbi Mii City and forest degdation in neighboring provinces. However, the evidence reported by fuelwood traders indicates tat the fores resource in provinces of the Northeast of the Mekong Delta Region are beig mined. Demand Management with Improved Cook Stove Programs 16. Since cooldng accounts for about 85 percent of total residential sector energy consumpion, it is logical to consider an improved cook stoves program as a means to reduce demand for the major cooldng fuels, particularly wood. In principle, the scope for fuel savings is tremendous, given the very low efficiencies of typical wood cook stoves in Vietnam. Erience from cook stove programs in other countries over the years bave shown that more efficient stoves 12 do not necessarnly translate into reduced fuel demand. Instead, it is not uncommon for much of the benefits of improved efficiency to be obtained in terms of enabling households to do more cooking, improving the k-itchen environment (e.g., smokeless stoves, chimneys, etc.) and saving time. However, carefully administered programs to disseminate improved stoves have resulted in improved welfae and some fuel savings. Another important argument is that, considering the magnitude of potential benefits, the cost of launching an improved cook stoves program dissemination is small, both in absolute terms and in comparison with alternative fuel saving programs, such as biogas. 17. Improved stove programs started in Vietnam in the early '8Os. Three govemment institutes have been involved: the Institute of Energy, the Forest Science Institute of Vietnam, and the Hanoi Architectural Institute. The State Commission for Science and Technology plays a coordinating role between the ministries and coordinates activities in all regions. Outside assistance has come from such donor agencies as FAO's Regional Wood Energy Development Programme (RWEDP), based in Bangkok, and the Swedish Iternational Development Agency (SIDA). 18. The present program in Vietnam is small and probably ineffective. Ihe Isitte of Energy appears to be the lead ageny for the program and has a small stove unit. The unit is underaking research into improved stoves design and is implementing a limited dissemintion effost, more or less confined to the area around Hanoi. It is unclear whether the improved stoves are simply given away fee or if part of the cost is paid by the recipients. What is certin is that because of the lmited budget and the non-commercial nature of te dissemination approach, only a smnall number of stoves could be distributed. While there is a demonstration effict to ftis effort the gross benefits are negligible. Only a commercial approach can make the project self-sustanig and capable of hissemiting a large volume of stoves. Expenence worldwide indicate that Govermnent can play a key role, in promoting public interest in improved stoves and in encouraging commercial disseminaion efflorts7. 19. Programs that involve-artisns early in the stove design process and include standardized parts that can be easily produced without specialized dies or procedures stand a bette chance of success. Tle role of small informal stove makers in various parts of Vietam is important as they are the traditional suppliers to the commnity. 20. Lessons leamed elsewhere also indicate that programs should be bighly selective of their maets, identfying areas where fuelwood is normally purchased, prices are high and distances to free supply sources are great. Efforts aimed at benefitng chiefly the poor unfortunatly are the most difficult to sustain because the poor nonnally cannot afford the higher purchase price of improved stoves (often two tothree times the price of traditional ones). It may be best to initially target middle-class households that are undergoing the fuel transition and have cash. Apart from the cost of "stove fairs" and ote promotional activities that need to be borne by the Govemment, subsidies should be avoided as they distort incentives for both users and artisans. A well-designed, self-sustaining progam for disseminating large volumes of higher efficiency cook stoves could have a significant impact on household welfare and on total household fuel denand. 7 A comprehensve review of iternational expeience in this field was conducted by ESMAP and published in 1993. See for example, Bares, et al, "The Design and Diffusion of improved Cooing Stoves, 7he World Bank Research Obserier, vol.8, no.2 (July 1993), pp 11941. 13 Projecting Residential Sector Energy Demand 21. Although the data collected in this study provides a good picture of the current structure of residential energy demand and an idea of the direction of the energy transition in the various regions, it is not detailed enough to construct a fonnal model for projecting energy demand in the subsector. In rral areas, local "free" resource availability and the population density of the community appear to play important roles in detemiining fuel choice and use along with relative prices and incomes. In urban areas, availability of fuels in the marketplace, prices, and incomes largely determine fuel use. Demand estimates should account for the effect of income on fuel choice, especially since the income elasticity of demand for traditional biomass fuels is generally negative, and strongly so in urban areas undergoing the fuel transiton. Fuel usage patterns could change dramatically, especially in urban areas, with the structural changes in te economy and increases in per capita incomes that are expected over the next 20 years. Without a fonnal model based on results of a comprehensive and generalizable household energy demand survey, it is not possible to evaluate the potential effects of pricing reform, the introduction of coal to rural areas in the North as a substitute for wood, removing the kerosene distribution requirement, changes in rural electrification policy, placing restrictions on the use of electricity for cooking, and other interesting policy questons. 22. Assuming rural usage patterns stay as they are and fte rumral population grows at 1.7 percent per year, the annual demand for biomass energy by households will rise from 21 mtoe to nearly 25 mtoe by 2002. This is likely to put firther strains on the natural resource base. This suggests that efforts to place the formulation of policy on a sounder footing through the systmatic gathering of more detailed information about the subsector should be a priority of govement. 23. Meanwhile, there is immediate cause for concern for resource-ssed nural areas, particularly parts of the Red River Delta. The excessive use of low-grade biomass residues as household fuels in the Delta raises serious questions about the eniroen sustainabity of the practice and the larger issue of the deterioration of the quality of life of people in this highly populated region. The present study has identified the Red River Delta as having the highest priority for more detailed analysis of the situation. These issues are analyzed fiuther in Chapter IV. Policy Implications of Household Energy Transition 24. As urban households purchase most of their fuels, income, prices and distribution policies largely determine urban residental fuel choice and use. Because the costs of stoves is relatively small, households can shift between between wood, charcoal, coal and kerosene relatively rapidly. ITe transition to bottled gas or electricity for co king is a longer tem substitution as the appliances needed require substanial financial outlays. Many urban homes have stoves for more than one fuel, allowing them to shift in response to seasonal or longer term changes in fuel prices and availability. 25. Actual substitution trends and responses of households to changing conditions are difficult to gauge due to lack of data, but some inference can be made from the urban patns in preseted in Table 2.2 and what is known of the urban household fiu!, transition in other countries. Ongoing research on the transition from traditional to conventional fuels in urban areas in many developing countries indicates that goverment policies have a marked influence on the way a country goes 14 through the transition.8 Income, fuel price, and availability are the major deterninants of urban household fuel choice and use. Much of the benefits of subsidized prices on conventional fuels used by the poor are generally obtained by middle and higher income households as they are able to consume larger quantities of the subsidized fuel. Conversely, a general subsidy on all household fuels does serve to lower the cost of energy use to the urban poor. Evidence from almost SO urban area in 12 developing countries has established that the prices of traditional fuels track prices of conventional fuel substitutes. Hence, if the objective of residentia energy pricing policy is to reduce the energy expenditure burden on poor households, conventional fuels should not be taxed. Fuel distribution policy has an independent impact on fuel choices. Restictions on conventional fuel imports serve to limit their adoption to higher income households. In countries that allow the madret to determine imports, conventional fuels penetrate more rapidly into middle income households than in countries that limit imports. A market-based approach to residential energy sector planning in which fuel imports are not restricted and prices are set according to cost appears to be equitable because households of all income levels benefit. 26. The distributional implications of fuel pricing policies and the effectiveness of energy policies designed to protect forest resources are clearly important issues for policymakers in Vetnam as the urban economy undergoes the transition from traditional to convenional fuels. As one element in the countrys rural energy supply policy, approximately 200,000 tons of coal fines are distributed annualy at subsidized prices to vilages in mountainous areas of 13 provinces. This policy costs the governent about US$1 million annually with the objecive of protecting highland forests from excessive fuelwood demand. Though the estimates in Chapter 4 are very rough, they indicate that there is no fuelwood deficit in the Northem or Southem Highlands. However, the may be severe localized shortages that are not evident in the regate regional figures. Moreover, 200,000 tns of coal is a substantial amount, but is small in compaison to exdstng quantities of fuclwood used in these two highland regions. A program of coal distibution migt be effective if the coal were distributed to those communities that would odwse deplete the surroundg resource base. Hwer, as stated above, exsting data does not allow this to be done in a consistent and comprehensive fiasion. A priority should be placed on assessing tbe efctivenes of this policy in the communities that receive subsidized coal as an ieral part of the expanded household survey efforts and studies of urban woodfuel supply systems. 27. Petolimx is required to supply all rural households with a ration of 1.7 liters of kerosene monthly at urban prices. ITis policy is designed to ras rua lhving standards by providing an affordable ghting fuel. Nc estimates were available on how much this policy costs the goverment. If the actual rate of rural electrification is closer to 35 percet (as reported above) than the * percent reported by the iectricity supply companies, one would expect that a substantial Rhare of mral kerosene use would be diverted for non-lightng end-uses, such as cooking and fir-sti. Though exstg data cannot address this question, it would be important to assess the extent to which lighting kerosene is diverted to other uses in electrified rural homes. 8 Banes, D., Te Urban Ener Transition in Developing Countries (draft manuscript), June 1993. 15 IIL ENERGY PROBLEMS IN THE RED RIVER DELTA Introduction 1. The Red River Delta is the most densely populated and intensively cultivated region of Vietnam. The patterns of energy use presented in Chapter II show that a large share of the available rice straw is used as a fuel for meeting rural cooking needs and for boiling pig food9. The widespread use of rice straw for fuel reflects low cash incomes1I and scarcity of immediately accessible woody biomass. This has caused concern that continued practice may lead to serious depletion of soil nutrients. In addition, ere is serious concern that demand for wood by rural households in small towns in the delta may be depleding the modest forest resources of the delta and neighboring North Midlands provinces. Over 11 million of the Red River Delta's 13.5 million residents live in villages or small tom classified as rul As such, even modest demand for wood by rural households may result in a substantial drain on what is left of the standig forests near towns. 2. To address these issues, a survey of fuel use and supply sources in rural households in four Red River Delta provinces was conducted by the present study. Four hundred housholds in villages and 1200 households in small towns of 600-1000 residents were surveyed. The sample villages and towns were selected to reflect the vaned resource conditions tbroughout the delta. Though sample villages and towns were not selected randomly, and hence cannot be fornally generalized to the entre rural population of the delta, some key data, such as the average electrification rates and incomes of households, obtained in this survey are very close to those of the rural Red River Delta households in the preliminary returns fom the Living Standards Survey. .L As such, the sample does not appear to be substantially biased and results can be cautiously interpreted as indicative of rural fuel use in the delta. Key summary tables of survey results are presented in Annx IV. In addition to this survey of household fuel use, fuelwood traders in Vandien town (15 kan south of Hanoi towards Hoa Binh) and Sontay town (42 km west of Hanoi) were interviewed to assess the sources of their fuelwood. Though these are urban towns, the sources of traded fuelwood in neighboring small towns are exected to be similar. Patterns of Fuel Use and Energy Expenditures 3. The average amount of each fuel used for each major end-use by sample households is displayed in Figure 3.1. Cooking end-uses dominate in village households, where straw and stalks are the major fuel, and in small town households, where fuelwood and coal are used in roughly equal proportion. In village households, the practice of boiling plant stalks, other residues, and rice as fodder for pigs uses almost as much energy as cooking household meals. Household enterprises 9 The very large share of pig feed boilirn in the end use figures is similar to ESMAP findings in southern China. 10 Preliminary returns from the Living Standards Survey indicate that rural per capita cash incomes in the Red River Delta outside of the immediate vicinity of Hanoi and in northern regions are substantially lower than in central and southern Victnaxn. I I Mean monthly per capita expendures for rual households in the Red River Delta from the partial Living Standards Survey sample was 85,500 Dong with 84% of households electrified. Surveyed households in this survey had mean monthly per capita expenditures of 64,000 Dong in villages and 102,000 Dong in small towns with 91 % of village households electrified and 99% of town households electrified. 16 are the second major end-use of energy in small town households-a demand met mostly by coal. Over 40 percent of all coal used in the surveyed households in small towns was used in household enterprise (1992 Rural Energy Survey in the Red Rive Delta, Table A4.19). Estimates of energy consumption in rural areas that do not account for these end-uses could be signifficandy lower than actual levels. 4. In addition to cooking, boiling pig food, and household enterprise, a substantal amount of wood is used as tinder to start coal stoves, especially in small towns. Since coal briquettes ar difficult to light without kerosene or wood as kindling, wood is a complementary fuel to coal in this use. The choice of fuielwood for starting coal fires is far more prevalent than krosene in both village and town households and hence fuelwood appears to be the preferred kindling fuel. For this reason it may not be possible to completely displace fuelwood demand with coal. Sample averages in both villages and small towns indicate that just over one kg of wood is necessary to light every 10 kg of coal briquettes (1992 Rural Energy Survey in the Red Rive Delta, Tables A4.4 and A4.19). Of the 82 percent of households in small towns that use fuelwood, almost 35 perceat use it only for starting coal fires. Figure 3.1. Red River Delta: Fuel Use by End-Use (kgoe/cap/month) VMages SmallbTows 4 coooking pig food fi. lightingbusimoss cooldng pig food firelig tenbsnss starting sat U straw& stalks U fuseliod M] coal ID kerosone 03 lctricity Source: 1992 Rural Energy Survey in the Red River Delta (Tables A4.4 and A4.19). 5. Survey findings on lighting fuel choice and use raise some interesting questions. While 91 percent of sample households in villages are electrified, 98 percent report using kerosene for lighting, using, on average, 1.2 liters/month for lighting (1992 Rural Energy Survey in the, Red Rive Delta, Tables A4.3 and A4.4). Kerosene is used for little else in these villages. A simila pattemn emerges from the small town samnple where there is nearly universa access to electricity, but fully 75 percent of households report that they still use kerosene for lighting. Despite higher electrification levels, households in small towns that use kerosene for lighting use just as much kerosene for lighting, 1.2 liters/month, as their village neighbors (1 992 Rural Energy Survey in the 17 Red Rive, Delta, Tables A4.18 and A4.19). Roughly half the kerosene consumed by households in these small towns is used for lighting. Though 1.2 liters of kerosene over one month does not provide a great deal of light, the question remains of why kerosene is consumed at all for lighting in electrified households? It is not becuse electricity is new to the area: the median household has had electricity service for 5 and 12 years in villages and small towns, respectively. It is also not because households cannot afford fixtures and light bulbs: average installed lighting capacity is 85 Watts in village homes and close to 200 Watts in small towns. However, over 60 percent of residents in both villages and small towns feel that the electricity service is unreliable and continued use of kerosene for lighting is probably a reflection of an unreliable standard of electrical service. Figure 3.2. Red River Delta: Fuel Shares of Delivered Cookng Energy by conme Quintile Milge Sm1ITowu eeticity |~ ~ ~ ~ ~ ~ ~~~~~~~~~E I mmsene' i .~~~~~~~~~~~~~~ 0 EE it low low-niddlhigh- high low lo-niddlIigh- high nid nid nid nid Source: l992 Rural Energy Survey in the Red River Delta (Tables A4.S and A4.20). 6. Turning now to the major household energy end-use, the share of cooking energy delivered to the pan by each fuel for households in villages and in small towns is displayed in Figure 3.2 (Also see Table 3.1, below, for heating values and stove efficiencies). Thre transition from traditional to conventional fuels as a function of income and location is evident. Over one-half of the cooking energy needs of village households is met by rice straw and other agricultural residues, but coal is making major inroads in higher income -illage households. Fuelwood which is partly gathered appears to be a transition fuel between rice straw which is entirely gathered and coal which is entirely purchased. Of the 60 percent of village households that use fuelwood 40 percent gather it themselves and over half of those who gather fuelwood obtain it from their own land or common land very close to home (1992 Rural Energy Survey in the Red River Delta, Table A4.8). Households in small towns purchase almost all of their fuel. Rice straw is a significant cooldng fuel only in the poorest houscholds. Coal and purchased wood provide the bulk of cookirg services 18 in small towns. Even electicity has begun to be used for boiling water in electric kettles and coolkng on hotplates in wealthier town households. Given the relative convenience of electricity for quick cooking tasks, some use of electricity is to be expected. Even though "white good" appliances are expensive in relation to other household expenditures, small town households havs had enough tie (median 12 years of electrical service) to accumulate electrical cooking appliances. However, since coal is so much cheaper than electricity, in contrast to the situafion in Hanoi electricity is not expected to become a major cooking fuel in rural households of the Red River Delta. 7. As shown in Table 3.1, coal is substantially cheaper than any other purchased fuel on an end-use basis in vilages andtowns of the Red River Delta: 1/3 the cost of wood; 117 the cost of kerosene; and 1/9 the cost of electricity. With these existing fuel prices, it is not surprising that coal has displaced fuelwood as the second most important cooking fuel in villages and is the dominant cooking fuel in small towns where almost all fuels are purchased. In fact, the overall cooldng fuel shares shown in Table 2.3 vary directly with access to residues from the fimily fields, access to wood supplies for collection, and the prices of marketed fuels. The relatively high price of wood reflects its scarcity and indicates that these small towns are well advanced in the transition to conventional fuels. If this indication is correct, the share of end-use cooking services provided by coal can be expected to increase as wood becomes increasingly scarce and incomes rise, perhaps even displacig crop residues as the most important cooldng fuel for village housolds. At exsing prices, neither kerosene nor electricity can be expected to be adopted as important fuel for cooking at any time in the near future. Table 3.1. End-use PFics of uchased Cooking Fuels and Shares of Cooking Services Delivered Fuel Price Heating Value Stoe ficency Price (DoW CoolkingSheiv (Dong/unit) (Wlunit) 1%) delfvervdMO Share (%) Villages Crop Residues (kg) - 13.5 12 - 53.2% Fuetwood (kg) 210 16 17 77 20.0% Coal (kg) 131 23 22 26 26.6% Karosene (It) 2916 35 45 185 0.0% Electricity (kWh) 595 3 6 70 236 0.2% Small Toumz Crop Residues (kg) - 13.5 12 - 7.4% Fuelwood (kg) 245 16 17 99 35.3% Coal (kg) 168 23 22 33 52.0W Kaeosene (It) 2789 35 45 177 0.9%YO Electticity (kWh) 577 3.6 70 229 4.3% Source: 1992 Rual Energ Survey in the Red River Delta. 8. The ready availability of rice straw as a "free resource" and some access to wood supplies keeps spending on fuels by village households between 6 and 7 percent of household income, without much variation across income groups(see Figure 3.3). This burden is not excessive in co'..parison to other countries in the region. If freely available wood supplies diminish in the future. an increasing financial burden of purchased fuel and a downward shift into rice straw and other agricultural residues can be expected. Substitution possibilities by coal appear attrctive as coal now provides over 25 percent of cooking services for a relatively small financial cost. Almost half of fuel expenditures in village households is for modest electricity consumption of 20 kWh/month/household which is used mostly for lighting (1992 Rural Energy Survey in the Red River Delta, Table A4.4)-indicating a high value placed on electricity service. 19 Figure 3.3. Red River Delta: Fuel Expenditures (% of Income) by Income Quintile Vfllages Smal Towns lo zu O eectricity 8. M~~~~~~~~~~~~~~~~ kerosene 6. M~~~~~~~~~~~~~~~~ coal * fucivood straw 8 1 l i n bw lOw-midddehigh- high low low-middlehigh- high nid nid mid aid Smrce: 1992 Rural Ener Surve in the Red River lta (rables A4.6 and A4.21). 9. Even though the aver cash income of surveyed households in small towns was twice that of village households (1992 Rual Energy Survey in the Red River Delta, Tables A4.1 and A4.16), since most of their fuels are purchased, small town households spend 7.5-12.5 percent of their incomes on fuels, with the poorest households beaing the highest relative burden. 10. Expeditur on coal are remarkably low, given that coal provides over half of cooking nrg requirements in town households. According to results displayed in Figure 3.3 households in small towns spend only 1.3 percent of teir cash incomes on coal without much variation across income groups. Small town households spend twice as much on wood as they do on coal even though wood provides a substay smaller share of cookig services. Expenditures on fuelwood and rice straw present a substantial financial burden to poor households in small towns of the Red River Delta. The share of family incomes spent on wood and rice straw fills monotonically with icme. Substitution possibilities by low cost coal as a means to lower the energy burden on poor town residents in the Red River Delta appear atractive. However, as a substtial amount of coal is consumed in middle and highe income households, subsidizig coal to provide an affordable cooking fuel for fte poor could be extremely costly in national tems. Coal was distributed in plan and prices were set in four regions until 1988, after which distbution and prices have been lagely decontrolled. The current low reail prices of coal fines and briquettes that present such atrctive substitution possibilities are detmined by market conditions (a review of current pricing policy is presented in Annex II). 