Document of The World Bank Report No. 17780-CD STAFF APPRAISAL REPORT REPUBLIC OF CHAD HOUSEHOLD ENERGY PROJECT May 4, 1998 Energy Unit Infrastructure Africa Region SAR - Household Energy Project CURRENCY EQUIVALENTS Currency Unit = CFA Franc US $ 1.0 = 572 CFA Francs (as of May 1997) WEIGHTS AND MEASURES Metric System CONVERSION FACTORS Air-dried wood 0.8 tons per m3 and 17 MJ per kg Charcoal 30 MJ per kg Kerosene 0.79 tons per m3 and 43.5 MJ per kg LPG gas 47.5 MJ per kg Sack of charcoal 40 kg 1 stere 300 kg wood, or 1 stacked m3 Efficiency factor for charcoal production 13 % on a dry weight basis, using traditional methods 20 % on a dry weight basis, using improved methods GOVERNMENT FISCAL YEAR January 1 - December 31 Vice Presidents Jean-Louis Sarbib, Callisto Madavo Director Serge Michailof Sector Manager Mark Tomlinson Task Team Leader Michel Layec SAR - Household Energy Project ABBREVIATIONS AND ACRONYMS ADER Programme d'appui au developpement de l'economie rurale AEDE Agence pour l'nergie domestique et l'environnement ATETIPE Agence Tchadienne d'Execution de Travaux d'Interet Public pour l'Emploi bbl Barrel of oil BIEP Bureau interministeriel d'etudes et de projets CILSS Comite inter-etat de lutte contre la secheresse CAS Country Assistance Strategy CDS Comite de suivi DAP Detailed Action Plan DFPE Direction des forets et de la protection de l'environnement DPDR Direction de la planification, du developpement rural, et de reconstruction DPENR Direction du petrole et des energies nouvelles et renouvelables DIT Direction de l'imp6t et taxe ESMAP Energy Sector Management Assistance Program FAO Food and Agriculture Organization of the United Nations FED Fonds europeen de developpement GDP Gross Domestic Product GOC Government of Chad ha hectare IDA International Development Association IF5 Inspection Forestiere Zone 5 kg kilogram kgoe kilogram of oil equivalent kWh kilowatt hour MCI Ministere du commerce et de l'industrie MEE Ministere de l'environnement et des eaux MFEPA Ministere des finances, de l'economie, du plan et de l'amenagement du territoire MMEP Ministere des mines, de l'energie et du petrole PARTIF World Bank Fund for Participatory Studies PNLCD Plan national de lutte contre la desertification PPF Project Preparation Facility SECADEV Secours catholique et developpement DSEED Direction de la statistique, des etudes economiques et demographiques SEERAT Societe d'etude et d'exploitation de la raffinerie du Tchad SIEP Societe de l'information et de l'evaluation permanente STEE Societe tchadienne d'eau et d'6lectricite toe ton of oil equivalent UNDP United Nations Development Program TABLE OF CONTENTS CREDIT AND PROJECT SUMMARY ...................................................................... v 1. PROJECT SE'ITING AND RATIONAL ...................................................................... 9 PROJECT'S CONTRIBUTION TO POVERTY REDUCTION, ENVIRONMENTAL PROTECTION, AND RURAL AND PRIVATE SECTOR DEVELOPMENT ..................................................................... 9 THE ENERGY SECTOR: DOMINANCE OF WOOD FUELS IN ENERGY BALANCE ....................................... 10 ENERGY SECTOR INSTITUTIONS ...................................................................... 0 THE BANK'S ROLE IN THE ENERGY SECTOR AND LESSONS AND PRINCIPLES INCORPORATED IN PROJECT DESIGN ......................................................................11 SUSTAJNABILITY ..................................................................... 12 2. HOUSEHOLD ENERGY SECTOR ..................................................................... 13 OVERVIEW ..................................................................... 13 DEMAND CHARACTERISTICS ...................................................................... 13 WOOD FUELS SUPPLY ..................................................................... 1 7 LAND-USE PRACTICES ..................................................................... 1 9 ENVIRONMENTAL IMPACT OF WOOD FUELS ...................................................................... 20 WOOD FUELS PRICING AND TAXATION ..................................................................... 2 1 DEMAND AND SUPPLY OUTLOOK FOR WOOD FUELS ..................................................................... 22 SECTOR POLICIES AND INSTITUTIONAL FRAMEWORK ...................................................................... 23 INSTITUTIONAL CONSTRAINTS ..................................................................... 24 3. THE PROJECT ..................................................................... 26 PROJECT OBJECTIVES ...................................................................... 26 PROJECT DESIGN ...................................................................... 26 PROJECT DESCRIPTION ..................................................................... 27 SECTOR REFORM AS PART OF PROJECT PREPARATION ...................................................................... 33 PROJECT COSTS ..................................................................... 33 FINANCING PLAN ..................................................................... 34 PROJECT IMPLEMENTATION ..................................................................... 3 5 DISBURSEMEN1S ..................................................................... 40 PROCUREMENT ..................................................................... 41 ACCOUNTING, FINANCIAL REPORTING, AND AUDITING ..................................................................... 43 ENVIRONMENTAL ASPECTS (CATEGORY C) ..................................................................... 43 PROJECT MONITORING AND SUPERVISION ..................................................................... 43 4. PROJECT EVALUATION ..................................................................... 36 INTRODUCTION ..................................................................... 46 ECONOMIC EVALUATION ...................................................................... 48 USER FEE ..................................................................... 49 FINANCIAL ANI) FISCAL ANALYSIS ..................................................................... 51 DISTRIBUTIONAL IMPACT ................................... 51 SENSITIVITY ANALYSIS ................................... 52 PROJECT RISKS ................................... 54 5. AGREEMENTS AND RECOMMENDATION ................................... 45 iv SAR - Household Energy Project Text Tables Table 2.1 .. 6 Table 3 I... 25 Table 3.2 .. 26 Table 3.3 .. 27 Table 3.4 .. 28 Table 3.5 .. 28 Table 4.1l.. 35 Table 4.2 .. 38 Table 4.3 .. 39 Text Figures Figure 4.1 .. 40 Figure 4.2 .. 40 Annexes: Annex 1.1 Energy Balance Annex 2.1 Forest Resources and Wood fuel Productivity Annex 2.2 Forest - Institutional Framework Annex 2.3 Energy prices and Household Use of Fuels Annex 3.1 Process to Create Resource Management Systems Annex 3.2 Project Organization Chart Annex 3.3 Detailed Cast Tables AZnnex 3.4 Activity Schedule. Annex 3.5 Procurement and Consulting Services Annex 3.6 Performance Indicators Annex 3.7 Documents in Project File Annex 3.8 Implementation Manual Table of Contents Annex 4.1 Basic Assumptions and Demand Scenario Annex 4.2 Resource Management Component - Economic analysis Annex 4.3 Demand-side Management Component - Economic Analysis Annex 4.4 Avoided CO2 Emissions Annex 4.5 User Fee Structure Annex 4.6 Financial Analysis Annex 5 Country at a Glance IBRD No. 27963 This report is based on the findings of an appraisal mission to Chad in March 1996, which consisted of Messrs. Robert Van der Plas (IENPD) and Michel Layec (AFTGI1), co-Task Managers and Gerard Madon, Consultant. Messrs. Luis Gutierrez (IENPD) andI Ken Chomitz (PRDEI) contributed- to the economic evaluation of the project. Mrs. Monique R. Amany and Ms. Savita Choudhry (AFTGI) provided support in the preparation of the report. The Technical Manager is Mr. Mark Tomlinson. Mr. Serge Michailof isl the Country Director for Chad. REPUBLIC OF CHAD HOUSEHOLD ENERGY PROJECT Credit and Project Summary Borrower: Republic of Chad Implementing Agency: Agency for Household Energy and Environment (AEDE) Beneficiaries: Ministry of Mines, Energy and Petroleum (MMEP) Ministry of Environment and Water Resources (MEE) Rural and Urban Households Amount: SDR 4.0 million (US$5.27 million equivalent) Terms: Standard IDA terms, with 40 year maturity, including 10 years grace Project Objectilves. The key objective of the project is to provide an economic and sustainable supplly of energy for households. Least cost supply and sustainability are being achieved througlh a community based participatory approach and environmental awareness. The specific objectives of the project are to: (i) promote the establishment of the sustainable production of woodfuel in selected villages providing energy to the capital, N'Djamena; (ii) strengthen the capacity of the Borrower to extend such production elsewhere; (iii) carry out institutional reforms in the household energy sector; and (iv) improve efficiency in the use of household energy. Project Description: The project comprises four components that will be implemented over four years: (a) establishing village-based natural resource management; (b) monitoring and control of wood product flows; (c) improvement in the efficiency of household fuel use; and (d) project management which includes capacity building and training. On the supply side, which accounts for about 80% of project costs, simple long-term village-based land-use and wood exploitation plans will be prepared for the N'Djamena wood fuel catchment area; these plans are based on an assessment of wood resources, and economic activities in the surroundings of the villages, focusing on a more rational and participatory approach to management of wood resources. Efficient charcoal conversion techniques will also be promoted in those areas where charcoal is produced. A system will be established to monitor the inflow of wood products from rural production zones into N'Djamena. An effective environmental policy instrument guiding transporters towards areas where least-cost wood is available will be implemented. On the demand side, the commercialization of efficient cooking stoves by private agents will account for about 20 percent of project costs; suitable stove models will be identified through NGOs and a promotional campaign will be launched to encourage the private sector to adopt the program. The project will also promote the commercialization of low-cost kerosene and LPG stoves by private agents and seek ways to increase the efficiency of their supply system. vi SAR - Household Energy Project Project Benefits: The main benefits for the project are to ensure a sustainable supply of economic household fuels and to prevent agricultural productivity losses from the environmental degradation caused by the unregulated clear cutting of wood. Other benefits, include the improvement of rural incomes by charging rural communities with the responsibility of managing and commercializing the wood resources in their areas. The additional incomes will be particularly significant for the poorer rural households in the wood- producing areas. The main quantifiable benefit of introducing efficient cooking equipment is the financial savings due to a reduction of cooking fuel use. Other benefits are the decrease of the negative health impacts of using traditional stoves and a reduction of CO2 emissions. Risks: Three risks exist: (a) the commitment of communities to effectively implement the wood management plans; (b) the efficiency of the system for controlling and monitoring wood entries in N'Djamena which might be diminished by fraud and non-cooperation of certain actors (esp. the military); and (c) the social obstacles which might arise from the wood fuel fiscal reform required to introduce economic pricing, namely the need to levy a wood fuel surcharge (equivalent to a user fee) to bring market price in line with the opportunity cost of wood fuels. These risks will be minimized through: (i) the up-front commitment on the part of Government to proceed with the proposed reforms, as has already been demonstrated by the enactment of the forestry law; (ii) the anticipated strong commitment of local communities to manage the available resources in their surroundings; (iii) the design of a simple and transparent system to monitor and control wood fuels; (iv) an awareness campaign on the use of more efficient stoves; (v) the participatory approach to project design and implementation; and (vi) the limited role of Government in project implementation combined with the emphasis on capacity building for public, private, communal, and NGO stakeholders. SAR - Household Energy Project vii Estimated Costs: Chad Household Energy Project Project Cost Summary % % Total (CFAF Million) (USS '000) Foreign Base Local Foreign Total Local Foreign Total Exchange Costs 1. Investment Costs A. Goods 1. office equipment 31.1 68.6 99.7 54.4 120.0 174.4 69 3 2. boats 4.5 25.7 30.2 7.9 44.9 52.8 85 1 3. motorcycles 13.4 76.2 89.7 23.5 133.2 156.8 85 3 4. cars 50.3 284.8 335.0 87.9 133.2 585.8 85 11 5. promotional equipment 81.6 88.2 169.9 142.7 497.9 297.0 52 5 6. laboratory equipment 2.4 13.4 15.7 4.1 154.3 27.5 85 1 7 training equip & materials 132.8 34.0 166.7 232.1 23.4 291.5 20 5 Subtotal Goods 316.1 590.9 907.0 552.6 1,033.0 1,585.7 65 29 B. Civil Works 53.5 9.4 6.9 93.5 16.5 110.0 15 2 C. Consultant services 1. National experts 6.2 35.3 41.5 10.9 61.7 72.6 85 1 2. Studies 44.0 132.1 176.2 77 .0 231.0 308.0 75 6 3. International Experts 64.7 602.3 667.0 113.0 1,053.0 1,166.0 90 21 4. Monitorng, database, and 160.4 - 160.4 280.5 - 280.5 - 5 extension services 5. NGO 213.0 101.6 314.6 372.4 177.7 550.0 32 10 6. training 99.4 10.7 110.1 173.8 18.7 192.5 10 4 Subtotal Consultant services 587.8 882.0 1,469.8 1,027.6 1,542.0 2,569.6 60 47 Total Investment Costs 957.4 1,482.4 2,439.7 1,673.7 2,591.5 4,265.3 61 78 11. Recurrent Costs A. Repayment PPF 18.0 102.1 120.1 31.5 178.5 210.0 85 4 B. Operating Costs 471.9 - 471.9 825.0 - 825.0 - 15 C. Operating Costs/ Govt Staff 95.0 - 95.0 166.1 - 166.1 - 3 Total Recurrent Costs 584.9 102.1 687.0 1,022.6 178.5 1,201.1 16 22 Total BASELINE COSTS 1,542.3 1,584.5 3,126.8 2,696.3 2,770.0 5,466.4 51 100 Physical Contingencies 147.6 148.2 295.9 258.1 259.2 517.3 50 9 Price Contingencies 105.2 79.8 185.0 183.9 139.5 323.4 34 6 Total PROJECT COSTS 1,795.1 1,812.5 3,307.6 3,138.3 3,168.7 6,307.0 50 115 Financing Plan: (US$ 000) Local Foreign Total % of Total IDA 2108.6 3168.7 5277.3 83.7 Ciovemment 1029.7 - 1029.7 16.3 TOTAL 3138.3 3168.7 6307.0 100.0 Estimate IDA Disbursements: (US$ 000) IDA Fiscal Year FY99 FY00 FY01 FY02 Annual 1,688.7 1,504.0 1,292.9 791.7 Cumulative 1,688.7 3,192.7 4,485.6 5,277.3 Economic Indicators: The project's combined net present value (NPV) is US$ 11.4 million and the economic rate of return (ERR) is 34.4%. The resource management component has a NPV of $ 5.3 million and an ERR of 25.1%; whereas the improved stoves component has an NPV of $6.1 million and an ERR of 75.1%. viii SAR - Household Energy Project Poverty Category: Not applicable. However, the project is designed to improve the living conditions of poor rural and urban households. Approximately, 42 percent of the net benefits will accrue to the lowest income groups in N'Djamena and 28 percent in rural areas. Map: IBRD No. 27963 Project ID Number: TD-PE-532 Vice President: Jean-Louis Sarbib, AFRVP Country Director: Serge Michailof, AFC07 Technical Manager: Mark Tomlinson, AFTG I Task Team Leader: Michel Layec, AFTG 1 SAR - Household Energy Project 9 REPUBLIC OF CHAD HOUSEHOLD ENERGY PROJECT 1. PROJECT SETTING AND RATIONAL PROJECT'S CONRIBUTION TO POVERTY REDUCTION, ENvIRONMENTAL PROTECTION, AND RURAL AND PRIVATE SECTOR DEVELOPMENT 1.1 The proposed Household Energy Project is fully consistent with the Country Assistance Strategy and the Environmental Action Plan, and directly supports four of the CAS main objectives: Poverty alleviation, rural and private sector development, and environmental protection. The project will generate income in rural areas, optimize the use of local wood resources, and protect the long-term environmental sustainability and rural livelihood. Health benefits will be obtained, particularly for women and children, through the use of more efficient stoves. Finally, a reduction in the deforestation rate will yield global benefits in terms of reduced carbon dioxide emissions. 1.2 The economy of Chad is in the process of reconstruction from the deleterious effects of both domestic and international factors which have led to an erratic economic performance. During most of the 1980s anned conflict destroyed significant infrastructure. This destruction, combined with ineffective public resource management and drought hindered economic growth. Structural reforms began in 1987 to address these problems and the key elements of these reforms were consolidated public expenditure and improved performance of the cotton sector. This program led to some improvement of economic growth which averaged 3.8 percent during 1987-90. However, by the end of 1990, a political coup plunged Chad into a period of renewed political and economic uncertainty. 1.3 Since 1990, sharp increases in military spending and the declining capacity of the GOC to collect revenues severely constrained economic performance. In addition to domestic problems, Chad faced two major external problems: (a) the appreciation of the real effective exchange rate which led to major losses in the cotton sector; and (b) the decline in the world price of cotton. By 1993, Chad's economic performance had diminished substantially with growth in GDP declining by 3.7 percent. In addition to macroeconomic imbalances, the management of public finances was a recurrent problem for Chad: tax collection was low, only about 6 percent of fiscal receipts; a parallel market was circumventing the taxation system; and the country's public administration was staffed by workers paid on an irregular basis, with very little incentive for improving their performance. 1.4 Since 1993, the Government has taken some significant actions for economic recovery. GOC, in consultation with member countries of the CFA zone in 1994, decided to change the fixed parity of the CFA franc from CFAF 50 to 100 per French franc. The devaluation helped make the country's major export products more competitive on the world market and reduce external imbalances. At the same time as the parity adjustment, GOC launched a new economic and social program to: reestablish order in public finance; correct macroeconomic imbalances through improved revenue collection and reduced expenditures, improve economic incentives for the agricultural sector; improve public investment performance and 70 SAR -Household Energy Project create a business environment conducive to private investment; and enhance economic adjustment measures with special programs for poverty alleviation and human resource development. THE ENERGY SECTOR: DOMINANCE OF WOOD FUELS IN ENERGY BALANCE 1.5 Although petroleum was discovered in Chad over 25 years ago, it is yet to be produced to meet Chad's own domestic needs for energy or for exports. This is likely to change, however, if two petroleum projects, now under preparation, move forward. The first is the development of a small oil field in the northwest part of the country at Sedigi, near Lake Chad. The project would be majority private sector financed by a consortium of oil companies consisting of Exxon, Shell and Elf. The oil would be transported in a pipeline to N'Djamena, refined and sold for the domestic market only. The Sedigi project will provide kerosene and LPG for household energy consumption and will support substitution away from woodfuels. The other oil project is located in the southern part of Chad at Doba. This is a large project for export being developed by the same members of the consortium. It involves: (i) drilling of some 300 wells; (ii) construction of a 30," 1,050 km pipeline from Doba to Cameroon's Atlantic coast at Kribi; and (iii) installation of an offshore export terminal facility in Cameroon. The cost of the project is estimated at $3.5 billion and is expected to generate about $2.5 billion in revenues for Chad (nearly doubling annuai fiscal revenues) and about $500 million for Cameroon over the 25 years of production. 1.6 Chad's energy balance (Annex 1.1) reflects the country's early stage of economic development. The economy's modem sector uses only a small portion of total net energy supply, while households consume 92%, mostly in form of wood fuels for cooking. Wood resources are mostly located in the south of the country where there is a heavy rainfall. The total standing stock of wood from the country's trees has been estimated at 859 million tons, or 344 million tons of oil equivalent (toe). Total sustainable annual wood yield from these areas is 31 million tons or 12.4 million toe. Of this, on a yearly basis, only about 14 million tons of wood are physically accessible to the population for use and this level of exploitation is equivalent to about 5.6 million toe. However, the wood off-take is not evenly divided over the available resources, resulting in over-exploitation in certain zones and under-exploitation in others. In addition, unsustainable wood exploitation practices aggravate the impact on the existing resources, resulting in a noticeable degradation of forested areas surrounding cities. N'Djamena is a case in point where considerable damage has already occurred to the surrounding wood resources, and if not acted upon soon, the sustainable supply of wood fuels will be in danger. ENERGY SECTOR INSTITUTIONS 1.7 There are three GOC ministries that are responsible for supervising the country's energy sector. The Ministry of Mines, Energy and Petroleum (MMEP) oversees the overall technical aspects of the energy sector. The Ministry of Environment and Water Resources (MEE) supervises forest and water resources and the environment. The Ministry of Commerce and Industry (MCI) monitors the activities of the oil companies and is responsible for setting electricity tariffs and the prices of petroleum products. There are also several other entities operating in electricity and petroleum subsectors. SAR - Household Energy Project 11 1.8 In the petroleum subsector, GOC has set up the SEERAT (Societi d'etude et d'exploitation de la raffinerie du Tchad), which is owned 49 percent by GOC and 51 percent by a consortium of'three international oil companies, Exxon (operator), Shell, and Elf. The purpose of SEERA4T is to carry out the feasibility study for the proposed pipeline and oil refinery, and be responsible for its construction and operation, if the investment project is considered economically, financially and statistically viable. The Doba oil project, located in Southern Chad, is currently managed by a negotiating team comprising representatives of various institutions interested in the implementation and exploitation of this large scale project. 