Report No. 10441-EAP Kiribati Issues and Options in the Energy Sector Annex D July 31, 1992 The World Bank in Cooperation with The UNDP/ESCAP Pacific Energy Development Programme The Asian Developmnt Bank and the Forum Secretariat Energy Division FOR OFFICIAL USE ONLY Document of the World Bank This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENT Kiribati's official currency is the Australian dollar A$1.23 = US$1.00 FISCAL YEAR July 1 to June 30 ACRONYMS ADB - Asian Development Bank AIDAB - Australian International Development Assistance Bureau EC - European Community EPU - Energy Planning Unit (Ministry of Works and Energy) FSED - Forum Secretariat Energy Division JICA - Japan International Cooperation Agency KMK - Karikirakean Mwengaraoin Kiribati KOIL - Kiribati Oil Company MWE - Ministry of Works and Energy PEDP - Pacific Energy Development Programme PUB - Public Utilities Board RPU - Foruta Secretariat's Regional Petroleum Unit SEC - Solar Energy Company SCF - Save the Children Foundation SOPAC - South Pacific Applied Geosciences Commission SPIRE - South Pacific Institute for Renewable Energy TSKL Telecom Service Kiribati, Ltd. Also known as Telecoms. ABBREVIATIONS kgoe - kilograms of oil equivalent LCT - local coastal tanker MR - medium range MT - metric ton OTEC - Ocean thermal energy conversion PV - photovoltaic TOE - tons of oil equivalent This report is based on the findings of an energy assessment mission which visited Kiribati in February 1991. The mission comprised Andres Liebenthal (mission leader - World Bank), Herbert Wade (rural and renewable energy specialist - consultant), Michael Charleson (power engineer - consultant), William Matthews (petroleum specialist - consultant), Douglas Macdonald (pcmzr .economist - consultant) and Chuck Filiaga (assistant power planner - PEDP). FOR OMCLAL USE ONLY KIRIBATI ISSUES AND OPTIONS IN THE ENERGY SECTOR Table of Contents Pfae No. EXECUTIVE SUMHARY . . . . . . . . . . . . . . . . . . . . . . . . . . I. THE ECONOMIC AND INSTITUTIONAL CONTEXT. . . . . . . . . . . . Energy and the Economy n y.. .... .. . 1 Institutional Framework ........... 1 II. ENERGY CONSUMPTION . . . . . . . . . . . . . . . . . . . . . 3 Petroleum Products 3 Electricity a 4 Solar Energy 9 . * 9 Biomass and Household Cooking .... .......... 10 III. ENERGY SUPPLY . . . . . . . . . . . . . . . . . . . . . . . 11 Petroleum Products . . . . . . . . . . . . . . . . . . 11 ;3lectricity ...... 13 Biomass .18 0e..i Solar Energy . . . . . . . . s18 Other Energy Resources . o . .............. 19 IV. POLICY AND INSTITUTIONAL ISSUES . . . . . . . . . . . . . . 21 Petroleum . . . . . . . . . . . . . . . * . * * a * a * * 21 Power Subsector . * . . . . a . . . . . . . . . * . . . o 23 Environmental Issues . . . . . . ... . . . . . . . . .# . . 27 V. INVESTMENT AND TECHNICAL ASSISTANCE PRIORITIES . . . . . . 9 28 Petroleum . . . . . . . . . . . . . . . . . . . . . . . . 28 Power Subsector . . . . . . . . . . . * * . . . . . . 28 Renewable Energy . . . . . . . . .... . .. . . . ... 29 Tables 2.1 KIRIBATI CONSUMPTION OF PETROLEUM PRODUCTS - 1990 . . . . . 3 2.2 KIRIBATI PETROLEUM PRODUCTS CONSUMPTION FORECAST . . . . . . 4 2.3 SUMMARY OF POWER SALES HISTORY (1981-90) . . . . . . . . . . 5 2.4 CONSUM ERS AND SALES BY CLASS. ... ...... 6 2.5 PUB SYSTEM LOSSES . . . . . . . . . . . . . . . . . . . . . 7 2.6 SUMMARY OF PROJECTIONS OF SALES, GENERATION AND PEAK DEMAND 9 3.1 SOUTH TARAWA PETROLEUM PRODUCT STORAGE CAPACITY . . . . . . 112 3.2 SUMMARY OF PUB SYSTEM STATISTICS (1989/90) . . . . . . . .'14 3.3 PUB OPERATIONAL GENERATING PLANT (February 1991) . . . . . . 14 3.4 SUMMARY OF POWER DEVELOPMENT PLAN FOR PUB . . ... . . . . 17 4.1 OFFICIAL RETAIL PRICES, LANDED COSTS AND DISTRIBUTION MARGINS OF PETROLEUM PRODUCTS . . . . . . . . . . . . . . 21 4.2 PUB COSTS AND REVENUES, 1989/90 *..............a...a.... 24 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. ENERGY CONVERSIONS AND MEASUREMENTS lypical Typical Gross Gross Oil Unit Density Density Energy Energy Equiv kg/litre 1/tonne MJI/g MJ/litre toe/unit (net) Biomass Fuels Fuelwood (5% mcwb) tonne 18.0 0.42 Coconut Residues (air dry) Shell (15% mcwb)hld tonne 14.6 034 Husk (30% mcwb)b.,,,,d tonne 12.0 0.28 Average (air dryh,,k d ,,,)2 tonne 14.0 033 Coconut Palm Wood ,air dry) tonne 115 0.27 Charcoal 30.0 0.70 Vegetable and Mineral Fuels Crude Oil tonne 42.6 1.00 Coconut Oil tonne 0.910 1100 38.4 0.90 LPG (propane) tonne 0510 1960 50.0 255 1.17 Ethanol tonne 27.0 0.63 Gasoline (Super) tonne 0.730 1370 465 34.0 1.09 Gasoline (Unleaded) tonne 0.735 1360 465 34.2 1.09 AviatiorS Gasoline (Avgas) tonne 0.695 1440 475 33.0 1.12 Lighting Kerosene tonne 0.790 1270 46.4 36.7 1.09 Power Kerosene (Avtur, DPK) tonne 0.795 1260 46.4 36.9 1.09 Automotive Diesel (ADO) tonne 0.840 1190 46.0 38.6 1.08 ligh Sulphur Fuel Oil (IFO) tonne 0.980 1020 42.9 42.0 1.01 Low Sulphur Fuel Oil (IFO) tonne 0.900 1110 44.5 40.1 1.04 Electricity (MWh) Fuelwood' MWh 0.93 Fuel Conversion Efficiency Diesel: Text uses actual where known, otherwise: Average efficiency for small (< 100 kW output) diesel engine 0.46 VkWh (22%). Average efficiency of large (> 100 kW output) modern diesel 0.284 V/kWh (36%). Average efficiency of low speed, base load diesel (Pacific regioP) 0.30-0-33 UkWh (28-32% ef). Energy Measurements Area: 1.0 km2 = 100 hectares = 0.386 mu2 1.0 acre = 0.41 hectares Mass: 1.0 long tons = 1.016 tonnes Energy: 1 kWh = 3.6 MJ = 860 kcal = 3412 Btu = 0.086 kgoe 1 toe = 11.83 MWh = 42.6 GJ 510 million kcal = 39.68 million Btu 1 MJ = 238.8 kcal = 947.8 Btu = 0.024 kgoe = 0.28 kWh Notes: (1) Ave.age yield of 2.93 air dry tonnes residues/tonne copra produced (Average NCV 14.0 MJ/kg) mcwb = moisture content wet basis. NCV = net calorific value. (2) Proportion: kernel 33%, shell 23%, husk 44% by dry weight. (3) Assumes converson efficiency of 9% (biomass-fuelled boiler). EXECUTIVE SUMARY 1. The geographical fragmentation of the Kiribati islands, their remoteness, and their smell size are fundamental constraints to Kiribati's development. During the 1980s, output in Kiribati followed a highly erratic pattern, reflecting the vagaries of weather and the vulnerability of the country's export commodities (copra and fish) to price and environmental shocks. Kiribati's per capita GDP is about US$500. Kiribati's trade balance has been negative for a number of years, and the deficit has been covered substantially by official transfers. Energy imports are approximately ton percent of total imports, and about 50X of total exports. 2. The Public Utilities Board (PUB) is responsible for electricity supply and water and sewage services to consumers on the southern islands of the Tarawa Atoll. Aside from Tarawa, there is a public electricity distribution system on Kiritimati, which is controlled by the Ministry of the Line and Phoenix Group. The import of petroleum products is through Mobil and BP. The Kiribati Oil Company (KOIL) operates the depot at the marine receiving terminal at Betio. The Solar Energy Company (SEC), wholly owned by the Government of Kiribati is responsible for rural electrification using photovoltaic systems. Petroleum Products 3. The main issues that emerge from the assessment of this subsector relate to the need for improved distribution of petroleum products, a change in the price control formula, closer monitoring of petroleum prices, and a possible reduction in LPG prices. 4. In 1990, total inland consumvtion of petroleum products in Kiribati was approximately 9.9 thousand kl, including about 7.0 thousand kl in Tarawa, 1.4 thousand kl in Kiritimati, and about 1.4 thousand kl in the outer islands. There was an additional 2.3 thousand kl of aviation fuel, estimated for 1990 based on historical levels, for a total Kiribati trade of 12.2 thousand kl. ADO is the major product at 6.2 thousand kl, with the single biggest consumer being PUB, in South Tarawa, with 2.1 thousand kl in 1990. Total ADO consumption for the country grew at an average annual rate of 2.22 over 1986-90. 5. Forecast: The inland Tarawa consumption of petroleum products is projected to grow at 4.5Z over 1990-2000, while the Kiritimati consumption is expected to remain unchanged. Motor spirit is projected to grow at an annual average rate of 3.02, kerosene at 1.01, and ADO at 5.51. 6. Imiroved distribution. KOIL's efforts to Improve the efficiency, safety and environmental aspects of the KOIL depot and distribution operation appear to be progressing well. Among KOILOo objectives are (i) reduction in KOIL's staffing from 35 to 21 on Tarawa, (ii) reduction or elimination of drum outlets with unsafe splash filling, (iii) reconstruction and modification of tank trucks to proper petroleum product standards, improving safety and efficiency, and (iv) acquisition of computer software and appropriate staff training for invoicing. It is recommended that the GOK work closely with KOIL to achieve these objectives. - ii - 7. Price Control Formula. GOK controls the retail price of motor spirit and kerosene in Kiribati. There are no controls on the ADO price. The GOK's price formula links distribution margins to CIF costs, which has, in the past, provided the petroleum distribution company with unintended windfall profits. To avoid the recurrence of such unintended windfalls, and the attendant cost to the consumers, it is recommended that the bulk of the distribution margin should be expressed as a flat, fixed value, to be adjusted periodically. 8. Price Monitoring. The surveillance of prices in Kiribati appears to be weak. The Ministry of Works and Energy is charged with the responsibility for reviewing the landed cost submissions provided by Mobil, but there is ni %'.tdence of any in-depth checks for tne reasonability of the various components. It is recommended that the GOK develop an appropriate price monitoring capacity. 9. LPG Price. Approximately 30 tonnes per year of LPG are supplied to Tarawa by Kirigas in 50 kg bottles shipped from Fiji Gas, Suva. Kirigas and ROIL are considering the bulk supply of LPG to Kiribati in small tankers, combined with local bottling. This could significantly reduce the LPG price to consumers. It is recommended that the GOK support these proposals for bulk LPG supply by taxing LPG in the same manner as competing fuels such as kerosene. 10. Buffer Fund. ROIL has expressed the objective of establishing e Price Buffer Fund. Since the successful operation of buffer fund is highly unlikily, it is recommended that this fund not be pursued further. Electricity Su'sector 11. The main issues that emerge from the assessment of this subsector relate to the need for a better use of existing resources, a cautious expansion of capacity, and appropriate tariffs. 12. Sales. PUB's total electricity sales in 1989/90 were 6,502 MWh, which were supplied to a total of 3,021 consumers, of which 2,200 were classified as residential, 234 commercial, and 455 industrial, including Government facilities and offices. Over the last ten years, energy sales have grown at an average annual rate of 7.6Z, while peak demand has gone up by only 4.31, and the number of consumers by merely 3.71. More than 601 of the consumers are concentrated in the Betio/Bairiki area, and they account for 701 of the total consumption. The two largest consumers are Telecom Service Kiribati, Ltd. (TSKL), also known as Telecoms, and Te Mautari Fishing Co., though To Mautari has ceased operations, and its future is in considerable doubt. 13. Forecast. It is projected that overall energy sales will grow by 6.11 over 1989/90-1999/2000. It is assumed total system losses will be reduced from 17.41 to 16.4Z, and that the system load factor will decline from about 68Z to 64Z. 14. Old Equipment. A substantial amount of PUB's equipment is so old that it is necessary to confirm its adequacy for satisfactory future service. PUB will require technical assistance for this purpose. Given the lack of spare parts and the limited reliability and age of the equipment, it is recommended - iii - that the 300 kW diesel generating units in service at Berio be retired during the 1990s. Also, in view of the high level of system losses, it is recommended that PUB take necessary actions tu reduce them. 15. Expansion Plan, Diesel generation is the only viable source of electricity generation in Tarawa, the main urban center in Kiribati, in the medium-term. The recommended expansion plan includes a 1 MW baseload unit at Betio in 1993, followed by a 700 kW peaking unit at Bikenibou in 1995, the retirement of one 300 kW unit in 1994/95 and the other 300 kW unit in 1996/97. The total cost of the expansion plan to 2000 will be about US$1.8 million (1991 prices). 16. Rural Electrification. The extension of PUB's grid beyond Nabeina appears to be unviable. Hence, it is recommended that PUB focus on South Tarawa, leaving the SEC to service the lower density, largely residential loads in North Tarawa. 17. Institutional Capabilities. In spite of past efforts, PUB lacks adequately trained and experienced managers in the technical, administrative, and financial areas. Much more effort is required if Kiribati nationals are to effectively manage this important organization. It is recommended that PUB prepare long-term training plans with clear objectives, and ensure that those who receive training of any kind continue to work at PUB after the training is completed. In the short-term, PUB should continue to seek advisors to provide the assistance necessary to effectively manage the operations. Advisors in technical roles, and in accounting and administration should be sought. Electricity Tariffs i8. Tariff Levels. In December, 1990, PUB's tariffs were increased; PUB's weighted average price is now almost A 37¢/kWh (approximately US 30¢/kWh). It appears that PUB's prices have approached the consumers' willingness to pay for electricity, and there is little room for further real tariff increases. 