11. Small town households in all income groups spend about 5 percent of their incomes on electricity, providing an average consumption of 60 kWhbmonth/hmsehold for some substantial uses in addition to lighting. This indicates that households of all income groups value the services provided by electricity and are willing to pay a substal amount relative to their incomes to consume these serices. Counting only fuel expeditu for necssary cooking services, the excessive energy burdens on household budgets mentioned above diminish to more reasonable 20 levels ranging from 2.5 percent of household incomes in the higlhest income group to 7.5 percent in the poorest households in small towns. Issues Related to Extensive use of Agricultural Residues 12. The use of rice straw as a predominant rural household fuel in the Red River Delta as portrayed in Figure 3.1 has raised concern that continued practice could deplete soil nutrients and lead to lower agricultural productivity in this very fertile delta region. Indicative estimates of biofuel use by households in the Red River Delta (partly based on the Rural Energy Survey) are compared to estinates of annual sustainable yield (Chapter 4, Table 4.4, based on mission estimates in Annex VII). 13. These figures indicate that only about 40 percent of total annual rice straw production is burned in household stoves in the Red River Delta. Far from placing excessive demands on the agricultural resource base, this pattern of usage may be an integral component of a sustainable production relationship that has been in practice for centuries in the Red River Delta. Anecdotal evidence cited in the next chapter indicates that rice straw has been used as a fuel in rural homes of the Red River Delta for many centuries and that much of the ash is returned to the field as a fertilizer. Indeed, the reason that fields are burned after harvest in many parts of the world is to return the nutrients to the soil more quickly and to improve the workability of the soil. Another reason rice paddies are burned is that they must hold water; straw would makes the soil permeable. Hence, it appears that at the implied levels of usage, crop residues are supplied on a sustainable basis and provide cooking services to households that would otherwise require a substitute fuel12. If the annual production of rice straw were not consumed in households stoves, much of it would be burned in the fields, thereby losing the economic benefit of the cooking services these residues could have provided. Any intervention designed to reduce the use of rice straw as a household fuel tha resulted in a larger share being burned in the fields instead of in the home would incur a proportional economic loss. Fuelwood Demand and Sources of Supply 14. While the above discussions may allay concemns over depletion of paddy soils due to the use of rice straw as a household fuel, the figures in Table 4.4 also indicate that concem over depletion of the modest forest resources of the delta and neighboring North Midlands provinces may be warranted. Estimates of fuelwood consumption in urban and rural households of the Red River Delta substantially exceed estimates of annual woody biomass yield in the delta and North Midlands combined. Survey data also show that roughly 40 percent of village households that use wood collect it. Of these, 60 percent collect wood from their own land or nearby commons land not more than 2 km away and the remaining 40 perceat collect wood from state or forest land as far away as thiry hn (1992 Rural Energy Survey in the Red River Delta, Table A4.8). However, fully 60 percent of households in villages that use wood purchase it and 2/3 of these households buy stemvood (1992 Rural Energy Survey in the Red River Delta, Table A4.8). Nearly all households that use wood in small towns buy it at market, with 85 percent of these households purchasing stemwood (1992 Rural Energy Survey in the Red River Delta, Table A4.23). Hence, stemwood is the preferred form of fuelwood in the market system and the market is the dominant 12 It must be emphasized that this finding is based on the rather tenuous assumption that the 1992 Rural Energy Survey is generalizable to the nual population of the Red River Delta. An energy survey on a genmlizable sample fame must be designed and carried out to confirm this finding. 21 source of fuelwood for households in small towns and villages of the Red River Delta (1992 Rural Energy Survey in the Red River Delta, Tables A4.23a and A4.8a). 15. The main fuel markets in Hanoi, Va idien town, and Sontay town (both near Hanoi) were interviewed for this study to assess recent trends from the perspective of fuel merchants and to determine sources of fuelwood for urban centers in the Red River Delta. Sales of coal to households is growing quickly in Hanoi while sales of kerosene have fallen dramatically from over 30,000 tons per annum before 1990 to roughly 5,000 TPA in 1992. According to wood traders, the market for fuelwood in Hanoi has also fallen drastically as wood cannot compete with coal at existing prices. It has been shown (Tables 2.4 and 3.1) that both in Hanoi and in rural areas of the Red River Delta, fuelwood is 3 times as expensive as coal on an end-use basis. What little fuelwood is sold in Hanoi comes from sawmills and the Hoa Binh forest reserve. Traders in the Vandien town market (15 km from Hanoi) report a similar substitution of household coae for fuelwood. Most of the fuelwood sold in this market comes from the nearby Hoa Binh forest ,eserve. There is some concern with deforestation of the watershed around the Hoa Binh Hydroelectric Project (see Chapter 4) and these results from spot surveys of traders in two nearby urban markets indicate that the Hoa Binh catchment may be a major fuelwood supply area. A nore detailed study of the fuelwood market structure around Hoa Binh and the forest resource management practices within the catchment area should be carried out at some point, especially given that severe erosion may reduce the capacity of the Hoa Binh reservoir and shorten the useful life of the Hoa Binh hydroelectric scheme. 16. Sontay town is located close to the Bavi mountainous area which is the source of all fuelwood traded in the market. Fuelwood is sold at market by collectors who travel to the mountains to collect the wood and by transporters who buy the wood along the road and take it to market. Fuelwood is priced substantially lower here than in the other centrs because it is sold not as split stemwood, but as branches of various sizes. Small branches are sold for less than 200 Dong/lcg while larger branches sell for up to 300 Dong/g. As coal sells for the same prices here as in Hanoi (shipped from the mine by river boats and barge), small branch wood is only twice as expensive as coal fines. The impact of the fuelwood trade around the Bavi mountainous area on the standing forests is an open question. 17. Without more detailed estimates of local resources and traded quantities, it is not possible to determine with any clarity where the existing resource base is threatened and where it is being used sustainably. Generalizable fuel usage surveys and detailed market studies, along with the biomass resource surveys proposed in Chapter 4, are the necessary first step in defining the problem with enough accuracy to design policies that will lead effectively to sustainable patterns of resource use. Such studies appear to be in line with the objectives of the Red River Delta Master Plan'3 that is now being formulated. One of the key objectives of this early phase of the project is to formulate a master plan for sustainable socio-economic development in the Red River Delta. A survey of household energy usage patterms (similar to the one conducted for this study) based on a stratified random sample of communes in the Red River Delta that include interviews of merchants in fuel markets associated with each commune, and that traces woodfuel back to its source for each commune could shed much light on the questions raised above and give a solid basis for planning toward sustainability in the delta. Such an integrated study would ideally be 13 UNDP funded (VIE/891034), executed by IBRD in coordination with the Ministry of Science, Technology, and Environment. 22 executed by the master plan team in coordination with Istitute of Energy staff that were involved with previous household energy surveys. 23 IV. ISSUES IN RURAL ENERGY SUPPLY Introduction 1. As showm in the previous chapters, wood is presenty the fuel of choice by households in most parts of Vietnam and is a major component of the total national fuel mix. Despite the household transition to modern fuels occurring as a result of mon, it is likely that wood and crop residues will coinume to be a domiant fuel m the next 2.3 decades. This chapter reviews available infonnation on wood supplies, deforestaion and ongoing plantation programs in order to assess the question of susinability. Crop residues and coal, on the other hand, have become major household fuels in oerta parts of the counry, often not by choice but by necessity. It is also important to deterine whe-ther the trend for increased use of these wood substitutes will not have adverse impacts on the environment and household welfxre. Electricity is not yet a significant fuel in rural areas and is not expectd to displace biomass or coal for the major energy end-use, namely cooking. Electricity supply issues are mainly those related to findig ways to expand rural semvice connections under an enviomnent of scarce public fies. These issues are discussed in Chapter 5. Table 4.1. Vietnn Land Ars By End-Use (N000 heces) Land Type LandArea Agricultal land 6016 Rice lad 3757 rrgation canas 174 Other food crps 1273 Commercial crops ug etc. 236 Commercial crops- tea etc. 576 Farest land 19065 Natual closed forest 8687 Plmted forest 628 Dee forest land 9750 MisDlous land 6634 Urban land and roads 1326 Totl Land 33041 Source. Official Statistics (see Table 1, Anne Vii). Wood Supplies: Review of the Data 2. Table 4.1, above, presents the area of Vietnam according to land use categories. Fully half the land area of Vietnam is classified as either degaded forest land (301%) or as miscellaneous land (20%). Some of the miscellaneous land is used for gazing (an estimaued 324,000 ha.) and some of the degraded forest land is used for agriculture, including shifting cultivation. The fact that little information is available about land use or the actual or potental carrying capacity of the land for this large part of the country makes biomass assessment difficult 3. Land classifications for each of 8 agro-ceological regions (based on geographical location and population density) are given in Annex VII, Table 1. Obtaining accurate information about land use and forest cover type is only the first, but necessary, step to deternine th quantity and quality of the woody biomass resource base. It is vital to deter-nine the growing stock and yield of 24 trees, bamboos, bushes and shrubs on all types of land if an assessment is to be made of the sustainability of woody biomass in different areas. Without such information, it is difficult to formulate plans and strategies targeted at optimal management and use of the renewable resource base. Because wood energy is a high bulk (and low cost) product, the supply source must be near the demand center for the product to be used. Thus, a wood surplus in the highland regions of Vietnam is of no use to the delta farmers who are looking for fuel. This is why biomass assessments must be detailed and area specific. 4. Measurements of standing stock and annual yield for the different types of land in Vietnam are generally not available. Despite the lack of reliable growth and yield data, however, esimates of the growing stock and yield of woody biomass on all types of land fonnations in the country ' ave been made on the basis of previous work.14 These estmates, a summary of which is presented in Table 4.2, below, were built up from regional totals and made for each land classification and each agro-ecological zone. They have not bee broken down to the provincial or district levels because they are meant to show the possible areas of shortages so that an inventory could focus on these areas. Nearly 85 percent of the growing stock and 50 percent of the annual yield come from the natural forests. These areas give a lower percentage annual yield in relation to their standing stock than trees on other land types because they are on a much longer rotatiun than other tree formations. 5. The supply sources for urban households and the non-household sectors are medium diameter trees, logging waste and wood industry residues which mainly come from the forests and plantations not more than 100 kilometers from the demand centers. It is esfimated that commercial or traded woodfuel accounts for about one-third of wood energy demand, but it is concentd in sall supply zones wlich may be being over-cut; only an inventory of these areas could clafy the situation and enable the formulation of responsive policy. Table 4.2. Vietnam: Estimated Growing Stock and Annual Yield for Above-round Woody Biomass Area WoodforFuelo and Charoal stock wusyield Land tN (000 ha) (000 tons) (000 tons) Agricultural land 6,016 11,562 1,544 Natual forest 8,687 465,385 18,616 Plantations 628 16,157 4,039 Degraded forest 9,750 27,857 6,965 Miscellaneous 6,634 27,954 6,987 Urban & Roads 1,326 1,893 190 Total 33,041 550,809 38,340 Source: Mission Estimates (see Tables 2 and 3, Annex VII). 14 See Annex VII for a review of previous estimates and the assumptions used here. 25 Forestry and Energy Deforestation Issues 6. Over the last 50 years the area of natural forest has been reduced by over thirteen million hectares, from 22 million ha. to 8.7 million ha. Over the same period, 600,000 ha. of plantations have been established, bringing the net loss of forest lands to just under 13 million hectares. Some open question exist about land classification in Vietnam. Why are 19.1 million ha. classified as forest land if there are only over 9 million ha. of forests ? What is growing on land classified as degaded and how much of it is settled? What is the status and use of 6.6 million ha. of miscellaneous land of which only 0.3 million ha. have been identified as grazing land? There must be some activity on this land, but it is not recorded in official statistics. Without a clearer picture of current land uses and proposed plans it is impossible to monitor land use changes. 7. If it is assumed that deforestation is confined to the loss of S million hectares over the last balf century, then the cause of this deforestation could be attributed to agricultual clearing, for the population has grown by 50 million durng that period and each person consumes crops from at least 0.1 ha. to survive. However, many areas of forest were affected by the spraying of herbicides during the last war in the 1960s and 1970s and many are recorded as still not yet recovered. The Vietnamese National Conservation Stratey Plan (page 17) states that 1.7 million hectares of lnd were still affected by herbicides in 1985. The percentages of affected forests and cropland are not stated. In additon, some forested areas were cleared with bulldozers, others were defoliated with flame throwers and napalm, and yet others had saturation bombing applied. Some of this land may fa into the miscellaneous categoty and others into degraded forest land. If the latter assumption is correct, then a part of the former degaded forest land must have sufficiently recovered to be now classified as forests. This is not unusual, because forest areas, if left after cutting, will generally recover. This illustrates the dynamics of land use changes as degrdation of once productive lands is rarely permanent if left idle. 8. The TFAP reports that only 9 percent of the forests are classified as "rich" (more than 150 m3 timber per ha.), 31 percent of natural forests are classified as "medium" (timber stock of 80 to 150 m3 per ha.), ad 38 percent are classified as "poor" with a timber stocking density of less than 80 m3 per ha. The remaining 22 percent is reported as "young" with no stockdng volume given. The same report indicates that "rich" forests are declining at about 1.5 percent per year. This deterioration of the forest composition must be caused by over-cutting for wood products, but it is most likely for sawlogs and veneer logs rather than for fuelwood. There are probably many areas throughout Vietnam where local forests have been cleared for fuel and timber products or this process is underway. These areas can be located only by examining local supply and demand situations. 9. Estimated 1992 demand for the various wood products is shown in Table 4.3. Fuelwood commands the largest market share, even for "traded" roundwood commodities. An estimated 86 percent of demand for roundwood is for fuelwood (82%) or charcoal wood (4%) of which S percent is saN%mill waste. However, this includes much self collected fuelwood for own use. If this is excluded, the estimated traded woodfuel amounts to 9.28 million tons or 68 percent of commercial wood products - 58 percent fuelwood and 10 percent charcoal wood. Sawlogs and veneer logs account for 21 percent of demand, but this includes 12 percent of the total which is sawmill waste and already included under woodfuel. Poles, posts and pit-props, not all of which 26 are trd are the next most important group and account for 20 percent of consumption, with the remaining 3 percent being pulpwood. Thus, fuel is the dominant end use of wood and, even if it is not the major cause of overall deforestation, it is important to exanine whether it is causing stress on local resources. 10. In Vietnam, woodfuzels already constitute over a third of all traded enery and must be considered an important conmercial fuel. The woodfuel industry is a significant source of employment, especially in rural areas. Using average market prices in 1992, the market value of commercial fuelwood and charcoal traded in 1992 is about Dong 4 trillion (US$400 million), roughly 3 percent of estimated 1992 GDP. The annual employment ge ted in the preparation, distibution and marketing of these fuels is esfimted to be in excess of 100,000 full time jobs, over 60 percent in rural areas. The ongoing economic refoms will probably furtier simulte te woodfuiels trade throughout the country, even as consumption of modem fuels also contiues to increase. Table 4.3. Vietnam 1992 Edimat Wood Demand by Poduct Units million tons (m3) ak dry - 15% moisture contedt dy basis WoodDemand Weight VoluM Sawuwood (saw) (1) 1.14 (1.60) Ply & veneer wood (roumd) 0.04 (0.06) Ptlpwood (roumd) 0.35 (0.53) Poles,posts&;pitprops 2.78 (3.90) Fuel & dcarcoal wood (2) 27.93 (39.10) Total Wood Demand 32.24 (4519) Sustainable Supply 38.34 (53.89) Notes: (1) Finised poduc It is assumed that waste from sawlogs is used as fuel and is included in that ttal. Estimated waste production 1.70 mill. tons (2) An estimated 9.28 mill. tons of fuelwood (7.97 mill t) and chacoal wood (1.31 mill t) were traded in 992. Ihis is 68% of the comercial wood products market, with poles etc. accoun for anoier 20%. SoMrce: Mission Estmates. Localized Deforestation by Fuelwood Cuffing 11. Using the estimation methodology presented in Ae VI, the annual sustnable yields of woody biomass, crop residues and other foms of biomass in each rgion of Vietnam were estimated. These estimates are compared against existing regional consumption patterns (esimated in Annex VI) in Table 4.4. This overview of regional supply of total biomass and exisin demand for biomass as fuel is based on very little firn data from witiin the country, and uses information and expence from other countries. Therefore, it should be used as a guide, rather than an accurate picture of the situation in the various regions of the country. 12. Table 4.4 gives the supply and demand for crop residues as well as wood energy. This was done because these two types of biomass fuels are close substitutes. This table was compiled on the basic assumption that the demand for crop residues could not exceed supply, but the demand fo;: wood products could, in the short rn, by consuming the forest capital stock. However, if both of these types of biomass fuels are scarce, then rural people wilH and do bum grass, leaves and dung. Reflecting this, the constraint on crop residues demand was relaxed and the end column, which gives an estimate of grass, leaves and weeds production, was added. 27 13. For the country as a whole, sustainable supply appears to be in excess of demand. This is still the case after aeccunting for other wood products demand, such as for sawlogs, veneer logs, pulpwood, poles, posts and pit props, estimated at 4.31 million tons of round wood in Table 4.3. Wood from protected forests is included in the supply, but the two highland areas, the areas with the most proted forests, have considerable surplus of wood and, therefore, this inclusion will not affect the overall picture. Table 4.4. Vietnm 1992I Household Fuel Supply and Conumption for Cooking and Boiing Pig Food (000 tons) Woodfor Fuewood and Charcoal Leave, Strw & L;eave & Dmand Supp Shw, etc. SAlk Grs )WRlon Urban Rural Total Tota DLem and Sup,!)) Sup,!) Northn Highlands 357 4,114 4,474 9,167 7,022 2,520 37,265 North Midlands 97 1,189 1,288 748 2,025 1,372 2,813 RedRiverDelta 313 1,140 1453 424 2,259 5,996 1,946 North Cerdal 373 2,707 3,081 6,080 7,022 3,794 20,565 SoudhernHighlands 245 1,171 1,41S 8,808 3,069 1,349 25,880 SouthCenltal 648 1,781 2,429 5,456 4,779 4,188 18,529 N.E. of Mekong Delta 2,042 2,816 4,857 3,546 1,364 2,716 7,696 MekongDelta 1,270 8,239 9,508 4,114 3,991 22,413 8,208 Vietnam 5,339 22,590 27,930 38,342 I38,188 44348 122,902 Soer: Mission Ebdimates (see Annexes VI and VIi). (1) lThse figus are etimates of tota producton that includes: (a) producioD of ceeas and other food crpp, (b) annual grwth of gpss, weeds and leaves of al crops not icluded under (a). The estmates are based on the Net Pi*wy Prodcton Potna for the varous climatic zones in Vietnm Much of this production, of course, is used as animal feed for both domestic and wild animals, and some are not used and deoompose natally. But sme are used as an naey source. e ble indicates that this demand is substally kss Ihan the tol ammal produc 14. Looking at the regions of wood shortages, it is seen ta the North, the North Midlands and the Red River Delta have considerable deficits. it is in these northern reions tha an imventory of tree resoures is most urgey required, coupled with a demand survey as proposed in Chapter 2. Also, there are areas in the Northen Hgan tion wher the firest captl is probably being extracted, such as in the Hoa Binh catcment area at supples wood to Hanoi and Vaien rcerenced in Chapter 2, and similar surveys should be carried out in thxe areas. 15. In the souther regions, the crtical areas where the tree capital is most under stress are the Mekng Delta and northeast of the Mekong Delta. The survey of fuel make in Ho Chi Mmh City reiewed in Chapter 2 indicated that the large dmand from residents and from other urban and woodfuel uig industries in HCMC are largely supplied by sources norheast of the city. A s in he Mekng Delta, particularly the coastal mangrove and Melaleuca foes are harvested and may be being over-cut to meet urban demand as well. Little is known of the curet status and impat of the woodfuels trade on these resources and on fore resurces th ghout the South that supply wood to meet enery demand in coastal zones fim Ho Cbi Minh to Danang. Thefore, invetoes and demand surveys are needed in these regions. 16. The woody biomass imbala indicad in Table 4.4 for the Mekong Delta is strkig. Given twat wood is the most common cooking fuel in rural and urban areas throughout the delta and that most nuWal housebolds gather their wood, it may be ta in the Mekong Delta and in oher reions, te are many more trees outside the fores an has been assumed in the method presented aoove and in Annex VII. The TFAP report assumed ta scattered trees on farm land 28 and rural roadsides would give a sustainable supply of 8 million tons of wood each year, whereas this report assumes about half of the above figure, namely 4.4 million tons. This divergence of reasonable estimates underscores the importance of obtaning an accurate picture of supply and demand. Assessing the Impact ofPlantation Programs 17. Vietnam has had a veiy ambitious plantation program since re-unification of the country in 1975, both with block plantations and the plating of scattered trees. Several ierational agencies are assisting with the replanting program, incl;iding the World Food Program (WFP). However, te success of the program has been somewhat patchy, because of lack of maintenance, poor soils, wrong species or variety choice, lack of skills and poor motivation in the population. These fictors mainly affected the plantation program, but scattered trees also suffered from poor species choice and a lack of extemion trai . 