1.9 The STEE (Societe tchadienne d'eau et d'dlectricite') is responsible for the production and distribution ol' electricity and water in the country. This company is a partnership between GOC (81.3% ownership) and the Caisse Frangaise de Developpement (18.7% ownership). THE BANK'S ROLE IN THE ENERGY SECTOR AND LESSONS AND PRINCIPLES INCORPORATED IN PROJECT DESIGN 1.10 This will be the first time IDA is involved in household energy sector in Chad. IDA's experience with comparable household energy projects in other African countries has been favorable and several projects are underway. A Best Practice paper I on this was approved in July 1996 by the 'World Bank's Policy Committee. This document highlights the need for devolution of control over natural resources to local villages, in the same way as is proposed for this project. 1.11 An IDA-supported household energy project in Niger has increased control over fuelwood flows into Niamey (the Capital) from 10% to 60%, raising Government revenues to over half a billion CFAF per year (about US$ I million), and led to the voluntary establishment of over 50 rural fuelwood markets with a managed natural forest resource base of some 160,000 ha. On the demand side, wood and kerosene stoves are being disseminated via existing commercial channels. The response of the local population to the devolution of control over forest resources has been extremely positive, and demand to participate in the project outstrips the project team's capacity at this time. In Chad, the experience with household energy has been encouraging, as witnessed by the preparation of a Detailed Action Plan (DAP) and new legislation that allows considerable improvements to take place in this field. DAP has mapped out the key concepts which formed the basis of this project. It has also mapped out the next steps/strategy needed to ensure the sustainable availability of biomass resources for energy consumption. 1.12 The project will incorporate the lessons of the Niger and other household or natural resource management projects (i.e., in Burkina Faso and Mali), as well as from the Bank- financed Review of Policies in the Traditional Energy Sector (RPTES) study. Lessons learnt will be incorporated from the Bank's substantial experience with household energy demand Rural Energy & Development: Improving Energy Supplies for Two Billion People, Development in Practice Series, No. 15912 GLB, 12 SAR - Household Energy Project side management projects such as improved stoves and substitution fuels, particularly in Africa (Burundi, Ethiopia, Madagascar, Malawi, Mauritania, Niger, Rwanda, Tanzania). 2 1.13 The Agricultural Services Project (TD-PA-501) in Chad provides extension services to farmers and establishes a better environment for agricultural research, but it is not specifically designed to address wood issues. However, its infrastructure for extension may be an effective vehicle to raise rural awareness about natural resource management. 1.14 Chad will require external, financial, and technical assistance to bring about the necessary institutional and legal reforms for better resource management and efficiency. IDA has the capability to provide this assistance because of its broad experience with household energy issues in other countries of the Africa region. Finally, IDA's active participation in the project is critical to mobilize needed additional financial resources from donors to replicate similar activities around other urban areas and to facilitate coordination between the different and potential actors active in this field in Chad. SUSTAINABILITY 1 .15 One of the objectives of the project is to develop a durable solution for the wood fuel supply of the Capital. Levels of income need to rise sufficiently so that urban households can afford to switch from wood fuels to modem cooking fuels such as kerosene and LPG. The project will ensure that until such level is reached, the wood fuel supply and demand balance is positive. Thus improved wood fuel management is an essential component in achieving sustainability by meeting the growing energy needs of urban population, maintaining their standard of living and protecting the long-term reproductive capacity of woodlands while ensuring that rural communities livelihoods are secure as well. 2 What makes people cook with improved biomass stoves, WB Technical Paper No. 242, Energy Series. 2. HOUSEHOLD ENERGY SECTOR OVERVIEW 2.1 Household energy demand is driven by rural and urban consumers, though it is the later which exerts considerable influence on wood fuel management practices. Fuelwood availability and its sustainable management is not a problem in most rural areas of Chad as communal based management systems have been in place and have functioned relatively well for decades. The majority of rural people reside in areas of limited biomass cover. As long as population densities are low, sustainable management is achievable. When wood fuel demand increases due to increasing population densities in urban areas, sustainable wood fuel management is threatened in areas of limited biomass cover. 2.2 Urban areas consume a relatively small percentage of the total annual fuelwood consumption in comparison to rural areas. However, extraction methods used to meet the growing urban demand for fuelwood are increasingly unsustainable. Illegal harvesting activities have promoted land degradation through excessive loss of biomass cover and stand to harm rural based economic activities such as agriculture and livestock. Many of these illegal harvesters do not have a vested interest in the community and are part-time laborers from other regions employed by powerful urban business interests. Continued over- harvesting not only reduces environmental and economic sustainability but further enforces a spiraling effect of continued and ever increasing degradation by marginalizing rural populations, rendering land unproductive, and forcing farmers to use unsustainable agricultural extensification (clearing of more land) to maintain household income. A case in point is N'Djamena where the reduction of economic output for outlying areas is promoting urban migration. DEMAND CHARACTERISTICS 2.3 Consumption3. Households account for most of the energy consumption in Chad and about 880 thousand toe or 89 percent of the estimated national energy consumption in 1995 (Annex 1.1). Most of this consumption is for cooking which use wood fuels as the main energy source. Rural areas, which consume about 75 percent of total household energy, rely entirely on fuelwood for cooking. In 1990 in N'Djamena, 80% of the population used fuelwood as the primary cooking fuel and as a primary fuel, charcoal was used by 16 percent of the population and by 54 percent as a secondary fuel. In 1995, fuelwood use considerably decreased to about 54 percent of the population. Charcoal demand has risen rapidly by 1995; 46 percent of the population used it as primary fuel and 35 percent used it as a secondary fuel. The demand for kerosene and LPG gas for cooking is limited to about I percent of the population in N'Djamena. Table 2.1 summarizes the structure of final energy consumption 3 Most of the information on household energy demand in Chad comes from a 1991 survey of household energy use under the Bank/UNDP Energy Sector Management Assistance Program. The information on the urban sector covers the capital city N'Djamena, which accounts for almost half of the urban household energy demand. The ESMAP survey assumes that other urban areas have similar demand characteristics. Household energy use in 1995 and 1997 shows characteristics very similar to the results obtained by the 1991 survey. 14 SAR - Household Energy Project for cooking by fuel for rural and urban areas. While this structure reflects 1990 data, no significant changes have been observed in the contribution of biomass sources (fuelwood and charcoal) to household energy consumption. Consumption of modern household fuels (kerosene and LPG) has not increased significantly since 1990, largely because of high costs and restricted availability. Table 2.1: Final Household Energy Consumption for Cooking by Fuel Type, 1990 (in toe) Area Fuelwood Charcoal Kerosene LPG Total % Share N'Djamena 41,596 15,739 481 300 58,116 7 Other Urban Areas 62,599 23,685 723 -- 87,007 10 Urban Subtotal 104,195 1,204 300 145,123 17 39,424 Rural Areas 732,884 -- -- -- 732,884 83 TOTAL 837,079 1,204 300 878,007 100 39,424 %Share 95.3 4.5 0.1 100 Source: Tchad: Elements de strategie pour I 'energie domestique urbaine: le cas de N'Djamena, December 1993 2.4 Fuel Use Patterns. A consumption survey conducted in 1990 indicated that most households use more than one fuel to satisfy their energy needs. Their choice of fuel depends on two main factors: (a) the socioeconomic level of the household; and (b) the preferences of the person in the household who does the cooking. In the low-income group, which accounts for about 70 percent of all households, 87 percent of the households use fuelwood as the principal fuel; 12 percent use charcoal; and less than 1 percent use LPG gas. Charcoal is used as a major secondary fuel for about 86 percent of these households. For the middle-income groups, about 45 percent use fuelwood as the principal fuel; 33 percent use charcoal; and 19 percent use LPG gas. For this group, charcoal is the main secondary fuel accounting for about 67 percent of secondary fuel used in those households that use multiple fuels. Most householders find that the wood fires are better for preparing "boule" which is the basic household meal. At the same time, there is a distinct preference in using charcoal to make sauces and hot drinks. 2.5 According to the ESMAP survey, when fuelwood was used as a secondary energy source instead of a primary energy source, the daily specific consumption of fuelwood declined by about two-thirds from 0.65 kg per person to 0.21 kg per person. In contrast, a similar situation for charcoal resulted in a specific-consumption decline of less than one third. This indicates that households tend to use charcoal more for specific types of food. Another survey carried out in 1995, indicated that charcoal had recently become equally important as fuelwood in N'Djamena. Other African countries have experienced the same pattern due to urbanization. As a result, overall wood consumption could increase dramatically, since charcoal use, compared to fuelwood use, on a similar weight basis, embodies at least three times the amount of wood resource use. The poorest section of the population estimated at 5 - 10 percent does not purchase its fuel, but gathers it in the surroundings of N'Djamena. SAR - Household Energy Project 15 2.6 Comparative Cost of Meal Preparation. The ESMAP study evaluated the comparative costs of cooking a standard meal using various fuels and stoves according to market prices in 1991. The results indicated an overwhelming preference for the use of the traditional "three- stone" open stove which has an efficiency of about 10 percent. The attachment to this type of stove seems to have deep cultural roots since it is prevalent among middle-income groups as well as lower income groups. At the time of the ESMAP survey, only 4 percent of households were using "improved" stoves for fuelwood or charcoal. The average household had two or three stoves, the principal one being the three-stone traditional stove for preparing the main meal. 2.7 The ESMAP study produced several other relevant results: first, the use of charcoal in a traditional stove was the least-cost cooking method, mainly because of the current low charcoal price, which does not reflect the fuel's economic cost; second, not all stoves designated as "improved " were necessarily more efficient than traditional stoves; and third, among the modem fuels, only one type of kerosene stove was competitive with the traditional "three-stone" fuelwood stove. Other stoves cost 50 percent more and the cost of meal preparation with one type of LPG stove was more than twice of the three-stone stove. 2.8 Household Lxpenditures on Wood fuels. A typical household in N'Djamena using fuelwood and charcoal as principal and secondary fuels, respectively, spends about CFAF 50,000 per year (1991 data) on fuel or about 4 percent of overall household expenditures and 56 percent on food. Although the level of cooking expense is an average, more than 80 percent of all households spend less than 10 percent of their budget on fuels and the poorest percentile could spend between 10 - 19 percent. 2.9 Factors Affecting Stove Choice. When selecting a stove, consumers consider: portability; stability; ease in lighting; rapid cooking time; efficiency; ability to accommodate a large family; adaptability for the use of fuelwood or charcoal; and esthetic appearance. In general, monetary factors account for 50 percent of stove choice, with greater emphasis on the fuel price than on the price of the stove. However, in some cases, consumers do not immediately perceive the efficiency benefits of using altemative stoves and fuels until they receive specific information about them. Although firewood stoves can be obtained free of cost (three stones), in urban areas households usually purchase their stove. To use charcoal a stove is required. The type of stove used and the cook's prevailing cooking practices determine his/her level of fuel consumption. 2.10 Improved Stoves. A good improved firewood stove can potentially save over 30 percent of monthly expenditures compared to the traditional three-stone stove. An improved charcoal stove can save 20 to 30 percent. Annual savings of about CFAF 10,000 or more are quite feasible, which compares favorably with the prices for improved stoves, ranging from CFAF 1000 to CFAF 3000 for firewood stoves and CFAF 4,000 to 5,000 for charcoal stoves. This results in a pay back period of less than six months. Improved stoves can thus effectively be used to off-set future price increases of wood fuels. Despite this, not many households are using improved stoves presently. The reasons for this include unfamiliarity with improved stoves, poorly designed improved stove models, cultural practices, and/or cash flow problems. 2.1 1 Improved stoves could benefit the user and the country if good stove model(s) were made available and accompanied by a systematic marketing effort. Even though an improved stove may save fuel in laboratory tests, households may not wish to buy it on a large scale 16 SAR -Household Energy Project even if it were commercially available. A household testing phase needs also to be implemented before stoves are sold in the market. Experience in other countries (Burkina, Kenya, Madagascar, Niger, Rwanda, Senegal) clearly suggest that once these initial steps are taken, commercialization can reach good results. SAR - Household Energy Project 17 WOOD FUELS SUPPLY 2.12 Forest Resources. The latest estimates of available wood resources are based on satellite imagery (SPOT) data of 1995 (for the N'Djamena area only), with a comparative analysis of past forestry records and a 1987 satellite data (Landsat Thematic Mapper). Annex 2.1 summarizes the results of this analysis. Total standing wood stock in Chad amounts to 859 million tons with an annual yield of about 31 million tons. Most of these resources are located in the south of the country where rainfall is considerably higher than in the center or the north. 2.13 There are several factors limiting the reliability of current resource assessment: (a) the absence of ground surveys to assess the standing volume; (b) insufficient correlation between the forest resource data and the geographical distribution of the population and fuel-use preferences; and (c) production estimates generally based on average regional approximations. Furthermore, not all the estimated forest resources are accessible for wood supply. The wood supply available to the population usually depends on the existence of roads and trails that make it possible for woodcutters to enter and transport the wood. Taking this into account, about 45 percent of annual forest production is available, amounting to 14 million tons of wood or 5.6 million toe. Thus further analysis is required to better estimate wood supply in Chad. 2.14 Three distinctive zones provide wood fuels to N'Djamena: (a) the area to the north and east, including the Reserve de Faune du Bas Chari, Massaguet, and the area north of the N'Djamena - Dourbali - Massenya where degradation is the result of both agricultural clearings and wood fuel supply; (b) the area south-east of N'Djamena, between the road to Massenya and the Chari river, where forest fires are the main problem and wood fuels are not produced on a large scale; and (c) the area south of N'Djamena, between the Chari and Logone rivers, which has suffered most from woodland clearance. This area has the highest population density which requires agricultural production to satisfy the daily needs. Also, the main tarmac route to N'Djamena makes the transport of charcoal and firewood easy. Some wood fuel is reportedly transported from as far as Sarh, 500 km upstream along the Chari river during parts of the year. 2.15 Annex 2.1 shows the total productivity of the wood catchment area that supplies N'Djamena with wood fuels. The total amount that can be harvested on an annual basis without affecting the resource base is 535 thousand tons per year. Although this is more than what is currently needed, reduction of the resource base is occurring. Not all areas are accessible or actively harvested, making the effectively harvested area much smaller. In reality, the wood off-take in a 10 - 20 km strip along easily accessible main roads is causing severe deforestation as far as 100 km from N'Djamena. Fruit trees are cut with other types of trees. The remaining trees do not give quality charcoal. As a result, plots of dry Sudanian woodland and mnoist Acacia bush land are degraded to wooded grasslands or less. 2.16 Exploitation of Wood fuel Supplies. The informal private sector handles all wood production and distribution in the wood fuels sector. In order to maximize profitability, illegal fuelwood harvesters seek to exploit supplies near the capital without regard for maintaining a sustainable supply. These actions not only occur on communal lands but also on privately held land. These include non-timber, fruit trees, and acacias (used to produce gum arabic), 18 SAR - Household Energy Project which many rural households are dependent upon for sources of their income. The rural population has recently become involved in wood-cutting and charcoal making on a part-time basis, after they observed how easily charcoalers earned money from resources belonging to the villages. 2.17 While considerable resources are "potentially" available for exploitation, they are not utilized as harvesters have no economic incentive to access these resources. The least cost supply is the first utilized which compares to the easiest access. Supply availability is in large part strictly a function of profitability. New supplies are only "made" available when pre- existing available supplies have been exhausted beyond the point of economic return as well as sustainable production. From a country perspective, total wood production may exceed consumption, but localized production may not. 2.18 There is evidence that wood deficits and environmental degradation is developing in the forested areas surrounding major urban centers. This will only intensify if inefficient land-use and fuel-use practices in the current supply system continue. These practices include: (a) the burning of large areas of forest for land-clearing by farmers and animal breeders who do not take sufficient precautions against the spread of fire; (b) a system of administrative regulations that does not encourage the sustainable offtake of wood and improvements in the efficiency of charcoal production; and (c) consumer wastage of wood by not using efficient stoves. In addition, charcoal making has become an important business with a total annual market value of about US$6.8 million for the N'Djamena area alone. Current charcoaling methods and practices are such that there is no consideration for the resource base: charcoal is made by itinerant charcoalers (outsiders), who are often financed by urban transporters. They cut as many suitable trees as possible to quickly produce charcoal and move on when there are no longer sufficient easily accessible trees. 2.19 Charcoal Conversion. Charcoalers in Chad use the traditional earth mound kiln for the carbonization process that transforms wood to charcoal. The estimated efficiency of this kiln is about 13 percent4, as tested in the field in early 1995 under the PPF financed study. More efficient kiln designs that are more labor-intensive than current methods and that require better monitoring of the carbonization process can improve the efficiency to about 18 - 22 percent. Such gain in conversion efficiency implies primary wood savings of almost 40 percent. 2.20 Transport and distribution. Firewood and charcoal are transported to N'Djamena (1991) by trucks and other motorized vehicles, as well as by non-motorized transport, mostly donkeys, and barges that travel to various sales points along inland waterways.5 The distribution network consists of 1,000 to 2,000 sales points in market areas, and street corners. The number of these sales outlets fluctuates greatly since some operate only on a part-time or seasonal basis. Between December and May, many sellers from rural areas come directly to sell wood in N'Djamena. The sales outlets are fairly specialized: a little more than half sell 4 Efficiency defined as dry weight of charcoal obtained divided by dry weight of wood input. 5 According to a survey by the Bureau inter-ministeriel d 'tudes et de projets (BIEP), half of all charcoal transport is by means of non-motorized vehicles. These results are not conclusive since the survey lasted only a week and did not monitor all access points to the city. The project will develop data collection on a regular basis. SAR - Household Energy Project 19 only fuelwood; one third sells only charcoal; and only 15 percent sells both fuels at the same time. In 1995, most charcoal was transported by pickup trucks (2.5t) of which approximately 45 are required on a daily basis to satisfy N'Djamena's demand. 