19. hgreement with TSKL. In October, 1990, GOK stipulated that TSRL'a cost of electricity would fall to A$0.22/kWh by August, 1991, and by February, 1992, TSKL would pay the average tariff for the Pacific region, which, by the GOK's estimate, was A$0.18/kWh in October, 1990. If these favorable rates do not actually materialize, then TSKL would be permitted to generate its own electricity. Since TSKL is PUB's largest customer, the sale of electricity at greatly reduced rates will have an extremely detrimental effect upon PUB's financial position. Similarly, if TSKL decides to generate its own electric power, PUB will have to bear the fixed cost of power facilities in excess of its needs, without any revenue from TSKL. It is recommerded that this issue be resolved in a manner that the viability of PUB's overall operations Is not undermined. 20. Cross-subsidies. At present, revenue from electricity sales is used to subsidize PUB'a water and sewage services. In view of the practical coiling on power tariff iacreases, such cross-subsidization between services makes it difficult for PUB to meet its overall financial connitmenta, the covenants with international lending institutions, and the continued operation of the electric power system in a safe and effective manner. Rather than burdening the power - iv - supply with such cross-subsidies, it is recommended that the GOK provide an explicit b4dgeLary subsidy to PUB for its socially important water and sewerage services, and allow power to be priced at a level that is close to its economic cost of supply. PUB's Financial Performance 21. PUB's overall financial pe;r -.mance has deteriorated in recent years. For electricity, PUB's Rate of Return (ROR) on net (revalued) fixed assets is only 32, while an 8Z ROR is required to meet PUB's existing loan covenants. Further, PUB may not be abie to sustain even a 32 ROR. In the medium-run, it is likely that, in the absence of further tariff increases or significant cost reductions, PUB's financial position will becvme critical. 22. PUB's costs are high relative to other Pacific region utilities. One iLldication of the high costs is that PUB has one of the lowest values in the region of annual sales per employee. However, a detailed analysis of PUB's operating costs ant orofitability is difficult since the most recent audited accounts availabl e those for 1986/87. Hence, it is recommended that PUB improve its fine, reporting procedures. 23. PUB has recently sought assistance from ADB to review its non-technical operations. To obtain full "enef.-^ from such a review, it is recommended that this review include PUB's flnanci.al accounting procedures, water ard electricity tariff policies, and the presenit arrangements for subsidizing PUB' s water and sewerage operations. Renewabl't Sources of Energa 24. The main issues that emerge from the assessment of this subsector relate to the need for an expanded use of solar energy for household lighting and water heating, no change in the status of biomass and other renewable energy sources, and further training of field staff and administrative personnel. 25. Solar electrification of rural homes began in 1984 with the formation of the SEC. However, the photovoltaic (PV) systems were poorly installed and poorly maintained, and most of the systems have since failed. By 1989, sales of the PV units fell to a level that was too low to sustain the company. In 1990, the management was changed. Funds from JICA and the EC are expected to allow the placement of 150 home lighting units during 1992 and 1993. These installations will remain the property of SEC, which will now function as a rural PV utility company. Prc io. that the pilot projects prove satisfactory, donor assistance will be soughi. Lo continue funding the expansion of village electrification using photovoltaics at a rate of 300 to 500 units per year, until the market of about 5,000 units has been saturated. 26. The GOK's stated policy of not subsidizina rural electrification has been appropriate to encourage the transformation of the SEC into a financially autonomous, commercially managed PV utility. At present, the SEC's main source of revenue is from installation and maintenance contracts, mostly government or church based, though by the end of 1993, sufficient rural household installations should be in place to firmly establish the company as a rural electric utility. -v - 27. Recycling lead. For solar PV applications, a system of reclaiming lead from spent lead acid batteries should be put into place to prevent poseible environmental damage. 28. Solar water heatina has been installed on the government hotel and a number of homes. Given the excellent record of solar water heaters in the Pacific and Kiribati's good solar environment, it is recommended that solar waters heaters be the first choice for water heating for all new construction. Biomass 29. Kiribati's main biomass resource for energy use consists of the products of the coconut tree. South Tarawa's densely populated areas have insufficient biomass for household energv use but most of the households use kerosene for cooking, and a small number use LPG. The poorer families do not appear to have difficulty in obtaining fuel. Elsewhere in Kiribati, there is no foreseeable shortage of biomass fuel for household use. 30. The present rate of copra production does not provide sufficient husk and shell waste for commercial use. While senile coconut trees are potentially a co mercial sources of energy, there are two problems associated with exploiting this source of energy. First, the operation of such a program is complex; for example, it requires a decades long program for plantation rehabilitation, with the schedule set by fuel needs, and not tree replacement needs. Second, atolls have a fragile ecosystem, which could be adversely affected by this program. Hence, it is recommended that no efforts be made to use senile coconut trees as an energy source. Other Energy Resources 31. While OTEC and wave energy are potential sources of energy in Kiribati, is recommended that they not be considered for development until commercial systems have been in operation elsewhere for sufficient time to judge their economics and their effects on the environment. The combination of a poor wind regime and the difficulty of maintaining rotating mechanical and electrical equipment in Kiribati precludes the use of wind power for purposes other than non-critical water pumping. Training 32. The SEC is capable of training PV field technicians with minimal external aasistance. It is recommended that senior SEC staff be given further training in PV technology, both in the form of overseas courses, similar to those organized by PEDP/SPIRE, and local training provided on a periodic basis. 33. It is recommended that the Energy Division train its staff for monitoring and surveillance of petroleum prices. Further, it is recommended that the Tarawa Technical Institute be encouraged to re-entablish its electrician training program, and to assist the Energy Division and the SEC in providing training to rural users and low-level technicians engaged in the maintenance of small diesel generators and PV systems. I. THE ECONOMIC AND INUTITUTIONAL CONTEXT Energy and the Economy 1.1 Kiribati consists of 33 islands located in the mid-Pacific, astride both the equator and the international date line, with three main groups--the Gilbert, Phoenix and Line Islands. The total land area amounts to only 725 km2. The geographical fragmentation of the islands, their remoteness, ana their small size represent fundamental constraints to Kiribati's development. 1.2 During the 1980., output in Kiribati followed a highly erratic pattern, reflecting the vagaries of weather and the vulnerability of the country's export commodities (copra and fish) to price and environmental shocks. Kiribati's pea capita GDP is about US$500. Stabilizing influences have been exerted over the years by a steady inflow of aid, budget grants and workers' remittances, together with revenues generated by the Revenue Equalization Reserve Fund.l/ 1.3 Kiribati's trade balance has been negative for . number of years, and the deficit has been covered substantially by official transfers. Energy imports are approximately ten percent of total imports, and about 50Z of total exports. Institutional Framework 1.4 The Energy Planning Unit (EPU) is a division of the Ministry of Works and Energy (MWE). Its primary goal is a reduction in the magnitude of Kiribati's dependence on imported oil. For this purpose, it has programs in renewable energy. EPU also has oversight responsibility over the Kiribati Oil Company (KOIL), the Public Utilities Board (PUP.), and the Solar Energy Company (SEC). The staff of EPU consists of two local and one expatriate of'icer (the solar energy technician); one additional position has been authorized, but remains vacant. 1.5 PUB generates and supplies electric power, water and sewage disposal services to consumers on the southern islands of the Tarawa Atoll. Its electrical service covers the main island of Betio, which is the most densely populated, and extends 3. In eastward to Tanaea. The population of South Tarawa is estimated to be about 23,000. PUB also has the authority to issue and control licenses for private electricity generation on South Tarawa. 1.6 Aside from Tarawa, the only other location where there is a public distribution system is Kiritimati Island in the remote Line Islands of Kiribati. On Kiritimati Island, power is provided from isolated diesel units at four locations; the amount of power distributed and the extent of the distribution systems is understood to be extremely limited. Power supply on Kiritimati comes under the responsibility of the Ministry of the Line and Phoenix Group. 1/ The RERF is managed in London, and it invests mainly in government bonds and cash in a variety of major world currencies. -2- 1.7 The import of petroleum products Lo In the hands of Mobil and BP. The Kiribati Oil Company (KOIL) operates the Mobil-owned dopot at the marine receiving terminal at Betio. 1.8 The Solar Energy Company (SEC), wholly owned by the Government of Kiribati, has the rosponsibility for rural electrificaticn using photovoltaic systems. -3- II. gERGt consTONl Petroleum Producto 2.1 In 1990, total inland consumption of petroleum products in Kiribati was approximately 9.9 thousand kl, including about 7.0 thousand kl for Tarawas, 1.4 thousand kl for Kiritimati, and about 1.4 thousand kl for the outer islands. Table 2.1 provide. an estimated aectoral breakdown for 1990 inland petroleum consumption. There was an additional 2.3 kl of aviation fuel, eatimated for 1990 based on historical levelso, for a total Kiribati trade of 12.2 thousand kl. There was no reliable breakdown between Tarawa and Kiritimati aviation fuel consumption available for 1990. Table 2.1i KIRIBATI CONSUMPTION OP PETROLEUM PRODUCTS - 1990 Power Genergation Non Domestic Transport Private Public Energy Total -^----------------------------- kl ---------------------------- Inland (Tarawa and Kiritimati) Gasoline 2,358 2,358 3erosene 1,168 1,168 ADO /a 3,310 827 2,090 6,227 Lube. 170 170 Total 1.168 5.668 827 2.09170 9.923 Aviation (No bunkers) Avgas n.s. 600 n.e. n.a. n.a. 600 Jet Al n.a. 1,700 n.a. n.e. n.a. 1,700 Total n.e. 2.300 n.e. n.a. n.e. 2.300 La ADO used in public power generation is an actual figure, while ADO used in private power is a mission estimate. Source: Mission estimates, based on discussions with ROIL. 2.2 ADO is the major product at 6.2 thousand kl, with the single biggest consumer being PUB, in South Tarawa, with 2.1 thousand kl in 1990. ADO is the only product which has major multi-sectoral use. Total ADO consumption for the country grew at an average annual rate of 2.2Z over 1986-90. The data indicate high growth rates of 7.3Z per annum for motor spirit, and 16.72 per annum for kerosene over 1986-90, but these growth rate. need to be treated with caution. In particular, the data for kerosene could be in error because of classification -4- problems with Jet Al. Motor spirit consumption growth would have to be further analyzed with respect to such factors as "lumpy" effects of development projects and possible surge in use of small power generating sets. 2.3 Table 2.2 is a forecast summary of Kiribati consumption to the year 2000. Motor spirit has been projected to increase at an annual average rate of 3.01, kerosene at 1.0X, and ADO "to others" at 4.0S. The forecast of ADO used by PUB is based on the projected demand for electricity. The aviatior. fuels have been held at their estimated 1990 consumption since no reliable forecasting basis is available in small Pacific Island countries such as Kiribati. Table 2.2: KIRIBATI PETROLEUM PRODUCTS CONSUMPTION FORECAST Foracast Annual Growt:. Rate 1990-2000 1990 1995 2000 -------------- kl -------------- INLAND (Tarawa) Gasoline 3.0S 2,058 2,386 2,766 Kerosene 1.01 1,018 1,081 1,125 ADO 5.5Z 5,327 7,048 9,112 Total 4.51 8.403 10,504 13.002 INLAND (Kiritimati) Gasoline 0.01 300 300 300 Kerosene 0.01 150 150 150 ADO 0.01 900 900 900 Total 0.01 1.350 1.350 1.350. INLAND (Tarawa & Kiritimati) Gasoline 2,358 2,686 3,066 Kerosene 1,168 1,220 1,275 ADO 6,227 7,948 10,012 Lubes 4.0X 170 207 252 TOTAL INLAND 9.923 12.061 14.603 AVIATION (No Bunkers) Avgas 0.01 600 600 600 Jet Al 0.01 1,700 1,700 1,700 TOTAL AVIATION 2.300 2.300 2.300 TOTAL KIRIBATI TRADE 12.223 14.361 16.903 Sources Mission Estimates; Annex 1. Electricity 2.4 PUB's total electricity sales in 1989/90 were 6,502 NWh, which were supplied to 3,021 consumers, of which 2,200 were classified as residential, 234 coumercial, and 455 industrial, including Goverrnent facilities and offices 2/ Residental& consumers used an average of about 65 kWh a month, while industrial consumers had an average use of about 470 kWh/month. In December 1990, the tariff was raised from A$0.29/kWh to A$0.32/kWh for residential consumers, and from A$0.33/kWh to A$0.39/kWh for cosmercial and industrial consumers. 