18. Because much planting was relegated to poor and degraded sites, an inherent lack of soil fertilty hampered seedling growth. This could and should have been remedied by undertakg soil testg and applying the appropriate quantites of ferlizer and lime at the time of pla3ting. Spending upwards of US$500 per hectare'3 to establish a govermet plantation, with only about a sixy percent chance of suocess, indicates that nmch more effort money and time could have been spent on the techical aspect of plantaton estabshent. According to an FAO Agricultral Officer based in the region,16 the application of fertilizers to degaded sites will give a much ger response than a similar application to "agricultural" land. 19. Over oae milion hectares of block plntations were planted between 1975 and 1989, but only about 600,000 ha. were considered successfully established.17 The most successful programs have been attahed to discrete projects or where ere has been an incenive to manage the plantation afterte trees have been planted. Successful plantations attached to prqe*c include- the 30,000 ha. VMh Phu pulp and paper mill plantations and the 20,000 ha. mange plantation near Ho Chi Minh city, established in an area destoyed by chemical defoliants. Icentives to manage have been a hallmark of acwtvies of the World Food Progmme (WFP) which has established nearly 100,000 hectares of plantaions between 1986 and 1993. 20. Nearly 6,000 milLion trees have been planted in scattered formations outside the forest beween 1961 and the present day.18 If all the tees were properly established, allowing for 20 percent morty, then the equivalent of over 2 million hectares will have been planted to date. Thus, scattered tree plantings may amount to three times te area equivalent of plantations. Trees planted with the ownership vested in the planter have a greater chance of survival than "public" trees. Persistent problems with poor species choice, unsuitable land preparation practices, and lack of maiteanc and agment skldls, all of which hamper the survival of the young trees, may 15 The Forest Service stated that heir establishment and tending costs, including overhead, are about $500/ba. To r-establish the mangrove areas destroyed during the war in Ho Chi Minh province cost $700/ha. Howe, the World Food Program costs are only about $100/ha, excluding expatriae assstnc 16 Persuoal n with r. Siegfried Lampe, FAO, Bangkok. 17 Tropical Foresby Action Progam, May 1992. 18 Tropica Forestry Action Progam, May 19. 29 have led to results less impressive than those assumed here. However, no suwvey of these plantings has been undertaken. 21. The government has vested nearly five million hectares of forest land in rural people with plans to allocate another two million hectares. Much of this land is degraded and, therefore, more difficult to establish than non-degraded land. All these vested areas should have management plans, but many plans are compiled by people with little experience in appropriate species choice and appropriate magemet prctices. Nevertheless, ewperience to date has been favorable. 22. While tree planting efforts are still important, emphasis now should be place! on standing stock and improved management of existing forests, plantations plus scattered tree resources, and ensuring that there is or will be a market for the trees that have been planted already. Several publications19 state that pure fuelwood plantations are uneconomic, because they are competing with a free wood resource which is collected fom the natural forest, degaded forest land, and miscellaneous areas. While this satem t is tu if plantation wood is from the same area, it may not hold if plantations are grown closer to market than sources of collected wood in natural forests. In this case, plantaion wood could compete with a "free" remote resource. The savings in transport costs can be iwested in a fuelwood plantion and be competitive with "fiee firewood". Thus, if the diffence in distance between a natral forest and a plantion is 80 km, other things being equal, then with a road tasport cost of Dong 1,000 per ton per ka (US$0.1 per tlkm), plntation wood can be grown at a cost of up to Dong 80,000 per ton (US $ 81t) and still compe with a "fiee" supply of wood that is 80 km or more further away from the maurt. If the mode of trsport is by boat then is break-even distance ouldd be about 240 lcm- for boat tusport costs are about one-hirdof tucking costs per ton/km. 23. An FAO analysis found tat te mangve plantations about 10 km from Ho Chi Minh city appear to be profitable for fielwood even at the curet very high inbterest rates (30% p.y.).2 MIis illustrates the point about location being crti when mpanng the cost of most goods, especially bulky goods like fucihvood. Of couse, the market for other wood products, such as poles, pulpwood and sawlogs is usually more ctive than the market for fuelwood and charcoal wood. But wood that is sold for bigher value end uses usually generate some wase wood which is sold as ficiwood. A small but significant share of rural ouseholds in the Red River Delta purchase their fuielwood as offcuts aid sawdust fom sawmis (1992 Rural Energy Survey in the Red Rtver Delta, Tal Its A4.8a and A4.23a). 24. Table 4.4 indicated some of the wood-short areas, such as in and near both dels, as wel as many urban areas, especially the lare cities of the North and Souh If land with few alteative uses is available near demand cents in these areas, this is where planta efforts should be cncentraed. Tbere are also areas of degrd land that form the water catchment of river systems with aal or potial for hydro eney projects. In most cases ftese watesheds need protection and trees could be one of the best protcion covers. Bust as stated previously, improved management of existing tree resources should be given as much, if not more emphasis. The Da river system has a water camet area of 2.7 milion hectares within four provinces of north- westerm Vietnam. This catcmt system is havng considerable erosian problas which could shorten the Hoa Binh Dam life considerably. The protectio of this catebmet area is vital to guarantee the electicity supply and to safeguard a massive invesent fbr Vietnam, estimated to be 19 Tropial Foresy Action Program, May 1992 and Chistopherse, KA., 1991. 20 "Fuelwood Supply Anay prepared by K GrayM br TAP, May 1992. 30 at least US$3,000 nillion. Tree planting initiatives, especially agro-foresty and other multpurpose fiam trees, would not only do this, but they could meet some of the market shortfalls for wood products in the North Midlands and Red River Delta regions. Therefore, planting initiatives in this whole area, especially in Hoa Binh province, should be intensified. Issues Related to Other Energy Supply Options Agricultural Residues: Practical Potential as Fuelwood Substitutes 25. Agricultural residues are produced in substantial quantities in Vietnam. Using general conversion factors and crop production stastics from the Statistical Yearbook, an idea of residue production can be obtained. Table 4.5 presents such estimates of 1992 crop residue production for Vietnam. The estimated production of crop residues of 44 million tons (37 million tons in wood equivalent terms) is just slightly more than the estimated annual production of woody biomass (35 million tons). This indicates that there is a considerable potenal for using crop esidues as fuel. Table 4.5. Vienm 1992 Esimatd Product of Crop Residues Reidw Quaniy (000 tons, air dry) Rice straw 29150 Rice husk and bran 7774 Maize straw, cobs and bran 1240 Other food cmps 1675 Baggase and arcane tops 1782 Cocout shells and hsks 2327 Oterrp rsdues 400 TOTAL 44348 Sm: Misoa Esmates (se Table 4, Annex VII). 26. Howev, agncultural resddues fm non-woody plants are usually more bulky than wood and on average contain 15 percet less energy per uit weig Theretfo, for energy puposes te have to be consumed very close to the supply source. A national surplus of residues, for exaple, is not relevant to a localized scarcity of fiels in the Red River Delta due to rnsport costraint. Crop residues cannot be stored for long periods without disintegating. As they usually burn quicldy wfth an intense flame, the fire bas to be attended consantly. For these reasons, crop residues are not a preferred household fuel. The extensive use of agricutural residues, parficublly rice straw, in Vietnam's rural areas shown by the survey data clearly indicate the scarcity of wood in those areas. 27. Seveal technologies are available for densifyig bulky resides, rnging fiom simple hand operated presses to mecanized systems. While densification may address the transport problem, it adds to the final cost of the fiiu. Experienc in other developing countries indicate that densified residues have never achieved significat co cialiion and widespread use. Considering the "free good" chacter of residue use in Vietnam, it is likely that its collection as needed and its use without densiScation will be the only way it will continue to be uilizd in wood scarce areas. 28. Agricual residues have many altrnative uses, such as animal feed, cOmpOstin8/mukhing and building material for roofis and walls. About 10 million tons of cp residues are presently used as animal feed. Where there is a surplus, stubble that is left in the field may be plouge into the soil or may be bumt in order to recover the mineral contns. Thi latter 31 is standard practice for rice cultivation where the farmer requires an impenneable soil surface. Several recent reports indicate that using crop residues as fuel deprives the soil of fertilizer.21 However, as discussed in Chapter 2, existing practice appears to contradict this view. If the ash is returned to the soil after use as a household fuel, then most of the minerals will not be lost. There is anecdotal evidence that rice straw has been used as a fuel in the Red River Delta for centuies and it is common practice to use the ash as ferilizer. Rice husk ash from brickworks apparently is being sold to sugar farmers as a fertilizer. Therefore, it seems logical that Vietnamese fiamers will return the ash to the fields, especially as they already apply compost and manure. Coal as a Household and Rural Indusbial Fuel 29. Nearly half of coal demand is consumed in rural areas and it is the most important "modem" fuel in energy terms for rural industries and households. It is also the most widely traded fuel in the rural regions of the North, mainly because it is the cheapest fuel close to the mme head. About 1.78 million tons of coal were consumed by households and small industries in 1990. This figure is expected to increase by 63 percent to 2.90 million tons in 2000. Table 4.6 Demand for Coal by Hoeds and Smal Scale Rura Industries Units 000 tons (1) sector 1990 1995 2000 Household Rural 545 695 886 Urban 585 747 9s3 Subtotal (2) 1130 1442 1839 Small Industries 652 832 1064 Total 1782 2274 2903 Nglt: (1) Th ener value of oa aumed in tbe above figure is 2U8 MJ Hoev, Oh actul ener aue of the a fins ddhvd for hoko and mln inuty is only about 23.0 Ml*& The coa fines are made into bdquefs and pails which may reduce the ary value fiter to about 16.8 M& Thus, in tam of this later energ value the toal demand in 1990, 1995 and 2000 would be 3.05, 3.9 and 4.98 million tons respecively, (2) This includes coal used to boil pigfeed, an estmaed 95,000 tm in 1990,120,000 tons in 1995 and 155,000 tons in 2000. Source: Mission Esimates. 30. The projected 63 percent increase in coal demand by 2000 r.means that its relative share in the energy mix will increase. Therefere, it is inportant to examine the infonnal industries using coal and explore ways to improve their end-use efficiencies. Considering the inroads that coal bas made in the residential sector, it is likewise important to improve the efficiencies of domestic coal bumning stoves The brick and lime industries are the largest rural industrial users of coal. These industries generally make their own patties or briquettes from a mixture of coal dust and clay. On the other hand, households usually buy manufactured bkiquettes made to specific sizes to fit the coal stoves in the narket. 31. Coal has some drawbacks as a fuel. First it is difficult to light, and like biomass, it is hard to control the heat output in a domestic stove. Once lit, the tendency is to keep the stove burning all day, damping it down when not in use. Of greater concem are environmental impacts of coal use, such as the low height particulate emissions from buming coal in an open domestic stoves and bricJclime kilns. On both environmental and efficiency grounds, stronger controls on the quality of 21 Koopmans A., 1991 and Gray K., 1991. 32 coal going to specific users in urban areas should be phased in as soon as possible. Coal washing and screening procedures can remove some of these particulates. The Energy Institute is already working on ways to improve the ignition properties of coal and coal briquettes and to find inexpensive ways to screen out particulates from the material. Renewable Energy Supply Options 32. Vietnam has a small ongoing program for renewable energy development, mainly carried out by the Energy Institute, the Energy Center of PC2 and some universities. Efforts include the design and installation of mini- and micro-hydropower stations in mountainous areas, the design and installation of biogas digesters, and the development of solar and wind energy applications for crop drying, water pumping and power supply in remote areas. As in other countries, the goal is to expand the energy sources available to rural households and relieve pressure on the forests and the agricultural resource base. 33. Although it is recogized that most of these technologies are not economic at this time, there is a high social value placed on providing lighting, radio, .,. television to households in rmote areas as a means to raise their standard of living and improve their cultural life.22 Thus, the goverment subsidizes by 25 to 50 percent 23te end-users of technologies that are still under development (wind, solar, and biogas) The subsidies are intended to encourage early adoption of technologies that serve as demonstation units. 34. Small HydQ w . Small hydro-power applications have a long history in Vietnam. Small hydro-power as a local supply source for rural electrification in remote and mounwinous areas has been a priority technology for government sponsored research and development in Vietnam since 1955. Since 1970, plans for installation of small hydropower stations have been developed for provinces with appropriate hydrology throughout the country. All small hydropower equipment was imported before 1975 (mainly from China), but since then a small domesfic capability to manufacture turbines, generators, regulators, and transformers has emerged in Vietnam. 35. The hydrological resources of Vietnam have been well researched and documented. The economic potenial for small hydro-electric applications in Vietnam is esfimated at roughly 1.5 GW. Some 3,000 sites have been identified for small hydropower stations in the range of I kW to 10 MW mini-hydro systems.24 By 1985, 400 small hydro stations were in place with a total installed capacity of 30 MW and delivering 90 - 100 GWh of electricity annually to over one million people in 20 mountainous and highland provinces. Current plans call for installation of 160 new small hydropower stations by the year 2000 with a total instlled capacity of 100 MW. This goal appears to require that domestic manufacturing capacity for complete small hydropower stations be expanded.25 However, there may be quality problems with some of the domestically 22 Nguyen Van Than (National Renewable Energy Program), 1990. 23 Tran Hong Quan (National Renewable Energy Program), 1990. 24 Ha Tien Luy (Institute of Energy), 1992. The method used for estimating the economic hydropower potential (roughly 1/3 of the total physical potential) was not reported. Evidence in 1TDG, 1991 indicates that idenufication of economic small hydropower sites may often concentrate mostly on technical design and hydrology with little attention paid to estimating demand or identifying applications for the electricity to be generated. In this light, the reported economic potential for small hydropower may be cautiously interpreted as a technically feasible potential. 25 Ha Tien Luy, 1992. 33 produced equipment. Much of the equipment for new stations is still imported and almost all of the micro-hydro equipment and smaller turbine-generator sets purchased by families and are still imported from China.26 36. in addition to these small hydro systems, it is thought that over 3,000 family bydro turbin-genrator sets of 1 kW or less are intalled throughout Vietnam. Representative costs for equipment, inion and dam constuction for a 300 Watt system are roughly 1-1.5 million Dong (1992) and about 0.5-0.8 million Dong (1992) for a 150 Watt system. For the small hydro systems discussed above, equipment costs are roughly 1 million Dong (1992)/istalled kW; construction costs valy but averge about 1.3 million Doug (1992)/instlled kW. Small hydro systms have an average life of 8 years. 37. Though statistics on how many of the installed small hydro systems are still in opertion nationwide are not available, evidence from Bac Thai indicates that a lare share may be out of sevice due to lack of teclmical and financial support27 This reflects a planning approach that is focused almost exclusively on techical site identification and installation desgn with very little ateton to trainig local operators in effective management practices or manten skils once the system is in place. In contrast, a 1985 Instiute of Energy survey of small hydro stations indicated that most of the 44 larger stations in the countly (0.1 to 10 MW) were well managed and were run proficienty. While these uer units are run by authorities that have sufficint support to mamitn their systems, it appears that lack of attention to building managmet skdls at local levels for smaller systems may result in reduced benefits that could be obtaed from the existng instaed capacity. Building local mnagment and maintenance skldls should be a priority area for govement efforts in small hydro. in additon, planning authorities at national and provincial levels should develop the capability to esfimate demand for electricity and compare it to tecinically feasible supply in idening sites for new istions. For villages in remote and mouninous areas, mini and micro hydropower represnts a valuable resource for rural electrical applications. Efforts to ensure that existing capacity is well managed should be supported. Planning authorities should develop the capability to identfy new sites by matching the hydrological potential with esimated demand for electricity services. 38. Biogas. Work on biogas in Vietnam has been conducted by the Institute of Energy in Hanoi, the Energy Center of PC2, the Agricultural University #1, Ho Chi Minh City Polytechnic, Can Tho University, and Committ es of Science and Technology in Hai Hung, Dong Nai, and Ho Chi Minh City. There are roughly 1600 digestors with volumes from 3 to 250 m3 throughout the countuy. Most are located in Ho Chi Minh City or in the South where the climate is more suitable. Many digestors were subsidized with government funds or by international organizations as demonstration units. The purpose of the insallations is to produce a gas that can be used for cooking and lighting as well as an effluent that can be used as a fertilizer. Data on the cost of the units are not available so it is not possible to deternine their economics. It is also not known how many of the installed 1,600 digestors are in operation today, but it has been reported that some of the digestors operate badly and some do not work at all, especially those with large capacities.28 This situation is not unique to Vietnam. Although household biogas has had some success in countries of South Asia and China, experience in other countries, including those in Southeast Asia, have not been positive. Households with highly subsidized 26 IDG, 1991 (for Bac Thai province). 27 ITDG, 1991. 28 Lam Minh Triet (HCMC Polytechnic), 1990. 34 demonstration units, as in Vietnam, had little incentive to manage and maintain the digestos. Despite the apparent interest in this technology, it is doubtful whetr it can be considered a practical ey supply option. As a means of conserving fuielwood, prmotng improved cook stove is probably a less capital intsive and more cost effective approach. 39. Wind and Solar Applications. With mean wind speeds of 3 m/sec, the wind regime of Vietnam is not suitable to a large scale wind enery development effort However, there are local areas in mounnous regins that have a better wind regime and are far from the existing electicity grid. The government has used recent wind speed data and disance from the electricity grid to identify the most promising locations for wind applications throughout the country.29 There are roughly 400 windmills in the country used for electricity generation and water pumping. A number of low speed, low cost windmill designs for electricity geneaion and for water pumping are now being developed at the Research Center for Thermal Equipment and Renewable Energy at the Ho Chi Minh Polytechnic to operate at wind speeds of 3 n/sec or above.30 The Center now makes 100 W and 150 W units that sell for around US$200 (at cost, wout battery). Even at this fairly high prce, the Center has sold about 100 units to families and prvate entrepreus mostly cn high plateaus who use the wind geneors to charge 12 Volt car batteries, suggesting general satisction with the product The Center has also sold about 30 wind water pumps (at cost) with designs tailored to diffeet lifls and wind rm. There is not much curent activities on photovoltaics. PV applications for remote areas would senm to have practical potenial in Vietam and may be worth a higher priority in the program. 40. The Center also has an active research program to develop solar crop drying platforms for the Mekong Delta. The wet climate of the delta leads to a sizable share of fruits and other crops spoiling each year. A number of low cost portable designs are being field tsted for effectiveness in meetng farmers' crop dying needs. Of the renewable enery applications being developed by the center, only several windmill designs appear to have immediate market potential. The Center is curently working on setfing standards for mass production in preparation for wider commercialization. Priority Areas for Renewable Energy Development in Vietnam 41. Given the scarcity of public resources, it is important to be highly selective when determining where to focus development efforts on renewable energy technologies in Vietnam. External financing from bilatrals have been used to do R&D work on a number of applications such as wind generators and pumps and this approach should be maximized. Wnd applications that are designed to serve a niche market in remote areas appear to be gaining commercial acceptance and should be encouraged. The Iostitute of Energy, the Energy Center and the other agencies engaged in renewable energy development should review the results of their work so far, with a view to clarifying goals, prioritizing work programs in the medium term and redirecting some of the staff and resources to activities that have more immediate relevance. Two of the Energy Insttute programs would appear to have the highest priority, namely: mini- and micro- hydro and improved stove design and dissemination. The small hydro group should build internal skills to assess and incorporate rural demand in site selection procedures. The improved cook stoves program should begin to pursue commercialization steps more actively (see Chapter 2). 29 Dinh Xuan Hung (Institute of Energy) 1990. 30 Nguyen Van Hoai (HCMC Polytechnic), 1990 and Duong Thi Thanh Luong (HCMC Polytechnic, 1990. 35 V. RURAL ELECTRIFICATION Background 1. Between 1954 and 1975, the major electrification objective of the Government in the northern part of the country was to provide for basic services that would sustain economic activities in urban and suburban areas. In the South, three cooperatives, patterned on the model of the U.S. National Rural Electric Cooperative Association (NRECA) cooperatives and mostly financed by USAID were launched in the late sixties, serving up to 10,000 customers each. In 1975, the assets of these cooperatives were consolidated with those of t-Ae power utilities into state assets. Between 1975 and 1985, a ler the end of the war, the bulk of investment in the Vietnam power subsector was targeted at iehabilitation and construction of generation and transmission systems. Although pronounced as a priority, rural electrification did not really gain any momentum until 1985, when refonns were undertaken in the rural economy and new supply and transmission facilities were gradually established. Electrification projects during this period consisted mainly of electrifying major towns in the provincial districts. 