2.21 Wholesalers control about one third of the wood fuels distribution outlets, both wholesale and retail. These wholesalers often supply wood to retailers with small concession stands and also sell kerosene. Women operate about half of all small retail points and monopolize the charcoal market. In total, the informal wood fuels sector employs about 9,000 people on a full-time basis of whom 6,000 collect wood and produce charcoal. The rest are involved in distribution and retail operations. Including part-time workers, total employment in the sector may be in the order of 15,000 employees. In general, the supply and distribution is very efficient; there are no major shortages and wood fuels are available at numerous and convenient locations throughout the town. 2.22 Role of Agriculture. Several factors affect depletion rates in the fuelwood catchment area surrounding N'Djamena. With the growth of urban population, increased demand for both fuelwood and agricultural products drives current land use practices. Agriculture has expanded to meet the growing demand for food, and now occupies 200,000 hectares surrounding N'Djamena much of which is around the lake Chad area. Farmers have typically expanded agricultural activities through sustainable measures. Land clearing for agriculture is a pre-requisite that requires the harvesting of wood fuel. As studies have indicated, farmers, while clearing land, maintain a broad management perspective to ensure that excessive harvesting does not harm the regenerative capacity of woodlands. While they may expand agricultural activities, they do it in a manner which does not affect woodlands: by either first, reducing fallow periods on land already under cultivation, or secondly, by expanding cultivation on low productivity soils which are often free of extensive biomass cover. These activities may in the long-term harm agricultural sustainability. However, they do not typically harm productive woodlands. Farmers are broadly speaking maintaining an optimal rate of depletion of forestry resources. LAND-USE PRACTICES 2.23 Forestry resources are at present considered as common property resource by illegal harvesters but are not by the community. Rural communities have highly developed traditional laws for regulating the use and extraction of communal resources (Annex 2.2). The fact that state laws may not formally recognize these rights and systems is immaterial. Villagers have been very adept at defining and managing their rights and use of resources; it is only since "illegal" free traders have begun accessing those resources that unsustainable management has resulted. Defining and enforcing the economic value of land rights to facilitate management by rural communities is essential for sustainable management. Allowing exclusive land rights, or usufruct rights, would not sufficiently enforce rights as villagers do not have the capability to confront trespassers, many of whom could be armed. As proposed in the project, enabling mechanisms for the rural communities will ensure that they can exercise control. 2.24 One way is to establish a management fee system to promote sustainable management of common property resources. At present, trees are a valued economic resource on which villagers depend for survival. Concurrently they are undervalued by illegal harvesters, 'free- riders', who are mining these resources. Mining of these resources is economically 20 SAR - Household Energy Project inefficient, reduces the economic benefits for rural communities, and has long-term implications on sustainable use of resources. The introduction of a management fee system where villagers levy an extraction fee for the harvesting of wood fuel in their communities would discourage over harvesting. 2.25 Since production costs may be higher, wise economic management of natural resources needs to be encouraged. Currently illegal extraction is occurring in large part because merchants/cutters are responding to a situation of market failure where resources are undervalued due to lax enforcement of community and state laws. Considering the circumstances, they are reacting in an economically justified manner (no enforcement of property rights and short time horizon). 2.26 Rate of depletion. While formal property rights do not exist, informal and traditionally enforced systems have been in place for some time. Most studies suggest that the optimal rate of depletion is being exceeded. Returns on capital and consumer time preferences are distorted. Inability on the part of rural communities to exert control over forestry management has lead indirectly to the application of inordinately high capital returns for fuelwood extraction (no value is applied to forestry resources by harvesters), and of non- representative consumer time preferences of individuals seeking quick, short-term rent from forestry activities. Actual depletion rates vary considerably throughout the country. In the N'Djamena catchment area, the current rate of extraction (depletion) of available wood fuel supplies is unsustainable as it is well above the regeneration rate, far exceeding the optimal depletion rate. Therefore, the rate of depletion must be assessed in the context of available supply (from an economic perspective) to N'Djamena and not total supply. ENVIRONMENTAL IMPACT OF WOOD FUELS 2.27 In certain areas, a fragile balance exists between supply and demand of wood products. The closer to N'Djamena, the more upset the balance. One of the main reasons is the rapidly increasing urban demand for wood fuels. Permits are provided by a central department without reference to the carrying capacity of the wood resource base (i.e. mining). Without consulting villagers, wood cutters take wood which is easily accessible. As long as responsibilities for managing the resources (including the rights for exploitation) are not given to the villages, it seems unlikely that the negative effects on the resource can be reversed. 2.28 The urban preference for charcoal exacerbates existing environmental problems. The charcoaling process is inefficient, implying that charcoal using households could consume at least 3 times more wood than firewood consuming households. Even improved charcoal stoves will not compensate for this. Nevertheless, it is important that there be commercialization of improved charcoal stoves: the share of charcoal in the energy mix of urban Chad will increase over time and every kg of charcoal that is not consumed will save 7 to 8 kg of wood. 2.29 Correlated to deforestation are water and wind erosion, declining soil fertility, micro climate deterioration, and loss of species diversity. This has an impact on several aspects of village life: wood supply, agriculture, animal husbandry, etc. However, experience in Niger shows that the effects are reversible. Once the forest cover begins to reappear, grasses, other plants, and animals tend to reappear as well. It is difficult to quantify these processes as there is not much data on either declining or improving soil erosion, soil fertility, and wildlife. SAR - Househok'd Energy Project 21 WOOD FUELS PRICING AND TAXATION 2.30 Actual Retail Prices. Comparative fuel prices for the different forms of energy (Annex 2.3) show that the more convenient modern fuels are much more expensive than traditional fuels. In fact, a household moving up the energy ladder will face a double energy unit price each time (s)he makes such a switch. The effect is less when stove efficiencies are factored in: the cost differences between charcoal and firewood are not so large any more but there remains a major gap between modern fuels such as kerosene, LPG and the traditional fuels (in combination with traditional stoves) which is shown in the last column of Annex 2.3. Modern fuels are therefore not an option for the majority of households in N'Djamena, and the market for such fuels will remain limited. A 1992 survey by ADER/FED/DFPE 6 indicated the retail price of wood in N'Djamena to be in the order of 13-22 CFA per kg, depending on the quantity purchased (Annex 2.3). 2.31 Structure of Charcoal Prices. Annex 2.3 shows the structure of the charcoal price (1996) in N'Djamena based on motorized transport from a distance of 100 km outside the city. For a retail price of CFAF 80 per kg, about 46 percent is the gross margin for the merchant- distributor and the retailer. In addition, the cost of the wood to the merchants and the taxes are extremely low, and taxes paid to GOC only amount to 3 percent of the retail price. 2.32 Taxation System. As Annex 2.3 indicates, the cost of wood and taxes are almost a negligible portion of the current retail price and do not take into account the wood's economic value. The basis for the current taxation of wood fuels is a Government decree of 1985 which established five tax categories, according to the product and its packaging: CFAF 100 per sack of charcoal; CFAF 20 per bundle of wood, 300 CFAF per stere of wood, CFAF 1,500 per ton of wood within a 30 km radius of the capital and CFAF 1,000 per ton beyond this radius. Inspection Forestiere 5 (IFS) is in charge of the control of wood fuel transport in the N'Djamena supply region. It has check points in most villages from where wood is supplied and at the entrance of the city. 2.33 There are several serious distortions in the tax system. First, there is no uniform measuring system for the tax, which is based either on the main unit of volume, the stere, or on the weight in lkg. Survey data indicates that the tax per kg which results from the volumetric measurement converted to weight equivalent is CFAF 0.75, less than half the tax based on weight, which is CFAF 1.5. In any case, the actual tax paid turns out to be lower than both of these rates -- CFAF 0.3 per kg. Second, there is no standard definition of the bundle which rural suppliers produce and the weight of the bundle varies considerably. Third, the tax rate for charcoal is CFAF 2.55 per kg despite the production of a kg of charcoal which requires almost eight kg of wood, making the tax rate of wood used in charcoal-making only CFAF 0.3 per kg, much lower than what applies to wood used directly as fuel. In addition, the control system is not very effective and tax collection rates are low. 2.34 In addition to the above, illicit taxes are levied and could amount for charcoal to as much as CFAF 50 per bag, mainly to allow expedient passage. The proposed wood fuel user fee (or "tax" as per Law 36) will replace all earlier mentioned taxes and would be paid at the rural market at the time of purchase or at the city entrance. The estimated rate of revenue recovery is only 10- 15 percent. Forestry staff are insufficient for the monitoring required. A better rate 6 Jaques Rosseel/ADER, July 1992 22 SAR - Household Energy Project of revenue collection could generate the funds necessary to finance management services or technical support in the wood production zones. To address weaknesses in the fiscal regime, the ESMAP study recommended that the Government establishes a new fiscal and regulatory system based on: a fee level that reflects the cost of wood replacement; the proceeds from fee collection to managers and owners of forest resources (i.e. villages); and incentives for reinvesting revenues from fees in forest management activities and reforestation. 2.35 Economic Pricing of Wood. The economic price range of wood can be estimated using different methods: border pricing of the closest substitution fuel, i.e. kerosene; marginal environmental cost pricing; or replacement value pricing. The most conservative, border pricing, would result in approximately $147 per ton of wood (CFAF 69 per kg) based on the current retail price minus 45% margin. In-country transport costs are to be added. The most broad-reaching approach, incorporating marginal environmental costs, is difficult to apply as it depends on many elements that are unknown. The marginal environmental value of wood should reflect its long-run marginal value, based on both its immediate environmental effects and the needs of future generations. Thus, the opportunity cost of wood equals the direct harvesting costs (the marginal costs as usually perceived) and the marginal external costs of wood to different sectors, such as agriculture, livestock, etc. 2.36 Replacement value pricing can be estimated based on reforestation or on a management system of existing resources. Industrial wood plantations do not exist in Chad and the few small holder plantations that exist are marginally successful. Two small holder plantations are known. One has been abandoned and the other is maintained but shows poor growth rates. Experience in other countries suggests invariably that management systems deliver wood at much lower costs than reforestation. Such valuation is not available for N'Djamena but estimations for the Niamey region in Niger, which has similar conditions as those in N'Djamena, can provide an approximate indicative value. Investment costs for management systems range between $10 - $50 per hectare and $500 - $1000 per hectare for plantations. An evaluation of costs in Niger shows a cost of about CFAF 5-9 per kg to establish and implement a forest management program. Taking this additional resource cost into account, the retail price of wood in N'Djamena would be CFAF 30 per kg or slightly above the current retail price. DEMAND AND SUPPLY OUTLOOK FOR WOOD FUELS 2.37 Overall, the population in Chad is growing at the average annual rate of 2.5 percent annually and is expected to increase to 9.35 million in 2010. The urban population, about 21 percent of the population in 1993, is expected to grow at a higher rate of about 3.5 percent annual. At this rate the urban population will double by the year 2010; if the current trends in household energy consumption do not change, the demand for wood as an energy source will more than double. Wood transformed in 1990 into charcoal only made up 59 percent of the total wood exploitation in the N'Djamena area, whereas this has increased to as much as 77 percent in 1995. 2.38 Given the projected demand trends, wood production on a country-wide basis will still be higher than demand. But for large urban areas these trends indicate possible wood shortages, especially in N'Djamena. By 2010, the population in N'Djamena is expected to be about 1.5 million, triple the current level. Studies in other African countries have indicated rapid growth in charcoal consumption associated with urbanization. Taking this into account, wood SAR - Household Energy Project 23 offtake in the N'Djamena area will increase from 410,000 tons in 1995 to 730,000 tons in 2010. Even in 1995, the corresponding annual wood production will be only slightly higher than the demand, about 535,000 tons. Furthermore, since other activities such as agriculture will also require the use of forested areas, land use tensions could threaten the sustainability of wood supply to meet demand. SECTOR POLICIES AND INSTITUTIONAL FRAMEWORK Supply-Side 2.39 GOC has no concerted household energy strategy to address expected shortages in wood supply. But a general framework for such a strategy exists in the national plan against desertification (PNLCD) which Chad adopted in 1989. There are three parts to the PNLCD. The first is the protection of ecological resources through efforts to realize forest potential, such as improvemnent in crop management, soil protection, rationalization of wood cutting, different types of afforestation, and sensitization of the population for wood use efficiency. The second part is the design of a land-management plan to be implemented on the village level. The third part concerns institutional strengthening, emphasizing the need to set up structures adapted to integrated rural development programs and improving production and pricing systems favorable to resource conservation. 2.40 In Chad, land tenure is complicated and there is ambiguity in current forest legislation and in the fiscal Regime. (Annex 2.2). In 1989, GOC began a project to establish a new forestry code which would provide GOC authorities with greater powers to control the use of forest resources and give specific propriety rights to private parties that regenerate forested areas. The proposed new forestry code is based on three principles. The first is the transfer of responsibility for forest management from the state to the local population. This transfer, based on the orgEnization of rural village markets, would take place within the context of an overall wood management and supply plan for each major city. The second principle is the reorientation of the State's role to monitor wood flows, raise money to implement the aforementioned transfer, and supervise the execution of the overall management plans. The third principle is to professionalize all activities which include woodcutting, charcoaling, transport, etc. through technical assistance to improve the technology and organization of these activities. 2.41 Projects to Enhance Wood Supply. There have hardly been any projects to improve forest exploitation except for a reforestation program for 7,500 hectares (ha) of forest with limited results. In addition, Chad only has limited (albeit positive) experience with improving the efficiency of charcoal production. At the time of the ESMAP survey, there were some ongoing pilot forest-management projects within the context of the ADER project which FED was financing and the FAO project which the Netherlands was funding. These projects showed some promising results but civil war prevented their completion. 2.42 As presented in the Project Evaluation Chapter (Chapter 4), expansion of the road network would facilitate an increase in available wood fuel supplies as supply is presently a function of road length. Though it is questionable at what cost this policy could be pursued, investment in a road network or for improved port/river facilities to exploit fuelwood supplies may not be an efficient allocation of economic resources. With typical construction costs as high as US $1 million per kilometer of roadway, road investment is unlikely to generate 24 SAR - Household Energy Project sufficient economic benefits to justify such a project, particularly in a country with a low population density and undeveloped regional trade and markets. Demand-Side 2.43 Improved Stoves. The penetration of improved stoves in the household sector is at a very early stage in Chad compared to other Sahelian countries: only about 4 percent of households are using an improved stove. This low level of penetration is mainly due to insufficient promotional activities by the related stove enterprises as well as poorly designed improved stove models. There are about thirty informal, artisan enterprises in N'Djamena that produce wood and charcoal stoves, both traditional and improved models. About two thirds are individual enterprise and one third operate as private cooperatives. Most artisans produce improved stoves by special order in the context of specific projects for their distribution. But they produce traditional stoves continuously and most sell them to clients at the workshop while some artisans use traveling sales persons. 2.44 Interfuel Substitution. The use of several fuels by most households in N'Djamena indicates that household energy consumption has begun a transition. This transition in many African countries is characterized by the progressive use of charcoal as the principal household fuel along with the penetration of more modern fuels such as kerosene and liquefied petroleum gas (LPG). The ESMAP survey asked householders about the advantages and disadvantages to the use of the various household fuels, aside from the price considerations. Annex 2.3 summarizes the responses, which indicate that charcoal is by far the preferred fuel at the present time and attempts to encourage the substitution of kerosene or LPG will require education campaigns to address some of the perceived disadvantages. Annex 2.3 also shows that the majority of the wood fuels users are quite satisfied with their present fuel and that half of them has no intention to switch to other fuels. INSTITUTIONAL CONSTRAINTS 2.45 The capacity of MMEP, especially that of the Directorate of Petroleum and New and Renewable Energy (DPENR) is not well adapted to the institutional needs for developing and implementing a household energy strategy. The DPENR has 42 professional positions, mostly electrical engineers. Others have a petroleum background, either in physics or chemistry. Neither their training nor their experience is adequate to implement the different components of the household energy strategy. To ensure the availability of professionals capable of monitoring and evaluating the execution of the household energy strategy, considerable in- country training and some specialized training outside Chad will be necessary. The same holds for staff of the Directorate of Forests and Environmental Protection (DFPE) who will have completely different objectives when village management plans become operational. 2.46 Chad's forestry staff is insufficient in number and in expertise to effectively manage its forest resource base. There are only 283 professional staff allocated among various staff categories, as indicated in Annex 2.2. The staff chiefly responsible for field execution of forestry programs, the technical advisors and their agents, account for only 16 percent of total staff which implies an average of 29,000 km2 of territory to monitor per forestry agent. The forestry aides, contractual surveyors, and various forestry officers often have low levels of technical skills. To develop a competent and motivated staff, GOC needs to establish several types of training programs, local and foreign, for all levels of forestry services. In addition, SAR - Household Energy Project 25 the focus of involvement should change away from control and policing to extension and providing advise. Responsibility for maintaining wood resources should be given to rural villages which is in their interest. 3. THE PROJECT PROJECT OBJECTIVES 3.1 The key objective of the project is to provide an economic and sustainable supply of energy for households. Least cost supply and sustainability are being achieved through a community based participatory approach and environmental awareness. The specific objectives of the project are to: (i) promote the establishment of the sustainable production of woodfuel in selected villages providing energy to the capital, N'Djamena; (ii) strengthen the capacity of the Borrower to extend such production elsewhere; (iii) carry out institutional reforms in the household energy sector; and (iv) improve efficiency in the use of household energy. PROJECT DESIGN 3.2 Four key concepts were used to design the project. Thefirst is the need for simultaneous intervention on the demand and the supply side to avert wood shortages and environmental degradation over the long term. The second is the involvement of the private sector and local communities, a concept which has worked well in other countries, notably Niger. The project will actively pursue a transfer of responsibilities to private actors and local communities and give them an opportunity to increase revenues from their local environmental resources in a sustainable manner. The third is limiting the project to the N'Djamena area because: (a) the capital accounts for the bulk of the commercial consumption of wood fuels in the country; (b) there is a need to test the concepts on a pilot basis and create the necessary institutional capacity before extending the project to other parts of the country; and (c) GOC currently lacks the institutional capability to manage a larger project in the sector. Thefourth key concept is a participatory approach in implementing the proposed project, making extensive use of non-governmental organizations and local consultants to broaden project ownership. The project fully supports the CAS objectives and complies with all applicable Bank policies, guidelines and best practices, in particular with respect to forestry policy, environmental policy and rural energy and development. 