2.5 Over the last ten years, energy sales hav- Increased at an average annual rate cf 7.61, while peek demand has Increased by only 4.31, and the number of consumers by merely 3.71 (Table 2.3). Table 2.3: SUMMARY OF POWER SALES RHISTORY (1981-90) Year Energy Sales Peak Demand Number of Consumers (MWh) (kW) 1980/81 3,366 910 2,179 1981/82 4,214 870 2,199 1982/83 4,103 950 2,218 1983/84 4,333 930 2,226 1984/85 4,554 1,080 2,405 1985/86 5,056 1,020 2,448 1986/87 5,342 1,200 2,483 1987/88 na 1,100 2,503 1988/89 5,965 1,210 2,521 1989/90 6,502 1,324 3,021 Average annual growth rate (2) 1980/81- 1989/90 7.6 4.3 3.7 Sources PUB. 2.6 The percentage of consumers in each of the three classes has remained fairly stable since 1984/85, as has the share of consumption (Table 2.4). Historically, the industrial/Government class has accounted for about 631 of total sales, while commercial and residential consumers together accounted for about 371. 2/ There are differing values available regarding the number of consumers. This confusion reflects PUB's deficiencies In Institutional capabilities. - 6 - Table 2.4: CONSUMERS AND SALES BY CLASS, PERCENTAGE SHARES Year Residential Commercial Indust./Govt. Consumers Sales Consumers Sales Consumers Sales z z Z Z Z 1984/85 75 27 10 10 15 63 1987/88 80 25 10 12 10 63 1989/90 80 25 10 11 10 64 Source: PUB. 2.7 More than 60Z of consumers are concentrated in the Betio/Bairiki area, and they account for 70Z, or more, of total consumption. 2.8 The two largest consumers were Telecom Service Kiribati, Ltd. (TSKL), also known as Telecoms, and Te Mautari Fishing Co. The TSKL consumption is fairly stable at about 54 MWh/month (which is approximately 10Z of total sales), while the Te Mautari consumption varied widely from month to month. While the Te Mautari consumption averaged 31 t.Vh/month (which is approximately 61 of total sales in 1990), Te Mautari ceased to operate in late 1990. 2.9 In October, 1990, TSKL signed an agreement with GOK, under which TSKL received written assurances from the Government that TSKL's cost of electricity would fall to A$0.22/kWh by August, 1991. Further, by February, 1992, TSKL would pay the average tariff for the Pacific region, which, by the GOK's estimate, was A$0.18/kWh in October, 1990. If these favorable rates do not actually materialize, then TSKL would be permitted to generate its own electricity. At present, TSKL has a 160 kW diesel generator to provide emergency power for essential services. 2.10 This arrangement raises a number of issues that need to be resolved promptly and judiciously. Firstly, while the Government can always take action that it considers appropriate, such action should not be detrimental to and undermine the institutions that the Government has established for specific purposes. In the case of agreements relating to electricity tariffs and private generation it would be more appropriate for any special arrangements to be made by PUB or at least in consultation with PUB. 2.11 Secondly, TSKL is by far the largest electric power consumer in Kiribati and the sale of electricity by PUB at greatly reduced rates to VSKL will have an extremely detrimental effect upon PUB's financial position, and its abiliy to subsidize the water and sewage services. Similarly, if TSKL decides to generate its own electric power, PUB will have to bear the fixed cost of power facilities in excess of their needs and with no revenu.e from TSKL. 2.12 Thirdly, the rates for electricity proposed by TSKL and apparently accepted by the Government, are understood to be the average electricity tariffs in the Paeific. However, the tariffs in the various countries of the Pacific -7- vary widely for many different reasons. The tariff levels in Kiribati must reflect the costs and situation in the country, not elsewhere. 2.13 It is recommended that this issue be resolved so that the viability of PUB's overall operations and its ability to meet its responsibilities under the Public Utilities Ordinance is not undermined. 2.14 The PUB system suffers from high system losses. In 1989/90, the total losses were 17.4Z of gross generation, comprising station use of 1.12 and technical and non-technical distribution system losses of 16.3Z. Distribution losses increajed from 1981/82 to 1985/86, and have decreased a little since that time (Table 2.5). The expansion of the 11 kV distribution system, which now extends 35 km from the Betio Power Station, has also led to higher technical losses. Non-technical losses 3/ are also a problem for PUB, and a program has been started recently aimed at reducing the level of non-technical losses. It is recommended that PUB pursue this program consistently and with determination. The station use fell in 1987/88, when the new 1 MW diesel generator was commissioned, and the station use is not expected to exceed 1.0-1.5Z in the future. 2.15 The system power factor appears to be satisfactory, averaging about 0.9, based upon spot readings that are recorded in the station log. Since low power factor is a source of losses, it is encouraging that poor power factor is not a problem on the PUB system. Table 2.5: PUB SYSTEM LOSSES 1981/82 1985/86 1989/90 ----- ----------- Distribution system 12.9 18.5 16.3 Station use 3.8 2.1 1.1 Total 16.7 20.6 17.4 Source: PUB. Load Forecast 2.16 The most recent load forecast for the PUB system was prepare# in October, 1989 as part of a study, financed by the Asian Development Bank (ADB), entitled "Future Power System Expansion." Although this study developed forecasts for the entire PUB system, the primary focus was on the expansion of the 11 kV system into the less populated areas north of the existing system 3/ Non-technical losses are the result of a utility's inability to collect payments due for the services it provides. - 8 - termination, and accordingly much of the work entailed load forecasts for these new areas. In this study, for the existing consumers, the load forecast was based on past growth trends, sad it was assumed that growth would take place at 7Z a year prior to 1991/92, and at 61 after that. This forecast for the existing consumers was added to the projected consumption of new consumers to obtain an overall average annual growth rate of 7.5Z to the year 2000. 2.17 This projected growth rate of 7.5Z must be evaluated in the context of the Kiribati economy. In Kiribati, the principle sources of cash income are fish, copra and handicrafts, and from remittances of Kiribati workers overseas. The economy is heavily dependent upon external assistance for budgetary support and development. Given this background, the economy cannot sustain a continued growth in electricity demand at the historical rate of 7.51 a year indefinitely. Further, the aim of Government policy includes the restraining of public and private consumption, reducing population growth, curbing migration to South Tarawa, and promoting outer islands development. In this respect, it is noteworthy that Government departments and agencies, together with a few small industries, account for more than 601 of electricity consumption (Table 2.4). It is unlikely that the Government agencies will expand their electricity consumption at the projected 7.5Z rate. 2.18 Recent developments may also make it difficult for the projected 7.51 growth rate to materialize. The closure of Te Mautari has significantly reduced the consumption of PUB's second largest consumer. Accordingly, it is projected that the growth in consumption by existing service areas after 1992 will be at 51 a year to 2000. 2.19 In part, this growth will be driven by a number of development projects, including a new hospital, completed in March 1991, the extensions to the airport and its facilities, including runway lighting, and a new prison. It is assumed that PUB will continue to provide power to TSKL, its largest consumer, at a mutually-acceptable tariff. It appears likely that Government electricity consumption will continue to form a considerable part of total usage. Other projects on the horizon include a new hotel, ice cream manufacturing and other light industrial projects in the private sector, but these appear to be some time away. Hence, they can be left out of the demand forecast until more solid evidence of their existence is provided to the PUB. 2.20 The data developed in the "Future Power System Expansion" study has been used to project the consumption of the new service areas. The reinforcement of tho South Tarawa system has been accomplished earlier than anticipated, and some 300 new consumers in the Betio/Bairiki areas were connected during the last six months of I990. However, the extension of the 11 kV system to Nabeina will be at least two ycars behind the original schedule, which will postpone the connection of new consumers. It is also to be noted that the load forecasts for this new service area assumes significant population relocation from wSouth Tarawa, based upon the expectation that the Government would make significant investments in infrastructure and housing to encourage the relocation. No meaningful action appears to have been taken by Government, and no funds have so far been allocated. Notwithstanding, the projections have assumed the same additional consumers in the load forecast, although postponed for 2 years because of the delay in the system extension. - 9 - 2.21 A summary of the overall sales growth projections is shown in Table 2.6, and provided in detail in Annex 4. The average nnual growth in overall energy sal. for 1989/90-1999/2000 is forecast to be 6.11. This growth rate includes _aoumption for approximately 1,000 new residential consumers, 44 commercial, and 40 industrial/Gzvertiment consumers, who are expected to be connected during the period of the projections. 2.22 Generation and peak demand projections have been made assuming that total losses will be 16.41 (152 for distribution system losses and 1.4Z for station use) during the period to 2000. PUB should be able to reduce its losses to this level, from the present 17.4Z level, if the loss reduction program, particularly for non-technical losses, is actively pursued. The system load factor is likely to decline over the period to 2000 because of the additional residential loading with its strong evening peak character without a proportionate increase in cmmercial and industrial load, which tends to have a greater daytime load. The load factor in 1989/90 was 67.92; the load projections assume that this will decline to 65Z in 1990/91 and very gradually thereafter reaching 641 in 1995/96 and remaining constant until 2000. Table 2 6: SUMMARY OF PROJECTIONS OF SALES, GENERATION AND PEAK DEMAND 1989/90 1991/92 1995/96 1999/2000 Av. Annual (Actual) growth (Z) Sales (MWh) 6,502 7,307 9,351 11,726 6.1 Generation (MWh) 7,872 8,740 11,185 14,026 5.9 Peak Demand (kW) 1,324 1,547 1,995 2,502 6.6 Source: Mission estimates. Solar Enerav 2.23 The use of solar energy for electricity production is increasing rapidly on the outer islands of Kiribati. Since 1984, nearly 200 solar lighting systems have been sold, but they have not been properly maintained, and most of them are inoperative. The Solar Energy Company (SEC) has been given the responsibility for rural electrification using photovoltaic systems. Funds from Japan International Cooperation Agency (JICA) and the EC are expected to allow the placement of 150 home lighting units during 1992 and 1993. These installations will remain the property of the SEC, which will function as a rural photovoltaic utility company. Provided that the pilot projects prove satisfactory, donor assistance will be sought to capitalize rural electrification using photovoltaics at a rate of 300 to 500 units per year, until the market of about 5,000 units has been saturated. - 10 - Biomass snd Household Cooking 2.24 On Tarawa, kerosene has increasingly replaced vood fuel for cooking in many households. This trend is expected to continue with LPG also becoming an increasingly important cooking fuel. Since the change to kerosene and LPG is occurring at a more rapid rate than population increases on Tarawa, the pressures on the biomass supply on Tarawa are expected to decrease rather than increase, and there are unlikely to be problems with sustainability of this resource. On the outer islands, the average biomass fuel used for cooking in each household is likely to remain close to five tonnes per year, as found by two joint PEDP/ZWE surveys in late 1985. The primary pressure on the biomass resource will be population increase rather than change in use patterns. However, it is expected that until well beyond 2000, the available resource will be sufficient to meet these needs on all the outer islands, without any need to undertake specific measures to increase wood use efficiency or to increase the supply. Since the fuel supply is abundant and readily available, no organized fuelvood markets exist in Kiribati. 2.25 During 1985-90, the Save the Children Foundation (SCF) conducted a project for the improvement of household cooking facilities, abLch included a concrete stove to replace the traditional open fire, and the construction of a metal roofed kitchen shelter which also serves as a rainwater collection surface. While SCF no longer serves Kiribati, a local organization, the Karikirakean Mwengaraoin Kiribati (RKM), has taken over this project. This project is intended primarily for convenience and comfort in cooking, and not for improved fuel efficiency. - 11 - III. E!5.flLhI!flLi Petroleum Producto 3.1 The bulk supply and procurement of inland fuels for South Tarawa, and both inland and aviation fuels for Kiritimati, is provided by Mobil, Australia, out of their SW Pacific office in Svwa, Fiji. Aviation fuels for South Tarawa are provided by BP SW Pacific, out of Suva, Fiji. The Mobil Supply Agreement, valid till October 1991 and "evergreen" thereafter based on three months mutual notice. Although the Agreement is based nominally on supply from Singapore, approximately 75X of the actual supply has been from Australia and New Zealand, and all of it passas through Mobil's Vuda terminal in Fiji. The local coastal tanker (LCT) has usually been the "Pacific Rover" about 1,600 DWT, which typically follows the three-port discharge circuits such as: (a) Vuda (load) - Tarawa - Funafuti - Wallis (b) Vuda (load) - Funafuti - Tarawa - Santo. 