2. Table 5.1 sunmariMs rural electrification growth from 1975-1990.31 Tl official figures appear to indicate that considerable progress has been made in rural electrification in the recent years, with more than 1.7 million new rural people connected to the electricity supply between 1989 and 1990: Table S.1. Rwal Electrification Growth, 1975-1990 Yewr riatio Rura ntdr Rua TOWal Perft ElcrWd na P=mPs (MWh) HOmeUd& nAiona dmand aW l (OWh) MM (M) POWon 1975 119 30 - 37 186 &5% 2.5% 1985 223 75 75 373 9.7% 5.5% 1989 329 141 150 620 10.9% 11% 1990 398 210 192 800 12.8% 13.9% Soure: TbhEneIute(1991) and mi1mediu 3. However, a closer look at investment statistics for the three power companies duing that year indicates that the electrification effort mostly involved the densification of electricity service in areas already covered by the medium voltage network and does not include extension of service to originally unelectrified areas. While instaUlled capacity in distribution transformers has increased by an amount coresponding to the supply of these new customers, the number of Iam of medium voltage lines (below 35 kV) and the instlled capacity in 35kV trnsformers supplying the MV lines remained almost constant. Most of the new customers were terefore (i) inhabitants of towns and suburbs, and (ii) inhabitts of vlages close to existing electric pumping stations. Most of the hinestmnt involved in this network development are attributed to local/private financing, which 31A] ough preliin tu from the Living Standards Survey seem to indicate th the national etrificadon rate cold be up to 35%, the official figure is only 140. It is possble that the discrepany is due to differing dtefinions of urban and rural in the estimates, a goss undestmaon of the extent of multiple conneions, or a combintion of both fctos 36 corroborates statements made by the power companies that their present involvement in rural electrification is quite small. 4. The responsibility for rural electrification lies with the Ministy of Energy, which decides on the overall investment program in the electricity sector and on the rural electrification investments proposed by the provincial authorities. There is at present no national planning for rural electrification. The decisions are made by the Ministry of Energy on a project by project basis based on the availability of funds in (i) the power companies (national and provincial power deartmets), (ii) the provincial authorities (provincial People's Committee) and (iii) the local authorities (village People's Committee). The different departments of the power companies are responsible for the preparation of the analysis on the technical and economic feasibility of each project (See Annex X). Pilot Projects 5. To find approaches to rural electrification that do not rely only on central government funds, pilot projects were launched in the last S years. These projects involved new financing schemes involving participation from the central goverment, local authorities and private consumers (see Table 5.2, below, which shows some of the northern projects). 6. Eight such projects have been selected by the Goverment in northern Vietnam, one in the cer part (a sub-district in the Highlands), one in the South (Song Be District in Long An province). The financing arrangements for these projects are as follows: The cental, Govemment, tough the appropriate Power Company, provides the funds for the 35 kV lines and the main 10 kV feeders. The 10 kV spurs are paid for by the local authorities (province and district) and contributions are raised from households at the cooperative (subdistrict) or village level to pay for the low voltage system. The typical contributions from households are 0.8 to 1 million Dong. The households buy meters (300,000 Dong, instllation included) and pay for (or install emselves) the service drops (typical cost of 500 Dong/m). Loans are sometimes available, from the Vietnam Bank of Agriculture (VBA) for people who are interested in electicity supply but cannot afford the up-front cost. However, VBA!s financial resources are vely limted and it cannot cope with the demand. Current interest rates amount to 3 percent per month. 7. In the pilot projects, the portion financed by the Cental Government averages 40 percent of the totlW cost of the project. Technical design is done by the Provincial and District bureaus of the power companies. The construction worss are carried out by one of the government-owned power construction companies under supervision of the local branch of the power company. Extension and mainte of the local low-voltage grid, and bill collection are under the purview of a team paid by the local association of shareholders (rual commune or electricity coopertive). The coopemtive buys electricity at a bulc rate. The resale rte to the end-consumer varies widely as there are nO controls on tariff levels by the local branch of the Power Company and the local authorities. 8. The pilot projects were identified and recommended by the Provincial authorities and evaluated at the Cental Goveme levrel. The main criterion appears to be that at least 50 percent of households in the concerned community were willing to pay the required contrbutions. Oveall, however, only 40 percent of the physical and financial targets have been met, mainly because of lack of funds. These pilot projects represent the major ivestments in runal 37 electrification in recent years, but they will not be repeated. In the future, potential consumers will have to pay the full cost. Table 5.2. Examples of Rural Electrification Pilot Pograms ___ ________ _ _ _EBach Saun NghisTru Minh Khai My 7bo Exiting Capacity 80 180 200 180 (kVA) . Nowe ltaUed Cqapafy 360 880 539 420 (kVA) Forat Ihnand (kNV) 365 910 331 352 ExistingSubstdaion 1 1 2 1 Now bstaled Subsation 3 5 7 3 Now 10 kVLines0nM) __ _ 2.5 3 Now 35 kV ILies (m) 1.2 _ Now Low Voltago lines (m) 7 14 9 5 Nunber of Mcers 1137 1800 1109 823 Finanabl Paricipation fixnn (lovenmien 203 600 337 234 (:imion Dongs) fhnn Loca Authorlbs 248 288 322 175 (million DonM) fr. Private Source Qiousdowlds) 163 600 160 118 (MiUion twongs) Source Powr Company# 1. Constraints to Rural Electrification Supply Constraints 9. For the South and cetral regions, it is clear that a succesul rural electrification progam cannot be implemented before the curent severe suppl problems are solved. The immediae priority in these regions will therefore be to secure sufficient generating caacity to supply te existig and potential deand with acceptable reliability. The Govement of Vietnam is undertaking the construction of a 500 kV line that would connect the northem grid, with surplus genratng capacity, to te shortage-constrained regions of the Center and the South. Scheduled for commission in 1994, this line should solve the supply problem in these two regions in the medium term if its operation does not present any major technical problem Power Lc::es 10. For all regions, cosdy technical and non-technical losses in electricity distribution, and end-use inefficiencies in both urban and rural areas should be remedied first. Inefficiencies on the distribution side include :(a) low system power factor, (b) transformer inefficiencies; and (c) poor quality of cables. 38 11. The power factor on the distribution systems of the three power companies is very low: values between 0.6 and 0.8 are currently encountered in suburban and rural areas. Investments are urgenty needed to leviiattc this pioblem, which causes significant energy losses, high voltage drops and frequent outages of overloaded equipment. For PC1, annual investment requirements on distribution networks for reactive compensation equipment (about 60 MVAR) is estimated to amount to approximately US$1 million. The low voltage problem, caused in part by low consumers power factors, is aggravated by widespread use of voltage boosters at consumer premises. These devices improve voltage conditions at the premises at which they are installed, but themselves impose additional reactive power demand on the system and, further, since the load they serve will remain relatively constant with variations in system voltage, exacerbate voltage conditions for other consumers on the line. 12. The transformers presently installed on the distribution systems are highly inefficient and oftE oversized, particularly in rural areas, mainly due to outdated manufacturing techniques. The characteristics of these transformers indicate that their loss levels correspond to the intemational standards of the sixties. The power companies should carty out systematic monitoring of the loads on the distnbution transformers and replace those that are improperly sized. It may be necessary initialy to import the 10 or 20 KVA transformers needed to supply clusters of houses in rural areas, as these sizes are not presently available in the Vietamese market. Locally manufctured transfomers were designed to comply with outdated Russian standards. Replacing than as soon as possible with more efficient, imported models is clearly economic. Neighboring developing counties, notably China, are now n ng transformers of acptable qualit levels and at costs that are similar to the current costs in Vietnam (see Annex Xl). 13. Rej9acement of existng igh loss transformers in the system if spread over a five-year period, wil probably require some IUS$15 million per year. In the medium term, electrical equipment factories in Vietnam should be encouraged to upgrade the efficiency of thei products, by imposition of increasingly strngnt Government standards and by ecurging joint ventures with more technologically advanced foreign manfcturers. 14. Signifcant losses also stem from the low quality of the cables generally used in the system. Currently, the power companies do not impose =mium standards on fth state-owned cable manucturig companies. Low voltage connections, insalled by private households or cooperatives, do not follow any official standards and are often uneconomically small in size and pose safety hazards to personnel. End-Use Inefficencdes 15. Various inefficiencies on the end-use side add to the magitude of technical losses. Electric motors manufted locally are designed to comply with a power factor requiment of 0.7 at nominal output. These motors, used as pumps or used in mural industries, represent 70 percent of the rural consumption. This low power factor causes additiol losses, both on te supply and end-use sides, and voltage drops and increases the operating cost of the system. Some braches of the power companies reportedly apply power factor penalties for large customs (above 100 kVA), but no provision for such a penalty is made in the official tanif and meters for reactive power consmption are only instlled in vety large industries. 16. Electric pumps for iigation and drainage represent a major load in nual areas. Only two models of electrical pumps are manuf,ctured in Vietnam for instalaion in irrigation stations: (i) a 39 "small" pump, (rated at 33 kW at an output flow of 1000 cubic meters/h and 4 to 6 meters head) and (ii) a large pump (rated at 75 kW at 4000 cubic meters/h and 9 to 10 meters head). The typical efficiency of these pumps at nominal output is said to be 80 percet. In all the sites visited by the nussion, the pumps were oversized compared to the head they have to supply, further reducing their efficiency and decreasing the power factor (which is already low by design). Since these pumps account for about 50 percent of the rural electricity consmption, it is clear that this sitation needs to be addressed urgently. Considerable gains in system efficiency could be achieved by (i) proper sizing of pump and motor, (ii) equipment design modifications at the fctoiry, (iii) installation improvements and (iv) optimized irrigation system design. Measures to address points (i), (iii) and (iv) could be undertaken within a relatively short tme fime. Site-by- site analysis of pump installations should lead to the identification of economic opporunities for rehabilitadon f installations and irrigation systems. Point (ii) requires longer tem measues, such as technology transfer from foreign manufacturers. Non-technical Losses 17. The present situation regarding non-technical losses is highly mixed. While meer reading and billing are generally well organized (their efficiency would be improved fiuer if more advanced computer tools and software were made available), collection and fraud detection efficiency vary widely for different areas. In some places, such as certain areas of Haiphong, the high level of fraud and theft (osses are above 40%) has led the power company to seek the help of police and justice authorities. In places where customer management is handled at the local evel, the problem is almost nonexisten In the whole country, difficulties are encounered in recoeming accounts receivable from institonal customers such as public enterprises or local authorities (water pumping). This problem could be miigated by appropriate arrangements with the goverment agencies, such as budgetized pre-payment procedures. Non-technical losses shoud be given major attention by the power companies, since the motivation for fraud will increase in the coming years with the planned increases in taffs and consumpton levels. 18. A fActor that contributes to non-technical losses is that most of the installed metrs are inaccurate and unreliable, causing major revenue losses to the power companies. It is estimated that some 300,000 meters per year would be needed to equip newly connected customers and gradually replace the old meters. This would cost approximately US$10 million anumally. 19. Both technical and non-technical losses exacerbate the poor financial position of the power companies and reduce the amount of funds available for new invetents, including rural electrification. Institutional Constraints 20. Although the provincial authorities are consulted by the Central Goverment in the design stage of the projects, final decisions regarding rural electrification investments remain centralized, often leading to rigidities in the technical approaches, delays in decision making and low motivation at the local level. The way in which load forecasts are prepared is a good example of this centralized approach: The departments of the Ministiy of Energy in Hanoi decide natior.wide targets for household consumption. For 1995, the standard demand (and energy) values are 700W/household in rural areas (150 kWh/capita/year) and 1500 to 2000W/household in urban areas (400 kWh/cap/year). These centrally derived figures do not appear to be based on any systematic study of the actual context in the subject communities and may lead to over- or 40 underdesigp of the networks in certain areas. In addition, the power companies have an unbalanced central role in rural electrification projects, and their natural bias favors classical electrification from the grid. Possibilities for altemative electrification schemes, such as decentralized generation by diesel, mini/micro hydropower or individual photo-voltaic systems are therefore not given adequate attention. 21. Responsibilities for planning are spUt among several government agencies, leading to lack of unifomity in tc -!ical standards and project evaluation criteria. There is no focal institution where important data and lessons could be gleaned from the results of past projects, such as the rate of growth of connections in newly electrfied areas, growth of individual demand over the years, and comparisons between actual accomplishments and physical and financial targets. 22. Tbe regulatory framework for rural electrification is not clearly defined: ownership of systems (networks and/or generating equipment) built with private fincing or mixed public and private financing is not clear. No general procedure is followed for tariff setfing in cooperatives or in privatelyowne isolated networks, wbich would be a fundamental step to ensure protection of the end-users and fair returns on ivestments for the financiers. These and current laws resticting the right to produce electricity for the public grid to the three power companies limit the likelihood of increased involvement of private finmcing in RE. schemes. 23. The de facto monopoly of the Govenment-owned construction companies presently ensures conformity to a single standard for medium voltage extensions. However, as competitiu is introduced (as it should be) to lower construction costs, the sitation will evolve. It is important to start defining and enforcing a set of thnical specifications and national stndards so that mrnimal safety and technical requirements will be observed in these networks in the fiutre. Scarcdty ofFinancing 24. Lack of financing is a general constraint on the hee gional power companies. This has limited the development of supply sources, notably in the South and Center, and the rehabilitation of transmission and distribution networks all over the country. The urgent need for new investent is felt particularly in the North where already access to electricity is restricted durng the peak hours because of the limited power transmission capacity in the system. The bulk of financing resources in the subsector is now earmarked for the 1500 km 500 kV transmission line, due to be commissioned in 1994. The estimated cost of the interconnection project has been revised upward from US$220 million to US$520 million. This implies that the amount of money available :or rehabilitation of existing networks and extension of electricity services in suburban areas in the light of this development would be i'ery limited. Rural Electrification Planning Electrificafion Targets 25. In most areas of Vietnam, the priority given to electrification of pumping/irrigation stations has been well-justified by the economic benefits realized (it allowed for double or triple cropping and helped to move Vietnam from a rice-importing country to the world's third largest exporter of rice). Opportnities for further investments of this type are many: only 10 percent of the irrigable lands enjoy that service in the Mekong Delta region. The high population density (380 inhabitants/km2) and current low electrification rate in the delta (14 to 18%), suggest opportunities 41 for highly econonic R.E. projects. New irrigation projects may also be pursued as components of projects with wider objectives, such as inhfastucture development schemes. An example of such intion is the UNCDF infastructure project in Da Nang Province, where the electriiation component represents 10 percent of the total financing. 26. The opportunities for further incmreases in rural household connections without constuction of new medium voltage lines are now severely restricted. By 1992, it seemed that the type of ural electrification resulting from the establishment of irrigation/drainage pumping stations was reaching its limits and that grid extension had stalled due to lack of financing from the pow r companies, the cetral and provincial authorities and the villages. Nevertheless, the offial targets for electrification for the cotmng years remain ambitious, aiming at an average of 300,000 new households connecdons per year. These targets will be increasingly difficult to meet since the easiest parts have been or are already being done: Table 5.3.Rmal Electrification Targets IM_a 1990 (ace v 199514 12000 Rual Population wvih Elatriciy (pacet) 13.9% 25% 3S% Rural Popuation whh Electiaty (million) 7.26 14.25 21.93 Supp to rigaton and Rura bIty 660 1118 1464 (GW hfea) ______ ____ Swplyto IIsehoh (GWhWye) 340 1000 1700 Source: lheEnr tute(1991). Investment Requirements 27. Given the lack of feasibility studies on potenti demand, it is not possible at this point to determine the total investment requirements for a rural electrfication program. owver, indicative estimates of the investment necessary to electrify 80 percent of the population by the year 2000 in (i) Red River Delta, (ii) Mekong Delta and (iui) center-south coastal areas (near Da Nang and Hue) have been made by the present study. These areas were selected for analysis because they are the regions where electrfication by extension of the regional grids is likely to be the most economic alternative, population densities are high and the regions' economies are the most likely to benefit strongly from the availability of electricity. If all of the 300,000 new connections each year were concentrated in these 3 areas, the 80 percent target would be reached in 12 years. Though it is unrealistic to assume actual electrification would be constined to only a few regions, this exwrcise enables a rough estimation of rural electrification costs. These estmates indicate that investnt needs are likely to exceed US$3 billion for the distribution networks alone, broken down into about US$1.9 billion for MV systems and US$1.3 billion for LV systems. The regional breakdown would be about US$350 million for the Red River Delta region, US$850 million for the Mekong Delta and US$2.1 billion for the central region. 28. This estimate was made by extrapolating the results of a prefeasibility study made for the Plain of Rushes for supply extensions to the most densely populated rural areas. The figures must be treated with caution and do not include the costs of: (i) development of corespding sources of supply, (ii) construction of transmission network (above 35 kV) and (iii) consumer connections and meters. An investment program of this magnitude would lead to an overall electrification rate of less than 40 percent, corresponding roughly to the plans prepared by the Ministry of Energy. 42 The magnitude of investment requirements points to the imperative of exploring innvative financing arangements that involve pnvate capital participation. Table 5.4 Indicative Cost Esfimates for Reaching Rural Electrification Targes Over 12 Years Households NewConnections (mi1lions) %Electrified for 80o eleficadtion dcaftive Costs 1992 2004 1992a by 2004 (US SmiLion) RedRiverDelta 2.25 2.75 70% 625,000 350 Center-South Coasl 1.00 1.30 20% 800,000 8S0 Mekong Delta 2.50 3.20 15% 2,185,000 2100 Totals 3,610,000 3300 Note (a): From partial returns of Living Standards Survey (1993). Rural Consumers: Willingness to Pay 29. There is evidence that electricity consumers are willing to pay high rates that may cover the costs of rural electric service. Presently, electricity end-users often pay more than the official tariff and even more than the margin cost because of the common practice of resale of electricity in both uran and rural areas. 30. The practice works as follows: in order to limit the level of their _invstmt in the low voltage systems and minimuize the workload of the customer nagment staffi e power companies have sanctioned the mse of secondary meters. The bouse which is closest to the grid (in rural areas, the one closest to the pumping station) is provided with a "main meter. The owner is te authorized to resell electricity to his neighbors, at a price that is largely not contrlled by the local branch of the power company. The low voltage network from the main house to the neighbors is instlled by the individuals concemed at their cost. The prctice is widespread, with departments and branches of the power companies having typically 5 secondary customers for every main customer. This practice is also common in the rural coopeatives. 31. The price paid by the secodary customers as a result of this arrangment varies widely. Ihe official household customer price is 450 Dong/kWh (i.e. about US$0.045/kWh), but prices ranging from 480 Dong/kWh to 1200 Dong/kWh to the end consumer have bee observed during the present study. This may be compared to the LRMC fot low voltage systems of 600 DonglcWh, as esfimated by the World Bank's Energy Sector Review study. This indicates thi the willingPe and ability to pay, even in rural areas, is higher than the official rate and that many nual households are able to afford the up front additional costs of electric meters and service drop installation. (See Annex XII). Rural Electrification Model 32. As mentioned earlier, pilot R.E. projects based on joint public/private financial participation have been promoted by the Govermment in recent years. However, there have also been a number of successful projects based on cooperatives. Unlike the normal experience in the U.S., these cooperatives are not specifically electric cooperatives, but most often agricultural, extending their activities to provide other services of benefit to their members. The example of the 43 Duy Xuyen electricity cooperative established in the late seventies and briefly described below demonstrates the feasibility of this approach in the country, even in a relatively unfavorable environment, and may be a suitable model for Vietnam to emulate in its future rural electrification programs. 33. MTe Duy Xuyen Cooperative is located 30 km south of Da Nang. The main economic activities in the area are rice growing, forestry (for timber and paper), textile and brick making. The cooperative was formed as an agricultural cooperative to provide services for the growing of crops, processing and marketing agricultural output. Its management team is elected (the head of the cooperative and an assistant). Using a minihydro power plant, the cooperative generates and distributes electicity and collects the revenues. Permanent staff are appointed by the cooperative to perform these tasks. A section headed by a power engineer is in charge of operation and mainance. The cooperative "exports" electricity to PC3 in the wet season at 900 Dong&Wh (18% of energy) peak, and 480 Dong,kWh (82% of energy) off-peak. In the dry season, electricity is bought from PC3 at 480 Dong/MWh (30% of energy) peak, and 360 Dong/kWh (70%/o of energy) off peak. 34. The cooperative comprises 2,400 members, of which 2,280 are families. The area served by the cooperative is fully electrified, the total number of inhabitants being 10,358. All members contributed a membership fee of 100 Dong (3kg of rice) at the creation of the electricity coopemtive in 1979. The average consumption per family is estimated at 20 kWh/month. The average income is said to be close to 300 $/household/year. 35. he iLWe capacity of the miha-hydpower plant owned and operated by the cooperative is 1200 kW. Eight hundred kW were instaled in 1983, partly self-financed, party through soft loans from the provincial governent Another 400 kW plant was added in 1990) (total cost 12 million Doag of which 3 millio Doug cawe from a 3 percent per month an fion the Govenmnt). Extensions and service drops are done by the cooperative, assisted in the design by the local branch of PC3. Members provide the work xce for some tasks for a fee of 3.5 kg of rice per day. The cooperative is cuntly upgrading the 4.2 kV system (output from the minihydro) to 10 kV. Establishing a Framework for Rural Electrification Institutonal Coordination 36. Expeience in other countries indicates that a nual electication program is often best coordinatd by an ter-inistal body, not by a single agency directly attached to one of the mnisties concemed. An appropriae body niugt be a "Rral Electcation omte", coopeting with the Ministry of Energy, the Ministy of Water Resources and the Ministy of Agriculture. Tbis body should be given the resonsibility of dfning nitonal policies, guidelines and regulns in the area, and preparing inputs to the Govenmet's budget planning process for electrification. 