3.3 Participatory Approach: Beneficiary consultations took place at several stages of project preparation. The last one involved visits to 50 villages and discussions held with villagers and village leaders. Discussions were also held with charcoalers, transporters, and other people involved in charcoal and firewood commerce. Local NGOs and/or firms assisted in the preparation of parts of the project. Since many of the activities will be implemented by the rural population, the participatory approach is a standard approach in addressing the problems and finding solutions. The Government prepared the Development Action Plan (DAP), which was the starting point for project preparation. SAR - Household Energy Project 27 PROJECT DESCRIPTION 3.4 The projecit has the following four components, which were designed following extensive consultation with stakeholders (communities, NGO's, transporters, etc.) (para. 3.17, para. 3.25): (a) create capacity to develop a village-based natural resource management system; (b) create capacity to monitor and control wood products flows; (c) improve the efficiency of household fuel use; and (d) project management. Component I: Village-Based Natural Resource Management System 3.5 This component will comprise approximately 48 percent of the project's base costs will be executed by a private agency, Agence pour I 'Energie Domestique & I 'Environnement (AEDE). It will establish the capacity to design simple long-term village land-use and wood exploitation plans for villages in the N'Djamena wood fuel catchment area. A master plan will be developed using the individual village plans as building stones. These plans will be developed by NGOs, forestry agents, and villagers, and will be assisted through technical assistance provided under the project. These plans will be based on an assessment of local wood resources using satellite GIS data and ground-truthing and on evaluation of economic activities surrounding the villages. The starting point for such plans will be the traditional management systems that have been in place before the central DFPE started issuing exploitation permits. At the most basic level, the outcome will be to determine the maximum allowable wood cut (or quota) for the resource base of the particular village so that the maximum wood offtake does not exceed natural regeneration. At the most sophisticated level, detailed plans will be available indicating where, how many, and what species of trees to cut over time. Once completed, the plan will be submitted for approval by the DFPE, which will propose a long-term contract between the DFPE (on behalf of the Government) and representatives of the village. On a contract basis, the responsibility for maintaining and managing the natural resources will be transferred to the village. With the responsibility comes the right to refuse cutting by people from outside the village and to charge a management fee on all wood products that are sold from the village's resources.7 Consultants, foresters, and villagers will design these land-use and wood exploitation plans on a village by village basis. Approximately 100 villages will be targeted on a demand driven basis. Lessons learnt from the Niger experience show that villagers are quickly convinced about the merits of such management systems, if not just because they are given usufruct rights to the products of the land. Improvements in terms of biodiversity were observed even within the limited period of the project. Particularly, grasses (used for fodder) came back and so did small animals. 28 SAR - Household Energy Project 3.6 Wood fuel Master Plan. The combined individual management systems will form the basis for a comprehensive wood fuel master plan for the N'Djamena region. In this regard, DFPE and the project team will: (a) formulate and adopt the necessary regulatory text for the commercialization and transport of wood products as well as appropriate fiscal policies including the level of wood fuel management fees and their periodic revision; and (b) define procedures for the creation of rural wood markets. Annex 3.1 describes the main stages in the creation of a rural wood fuel market. These rural markets will be set up in villages that have a signed contract with the DFPE. Wood fuel transactions to outsiders will only be allowed at these markets. A management fee, that is meant to be an efficient mechanism to manage environmental damage, will be charged to transporters of wood and charcoal in addition to the cost of wood exploitation and transformation into wood fuel (firewood or charcoal). Its level will be zero when the wood is purchased at a rural market but CFAF 300 elsewhere. The user fee will be levied at source (in the village) and at the city entrance where five fixed control posts will be established and manned by IF5 (para. 3.20). In addition, mobile teams will try to catch transporters averting fixed control posts. This reflects the long-range marginal costs of maintaining the control system. The monitoring system is designed to become self-financing before the end of project implementation. The project team will also: (a) improve the system for monitoring the flows of wood used for energy purposes entering into N'Djamena; and (b) establish an effective monitoring system for rural markets to develop common standards and encourage adherence to official guidelines. 3.7 Natural resource user fee. Enforcement of existing property rights will facilitate sound management of woodlands. The development of a management system is necessary to enforce the rights of rural communities. To develop a successful management system, users of forestry resources must recognize the economic cost of those resources and make sure that viable and easily enforceable measures are in place. Due to limited personnel and financial resources, rural communities and authorities will not be able to easily monitor cutting activities. Establishing a control zone in urban areas to monitor incoming fuelwood and charcoal resources will alleviate the need to monitor and enforce harvesting in the entire N'Djamena catchment area. This will reduce the cost of the management system. 3.8 The introduction of a natural resource user fee, levied at the community level, will facilitate successful adoption of this system. Furthermore, villagers will be able to better value wood fuel resources, specifically those cut illegally. While they have some control over the price for wood and charcoal, the true economic cost of replacement will not be reflected. User fees collected by communities would represent a portion of the economic value of harvested trees. Rural communities will decide the form in which the benefit of their woodlands will accrue to them. This will either be through personal/communal consumption or in the form of the natural resource user fees, e.g. monetary compensation. In addition, part of the proceeds will go to higher local government structures such as the Sultan of Canton, thereby encouraging their participation and support. 3.9 Types of Supply Zones. Under the master plan, three types of wood fuel production zones will be distinguished: "red" where commercial wood fuel production is not allowed (i.e., designated Parks, fragile areas, and where the resource base is too small to allow commercial exploitation); "yellow" where wood fuel production could take place but is not managed; and "green" where villagers are fully responsible for managing forest resources. At the beginning of the project, there will be only yellow and red zones and towards the end of the project, most yellow zones will have been transformed into green. Annex 3.1 provides SAR - Household Energy Project 29 information about the process of creating such management systems. Several conditions should exist before responsibility is transferred to a village: (a) land boundaries should be established and agreed with neighboring villages and forested areas should have been surveyed; (b) a simple land-use and wood exploitation plan for the local resource base should be prepared by an NGO or private firm in collaboration with villagers; (c) the plan should be approved by the DFPE, and (d) the village should have formed its own management structure, signed a long-term contract for the implementation of the plan, and established a rural market. 8 3.10 Taxation System. As part of the rationalization of the wood energy sector, the Government has decided to change the existing tax structure on wood fuels. Tax will now be levied at source and paid by transporters, replacing all existing cutting permits and wood fuel taxes. This is described in a forestry law, No. 36/PR194, dated December 3, 1994, and implemented through a decree (#107/MTE/DG/97) dated 3/14/97. This tax structure is critical to project success. If it is properly implemented, it will be an effective management tool to provide incentives to most stakeholders to use scarce resources more efficiently. The user fee is primarily to facilitate natural resource management, reflecting cost of control and management of the resources. Assurances have been obtained before negotiations that the level, recovery, and allocation of the tax (user fees) will be acceptable to IDA at all times during project implementation. Additional revenues are secondary; although they could turn out to be substantial. 3.11 Initially, the level of the user fee in green zones will not change from earlier; it will remain at the previous level of CFAF 300 per stere of wood. For charcoal, the level will increase from C]FAF 100 to CFAF 300 per bag to reflect the actual wood content of the charcoal (one needs approximately one stere per 40 kg bag). This level is justified as the economic analysis shows that a user fee of about CFAF 330 per stere should be levied in respect to the resources that are being depleted (para. 4.17). Under the new tax system, differential levels are introduced as there are different management and control costs involved in the green or yellow zones. Environmental damage is prone to occur more in yellow than in green zones, thus justifying lower fees in green zones and higher fees in yellow zones. Fee levels for wood fuels from yellow zones will initially be as follows: CFAF 600 per 40 kg-bag of charcoal and CFAF 600 per stere of wood. After a six month period, DFPE and DIT will evaluate these levels and determine whether changes are required. For the different types of trucks that transport wood fuels, the loading capacity will be estimated and corresponding tax levels will be determined. In green zones, fees will be collected at source; supply from yellow zones will be charged at city entrance (para. 3.20). 3.12 Since there will be more green zones over time, the effective user fee will gradually reduce. A village that creates a rural market and develops plans to manage its wood resources properly will start charging the lower fee. By allowing "green zone" villages to keep part of the fees and by tlhe employment created in rural areas, powerful incentives are provided to manage effectively local resources in a sustainable manner. The fees will be paid by transporters, who will transfer the charge to the end users. The latter are thus given better market signals about the scarcity of the resource which facilitates fuel substitution and 8 A rural market is a central place in the village where wood products are sold; transactions in other locations will no longer be allowed. 30 SAR - Household Energy Project conservation of wood fuel consumption. Since wood fuel costs in relation with the household budget is small, it is expected that a 10 percent increase will not cause problems.9 The fees will also create more revenue for the government though this is not the primary objective. However, it should allow the government to fund an extension of the program resulting in additional green zone villages, to establish rural nurseries, etc., and reimburse the costs of the project. 3.13 The level of the user fees will be evaluated at least once a year by DFPE and DIT, and adjusted if warranted, in particular, for economic reasons. DFPE or DIT will collect payments from villagers which will be transferred to the Treasury on a regular basis (paras. 3.14 - 3.16). Wood fuel trade will take place at rural markets which are established to make monitoring easier and more transparent. Upon payment of the user fee, a receipt is issued by a designated village representative. The receipt has three parts: one for the transporter, one for DFPE/DIT (for record keeping) and one which will be handed over to personnel of the IF control point (Inspection Forestiere) at the entrance of N'Djamena. Without a receipt, IF personnel will charge fees as if the wood came from a yellow zone. The system of receipts will allow double checking and tracking of the origin of the wood fuel flows as the receipts make mention of the village of origin. The Treasury portion of the tax revenue will be deposited in a designated bank account. 3.14 In green zones, transporters can only buy wood from local managers of the rural market. They negotiate a price for the wood and pay the relatively low wood fuel user fee. They are no longer allowed to make charcoal or cut wood themselves in green zones unless they are contracted by the village. Wood fuel prices will entirely be determined between villagers and transporters. No-one will be exempted from paying these user fees. At the city gates there will be checkpoints to verify that payments have been made and to register where the wood fuel originated. Since the villagers are allowed to keep most of the fees, they are likely to be very effective in its collection. The proceeds of the fees will be distributed as follows: 10 percent for Treasury, 50 percent for the village (part for replanting, maintenance and forestry management operations), and 40 percent for the local management structures (at the Canton and Arrondissement level, administered by the Sultan). An information campaign will inform villagers on the importance of local resource management and will suggest reinvesting the village budget portion back into the village (such as for building a school, a tree nursery, water pump, etc.). 3.15 For wood harvested from yellow zones, transporters will no longer need to buy a cutting permit since this has not worked well before, but instead will need to pay the wood fuel tax when entering the city (at the IF control point). The level of the payment is higher than in green zones giving an incentive to transporters to go to green villages. The tax revenue will be deposited in a designated bank account. Transporters will receive a receipt and the IF control point will keep a copy. 3.16 In red zones no commercial wood exploitation is allowed. Red zones are classified as forests, reserves, and parks. Zones that are severely degraded can be classified red as well. 9 This increase can easily be offset by improved stoves, which should reduce consumption by about 20% (para. 2. 10). SAR - Household Energy Project 31 The Government: needs to concentrate its efforts to protect red zones through the forestry police. 3.17 It will take some time and effort before transporters know the system and comply. In order to reach that point as quickly as possible, meetings will be organized to discuss the problems and find solutions. Rural wood and charcoal markets will be established in villages in green zones oni a demand driven basis. Every village with an approved management plan should have a rural market. Areas closest to N'Djamena along the main roads should be converted into green zones first. As this cannot be done overnight, a transition period will exist for a limited time. An effort should be made to create as many green zones as quickly as possible starting with the main production areas where wood cutting is currently concentrated. Although it will require a substantial effort in sensitization and communications with villagers, the rural consultations in about 50 villages showed that villagers are quite keen on taking on those responsibilities if the Government helps them enforcing the new rules. The control and monitoring systems are precisely developed to achieve that. 3.18 Techniques for planting, maintaining small nurseries, etc. will be demonstrated as well as better wood cutting techniques that promote spontaneous regeneration. Efficient charcoal conversion techniques will be promoted in green zones where charcoal is produced on a regular basis. This will be done by training on the spot, i.e. by a charcoaler trainer who will assist occasional charcoalers to become more professional. Improved techniques will be demonstrated for which the only investment required is training and a chimney made of used oil drums. It is certain that some time will be needed to make this understood by all actors in the field. A substantial effort to increase awareness is clearly needed. As an example, the military is currently accustomed to obtaining a free permit and harvesting the wood in villages which have no say in the matter. Once the new system is in place, there are three options: (a) business as usual, which will have to take place in yellow zones only (but the user fee will need to be paid when entering N'Djamena), (b) buying the wood at a rural market in green zones (and paying a lower user fee), or (c) starting to use alternative fuels such as kerosene. Component II: Monitoring and Control of Wood Products Flows 3.19 Accounting for about 20 percent of project base costs, the inflow of wood products from rural production zones into N'Djamena will be monitored by AEDE. User fees/taxes will be collected by IF, and payment compliance will be verified by AEDE, which will also compile statistical data. The user fee will be used as an environmental policy instrument, working on three different levels: (a) providing an incentive to villages to manage their resources as well as possible; (b) guiding transporters towards areas of least-cost wood locations (green: minimal fee but have to buy the wood; yellow, intermediary fee but wood is free; and red prohibited); and (c) giving incentives for end-users to use improved stoves and wood products more rationally as prices increase. A mechanism will be designed to adjust the fees/taxes to reflect varying economic costs over time and possibly by location. 3.20 Effective control at the city gate will be important. A detailed study has been carried out to confirm its feasibility. Fixed control points will be established at the five main entry axes into N'Djamena and will be permanently manned; some of these are already operational. These five posts will replace the existing posts throughout the N'Djamena catchment area. In addition, three mobile teams (two teams using cars and motorcycles and one team using boats) will be created to fill in any gaps. Control beyond the city will be impossible due to the 32 SAR - Household Energy Project vastness and accessibility of the land. In the way the project is designed, there is relatively tight control at entrance (in the villages where wood resources are managed) and at the point of consumption (in town). A system of triple receipts will allow verification of data. Also, it will provide data to monitor wood flows which will be used to fine-tune the wood supply master plan. The private agency will be fully auto-financed from proceeds of the user fee/tax expected at the end of the project; although this may happen as early as by the second year of the project. 3.21 AEDE will collect the user fee/tax proceeds, once a week from rural markets and every other day from fixed control points. It will deposit the money into the appropriate accounts (villages and Treasury). AEDE is allowed to keep 50 percent of the proceeds assigned to the Treasury to finance its operations. Component III: Improving the Efficiency of Household Fuel Use 3.22 On the demand side, accounting for about 19 percent of total project base costs, the two subcomponents will also be executed by AEDE: (a) the commercialization of efficient cooking stoves (firewood, charcoal); (b) the promotion of the use of low-cost kerosene and LPG stoves. Suitable improved stove models will be identified and tested. Stove producers will produce prototype stoves and receive feedback from the tests to improve the models. The objective of this subcomponent is not to promote the use of charcoal stoves and encourage households to switch from firewood to charcoal but to have households use less fuel and derive greater benefits. There will be a publicity and awareness campaign to start the development of the market for the models developed under the project. NGOs will be involved in the implementation of this subcomponent for testing, product development, monitoring of stove performance, and for promotional activities. If such capacity does not exist, training will be provided under the project. A similar approach will be followed with the kerosene and LPG stove subcomponent. However, stoves (or most components) will need to be imported rather than manufactured locally. 