3.2 Parcels of about 700 to 800 tonnes are discharged at the Mobil depot in Betio every four to six weeks. Only three products are received in bulk - motor spirit, kerosene, and ADO. The terminal is situated near the jetty which has a draft of about five meters. The depot is owned by Mobil, but operated and maintained by the Kiribati Oil Company (KOIL). KOIL is 100X owned by GOK and is chkrged with the depot operations, as well as wholesale distribution of the three fuel products to consumers in Kiribati. It also re-sells Mobil lubricants supplied in packaged form. The Mobil depot has a capability of 1.7 thousand kl. 3.3 BP owns and operates a bulk receiving depot in Betio, near the dock adjacent to Mobil. Aviation fuels are received here and trans-shipped by road to the small aviation depot at Bonriki airport. The Betio terminal has a capacity of 810 kl, and Bonriki 77 kl, which together is sufficient for about half 'year's consumption. The total storage for Tarawa with breakdown by product is summarized in Table 3.1. - 12 - Table 3.1: SOUTH TARAWA PETROLEUM PRODUCT STORAGE CAPACITY Mobil BP BP Betio Betio Airport Total ____________________---- kl ----------------------- Avgas - 270 26 296 Motor Spirit 405 - - 405 Kerosene 155 - - 155 Jet Al - 540 51 591 ADO 1,097 - - 1,097 Total 1.657 810 77 2.544 Source: ROIL. 3.4 Mobil owns all the depot facilities--tanks, lines, pumps, buildings, drum filling and truck loading rack. ROIL owns the four-inch transfer line from the jetty to the two storage depots and has a sharing arrangement with BP. There is a two-inch transfer line for ADO from the Mobil depot to the nearby PUB powerhouse, owned by Mobil. KOIL owns two tank trucks, which have capacities of 4 and 10 kl, as well as a garage/workshop. ROIL also owns a stock of 200 liter drums. 3.5 There are four formal retail pump outlets on Tarawa, run by private dealers. In addidon, there are some 200 drum outlets where the fuels are dispensed to clients through splash-filling. These drum outlets, licensed by the MWE, are supposed to be inspected for safety, weights and measures, etc., but control is not exercised. Three additional pump outlets are proposed by ROIL with accompanied tightening of the policing of drum outlets. 3.6 The present staffing of ROIL is 54, with 23 at the depot, 12 in the administration office, and 19 on Riritimati Island. This excludes a Mobil- assigned manager whose recponsibility it is to develop work plans for, and begin implementation of, a program to improve the efficiency, safety and environmental aspects of staffing, procedures and infrastructure of the ROIL depot and distribution operation to bring it to acceptable international oil company standards. This program appears to be progressing well, with a coherent work plan prepared and significant improvements already made in accordance with the established objectives under the plan (5-year Work Plan 1990-95). 3.7 Among the KOIL work plan objectives are: (a) reduction in total staffing of ROIL on Tarawa from 35 to 21; (b) reduction or preferably elimination of drum outlets with unsafe splash filling through the construction of two more proper pump outlets for motor spirit and ADO dispensingp and acquisition of several 680 liter steel tanks for kerosene dispensing in shops; - 13 - (c) reconstruction and modification of tank trucks to improve safety and efficiency; (d) acquisition of computer software and appropriate staff training to enable the reconciliation of depot liftings and associated invoicing by Mobil with the invoice to KOIL's customers. rhis could be done with simple spreadsheets, using standard software. 3.8 It is recommended that the GOK work closely with KOIL to ensure that these objectives are achieved. The need for co-operation is essential in areas such as downsizing of staff and upgrading of drum outlets. LPG 3.9 Approximately 30 tonnes per year of LPG is presently at , Died to Tarawa by a private company, Kirigas, in 50 kg bottles shipped from Fi. Gas, Suva. A small portion of this supply is redistributed directly in these bottles to larger consumers such as hotels and restaurants, but the greater portion is decanted into 13 kg cylinders for redistribution to approximately 350 smaller household consumers. The only use of LPG is cooking. The freight and handling costs for this bottled supply, combined with Kiribati customs duties, results in a high price in Tarawa and the market is unlikely to expand greatly to replace electricity and kerosene at the present price relationships. 3.10 Both Kirigas and KOIL (not presently in the LPG business) are considering the bulk supply of LPG to Kiribati in small tankers into pressurized bulk storage here, with local bottling. This has the potential to significantly reduce the price of this product to consumers in Tarawa, enhancing the commercial and household energy situation. One important aspect of this could be the replacement of electric cooking with LPG,A/ which would have a beneficial effect on Kiribati's overall energy costs through reduction in energy transformation losses. Electricity 3.11 Diesel generation is the only viable source of electricity generation in Kiribati in the medium-term. Kiribati has no large energy resources that could replace diesel powered generation. Present Power Slstem - PUB 3.12 The PUB system comprises a single operating diesel powered generating station at Betio, at the extreme western end of the Tarawa Atoll. Power system statistics for 1990 are summarized in Table 3.2. A/ There is already an PSED project financed through the EC to assist the Government in replacing electric stoves. - 14 - Table 3.2: SUMMARY OF PUB SYSTEM STATISTICS (1989/90) Installed diesel generating capacity (operational) (kW) 3,180 Generation capability (adjusted for derating) (kW) 2,600 Peak Demand (kW) 1,324 Energy Generation (MWh) 7,872 Load Factor (M) 67.9 Energy sales (MWh) 6,502 Losses, incl. station use (M) 17.4 Power Factor 0.9 No. of consumers 3,021 Source: PUB. 3.13 In 1967/68, three power stations were built, of which the largest was at Betio, and the other two at Bairiki and Bikenibeu. Second-hand units manufactured in 1953/54 were transferred from British military facilities on Canton Island in the Phoenix Group to these stations. Five 300 kW sets were installed at Betio, two of which are still operational. One set each, of the same type and size as at Betio, was installed at Bairiki and Bikenibeu. At Betio, two 750 kW diesel generating units were added in 1975/76, and in 1987/88 another unit of 1 MW capacity was installed. At present, there are five operational units at Betio (Table 3.3). The units at Bairiki and Bikenibeu are no longer operational. Table 3.3: PUB OPERATIONAL GENERATING PLANT (February 1991) Nameplate Capability Operating Unit Rating Rating Age Time (kW) (kW) (Years) (Hours) 1 300 240 37+ 58,669 3 300 240 37+ 47,794 6 750 600 15 61,235 7 750 600 15 63,607 8 1,080 920 3 20,040 Total 3.180 2.600 Source: PUB. 3.14 The general condition of the electrical plant and auxiliaries in the station, and of the fuel storage tanks and delivery systems to the generating units is uncertain. Units I and 3 are close to 40 years old, and have long exceeded their economic life. Spare parts for these units are no longer available. The units have relatively low fuel efficiency and are no longer - 15 - reliable except for standby or emergency duty. The two 750 kW units, Units 6 and 7, are in relatively good condition and have reasonable fuel efficiency. Until 1987/88 these units were operated on base load, with the smaller units catering for the peak demand. The commissioning of Unit 8, with a capacity of 1 MW, in 1987/88 greatly improved the supply security and the fuel efficiency of the station. The two 750 MW units now handle peaking duty, and provide the reserve capacity in the event of maintenance or forced outage of the base load 1 MW unit. The two 300 kW units are used purely for standby purposes. 3.15 Within the PUB system, which was initially built in the late 19609, much of the equipment has reached a stage at which it should be thoroughly checked to confirm the adequacy of the equipment for satisfactory future service. Hence, it is recommended that PUB check all of the equipment and correct the deficiencies before failure causes operational and safety problems. The equipment that should be included in such an assessment includes transformers, circuit-breakers and switchgear, metering equipment, generators and exciters, station auxiliary equipment (pumps, compressors, battery chargers, etc.), and fuel storage, handling and delivery systems. 3.16 At present, PUB lacks the resources and expertise for such inspections. Hence, it is recommended that technical assistance be provided for the inspection of most transformers and much of the switchgear, including the equipment and facilities at Betio Power Station. The proposed technical assistance would make detailed recommendations on any maintenance repair or replacement required so that the equipment can be placed in a condition that will ensure the provision of a high standard of reliable service, eliminate unsafe conditions and avoid unnecessary system failures. In connection with this work it is recommended that an inspection of the present system protective relays be carried out to ascertain if they are adjusted and are operating correctly. Some changes in the protective relaying may be required, particularly with the continued extension of the system and the increasing load and system complexity. Terms of reference for this work are included in Annex 6. 3.17 Given the lack of spare parts and the limited reliability and age of the equipment, it is recommended that the 300 kW diesel generating units in service at Betio be considered for retirement during the 1990.. If additional base load generating capacity is installed at Betio within the next few years, then these units could either be safely retired or, if they are in operational condition, they could be retained for emergency situations, until such time as major problems develop that would be costly to repair. ExDansion Plans 3.18 For the purposes of planning, and desirably for operations also, it is assumed that diesel units will normally be operated at a maximum of 85% of the nameplate rating. This is typically the loading at which maximum fuel efficiency is achieved, and loading at this level causes less stress on the engine and all auxiliary plant. 3.19 PUB's power development plan is based on the plan developed in the "Future Power System Expansion" ADB-financed study. This study focused primarily on the economic and technical viability of proposals to extend the 11 kV system to Nabiena, and possibly to the Islands of Northern Tarawa. The study - 16 - established that the extension to Nabiena, about 10 km beyond the present supply end point, was technically and economically viable, while extension beyond this point appeared to be non-viable. 3.20 The expansion study analyzed the operation of the system and determined that generation expansion should initially consist of a 700 kW peaking plant at Bikenibeu, followed by a 1 MW unit at Betio a few years later. The study's proposed peaking unit at Bikenibeu would cater for the evening peak demand in the eastern section of the system, and reduce losses and improve voltage regulation in that area. It w-uld also provide standby service in the event of inadequate generating capacity being available at Betio, for any reason, or for trouble on the 11 kV distribution circuit from Betio. 3.21 Nevertheless, the expans3ion study did not clearly establish that the installation of the peaking unit was critical early in the planning period, and this timing does not appear to be justified. Most of the increase in demand in the eastern area of the system, resulting from the opening of the new hospital, the developments at the airport and the system extension to Ne.biena, is still several years away. In contrast, demand, in absolute terms, itr increasing more quickly in the westen, areas of Betio and Bairiki, particularly following the reinforcement of the system in South Tarawa and the additional consumers resulting therefrom. After considering these projected increases in demand, and recognizing that about 70-75Z of energy consumption and peak demand is in the Betio/Bairiki area, it is recommended that the addition of a base load unit at Betio should precede the installation of a peaking unit at Bikenibeu. The peaking unit can be added at the appropriate time to meet the system conditions, as the load develops. 3.22 Given the above changes, the mission's recommended power development plan i9 shown in brief in Table 3.4, and in detail in Annex 5. The plan envisages the addition of a unit of 1 MW capacity in early 1993/94. One 300 kW unit, either Unit 1 or Unit 3, will be retired in 1994/95, and the other 300 kW unit will be retired in 1996/97. However, it is recognized that PUB may wish to retain one or both of these units for stand-by emergency purposes. The plan provides for a 700 kW peaking plant at Bikenibeu in 1995/96, but the actual timing will be determined more accurately as the system and the demand develops. 