37. The bulk of the planning, design, deion-making and opetg process should be decentralied. To take advante of the community-based struct , the provincial aurities should be allowed to play a major role in screening sites, coorditig feasibility stdies, defining institutionaVfl/naning schemes and supervising impl tion. 44 38. Since it is clear that financing the program will not be feasible through public funds alone, the enabling environment must be provided to maximize private financing participation. This will be achieved only if there is: (i) a clear and stable regulatory framework, and (ii) assurance of fair retums on investments through transparent tariff levels. The regulatory framework must set: (i) clear and appropriate rules on private generation and distribution, system ownership and tariff setting (ii) sndardized planning and selection methodologies, and (iii) technical standards adapted to the rural environment. 39. Potential private participants will need to have access to public funds in order to cope with the up front cost of projest investments. Future loan funds from international financing agencies need appropriate local channels for project appraisal and disbursements. A possible agency for this purpose is the Vietnam Bank for Agriculture (VBA). VBA was originally a department of the State Bank but was declared an autonomous agency in 1988 and established as a commercial bank in 1990. With 5 regional offices, 52 provincial branches, and 447 district branches, it has a good area coveage. 40. The bank provides 3 ypes of loans: (i) less than one year, (ii) 1 to 3 years duration, and (iii) "long term" (3 to 5 years). Due to lack of long term resources, it currently provides very little long term lending (2 to 4 % of the total portfolio), but already 30 percent of these long term loans are made to rural cooperatives. VBA is familiar with the concept of credit groups (oans to about 50 bouseholds based on group liability, as similarly experienced successfully in Bangladesh). Uts custmer mim has evolved in recent years: lending to private customers is booming, from 2 percent of total portfolio in 1991 to 25 percent in 1992. If it is appointed to play the lead role in fimancing ral electrification, stregteing of staff capabilities will be needed, particularly in the administraion of credit lines aimed at rural groups and in evaluation of profitability of technical proects. 41. The success of agricultural cooperatives in providing electricity supplies to its members suggests that rurl electric cooperatives may be an appropriate medium, for incre*aed rural electrfication while reducing the extent to which fincig from the Government is reqired. Electric cooperatives could arrange for load surveys and attempt to achieve diversity in consumer demand. Consumer equity contnbutions would reduce (minimally) the need for Govenment contributions, but the Govemment could, in turn, arrange for loans on favorable terms for investnts by the cooperatives. Technical Standards 42. There is strikdng contrast between the low standard of desigp and construction employd in the low voltage networ installed by the private consumers or the cooperaives and the uneconomcally high stmards used for the medium voltage and transforner systems. An example is the etensive use of large cement poles where less expensive wood poles or cement poles of snaller diantrs could be used instead. The capacity of the smallest trnsformer currently insalled is 50 kVA, which is much larger han the capacities economically used for ural electriScation in other countries. The practice not only requires igber investments32 but also leads to increased losses. 32mn the case wher a tansfme has to be i ed to Wpply a clusw of 30 to 50 hmses with a peak power of 15 kW, if a SO kVA tasfmer is isalled instead ofa more sutable 20 kVA lftm¢r, it will leadtoadditional 45 43. Rural grid extensions are currently designed mainly to supply power to irrigation pumps. Connections from these lines to nearby households and villages are done on an ad hoc basis, resulting in expensive overall design and technical disadvantages. Lengthy lines often result from this arrangement (up to 4 km low voltage lines, up to 50 km 10 kV lines have been observed) which leads to increased losses, voltage drops and reduced reliability. Increasing the number of household connections will also improve the capacity utilization of the supply systems. The irrigation/drainage pumps are normally used for about 2,500 hours a year maxiunm, so that increased usage of these facilities will make the investment distribution lines and transformers more economic. Typically, household loads result in an undesirable increase in system evening peaks, but this may be alleviated somewhat by daytime loads oriinating in cottage industries or similar activities which generally accompany rural electrification. 44. The optimal design of rural systems is typically a trade-off between cost and system performance, including quality and reliability of supply. Past experience in developing countries indicates that the rural customers are willing, at least during a transitional period, to settle for lower service reliability and quality than urban customers. The main uses of electricity in wural areas are (i) irrigation, (ii) small productive activities during the day, and (iii) residential lighting and electronic entrinment in the evemng. Service intermptions a times of low demand are therefore easily tolerated. There is a wide range of design options to reduce the cost of ural extensions while maintaining quality and reliability of supply at acceptable sndards. Economic options for reducing costs should be analyzed at the national level and guidelines should be established (cable sizes, standard transformer sizes, pole-mounted transformers, 35/15 or 35/0.4 transfonnation, construction of single-phase extensions, wood poles,etc.). &reening ofProjects 45. To ensure optimal use of funds that the Govenment may finally decide to devote to rral electrification, the screeing of proposed projects shoud follow a unifor national procedure, developed by considering locally validated data. A national policy should be developed that provides consistent guidelines to each province to ident potental rural clectrification projects. 46. Application of the policy would allow priorifization at the national level of the overall group of RE. projects and enable the prepaation of a medium term (5 to 10 years) national nual electrification investment program. The priorinization criteria would be based on the following points: (i) areas with relatively high population densities which are currently unelectrified, (ii) preparation of realisfic demand forecasts for such areas, (in) review of possible supply altenativ (grid extension or decentralized generation with minihydro or diesel-based supply), (iv) selection of least-cost system designs, (v) preparation of feasibilit analyses, (vi) identification of feasible institonaVfinancing arrangements, and (vii) proritzg the projects to be preseted to the Central Government. Province-based agencies would then be given the responsibility for implementing the various components o, the investment program, including involvement of private investors. At the national and provincial levels, care should be taken to coordinate such actions with similar plans developed for infrastructure or agriculture projects. technical losses of 9oo kWblyear. The financial loss for the vilage will be close to aS milon Dong per year per transformer Installed, witout accounting for fte additional investment for lager capacity tusfms 46 47. Opportunities for economic small hydro projects must be included in the evaluation of supply alternatives. The huge potential in small hydroelectric developments is virtually unused, since only 2 to 3 percent (2.5 MW producing 90 GWh/an) has been exploited to date. Most of this potential is concentrated in areas of low population density and far from the grid. Forty-five percent of the potential sites are located in the northern mountains and midlands, 34 percent in the south-central highlands and 20 percent in the hifly areas of the center-north. Systematic evaluation of such sites needs to be undertaken, as has been done in Bac Thai Province, and correlations established between estimates of the potential demand in surrounding areas, the power and energy potential of the sites and the corresponding investment requirements (including installation of diesels for secondary power, if seasonal variations in site hydrology would not permit year-round power demand to be satisfied from hydro generation). This process will allow identification of economic decentralized generation schemes. (S( Annex XIII). 47 VI. CONCLUSIONS AND RECOMMENDATIONS 1. The recently completed World Bank review of Vietnam's energy sector has identified key policy reforms and investuents that need to be made in the oil ard gas, coal and electriity subsectors. Issues related to household energy consumption and traditional fuels were found to be much harder to analyze because of the lack of reliable data, the dynamic nature of household energy demand and the fact that the issues straddle not only energy but agriculture, forestry and envionment, as well. Nevertheless, there is no question that they deseive equal attention because of the strildng dominance of household demand and biomass fuel supplies in the overall energy balance, a consequence of the still highly rural nature of the economy. 2. Some of the problems that emerge in the present analysis are due to the excessive use of biomass fuels. Others are due to the inevitable "household energy transition" that occurs as a result of moderiion, urbanization and general economic growth. As households inreasingly purchase most of their fuels, income, prices and distribution policies largely determine residential fuel choice and use. The resulting demand mix can severely strain the supply system for cerin fuels or put the poor at a disadvantage. The availability of electricity at low cost (before March 1992), for example, led to the abnornally heavy use of electricity for cooking in cities like Hanoi, and severely taxed the power system The oveutlization of woodfuels has obvious advse e el impacts in itself. It is exacerbated if the substitute fuel that emerges as wood supplies vanish, such as rice straw in the Red River Delta, is detenmined to be better reumed to the soil than burned in household stoves. Household Energy and Traditional Fuels 3. The problematic situaition in the Red River Delta and the measures that are indicated by analysis of the available data exemplify the type of policies that Govemment must consider for the subsector nationwide. 4. Fit, the heavy use of wood in the towns of the delta over the decades has contibuted significandy to the denudation of the immediate landscape and, as wood sources shifted farther into the highlands, has contributed to the serious erosion of watershed areas, including those protecting the Hoa Binh reservoir. If it goes unchecked, this trend can lead to severe wood supply shortages, degradation of the highland areas, and drastically shortened life of the hydroelectric power plant The solution does not only involve the obvious and necessary reforestation of the catchment area but requires an understanding of the likely shifts in household fuel choices in the delta towns. Survey data have shown that, despite the preference for wood as cooking fuel, coal now accounts for 65 percent of total cooking energy. This share is liely to increase since coal costs substantially less than fuelwood per kilogram and per unit of delivered energ. However, since it, will not be possible to displace wood entirely, continued supply from managed plantations must still be assured. 5. Establishing multipurpose tree plantations in the low lying areas near heavy population concentrations of the North Midlands and Red River Delta regions plus densely populated areas of Hoa Binh province will be directly relevant to addressing the above issue. It is cmmeded that a project along this line be given high priority in the immediate term. The project, with the comnbined objectives of watershed protection/farm tree planting and expansion of fuelwood supplies, could initially cover about 575,000 hectares in the provinces of Hoa Binh, Yen Bai and Son La (see Annex IX). The estimated cost is US$30 million spread over 10 years. This will complement or 48 could be made an integral part of a comprehensive watershed mangement project already proposed by the Tropical Frestry Action Plan, covering 4.7 million hectares in six watershed areas. 6. Send. the extensive of use rice straw and other agricultural residues in villages in the Red River Delta has raised questions about environmental sustainability and household welfre. Crop residues, almost entirely collected, already account for about half of cooking energy in these households-a figure that seems alanningly high-and reflects their much lower average income compared to households in the towns. The present study concludes, with some caveats (see Chapter 3, paras 10-12), that the practice is probably sustainable and that no direct intrventions to curtail its use need be made. However, the larger issue of a deterorating quality of life of households in these villages remains and must be addressed. In the energy transition "ladder", the shift to crop -esidues-which are bulky, inconvenient, and need continuous tending of fires-represent a descent, as residues have never been a fuel of choice but of necessity in all parts of the world. It is clear that Govemment policy must be to encourage a shift to affordable, higher grade fuel substitutes. 7. Te surveys confim that coal is already the next mst used fuel in vie households in the delta (30% of cooking share) and appears to be the most suitable substitute to crop residues in this conte. Thus, programs that facilitate the distribution of coal in the Red River Delta would benefit households of both villages and towns. Since coal price is already low, no other intervention would be needed. However, consdering the expected increase in coal conswnption not only m te delta but in other northern parts of Vietnam in the medium tm, efforts must be directed at further enhancing consumer acceptance and alleviating adverse envonmenl impacts. This means improving te quality of the briquettes by way of reduced smoke, increased heating value and ease of lighting. It is rommended that expert technical assistance be provided to both large-scale and informal sector makers of coal briquettes to improve their production methods. 8. In the Mekong Delta and areas northeast to it, etmates made in this study indicate the possibility that the wood resource base is already being mined, with demand probably almost double the sustinable supply. Unlike in the North, wood is the prncipal cooking fuel in both rural and urban households of the delta, including Ho Chi Minh City that has an extensive commercial woodfuels market. However, anecdotal and survey data paint conflicting pictures of the status of the resource. Although traders report that most of the wood supply to HCMC now come from provinces 150 kn and beyond, survey data suggest that a large part of household woodfuels in the delta are still being collected. One explanation for this inconsistency is that there may be more trees outside the forests (in private lands, for example) than is normally assumed, in the Mekong Delta and possibly also in other regions. Due to the prominent role of woodfuels in the energy economy of the South, it is recommended that high priority be given to the conduct of surveys and inventories to establish reliable information on sustainability of the resource, with particularly attention to determining the quantity of sustainable woody biomass supply outside the forests. 9. For the nation as a whole, woodfuels already constitute over a third of all traded energy and must be considered an important commercial fuel. The woodfuel industry is a significant source of employment, especially in rural areas. Using average market prices in 1992, the market value of commercial fuelwood and charcoal traded in 1992 is about Dong 4 trillion (US$400 million), roughly 3 percent of estimated 1992 GDP. The annual employment generated in the preparation, distribution and miarketing of these fuels is estimated to be in excess of 100,000 fu&l time jobs, over 60 percent in rural areas. The ongoing economic reforms will probably further stimulate the woodfuels trade throughout the country, even as consumption of modem fuels continues to increase. Trading and distribution of woodfuels appear to be working efficiently and 49 prices are wholly market determined. Government interventon m the sector does not appear to be needed and in fact has the potential to be disruptive. The role of Government should be merely to monitor the sector to ensure that overall operations adhere to the objective of resource sustainability. 10. Esfimates made in this study (Chapter 4, Table 4.3) indicate that, for the nation as a whole today, the amual sustainable supply of woodfuels probably exceeds totl demand slightly. However, the analysis also reveal areas of significant deficits, some of them already discussed above. It is recommended that these areas be closely monitored to determine if intrventions may be needed. 11. Except for electricity tariffs which are still below marginal costs, the prices of major household fuels do not appear to be distorted by subsidies. There are a few specific cases that may need to be re-examined. As one element in the rural energy supply policy, approxnimately 200,000 tons of coal fines are distributed annually at subsidized prices to villages in mountainos areas of 13 provinces with the objective of protecting highland forests from excessive fuelwood demand. This policy costs the government about US$1 million annually. Though the esfimates made by the present study are very rough, they indicate that there is no fueiwood deficit in the Norten or Southern Highlands. If this is confirmed, the policy may be having the effect of discouraging the production and use of woodfuels which, for convenience and environmenl reasons, is a better fuel. It is recommended that this policy be reviewed. 12. There is a potentially important role for improved cook stoms programs as a demand maagement tool for woodfiels. Substantial development and demonstation work bas already been done in Vietnam on higher efficiency wood stoves but dissemination is severely limited. Presently, the units are given away free or with heavy subsidy. The deployment of large volumes of improved stoves, specially in resource stressed areas, is fte only way to make a devt in wood consumption. The only way to do this is to take a commercial approach, i.e., involve artsaas and large stove manufhcturers in a program that would put affordable improved stovcs on the market Initially, the program should target middle class households in urban areas. It is recommended that the Government's improved cook stoves program be expanded and re-irected along commercial lines. Efforts must be also be directed at improving the efficiency and emission characteistis of coal stoves. 13. With a few notable exceptions, renewable energy technologies stil have a long way to go in Vietnam before widespread, practical applications become a reality. More attention should be given by the Government to prioritization of its research and development projects, and lessons must be drawn from more extensive experience in other countries in this field. Household biogas systems, for exarnple, did not prove economic in many countries and are largely impractical as an energy supply option. Wind and photovoltaic technologies, on the other hand, may find economic "niche" applications and should be encouiaged where consumers are willing to pay the price. Within the Government's renewable energy development program, it is recommended that the highest priority be directed at mini/micro hydro development and deployment and at photovoltaic system applications for iural areas. Rural Electrification 14. The first priority of rural electrification in Vietnam remains the connection of irrigation/drainage pumps to the grid in order to expand cultivated areas and increase their so producvity. lbis is an important program and should be continued. Extendg connections to households and mural industries is also a worthy goal for Vietnam over tie coming years, despite the burden on public finances which would result Observations in other developing counties, and in the areas of Vietnam already electrified, show that electricity is a key ingredient of economic development, through increased agricultural productivity, growt of rural industries and general improvement of the quality of life of the rural population. However, several important preparatory investments, actions and studies must be made before a major, properly-phased mral electrification plan can be implemented. 15. There are two major prerequisite investments, both also cited by the Energy Sector Investment and Policy Review report EI supply conditions in the South and central regons must be improved, since no mral electification program can be implemented if adequate supply is not secured. The EHV line now being installed should help to overcome the cument capacity and energy shortfall, but rehabilitation of existng thernal units and timely constuction of new capacity would also be required Seond, the existng MV and LV system must be rehabilitated, to improve operational efficiency "d quality of service to the consumers. The activity should give priority to instaUlation of capacitors on feeders with high reactive power dmands, and reconductonng of heavily loaded feeders. These investments should be accorded the highest priority. 16. Three important activities must first be implemented. Ei, non-technical losses in seriously affected areas, such as Haiphong, must be reduced. This will reqire the launching of an inspection program of individual consumer installations, with priority being given to the larger consumers. The inspectons will ensue that the meter are properly instaBed and fiioning correctly, and that consumers are duly regsered on the utilitie' billing syste. A comprehensive progam to replace defective meters, including those which are generically unreliable, should be developed and implemented. Second. national planning guidelines and stnards for distribution sstemns should be developed. Application of such standards, along with loss reduction and imnlrovement of the quality of supply, are necessary to achieve optimum system efficiency. 1Ibid the Govement must develop and establish a policy on rural electification which will allow rational and consistent prioritization of rural electrification projects on a nationwide basis. The policy should define (a) appropriate regulatory and institutional firaeworks; (b) methodologie for forecasting and economic evaluation of alternative supply locations and options; and (c) technical standards of design, construction and operation. 17. As an immediate step, it is recommended that external technical assistance be sought to: (i) conduct loss reduction studies, and (ii) to help develop a coherent rural electrification policy. The studies should be conducted not only for their specific outputs but also to help develop local planning capabilities. Institutional Coordination 18. The broad institutional reforms proposed for the energy sector by the World Bank's Energy Sector Review, including the strengthening of the Energy Institute, wil also benefit the progrms identified for the rural and household energy subsectots. Two supporting recommendations specific to the subsectors should be considered additionally. First- given the importance of biomass energy to energy planning and the cross-sectoral nature of the issues associated with it, there may be need for special coordination of activities and responsibilities of the various ministries involved in this field, namely, energy, agriculture and forestry. Each of these agencies deal with separate aspects 51 of biomass production ard utifization, and a case can be made for a more coordinated planning and monitorig of activities Ui this area. For example, the recommended comprehensive inventory of supply and demand for woodfuels in households and rural industries and the periodic monitoring of the situation in highly stressed areas, cannot be effectively carried out by just one of these agencies alone. 