3.23 A market study was carried out to determine the prospects for introducing better stoves. About half of the population of N'Djamena is presently not satisfied with their cooking fuel. Based on surveys, it was estimated that of the 116,000 households, 15% would ultimately refuse any change, 28% could adopt an improved stove, 45% could start using kerosene, and 17% could start using LPG. Households that decide to use substitution fuels will continue to use charcoal for some time. Although these numbers indicate what can be reached, the following conservative targets will be set as project objective: to commercialize (entirely by the private sector) some 17,000 improved woodstoves, 11,000 improved charcoal stoves, 8,000 kerosene stoves, and 4,000 LPG stoves. Component IV. Project Management 3.24 Approximately 12 percent of project base costs are allocated for project management. Successful implementation will require setting up a database to monitor performance and developments in household energy markets over time, and also reach considerable effort in capacity building. An essential part of the project will be capacity building and sensibilization through training, technical assistance and education/information and promotional actions for both public and private actors with systematic stakeholder consultation. An allocation for SAR - Household Energy Project 33 studies will allow the preparation of the next phase (in the South and East of the country, around secondary cities) and help villages with a management plan to further improve their performance on a demand driven basis. Civil works will be needed for the structural improvement of AEDE's main office and satellite offices around the N'Djamena area. SECTOR REFORM AS PART OF PROJECT PREPARATION 3.25 Based on the DAP, the Government initiated the process to change the law dealing with wood fuel issues. Systematic client consultations were organized at several points in time, the last one was in early 1996, when approximately 50 villages in the project area were contacted. Key policy changes have already been realized in this process. Law 36/PR194 (portant organ isation de la commercialisation et du transport de bois dans les grandes agglomerations et de laflscalite qui lui est applicable), dated December 3, 1994, specifically states, inter alia: (a) Ownership of forests: concessions of public forests to rural communities or rural villages and state owned enterprises are allowed; the transfer of full property rights to rural communities or rural villages is allowed for domanial forests that have been regenerated or saved from disappearance; and individuals or entities who planted trees or forests on their own terrain will enjoy full ownership without restrictions. (b) Transport of wood products: only commercial transporters are allowed to transport wood products to towns; these transporters must have a license. (c) Rural wood markets: wood markets can be established in rural villages where prices of wood products are to be freely determined by the sellers; local, rural wood cutter organizations are the sole to exploit wood for supply to the rural markets; for exploitation of privately owned forests, an authorization can be obtalined from the local DFPE representatives; and wood exploitation should not exceed annual regeneration capacity of the resources that supply to the rural wood market; quota will be established. (d) "Taxes": which correspond mostly to a user fee levied on the transport of wood is called "taxeforestiere" and is paid by the transporter to a designated person at the rural market according to the nature of the product and the category of production zone; the user fee/tax structure will be periodically reassessed, based on inflation, price of substitution fuels, etc.; the law also refers to the control system to be established, penalties in case of fraud, and remuneration for control agents. 3.26 This non-exhaustive list of issues that are addressed in the law (there are 50 articles in total) clearly demonstrates the Government's intentions to improve the wood fuel situation. PROJECT COSTS 3.27 The total estimaRted cost of the proposed project is US$ 6.3 million including physical and price contingencies. Approximately 50 percent correspond to foreign exchange expenditures. A summary of project costs by components is provided in Table 3.1. These estimates include price escalation from World Bank estimates of local and intemational inflation for the four years of the 34 SAR -Household Energy Project implementation period (FY1999-FY2002). Detailed costs are given in Annex 3.3. Table 3.1: Summary of Project Costs (US$ 000) 1999 2000 2001 2002 Total A. Establish Village-Based Natural Resource Management System 1. Create National Capacity to Design Firewood/Charcoal Exploitation Plans 399.3 255.2 107.8 3.3 765.6 2. Create Rural Firewood/Charcoal Markets 273.4 409.2 337.2 213.4 1,233.1 3. Monitor Perfonnance of Rural Markets 56.1 165.6 226.6 177.1 625.4 Subtotal Establish Village-Based Natural Resource Management System 728.8 830.0 671.6 393.8 2,624.1 B. Monitor/Control of Wood Products Flows 397.7 326.2 263.5 132.6 1,119.8 C. Improve Efficiency of Household Fuel Use 1. Facilitate the Commercialization of Charcoal and Firewood Stoves 198.0 192.5 143.0 66.0 599.5 2. Introduce Use of Kerosene/LPG stoves 145.8 151.3 107.3 57.8 462.0 Subtotal Improve Efficiency of Household Fuel 343.8 343.8 250.3 123.8 1,061.5 Use D. Project Management 323.3 68.2 129.8 139.7 661.0 Total BASELINE COSTS 1,793.5 1,568.1 1,315.1 789.8 5,466.4 Physical Contingencies 155.7 154.6 129.7 77.2 517.3 Price Contingencies 27.7 83.1 114.8 97.8 323.4 Total PROJECT COSTS 1,976.8 1,805.8 1,559.6 964.8 6,307.0 Taxes 237.4 242.4 219.3 144.7 843.8 Foreign Exchange 1,152.1 915.6 774.4 326.7 3,168.7 See Annex 3.3 for detailed cost tables. FINANCING PLAN 3.28 IDA will finance about 84 percent (US$ 5.27 million) of total project cost and GOC will supply the remaining 16 percent (US$ 1.03 million). GOC will cover the: (a) salaries of management staff of DPENR and DFPE involved in the proposed project, and (b) costs of AEDE to a maximum of 50 percent in the second year of the project, 25 percent in the third year and none in the last year'0. This includes the costs of monitoring the entrance of wood energy to N'Djamena and administrative monitoring of rural markets. The governments share will also cover certain functional charges related to the project such as electricity, water, and telecommunication for its offices. Part of the proceeds of the user fee/tax will be used to finance some of the expenses incurred by AEDE. GOC will be responsible for covering all taxes, levies, and duties paid under the project (Table 3.2). 3.29 IDA will be financing 100 percent of foreign costs and a large portion of local costs (70 %). Chad is one of the poorest countries in the world (GDP $180 per capita) and needs foreign aid to facilitate development. Since other donors are yet to provide aid especially in the household energy sector, Chad is entirely dependent on IDA. 10 It is expected that user fee proceeds will cover at least the costs of AEDE minus the indicated govermnent contribution. SAR - Household Energy Project 35 3.30 The Caisse Francaise de Developpement (CFD) and the European Union (EU) have indicated interest in financing follow-up projects of the same nature in other cities which could address the supply problems of wood fuels. Table 3.2: Financing Plan (US$ 000) Local Foreign Total % of Total IDA 2108.6 3168.7 5277.3 83.7 Giovernment 1029.7 - 1029.7 16.3 TOTAL 3138.3 3168.7 6307.0 100.0 PROJECT IMPLEMENTATION The Implementing Agency (AEDE) 3.31 The project will be implemented by AEDE (Agence pour I 'Energie Domestique & I 'Environnement), an agency created in 1996 specifically for this project. The statutes of AEDE will be modified as a condition of Credit effectiveness to realign responsibilities of the organs of AEDE in a manner satisfactory to the Association. AEDE is authorized to operate as a non profit autonomous entity under the authorization from MAT (Ministere de l 'Administration Territoriale) dated April 23, 1996 comprising of representatives of the CDS, NGOs, and the private sector (Annex 3.2). The Government has also issued a Decree granting AEDE the status of a Public Interest association (Declaration d'Utilite Publique). To help in the implementation of the project, a detailed Project Implementation Manual ("Manuel d'Execution") has been prepared that sets out the objectives and institutional arrangements. The Manuel is in project files and is outlined in Annex 3.8. Agreement was reached during negotiations that the Project Implementation Manual be acceptable to IDA at all times during project implementation and any modifications to the Implementation Manual ("Manuel d'Execution") be subject to IDA's approval. The project will be implemented over a 4 year period, with all project components implemented concurrently (Annex 3.4). The CDS (Comite de suivi) will monitor project implementation. It will implement the proposed project under a project agreement with IDA and a convention signed by the minister responsible for MFEPA on behalf of the Republic of Chad. AEDE should be self-financing at the end of the 4-year project from proceeds of the user fees. AEDE also will function as a focal point for household energy and environmental issues in Chad, and facilitate coordination between different stakeholders in this sector. MMEPH and MET will be co-beneficiaries of the proposed project with non-governmental institutions playing an important role in project implementation. 3.32 A General Manager was selected in August 1997. Assurances were obtained during negotiations that AEDE General Manager, the Administration and Financial Director (Directeur Administratif et Financier) and the two persons respectively in charge within AEDE of rural markets and of the user-fee system, will be appointed in accordance with procedures specified under IDA consultants guidelines and will be acceptable to IDA at all 36 SAR - Household Energy Project times during project implementation. The appointment of AEDE's Administration and Financial Director and of the persons respectively in charge of rural markets and of monitoring the tax system will be a condition of credit effectiveness. 3.33 As a condition of effectiveness, the Government will provide a signed copy of the convention between AEDE and the Republic of Chad. 3.34 With respect to the resource management component, AEDE, among other activities, will: a) prepare and approve N'Djamena's master plan including resource mapping, delimitation of wood-production production areas, supply and demand strategies, socio- economic surveys; b) provide information to the rural areas about the new regulatory framework with respect to forestry resource management, user fees and particularly the role of rural markets; c) select individuals and firms including NGOs that will establish wood fuels and charcoal markets in rural areas; (d) facilitate coordination between MMEP and MEE and the Ministry in charge of Finance (MFEPA) about fiscal aspects; e) set up a system to follow up payments of user fees; and f) develop new charcoaling techniques with local charcoalers. For the demand side management component, AEDE will: a) set up a data collection and a evaluation system to monitor use of improved and traditional cookstoves; b) assess alternative cookstoves and marketing mechanisms; c) design pilot operations for the import, production and sales of efficient cookstoves by local private professionals; and d) design promotion/information campaigns. 3.35 AEDE will act as the maitre d'ouvrage delegue and be responsible for: (a) the procurement and management of contracts for materials and services; and (b) verification of user fee collection on wood for energy use and the management of some of the funds collected. It may decide to subcontract part of the work out to NGOs, particularly the monitoring and control function of wood flows. The technical assistance necessary to establish the Project will be supplied by firms and entities selected in accordance with para 3.50 below, within the framework of an overall contract with AEDE. The selection of the candidates will take place according to Bank's Guidelines. The technical assistance will also provide methodological support to DPENR, DFPE and AEDE, and the training necessary for management positions at the national level. This will also be applied to local operators who will implement subcontracts. Studies will be conducted as needed to assist rural villages in achieving further energy efficiency gains and to prepare for an extension of the project to the southern and eastern regions of the country. The studies will be coordinated by DPENR and DFPE. Comite de Suivi (CDS) 3.36 The ad-hoc CDS (Comite de suivi) that was created as a special task force to prepare the Detailed Action Plan (DAP) (para 1.1 1), has been formalized by a decree of the Council of Ministers dated October 10, 1996. The CDS will be responsible for general project supervision, if needed adjustments in the project implementation strategy and for the identification of the necessary regulatory and fiscal measures. It has five permanent members: the Director of DPENR (chairman) of MMEP, the Director of DFPE of MEE, the Director of DIT of MFI, the Director of External Aid and Planning and the Director of Regulations from the Government's General Secretary. DPENR will ensure CDS's secretariat. The CDS will meet at least once a year; additional meetings may be required for the SAR - Household Energy Project 37 preparation of regulatory framework, the revision of taxation on wood used for energy, and the definition of administrative procedures for the creation of rural wood markets. 3.37 In their respective technical areas, the MMEP and the MEE will supervise and monitor the four project components implemented by AEDE. Two persons from MMEP will participate in monitoring activities regarding improved cookstoves, substitution stoves, improved charcoal making techniques, facilitate the Project's effective functioning, and create and maintain a database on household energy. Four persons from MEE will participate in the design, development, fine-tuning, and tax-collection. Two personnel from the Ministry of Mines, Energy and Petroleum (MMEP) and four personnel from the Ministry of Environment and water (MEE) have been assigned to work closely with AEDE in monitoring and coordinating the ministry's involvement in project matters. MEE will monitor the components related to the development of a village-based natural resource management system and the control of wood products flows; MMEP will monitor the component related to improving the efficiency of household fuel use. Institutional support will be provided by the project to DPENR and DFPE through a system of evaluation and training of its agents. Both ministries will be responsible in establishing the regulatory and fiscal framework to support the creation of rural wood energy markets. AEDE: Operating Procedures 3.38 The proposed Project will take place over a period of four years and by then should become self-financing. A provisional schedule for the execution of principal activities during the first four years is attached as Annex 3.4. The performance indicators are provided in Annex 3.6. 3.39 AEDE will issue contracts to consultants and NGOs, will be responsible for procurement of equipment (see Annex 3.2) and will work with NGOs which will provide most of the technical assistance after being trained under the project. Agreement has been reached prior to negotiations that AEDE will use standard IDA Procurement procedures and documentation. If technical assistance does not exist locally, it will be of short-term, decreasing over time and preferably of regional origin (e.g. Nigerien or Burkinabe consultants). Based on the experience of the World Bank Niger Household Energy Project and in Mali, it is important that one long-term TA be recruited for two and a half to three years to assist in the launching and realization of the village wood management plans and their compilation into an overall wood fuel master plan. 3.40 Proceeds from user fees/taxes collected at the IF control points around the city entrances as well as from rural markets will be deposited into designated bank accounts. DIT agents will regularly visit collection points to verify compliance with procedures. AEDE can keep 50 percent of the tax proceeds that it collects on behalf of Treasury to finance its operations. Revenues for Treasury are estimated to exceed $400,000 in year two and will gradually increase to a level of about $800,000 per year after twenty years. The share to Treasury will gradually decrease as the majority of wood producing areas are converted into green zones. At that point in time, the need to levy the tax should be evaluated. In principle, there should not be a need for a tax if all wood fuels come from managed zones. An initial deposit will also be made to the Special Account (para. 3.48) to cover initial operating costs of AEDE. 38 SAR - Household Energy Project Project Monitoring and Review 3.41 Project Monitoring and Quality Assurance: During project preparation, the Government, AEDE and IDA discussed and agreed on quality assurance arrangements and on the records and reports necessary to monitor the progress of the project, particularly, the achievement of its objectives. In addition to the monitoring and supervision carried out by the Comite de Suivi (paras. 3.36 - 3.37), by AEDE's Board (paras. 3.31 - 3.35) and as described in AEDE's operating procedures (paras. 3.38-3.39), during the lifetime of the project there will be a minimum of two supervision missions per year (para. 3.60) to monitor performance indicators (described in Annex 3.6) and the compliance with the Implementation Manual (Annex 3.8). The Government, AEDE and IDA agreed that as part of normal project supervision there would be a mid-term review at the end of CY 2000, with the participation of all stakeholders (para. 3.45). In addition, very close monitoring of project implementation will be carried out by the Resident Mission. 3.42 Monitoring and Evaluation: Agreement has been reached during negotiations that AEDE will establish and maintain a project internal accounting and financial system consistent with the implementation manual, in accordance with sound accounting principles and practices satisfactory to IDA at all times during project implementation. Setting up of AEDE's internal accounting and financial system acceptable to IDA will be a condition of credit effectiveness. Interim and annual financial statements will duly reflect the financial performance and position of the project. A final audit will be submitted to IDA within six months of the Credit Closing Date. 3.43 Progress status reports will be submitted to by AEDE to CDS and IDA every three months, which will include the financial overview, main substantive results, work program, and budget status. These reports should be submitted within one month of the end of the period concerned. These reports will also contain the following procurement information: revised cost estimates of contracts, including best estimates for physical and price contingencies; revised timing of procurement actions, including advertising, bidding, contract award, and completion time for indicated projects; and compliance with aggregated limits on procurement methods. Assurances have been obtained that DPENR and DFPE will prepare semi-annual progress reports every year and issue a final report (Implementation Completion Report) within six months of the Credit Closing Date. 3.44Annual Reviews: The Project will be implemented over a four-year period. The annual reviews will ascertain the efficiency of AEDE's procedures and management using the performance indicators described in annex 3.6 and will recommend appropriate changes. 3.45 Mid-Term Review: Agreement has been reached during negotiations that a mid- term review will be carried out two years after project effectiveness. Annex 3.6 provides a series of performance indicators that will be used to monitor progress in meeting the project's objectives, overall project performance against performance indicators, project costs, and compliance with legal covenants. The review will be another opportunity to evaluate, and, if needed, to modify some major features of the project. Finally the review will create an opportunity to; (a) thoroughly discuss issues with stakeholders and also to (b) evaluate the need for including new activities in the project scope in order to better meet the project objectives. SAR - Household Energy Project 39 Project Sustainability 3.46 Project Sustainability: One of the objectives of the project is to obtain a durable solution for the wood fuel supply to the capital city of N'Djamena. Income levels need to be risen sufficiently so that urban households can afford to switch from wood fuels to modem cooking fuels such as kerosene and LPG. The project will ensure that until such level is reached, the wood fuel supply and demand balance is positive. Thus improved wood fuel management is an essential component in achieving sustainability by meeting the growing energy needs of urban populations, maintaining their standard of living and protecting the long-term reproductive capacity of woodlands while ensuring that rural communities livelihoods are secure as well. In addition, the project supports the setting-up of AEDE, an autonomous agency, that will become self-financing at the end of the 4 year project from the proceeds of its activities. 40 SAR - Household Energy Project DISBURSEMENTS 3.47 The project will be implemented over a four-year period. Annex 3.4 presents the project's implementation schedule. Table 3.3 below sets forth the categories of items which the IDA credit will finance, the allocation of credit amounts, and the percentage of expenditures for items to be financed in each category. The IDA credit will finance 100 percent of foreign exchange expenditures and up to 90 percent of local expenditures for training, goods and civil works. Consulting services, expatriate and local, will be disbursed against 100 percent of expenditures, excluding taxes. Table 3.3: Disbursement Table (US$ 000) Description Percentage Financed Total Goods 100% of foreign expenditures and 90% of local expenditures 1492.3 Civil works 100% of foreign expenditures and 90% of local expenditures 104.6 Consulting services 100% of expenditures 2672.6 Operating costs 90% during the first project year, 80% during the second, 70% during 797.8 the third and 60% thereafter Refnancing PPF amounts due 210.0 Total 5277.3 3.48 To expedite disbursements, a Special Account in FCFA francs will be opened in a local commercial bank acceptable to IDA. AEDE will manage this Special Account. The authorized allocation will cover approximately 4 months of expenditures, or the equivalent of US$ 500,000. Upon effectiveness, 50% of the authorized allocation will be deposited into the Special Account. The remaining balance will be made available as needed. All replenishment applications will be fully documented, except in the case of expenditures of less than $100,000 for goods and for works, $50,000 for individual consultants, and $100,000 for consultant firms, which may be claimed on the basis of Statement of Expenditures (SOEs). All documents will be kept for review by IDA supervision missions and the external auditors. 3.49 Table 3.4 gives the disbursement schedule for the proposed IDA credit. The project is expected to be completed by December 31, 2002, and the closing date for the credit would be June 30, 2003. Table 3.4: Disbursement Schedule (US$ 000) IDA Fiscal Year FY99 FY00 FY01 FY02 Annual 1,688.7 1,504.0 1,292.9 791.7 Cumulative 1,688.7 3,192.7 4,485.6 5,277.3 SAR - Household Energy Project 41 PROCUREMENT 3.50 Table 3.5 summarizes the project elements, their estimated costs and the proposed method of procurernent. No special exemptions, permits, or licenses need to be specified in credit documents for international competitive bidding as Chad's procurement practices allow IDA to take precedence over any contrary provisions in local regulations. Agreement has been reached, that AEDE will procure goods and works in accordance with the procedures set-forth in the Guidelines for Procurement under IDRD loans and IDA credits (January 1995, revised in January and August 1996 and September 1997) and consulting services in accordance with Guidelines for the Selection and Employment of Consultants by World Bank Borrowers (January 1997, revised in September 1997). Table 3.5: Summary of Procurement Arrangements (US$ 000) Project Element Procurement Method Total ICB NCB Other Costs Civil Works 123.1 123.1 (104.6) (104.6) Goods (a) office, lab, and promotional equipment, 539.0 202.1 101.1 842.2 furniture and supplies (458.1) (171.8) (85.9) (715.8) (b) vehicles, motorcycles, boats 803.8 109.6 913.4 (683.3) (93.2) (776.5) Services Consultancies, studies, technical assistance, 3060.9 3060.9 and training (2672.6) (2672.6) Miscellaneous (a) refunding PPF 210.0 210.0 (210.0) (210.0) (b) operating costs 1157.4a1 1157.4 (797.8) (797.8) Total 1342.8 434.8 4529.4 6307.0 (1141.4) (369.6) (3766.3) (5277.3) Notes: Figures in parenthesis are the respective amounts financed by IDA; discrepancies are due to rounding of numbers. ICB: Intemational Competitive Bidding; NCB: National Competitive Bidding. a/ incremental operating expenses including Bank charges on the Special Account, office supplies, office space, utilities, communications and the cost of operating vehicles. 