3.23 Apart from the costs of the generation additions, notional sums are included for the removal of Units 1 and 3. Notional sums are also included for limited reinforcement of the distribution system and for the repair/replacement of equipment that may be recommended in the proposed survey of power system equipment (see para 3.16). - 17 - Table 3.4: SUMMARY 0F POWER DEVELOPMENT PLAN FOR PUB Year Item Cost (constant 1991 US$ '000) 1992/93 Repair or replace deficient system plant and equipment as recommended in the Survey of Power Syotem Equipment lOO 1993/94 Install and commission a 1 MW diesel generator and associated equipment at Betio Power Station 200 1994/95 Retire and remove one 300 kW unit, either Unit 1 or Unit 3 10 1995/96 Install and commission one 700 kW high speed diesel generator unit, with all auxiliary equipment, electronic gear, lAcluding also possible remote control facilities at Bikenibeu 700 1996/97 Retire and remove the other 300 kW unit, either Unit I or Unit 3 10 1991/92- Distribution system (11 kV & LV) reinforcement and 1999/2000 expansion to moet load growth La 665 La Refer to Annex 5 for breakdown by year. Source: Mission estimates. Rural Electrification 3.24 In addition to the recent ADB-funded extensions of the grid on Betio and Bairiki, PUB is also extending the grid to supply Buota, Abatao, Tabitausa and Nabeina. This project, also funded by an ADB loan and scheduled for completion in 1990/91, is expected to add a further 240 consumers by 1993/94. At present, PUB has no plans to extend the grid beyond Nabeina. In view of the fact that grid extension beyond Nabeina appears to be uiviable (see para. 3.19), it is recommended that PUB continue to focus on providing a reliable and cost effective power supply in South Tarava, leaving the Solar Energy Company (SIC) to service the lower density, largely residential loads in North Tarawa. This recommendation is consistent with the GOK's policy of developing rural electrification with solar photovoltaics (PV) where feasible, and pursuing diesel-based rural electrification only for sites with concentrated loads thct cannot be economically met using PV systems. - 18 - Biomass 3 .25 All of the islands of Kiribati are atolls or raised coral reefs, and the biomass resources available for energy use consist primarily of the products of the coconut tree. Other common trees include pandanus and breadfruit, but their use does not result in significant biomass being available for energy purposes. Mangroves are also common, but their ecological significance, e.g., for fish breeding, precludes their use for fuelwood on other than a minor, household basis. 3.26 The densely populated areas of South Tarava have insufficient biomass for household energy use but the families are relatively affluent, and a high proportion of the families prefer to use kerosene for cooking. The poorer families do not appear to have difficulty in obtaining fuel, as shown by the lack of a wood fuel market supported from nearby North Tarawa, where there is a surplus of biomass. Elsewhere in Kiribati; there is no foreseeable shortage of biomass fuel for household use. 3.27 The present rate of copra production does not provide sufficient husk and shell waste to meet more than household fuel needs. With the present coconut product prices, only the planned cutting of senile coconut trees for plantation rejuvenation could provide the biomass fuel for energy use beyond the household level. On some of the larger islands, senile trees could provide sufficient biomass for a village steam electricity system. Since storage of cut trees for long periods is not practical, in order to use this resource, it would be necessary to cut the fuel trees shortly before they are needed for fuel. This requires a decades long program for plantation rehabilitation with ths schedule set by fuel needs, and not tree replacement needs. Given the very fragmented land ownership system on mcat islands, and the conflicting needs of agriculture and energy, administering such a program would be very difficult. 3.28 Should the price of coconut products rise dramatically, sufficient waste might become available for small steam plant operation, but it is recommended that investment in such system. be made only if there is an assurance of at least ton years of adequate fuel supply. Such assurances are unlikely to become possible. 3.29 No planned development of biomass fuels has taken place in Kiribati. In 1982-84, biomass was considered for electricity generation on Kiritimati, and funding was sought under the EC Lom6 II regional energy program. However, the proposal was withdrawn after feasibility studies showed that the project was not sustainable. Solar Knerav 3.30 Good quality solar radiation records are available only for Betio, South Tarawa. Rainfall data indicate slightly decreasing solar energy available, as one moves from south to north in the island chain of the Gilbert, Line and Phoenix groups. Using Betio records as a baseline, the solar resource appears good, though sometimes there are cloudy periods lasting more than a week, and solar designers need to take this into consideration. When the skies are clear, the clean air and equatorial sun angles result in high levels of solar radiation. - 19 - 3.31 Solar electrification of rural homes began in 1984 with the formation of the Solar Energy Company (SEC) under the auspices of the Foundation for the Peoples of the South Pacific. The initial funds came from USAID, which gave the SEC sufficient equipment to begin the sale of solar lighting systems. Unfortunately, on-site service was provided only on demand and on a pay-as-you-go basis. To save money, purchased systems were usuallyp in3talled by the owners rather than the SEC, and repairs were also attempted by owners to avoid the cost of an SEC technical visit. Poorly installed and poorly maintained, few of the systems functioned properly for more than a year, and the reputation of PV systems was badly damaged. 3.32 By 1989, sales of the PV units fell to a level that was too low to sustain the company. In 1990, the management was changed and, prompted by the expectation of a 50 to 70 household rural PV electrification pilot project from JICA, the company reorganized as a service company in the model of a rural utility. A proposal to install approximately 100 more two-panel household lighting systems is in the approval process for EC funding through the Lom6 II regional program. 3.33 The GOK's stated policy of not subsidizing rural electrification has been appropriate to encourage the transformation of the SEC into a financially autonomous, commercially managed PV utility. At present, the SEC's main source of revenue is from installation and maintenance contracts, mostly government or church based, though by the end of 1993, sufficient rural household installations should be in place to firmly establish the company as a rural electric utility. 3.34 Solar water heating has been installed on the government hotel and a number of homes. There is no local capability to manufacture water heaters, though the PWD and private contractors can provide installation and service. Given the excellent record of solar water heaters in the Pacific and the good solar environment of Kiribati, it is recommended that solar waters heaters should be the first choice for water heating for all new construction. Other Eneriv Resources 3.35 Wind. Winds are variable with no consistent, energy quality winds on South Tarawa, though Kiritimati Isl%nd has higher average wind speeds. The combination of a marginal wind regime and the problem of maintaining rotating mechanical and electrical equipment in the corrosive atoll environment makes it difficult to use wind power for purposes other than non-critical water pumping. 3.36 OTEC. Preliminary investigations by SOPAC indicate OTEC potential. Additionally, the higher temperature of the lagoons associated with many islands might be used to advantage with an OTEC system. However, OTEC systems have not yet been commercially proven anywhere. Given the limited land area and the fragile ecosystem 'f atoll islands, it is recommended that OTEC not be considered, even if offered on the basis of total external investment, until commercial systems have been in operation elsewhere for sufficient time to judge their economics and their affects on the environment. 3.37 Tidal Enernv. A small tidal range and a lack of suitable sites precludes the use of tidal energy in Kiribati. - 20 - 3.38 Wave Enerav. From the limited available data, it appears that, in principle, wave energy might be a significant energy resource. Given the absence of any coastal features other than low lying reefs, wave energy will be difficult and expensive to tap, even when the equipment is commorcially proven and generally available. Hence, it is recommended that wave energy not be considered until commercially operated systems have been in operation for sufficient time to judge their economic usefulness and environmental impact. - 21 - IV. POLICY AND INSTITUTIONAL ISSUES Petroleum 4.1 GOK, through the Ministry of Trade, Industry and Labor, controls the retail price of motor spirit and kerosene in Kiribati. There are no controls on ADO price. For controlled products, the price is the same throughout Kiribati. The ceiling price is set at 25S above the landed cost. This means that the total wholesale cost and the retail margin varies directly in proportion with the level of landed cost. A summary of the level of controlled prices over the past year, as well as calculated landed cost (CIF) and total onshore distribution analysis is provided in Table 4.1. Table 4.1: OFFICIAL RETAIL PRICES, LANDED COSTS AND DISTRIBUTION MARGINS OF PETROLEUM PRODUCTS Effective Price Dates Mar. 1 Oct. 24 Dec. 31 Jan. 29 1990 1990 1990 1991 -A------$ per liter------------ Motor Spirit Retail Price 0.63 0.86 0.83 0.66 CIF cost la 0.50 0.69 0.66 0.53 Margin lb 0.13 0.17 0.17 0.13 Kerosene Retail Price 0.50 0.71 0.76 0.72 CIF cost La 0.40 0.57 0.61 0.58 Margin /b 0.10 0.14 0.15 0.14 /a Mission calculation. /b Retail price less CIF cost. Source: Mission estimates. 4.2 During the recent Gulf War, the total distribution margin would have increased in direct proportion to the increase in CIF. Motor spirit margins peaked at A$O.04 per liter higher than pre-war, and kerosene at A$0.05 per liter higher thin pre-war. As a result, the price adjustments permitted under the existing ad valorem margin allowance appear to have provided the petroleum distribution companies with an unintended windfall profit, as there is no reason why distribution costs should have increased tiimply because the underlying costs of the prodrct increased. There is a direct linkage, In percentage terms, between distribution costs and required margins due mainly to product losses and inventory financing charges. There may also be a few other small product value- related charges, such as insurance. However, the bulk of the margin should not be directly linked to the underlying product value. To avoid the recurrence of such unintended windfalls, and the attendant costs to the consumers, the - 22 - remainder of the margin should be expressed as a flat, fixed value, to be adjusted yearly as necessary, based on audited statements of unit costs, presented in a standardized format at a regular time each year. If the pre-Gulf- War margins are accepted as valid, for example, a preferable margin structure to the straight 25; of CIF would be: - Motor spirit: 5% of CI? plus A$0.105 per liter - Kerosene: 5% of CIF plus A$0.08 per liter This calculation is intended only to be indicative of the preferred structure. To obtain a more complete determination, it is recommended that the exact percentage and flat values for each petroleum product should be based on an analysis of cost statements. 4.3 The surveillance of prices in general in Kiribati appears to be weak. The Ministry of Works and Energy is charged with the responsibility for reviewing the landed cost submissions provided by Mobil, but there is no evidence of any in-depth checks of the values of the various components. Although the components from Singapore FOB through the Vuda terminal should be analyzed and not simply accepted as given, the fact that they are verifiable with respect to international norms and are subject to the analysis of Fiji's Prices and Incomes Board (PIB) makes them more transparent and manageable. Of course, if Fiji abolishes the PIB, such controls would end, and Kiribati would have to establish its own price monitoring and surveillance capacity. 4.4 The tanker freight component for the shipping from Vuda to Tarawa is a large component, which could particularly bear some scrutiny. At a minimum, Mobil should assist the Ministry in establishing some sort of reference framework for the analysis of this component. 4.5 The Ministry of Trade, Transport, Industry and Labor is charged with administering the control of final retail price of motor spirit and kerosene. There is one (formal, paid) price control officer in the Ministry, and unpaid officers checking prices throughout the country. The paid officer seems to do little more than recalculate the 25% add-on when the CIF changes and administer the preparation and issuance of a new retail price order. The breakdown between wholesale and retail margin is left to ROIL to negotiate with the retail outlets or bulk clients such as PUB. 4.6 ROIL in its 1990-95 work plan has expressed the objective of establishing a Price Buffer Fund. A relatively small allotment of funds from ROIL's general revenues have already been designated for this fund. Their objective is to use the fund to maintain "normal prices" onshore in the face of fluctuating external prices. In spite of the fact that they have made a ndminal allocation to a price buffer fund, neither ROIL nor GOK has any concept of the real workings of such a fund and their detailed objectives are not clearly defined. Even if such a fund were desirable for Riribati, it is questionable whether ROIL as the operating oil company, should be administering what is a function of GOK central revenue authorities. As to desirability, unless ROIL can forecast the long-term average world oil price, as well as the extent and duration of fluctuations from the trend line, it is not possible to administer a buffer fund in a satisfactory manner. These parameters are required in order - 23 - to know what the "normal" buffered price level should be as well as the extent of the initial financing required to support it. Experience shows that buffer funds become, at best, variable taxes as the funds get used by general revenues when in surplus, and disappear altogether when in deficit. At worst, major surplus funds attract the attention of other dispositions - often inefficient, if not fraudulent uses of the consumer's money. Hence, it is recommended that the proposed buffer fund be not pursued further. Power Subsector Price and Cost of SuppIlv 4.7 In December, 1990, PUB's tariff for domestic electricity consumers was increased from A 290/kWh to A 32*/kWh, and for commercial/lindustrial consumers from A 33¢/kWh to A 39¢/kWh. It appears that PUB's prices have approached the consumers' willingness to pay for electricity. Indeed, TSKL's recent agreement with GOK (see para 2.9) suggests that PUB's larger consumers may have already realized that they can generate their own electricity for leos than the PUB tariff. To an extent, this is to be expected, given the typically low levels of electricity usage per residential consumer and the fact that utilities such as PUB are often required to invest in costly projects such as rural electrification or grid extension that are not financially remunerative. Nevertheless, with PUB's weighted average price now almost A 38¢/kWh (approximately US 30¢/kWh), there is little room for further real tariff increases. This again points to the need for caution in regard to the financial viability of the further extension of the PUB's service beyond Nabeina in North Tarawa. 