19. s the ministries of energy, water resources and agriculture have interrelated interests and responsibilities for rmal electrification. Therefore, a future comprehensive rural electrification program would be more effectively coordinated by an inter-ministerial body, perhaps a "Rural Electrification Committee", rather than by a line agency directly attached to just one of the ministries. This body should be given the responsibility of developing guidelines and regulations in for the program and preparing inputs to the Goverent's budget planning process for electrification. - 52 - References Banes, D., Openshaw, K., Smith, K., and van der Plas R. "The Design and Diffusion of hnproved Cooking Stoves", World Bank Research Observer 8(2):119-142, July 1993. Bames, D. "The Urban Energy Transition in Developing Countries", draft manuscript, 1993. Institute of Energy-Vietiam, "Survey of Fuel Markets in Major Urban Areas", Hanoi, February, 1993. Institute of Energy-Vietnam, "Ho Chi Minh City Fuelwood Market Survey", Hanoi, December, 1992. The World Bank, "Viet Nam Energy Sector Investment and Policy Review", Washington, October, 1992. ILO/ARTEP, "Small Enterprises in Vietnam", September, 1992. Ha Tien Luy, "Small Scale Hydropower Development in Vietnam". Prepared for the UNDESD Study Tour of Small Hydropower in Hangzhou/Guangzhou, China, June, 1992. Ministry of Energy- Vietnam,"Sectoral Energy Demand in Vietnam", Issued under the Regional Energy Development Program of the United Nations Economic and Social Commission for Asia and the Pacific (RAS/86/136), June 1992. A. Koopmans and K. M. Gray,, "Vietnam Fuelwood and Energy Sectoral Review" Tropical Forestry Action Program, Regional Wood Energy Development Progrm in Asia, GCP/RAS/131/NET, May, 1992. Vien ngoc Nam and Tran viet My, "Report on Cbarcoal Production at Can Gio", Hanoi, 1992. Stastical Publishing House, Statistical Data of Vietnam's Agriculture, Forestry and Ffshery (1976-1991), Hanoi, 1992. Statistical Publishing House, Economy and Trade of Vietnam 1986-1991, Hanoi, 1992. Christophersen, K.A., "Financial and Economic Feasibility of Forest Plantations for WFP Foresty Project 4304", report prepared for the WFP, 1991. Foley, G. "H'imihold Energy, prepared for the Vetnam Energy Sector Jnvestment and Policy Review, IBRD, December, 1991. Intmediate Technology Development Group. "Feasibility Study of Micro-hydro Projects in Bac Thai Province", London, February 1991. Generl Statistics Office, Vietnam Population Census -1989, Hanoi 1991. UNDP, Report on the Economy of Vietnam, December, 1990. Annex I 53 Page I of 2 Annexes Annex I. Definitions of Urban and Rural 1. This study addresses issues related to energy supply and consumption for (i) households in rural and urban areas; and (ii) agriculture and rural industry. Thus the focus is on energy issues faced by households and rural areas. Unforunately, there is no clear definition of urban and rural energy consumption within the energy planning structures of Vietnam. The three power companies do not separate rural and urban electricity sales, and some uncertainty prevails as to the definition of "rural electrification". Furthermore, many households have recently started small scale commercial and industrial activities at their residence and it is often difficult to separate energy consumption/demand for such activities from te proper residential energy consumption. 2. ESCAP defines rural electrification in Vietnam as the supply of electricity to all areas outside the cities, major towns, district centres and municipalities (see Foley, p. 15). However, this definition does not conform with the adminisat structure and definitions used by Government. Administratively Vietnam is divided into a central and a local level. The latter comprises provinces with a relatively Ihigh degree of autonomy, and under the provinces there are districts and communes. Large 'ities such as Hanoi and HCMC have the same satus as provinces. In 1990, Vietnara had 44 provinces but in 1991 the National Assembly approved a division of some previously merged provinces, and today Vietnam has 53 provinces and cities with 467 districts and 9,765 communes. The 1989 Population Census defines the urban and rural conrponents of this administrative structure as shown in Tabltd, below. Table 1. Urbam and ural Components in the Administaive Struch Adminsistn?ive Unit Urbo' Component Rural Comonent ClTY (Thih pho) Quartr + District Town (Qumn + Thi tan) District (Yuyen) TOWN(liixa) Ward (hwug) Cmmune (Xa) DISTRICT (Huvn) District town (hi tran) Commme (Xa) Source8: Viet Nam PoationCensus, 1989. 3. It should be noted that district towns are considered to be urban places only if tiey are the administrative or industral centre of the distric, they have a population of at least 2,000, and 50 percent of their labor force is in non-agnculture. Furthermore, large cities and metopoles such as HCMC also have rural areas within their administrative borders. Applying these definitions, the urban population constiued 20.1 percent of total population in the 1989 Population Census. 4. The problem with such administrative definitions is that te, as well as the administrative structures, change over time. For example between l79 and 1989 two set of changes with opposite impact took place: Many commune centres (thi tu) witi a population of 30,00040,000 were dissolved and replaced with district towns (thi tran) with populations of 10,000-15,000 and rural commune areas (xa), resulfing in a smaller urban population. However, at the same time some district towns were upgraded to towns and some industrial centres were rclssified from comnmnes to district towns which tended to increase urban population. Amex I 54 Page 2 of 2 Table 2. Viet Nam - Spatial Distribution of the Population LandArea Population : 1989 Densities Annual Growth 1979 1989 : personssq.4bn Rate 1979-89 -Percentage Shares - -Percent- Northem Uplands 29.7 15.3 15.9 : 103 2.82 Red River Delta 5.2 21.7 21.4 784 2.24 North Central 15.5 13.8 13.5 167 2.16 Cenhal Coast 13.7 11.0 10.5 148 1.94 CentralHilands 16.8 2.9 3.9 45 5.64 Southeast 7.1 11.9 12.3 333 2.77 MeongRiverDelta 12.0 23.4 22.4 359 1.94 Total 100 100 100 195 2.1 Soie. VietNam Populaion Census, General Statistical Ofice, Hanoi 1991. Annex II s5 Page 1 of 3 Annex II. Energa Taxes and Subsidies 1. Govermet influences indirecty and directly the level and composion of energy supply and cmsumpiuon through its exchange rate policy and through a mber of energ taxes and subsidies, by setting prices for electricity and oil products, and by underting investent in energy production and supply as weil as by taking operaional responsibility for such invest. The main national taxes ana subsidies are briefly reviewed below. In addition, the practice of setting electricy tariffs and oil product price the same throughout th country implies considerable cross-subsidiation betwe regions. Consumers in regions where the cost of supplying electricity or oil products is low, are subsidising consumers in regions with high supply costs. 2. The combined impact of all of these measures and interventions is unclear. Available inmfonnation makes it difficult to assess whether the net transfers fim Govemet to an energy sub-sector, e.g. coal, oil, power, are positive or negative. More research and infbrmation are required to improve transparency and to project and assess the impact of Govemnmt intewretions on the level and composition of energy supply and consumption. 3. Govenment interventions serve a number of soeio-eonomic objectives. Energy sector policy has important social policy aspects, in terms of ensuring that low incm- groups can meet their energy requiremets. Energy sector policy is also related to environn. *al policies and strategie and to fiscal and balance of payments strategies. Some of the objectives to whih eny sector poLicy contributes are occasionally contadictory and there are trade-offs involved. A clear u nd din of the objectives and rade-offs is required for proper planing. 4. Vietnam could benefit from a technical assistance program that suppLrts Governmnt m (i) developing an adequate information basis for planning in a market based envroment, and (i) clarifying the objectives and trade-offs of energy sector interventions. Electicity Taxes 5. Electricity generation and distribution is taxed in 4 different ways: * Revenue Tax: 12 percent of gross revenue (total value of outut). Treasuty received Dong 130 billion in 1991 representing 12 percent of 11 months' revenue (total billed reven in 1991 was Dong 1,673 billion). * Resource Tax: 2.4 percent of gross revenue from sale of hydro-power (value of output). * Capital Tax: 2 percent of fixed and working capital. Fixed capital is revalued every year. o Net Income Tax: 3 percent of net income/profit of each of the three PCs. Annex 11 56 Page 2 of 3 Subsidies 6. An electricity consumption subsidy is provided to state employees as part of their reunueration package; the subsidy may be used for other purposes than electricity consumption. The subsidy increases with the level of salary. No data could be obtained on the total cost to Government of this subsidy. 7. Government provides a substantial subsidy to the sector in the form of investenet fnds which are extended on grant or concessional terms. The amount of this subsidy is not known. In reality, the Power Companies are considered as operators of Goverment capital and the profit or losses of the Power Companies are the income or expenditure of Govenment who sets the tariffs. Thus it is not possible to assess whether Government on a net basis supports or taxes power supply and consumption. Oil Products Taxes 8. The main taxes applied on oil porudcts are: * Lmport tax: applied as a percentage of c.i.f. costs: petrol 25 percent, diesel 8 percent, kerosene 3 percent. * Net reveme tax: 14 percent levied as a percentage of the sales price minus total cost up to reil outlet, i.e. a kind of value added tax. Total revenue income in 1992 from taxes on the oil sector was estimated at Dong 499 billion composed as follows: Billion Dong Iaport tax 305 Net revenue tax 91 Tax on net income of oil distributors Z30-50%) 34 Capital tax on state oil enterprises 29 Other 40 Total 499 Subsidies 9. Govemrnment sets the retail prices, which were as follows as of Febnaruy 1993: petrol and diesel 22.7 US cents/litre, and kerosene 24.5 US cents/litre. It is unclear whether the Government prices contain an indirect subsidy. In the past when the Dong was overvalued, a considerable indirect subsidy was contained in the Government fixed retail prices. Annex II 57 Page 3 of 3 Coal Taxes 10. Various taxes are applied; they differ between open and underground mines: Open Underground Tax an gross revenue 2% 1% Resouce Tax (as % of output value) 2% 1% Expott Tax 2% 2% Subsidies 11. Overall the coal industry is reported to balance financially, no subsidies are given to the production enteprises. However, a subsidy is provided to compensate for the bigh cost of transporting coal to the mountan regions. The objective is th consumers in mountain regions shall be able to buy coal at the same price as households close to the mines. About 200,000 tons are distributed to the mountan regions annually with a total transport subsidy of Dong 10 billion. The 1993 budget contains a subsidy of Dong 13 billion. Thirtee provinces receive subsidised coal deliveries directy fiom state trading companies while remaining mountain provinces go and collect the coal themselves and then have their transport costs reimbursed from the Central Goverment 12. Revenues from coal exports are said to balance fte costs of providing this subsidy to households in mountainous provinces. If this is the case, the govemment take from coal ecports is entirely distributed to households in mountainous provinces. Fuelwood 13. A tax of 15-20 percent is levied on use of forests. The revenue is allocated to the Ministry of Forest for reforestation work. Annex III 58 Page 1 of 2 Annex IIL Previous Household Energy Studies: the Basis for Current Policy i!eport on Daily Life Fuel, 1987 1. The most recet primary data on residential energy use pattems in all regions of Vietnam was collected by the Ministiy of Energy in 1987.1 Fifty to 100 households in each of Hanoi Ho Chi Minh City, Danang, 80 provncial towns, and villages in the Red River Delta, the Mekong Delta and in coastal and mountainous zones were surveyed These spot surveys collected data on appliance holdings, stove types, fuel prices, and the quantities of each fuel used for cooking, boiling pig food, lighting, and other uses. In addition, measuts were taken of actual cooking fuel use. The only available results of tiese surveys were esimates of average fuel use for cooking by rral households in each region and by urban households nationwide. These reported average fuel use figures have been used in Annex V to estmate urban and rural household cooldng fuel use in each region. Report on Sectoral Energy Demand, 1992 2. The first attempt to include traditional fuels in constructaj a consistent and comprensive picure of energy supply and demand in Vietnam was initiated by the Ministry of Energy in 1989.2 In this study, the Institute of Energy worlkng group recognized that of all economic sectors, energy use is most complicated in the household sector. The working group found broad gaps in data on non-commercil fuels and distribution figures from the national, regional and provincial offices of coal and oil ditribution companies were ofen incomplete and inconsistent. One outcome of the study is that the Minstry of Energy is committed to addressing the gaps in the existing sectoral energy demand database by underking extended surveys of energy use in the household/service sectors in rural and urban areas. 3. The energy usage patterns of households in Hanoi city and in all major urban areas of Hanoi Province were surveyed for this study. The key results, presented in Table 2.2, show that electricity and kerosene were much cheaper than wood as cooking fuels in Hanoi city and these two fuels met almost 90 percent of cooldng energy needs. In contrast, almost 90 percent of the cooking energy needs of households in other urban areas of Hanoi Prorincewere met by coal and crop residues. 4. Fuel use patterns like those reported in Table 2.2 for Hanoi are not available for households in other areas of Vietnam. The spot surveys of villages in other ecological zones, mentioned above, continued during 1985-1990. The Ititute of Energy has reportedly constructed a "non- commercial" energy database on the basis of these spot surveys, disaggregaed at the regional leve, used for planning in the sector. However, neither data nor summaries of the data from the spot surveys were available. I Report on Daily Life Fuel at the National Level, Ministhy of Energy, Institute of Energy, April 1989. 2 Sectoral Energy Demand in Vietnam Ministry of Energy, June, 1992. Sponsored by the Regional Energy Development Program of the United Nations Econo'ic and Social Commission for Asia and the Pacific. Annex III Page 2 Of 2 5. Using regional electricity supply company estimates of rural electrification, the working group reported that the share of the rural poulation connected to electricity service grew steadily from 4 percent in 1976 to 14 percent in 1990 which constitutes a 7 percent growth rate in percent of rural housheolds electrified over the period. To date, these are the official estimates that have been used in most reports on rural electrification in Vietnam. Nonetheless, the power supply companies appav'iitly define "rural" in a manner different from the official demographic definition employed by the General Staistical Office. New evidence, reported in Chapter 2, based on partial retums from a random sample of households throughout Vietnam and employing the official demographic utrban/rural classification of communes, indicates that 35 percent of rural households nationwide had electricity service by early 1993. 6. Following its review of energy usage in the sector, the working group identified the widespread use of wood and agricultural residues for cooking as a priority issue to be solved in 1990-2000 to reduce deforestation and protect the environment. Noting that: i) current technologies for uti g biomass fuels are inefficient - rural stoves bum wood and agricultural residues at 8 to 19 percent efficiency for cooking and traditional small-scale brick kilns in rural areas achieve very low efficiencies of around 10-15 percent; and ii) massive use of woodfuels and crop residues may be causing deforestation, depleting the nutrients in the soiL and destroing local ecosystems, a rural ener supply policy for 1990-2000 was recoumended. The components of this policy include: i) a program to improve te efficiency of rural cookstoves and widely disseminate stove designs for biomass fuels reaching 20 percent efficiencies; ii) supply of coal as a substte for biomass fuels; ii) two programs to install minu/micro hydro power stations in mountainous areas and biogRs digestors in rural plains areas; and iv) encouragement of fuelwood plantations on private fims as part of the reformed rual economic system. Along witi the priority conuitment to improve the household/service sector database through extended survey effrt, this rumral energy supply policy outlines the curnt approach to rral and household energy planning in Vietnam. C Annex IV. 1992 SURVEY OF HOUSEHOLDS IN THE RED RIVER DELTA Table 1. Red River Delta 1992: lIcome sud Expenditure Data Units: 000 Dong _____ ____ _____ ___Wges Small Towm Hluad Icome per mouth 381.3 679.7 NmaboMid E2mdtw pe _ endi 330.8 505.1 Pe MP"a hma per tawna 75.2 138.7 Pa capita Evapadbr PM month 64.3 102.0 Table 2: Red River Delta 1992: Fuel Expenditure by Income Class Units: Percentage except Household Size (Number) Vawa Sml Towns _______________ _______ Income Cas [nome Cmass low k, w Widdle High High Mea LOW LOW Middle High High Meaw a Middle _ Middle Middle __ _ Middle o Household Size 5.91 5.51 5.54 5.24 4.22 5.33 5.85 5.61 5.15 4.87 4.33 5.16 re_wod 1.2 13 1.1 0.9 1.1 1.1 4.1 2.4 2.2 1.9 1.7 2.5 Crp Reslu 0.1 0.0 0.0 0.0 0.1 0.0 1.1 0.1 0.1 0.1 0.0 0.2 Cod 1.1 1.3 1.4 1.7 1.1 1.3 1.6 1.7 1.4 0.9 0.8 1.3 K e1.3 1.1 0.9 0.9 0.6 1.0 0.7 0.7 0.6 0.8 0.7 0.7 mEbcft 2.8 3.3 3.8 2.4 2.9 3.0 5.0 5.1 5.0 4.8 4.4 4.8 Tital 6.5 6.9 7.4 5.9 5.8 6.5 12.5 10.0 9.3 8.6 7.6 9.6 ,vaie b# C a: ,h . Smal Towns ncM Cateudes: forOtherP_im Hanoi Plincc: LOW 0- 46000 0 - 86000 LoW 0 - 8S000 id" 46000 - 533$0 NM - 96500 LOW-Mid 85000- 110000 Bomb 53500- 6200 0 96SO - 11200 MIddl 110000- 134000 }G>&d 6200M- :4000 12000 - 130000 lli3d 134000-82000 1}l abov 84000 aMdv 130000 lI above 182000 Sms IM19 Bud h Suvey in Ad Rk Dde g - 61 - Annex IV Page 2 of 5 Annex IV Table 3. Red River Delta 1992: Energy Choice and End Use by Fuel Type Units: Percentage' Villa I SMallTown_ Fued Crop Coal Karos Elecliy Fuewood Crp Coa Kees Eldricty Wood Residue _ __ Residue 0.0 0.0 0.0 97.7 90.6 0.0 0.0 0,0 75.2 995 Cooing 46.7 88.8 46.2 0.5 0.5 59.8 17.5 56.7 7.8 17.8 Boi_ing 0.0 0.0 0.0 0.0 2.8 0.0 0.0 0.0 2.2 35.5 Drinking Wa- Heair- 0.3 0.0 0.3 0.3 0.0 5.1 1.8 3.2 0.5 1.0 BolidngPig 38.8 76.1 44.9 0.0 0.0 16.2 11.3 22.6 0.0 0.0 Feed-- --- - - Businm 0.2 0.0 1.5 0.0 1.3 2.5 0.9 9.6 0.9 19.4 Sating 29.4 0.0 0.0 5.1 0.0 425 0.0 0.0 20.6 0.0 OdwerUs 1.0 40.0 0.5 1.5 78.9 43.3 4.1 -c6.1 3.5 97.9 a Note: Becus of multiple fuel choices, figures do not add up to 100%. Table 4. Red River Deta 1992: Energy Use by Fuel and End Use Units: Per Capita Kg Oil Equivalent Tot~~ - a g _ ~ _ _ _ _ _ _ _ Fuad coop coad Kuoem Ebdkiciy Thai Fmae Crp cod Kaamm ElaWriciy Thai Wood Ra" Wood Re. !A .....0.0 0.0 0.0 .22 0.1 0.3 0.0 0.0 0.0 0.2 0.2 0.4 1.6 4.4 2.1 0.0 0.0 8.1 2.9 0.8 3.7 0.1 0.1 7.6 Bal EDudki WaW 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.0 0.1 0.0 0.0 0.2 Haui We LO 2.7 L9 0.0 0.0 5.6 0.5 0.3 I t 0.0 0.0 1.9 F cm 0.0 0.0 0.1 0.0 0.1 0.0 0.2 0.1 4.2 0.0 0.0 4.5 Dusism Use 0.3 0.0 0.0 0.0 0.0 0.3 0.7 0.0 0.0 0.0 0.0 0.7 Odinthe 0.0 0.9 0.0 0.0 0.2 3.1 0.5 0.1 19.6 0.0 0.7 20.9 TOW 2.9 8.0 4.1 0.2 0.3 15.5 4.9 1.3 28.7 03 1.0 36.2 Table 5. Red River Delta 1992: Energy Used for Cooking by Income Cass Units: Per Capita KG Oil Equivalent per Month - - Sas~pim- wo canTom Im h as Law LoW MiW M 1 Hgh a LoW LOW mime HOgh WMe 16dl WI l _d Middle Vuwrod _ 1.6 1.6 1.6 1 1.3 2.1 1. 2.7 2.4 2.8 3.3 3.7 3.0 COpRlda 4.3 4.9 4.3 4.2 4.7 4.4 2.0 0.7 0.6 0.6 0.1 0.8 Coad la 1.7 2.1 2.9 2.5 2.1 2.5 3.8 4.0 3.8 4.2 3.7 OAr0 0.0 0.0 o0.0 0.0 0A . 0.0 0.1 0.0 2 0.2 * 0.1 0.0 I 0.0 0.0 I0.0 0.0 0.0 I0.0 I0.1 I0.1 0.1 10.2 10.1 To_a 7.1 12 80 14 9.3 382 7.2 7.0 7.5 8.0 8.4 7.6 S== IM Rm! EwV Swey in do Red River Deta C Table 6. RED RIVER DELTA 1992: FUELWOOD USE BY SOURCE _ ltage Small Town 92Q! Kse9w a) Purchased 2.86 6.29 b) Collected 2.87 1.14 Distance to Collect ()an) 8.71 3.11 Source of Fuelwood (%/) L Don't Use 31.2 14.8 Purchase only 34.3 80.8 Collect only 27.4 2.5 Both 5.6 1.3 Other 1.5 0.6 Total 100.0 100.0 Source of collected A;)od (°/) Ownland 33.7 32.1 Oder Pdvate land 3.1 0.0 State/Forest Land 37.8 5.4 Sawndll Residie 4.0 17.9 Village or comnon land 21.4 44.6 Total 100.0 100.0 0 a Table 7: Red River Delta 1992 Tyve of Coal Used Units: Percentage -l.lage Sml Town Briquettes 12.3 44.8 Coal Dust 33.2 12.1 B niute plus Dust 0.0 0.8 Lump Coal 2.0 3.3 Dont Use 52.5 39.0 Se: Rmal Ea Survy m Red River Def Table 8 :Red River Delta 9M: Consumption of Coal Units: Per Capita Kg. Oi Equivalent per month _llage Smal Town Briquete 0.78 7.69 Coal Dust 3.13 19.92 Lunp Coal 0.23 1.00 Total 4.14 28.61 Same RWal Eoa Surey m Bed R;w Ddef a Note: Because of multiple fuel choices, figures do not add up to 100%. VW - 65 - Annex V Page I of 3 Anmex V. 1993 Living Standards Survey: Fuel Choice and Expenditures Table 1. FueL Choice and Expenditures by UrbenVRural .................................................... urban rural All .................................................... Primary Cooking Fuel leaves, straw, sawdust 5.5X 55.6% 40.8X wood 48.0% 39.81 42.21 coal or charcoal 33.2% 4.41 12.9% kerosene 11.0% .1X 3.3% electricity 2.3X .1X .8X Total 100.0% 100.0% 100.0X Valid N N=346 NaW25 N-1171 Kh'i Lighting Fuel electricity 91.3% 48.71 61.3% kerosene, oil, or gas 8.7% 50.6X 38.21 battery .7X .5S Total 100.0X 100.01 100.0% Valid X Ng346 Mz826 N3112n Source of Fuelwood not used 41.6% 52.2% 49.1% collected 17.11 36.61 30.91 purchased 41.3% 11.1% 20.0% Total 100.0% 100.01 100.01 Valid N M4346 1=827 Mu11OM Total expenditures (1000 Dong/o) 748 422 518 Std Deviation 663 675 687 Valid V 346 827 1173 Energy share of household budget (non-transport) 9.17X 3.36X 5.08X Std Deviation 6.45 3.70 5.39 Valid N 346 820 1166 Electricity ('000 Dong/mo) 34.03 4.54 13.29 Std Deviation 39.12 7.75 26.02 Valid N 346 820 1166 Cosl, wood, sawdust or husk ('000 DoQngmo) 17.07 2.50 6.80 Std Deviation 19.41 8.94 14.54 Valid N 346 827 1173 Cooking & lighting fuels ('000 Dong/mo) 5.48 3.49 4.08 Std Deviation 11.52 3.90 7.12 Valid N 346 827 1173 Labor for colltcting Wood (hours/year) 4.05 42.16 30.27 Std Deviation 22.88 219.13 183.02 Valid N 312 688 1000 ,.... ........................................... Sourte: 1993 Living Standards Survey (preliminery results - only 201 of sasple clusters) Tabte 2. Fuel thofce by Location Rural Rural Rural Rural Rural Urban Urban Urban Urban HCMC North Red Nsnoi Central Mekong Red 0anol Central Mekong River Delta River Detta Delta Detta PrSoary Cooking Fuel leaves, straw, sawdust 49.X 98.5X 70.0X 60.2X 7.81 3.3X 17.7X wood 49.71 1.01 8.71 39.81 90.71 38.31 12.5X 51.01 98.41 30.2X coal or charcoal 1.21 .5S 20.71 1.01 55.0X 53.11 27.11 40.6X kerosene .5X 3.31 15.61 4.21 28.11 electricity .7X 18.81 1.61 1.OX Total 100.0 100.0 100.01 100.01 100.01 100.0X 100.01 100.01 100.01 100.01 ValidN 173 194 150 103 205 60 32 96 62 96 Main Lighting Fuel electriety 36.41 72.21 95.31 21.41 16.61 100.0X 100.0O 89.61 67.71 100.01 kerosene, oil, or gas 63.61 27.81 4.71 78.61 80.51 10.41 32.31 battery 2.9° rotal 10u.0% 100.01 100.01 100.01 100.01 100.01 100.01 100.01 100.01 100.01 Valid N 173 194 150 103 205 60 32 96 62 96 Electrified NO with Shared Electric Meter Total 32.01 31.01 24.01 50.01 12.01 15.01 31.01 55.01 38.01 25.01 ValidN 63 140 143 22 34 60 32 86 42 96 Source of fuetwood not used 33.9X 97.9X 75.51 54.4X 6.3X 26.71 75.01 39.61 1.6X 67.71 collected 60.9 1.OX 1.3 34.01 77.1X 1.71 6.31 12.51 62.91 5.21 purchased 5.2X 1.01 23.21 11.71 16.6 71.71 18.81 47.9X 35.5 27.1X Total 100.01 100.0X 100.01 100.01 100.01 100.01 100.01 100.01 100.01 100.01 Valid H 3=174 N=194 3=1S1 3=103 3.205 4=60 3=32 V=96 N=62 N=96 .__. ............ ..... ....... ._....... .__,___..............................__.._. ___,,,,_,............................................................................. Source: 1993 Living Standards Survey (prelifinary results - only 201 of sample clusters). Comsunes are classified as urban or rural acording to the administrative definition (see Annex 1). North Includes camunes in the Northern Highlands and North Midlands Regions. Red River Delta fncludes communes In Ha Tay, Oal Hung, HaS Phong, Thai BSnh, Nan Ha, and NSnh ifnh Provinces. Hanoi includes co_m in Hanoi Province and fmmediately adjacent areas. Central included coAme in North Central, South Central, and the Southern Highlands Regions. Mekong Delta includes corumnes in Northeast of the Mekong Detta and the Mekong Delta Regions. HCNC: Ho Chi Minh City. so Table 3. Fuel Expenditures by Eocation tural Rural Rural Rural Rural Urban Urban Urban Urban HCMC Worth Red Hanoi Central ftekong Red Hanoi Central Mekong River Delta River Delta Detta Delta ,_____,,_._____ ..,_.................,,,...........................,,_....... .,.... *....... ............... . .. ................ Total exwenditrs ('000 1aw/) 317 294 421 418 636 437 917 596 722 1,054 Std Deviation 191 171 303 374 1,256 400 960 439 631 749 Valid 1 174 194 151 103 205 60 32 96 62 96 Energy share of household bLdget (non-trnport) 2.23X 3.46X 5.62X 3.11t 2.67X 11.15t 6.94X 9.95X 4.44X 10.97X Std Deviation 1.43 4.17 5.14 2.84 2.91 5.55 3.70 6.85 3.76 6.98 Yalid 1 174 194 150 103 199 60 32 96 62 96 Electricity ('000 na/mo) 2.14 5.21 11.73 1.90 1.94 21.38 31.25 26.16 15.87 62.45 Std Deviation 3.62 5.04 12.40 4.02 5.76 13.01 20.13 34.19 17.63 52.48 ValId 1 174 194 150 103 199 60 32 96 62 96 Coal, wood, smawst or husk ('000 Donagjo) .21 1.09 6.48 3.20 2.50 16.98 8.59 20. 1 6.37 23.72 Std Deviatien 1.42 7.74 14.68 9.82 6.36 12.65 9.22 16.67 14.59 25.93 Valid N 174 194 151 103 205 60 32 96 62 96 Cooking & lighting futls (O000 D=Wm) 3.56 2.11 1.20 5.50 5.43 .78 7.47 4.10 3.02 10.73 Std Deviation 3.40 2.03 1.67 S.42 4.45 2.61 17.41 7.90 4.47 15.96 Valid N 174 194 151 103 205 60 32 96 62 96 Gasoline and motor oil ('000 on ) .44 .00 .40 1.48 1.70 3.18 7.31 4.75 6.44 19.44 Std Deviation 3.72 .00 2.51 10.16 11.29 9.73 14.49 12.90 17.44 23.26 Valid 1 174 194 151 103 205 60 32 96 62 96 Natebes, candles A flint ('000 D/.l) .28 .29 .65 .52 .83 .85 .50 .17 1.00 2.28 Std Dviatin .57 .88 1.54 1.17 1.13 2.70 .51 .43 1.28 4.72 valid b 174 194 151 103 205 60 32 96 62 96 Labor for collection wood (hbouWyemr) 155.97 .13 .00 37.67 17.88 .00 .42 .00 26.60 .00 Std Deviation 436.59 1.87 .00 124.18 27.40 .00 2.33 .00 54.08 .00 Vatld 1 153 193 149 84 109 59 31 84 47 91 Source: 199I Living Standards Survey (Preltminary Results) so O1a c'l - 68 - Annex VI Page 1 of 2 Annex VI. Estimates of Residential Fuel Consumption Table 1. Viebtnm 1992 Population and Estimated Cooking Energy Requirements bv Agro-ecological Zone Area Population Cooking Enery (2) (000 ha) (000 people) (kg wood equivalent/cap/ay) RegIon (1) Rural Urban Total Rural Urban Normen Highlands 9,361 6,127 1,320 7,447 2.5 1.35 Northbidlands 919 4,020 366 4,386 1.1 1.35 Red RiverDelta 1,262 11,171 2,347 13,518 1.1 1.35 NorthCentnli 5,123 8,282 1,005 9,287 1.5 1.35 Southern Highlands S,5S7 2,149 656 2,805 2.5 1.35 South Ce"nal 4,517 5,450 1,742 7,192 1.5 1.35 N.E. of Mekong Delta 2,349 4,339 4,067 8,406 1.5 1.35 Mekong Delta 3,956 12,694 2,527 15,221 1.5 1.35 Viebnm 33,044 54,232 14,030 68,262 (1) Se eMap 1 for boundaries of each agro-ncological zone. (2) These cookng energy requirements are from the "Report on Daily Life Fuel at the National Level", 1987, Ministry ofEnera. Institute of Energy (reported in FAO, 1992). The Institute of Energy derived these estimates from the results of quick sample surveys of households in Hanoi, Ho Chi Minh City, Dansng, 80 provincial towns, and villages in the Red River Delta, the Mekong Delta and in coastl and mountainous zones. These sure collected data on appliance holdings. stove types, fuel pnces, and the quantities of each fuel used for cookin, boiling pig food, lightn, and other uses. In addition, aWtual cooking fud use vwas me ed over a perod of time. Cooking nrgy requrments for households in the Red River Delta and North Midlands are based on relts fiom the 1992 Surne ofHousehls in the Red River Delta undaken for this study. Table 2. Vietnm 1992 Estimated Share of Cooking Services (including boiling pig foo) Provided by Each Fuel Regtion Crop reidues FuelwoGd Chanvoal Coal Ke,wsae Electridiy Northem Higlds 48.5% 49.1% O.0o 2.4% 0.0% 0.0% North Midlands 48.5% 49.1% 0.0% 2.4% 0.0% 0.0Y Red River Ddta 42.0Yo 20.0W 0.0W 37.0% 0.0% 1.0% North Cental 60.2% 39.8% 0.0% 0.0% 0.0% 0.0%6 SouthernHighlands 60.2% 39.8% 0.0% 0.0W 0.0Y 0.0% South Central 60.2% 39.8% 0.0% 0.0% 0.09% 0.09% NE of Mebong Delta 22.W% 72.7% 3.5% 0.0% 0.0% 1.0% Mekong Delta 22.8% 72.7?Y 3.5% 0.0% 0.0% 1.0% UAW Northern Highlands 17.7% 51.0% 2.1% 25.0% 4.2% 0.0% NorthMidlands 17.7% S1.0% 2.1% 25.0% 4.2% 0.0% RedRiverDElta 1.9% 27.1% 0.0%A 54.1% 8.7% 8.2% Noart Centr 17.7% 51.0% 13.5% 13.6% 4.2% 0.0% Southean Hihlands 17.7% 51.0% 13.5% 13.6% 42% 0.0% South Cental 17.7% 51.0% 13.S% 13.6% 4.2% 0.0% N.E of Meomg Del 0.0% 57.0% 24.7% 0.0% 17.1% 1.2% Y.kanglDelft 0.0% S7.0% 24.7% 0.0% 17.1% 1.2% Estimed sar are based on the share of houseolds using eac fued as a primary cooking 0h in eacwh rpA fi 1993 Lving Standards Survey, modifid to allow for multiple fae sp (commo throughu Vieam). Rural Red Rivt Delt shares use 1992 Rual Energy Survey Data and asawne 2,'a of te rural population Ave in mali towns and 80% in ilages. * Based on urban Central reion pae but for mo oa and s charai ta in Centi proims - 69- iAnnex Vi -69- ~~~~Page 2of 2 Table 3. Vietnar 1992 Estimated Residential Fuel Consumption ftb Cooking and Boiling Pig Food Crop msidues Fuelwood Charcoa Coal Kerosene Electricty Region (000 tonsw) 0ooo ton) o(000 ts) (000 ton) (000 in) GV* RURAL Northmn Highlands 6,829 4,118 0 108 0 0 NorthMidlmads 1,972 1,189 0 31 0 0 Red River Delta 2,522 1,140 0 730 0 48 North Cenbtl 6,875 2,707 0 0 0 0 SouthernfHighlands 2,973 1,171 0 0 0 0 SouthCentam 4,524 1,781 0 0 0 0 N.E of Mekong Delta 1,364 2,591 45 0 0 26 Mekong Delta 3,991 7,579 132 0 0 75 Rura Total 31,050 22,276 177 869 0 149 NorthernHighlands 193 332 S 87 5 0 NorthMfidlands 54 92 1 24 1 0 Red RiverDelta 37 313 0 336 17 102 Noth Cental 147 253 24 36 4 0 Southen Highlants 96 165 16 24 2 0 SoCetal 255 438 42 63 6 0 NX of MkongDelta 0 1,142 180 0 59 26 MekogDelta 0 710 112 0 37 16 Urban Total 782 3,445 380 571 132 144 Vietuam 31,832 25,721 5S7 1,440 132 294 Vretnam (kTOE)1 9,9S2 9,531 387 767 107 2S Auptions Stove Efficen 12.0% 17.0% 2S.0% 22.0% 45.0% 70.0% Unit kg kg kg kg lier W Hea Value(MAYunit) 13.5 16 30 23 35 3.6 Estimates ae based on i) the estimated share of cooking ener seices fim Table 2 above, ii) the population estimates and aid-use cooking energy requrements disly i Table 1, and iU) hang values and avae stove efficienies on here. There are many types of coal taded in Vidnam, but the grade most commony used by houseolds has a lobW beat coet an the indusial had coas (th av heatig value of coal used mm all sectors is rughly 28.8 Mlk* An additiona 50% ws added to ural _ of reidue wood, c ol, and coal br the prepartion of pig food (based on fiel use patterns in illages and small t_1s in tho Red Rhewr Dft Rual fuel cumo estinmes for the Red River Ddta use men figures fiam the 1992 Rural Energy Suvq of 1th Red Rivr Ddta presented in Anec IV and weight res_t accrig to the _Z that 20K oftb ma population live in small towns and 80% live in Willages. tNote: I TOE- 43.18 01 - 70- Annex VII Page 1 of 6 Annex VII. Estimatcs of Land Use and Biomass Supply Assessing the Woody Biomass Resource Base 1. The only infornation that is available on the growing stock (and annual yield) of woody biomass in Vietam is from periodic inventories that the Forest Service undertakes in natural forests. However, these inventores are confined to the stem wood of trees above a mniumum diameter. Branch wood, small wood, scrub and bamboos, etc. are excluded from the equation as are all rees outside the natural forests. Official figures are also reported for plantations, but appear to be based on estiates, not measurements. 2. The latest published figures indicate a 1989 total stem volume of 586 million cubic meters, including 6 million m3 for forest plantations.3 This total volume has been used as a basis for assessing total above ground woody biomass in the natural forests. To account for brnhes, bamboo's, scrub, etc., an additional 12 percent has been added to this total, bringing the average above ground volume in forest land to 75 m3 per hectare (53.6 air dry tons per ha, 15% moisture contet -wet basis-). 3. Official estimat.s of average standing stem volume for plantions of 10 m3 per ba. appear to be low. The Tropical Forestry Action Plan for Vietnam (1FAP) aumed th the average annual sustaiable off-take from plantations is 10 m3 per year. This would be impossible if the growing stock were only 10 m3/ha. Based on the average age of the plantations, a figure of 30 m3 per ha. or 20 tjba. has been used to estimate the sanding stock in these plantations. 4. Ammal yield figaes are not reported by the Geneal Staistical Office. What is given is the production of sawlogs (cutting wood), stated to be 3.5 mill m3 for 1991 or 2.5 percent of the commercially valuable speces, - a production that should be sustamable. The same book gives the production (esimated consumption) of firewood from all sources, estmated to be 32 million stacked m3 (stres) or about 19 million m3 (13 mill. t.) for 1991. This represents about 3 percent of above ground woody biomass in natural forests, again a figure t should be sustinable. However, the estmated demand for wood e in 1992 is approximately 27 million tons, more than double the above figure: if this latter figure is correct then the additional supply may come from a reduction of the growmg stock and/or trees fiom outside the forest. 5. No masu have been made for trees on te 23.6 million ba. of frm, miscellaneous, urban and degaded forest land. TIhe TFAP, estimates the sustnable yield from dtese areas as 12 million tons, but no estimate is given of standing stock. Te same paper also estimate, the su6tainable yield from natural forests for fuelwood to be 2.1 million tons per year which is only 0.5 percet of the standing stock. This is a very low figure and sgnificantly below the sustainable supply. 6. There Ls an urgent need to undetake inetories of biomass on tiese non-forested areas, both for woody and non-woody growth and yield in order to obtain a more accurate picture of the dynamics of supply and demand. Mlost of the people live on or unar these areas that are and will be fte 3 S Data of Vietnams Agricultre, Foestry and Fishery (1976-1991), Stical PublishingHouse, Hanoi, 1992. Annex VII - 71- Page 2 of 6 priniary supply sources. At fte same time, an inventoiy of plantations should be undertaken together with estimates of total above ground growing stock and annual yield in natural forests. Table 1. Vietnam 1992 land Area by Entd Use COW hectaes_) Agnrlture Forest UMic Urban Total Rgion Rice Odhrfoods Sra,r pine- Tea, rubbe, Ir.ngatioe Closed Plantatidw Degnuedt apple, etc. etc. Cana frest NorthernHighlsnds 396 328 18 33 1 1527 175 Sill 1616 156 9361 NorthMidlands 185 111 7 9 10 115 30 186 223 43 919 RedRivNrDelta 528 151 1S 3 29 32 16 69 181 238 1262 Noih Cenb 381 262 17 28 21 1495 161 1621 1018 119 5123 Southern Iighlands 160 94 11 128 0 3290 40 707 1049 78 5557 South Centrl 227 131 33 20 12 1546 80 1524 735 206 4514 N.E. of Mekong Delta 265 163 40 240 14 499 76 278 587 187 2349 MckonglDelta 1615 33 95 115 87 183 So 254 1225 299 3956 Vietnam 3757 1273 236 576 174 8687 628 9750 6634 1326 33041 Sowu, SicajD -oP/ VisApioAm F omaydFuhay(Q96-1991XThPiwtal Aam oCm &odyProAhSioH; amci. Ecnosmmy iTra&*Vxu 1tm .1991Hw*; 19. Vwi*wOCwwrG m;nd Table 2. Vietnam 1992 Estimated Growing Stock of Woody Biomass ()00 tons ai dty I5% moisre content, dry basis) Agricultzure Fors Misc- Uidm Total Region Rice Owherfoods Suga,r pine- Tea. nrbber, nligation Closed Plantation Degmded apple, etc. etc. aMals forst Northern Highlands 119 197 5 550 0 81,805 3,750 14.603 4,617 223 105,869 Noth Midlads 56 67 2 150 0 6,161 643 531 637 61 8,308 RodRiverDDdta 158 91 S SO 0 1,714 343 197 517 340 3,415 NotthCnta 114 157 S 467 0 80,091 3,450 4,632 2,909 170 91,994 SouthemnHighlands 48 56 3 2,133 0 176,254 857 2,020 2,997 tI1 184,480 South Central 68 79 9 333 0 82,823 1,714 4,354 2,100 294 91,776 NE. of Mekong Delta 83 98 12 4,000 0 26,733 3,257 794 3,677 267 38,917 Mekong Delta 485 20 29 1,917 0 9,804 2,143 726 10,S50 427 26,050 Vi_tn_m 1,128 76S 70 9,600 0 465,385 16,157 27,857 27,954 1,893 S50,809 Awxnptions (cubicenewwU) 0.5 I 0.5 25 0 75 30' 4 4 2 (toaskubic meter) 0.6 0.6 0.6 0.6667 0.6 0.7143 0.7143. 0.7143 0.7143 0.7143 (toaslba) 0.3 0.6 0.3 16.6675 0 53.S725 21.429 2.8572 2.8572 1.4286 a Except for plantaioa N Mekomg Deltaand Mekong Delta where grow.g stocl assumed to be 60 cii.n per ha. Also in NEMD and Mekong Delta, 15,000 ha. of misoc eas land assumed to be pb ton land. Table 3. Vietnam 1992 Production of Woody Biomass (Sustainable Supply) (O00 tons air dry 1 S% moisture content, dry basis) Agiculture Forrst misc. Urban Tota Region Rice Otherfoohs Sugar. pine- Tea, rubber, Irmgation Clos,ed Plantation Degrded apple, etc. etc. canals forest Northern lighlands 24 39 1 66 0 3,272 937 3,651 1,154 22 9,166 NorthMidlands I1 13 0 18 0 246 1l1 133 159 6 747 Red River Delta 32 18 1 6 0 69 86 49 129 34 424 North Central 23 31 1 56 0 3,204 862 1,158 727 17 6,079 Southern Highlands 9 12 1 256 0 7,050 214 505 749 11 8,807 South Central 13 16 2 40 0 3,314 429 1,089 525 29 5,457 N.E. of Mekong Delta 16 20 2 480 0 1,069 814 199 919 27 3,546 Mekong Delta 97 4 6 230 0 392 536 181 2,625 43 4,114 Vietnam 225 153 14 1,152 0 18,616 4,039 6,965 6,987 189 38,340 Assumptions: (tons/ha) 0.06 0.12 0.06 2 0 2.143 5.357 0.7143 0.7143 0.143 Assumptions: Average growing stock of woody biomass on rice land and sugar la 0.Sm3fih, rotation 10 years, annual offtaue O.lm3 or 0.06t; average growing stock of woody biormass on other food land: 1.Om3iha, rotation year, annualoffake ).2m3 orO.12t; average growing stock ofwoody biomass on tea, coffee, rubber, mulbery, coconut,pepperandorangeland: 25m3/ha, nnualofftake3m3 or2.0t,rotation 17vears; averagegrowngstocofwoodybiomassofnaturalforest: 75m31ha,annualofflake 3m3 or 2.14t, nominal rotation SO years; average grwing stock of woody bioma on planttions: 30m3/ha, annual offlake 7.5m3 or 5.6t, rotation 8 years, except in NE of Mekong Delta and Mekong Delta her the growing stock and yield are assmed to be double these figures3, -amely, GS 60 ct.m. per ha, annual oflake 15 cum. per ha or 11.2t, rotation 8 years, average growing stock of woody biomass on degrded and miscellaneous ands: 4m/ha, annual offlake lm3 or 0.71t, noinal rotation yeasrs, average growing stock of woody biomass on urban landlroads: 2.0m3/ha, amnal takeoff 2m3 or 0.14t, nominal rotation 20 years. From various surveys, there is evidence that there is more wood outside the closed forests and plantations in NE of Mekong Delta and in the Mekong Delta. Therefore, it has been assumed that 50,000 ha. of misceLtaneous and in NEMD and 175,000 ha. of the same land in the Mekong Delta have been converted to plantatis with an annual yield of 15 cu.m. per ha and a growing stock of 60 cu.m. per ha. Genal formula usedL Yield (offtake) = (Average Growing Stock X 2) * Rotation (assmming average growing stock per hectare is half the final felling growing stock,. This is total above ground woody biomass. Stem volume is 83% of above figures. Ref. Openshaw, IK, 1986. 'I ea4% Table 4: Vietnam 1992 Production of Agricultuml Residues (UO tms ardry 15% moisbture contnt, dry basis) Region Rice Straw .ice husk bran Maizeo*Strw aie cob bran SweetPoitoo Cassava PJ/Se ean) SugarBagase N.H 1469 386 330 88 32 132 70 15 N.M. 888 237 63 17 56 39 48 14 R.R.D. 4386 1170 167 45 98 7 72 33 N.C. 2522 673 96 26 115 58 125 80 ST.N. 9245 2466 656 176 301 236 315 142 S.17L 633 168 129 34 0 40 62 46 S.C. 2571 686 45 12 40 107 122 194 NE.M.D. 1251 334 110 29 8 58 200 222 M.D. 15450 4120 39 10 71 37 78 584 ST.S. 19905 5308 323 85 119 242 462 1046 VErNAM 29150 7,774 979 261 420 478 777 1188 C.F. 1.5 0.4 1.5 0.4 0.2 0.2 2.5 0.2 Region Sar Tons Coton Coffee Husk Cocosheil/husk Tobacco Total N.H. 7 8 0 0 3 2520 N.M. 7 0 0 0 3 1372 R.R.D. 17 0 0 0 1 5996 N.C. 40 1 4 53 1 3794 ST.N. 71 9 4 53 8 13682 S81 23 6 208 0 0 1349 S.C. 97 2 2 303 7 4188 NE.M.D. 111 2 139 245 7 2716 M.D. 292 0 0 1726 6 22413 ST.S. 523 10 349 2274 20 30666 VnETNAM 594 19 353 23?7 28 44348 C.F. 0.1 4.0 1.0 225 1.0 C.F.= Conversion Factor Food to Residue (residuws as a multiple of food production) Ua3 Table S. Vietnm 19 Produto of Grass, Tree Leaves Weeds, e (%0 tons ai dry 15% moist cnteat dry bass) Asrlkxtm Forest Mic. Urban Total Avian Rie Otherfoods SagW pine- Tea, ner, Irrigation Closed Plantation begnWed apple. etc. eft can- fores Nothae Highlands 24 820 3 66 5 8,399 963 20,444 6,464 78 37,266 N=thMidlands 11 278 1 18 S0 633 165 744 892 22 2,814 RedRiverDelta 32 378 3 6 14S 176 88 276 724 119 1,947 North Central 23 655 3 S6 105 8,223 886 6,484 4,072 60 20,567 Southern Highdands 9 23S 2 256 0 18,095 220 2,828 4,196 39 25,880 South Cena Ii 328 6 40 60 8,503 440 6,096 2,940 103 18,529 N.E. of Mekong Delta .i 408 7 480 70 2,745 418 1,112 2,348 94 7,698 Mekong Delta 9, 83 16 230 43S 1,007 275 1,016 4,900 150 8,209 Vietnam 22S 3,185 41 1,152 870 47,781 3,455 39,000 26,536 665 122,910 (tonsha) 0.06 2.5 0.17 2 S 5.5 S.5 4 4 0.5 Soure: Theseassumptionsar deived fri a reviewofNet Pt5lnry Producion(NPP) forcounAies within 10 degrees of the equaor found i Openshaw (1986). NPP Ln pincipAly depends on infall, although the qua of the soil is b,nptornt Bearing this a mind, the NPP for Vetnam should rnge from 5 tons to 10 tons per hectare, except nader intense agcut such as _a ptxduci and doub_rple ne cultiation, where NPP will be higher. The estuated total production of leaves and grass - 123 million tons (100 million tons of wood equivalent) - is more than the combhnd total production of woody biomass and crop residues. This is not supising wben considering that the annua production oftree loaes is appq qmately equd to the production of wood and that gass and weeds are ubiquitous and grow throughout the entire year. Nonetheless, these are vry low qult fuels and are aoy used as a last resart They also provide feed for many animals of all kinds. For example, the cattle and buffaloes in Vietnam require about 23 million air dry tons of grass and cap residues for feed eah year. PC > - 76 - Annex VIII Page 1 of 2 Anners VIII. Energy Issues in Rtiral Industry 1. Non-household energy accounts for twenty percent of energy used in Vietnam, with industry making up two-thirds of this total. Table 2.1 gives a breakdown of the 1990 estimated final consumption of energy by sector and by fuel. Industry accounts for the bulk of non-household energy use a substantial share of this is used in small scale, mainly infonnal. industries. Bionmss supplies almost one-third of all energy requirements to te industrial sector, principally to rrl enterprises which require a cheap and reliable supply of fuel for process heat. Therefore, it is important to survey these industries to discover if fhey have energy supply problems, and if so detenrine what could be done to alleviate this problem. For exanple, as wood has become scarce in the Red River delta region, coal has taken its place, particularly in brick kilns and it is now an important small scale industrial fuel in this region. Table 1 gives an esfimate of the 1990 consumption of biomass energy and coal for smal scale industries in Vietnam. Table 1. Vietnam 1990: Esti nated Small Scale Industrial Use of Biomass and Coal ('000 toe) Indusby Coal Fuelwood Resdues Total Miner based (1) 400 463 863 Agriculural proceing (2) 26 117 357 SO0 Food processing (3) 7 20 27 Wood ndustries (4) 0 28 28 Alcoholic beveages (5) 3 65 68 Misceleous (6) 7 24 (7) 31 Total 443 8) 717 357 1517 Notes: (1) These include brick and tile making, lime buni pricipaly for mortar manufact, and casmic ianufacl. (2) These include processing the followmg products:- coconut and other vegetable oils, coffee, rubber, sugar, gur aaggery) and molasses, tea and tobacco. (3) Food processing includes animal fat rendering. bread and cake making etc., cassava dryig bean curd (tofu) manufactur, frut and other food preparation for canning, mollusk pepamr , noodle protuco, nut oasting, sweets manufacture etc. It excludes, food preparation in restaurant canteens, cafes and mobile hot food vendors and process heat for laundries. These are included under the seniice sector and use an estimated 43,000 toe of coal, 14,000 toe of choal and 46,000 toe of wood. (Table 2.1) (4) Wood industries use waste wood to provide eer for motive power and in the mamfcturing process. These industries include sawmilli veneer, plywood and other board manuf_cture, pulp and paper production and wood pwdcess (5) These include local production of alcoholic ceverages and spirits. (6) Miselaneus industries cover- essetial oil exraction, metll wodkng, salt producti, soap makingt tannin extraction for leather tanning, road taring and road maintnnc (7) This includes ',000 toe of charcoal used by blksmiths and smilt metal manufactrers etc.. (8) This figue, plu. some of the household total for coal, includes sa estd 43,000 toe of power station ash which is rcycled and made into briquettes or patties. Source: Koopms A.199i, (TFAP) adapted andMission esimates. 2. Brick, le and lime bumig are the largest group of indusies that use fuelwood and coal. In rural areas near cities and towns there are a large number of kIlns producig building materials. Ineed on one of the roads out of Hanoi, small brick factories were counted at about one kdlometer intervals for over 40 hn. There has been a umedous upsurge in building activities over the last two to three years and this is likely to continue for some time to come, thus an increasing amount - 77 - Annex VIII Page 2 of 2 of energy may be required for these industries. Such industries are labor intensive and should be encouraged as a means of creating rural employment. If the fuel source is wood, this will bring rual employment in its growing, producton, transport and maketig. Accordi-ig to estimates presented in Chapter 3, more than 100,000 ful time people obtain employment in the production, tunsport and marketing of fuielwood and charcoal across the nation. In addition, more than 10,000 people may be employed in growing and tending trees, especially if the bulk of the woodfuiel supply in Vietnam is coming from planted forests as in Danang (see above). 3. Agricultural processing covers a large number ot rural industries at are almost entirely depndent on biomass for their process heat requieents. If wood is being over cut to meet the demands of these industries then they could be in jeopardy. A survey of all these industries should be undertaken to ascertain how much energ they use and if it is biomass, their supply sources If these and otherrural industries, which depend on a supply of energy close to where the raw maerial is grown, cannot rely on a sustinable supply source, then steps should be taken to ensure its sustaibility. 4. Such mral industries may need assistance to improve their energy efficiency in the .production process. is could be included in the work of an expaned "hnproved Stove Unit" under the Enery Istitute or coordinaed by them, (see para 83. Chapter 3.). There is already a considerable body of knowledge about impved idlns and improved agricuual procing evices and assistance could be given to the Energy Institute to make this knowledge available. 3. Because these indusries are mainly rim by the ifrmal sector, they do not have the capacity, money or capabiity to undtake energy audits or efficiency improvts. Yet hese inuis as a group use more energy and most likely employ more people than the fonnal industrial sector. These industries also brmg income to rumal people and supply the means to pay for electia connections and other imp-rovemes to living stads. Thereore, it should be in the interest of the govemeSn to support these rumral industries, by ensurng they are USing their energy efficietly and if they are using biomass, it is coning from a rnewable supply source. Unless they are near to another fuel such as coal, *t have lte opporknity to switch to other eneWr forms. From an environmental viewpoit, ey should be encouraged to use an inmgous renewable fuel that can be grown near to the demand. 6. Biomass is also used by he service sector in etaurants, cafes, mobile hot food shops, canteem in schools, colleges, anmy camps and hospitals etc. and by laudies. Such establi would benefit from energy efficiency imp s and an expanded stove uiit could cater to their needs. 7. For these reasons, govnment should survey all the users of non4hosehold biomass energy to detemine with more accuracy the size, locatin and kind of industry or serce that uses bims fiels and find out the quantity and source of biomass consumed. With this information as a basis, a srteg can be formuated to asist these sectos improve their operaons and end-use efficieny and ensure that their will be a sustinable supply of mnewable energy. - 78 - Annex IX Page 1 of 3 Da River Water Catchment Area Proiect Introdacdion. 1. This project is envisioned to be part of a much larger watershed managemlnent project identified in the Tropical Forestry Action Programnne Project Profile for Vietnam. (Ministry of Forest Hanoi Deemer 1991.). The TFAP project covers six watershed areas of 4.7 mil!ion hectares and has hee components namely: a) identification of enviromunentally threatened areas; b) waershed management pilot projects; and c) watrshed management projects. 2. The esfimated cost for the whole project is between US$ 275 and 300 milion with a lifetime of at least 10 years. Out of this total, the Da river cmponent is estmed to cost about US$ 110 million, or over one-ird of this total. 