42 SAR - Household Energy Project 3.51 Civil Works. Contracts for the rehabilitation and the improvement of the control points at the city gate which will cost approximately $123,100 would be procured through NCB procedures which are acceptable to IDA. The following procedures would be followed: (a) tenders would be advertised locally; (b) bidders would be given a minimum of 30 days for submitting bids; (c) evaluation criteria would be specified in precise quantitative/monetary terms; (d) all bids would be opened in public, with bidders representatives permitted to attend; (e) interested eligible foreign contractors would be allowed to participate in the bidding; and (f) contract will be awarded to the lowest evaluated responsive bidder. 3.52 Goods financed by IDA (totaling about US$ 1.4 million), consisting of equipment, furniture, office supplies, laboratory, vehicles, motorcycles, and boats, would be purchased through ICB in accordance with Bank's guidelines for Procurement under IBRD Loans and IDA Credits published in January 1995 and revised in January and August 1996 and September 1997. Contracts would as far as possible be packaged for amounts of at least $100,000 equivalent. Contracts for office equipment, supplies, furniture, and some vehicles and motorcycles available locally for an aggregate amount not to exceed US$300,000, which cost more than US$30,000 equivalent but less than US$100,000 equivalent per contract would be procured through NCB procedures acceptable to IDA. Small quantities of office equipment, supplies, furniture and consumable materials, which are normally available off the shelf at economical prices and cannot be grouped into packages of less than US$30,000 equivalent per contract, would be procured through international and national shopping, based on quotations obtained from at least three reliable suppliers, provided that the aggregate does not exceed US $100,000. 3.53 Consulting Services, Training, and Special Studies financed by IDA would be for: (i) supervision and monitoring, (ii) specialized studies, and (iii) training and development. Consultants would be hired in accordance with Bank's Guidelines for the selection and employment of Consultants (January 1997 and revised in September 1997). All consultant selection will be carried out through competition among qualified short-listed firms in which the selection will be based on Quality-and-Cost-Based -Selection (QCBS) by evaluating the quality of the proposal before comparing the cost of services to be provided. Financial audits will be carried out using the Least Cost Solution method. Individual consultants for some specialized technical studies ($200,000) where firms would not be required would be selected based on consultant experience and competence for the assignment. 3.54 Prior review thresholds: IDA financed contracts above the threshold of US$100,000 equivalent for works and goods receptively would be subject to IDA's prior review. All other works and goods contracts under this threshold would be subject to post-review. Prior review will apply to contracts for the recruitment of consulting firms and individuals estimated to cost more than $25,000 each. However for contracts with firms costing more than $50,000, the technical evaluation report will also be required for prior review. All other contracts will be subject to post review. 3.55 For the proposed project a number of activities are planned to establish local capacity in the area of project coordination and implementation: (a) project coordination will be with AEDE and personnel has been recruited for that purpose. Past experience in project management and procurement will be taken into consideration in the selection process; (b) a detailed processing schedule for goods and services to be procured under the project would SAR - Household Energy Project 43 contribute in the timely processing of all required actions. During implementation, all bid evaluation reports transmitted to IDA for review would contain an updated copy of the implementation schedule. 3.56 Agreement was confirmed during negotiations on the proper monitoring of procurement, the use of Bank standard bidding documents for ICB and standard procurement documents for NCB, and model letter of invitation and standard form of contracts for consultants. The Government has agreed that it would apply the procurement procedures and arrangements outlined above. ACCOUNTING, FINANCIAL REPORTING, AND AUDITING 3.57 AEDE will establish and maintain project accounting according to sound accounting principles and practices satisfactory to IDA. Interim and annual financial statements will duly reflect the financial performance and status of the project. These statements will include the Special Account and SOEs. Appointment of independent auditors acceptable to the Association for a period of four years will be a condition of effectiveness. Agreement has also been reached during negotiations that the annual financial audits and the final audit will be performed by external independent auditors satisfactory to IDA, both for the Special Account and for the Project accounts. The independent final audit will be submitted to IDA within six months of the Credit Closing Date. 3.58 The report provided to the Government and IDA by AEDE at the end of each calendar quarter and no later than one month after the end of the quarter regarding progress will include a financial overview, main substantive results, work program, and indicative budget. This report will also contain the following procurement information: revised cost estimates of contracts, including best estimates for physical and price contingencies; revised timing of procurement actions, including advertising, bidding, contract award, and completion time for indicated projects; and compliance with aggregated limits on procurement methods. DPENR and DFPE will issue a final report within six months of the Credit Closing Date. ENVIRONMENTAL ASPECTS (CATEGORY C) 3.59 The proposed project will considerably reduce soil degradation, bush fires and deforestation, through better management of the natural forest cover. The introduction of more efficient charcoal-making techniques will reduce the amount of wood required as feedstock for this increasingly popular fuel and the increased use of wood originating from forest under sustained management. Because of reduced deforestation and the use of more efficient stoves, the project will also help reduce carbon dioxide emissions which are harmful to the global enviromnent and to the health of the women. The total reduction of C02 emissions over a 20 year period is expected to exceed I million tons. PROJECT MONITORING AND SUPERVISION 3.60 The semi-arnual progress reports prepared by DPENR and DFPE will include an overview of achievements, a proposed work plan, and a leaflet with price and flow trends for household fuels, including an indication of number of rural markets established, number of improved stoves sold, and tax compliance. There will be two supervision missions per year. A mid-term review will need to be carried out two years into the project, or mid-2001. Annex 44 SAR - Household Energy Project 3.6 provides a series of performance indicators that will be used to monitor progress, project costs, and compliance with legal covenants. More details are provided in the Implementation Manual. 46 SAR - Household Energy Project 4. PROJECT EVALUATION INTRODUCTION 4.1 The project supports economic development in line with IDA's country assistance strategy, is technically, socially, financially and economically sound and promotes environmentally sustainable rural development. The overall project economic rate of return (ERR) is 34.4 percent. The Resource Management Component (RMP) of the project has an ERR of 25.1 percent and is the least-expensive alternative for the provision of household fuels. The next best alternative costs almost 3 times more to supply the same output. The Demand Side Management component (DSMP) of the project has an ERR of 75.1 percent. These attractive economic indicators are typical for natural resource management and household energy conservation projects, where relatively little expenditure ensures better management and efficient use of existing resources. The economics of the two subcomponents are very robust to changes in key parameters. In addition, there are global environmental benefits amounting to $2.9 million which have not been taken into account in the economic rate of return. The project financial rate of return is 6.9 percent and the pay back time is estimated to be around 12 years. 4.2 The distributional impact of the project is positive. The distributional coefficient of the project (net benefits over a 20-year period to rural and urban poor households as a proportion of project net benefits) amounts to 70.4 percent. In addition, 28 percent of net project benefits will remain in rural areas, through proceeds of user fees and increased agricultural productivity. 4.3 Public investment in the RMP component is estimated at $3.9 million (net present value at 12% discount rate) and at $1.1 million in the DSMP component. In addition to public investment, private investments by villagers for the creation of the rural markets are estimated at $0.62 million, and by households to purchase improved stoves are estimated at $1.2 million. Support to CAS Objectives 4.4 The project will provide an economic and sustainable supply of energy for households living mainly in N'Djamena. It is an operational instrument of the Bank's Country Assistance Strategy (CAS) adopted in February 1996 and supports four of the CAS's objectives: poverty alleviation, rural and private sector development and environmental protection. The key objective of the resource management component is to ensure an economic and sustainable supply of energy for households living in N'Djamena. This is accomplished through an approach that encourages the development of ownership and usufruct rights of natural resources through voluntary community based management, while promoting environmental awareness. The main objective of the DSMP component is to improve the efficiency of cooking fuels through the introduction of improved energy efficient stoves which reduce energy consumption. 4.5 Project evaluation assesses: (a) the cost-effectiveness of the RMP, as the least cost alternative for providing energy for households living in N'Djamena; (b) the economic justification for investments both in the RMP and in the DSMP components; and (c) the SAR - Household Energy Project 47 impacts of uncertainties on the net benefits. In addition to the RMP analysis, the computation of natural resource user fees, distributional impact assessment on rural and urban households and the fiscal impact of the proposed project have been carried out. Project as the least-cost alternative 4.6 Project Altematives. The following four alternatives to the project for supplying energy to households in N'Djamena were assessed. The relevant assumptions and the detailed cost comparison of supply alternatives are presented in Annex 4.1 and Annex 4.2. 4.7 Alternative 1: harvesting wood from more productive resource areas (particularly around Sahr in Southern Chad, about 500 km from N'Djamena) and transporting it to N'Djamena through fluvial transport. Under this scenario, wood will be exploited as a non- renewable resource, starting from 2007 when the capital stock of wood is noticeably reduced in the N'Djamena area. 4.8 Alternative 2: continuing to harvest wood from the main roadways leading to N'Djamena and progressively moving further away as accessible supplies diminish. All wood fuel is transported by road which by 2003 will result in an increased price of wood fuels of more than 10%. UJnder this scenario, no change in conversion techniques is foreseen and natural resources are mined until they are exhausted. This is the usual scenario that would occur without such a project. There are no incentives for villagers to manage woodlands properly. Simply granting them property rights will not automatically imply change for the better. One of the reasons is that a system to enforce property rights does not currently exist. 4.9 Alternative 3: planting of trees andlor establishing plantations to compensate for harvested trees now, to replenish reduced stocks after eight to ten years. A combination of village plantations and forestry department plantations is implemented, using local tree species, such as Prosopis Juliflora, or any other species that has a successful track record in Chad. Full demand for wood energy would be satisfied from plantations by 2007. Plantations will be established immediately under a project and managed by villagers. This is a hypothetical case, as World Bank forestry policy does not support investments in wood plantations in this part of the world due to climatic reasons. 4.10 Alternative 4: substituting commercial fuels (kerosene) when fuelwood stocks are drawn down-i.e., when the least costly supply of wood fuels in areas near demand centers are exhausted, around 2007. 4.1 1 As indicated in table 4. 1, the proposed RMP is the least cost alternative for supplying wood fuel and charcoal to N'Djamena. The best alternative to the proposed project would be to transport wood fuel by truck and continue to mine it further along the roads until the resource base has disappeared: this is the situation without the project. Table 4.1 only provides cost elements of the alternative scenarios. The alternatives other than the proposed project and the plantations do not offer additional economic benefits and do not address wider issues such as achieving sustainable natural resource management and supporting livelihood of rural communities. 48 SAR - Household Energy Project Table 4.1: Project Alternatives (US$ 000) Alternatives Description Discounted Cost Project Nvatural resource management by villages through $4,870 community participation Road transport Harvest and transport woodfrom resource rich $10,904 areas along roadways by trucks Wood Plantations Institute a program ofplanting trees and/or $48,291 establishing plantations Fuel Substitution Project Continue harvest of wood until supplies are $53,050 exhausted; substitute with petroleum fuels (kerosene and LPG) Fluvial transport Harvest and transport woodfrom resource rich $54,044 areas by river boats Note: Discounted costs over a 20-year period at a 12 percent discount rate. This presents only the costs to supply energy; no benefits are included other than satisfying cooking energy demand. ECONOMIC EVALUATION 4.12 Cost Benefit Analysis: Detailed analysis was carried out based on satellite data and a model to project the state of the resource base in the with and the without case I I was developed. As presented in Annexes 4.1, 4.2 and 4.3, both the RMP and DSMP project components are economically very sound, with ERRs' of 25.1 percent and 75.1 percent, respectively. These ERRs' are quite favorable even though conservative assumptions were used for analysis. Using a discount rate of 12 percent and an evaluation period of 20 years, the RMP has a Net Present Value (NPV) of US$ 5.3 million and the DSMP has a NPV of $6.1 million. The ERR for the project as a whole amounts to 34.4 percent. 4.13 Resource Management Benefits. The RMP will support activities to slow down the rate of forest degradation through the introduction of land-use management systems with improved transformation techniques (woodcutting, charcoaling). This will be done by making rural communities responsible for the village forest land, while assisting them to get organized and by changing the regulatory framework for the subsector so that it fully supports them in carrying out their responsibilities (paras. 3.5 to 3.18). Benefits will accrue due to transport savings and avoided agricultural productivity losses such as from fruit trees, agricultural produce, and livestock. 12 The main benefits from the project, accounting for about two-thirds of the benefits, will be savings in transport costs as the project will allow a sustainable supply of wood fuels in areas closer to N'Djamena. Without the project, there would be continued unsustainable harvesting of wood fuel, and production of charcoal, in a collection radius of 15 kilometers along easily accessible roads at even larger distance from N'Djamena. See "An economic analysis of the resource management component of the Chad household energy project", K. Chomitz, C. Griffiths, July 1996. 12 Conservative assumptions were selected: transport benefits are counted for only 80% of expected transport savings and agricultural productivity benefits for only 50% of expected benefits. SAR - Household Energy Project 49 4.14 The present value (PV, at 12% discount rate) of the benefits of the RMP component is estimated at $10. 1 million of which $7.6 million are related to transport savings and about $2.6 million to avoid productivity losses, are the principal benefits. Improvements on soil fertility/crop production and reduced harvesting of fruit trees have a PV of $1.6 million and $3.0 million, respectively for each, with an additional $0.50 million from benefits from increased fodder production on livestock. Through the promotion of appropriate natural resource managernent, continued harvesting along main roads will be supplanted by forestry resources nearer urban demand centers which are developed and managed by rural communities. There are also additional benefits which are not as tangible or quantifiable as the above benefits due to impacts on microclimates, soil, wind, and water erosion and their impact on sylviculture, agriculture and livestock. These benefits have not been estimated. The RMP ERR is estimated at 25.1%. The sensitivity analysis shows that this ERR is very robust (Figure 4. 1). 4.15 Demand Side Management Benefits. The quantifiable benefits of the DSM component are reduced use of cooking fuels, wood fuel and charcoal, through the introduction of more efficient cooking equipment. Rational use of wood and charcoal will be encouraged through the introduction of improved stoves, or by increased use of substitute fuels, such as kerosene and LPG. Improved stoves will also emit less smoke, particulates, and carbon monoxide than existing models. This will have a positive effect on the lives of women and children as they will have a reduced burden for fuel collection and as well experience a healthier cooking environment. Reductions in negative health impacts were not estimated. The NPV of the DSM benefits is conservatively estimated at $6.1 million, resulting in an ERR of about 75.1 percent. The sensitivity analysis shows that this ERR is also very robust (Figure 4.2). 4.16 Environmental Benefits. The project produces global environmental benefits beyond savings in agricultural productivity through the reduction of greenhouse gas emissions as a result of reduced household fuel consumption. Estimates of avoided CO2 emissions due to a reduction of wood fuel use amount to about 1.2 million ton over a 20-year period. Global environmental benefits or avoided C02 emissions, valued at about 10 US$ per ton13, give an NPV of $2.9 million. This estimate is rather conservative as it is based on fuel savings alone, and does not include savings from more efficient charcoaling techniques, reduced deforestation, or a reduction in transport needs. Annex 4.4 provides more details about C02 abatement. USER FEE 4.17 The price of wood should provide consumers with an incentive to use it efficiently and avoid non-economic uses, and should induce producers to supply it and maintain the existing natural resources. The current price is below the economic cost of wood which should include the marginal costs of cutting, preparation, transformation, transport and distribution, and, the user value of wood. Without the project, wood fuels will be supplied through clear cutting and mining of resources at ever increasing distance from N'Djamena. This method of supply entails productivity losses, and, when there is no longer sufficient wood, users will need to use substitute fuels, such as kerosene, LPG, or biomass derived alternatives such as briquettes made from agricultural residues. The present value of these effects is a measure of 13 "GEF: Operational Strategy" indicates arange of$5.3 - $10 perton of C. 50 SAR - Household Energy Project the scarcity value of wood now, also known as the depletion premium or user fee, which was estimated at about $3.35 per ton of wood (574 CFAF per stere). 4.18 The user fee depends on the: (a) remaining wood reserves; (b) level and growth of demand for wood; (c) volume of the deficit; (d) end-user prices of substitutes in the future; and (e) productivity losses. The nearer the date the deficit occurs, the higher the depletion allowance. In the context of the appraisal of renewable projects, the principle of the depletion allowance dictates that the cost of wood should include a premium that, when spread across the wood saved by the project (avoided deficit) over its lifetime, would promote an optimal supply and use of the natural resource. 4.19 The project will promote a differentiated userfee based on the damage done to the natural resource base. In unmanaged zones (without a rural market, yellow zones), the user fee will be CFAF 600 per stere of wood, or per bag of charcoal (which uses about one stere of wood to produce) or CFAF 1.5 per kg (Annex 4.5). In managed zones (with a rural market, green zones), the user fee will be CFAF 300 or CFAF 7.5 per kg (Annex 4.5), reflecting only costs of control, monitoring and creation of more rural markets, and more efficient use and transformation of resources. This level of fees should be sufficient to obtain the desired benefits, and the average user fee (over all wood consumed, from green and yellow zones) will be about CFAF 318, taking into account collection efficiencies and geographical distribution of supply. This level of proposed fees corresponds to the actual tax level. The forestry law provides the possibility to change the level of fees at least once a year, or when required for economic reasons (para. 3.11). 