4.8 Analysis of PUB's provisional data for 1989/90 indicates an average cost per unit sold of A 34.9¢/kWh, an average revenue of A 38.4¢/kWh, for a net profit of A 3.5¢/kWh (Table 4.2). - 24 - Table 4.2t PUB COSTS AND REVENUES, 1989/90 A*/kWh Revenues Electricity Sales 32.3 Interest plus Sundries 2.3 Administrative Charges la 3.9 Totill 38.4 Costs Fuel and Lube Oil 14 8 Wages and Salaries 7.6 Repairs and Maintenance 4.2 Misc. Office Expenses 1.6 Depreciation 5.2 New Connections 0.6 Other ZEpenses 1.0 Total 34.9 Net Profit 3.5 /a Internal Charges to Water and Sewerage Divisions. Sources Mission calculations. 4.9 In comparison with the financial cst of A 34.9¢/kWh, the estimated long-run marginal cost of electricity supply 5/ is around A 21.5¢/kWh, based ont (a) a marginal capacity cost of generation, including a 10Z reserve margin, of A 2.0*/kWhi 5/ The long-run marginal cost is the cost of an additional unit of electricity in the long-run, which is the period in which it is possible to change the power generating equipment in an optimal manner. The marginal costs, based on 1990 financial prices, have been calculatei on the basis oft (i) A$850,000 investment cost for 1 MW generator; (1i) A$45/kW per year for transmission and distribution capacity costs; (i) PUB's actual fuel costs for 1989/90, and allowance for variable OM costs of A 2.00/kWh; and (iv) Mission estimates of cost of meters, meter reading, billing and money collection. - 25 - (b) a marginal capacity cost of transmission and distribution of A 1.75¢/kWh; (c) a marginal energy cost, including operating and maintenance (O&H) costs and 17.5Z losses, of A 17.250/kWh; and (d) marginal customer costs, including meter purchase and installation, of A 0.5¢/kWh. 4.10 The long-run marginal cost of A 21.5¢/kWh is also a crude estimate of the marginal cost ci supply for those large customers for whom self-generation is a practical alternative, assuming that the higher fuel costs associated with self-generation would be offset by the avoidance of transmission and distribution costs and energy losses. 4.11 These comparisons indicate that PUB's costs appear to be high; in particular, the labor costs and O&M expenditures appear high relative to other Pacific Island region utilities. For example, PUB has one of the lowest ratios of annual sales per employee at just 60 MWh per employee, which is substantially lower than the comparable figure of 150 MWh for the Solomon Island Electricity Authority, 325 MWh for Fiji Electric Authority, and 375 MWh for the American Samoa Power Authority.6/ PUB's Financial Performance 4.12 PUB's overall financial performance has deteriorated in recent years, with the budget for 1990/91 showing a net operating loss of almost A$550,0009 following an estimated loss of A$380,000 in 1989/90. While it is only the water and sewerage divisions that are expected to record losses this year, the profits from electricity sales are low, representing a Rate of Return (ROR) on net (revalued) fixed assets of just 3Z, which is substantially lower than the 82 ROR required to meet PUB's existing ADB loan covenants. In spite of the recent tariff increase, there are doubts whether PUB will sustain even a 31 level of profitability, given the loss of sales to To Mautari It is estimated that the loss of sales to Te Mautari will reduce PUB's 1990/91 revenues by almost A$80,000 and its net operating profit by around A$45,000. 4.13 In the medium-run, it is likely that, in the absence of further tariff increases or significant cost reductions, PUB's financial position will become critical over the next two to three years, as GOK subsidies to water and sewage are phased out and PUB's annual debt service costs for two ADB loans ($92,000 in 1990/91) increases to around $300,000. In addition, it is estimated that the A 170/kWh tariff reduction promised to TSKL from August, 1991 will reduce PUB projected revenue and profits by more than A$100,000 on an annual basis. Inaeed, it is estimated that in order to offset the loss of revenues and propfits resulting from the cessation of sales to Ta Mautari and reduced tariff to ThDL, the average tariff to other PUB consumers would have to increase by A 3.5¢/kWh. 6/ To some extent, Kiribati's low ratio is a result of the fact that its electricity aystem is smaller than that of many other Pacific Island countries. - 26 - 4.14 However, a detailed analysis of PUB's operating costs and profitability is difficult since the most recent audited accounts available are those for 1986/87. While acknowledging that PUB is short on qualified accounting staff, it is noted that PUB is required under the terms of its existing loan agreements to submit audited financial accounts within nine months of the close of each fiscal year. Quite apart from the need to meet existing loan covenants, however, PUB needs to improve its financial reporting procedures in order to facilitate future pricing and investment strategies. 4.15 PUB has recently sought assistance from ADB to review its non-technical operations. To obtain full benefits from such a review, it is recommended that this review include PUB's financial accounting procedures, water, sewage and electticity tariff policies, and the present arrangements for subsidizing PUB's water and sewerage operations. 4.16 The G0K has approved electricity tariffs and charges for water supply and sewage disposal such that revenue from electricity sales is used to subsidize the water and sewage services. In view of the practical market-imposed ceiling on power tariff increases, such cross-subsidization between services makes it difficult for PUB to meet its overall financial commitments, the covenants with international lending institutions, and that permit the continued operation of the electric power system in a safe and effective manner. Rather than burdening the power supply with such cross-subsidies, it is recommended that the GOK provide an explicit budgetary subsidy to PUB for its socially important water and sewerage services, and allow power to be priced at a level that is close to its economic cost of supply. PUB's Institutional Ci2abilities 4.17 The PUB lacks adequately trained and experienced managers in the technical, administrative, and financial areas; for example, the billing and management information systems have been computerized, but it is unclear whether PUB has the capacity to operate and maintain these systems. In the past, efforts have been made to address the lack of skilled personnel, primarily through the provision of advisors in specific fields. The PUB has also supported training and education for staff, both at the Tarawa Technical Institute and at the University of the South Pacific, Fiji. Nevertheless, much more effort is required if Kiribati nationals are to effectively manage this important organization. Long-term training plans with clear objectives need to be prepared, and PUB should ensure that those who receive training of any kind, continue to work at PUB after the training is completed. 4.18 The PUB has received considerable assistance from various multilateral and bilateral sources, particularly from ADB and from Australia. An engineering advisor, under Australian (AIDAB) aid, has been assisting PUB during the lqst two years with the distribution expansion and rehabilitation program, and TUB is seeking an extension of his contract. A number of studies on technical and institutional matters have been financed from ADB technical assistance grants, the most recent being a study of future power system expansion in Tarawa, which was completed in March 1990. - 27 - 4.19 In the short-term, PUB should continue to seek advisors to provide the assistance necessary to effectively manage the operations. Advisors in technical roles, and in accounting and administration should be sought. Environmental Issues 4.20 Solar. For solar PV applications, a system of reclaiming lead from spent lead acid batteries should be put into place to prevent possible environmental damage, and also to make use of lead by recycling it. 4.21 Biomass. Atolls have a fragile ecosystem, and caution is urged to minimize the adverse environmental effects of biomass-based energy development. It is recommended that only developments based on sustainable agricultural waste should be contemplated. Fuel wood plantations are not appropriate in the limited space and fragile ecosystem of the atoll environment. It is recommended that the use of senile coconut trees for biomass be viewed with caution, because such use requires truck access, which has adverse environmental implications. - 28 - V. INVESTMENT AND TECHNICAL ASSISTANCE PRIORITIES Petroleum 5.1 Subsector Focus. There is no need for Government investments in this subsector. The focus should be on price monitoring, and safety and environmental concerns. 5.2 Price Monitoring. There is weak price monitoring of petroleum products, both in terms of the CIF cost and the establishment of onshore margins. In order to strengthen this monitoring, it is recommended that the GOK request external specific training and ongoing technical support, particularly for; (a) An analysis of the reasonableness of the freight component in the CIF price buildup. (b) An analysis of onshore costs, with a view to establishing a more realistic margin adjustment basis, consisting of a flat rate component and a component linked to the landed cost. (See paragraphs 4.1-4.4) 5.3 Price Buffer Fund. In view of the difficulties of managing price buffer funds, it is recommended that the GOK does not pursue KOIL's proposed price buffer fund. (See paragraph 4.5) 5.4 KOIL's Goals. In order to ensure progress with the planning and implementation of major efficiency, safety and environmental improvements, it is recommended that GOK work closely with KOIL, particularly in areas such as staff downsizing and more stringent licensing of drum outlets. (See paragraphs 3.8- 3.9). LPG 5.5 It is recommended that the GOK support proposals for the bulk supply of LPG to Tarawa by taxing LPG in the same manner as competing fuels such as kerosene. (See paragraphs 3.9-3.10). Power Subsector 5.6 Subsector Focus. PUB's total capital expenditures until 2000 will be about US$1.8 million, in constant 1991 prices. (See paragraphs 3.22-3.23). Apart from this, the focus should be on making better use of the existing assets, and on improving PUB's financial performance and institutional capabilities. 5.7 Existing Assets. In order to ensure that PUB's existing assets are used properly, it is recommended that technical assistance be provided for the inspection of PUB's existing equipment. (See paragraphs 3.15-3.16) 5.8 PUB's Financial Performance. While PUB's costs appear to be high and PUB's financial performance has deteriorated in the last three years, there are inadequate records for a detailed analysis of PUB's performance. Hence, it is recommended that technical assistance be provided for a review of PUB's accounting procedures, water and electricity tariff policies, and the present - 29 - arrangements for subsidizing PUB's water and sewerage operations (see paragraphs 4.11-4.15). 5.9 PUB's Institutional Capabilities. Since PUB lacks adequately trained and experienced m nagers in the technical, administrative, and financial areas, it is recommnded that in the short-term, PUB should continue to seek advisors to assist in technical roles, and in accounting and administration. In the long- run, it is recommended that PUB provide appropriate training to its staff (see paragraphs 4.16-4.18). Renewable Enerat 5.10 The present institutional arrangements seem adequate for renewable energy development and for rural electrification, though technical assistance and external aid will be necessary for the feasibility stage of renewable energy projects, to optimize projects and to prevent inappropriate development. 5.11 It is recommended that the SEC train its staff for the management and design of renewable energy projects, with emphasis on solar and biomass technologies. The SEC is capable of training PV field technicians with minimal external assistance. It is recommended that senior SEC staff be given further training in PV technology, both in the form of overseas courses, such as those organized in the past by PEDP/SPIRE, and local training provided on a periodic basis. 