3. The particular project being proposed in this report would be a smll portion of TFAP's Da river project component and could be implemented as a "fat track" project. It will focus on the low lying areas near the population crations of the North Midlands and Red River Delta Regions plus densely popuated areas of Hoa Binh province. It will cover areas toling 575,000 hectar in the provinces of Hoa Binh, Yen Bai and Son La. 4. Prctically all hilly and mouninous parts in these areas are affected by serius erosiaL The worst cases are ncountered on low hills adjacet to densely populaed agriculral areas. These hills bave been cut-over many tm to supply wood products, principally fuelwood, to nearby urban and lowland mral households and industry. Also, because of popuation pressue, due in part to over 100,000 people being displaced by the flooding caused by the buO g of the storage reservoir, many of tese areas have been cultivated with agricultual crops and/or over grazed beond their sustaible capacy. 5. The Da river feeds the 2 GigaWatt Hoa Binh hydro-ectric power station which was coissioned in 1988. Due to serious erosion problems, the stwrage capacity reservoir is anticipated to have no more than one-fifth of its planmed lifetime of 250 yeas, unless steps are takm to slow down the erosion rate significantly. This project is intended to: a) slow down the rate of erosion, thus protcting the huge invement of US$ 3000 million in the dam and power plant; b) provide fielwood and other tree products to the urban and nul commanities in and around the Red River delta; - 79- Annex IX Page 2 of 3 c) introduce sustainable silvicultur3l and agricultural pracices to the water catchment areas, especially a£o-forestry and multipurpose tree d) provide employment and sustible economic development to fte people; and e) help with the resetdement of the displaced people. Projct PDesriton. 6. As part of the project, infortmation will be gathered about the supply, demand and trde in wood and tree products, particularly fuelwood in the water ca;chment areas that serve the lowland agricultural and urban areas. The study would hilight the present d=mand for and trade in wood energ and other tree pliducts. Forecasts will be made of potential fitre demand, tking into cosideratioon supply constaints at presen 7. Parallel to the woodfuel demand and marketng study, the pioject area will be identified and delineated. A land use map will be produced and land ownership/land occupancy register will be compiled. This should be done in cooprationwith the Red River Delta Masw Plan Projec 8. Once this infrmation has been compiled, a land planning exercise wil be undertake to classify land according to its most sustable use firm the points of view of land reclamaion, erosion cotol and sustnable economic development Specfic interventions to be considered are ta& ceck dams, river bank protection, and generl watershed management activities. Ibis initiative will take place in consultation with and with the agrement of the population already living in the area or the displaced people about to be moved there. 9. After identifying appropriate technical and insiutional approaches such as community forestry, agro-forestry, woodlots, tree fodder producdon, terrcing etc. for the bare nd degraded land and improved manageet intvenions for the existing forest and planon areas, pilot projects will be iiaed in representative ai'eas which will cover the various communites. Successful planting and management initiatives such as those undertaken by the World Food Programe and CARE Intenational will be used as models. 10. A preparation and implementaton plan will be prepared to cover the whole area. Ihis will include technical assisace and investment costs and benefits for the projects lifetime. Tentative Costs and Area Covered. 11. It is envisaged that there will be interventions in five areas, three of which are concerned with tree planting activities, nanely: a) establishing about 50,000 hectares of woodlots, plantations and riverside plantings at an estimated cost of US$ 10 million; - 80 - Annex IX Page 3 of 3 b) converting about 125,000 heab of degraded agricultural or pasture land to land with sustainable soil conservation interventions such as agro-foresty, terracing, fodder production in which trees will cover an etimated 20 % of the area. Tis will cost approximatly US$ 5 million; c) reclaiming 400,000 hectaes of degraded forest land through varous management techniques such as encouraging natural re,eneration from superior trees, under planting and enrichmet planting, and management for multipurpose use. The cost of this intervention will be about US$ 10 million. In addition there will be the demand and market survey and an initiative to increase the end use efficiency of fuelwood. 12. The total cost, inci.. .--g the preparation and supervision stork, is etmatd to be about US$ 30 million in 1993 dollars and the projects liftime will be an intial 10 years. The above costs exclude many inputs by the people themselves who will be providing land and labor freely or in exchag for food and other inputs. The overall benefits include reduced erosion, prolonged reservoir P e, sustainable agricultural and silvicultural development and enhanced provision of fuclwood and other tree products. - 81 - Amex X Page 1 of 1 Annex X Participants in Rural Electrification Process Institute of Energy Ministry of Energy Investostion and Design Companies Power Construction Companies (north, (South) ( central) Regional Electricity Departments PrOvincial People's Commite Local Branches of the Power Companies 0) DIstDict People's Committee Rural Cooperatives Vilage People's Committee (or sub-districts) End users - 82 - Annex la Page 1 of I Awmes XL Comparauve efriciencies of Vietnamese and currendy installed Chinese transsormems Sin Vietnes Chines (S7 (*) kVA No load losses OkM) Load losses No load losses (k) Loadlosses SO 300 1400 190 1150 100 550 2400 320 2000 160 700 3500 460 2850 250 900 3800 640 3000 320 1500 7500 920 5'J0 630 2000 9000 1300 8100 1000 3400 15000 1800 11600 1600 5200 23000 2650 19500 2500 7000 32000 3630 23000 Soorce: Dong Anh factory information and mission data (M) The Chinese models referenced as "S70 sine arethose ceny insalled on the Cines pow ysems. Their cost is similar to the cost of Vieamese tunrmers (S 1850 for a 1S kVtO.4 kV 100 kVA t )usfomr), whirh mas them a good refer for Vietm. Te Chs factoies axe now proposing a new top of mods (*S9' serie) whose ficencies a similar to state-of-the-art siLicon-seel core distributon t tnfoms, but at a much higher cost (25% more than S7 n). - 83 - Annex XII Page 1 of 1 Annex XII Electricity Tariff Indsry (DonW h) , Supply: 6kVandabove Low VoltagesupY Nomal tariff 450 480 Peaktme ( 6 to 10 p.m.) 750 800 Vaeny time (10 p.m. to 4 a.m.)_ 300 320 Irigation pumps 180 190 Househds (DonglkWh) Prite mets 450 Main meters at village mediumwvoltageow vovolt tnO 360 Main mete at Redenial Estae medium voltagelow voltage 400 tuans_o.me COMMria srvces 750 Foteiiers varble Peunaltes for exces consumption: Letan 50 % above quota +150%ontheaplcabtariff Between SO % and 200% above quota ++200% on the applicable tariff Abov 200 % above oao +250 % on the solicable rff ILB. The quota depends on the size and the income of the family Source: Power Company # 2 - 84 -Annex XIII Page I of 1 Annex XIIL Regional Considerations for Rural Electrification Projects zones % nrual Ruml Area Desity Main acps, Potal incom people population (million rural areas activities sources for (US S / -_ (million) ha) (inhkn2) -_ E household) North 86% 8.6 9.8 88 forest, Mni and above S 600 Mountains and nomadic micro bydro midlas - breeding (44%) Red Riv Delta 81% 11.3 1.0 1130 Rice paddy, Natoual / fiom S400 to pouly regional $ 600 - - - -- _ _ _____ breeding -1 d Nort-Centrai 89o 7.7 ;.4 Paddy, cor National frm $ 250 to cattl grid/ $400 breeding dieses Minihydro ,__________ _________ _ _ _(6%) _ Cen-south 76% 5.1 4.4 116 Paddy, Minihydro fom $ 250 to coastal a cotton, catte (14%), S 400 breediln dils Highlands 78% 1.8 5.5 33 Cofe Minhydro fom S iSoto rubber, (34%), S250 nomadic died __ __ __ __ ,.__ __ breedin _ _ _ __ _ _ _ _ _ East south 54 % 4.1 2.4 171 Cofe Naiona I < S10 rbe, catte regioa breedig gVds _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ _ _ _ _ __________ (2YO) _ MekongDela 86% 12.4 4 310 Rice paddy, National above S 600 *^its. and seafoo& regional Soue: _ner Instute,11breedin I Souc.E Vlsiue 1991 Joint UNDP/World Bank ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAMME (ESMAP) LIST OF REPORTS ON COMPLETED AC'lr IVIES RegionlCoun,y Acdvliy/Report lThi Date Number SUB-SAHARAN AFRICA (AFR) Africa Regional Anglophone Africa Household Energy Workshop (English) 07/88 085/88 Regional Power Seminar on Reducing Electric Power System Losses in Africa (English) 08/88 087/88 Institutional Evaluation of EGI. (English) 02/89 098/89 Biomns Mapping Regional Workshops (English - Out of Print) 05/69 - Francophone Household Energy Workshop (French) 08/89 103/89 Interafrican ElectricRI Engineering College.. Proposals for Short- and Long-Term Development (English) 03/90 112/90 Biomr Assessment and Mapping (English - Out of Print) 03/90 - Angola Energy Asement (English and Portuguese) 05/89 4708-ANG Power Rebabilitation and Technical Assistae (English) 10/91 142/91 Benin Energy Assessment (English and French) 06/8S 5222-BEN Botswana Energy Assesment (English) 09/84 4998-BT Pump Electrification Prefeasibility Study (English) 01/86 047/86 Review of Electricity Service Connection Policy (English) 07/87 071/87 Tuli Block Farms Electrification Study (English) 07/87 072/87 HousehdLld Energy isues Study (English - Out of Print) 02/88 - 'Urban Household Energy Stte Study (English) 05/91 132/91 Burkdna Paso Energy Assessment (English and French) 01/86 5730-BUR Technical Assistance Program (English) 03/8c 052/86 Urban Household Energy Stra Study (English and Prench) 06/91 134/91 Burundi Energy Assest (English) 06/82 3778-BU Petroleum Supply Management (English) 01/84 012/84 Status Report (English and French) 02/84 011/84 Presentation of Energy Projects for the Fourth Five-Year Plan (1983-1987) (English and French) 05/85 036/85 Improved Charcoal Cookstove Strategy (English and French) 09/85 042/85 Peat Utilization Project (English) 11/85 046/85 Energy Assessment (English and French) 01/92 9215-BU Cape VTerde Energy Assessment (English and Portuguese) 08/84 5073-CV Household Energy Strategy Study (English) 02/90 110/90 Central African Republic Energy et (French) 08/92 9898-CAR Chad Elements of Stategy for Urban Hor- Iold Enew The Case of N'djamena (French) 12/93 160/94 Comoros Energy Assessment (English and French) 01/88 7104-COM Congo Energy Assessment (English) 01/88 6420-COB Power Development Plan (English and French) 03/90 106/90 Cote d'Ivoire Energy Assessment (English and French) 04/85 5250-I'v Improved Biomass Utilization (English and French) 04/87 069/87 Power System Efficiency Study (Out of Print) 12/87 - Power Sector Efficieacy Study (French) 02/92 140/91 - 2 - Region/Country Activity/Report Ytle Date Number Ethiopia Energy Assessment (English) 07/84 4741-ET Power System Efficiency Study (English) 10/85 045/85 Agricultural Residue Briquetting Pilot Project (English) 12/86 062/86 Bagasse Study (English) 12/86 063/86 Cooking Efficiency Project (English) 12/87 - Gabon Energy Assessment (English) 07/88 6915-4A The Gambia Energy Assessment (English) 1l/83 4743-GM Solar Water Heating Retrofit Project (English) 02/85 030/85 Solar Photovoltaic Applications (English) 03/85 032/85 Petroleum Supply Management Assistance (English) 04/85 035/85 Ghana Energy Assessment (English) 11/86 6234-GH Energy Rationalization in the Industrial Sector (English) 06/88 084/88 Sawmill Residues Utilization Study (English) 11/88 074/87 Industrial Energy Efficiency (English) 11/92 148/92 Guinea Energy Assessment (Out of Print) 11/86 6137-GUI Guinea-Bissau Energy Assessment (English and Portuguese) 08/84 5083-OUB Recommended Technical Assistance Projects (English & Portuguese) 04/85 033/85 Management Options for the Electric Power and Water Supply Subsectors (English) 02/90 100/'0 Power and Water Institutional Restructuring (French) 04/91 118/91 Kenya Energy Assessment (English) 05/82 3800-KIE Power System Efficiency Study (English) 03/84 014/84 Status Report (English) 05/84 016/84 Coal Conversion Action Plan (English - Out of Print) 02/87 - Solar Water Heating Study (English) 02/87 066/87 Ped-Urban Woodfuel Development (English) 10/87 076/87 Power Master Plan (English - Out of Print) 11/87 - Lesotho Energ Assessment (English) 01/84 4676-LSO Liberia Energy Assessment (English) 12/84 5279-LBR Recommended Technical Assistance Projects (English) 06/85 038/85 Power System Efficiency Study (English) 12/87 081/87 Madagascar Energy Assessment (English) 01/87 5700-MAG Power System Efficiency Study (English and French) 12/87 075/87 Mdawi Energy Assessment (English) 08/82 3903-MAL Technical Assistance to Improve the Efficiency of Fuelwood Use in the Tobacco Industry (English) 11/83 009/83 Status Report (English) 01/84 013/84 Mali Energy Assessment (English and French) 11/91 8423-MLI Household Energy Strategy (English and French) 03/92 147/92 Islamic Republic of Mauntania Energy Assessment (English and French) 04/85 5224-MAU Household Energy Strategy Study (English and French) 07/90 123/90 Mauritius Energy Assessment (English) 12igt 3510-MAS Status Report (English) 10/83 008/83 Power System Efficiency Audit (English) 05/87 070/87 bagasse Power Potential (English) 10/87 077/87 Mozambique Energy Assessment (English) 01/87 6128-MOZ Household Electricity Utilization Study (English) 03/90 113/90 ReglonlCwunhy Activy/Report Ttle Date Number Namibia Energy Assessment (English) 03/93 11320-NAM Niger Energy Assessment (French) 05184 4642-NIR Status Report (English and French) 02/86 051186 Improved Stoves Project (English and French) 12/87 080/87 Household Energy Conservation and Substitution (English and French) 01/88 082/88 Nigeria Energy Assessment (English) 08/83 4440-UNI Energy Assessment (English) 07/93 11672-UNI Rwanda Energy Assessment (English) 06/82 3779-RW Energy Assemnt (English and French) 07/91 8017-RW Status Report (English and French) 05/84 017/84 Improved Charcoal Cookstove Sraegy (English and French) 08/86 059186 Improved Charcoal Production Techniques (English and French) 02/87 065/87 Commercialization of Improved Charcoal Stoves and Carbonization Techniques Mid-Term Progress Report (English and French) 12/91 141/91 SAD)CC SADCC Regional Sector: Regional Capacity-Building Program for Energy Surveys and Policy Analysis (English) 11/91 - Sao Tome and Principe Energy Assessment (English) 10/85 5803-SW Senegal Energy Assessment (English) 07/83 4182-SE Status .Report (English and French) 10/84 02S/84 Industrial Energy Conservation Study (English) 05/85 037/85 Preparatory Assistance for Donor Meeting (English and French) 04186 056/86 Urban Household Energy Strategy (English) 02/89 096189 Seychelles Energy Assessment (English) 01/84 4693-SEY Electric Power System Efficiency Study (English) 08/84 021/84 Sierra Leone Energy Assessment (English) 10/87 6597-SL Somalia Energy Assessment (English) 12/85 5796-SO Sudan Management Assistance to the Ministry of Energy and Mining 05/83 003/83 Energy Assessment (English) 07/83 4511-SU Power System Efficiency Study (English) 06/84 018/84 Status Report (English) 11/84 026/84 Wood Energy/Forestry Feasibility (English - Out of Print) 07/87 073/87 Swaziland Energy Asessment (English) 02/87 6262-SW Tanzania Energy Assessment (English) 11/84 4969-TA Peri-Urban Woodfuels Feasibility Study (English) 08/88 086/88 Tobacco Curing Efficiency Study (English) 05/89 102/89 Remote Sensing and Mapping of Woodlands (English) 06/90 - Industrial Energy Efficiency Technical Assistance (English - Out of Print) 08/90 122/90 Togo Energy Assessment (English) 06/85 5221-TO Wood Recovery in the Nangbeto Lake (English and French) 04/86 055/86 Power Efficiency Improvement (English and French) 12/87 078187 Uganda Energy Assessment (English) 07/83 4453-UG Status Report (English) 08/84 020/84 Institutional Review of the Energy Sector (English) 01/85 029/85 Energy Efficiency in Tobacco Curing Industry (English) 02/86 049/86 Fuelwood/Forestry Feasibility Study (English) 03/86 053186 -4 - Reg&ou/Counhy Ac*ivky/Reporit Wle Date Number Uganda Power System Efficiency Study (English) 12/88 092/88 Energy Efficiency Improvement in the Brick and Tile Industry (English) 02/89 097/89 Tobacco Curing Pilot Project (English - Out of Print) 03/89 UNDP Terminal Report Zaire Energy Assessment (English) 05/86 5837-ZR Zambia Energy Assessment (English) 01/83 4110-ZA Status Report (English) 08/85 039/85 Energy Sector Institutional Review (English) 11/86 060/86 Power Subsector Efficiency Study (English) 02/89 093/88 Energy Strategy Study (English) 02/89 094/88 Urban Household Energy Strategy Study (English) 08/90 121/90 Zimbabwe Energy Assessment (English) 06/82 3765-ZIM Power System Efficiency Study (English) 06/83 005/83 Status Report (English) 08/84 019/84 Power Sector Management Assistance Project (English) 04/85 034/85 Petroleum Management Assistance (English) 12/89 109/89 Power Sector Management lIstitution Building (English - Out of Print) 09/89 - Charcoal Utilization Prefeasibility Study (EngLish) 06/90 119/90 lItegrated Energy Strategy Evaluation (English) 01/92 8768-ZIM EAST ASIA AND PACIFC (EAP) Asia Regional Pacific Household and Rural Energy Seminar (English) 11/90 - China County-Level Rural Energy Assessments (English) 05/89 101/89 Fuelwood Foresty Preinvestment Study (English) 12/89 105/89 Fiji Energy Asessment (English) 06/83 4462-FID Indonesia Energy Assement (Engli*' 11/81 3543-IND Status Report (English) 09/84 022/84 Power Generation Efficiency Study (English) 02/86 050/86 Energy Efficiency in the Brick, Tile and Lime Industries (English) 04/87 067/87 Diesel Generating Plant Efficiency Study (English) 12/88 095/88 Urban Household Energy Strategy Study (English) 02/90 107/90 Biomass Gasifier Preinvestment Study Vols. I & II (English) 12/90 124/90 Lao PDR Urban Electricity Demand Assessment Study (English) 03/93 154/93 Malaysia Sabah Power System Efficiency Study (English) 03/87 068/87 Gas Utilization Study (English) 09/91 9645-MA Myanmar Energy Assessment (English) 06'85 5416-BA Papua New Guinea Energy Assessment (English) 06/82 3882-PNG Status Report (English) 07/83 006/83 Energy Strategy Paper (English - Out of Print) - - Institutional Review in the Energy Sector (English) 10/84 023/84 Power Tariff Study (English) 10/84 024/84 - - Region/Ceehy Acdily/Repoa dtle D7 Number Vietnam Rural and Household Energy - Issues and Options (English) 01194 161/94 Philippines Commercial Potential for Power Production from Agricultural Residues (English) 12/93 157193 Solomon Islands Energy Assessment (English) 06/83 4404-SOL Energy Assessment (English) 01/92 979/SOL South Pacific Petroleum Transport in the South Pacific (English-Out of Print) 05186 - Thailand Energy Assessment (English) 09/85 5793-TH Rural Energy Issues and Options (English - Out of Print) 09/85 044/85 Accelerated Dissemination of Improved Stoves and Charcoal Kilns (English - Out of Print) 09/87 079/87 Northeast Region Village Forestry and Woodfuels Preinvestment Study (English) 02/88 083/88 Impact of Lower Oil Prices (English) 08/88 - Coal Development and Utilization Study (English) 10/89 - Tonga Energy Assessment (English) 06/85 5498-TON Vanuatu Energy Assessment (English) 06185 5577-VA Western Samoa Energy Assessment (English) 06/85 5497-WSO SOUTH ASIA (SAS) Bangladesh Energy Assessment (English) 10/82 3873-BD Priority Investment Program 05183 002/83 Status Report (English) 04184 015/84 Power System Efficiency Study (English) 02/85 031J85 Small Scale Uses of Gas Prefeasibility Study (English - (Out of Print) 12/88 - India Opportunities for Commercialization of Nonconventional Energy Systems (English) 11/88 091/88 Maharashtra Bagasse Energy Efficiency Project (English) 05/91 120/91 Mini-Hydro Development on Irrigation Dams and Ciaa Drops Vols. I, II and III (English) 07/91 139/91 WindFann Pre-Investment Study (English) 12192 150/92 Nepal Energy Assessment (English) 08/83 4474-NIP Status Report (English) 01/85 028184 Energy Efficiency & Fuel Substitution in Industries (English) 06/93 158/93 Pakistan Household Energy Assessment (English - Out of Print) 05/88 - Assessment of Photovoltaic Programs, Applications, and Markets (English) 10/89 103/89 Sri Lanka Energy Assessment (English) 05/82 3792-CE Power System Loss Reduction Study (English) 07/83 007/83 Status Report (English) 01/84 010/84 Industrial Energy Conservation Study (English) 03/86 054186 -6 - Region/CoUnt4 Activkl/Reron Thti Date Number EUROPE AND CENTRAL ASIA (ECA) Eastern Europe The Future of Natural Gas in Eastemn Europe (English) 08/92 149/92 Poland Energy Sector Restructuring Program Vols. I-V (English) 01/93 153/93 Portugal Energy Assessment (Engsish) 04/84 4824-PO Turkey Energy Assessment (English) 03/83 3877-TU MEDDLE EAST AND NORTH ARICA (MNA) Morocco Energy Assessment (English and French) 03/84 4157-MOR Status Report (English and French) 01/86 048/86 Syria Energy Assessment (English) 05/86 S822-SYR Electric Power Efficiency Study (English) 09/88 089/88 Energy Efficiency Improvement in the Cement Sector (English) 04/89 099/89 Energy Efficiency Improvement in the Fertilizer Sector(English) 06/90 115/90 Tunisia Fuel Substitution (English and French) 03/90 -. Power Efficiency Study (English and French) 02/92 136/91 Energy Management Strategy in the Residential and Tertiary Sectors (English) 04/92 146/92 Yemen Energy Assessment (English) 12/84 4892-YAR Energy Investment Priorities (English - Out of Print) 02/87 6376-YAR Household Energy Strategy Study Phase I (English) 03/91 126/91 LATIN AMERICA AND THE CARIBBEAN (LAC) LAC Regional Regional Seminar on Electric Power System Loss Reduction in the Caribbean (English) 07/89 - Bolivia Energy Assessment (English) 04/83 4213-BO National Energy Plan (English) 12/87 - National Energy Plan (Spanish) 08/91 131/91 La Paz Private Power Tecnnical Assistance (English) 11/90 111/90 Natural Gas Distribution: Economics and Regulation (English) 03/92 125/92 Prefeasibility Evaluation Rural Electrification and Demand Assessment (English and Spanish) 04/91 129/91 Private Power Generation and Transmission (English) 01/92 137/91 Chile Energy Sector Review (English - Out of Print) 08/88 7129-CH Colombia Energy Strategy Paper (English) 12/86 - Costa Rica Energy Assessment (English and Spanish) 01/84 4655-CR Recommended Technical Assistance Projects (English) 11/84 027/84 Forest Residues Utilization Study (English and Spanis) 02/90 108/90 Dominican Republic Energy Assessment (English) 05/91 8234-DO Ecuador Energy Assssment (Spanish) 12/85 5865-EC Energy Strategy Phase I (Spanish) 07/88 - Energy Strategy (English) 04/91 - Private Minihydropower Development Study (English) 11/92 - -7 - Region/Countr Activty/Report Ale Date Number Guatemala Issues and Options in the Energy Sector (Etiglish) 09/93 12160-CU Haiti Energy Assessment (English and French) 06/82 3672-HA Status Report (English and French) 08/85 041/85 Household Energy Strategy (English and French) 12/91 143/91 Honduras Energy Assessment (English) 08/87 6476-HO Petroleum Supply Management (English) 03/91 128/91 Jamaica Energy Assessment (English) 04/85 5466-JM Petroleum Procurement, Refining, and Distribution Study (English) 11/86 061/86 Energy Efficiency Building Code Phase I (English-out of Print) 03/88 - Energy Efficiency Standards and Labels Phase I (English - Out of Print) 03/88 - Management Information System Phase I (Engli - Out of Print) 03/88 - Charcoal Production Project (English) 09/88 090/88 FIDCO Sawmill Residues Utilization Study (English) 09/88 088/88 E-nergy Sector Strategy and lavestmnt Planning Stucy (Etylish) 07/92 135/92 Mexico Improved Charcoal Production Within Forest Management for the State of Veracruz (English and Spanish) 08191 138/91 Panama Power System Efficiency Study (English - Out of Print) 06/83 004/83 Paraguay Energy Assessment (English) 10/84 5145-PA Recommended Technical Assistan=c Projects (English- (Out of Print) 09/85 - Status Report (English and Spanish) 09/85 043/8S Peru Energy Assessment (English) 01/84 4677-PB Status Report (English - Out of Print) 08/85 040/85 Proposal for a Stove Dissemination Program in the Sierra (English and Spanish) 02/87 064/87 PEnergy Strategy (English and Spanish) 12/90 - Saint Lucia Energy Assessment (English) 09/84 5111-SLU St. Vincent and the Grenadines Energy Assessment (English) 09/84 S103-STV Trinidad and Tobago Energy Assessment (English - Out of Print) 12/8S S930-TR GLOBAL Energy End Use Efficiency: Research and Strategy (English - Out of Print) 11/89 - Guidelines for Utility Customer Management and Metering (English and Spamish) 07/91 - Women and Energy-A Resource Guide The International Network: Policies and Experience (English) 04/90 - Assessment of Personal Computer Models for Energy Planning in Developing Countries (English) 10/91 - Long-Term Gas Contracts Principles and Applications (Ensh) 02/93 152/93 Comparative Behavior of Firms Under Public and Private Ownership (English) 05/93 lS1/93 012594 IBRD 25147 CHINA < Ho~~~~~~~~~~~~~~~~po ono MIDLAND~~1WL~J NORTHERN TAI oi H o n _ 110 HIGHLANDS x IILAD \. 110* -20' 2RED RIVER 20 Jow ' ' -DELTA VIET NAM LAO PEOPLE'S ' NgheAn ADMINISTRATIVE MAP REPUBLIC N OF VIET NAM VIE~> _ NATIONAL CAPIlA RIVERS -4 \ (lPROVINCE BOUNDARIES - vnh INTERNATIONAL BOUNDAIUES HohiMinh T H A I L A N D I SI O UTI H D tre"s~~ENRA ( t J;bn Tum Binhh r CAMBODIA E IOT t r ~~~~~~~~~~~~~~SOUTHEN _JYen oIond,honl . i\ 1HIGHLANDS Lac sv < ,ANORTH-EAST Of193 \ > ~~~ ~~-Q. 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