4.20 The user fee will in principle be collected at source, starting with rural markets that begin to operate. As not all zones are immediately converted into managed areas and have established a rural market, collection will also be done at entry into N'Djamena, at a higher rate that reflects additional costs for its collection as well as costs for converting areas into green zones. Over time, the rationale for applying the user fee will disappear (as more areas become under management), and its level will automatically be lowered. The user fee will cause average retail prices to increase about 10 percent by 2010, which is much less than what would happen in the "business as usual" scenario where the price increase would be greater than 16 percent. The 10 percent price increase can easily be offset by the use of improved stoves which should reduce fuel consumption by at least twenty percent. The actual retail price will be an average of the three supply alternatives (green zones, yellow zones, and entering the city by circumventing the control system). Table 4.2 presents the economic costs of charcoal in N'Djamena, according to the supply mode. The revenue generated from the introduction of user fees is sufficient to cover project costs and pay back in about a twelve year period. It gives a boost in rural revenue generation (which in itself is a good incentive to pursue the resource management). SAR - Household Energy Project 51 Table 4.2: Costs of Charcoal Supply to N'Djamena (CFAF/kg) Current Situation Charcoal from Managed Area Charcoal from non Managed Areas Cutting, Transport 47.1 47.1 47.1 User fee: - Management Fee 1/ 7.5 7.5 - Depletion Fee 7.5 Margins & distribution 40.9 40.9 40.9 Market Price 88.0 95.5 103.0 I/ Reflecting costs of control, monitoring, creation of rural markets, etc. (para. 4.19). FINANCIAL AND FISCAL ANALYSIS 4.21 Under conservative assumptions, the project will generate revenue sufficient to reimburse project public financing in about twelve years. The financial internal rate of return is about 6.9% (Annex 4.6). Initially user fees will be collected at city entrance as wood fuel and charcoal will come from unoccupied zones, but gradually in the rural markets where resources are managed. The collection efficiency in rural markets will be much higher than at the city entrance due to involvement of the local people. It is estimated that over 24% of the wood flow at the end of the second year will be controlled (subject to user fee collection), increasing to 46% at the end of the project which amounts to a total fee collected of $568,000 in 2001 to $856,000 four years later. The rate of increase in the total user fee collected rises rapidly thereafter. Costs of control will be self-finance early on, possibly starting in year two. Participating rural villages will generate approximately $265,000 over the four year life of the project (discounted at 12%); this is over and above the money they will receive from the sale of wood and charcoal. Although these financial transactions are not important for the economic evaluation of the project, they are extremely important for the population in the project area. DISTRIBUTIONAL IMPACT 4.22 Of total net project benefits, an estimated 42.0% go to the urban poor and 28.4% remains in rural areas as a result of increased productivity, higher efficiencies, and proceeds of user fees. Table 4.3 provides for the distribution of costs and benefits. Almost 10 percent of the net benefits go to the poorest urban households. Firewood and charcoal prices are expected to increase by about 4.4% and 10.3% respectively, which can easily be offset by using an improved stove. Even the investments in improved stoves will be recovered within a two- month period through reduced fuel consumption. Although the user fee is netted out from the economic evaluation, it is quite important as a net transfer from the rich to the poor occurs, giving incentives for all economic actors to behave more rationally. 52 SAR -Household Energy Project Table 4.3: Distribution of Project Net Benefits (US$ 000) Private Sector Public Sector Total/! Villages with Urban Households Canton AEDE Treasury Rural Market Rich Medium Poor Costs (7,105) Investment (6,089) - Equipment and parts (4,928) (4,928) - charcoal/firewood stoves ( 20) ( 19) ( 39) - kerosene/LPG stoves ( 674) ( 449) (1,123) Operational costs (1,015) - Control (390) ( 390) - Running costs ( 125) ( 375) ( 125) ( 625) - User fees 1,679 (1,272) (3,817) (1,272) 1,120 390 3,173 ( 0) Benefits 18,497 Fuel savings 2,089 5,015 1,254 8,358 Transport savings 1,517 4,550 1,517 7,583 Avoided Productivity 2,556 2,556 Losses Net 4,236 1,535 4,904 1,354 1,120 0 (1,755) 11,393 I/ Cost and benefits are discounted at 12 percent. 4.23 Rural Communities. Substantial financial benefits will accrue to poor households in rural communities with a natural resource management plan, through the collection of user fees and the participation in natural resource income generating activities. Under the proposed project, services from wood cutters, wood transporters (from harvesting place to the rural market site), wood stackers, rural market managers, etc. will be required which translates into economic opportunities for many villagers. The total value of the 1995 wood fuel market in N'Djamena was estimated at approximately US$ 11 million of which a maximum of 20% accruing to the producers (who are not necessarily rural villagers). In fact, a large portion of this value is for distribution margins by urban commerce. The project seeks to increase the allocation for rural stakeholders to about 25 to 35 percent of the economic value of wood fuels. Gains are achieved through avoided productivity losses as well though higher income groups tend to benefit to a greater extent than poorer income groups. 4.24 For urban households, distributional effects are relatively minor as all income groups benefit through efficiency gains and lower priced energy than what would have been the case under the business as usual scenario. While operational costs increase, as a result of applied management techniques for natural resources, benefits from fuel and transport savings outweigh these increased operational costs through lower priced wood fuel and charcoal. SENSITIVITY ANALYSIS 4.25 Figure 4.1 shows the results of the sensitivity analysis for the RMP and figure 4.2 for the DSMP. Both components thus appear very robust against the risks and uncertainties that may affect their economic performance. The figures display the changes (shown in the Y axis) in each of the cost and benefit streams for the component to yield a given ERR (the X axis). The SAR -Household Energy Project 53 point where the curves intersect along the X axis corresponds to the component base case ERR. 4.26 The sensitivity analysis demonstrates that significant changes must result before the ERR of either project component would drop below the 12 percent benchmark. For the RMP component, the ERR would not drop below the 12 percent benchmark unless either investment costs increased by more than 150 percent, operational and control costs increased by more than 900 percent, transport costs declined by more than 70 percent, or the agricultural productivity gains declined by more than 200 percent. For the DSMP component, the 12 percent benchmark would not be reached until investment costs rose above 600 percent, the cost of the improved stoves increased by more than 500 percent, or fuel savings declined by more than 70 percent (figures are approximations). Figure 4.1: Sensitivity Analysis RMIP Resource Management Project Sensitivity Analysis 200% 100% ..... Change 0% in costs 100 w --------- and benefits -200% 0% 10% 20% 30% 40% 50% Discount rates Investment Cs Ops Cs Control Transport Productivity 54 SAR - Household Energy Project Figure 4.2: Sensitivity Analysis DSMP DSM Component Sensitivity Analysis 9 200% \ 100% ---------- _1 0 / ' - - - - - - ------ ---- ..... .. .. ... .... -200% e -0% 50% 100% 150% 200% Discount rates Investment _ Stoves _ Fuel savings PROJECT RISKS 4.27 The principal risks surrounding the implementation of the proposed project includes the: limited capability of the GOC; non-cooperative villages and conflicting land tenure systems which limit the access to wood-producing areas; possibility that fraudulent practices (by the army or police forces) might limit the efficiency of the wood fuel monitoring system into N'Djamena; and social obstacles that may arise in implementing fiscal reform, which could result in higher wood prices to the consumer. 4.28 The up-front commitment of GOC to proceed with reforms is a good indicator of the political will to support this operation. During preparation of the project, these risks were addressed by: conducting several participatory studies to verify and maximize villagers' willingness to cooperate; designing a simple and transparent system to monitor the origin and flows of wood fuels; providing financial incentives for most actors in the sector; developing a participatory approach to project design; and limiting the role of GOC in project implementation, complemented with the increased participation of non-governmental organizations, local communities, and the private sector. 4.29 The user fee system has been designed to limit fraudulent practices and obtain higher benefits for all involved. Legitimate transporters will now have proof that they should not pay any "informal" taxes along the way and may have recourse if the old system persists. Sultans have an incentive to get as many rural markets in operation in their Canton, as the derived benefits will rapidly exceed what he would have received otherwise. 5. AGREEMENTS REACHED AND RECOMMENDATION 5.1 The following actions have already been taken: (a) signing of the Decree establishing the Comite de Suivi (para. 3.36); (b) modification and adoption of the project implementation manual by AEDE (para. 3.3 1); (c) discussion draft of the Convention between AEDE and the Republic of Chad (para. 3.3 1); (d) signing of the Decree providing for the enforcement of Law 36 issued on December 3, 1994 (para. 3.10); (e) creation of AEDE and its authorization to operate (para 3.31); (f) assignment of two suitable personnel from the Ministry of Mines, Energy and Petroleum (MMEP) and four personnel from the Ministry of Environment and water (MEE) to work closely with AEDE in monitoring and coordinating the ministry's involvement in project matters (para 3.37); (g ) appointment of AEDE's General Manager and approval of his contract by the Assemblee Generale (3.32); (h) signing of the Decree recognizing AEDE as an institution of public interest (Declaration d 'Utilite Publique) (para 3.31); 5.2 The following agreements and assurances have been received during negotiations: (a) the level, recovery and allocation of the user fees will be acceptable to IDA at all times during project implementation (para 3.10); (b) AEDE General Manager (Directeur General), the Administration and Financial Director (Directeur Administratif et Financier) and the two persons respectively in charge within AEDE of rural markets and of monitoring the user-fee system, will be acceptable to IDA at all times during project implementation (para 3.32); (c) the Project Implementation Manual ("Manuel d'Execution") be acceptable to IDA at all times during project implementation and any modifications to the Implementation Manual be subject to IDA's approval (para 3.31); (d) agreement that AEDE will procure goods and works in accordance with the procedures set-forth in the Guidelines for Procurement under IDRD loans and IDA credits (January 1995, revised in January, August 1996 and September 1997) and consulting services in accordance with Guidelines for the Selection and Employment of Consultants by World Bank Borrowers (January 1997 and revised in September 1997) (para 3.50); 56 SAR - Household Energy Project (e) AEDE' s accounting and financial system will be consistent with sound accounting principles and practices satisfactory to IDA at all times during project implementation (para 3.42); (f) reports and documentation will be submitted to IDA within one month of completion of period covered by such reports and documentation (para 3.43); (g) Progress Status Report will be issued by AEDE to CDS and IDA every 3 months (para 3.43); (h) semi-annual progress reports every year will be issued by DPENR and DFPE to IDA and a final Implementation Completion Report within six months of the Credit Closing Date (para 3.43); (i) a mid-terrn review be carried out two years after project effectiveness (para 3.45); and (j) audit of AEDE's annual financial statements be performed by independent external auditors satisfactory to IDA; final audit be submitted within six-month of the Credit Closing date (para 3.57). 5.3 The following will be conditions of credit effectiveness: (a) the statutes of AEDE will be revised to the satisfaction of IDA (Para. 3.31); (b) submission of a signed Convention between the Government and AEDE (para 3.33); (c) setting-up of AEDE's internal accounting and financial system consistent with the Implementation Manual and acceptable to IDA (para 3.42); (d) appointment of AEDE's Administration and Financial Director (Directeur Administratif et Financier) and of the two persons respectively in charge of rural markets and of monitoring the user fee/tax system (para 3.32); and (e) appointment of independent auditors acceptable to the Association for a period of four years (para 3.57). 5.4 Recommendation: Subject to the above agreements, the proposed project is suitable for an IDA credit of SDR 4.0 million (US$ 5.27 million equivalent) to the Republic of Chad on standard terms, with maturity of 40 years, including 10 years of grace. SAR - Household Energy Project Annex 1.1 Page 1 REPUBLIC OF CHAD HOUSEHOLD ENERGY PROJECT Energy Balance Estimated 1995 Energy Balance (in thousand toe) Crop Petroleum Supply and Demand Fuelwood Wastes Charcoal Products Electricity Total Gross Supply Production 1073 12 - - - 1085 Imports - - - 101 - 101 Total Supply 1073 12 - 101 - 1,187 Conversions -Electricity STEE - - - (21) 8 (13) -Electricity other - - - (9) 3 (6) -Charcoal production (230) - 57 - _ (172) Distribution losses - - - I 1 3 Net Supply 843 12 57 71 9 992 Final Consumptionr -Households 817 3 52 5 3 880 -Transport - - - 57 - 57 -Agriculture, Industry and Services 26 9 5 10 5 55 TOTAL 843 12 57 72 8 992 Source: DPENR, W1B staff estimates SAR -Household Energy Project Annex 2. 1 Page 1 of 2 REPUBLIC OF CHAD HOUSEHOLD ENERGY PROJECT Forest Resources and Woodfuel Productivity Forest Resources Detailed resource data are now available for the N'Djamena area, based on satellite imagery (7 scenes, using SPOT 3 with recordings in September 1995 and November 1994). In addition a two-week ground truthing period in November 1995 was carried out to assess provisional forest classes, measure sample sites to provide estimates of biomass yield by forest type, and assess the value of different wood species to calibrate the satellite data. These data are sufficient for a first order estimate of the availability of resources in the N'Djamena wood catchment area. This recent study confirms previous observation: degradation and deforestation are increasing, but there is still enough resource left to maintain woodfuel as N'Djamena's primary energy source, on condition that current trends are reversed quickly. Estimated Forest Resources in Chad (thousand tons) Type of Formation Standing Wood Stock Annual Yield Share of Total (%o) Grassland 5,299 233 Wooded Grassland 77,365 2,344 7 Bushland/Thicket 37,866 8,136 26 Woodland 712,908 18,864 60 Woody Biomass 12,965 146 1 Forest 13,006 150 5 TOTAL 859,402 31,279 100 Source: Tchad: Eldments de strategie pour l'energie domestique urbaine: le cas deN'Djamena, December, 1993. Based on survey data of 1989. Annex 2. 1 SAR - Household Energy Project Page 2 of 2 Woodfuel Productivity Estimated Woodfuel Productivity and Total Production N'Djamena Catchment Area Land-use classification Estimated Fnelwood Yield 1995 dry tons/Eta/year Hectares % of area tons/yr Water 12,774 0.7 Inundated Grassland 132,379 7.3 Dry Sudanian Woodland 3.50 68.115 3.7 238.402 Moist Acacia Bushland 1.37 82,538 4.5 113.077 Dry Acacia Bushland 0.57 278,069 15.3 158,499 Wet Semi-desert Wooded Grassland 0.30 50.265 2.8 15,080 Dry Semi-desert Wooded Grassland 0.15 67,880 3.7 10.182 Sand / bare soil 117,100 6.4 Scrub 704,277 38.8 Agriculture 197,375 10.9 Mud / silt 61,043 3.4 Reeds 17,740 1 Total surface area 1,789,554 Total productivity (tons/year) 535,239 Source: I.S. Ltd, January 1996. SAR - Household Energy Project Annex 2.2 Page 1 of 2 REPUBLIC OF CHAD HOUSEHOLD ENERGY PROJECT Forests - Institutional Framework 1. Land tenure. In Chad as in many other Sub-Saharan countries, land tenure is complicated as the official law, Islamic law, and traditional laws prevail simultaneously. Official laws are the published laws, approved by the government; Islamic law dictates that a person is free to harvest natural resources for his own use, free of charge, as natural resources are shared by all living in the society. Traditional laws are more like traditions practiced by local sultans, village chiefs, etc., small rents are paid by villagers for the use of natural resources. In many cases these laws are applied without problems, but problems arise where laws from the different systems compete. A good example is the wood fuel exploitation: central authorities provide transporters with a permit to cut wood in certain villages, without consent of (without even discussing with) the villagers who claim it to be their own resource. 2. Forest Legislation. A major factor constraining improved land management is the ambiguity of rights to land use and ownership. While current legislation stipulates that the land belongs to the state, it also recognizes certain land-use and property rights of traditional groups or individuals. Two main problems have resulted from this ambiguity: (a) private groups that harvest forest resources for commercial purposes are not concerned about sustaining the resource base because they feel no sense of ownership; (b) forest agents place no restrictions on the wood harvesting by private parties; and (c) villagers can not deny woodcutters access to the forest resources within their territory. In essence, forest administration reflects current practice more than the legislation and much of commercial wood activity escapes taxation since the monitoring of forest offtake and transport is sporadic. 3. Institutional Framework. Chad's forestry staff is insufficient in number and in expertise to effectively manage its forest resource base. There are only 283 professional staff allocated among various staff categories (Table below). The staff chiefly responsible for field execution of forestry programs, the technical advisors and their agents, account for only 16 percent of total staff, which implies on average 29,000 km2 of territory to monitor per forestry agent. The forestry aides, contractual surveyors, and various forestry officers often have a low level of technical skills. To develop a competent, motivated staff, GOC needs to establish several types of training programs, local and foreign, for all levels of forestry services. In addition, the focus of involvement should change away from control and policing, to extension and providing advise. Responsibility for maintaining wood resources should be given to rural villages, which is in their daily interest. Forestry staff should assist villagers to develop management systems that allow them to do this efficiently. Annex 2.2 SAR - Household Energy Project Page 2 of 2 Professional Staffing of the Forestry Sector Projfessional Category NViuiber of Staff Engineers for water and forest resources 15 Engineers for forest works 20 Technical assistants 23 Technical agents 24 Forestry aides 16 Contractual supervisors 39 Forest employees 151 TOTAL 283 Source: Tchad: ESMAP, '91. 4. Fiscal Regime. The current fiscal regime in the forestry sector is neither sufficient for resource management nor for revenue collection. Anyone may engage in wood commerce by paying related forestry fees and purchasing a cutting permit. GOC's Department of Forestry grants permits on a monthly basis and determines the forestry fee based on the estimated number of trips to the forested area and the quantities taken; these estimates are usually far from reality. After obtaining the permit it is possible to cut wood in any rural area within a given zone. The field monitoring of forest exploitation is practically nonexistent and it is easy to circumvent permit control. 5. The estimated rate of revenue recovery is only about 10-15 percent. Forestry staff are insufficient for the monitoring required. A better rate of revenue collection could generate the funds necessary to finance management services or technical support in the wood production zones. To address weaknesses in the fiscal regime, the ESMAP study recommended that the Government establish a new fiscal and regulatory system based on: a fee level that reflects the cost of wood replacement; the channeling of the proceeds from fee collection to managers and owners of forest resources (i.e. villages); and incentives for reinvesting revenues from fees in forest management activities and reforestation. SAR - Household Energy Project Annex 2.3 Page 1 of 3 REPUBLIC OF CHAD HOUSEHOLD ENERGY PROJECT Energy Prices and Household Use of Fuels Energy Prices 1. Woodfuels. The woodfuels market, which amounts to over US$ 20 million per year, operates through numerous private operators who set prices based on laws of demand and supply. The main pricing issue for woodfuels is that the producer price of wood does not reflect the economic cost of producing wood, resulting in overexploitation of resources. Taxes levied on firewood and charcoal do not correct this deficiency. Illegal and unsustainable harvesting of woodfuel resources is in large part the cause of this problem as woodfuel is mined as a common property resource and thus in large part goes unvalued. Furthermore, it is difficult to estimate the true wood value at the present time given omissions in the existing data base. 2. Petroleum Products. The Government fixes the prices petroleum products based on the cost structure of the operations of the GPP, which purchases the products from the various refineries in the West Africa region, Nigeria, or on the international market. Prices in the parallel market are about 15-30 percent below official prices, partly because some operators bypass import duties and taxes. Petroleum product taxes are high and vary according to product: CFAF 112 per liter for gasoline; CFAF 62 per liter for diesel oil; and no taxes on kerosene. The price of kerosene is CFAF 270 per liter, and LPG CFAF 600 per kg. LPG doubled in price since 1994, where as the price of kerosene remained relatively stable: it was CFAF 225 in 1993, and CFAF 240 in 1991. 