5.12 It is recommended that the Tarawa Technical Institute be encouraged to re-establish its electrician training program, and to assist the SEC in providing training to low-level technicians engaged in the maintenance of mall diesel generators and PV systems. - 30 - ANNEXES 1. MAP - Kiribati and South Tarawa Power System 2. PUB Historical Statistics (1981-90) 3. PUB Diesel Generating Plant 4. Projected PUB Sales, Generation and Peak Demand (1990-2000) 5. Power Development Plan 6. PUB Organization Chart 7. Survey of Power System Equipment - Terms of Reference -31 - AN x I KIRIBATI ISSUES AND OPTIONS IN THE ENERGY SECTOR Kiribati Eneray Assessment Petroleum Products Consumption--Forecast Forecast Actuals 1990-2000 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Inland (Tarawa) Motor spirit 3.02 2,058 2,120 2,183 2,249 2,316 2,386 2,457 2,531 2,607 2,685 2,766 Kerosene 1.02 1,018 1,028 1,038 1,049 1,059 1,070 1,081 1,091 1,102 1,113 1,125 ADO to PUB 7.52 2,090 2,230 2,510 2,700 2,900 3,110 3,320 3,550 3,790 4,050 4,320 ADO to others 4.02 3,237 3,366 3,501 3,641 3,787 3,938 4,096 4,260 4,430 4,607 4,792 ADO Total 5.52 5.327 5.596 6.011 6.341 6.687 7.048 7.416 7.810 8.220 8.657 9.112 4.52 8,403 8,744 9,233 9,639 10,062 10,504 10,954 11,432 11,929 12,456 13,002 Inland (Kiritimati) Motor spirit 300 300 300 300 300 300 300 300 300 300 300 Kerosene 150 150 150 150 150 150 150 150 150 150 150 ADO Total 900 900 900 900 900 900 900 900 900 900 900 Total Inland 1.350 1.350 1.350 1.350 1,350 1.350 1.350 1.350 1.350 1.350 1.350 Inalnd Total (Tarawa + Kiritimati) Motor spirit 2,358 2,420 2,483 2,549 2,616 2,686 2,757 2,831 2,907 2,985 3,066 Kerosene 1,168 1,178 1,188 1,199 1,209 1,220 1,231 1,241 1,252 1,263 1,275 ADO to PUB 2,090 2,230 2,510 2,700 2,900 3,110 3,320 3,550 3,790 4,050 4,320 ADO to others 4,137 4,266 4,401 4,541 4,687 4,838 4,996 5,160 5,330 5,507 5,692 ADO Total 6.227 6,496 6.911 7.241 7.587 7.948 8.316 8.710 9.120 9.557 10.012 Lubes 4.02 170 177 184 191 199 207 215 224 233 242 252 Aviation (No Bunkers) Avgas 600 600 600 600 600 600 600 600 600 600 600 Jet Al 1,700 1,700 1,700 1,700 1,700 1,700 1,700 1,700 1,700 1,700 1,700 2.300 2.3030 0 200 2.300 2.300 2.300 2.300 2.300 2.300 2.300 2.300 Total Kiribati Trade 12.223 12.571 13.067 13.480 13.911 14.361 14.819 15.306 15.812 16.348 16.903 Sources Kiribati Oil Company; Mission estimates. - 32 - AIIXL 2 KIRIBATI ISSUES AND OPTIONS IN THE ENERGY SECTOR Kirabati Energy Assesoment PUB Historical System Statistics (1981-90) Year to Number of Energy Distribution Energy Load Peak June 30 Customers Sales Losses /I Station Use Generation Factor Demand (l4Wh) (M4Wh) (1) (MWh) (X) (MW3I) (X) (kV) 1981 2,179 3,366 1,644 32.1 116 2.3 5,126 64.3 910 1982 2,199 4,214 653 12.9 193 3.8 5,060 66.4 870 1983 2,218 4,103 955 18.5 103 2.0 5,161 62.0 950 1984 2,266 4,333 1,076 19.5 112 2.0 5,521 67.8 930 1985 2,405 4,554 1,269 21.2 167 2.8 5,990 63.3 1,080 1986 2,448 5,056 1,181 18.5 134 2.1 6,371 71.3 1,020 1987 2,483 5,342 1,046 16.0 148 2.3 6,536 62.2 1,200 1988 2,503 5,759 902 13.3 97 1.4 6,758 70.1 1,100 1989 2,521 6,026 1,102 15.2 105 1.5 7,233 73.3 1,260 1990 3,021 6,502 1,280 16.3 88 1.1 7,872 67.9 1,324 Av. annual growth (Z) 1981-90 3.3 6..8 4.4 3.8 1985-90 4.7 7.4 5.6 4.2 Source: PUB. la As a percentage of gross energy generation. KIRIBATI ISSUES AND OPTIONS IN THE ENERGY SECTOR Kirabati Enerty Asseosment PUB Diesel Generatina Plant. South Tarawa (As of February 15, 1991) Total Last Unit Nameplate Available Year Running Major No. Location Manufacturer Type Rating Capacity Installed Hours /c Overhaul (kW) (kW) /a 1 Betio English Electric 4SRK 300 240 1968 58,669 Feb. '89 3 Betio English Electric 4SRK 300 240 1968 47,794 Dec. '84 6 Betio English Electric 6RK3C 750 600 1976 61,235 Sept. '88 7 Betio English Electric 6RK3C 750 600 1976 63,607 Mar. '87 8 Betio Wartsila F38 1,080 920 1988 20,040 Jan. '91 9 Ic Dairiki English Electric 4SRK 300 240 1968 7,452 Jan. '88 10 Id Bikenibeu English Electric 4SRK 300 240 1968 15,730 n.a. Sources PUB. k Based upon approximately 80-852 of nameplate rating. lb As of January 31, 1991. Excludes operating hours of second-hand units prior to their installation in Tarawa in 1968. /c Unit 9 at Bairiki has been decommissioned. It may be relocated to Betio. Id Unit 10 at Bikenibeu is decommissioned. It may be reconditioned and moved to Betio. I - 34 - ANNEX 4 KIRIBATI ISSUES AND OPTIONS IN THE ENERGY SECTOR Kirabati Energy Assessment Prolected PUB Sales. Generation and Peak Demand (1990 - 2000) Energy Total Energy Load Peak Year Sales Losses Generation Factor Demand (Z4Wh) (1) (M(Wh) (Z) (kW) 1990 (Actual) 6,502 17.4 7,872 67.9 1,324 1991 6,912 16.4 8,268 65.0 1,452 1992 7,307 16.4 8,740 65.0 1,547 1993 7,763 16.4 9,286 64.8 1,636 1994 8,301 16.4 9,929 64.6 1,755 1995 8,811 16.4 10,539 64.4 1,868 1996 9,351 16.4 11,185 64.0 1,995 1997 9,924 16.4 11,871 64.0 2,117 1998 10,511 16.4 12,573 64.0 2,243 1999 11,127 16.4 13,310 64.0 2,374 2000 11,726 16.4 14,026 64.0 2,502 Av. annual growth (Z) 6.1 5.9 6.6 Source: Mission estimates. -35- hIL Page 1 of 2 MR&WTI ISSUES MM I- T ENERGY SECTOR buer svstm Develooment Plan Plannina Critorill Reserve capacity The largest generating unit not available. Not* that all figures should be based on capability of the units, not nameplate rating. Capability (for planning purposoe) The older gonerating units will have the derated levels in use. The new 1 MW unit and proposed new units would be deemed to have a capability equivalent to 85Z of nmeplate. Firm energy Blaed upon tanits operating at 65Z load factor at capability level for one year. Retirement For the purposa of planning the tilming of additional capacity it is assumed that the 300 kW units will be excluded from the determination of syatem capacity, even though they may be maintained in operation for standby operation. One unit retired In 1995, the other in 1997. Power Develooment Plan - PUB Tarawa Svstem (Year ending June 30) Description 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Projected generation (KWh) 7,872 8,268 8,740 9,286 9,929 10,539 11,185 11,871 12,573 13,310 14,026 Projected peak demand (W) 1,324 1,452 1,547 1,636 1,755 1,86;8 1,995 2,117 2,243 2,374 2,502 Installed capability (start of year) (kW) 2,600 2,600 2,600 2,600 2,600 3,520 3,280 3,875 3,635 3,635 3,635 Neo capability (kHO 920 595 Retired capability (kW) 240 240 Total capability (kW) 2,600 2,600 2,600 2,600 3,520 3,280 3,875 3,635 3,635 3,635 3,635 Reserve capability (W) 920 920 920 920 920 920 920 920 920 920 920 Total Svstem Firm Capacity (kW) 1.680 1.680 1.680 1.680 2.600 2,360 2.955 2.716 2.715 2.715 2.715 COST STREuS --------------------------- Constant USS '000 (1991) ---------------- Generation Add 1.0 MW diesel generator 200 Add 700 kW high peed peakin0g diesel generator 700 1 Retire & remove 300 kW unit 10 10 Distribua-.n - 11 kV and LV Expansion, reinforeement as planned and as required 120 65 100 125 95 63 32 32 32 Repair end replacement of deficient paver system equipment 100 Total Invesroent 120 165 300 135 795 73 32 32 32 Source: Mission entimates. 00N U' §_ O ~~~~~~~~~~~~~~n KIRIBATI COUNTRY ENERGY ASSESSMENT PUP Organization Chart Minister of Works & Energy Board of Directors General Manager 1~~~ 1 -f ll I Mechanical Mechanical W/Sewerage Financial Personnel Internal | Engineer J Engineer l Engineer Controller_| Officer Auditor 4 Generation 1 Electrical Headworks Revenue Traini Service Distribution Section Section l Unit -j Plant & l Reticulation Payments | Personnel Vehicle Div. Electrical Section Section ___ Distribution _ _ _ ~~~~~West Aircon & l Drafting & O office _ Refrigeration Surveying Stores Support Inspection Services Section Computer Planning Section _ Designing Unit - 38 - ANNEX ? Page 1 of 2 KIRIBATI ISSUES AND OPTIONS IN THE ENERGY SECTOR Survey of Power Svstem EauiDment Obiective 1. To ensure that the condition of the aging power system equipment and facilities is adequate to provide safe reliable service, and to assure that the power system protective relaying will effectively de-energize faulty and unsafe segments of the system under fault conditions. Introduction 2. Electricity on the Tarawa Atoll of Kiribati is generated and distributed by the Public Utilities Board (PUB). The PUB power system was built starting in the late 1960s, and much of the equipment has had more than twenty years of service life in a harsh tropical marine environment. Very limited testing and inspection of the equipment, if any, may have been carried out from time to time. From the standpoints of safety and service reliability it is necessary to confirm the condition of the power system plant and equipment, and to correct any deficiencies, so as to avoid serious damage to equipment and serious power outages, and to ensure the safety of operating equipment. 3. The power system protective relaying was designed for a smaller simpler system than that which exists, and which is contemplated in the near future. The ability of the protective equipment to operate satisfactorily under all appropriate conditions must be confirmed to ensure the safety of life and property and to ensure satisfactory service reliability. Power System Plant and Equipment 4. The survey will: (a) Make an inventory of the power system plant and equipment, including details of the age and condition. (b) Make a detailed examination of all plant and equipment that, because of age, or service, may require maintenance, repair, rehabilitation, or replacement. (c) Determine the urgency ranking for the repair or replacement of equipment based upon considerations of safety, of life and property, and power system reliability. (d) Prepare a report containi.L, the record of the survey, the inventory of plant and equipment, and an assessment of the condition of the equipment and recommendations for maintenance, repair or replacement, together with a recommended program and schedule for such work, and cost estimates, broken down into local costs and foreign costs, for the recommended work. - 39 - ANNEX 7 Page 2 of 2 Protective Relaving 5. Further, the survey will: (a) Prepare an inventory of all protective relaying and single line diagrams showing all instrument transformers and relays, using international standard symbols. (b) Determine the present relay settings, and the adequacy of the settings for all conditions on the present system. (c) Based upon any deficiencies in the protective relaying, and taking into account planned extensions of the 11 kV system and the installation of generating capacity at Bikenibeu, prepare detailed recommendations for modifications and improvements to the protective relaying. (d) Prepare a report detailing the findings and containing the inventory of protective equipment (e.g., circuit breakers, instrument transformers, transducers, relays, etc.). Requirements 6. The survey will require an electrical engineer with practical experience of power distribution equipment, including transformers, switchgear, cables, etc., including the assessment of equipment condition and maintenance and rehauilitation requirements. An engineer with experience of diesel electric power stations will be required to assess the condition of the power station auxiliary plant, equipment and services, including fuel storage facilities and fuel handling/delivery systems. 7. An electrical engineer, possibly the same, if the appropriate knowledge and experience is evident, competent in the field of distribution and small power station protective relaying. The requirements include detailed recommendations for the upgrading of the protective relay system, including recommendations on the priority ranking of any work, and cost estimates, broken down into local and foreign expenditures, for the recommended improvements. 8. It is estimated that .he complete survey and preparation of the report will require approximately 2h-3 work-months, of which about 2-2½ work- months will be in the field. - 40 - STATISTICAL APPENDIX Table 1 KIRIBATI: SELECTED DEVELOPMENT INDICATORS Table 2 KIRIBATI: SELECTED PROJECTIONS Table 3a KIRIBATI: ENERGY BALANCE, 1990 (ORIGINAL UNITS) Table 3b KIRIBATI: ENERGY BALANCE, 1990 (TOE) Table 4a KIRIBATI: ENERGY BALANCE, 2000 (ORIGINAL UNITS) Table 4b KIRIBATI: ENERGY BALANCE, 2000 (TOE) Table 5 KIRIBATI: PETROLEUM CONSUMPTION, 1986-1990 Table 6 KIRIBATI: NATIONAL PUBLIC ELECTRIFICATION SYSTEM Table 7 KIRIBATI: ELECTRIFICATION PERFORMANCE INDICATORS, 1990 - 41 - TABLE 1 KIRIBATI: SELECTED DEVELOPMENT INDICATORS 1985 1986 1987 1988 1989 1990 GDP ('000 AU$)' 32795 35,947 36,874 44.930 45,784 47.295 Per capita (AU$) 512 550 552 659 658 654 Total Imports ('000 AU$)W 21,548 21,456 17,980 24,130 28,143 34,446 Total Exports ('000 AUS)3 5,°93 2,682 2.854 6,60" 5,931 3,681 Inflation Rate4 4.5 6.5 6.5 3.1 3.9 na Exchange Rate5 (AUS$/US$) 1.43 1.49 1.43 1.27 1.26 1.28 Sea Area ('000 sq. km)6 3,550 Land Area ('000 sq. kIn) 0.81 Wage & Salary Emit7 6 Wage& Salary Employmen 6,769 na na na na na Average Wage (AU$) na na na na na na Total Populationg | | | | 64,000 65,400 66,800 68,20 69,600 72,30 urban( 33 na na na na 35 Overseas Development Assistance Annual ODA ('000 AU$)9 17,124 19,966 12,689 15,187 17.027 na Multilateral ('00 AU$) na na 1,784 1,566 2,556 na Bilateral ('000 AU$) na na 10,905 13,622 14,470 na % Bilateral na na 85.9 89.7 85.0 na ODA as % of GDP 52.2 55.5 34.4 33.8 .37.2 na ODA as % of Current Government Income1o 1.2 1.2 0.7 0.8 0.9 na | ODA/Capita (AU$) | 2681 305| 190| 22| 245 na Sources: Key Indicators of Developing Asian and Pacific Countries (ADB 1990). Towards Higher Growth in Pacific Island Economies (World Bank 1990). Kiribati Statistical Yearbook (1988). Kiribati 1979- 1987. A Compendium of Statistics (1989). Kiribati 1991 Development Budget and Supplementaries (1991). UNDP Development Co-operation Reports. Mission Estimates. Notes: (1) For 1985-1988, at current mnarket prices (Statistical YearbookX for 1989, estimated growth at 1.9%; for 1990. estimated growth at 3.3%. (2) For 1985-1988, CIF (Statistical Yearbook); 1989 from 1990 World Bank Report; 1990 from Statistics Office. (3) For 1985-1988, FOB (Statistical Yearbook); 1989 from 1990 World Bank Report; 1990 from Statistics Office. (4) Based on 1980 CPI 100. (5) For 1985-1988, yearly averages (Statistical Yearbook); 1989 from 1990 World Bank Report. (6) Sea and land areas taken from Compendium of Statistics. (7) 1985 mid-year figure as reflected in 1985 census in Statistical Yearbook. (8) 1985 figures from 1985 census. 1986-88 population from Statistical Yearbook. 1989 populaticn estimated at growth rate of 2.1%. Urban population accounted as population of South Tarawa. 1990 from 1990 census. (9) 1987-1989 from UNDP DCRs. 1990 from Kiribati Development Budget. (10) Current Govt Income estimated from 1990 World Bank Report. - 42 - TABLE 2 KIRIBATI: SELECTED PROJECTIONS I1990 1995 2000 Populationl: urban 24,885 29,193 35,000 rural .46,215 49,707 52,500 Total 71,100 78,900 87,s5Q GDP ('000 AU$): high growth at 5% 47,295 60,362 77-039- med growth at 4% 47,295 57,542 70,0 low growth 3% 47,295 54,828 63,561 GDP/Capita (AU$)2: 665 729 .00 Electricity Generation (MWh)3: 7,872 10,485 14,026 Peak demand (kW) 1,324 1,823 - . 0 Fuel Consumption (kl)4: Gasoline 2.,t358 2,686 - ,066 Kerosene 1,168 1,220 1-,275 ADO 6,227 7,774 9,68 Lubes . :170 247 524 Total Inland 9,93 11,927. 4. Total Aviation .2,300 2,300 2,300 Total Kiribati Trade 12,223 14,227 1 84 Rural electricity consumers5: grid 121 128 ; 36 isolated 675 716 758 Source: Mission Estimates. Notes: (1) Population growth rate of 2.1%; 37% urban in 1995, 40% urban in 2000. (2) Medium growth scenario of 4.0%. (3) Growth estimated at 5.9% with demand increasing at 6.6% assuming an additional 1000 residential, 44 commercial and 40 industrial consumers connected by 2000. Private power generation assumed constant at 350 kWb/yr. (4) Gasoline: constant at 300 kl on Kiritimati, 3.0% elswhere; Kerosene: constant at 150 kl on Kiritimati, 1.0% elswhere; ADO to PUB at 7.5%, ADO to others at 4.0%, ADO on Kiritimati constant at 900 kI; Lubes: 7.8%. (5) 1990: Approximately 5% of PUB's total number of residential consumers located in North Tarawa. Isolated consumers comprise approximately 250 on Kiritimati Island, 300 solar co-op customers and several independent diesel generator on outer islands. Assume growth rate of 6%. TABLE 3a KIRIBATI, ENERGY BALANCE, 1990 (Original units) Fuelwood Coconut Total Electricity GasoGne Jet Al Kerosene ADO Avgas Total Residues Biomass Petrodeum5 (tonnes) (tonnes) (tonnes) (MWh) (kl) (ki) (kl) (ki) (k) (ki) Primary Supplies: Production 15,084 26,816 41,900 0 Imports1 0 2,358 1,700 1,168 6,227 600 12,053 BunkerinJExports 0 (1.700) (600) (2.300) I GROSS AVAILABLE 15,084 26.816 41.900 0 2,358 0 1.168 6.227 0 9,753 Conversion: Public Power Generation2 0 8,222 (2,251) (2,251) Station use 0 (99) 0 TransmissiontDistrbution Losses 0 (1,330) 0 NET SUPPLIED 15,084 26.816 41,900 6,793 2.358 0 1.168 3.976 0 7,502 Final Consumption: Households344 15.084 26,816 41,900 1.714 1,168 1,168 Transport 0 2,358 3.976 6,334 Government 0 4,163 0 Commercial 0 917 0 Agro-industries 0 0 Others 0 0 ITOTAL 15084 26.816 41.900 6.793 2.358 0 1,168 3,976 0 7.502 Sources: Mission Estimates (February 1991) Notes: (I) Jet Al for international flights, Avgas used for Air Tungaru domestic flights. (2) Private power generation estimated at 350 kWh with losses at 17.4% (3% station & 13.4% T/D) Fuel consumption for private power generation estimated at .46 L/kWh. (3) Cooking and lighting. Population data as estimatc d from 1985 census (71,100,35% urban). Biomass consumption based on Abaiang/Tarawa cooking patterns (1985 surveys) Assume 7.2 persons/urban HH with 91% of urban population using biomass and 5.7 persons/rural HH with 100% rural population using biomass. Rural consumption is estimated at 3,900 kg/HHtyear (1.9 kgtcap/day). urban consumption is estimated at 3,100 kg/HH/year (1.2 kgtcap/day) Biomass consumption is therefore as follows: Urban: 71,100 people x 35% x 1.2 kg/cap/dayx 91% x 365 days/year/1000 kghonne = 9,900 tonnes Rural: 71,100 people x 65% x 1.9 kg/cap/dayx 100% x 365 days/year/1000 kgttonne = 32,000 tonnes Total Household Biomass consumption (assumed to be 64% coconut waste and 36 % fuelwood) = 41,900 tonnas (4) Household consumption of private electricity estimated at 25% of private generation: 350 kWh x25% = 88 kWh; balance consumed by commercial sector. (5) Energy Balance does not include consumption of Lubes (170 kl) TABLE 3b KIRIBATI, ENERGY BALANCE, 1990 (TOE) Fuelwood Coconut Total Electricity Gasoline Jet Al Kerosene ADO Avgas Petroleum5 Total Residues Bio mass Energy Primary Supplies: Production 6,335 9,064 15,399 0 15,399 Imports' 1,904 1,469 1,009 5,599 470 10.451 10,451 Bunkering/Exports (1.469) (470) (1,939) (1.939) i GROSS AVAILABLE 6,335 9.064 15.399 0 1,904 0 1.009 5,599 0 8,512 23,911 Conversion: Public Power Generation2 2,024 (2,024) (2,024) 0 Transformation Losses (1,329) (1.329) Station use (8) (8) . Transmission/Distribution Losses (112) (112) | NET SUPPLIED 6,335 9,064 ,15399 574 1,904 0 1,009 3,575 0 6,488 22,431 Final Consumption: Households34 6,335 9.064 15,399 145 1,009 1,009 16,553 Transport 1.904 3,575 5.479 5.479 Government 352 352 Commercial 77 77 Agro-industries 0 Others 0 [TOTAL 6.335 9,064 15,399 574 1,904 0 1,009 3,575 0 6,488 22.4611 Sources: Mission Estimates (February 1991). Notes: (1) Jet Al for international flights, Avgas used for Air Tungaru domestic flights. (2) Private power generation estimated at 350 kWh with losses at 17.4% (3% station & 13.4% T/D). Fuel consumption for private power generation estimated at .46 LkWh. Transformation losses account for approximately 66% of energy in fuel. (3) Cooking and lighting. Porulation data as estimated from 1985 census (71.100,35% urban) Biomass consumption based on Abaiang/Tarawa cooking patterns (1985 surveys). Assume 7.2 persons/urban HH with 91% of urban population using biomass and 5.7 persons/rural HH with 100% rural population using biomass. Rural consumption is estimated at 3,900 kg/HH/year (1.9 kg/cap/day), urban consumption is estimated at 3,100 kg/HHlyear (1.2 kg/cap/day). Biomass consumption is therefore as follows: Urban: 71,100 people x 35% x 1.2 kg/cap/dayx 91% x 365 days/year/1000 kg/tonne = 9,900 tonnes Rural: 71.100 people x 65% x 1.9 kg/cap/day x 100% x 365 days/year/W00 kg/tonne = 32,000 tonnes Total Household Biomass consumption (assumed to be 64% coconut waste and 36 % fuelwood) = 41,900 tonmes (4) Household consumption of ,rivate electricity estimated at 25% of private generation: 350kWh x 25% = 88 kWh; balance consumed by commercial sector. (5) Energy Balance does not include consumption of Lubes (1iU kl). TABLE 4a KIRIBATI: ENERGY BALANCE, 2000 (Original units) Fuelwood Coconut Total Electricity Gasoline Jet Al Kerosene ADO Avgas Total Residues Bianass Petroleum10 (tonnes) (tonnes) (tonnes) (MWh) (ki) (kI) (ki) (kI) (k]) (kl) Primary Supplies: Production 16,212 28,820 45,032 0 I.ports 0 3.066 1,71)0 1,275 9.619 600 16.260 Bunkerinx/Exports1 0 (1,700) (600) (2,300) IGROSS AVAILABLE 16,212 28,820 4S.032 0 3,066 0 1275 9619 0 13.9e6 Conversion: Power Generation2 0 14,376 (4,088) (4.088) Station use3 0 (431) 0 Transmission/Distribution Losses4 0 (1.926) 0 NET SUPPLIED 16212 28§820 45032 12.013 3.066 0 1275 5s31 0 9,8721 Final Consumption: Households5'6 16,212 28,820 45,032 3,005 1.275 1.275 Transport 0 3.066 5,531 8,597 Government7 0 6,009 0 CommerciaP 0 3.005 0 Agro-industries9 0 0 Others 0 0 | TOTAL 16.212 28.820 45032 12.018 3066 0 127S 5,S31 0 9,872 Sources: Mission Estimates (February 1991). Notes: (1) Jet Al for international Rlights. Avgas used for Air Tungaru domestic flights. (2) Private power at 1990 estimate of 350 MWh. PUB growth at 5.9% to 14026 MWh. Fuel consumption: A6 L/kWh for small diesels and .28 litres/kWh for large diesek. Total losses at 16.4%. (3) Station usage estimated at 3%. (4) T&D losses estimated to be 13.4%. (5) Cooking and lighting. Population for 2000 estimated using growth rate of 2.1% (87,500.40% urban). Biomass consumption based on Abaiang/Tarawa cooking patterns(1985 surveys). Assumplions based on 7.2 persons/urban HH with 80% of urban population using biomass and 5.7 persons/rural HH with 90% rural population using biomass. Urban and rural consumptions at 3100 kglHHfyear (1.2 kg/cap/day) and 3900 kg/HH/year (1.9 kgkap/day). Biomass consumplion estimated as follows: Urban: S7,500 people x 40% x 1.2 kg/cap/day x 80% x 365 days/year/10D0 kg/tonne = 12.264 tonnes Rural: 87,500 people x 60% x 1.9 kg/cap/day x 90% x 365 days/year/1000 kg/tonne = 32,768 tonnes Total Household Biomass consumption (ass um,ed to be 64% coconut waste and 36 % fuelwood) = 4S,032 toene (6) Household electricity consumption estimated based on 1990 average of 25%. (7) Government electricity consumption estimated at 50%. (8) Commercial electricity consumption estimated at 25%. (9) Copra drying done mainly with solar energy, tbus Agro-industry biomass use negligible. (10) Energy Balance does not include consumption of Lubes. TABIE 4b KIRIBATI: ENERGY BALANCE, 2000 (TOE) Fuelwood Coconut Total Electricity Gasoline Jet Al Kerosene ADO Avgas Petroleum" Total I___________________________ Residues Bionass Energy Primary Supplies: Production 6,809 9,718 16,527 0 16,527 Imports 2,476 1,469 1,102 8,649 470 14,165 14,165 BunkeringlExportsi (1,469! (470) (1.939) (1.939) I GROSS AVAIIABLE 6.809 9,718 16,527 0 2,476 0 1,102 8,649 0 12.26 28,753 Conversion: Public Power Generation2 3,676 (3,676) (3,676) 0 Transformation Losses (2,461) (2,461) Station use3 (36) (36) Transnission/Distn'bution Losses4 (163) (163) INE' SUPPLAED 6,809 9.718 16,527 1,016 2.476 0 1.102 4.973 0 8,550 26.0931 Findi Consumption: Househokds56 6,809 9,718 16,527 254 1,102 1,102 17,883 Transport 2,476 4,973 7,449 7,449 Government7 508 508 commercial 254 254 Agro-industries9 0 Others 0 0 0 [TOTAL 6.809 9.718 16.527 1.016 2476 0 102 4.973 0 550 26.093 Source: Mission Estimates. Notes: (1) Jet Al for international flights, Avgas used for A.irTbngaru domestic flights. (2) Private power at 1990 estimate of 350 MWh. PUB growth at 5.99 to 14026 MWh. Fuel consumption: .46 LkWh for small diesels and .28 litres/kWh for large diesels. Total losses at 16.4%. Transformation losses account for approximately 66% of energy in fuel. (3) Station usage estimated at 3%. (4) T&D losser estimated tobe 13.4%. (5) Cookingand lighting. Population for 2000 estimated using growth rate of 2.1% (87,500,40% urban). Biomass consumptionbased on AbaianglTarawa cooking patterns(1985 surveys). Assumptions based on 7.2 personsturban HH with 80% of urban population usingbiomass and 5.7 persons/rural RH with 90% rural population usingbiomass. Urban and rural consumptionsat 3100 kglHHVyear (12 kg/cap/day) and 3900 kg/HW/year (1.9 kg/cap/day). Biomass consumption estimated as follows: Urban: 87,500 people x 40%o x 1.2 kg/cap/day x 80% x 365 days/year/1000 kg/tonne = 12,264 tonnes Rural: 87,500 people x 60% x 1.9 kg/cap/day x 90% x 365 days*year/1000 kgltonne = 32,768 tonnes Total Household Biomass consumption (assumed to be 64% coconut waste and 36 % fuelwood) = 45,032 tonnes (6) Household electricity consumption estimated based on 1990 average of 25%. (7) Government electricityconsumpdon estimated at 50%. (8) Commercial elcctricityconsumption estimated at 25%. (9) Copra drying done mainlywith solar energy, thusAgro-industrybiomass use negligble. (10) Energy Balance does not include consumption of Lubes. - 47 - TABLE 5 KIRIBATI: PETROLEUM CONSUMPTION (kI), 1986-1990 1986 1987 1988 1989 1990 INLAND (Tarawa) Gasoline 1,456 1,418 1,712 2,069 2,058 Kerosene 621 713 733 813 1,018 ADO 4,078 4,409 4,612 4,835 5,327 PUB na na na na 2,090 OTHERS na na na na 3,237 TOTAL 6,155 6,540 7,057 7,717 8,403 INLAND (Kiritimati)1 Gasoline 323 329 304 303 300 Kerosene 8 134 150 179 150 ADO 1,012 859 884 850 900 TOTAL 1,343 1,322 1,338 1,332 1,350 INLAND (Tarawa & Kiritimati) Gasoline 1,779 1,747 2,016 2,372 2,358 Kerosene 629 847 883 992 1,168 ADO 5,090 5,268 5,496 5,685 6,227 Lubes 126 144 150 161 170 TOTAL INLAND 7,624 8,006 8,545 9,210 9,923 AVIATION (No Bunkers) Avgas 295 263 na 636 600 Jet Al 1,036 1,474 na 1,698 1,700 TOTAL AVIATION 1,331 1,737 na 2,334 2,300 TOTAL KIRIBAIT TRADE 8,955 9,743 na 11,544 12,223 Source: Mission Estimates based on discussions with with Kiribati Oil Company. Note: (1) 1986-1988 actual figures. 1990 estimated. - 48 - TABLE 6 KIRIBATI: NATIONAL PUBLIC ELECTRIFICATION SYSTEM L 19851 19861 19871 19881 19891 1990'' Consumers2: Residential 1,804 na na 1,992 na 2,419 Commercial 248 na na 252 na 290 Industrial/Government. 253 na na 259 na 312 Total Consumers 2,305 2,448 2,483 2,503 2,521 3,021 Capacity (KW): I Installed diesel3 2,700 2,700 2,700 3,780 3,780 3,7801 Available diesel4 1,680 1,680 1,680 2,600 2,600 2,600 I Max demand r 1,080| 1,0201 1,2001 1,100| 1,260 1,324 Output (MWh): PUB Generation 5,990 6,371 6,536 6,758 7,233 7,872 Station usage 167 134 148 97 105 88 Total sent out 5,823 6,237 6,388 6,661 7,128 7,784 Distribution losses 1,269 1,181 1,046 902 1,102 1,280 INet consumption 4,554 5,056 5,342 5,7591 6,026 6,504: Sources: Public Utilities Board generation and sales records. Coopers & Lybrand Kiribati Power System Expansion Report. Mission Estimates (February 1991). Notes: (1) Financial year begining 1 July and ending 30 June. (2) Listed by PUB classification. (3) Manufacturer nameplate rating. Installed equipment includes 2-300 KW non-operational at Bairiki and Bikenibeu. (4) Total "de-rated" capacity based on 80-85 percent of nameplate rating of operational units - 49 - TABLE 7 KIRIBATI: ELECTRIFICATION PERFORMANCE INDICATORS, 1990 PUBLIC UTILITIES BOARD (PUB) Fixed Assets ('000 AU$) na Average Revenue' (AU¢/kWh) 44.0 Average Cost (AUo/kWh) Capital na Fuel 18.9 Other operating 25.7 Estimated ROT2 (%) 3.0 Fuel Consumption3 (I/kWh) Main system 0.27 Outer islands 0.46 % Households Electrified4 95.0 kWh/year/consumer 2,606 kWb/year/employee5 60,554 Employees/MW installed 34 Outages7 Number na Ave. duration (hrs) na Customers affected (%) na Voltage drop/increase na Sources: Mission Estimates (February 1991). Notes: (1) Includes revenue from electricity sales, interest and sundries. (2) Rate of Return based on (revalued) fixed assets. (3) Outer islands fuel consumption estimated. (4) Mission estimates complete electrification of South Tarawa. However, RE program in progress to electrify part of North Tarawa. (5) PUB staff level of 130 not including 35 in Water/Wastewater divisions. 17300 TARAWA 1 * 165- 150.W K ILME115 1HWAIIAN rvopic of Co"ce- - 0 3 6 1 E ISLANDS MILES a A :E~ ~ ~ ~ ~ ~ ~~~~~(.. U) u- ) .Wake W~(~ -1*30'N F A C F C 0 C E A N ~~~KIRIBATI P|FA CIFIC ! c | cEA N ENERGY SUPPLY 150 5t DIESEL POWER STATIONS -%zo MARSHAL I ^ PETROLEUM PRODUCTS STORAGE 0 ISS .. , - EXISTING POWER DISTRIBUTION UNE ISLANIDS Q *------ o PLANNED POWER DISTRIBUTION UNE .__ auuj 1 US.J z NATIONAL CAPITAL MZUST U.S.) -C~ ~ ~ ~ ~ ~~~~~~~~Kigoo .. U.. 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