3. Electricity Tariffs. Chad's electricity tariffs are very high: the average price of electricity for low-voltage consumers is CFAF 170 (US$ 0.34) per kWh (for a consumption of about 150 kWh/month), and respectively CFAF 108, CFAF 200, and CFAF 84 for medium voltage customers during normal, peak, and low hours. The reasons for this high price are the low demand on the system, the use of expensive high speed diesel generators, the poor condition of the distribution network, high losses, and the weak institutional structure of the subsector. The tariff includes a social safety net for the energy charges (the first 30 kWh @ CFAF 83/kWh, the next 60 kWh @ CFAF 197/kWh, the following 60 kWh @ CFAF 177/kWh, and above that @ CFAF 201 /kWh. Added to these energy charges are 11 % tax, I % surcharge, and maintenance costs and rent for the meter. 4. Charcoal Prices. Charcoal prices are around 40-50 CFAF per kg. These prices are comparable to those of other West African countries in the Sahelian region. According to the 1992 survey, there is a significant correlation in the price per bundle for woodfuels and the distance of the sales point from the capital. For example, the average price per bundle of wood is CFAF 10.6 per kg at a distance of 20 km but at a distance of 100 km, it declines by 30 percent to CFAF 7.6 per kg. For charcoal, which sells by the sack, the price 100 km from the N'Djamena is 20 CFAF per kg, 40 percent lower than the price at 20 km from the capital, 32.3 CFAF per kg. The prices that the wood merchants pay from the village supply sources varies as well, with the price of a truckload of wood ranging between CFAF 15,000 and 20,000, averaging CFAF 1.9 per kg. In 1995, the retail price of wood is slightly higher than in 1992, Annex 2.3 SAR - Household Energy Project Page 2 of 3 at around CFAF 20 - 24 per kg. The devaluation of the CFAF did have a major impact on the retail price of charcoal, which increased sharply to about CFAF 80 per kg in 1995. Estimated Structure of the Price of Charcoal in the N'Djamena Area Price Component CFAF per kg Share of Retail Price (%) Forest Tax 2.5 3.1 Rural supplier price 18 - 21 23.7 Roadside transport 6.2 7.8 Truck transport a/ 12.5 - 15 17.5 Miscellaneous Charges b/ 0.6 0.1 Price delivered in town 42.8 53.5 Gross Margin c/ 37.2 46.5 Retail Price 80 100.0 Notes: a/ At a distance of 120 km, this includes an average CFAF 50 illicit ax per bag. b/ Loading, unloading, etc. C/ Merchant, transporter, and retailer margins. Source: Survey ADER-FED/DFPE, August 1992 and ESMAP estimates. Comparative Household Cooking Fuel Prices in N'Djamena (February 1995) Fuell type Unit Unit Price Price per MJ Price per Mjeff (CFAF) (CFAF/MJ) (CFAF/MJeff) a/ Firewood kg 22 1.4 6.9 Charcoal kg 80 2.7 7.6 Kerosene liter 270 7.7 19.3 LPG kg 600 14.1 28.1 Electricity kWh 170 47.2 59.0 a/ taking into account stove efficiencies Soturce: Matly, Market Study for Improved Stoves, Feb 95. SAR - Household Energy Project Annex 2.3 Page 3 of 3 Household Use of Cooking Fuels (% of households in the Rich Medium Poor Inactive group) Principal fuel wood 45.2 77.2 87.3 84.2 charcoal 33.4 22.8 12.1 15.8 kerosene 0 0 0.6 0 LPG 19.0 0 0 0 electricity 2.4 0 0 0 Secondary fuel wood 7.5 8.0 5.8 1.8 charcoal 45.0 53.4 65.9 53.6 kerosene 2.5 5.3 4.0 8.9 LPG 12.5 0 0.6 0 electricity 32.5 33.3 23.7 35.7 Source: ESMAP, 1991. Fuel Use Opinions, N'Djamena, 1995 Satisfaction with actual fuel (%) Fuel of preference (%) Fuel used excellent satisfied not dissatisfied LPG kerosene charcoal satisfied Firewood 9 43 38 11 52 19 28 Charcoal 11 47 36 4 52 19 29 Source: Matly, 1995 SAR - Household Energy Project Annex 3.1 Page 1 REPUBLIC OF CHAD HOUSEHOLD ENERGY PROJECT Process To Create Resource Management Systems Box 1: The Main Stages in the Creation of a Rural Woodfuel Market I) Information Campaign national: tv, radio, brochure at village level: visit by a project agent "Presentation of the new legalframework enabling villages to manage their own woodland areas (brush management)" result: candidate villages II) Selection of Candidate Villages further information about rural markets and the management structure rough assessment of resources, sociological survey result: initial choice of village III) Final Selection of Initial Villages detailed studies: woodcutter/woodharvester/charcoaler/tenures/ pasture surveys, negotiation between and within villages on forest boundaries, inventory of resources and productivity result: choice of priority regions IV) Support for the Development of a Rural market Structure help villages set up management structure, preparation of statutes and regulations election of members of the management structure and training of managers, general manager, treasurer, chairman negotiation of annual harvesting sales-quota result: creation of local management structure and appllication for official approval by DFPE and launching of activities V) Official Approval approval of the rural market, signature of long-terrn contract with DFPE setting of legal forest boundaries promulgation of the act of rural concessions information to local and national professionals in the fuel wood commodity chain distribution of coupons (tax receipts to be handed out to transporters) to the local management structure VI) Support and Supervision market should run independently as soon as possible, initially assistance may be required organizat:ionaVadministrative/technical/commercial/accounting/fmancial support a posteriori supervision, levying of taxes by the administration annual quota reassessment (possible operational modifications) SAR - Household Energy Project Annex 3.2 Page I of 2 REPUBLIC OF CHAD HOUSEHOLD ENERGY PROJECT Organization Chart 1.1 'Organigramme d'Exication du Projet" it _ _ ji l i | ASSEMBLEE GENERALE ]|06 | Conseil d'AdministraiWoa BUREAU t . ~~~~~~~Pr6sident Q Directeur generas Vice-President | Assistance to technique HM Directeur administratif& financier~~~~~~~~~~~~~~~~~i Responsable operations Responsable recouvrcment . I~~~~~~~~~~~~ ~ ~~ ~~ de la taxe ___ __ Personnel administratif ° ONG, cntreprise(s), de ONG, ,bureau(x) d'etudes d'appui MC communication/publicite intervenant dans misc en place Inspection operateur contrdle de qualite marches ruraux Foresti6rc N.5 Secretaire de direction, : I C intervenant dans diffusion produits Comptable, Planton, Chauffuers energic populaire L6pend: fl relation hierarchique Marches . rruraux den n bois-6neroic I relation fonctionnelle C% SAR - Household Energy Project Annex 3.3 Page lof 6 REPUBLIC OF CHAD HOUSEHOLD ENERGY PROJECT Detailed Cost Tables Project Cost Summary w Total tF.CFa Million) fUSS 000p _ Foreign Base _Qacal Foreion T.ota1 Locai Foreign Total exchange Coscs A. Zatablish Village-Baa.d Natural lesource management systea 1. Create National Capacity to Design Firewood/Charcoal Exploitation Plans 110.8 327.1 437.9 193.7 S71.9 76S.6 75 14 2. Create Rtural Firewood/Charcoal Markets 272.S 432.8 700.3 476.5 756.6 1,233.1 61 23 3. Monitor Performance of Rural Markets _240L 116J8 3e7 7 421.2 204 . 625.4 33 11 Subtotal Establish Village-Based Natural Resource Management system 624.3 876.7 1,501.0 1,091.4 1,532.7 2,624.1 58 48 B. Monitor/Control of Wood Products Flows 423.0 217.5 640.5 739.5 380.3 1,119.8 34 20 C. Improve Efficiency of Sousehold Fuel Use 1. Facilitate the Commercialization of Charcoal and Firewood Stoves 216.4 126.5 342.9 378.4 221.1 099.S 37 11 2. Introduce Use of Xerosene/LPG stoves 169.1 95.2 264 . 3 295.6 166.4 462.0 36 a Sub*totl Improve *fficiency of Lousehold Fuel tai 385.S 221.6 607.2 674.0 387.5 1,061.5 37 19 D. Project Management __LQ1 ..268h6 __.3 1 1914. 469.6 661. 0 71 12 Total BASELINI COSTS 1,542.3 1,584.S 3,126.8 2.696.3 2,770.0 S,466.3 S1 100 Physical Contingencies 147.6 148.2 295.9 258.1 259.2 517.3 SO 9 Price Contingencies 910.28A 185.J lS3. 9 139.5 323.4 .43 6 Total PROSJCT COSTS 1,79S.1 1,812.5 3,607.6 3,138.3 3,168.7 4,307.0 50 11S Wed Jun 25 1101:31 1997 Table 1- Create National Capacity to Design Natural Resource Management (NRM) Plans /a (USS '000) Breakdown of Totals Incl. Totals Including Local Outies .. San. nn.r Con,,inpef.ei For. (Excl. & I=.. 2 24 Dl,_ .1002_ T0cal JaS-z 2g.L_ 2oL 1QIL. TIorl Bflt.h TaxL.) TASaL. TAoLal X. Investment Costs A. equipm.ent Cars 82.5 - - 82.5 92.1 - - - 92.1 78.3 - 13.8 92.1 Training equipment 22.0 11.0 S.S - 38.S 24.6 12.7 6.5 - 43.8 17.5 19.8 6.6 43.8 Computers lb 16.5 3.3 3.3 3.3 26.4 18.4 3.8 3.9 4.0 30.1 20.6 - 4.5 30.1 Printers, copiers, fax. 8-mail 27.5 _ ___ 11.0 - 38.- .7 13.0 -_ 43.7 37.2 - 6.6 43.7 subtotal equipment 148.S 14.3 19.8 3.3 185.9 165.8 16.5 23.5 4.0 209.8 158.6 19.8 31.5 209.8 n. xp-rt Services Training for Foresters/DFPE /c 27.5 27.5 - - 55.0 30.8 31.8 - - 62.6 - 53.2 9.4 62.6 Training for NGDS /d 22.0 _1l. . - 38.5 24.6 191 43 7 ------ t7.2 6-6 43.7 Subtotal p-rt Services 49.S 44.0 - - 93.S S5.4 50.9 - 106.3 - 90.4 15.9 106.3 C. Long Term TA 165.0 165.0 82.s - 412.0 184.2 189.7 97.6 - 471.5 471.5 - - 471.5 0. Training Visits for Staff c 11.0 12 0 ___ -..... 22.0 12.3 12.1A 249 . .2 * 1. 27 24 _9 Total Investment Costs 374.0 234.3 102.3 3.3 713.9 417.7 269.8 121.0 4.0 812.6 651.3 110.1 S1.2 812.6 IT. Recurrent Costs A. Operattonal Costs salaries D0PB 8.8 4.4 - - 13.2 9.0 4.6 - - 13.6 - 11.0 2.0 13.6 OWM 16.5 16.5 -5.5 -38.5 18.5 19.1 6.6 4 4.1 _ 7.5 6.6 -411- Total Recurrut Coats 2s.1 20.9 s. -- 1.J7 27.4 23.7 6.6 - s7.7 _ 42-1 8.7 7-7 Total 399.3 2S5.2 107.8 3.3 765.6 445.2 293.5 127.6 4.0 870.3 651.3 159.2 S9.8 870.3 \a Thesa Village-Based Plans Include Management of Resource gSe and Wood Products Exploitation Plans \b To enable DPBNR to implement components A. S, C (design NRM plans, create, and monitor rural markets) \c To Unable DFPB to Verify Quality of NRM Plans and to Sign Contracts with Villages for Implementation of NU4 Plang \d To 3nable NGOs to Assist Villages to design NUM and Wood Products Bxploitation Plans \e Niger, Mali, to Gain Experience with MUM Plans in Practice Wed Jun 25 11:01:10 1997 Table 2 Create Rural Markets /a (US$ '000) Btreakdown ofTtale lnci Cont Base Coat 3g5jj~ Including Con~~~ncisa For. (Excl . Duties ( 1.Investment costs -KI-Txs A. quipment 4o4 55.0od 550 7. 137.S 61.4 63.2 32.5 - 157.2 133.6 - 23.6 157.2 0 ou th oa .3 16.5 24.8 16.5 66.0 9.2 19.0 29.3 2.1 77.5 65.9 I 1. 77.5 Training equipment 11.0J.J .2L. ILAI ____ ....66.f .....-. 2...S 39A..J. 20- 7....ii ....Li...11..l. Subseoticl asimn 4. 35 8.3 16.5 269.5 82.9 107.6 101.0 20.1 311.6 230.1 34.7 46.7 311.6 Charcoal expert lb 66.0 66.0 22.0 - 154.0 73.7 75.9 26.0 - 175.6 149.3 - 26.3 175.6 Rural Markets gxpert 66.0 88.0 44.0 22.0 220.0 73.7 101.2 52.0 26.7 253.7 215.6 - 38.1 253.7 lmplesinting Noos 22.0 66.0 66.0 55.0 209.0 24.6 75.9 78.1 66.9 245.4 208.6 36.8 245.4 National Experts 6.6 13A 26.4 26.4 72.6 7.4 1.5.2 131.2 32.1 85.51 730 2.9 8. Extension Services Rural Markets ___I" ...2Z20 .fl..0 .....1..f 12..I .L3 2....L. ~394 ......L 117.7.I. 17..IL1..AL M..lL2 Subtotal asgyices .....~171.S...Z.. ..34 11. 7S4.ZS 19..6... ..291.6 ..226L71 ...SL .78.1 .4..5.liL .....ll1 II43L1 87....l2L Total Invetatast costs 245.9 348.7 276.7 152.9 1,024.1 274.5 401.2 327.8 186.4 1,189.9 876.6 134.8 178.5 1,189.9 II. Recurrent coats A. alaries -charcoaling (OPENR) 5.5 5.5 5.5 5.5 22.0 6.2 6.4 6.6 6.8 25.8 - 22.0 3.9 25.8 rural markets (OULPNI ..-.L. ILA5....L I" A 111 ...L ....12.71 ....J.L ...IL. JL ...II -h.... Subtotal Salaries 11.0 16.5 16.5 16.5 60.5 123 1. 1. 03 714 - 6. 10. 71.4 S. Operational Coats 1i..1 jj.A. 4Aif 44.0 12. ..3..I. .. 9.1... .19.75 20..5.. 714 - . 0i.6 ..J.L .. 1.J. Total RLecurrent Costa ..L ..I5 ~ ..6.. _20LD 1JO ...9.lk. ..2.U. __...2L _.2114 __""10 .326 .4.. Total ~~~~~~~~~~~~273.4 409.2 337.2 213.4 1,233.1 305.3 471.3 400.0 260.7 1,437.3 876.6 345.1 215.6 1,437.3 %a Rural markets will be set up once a villagq has an agreed and signed a contract with OppE tor the management and exploitation pTlana \b training ol traditional charcoalars in villages with a rural market Wed Jun 25 lltO3i3l 1997 Table 3 - Monitor Rural Markets (us$ '000) Breakdown of Totalo Incl, cant, Totals Including Local Duties Bas cot -- --- -- ?Lj,nGjie .. For. (Bxcl. MILAL Exch,. Taxus) Taxag. TntAl 1. Investment Costg k. equipment ( 4X4 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~(A 4x4 - 2~~~~~~~~ ~~7.5 55.0 - 82.5 - 31.6 65.1 - 96.7 92.2 - 14.5 96.7 ( Off the road - 5.0 16.5 16.5 38.0 - 5.7 19.S 20.1 45.3 385- . 4. Training equipment 3J,. Lf ...Li L J.JAL .2. 6.J..S.L -2.. 6..0..... 45.3l Subtotal equipment 11.0 43.5 93.5 16.5 164.5 12.3 50.0 110.7 20.1 193.1 141.0 23.1 29.0 193.1 a. services International experts - 33.0 33.0 33.0 99.0 - 37.9 39.0 40.1 117.1 99.5 - 17.6 117.1 ' Forestry expert /a 27.5 27.5 11.0 11.0 77.0 30.8 31.8 13.1 13.5 89.3 - 75.9 13.4 69.3 Implementing NG00. - 22.0 33.0 44.0 99.0 - 25.5 39.4 54.1 119.0 - 101.1 17.6 119.0 database development /b -L.AL. ..16Ll --2LI -..lL. ... ..IL ALl- .."L -5 __ 59. L19 52A Subtotal services .J27A ..9L3 ..15 -2 L.5 1C 32ZIA 3.0- 18 - IR 1 1-3 1JILl JILl -22-5 -.2Z2.5 5L -. Total Investment Coats 38.5 137.0 187.0 126.5 489.0 43.1 158.0 222.0 154.9 577.9 240.6 250.6 06.7 577.9 Q II. Recurrent Coats A. Operational costs 0 & N 11.0 22.0 33.0 44.0 110.0 12.3 25.5 39.4 54.1 131.3 -111.6 19.7 131.3 salaries 6j l .6..S 6.6..h -Zi4 6.7... 6.9.A ...A 7.1 -Il - ...JA A2 28j2 Total Recurrent Costs 1J.7.6. 2.6L 3.6.L. 5.6~ 1JIl 1.0IA .12-4 -A". A"5 1S.L.- AJ.5A ..2.LI 159.5 Total 56.1 165.6 226.6 177.1 625.4 62.1 190.4 268.5 216.3 737.3 240.6 386.2 110.6 737.3 \a To iprovide TA to villagers, verify functioning of rural ma.rkets Ha Mantain a database of operational experience, and to update village level implementalon manual lied Jun 25 11:03:34 1997 Table 4 - Conitrol & Monitiorinig of Wood Flows (US$ '000) 5.c, I dn..., 700L 2QUZ_ota TotallnaCann TotIal For.- Tlewd. ae Toa I. investment Costa A. Equipmaflt 4x4 55.0 82 55.0 - 192.15 61.4 94.9 65.1 I 221.3 186.1 - 33.2 221.3 motorcycles 22.0 13.2 8.8 8.8 52.81 24.6 15.2 10.4 10.7 60.9 51.7 - 9.1 60.9 BOOtS 8.8 26.4 17.6 - 52.8 9.8 30.4 20.8 - 61.0 51.9 - 9.2 61.0 CoDmputers 17.6 6.8 8.6 35.2 19.7 10.2 10.5 - 40.3 8.0 26.3 6.1 40.3 (J3 Printers, copiers. tax, a-mail 27-5 .1.9-... -- .AL.S0 ....~l I ......2 .h. _- 4iL9 12A 4 - ........ ...A4" Slubtotal Xquipseat 130.9 141.9 95.7 8.8 377.3 146.2 163.2 113.3 10.7 433.4 .342.1 26.3 65.0 433.4 1 I. StrUCCurSI LVAPrQveeenf Offices /a 110.0 - - 110.0 121.1 - - 123.1 18.4 86.2 16.5 123.1 C. services International Experts 33.0 11.0 11.0 - 55.0 36.8 12.6 .13.0 - 62.5 53.1 - 9.4 62.5 Training to Controller 5.5 11.0 5.5 - 22.0 6.2 12.7 6.6 - 25.5 - 21.6 3.8 25.5 Awareness CampaIgn lb 5.5 22.0 11.0 - 38.5 6.1 25.4 13.1 - 44.6 22.2 15.7 6.) 44.6 Database /C -- .L I 1L JiJ 2.U..Ifl .. .2 .AIA_ 2i_4 7L.Q.2 6 - .1L 11....2i. 1L6 Subtotal Services 4....AL _--..4i .....JL 22_I ..A&I5 -.5L1 I2iJ .._.L 21LO --2.L.1 ...2i. .ADI.1 ....3L- 2..11U Total Zinwest.mset Costs 290.4 202.4 145.2 10.8 668.8 324.6 233.1 172.2 37.7 767.5 435.9 216.5 115.1 767.5 it. Recurrent costs A. operational costs /d 38.5 38.5 38.5 38.5 154.0 43.1 44.6 46.0 47.3 180.9 - 13.8 27,1 180.9 D. Salaries Government staff 2.8 2.8 2.8 2.8 11.0 3.1 3.2 3.3 3.4 12.9 - 11.0 1.9 12.9 'C. AWDE personnel /a 49.5 55.0 36.5 22.0 165.0 55.4 63.7 46.0 27.0 192.1 1 63.3 28.8 192.1 D. operational costs /9 ___..15 21-S .....JE _-..I.4 J121f _-_I.. 31..JLA ...ALJ __A.L1 143-6.L. __A2122 143...LI.. 6 Total Recurreat Costs 107Jfl.. _..J2L. ...JIML. ...IIL- ...JL_Q 120.0 141 ...U ..JS1_. .2..J1AZ2. .. . .4SIt-1 79.. 4 ...2.L- Total 397.7 326.2 263.5 132.6 1.119.6, 444.6 376.3 113.3 162.9 1.297.1 435.9 666.6 194.6 1.297.1 \a For the min office ed antelite otfices around arDjamena ( \b To make sure all actors know the new woodguel control system (I \c To per. up and maintain a household energy database, such as origin, price. and flows of wood and charcoal number of rural markes, and their production date estimates for total wood consumption, tax revenue, etc. \Id PE'V, JIPIN \Is LODE start-up will be financed by the project, to be phased out and become autofinancing VI AIDE Table 5- Imiproved Stove Componient (US$ '000) Breakdown of Totals imc. ToaL&s inicluding Local Duties 1999- 200_ _ 200 2 i~1Lm k wJfi....... a... jor. (Excl. & .I~22..... _ Z2L xL.TIJ Z Lh_ ~I1 T&aa-L lax~es TotaL 1. Investment costs A. Services implementLing MGO 33.0 33.0 27.5 22.0 115.5 36.9 18.2 32 6 21.0 135.0 -114.0 20.3 135.0 Stove Expert 44.0 22 .0 22.0 . 88.0 49.1 25 3 26.0 .100.4 85.4 15.1 100.4 Marketing Expert . 11.0 27.5 -38.5 .12.6 32.5 -45.2 38.4 - 6.8 45 .2 M4onitoring A..L. -.Jl-4 _.165.i.. ..6. ..15 _...35.._19._. _2L1 .2_5 - .5 ..ni zi Subtotal services ~~~~93.5 82.5 93.5 38.5 308.0 304.5 95.2 111.1 47.3 358.2 323.8 180.7 53.7 358.2 S. equipment Car 22.0 - - -22.0 24.6 -- 24.6 20.9 . 3. 7 24.6 laboratory /a 27.5 --27.5 30.7 . -30.7 26.1 4.6 30.7 Initial Purclhase of Stoves lb 21.0 16.5S - 27.5 12.3 19.0 - -31.3 15.6 31.0 4.7 31.3 promotional campaign 16.5 44.0 33.0 22.0 115.5 18.4 50.7 39.2 26.9 135.2 67.4 47.5 20.1 135.2 training tor stove artisanis .122-0 .A*..A _.1LAI --- _.1.LD .24.. _502 _1l.J ......E2 . ....4 ...LI .ag_ l Subtotal equipment ..5-j" 10- _.A!I_ 22..0 Zfi L.S Dj "1213. _.S. EA)L ..L .LI_ 4. .I. Total Investment Costs 192.5 187.0 137.5 60.5 577.5 215.2 215.916. 7426872.83.6 0.36.7q 11. Recurrent Costs 1347. 6. S. 1. 0. 6. A. Operational Costs salaries ..5,S ..i..-5 ...5_.. ..i.5 ..2" .fl 5-. S..i A. ..A 1. ...19 ... -2L-5 Total Recurreat Costs ...L. -L..5 .....L -1..I .22AD ...6 S-i -AA _61L.5 - -2L.Q .....3 .2L Total. 195.0 192.5 143.0 66.0 599.5 220.8 221.7 169.3 So0.4 692.2 253.8 3314.5 103.8 692 .2 r 3 \a This laboratory will also be used for the fuelsubstitutioln compontent \Ib Proceeds to be used as revolving fund Wed Jun 25 11:0J:39 1997 Table 6- Fuel Substitution Component (US$ '000) Breakdown of Totals Incl. ik Cont. 4 Totals ltlcluding Local Duties Base Cost , nL3 ugencies For. (Excl. & 49w-_ 2000- _ m, 1i _aotal -19L 70X9L _ZOQQL _=1 =:oAl Exch. Taxes) Taxes1 lpotal- Cb I. Investment Coats A. equipment project car (pickup) 22.0 - - - 22.0 24.6 - - 24.6 20.9 - 3.7 24.6 Initial Purchase of Stoves /a 5.5 11.0 - - 16.5 6.1 12.6 - - 18.8 16.0 - 2.8 18.8 promotional campaign 11.0 33.0 33.0 22.0 99.0 12.3 38.0 39.2 26.9 116.4 58.0 40.9 17.5 116.4 Assistance to Retailers -11-0 _.2a., 011A 0 _ A_4.Q ,Z-J3 _.5-5 -13-1 _ 5Q...2 43 7..L .5.QS2 Subtotal equipment 49.5 66.0 44.0 22.0 181.5 55.3 76.2 52.3 26.9 210.7 94.9 84.2 31.6 210.7 B. services international experts 44.0 33.0 22.0 - 99.0 49.1 37.9 26.0 - 113.1 96.1 - 17.0 113.1 implementing NGO 38.5 38.5 _ 7.5 20.0 126.5 43.1 44.6 _32.8 .27,Q j0 7,4 - ,125.4 22.1 _147-5 Subtotal services 82.5 71.5 495 22.0 225.5 92.2 _AL21 _582 -27, 26.6 96. 125.4 _. 2.J .260. 6 Total Investment Costs 132.0 137.5 93.5 44.0 407.0 147.5 158.7 111.2 53.9 471.3 191.0 209.6 70.7 471.3 II. Recurrent Costs A. incremental salaries 2.8 2.8 2.8 2.8 11.0 3.1 3.2 3.3 3.4 12.9 - 11.0 1.9 12.9 B. operational costs .1.2Q _11.0 ll.Q .I ,Q 4QCA 12.3 _1,21 1 3,l 1. __1 __ -_ _.2 _ 71._ 517 Total Recurrent Costs 11 ll3 13.8 1,- 3.81 _55.Q j15 _15.2 16. 16_9 4A62 6 _54..-2 __. _4 9. Total 145.8 151.3 107.3 57.8 462.0 162.9 174.6 127.6 70.8 535.9 191.0 264.5 80.4 535.9 \a Proceeds to be used as revolving fund Wed Jun 25 11:03:42 1997 Table 7-Effective Project Management (US$ '000) Breakdown of Totals Incl. Cont. Totals Including Local Duties Base Cost a gencime For. (Sxel. & D"S_ 20@P ZMt WOZ Total 7X ,,W o§ Total Exch, Taxes) Taxes Total I. Investment Costs A. equipment 4x4 27.5 - - 27.5 30.7 - - - 30.7 26.1 - 4:6 30.7 O Sedan 19.3 - - - 19.3 21.5 - - - 21.S 18.3 - 3.2 21.5 Computers S.5 - 2.8 - 8.3 6.2 - 3.3 - 9.4 1.9 6.1 1.4 9.4 Printers, copiers, tax. 8-mail 13-8 5.5 2.8L - 22.0 15.4 6.3 3.3 _- " 22 21.2 -- 3.7 24.9a Subtotal equipment 66.0 5.5 5.5 - 77.0 73.7 6.3 6.5 - 86.6 67.4 6.1 13.0 86.6 (b B. StudieS a _3Q,Q 46.2 107.B 123.2 J0E.) _14_A 53.2 127. 1lJ0. 365i2 _2173.6 3.8... 54. 365.2 Total investment cost. 96.8 51.7 113.3 123.2 3,85.0 108.1 59.S 134.2 150.0 451.8 341.0 42.9 67.8 451.8 II. Recurrent Costs A. Repayment PPF 210.0 - - - 210.0 210.0 - - - 210.0 178.5 31.5 - 210.0 D. Operating Coot. 0e 0 & H 11.0 11.0 11.0 11.0 44.0 12.3 12.7 13.1 13.5 51.7 - 43.9 7.8 51.7 (5 salaries .5 5.5 5.5 . .52 .21Q 5.6 5.8 6.0 6.1 23.5 -_ ... 3._ 2$ _.1 1 Subtotal Operating Costs _i._ 16.5 16.5 16.5 66. Q1 .2 t8.5 _-LJ. _19.7 1S.2 _ 63.9 111 75.2 " Total Recurrent Costs 226.5 16t5 16.5 16.5 2ilLQ 227.9 18.5 19.1 19.7 a"ZQ2 _17B5 95.4 11.3 285.2 Total 323.3 68.2 129.8 139.7 661.0 336.0 78.0 153.3 169.7 737.0 519.5 138.4 79.0 737.0 \a Village DSM, preparation of phase in South of Chad, etc. Red Jun 25 11:03:45 1997 Expenditure Accounts by Components - Totals Including Contingencies (US$ '000) Establish Village-Based Natural Resource Nanazement System CD Create National Improve Efficiency of Household zi- Capacity to Fuil Ut e 0 Design Faiitt the Firewood/Charcoal Create Rural Monitor Monitor/Control Comuercialization Introduce Use oC Bxploitation Pirewood/Charcoal Performance of of Wood of Charcoal and Keroseoe/LPO Project rj Plang Markets Rural Market froduc FlowsL Firewood Stoves stoves Manament t.ol& ab 1. Investmnt Cots &. goods 1. office equipment 73.8 - - 90.2 - - 34.4 198.4 b 3. boats - - - 61.0 - - - 61.0 - 4. motor cycles- 77.5 45.3 60.9 - - - 183.6 1E. S. cars 92.1 157.2 96.7 221.3 24.6 24.6 52.2 668.6 (I 6. promotional equipment - - - 44.6 166.5 135.2 - 346.3 O 7. laboratory - - - 30.7 - - 30.7 10. training equipment and materials 43.8 76.9 511 25.s 88 7 50o 3 Subtotal goods 209.8 311.6 193.1 503.4 310.5 210.7 86.6 1,825.6 C. Civil Works - - - 123.1 - - 123.1 D. Consultant services 1. National expert 85.9 - - - - 85.9 2. Studies - - - - 365.2 365.2 3. International Expert 471.5 429.3 117.1 62.5 145.6 113.1 - 1,339.2 4. Monitoring, database, and extension services - 117.7 59.S 78.6 77.5 - - 333.1 5. NGO 245.4 119.0 - 135.0 147.5 - 646.9 6. training .. U . _______ - 89.3 -- - 220ljj Subtotal Consultant services 602 8 78.1 384 8 141.1 358.2 260.6 26.2. LL. Total Investment Costs 812.6 1,189.9 577.9 767.5 668.7 471.3 451.8 4,939.6 II. Recurreat Costs 3. Repayment PPF - - - - - - 210.0 210.0 C. Operating Costs 44.1 176.0 131.3 516.6 51.7 51.7 971.4 S. Operating Costs Government Staff 13.6 714L 28.2 12.9 23.5 12.9 21.c 186L0 Total Recurrent Costs 57.7 247.4 .1,95 529.5 23.5 64.6 _.__2LS_Z 167IA Total PROJKCT COSTS 870.3 1,437.3 737.3 1,297.1 692.2 535.9 737.0 6,307.0 Taxes 59.8 215.6 110.6 194.6 103.8 80.4 79.0 843.8 Foreign Exchange 651.3 876.6 240.6 435.9 253.8 191.0 519.5 3,168.7 Wed Jun 25 11:03:51 1997 (4 W 0 Annex 3.3 SAR - Household Energy Project Page 6 of 6 Project Components by Year (US$ '000) zg6an fnel-udineq Cane iASneniAe _22L_ 2 200 201 Toral A. XstAblish V lage.-ftsed Natual Resource Xazag)qit Syset 1. Creace National Capacicy to Design Firewood/Charcoal Exploicacion Plans 445.2 293.5 127.6 4.0 670.3 2. Create Rural Pirewood/C3arcoal Markets 305.3 471.3 400.0 260.7 1,437.3 3. Monitor Perfornance of Rural Markets 62.1 190.4 26a.5 216L3 , 737 3 Subtotal Natablish Village-Based Watural Resource XanaginrLt Systu 8212.6 955.2 796.1 481.1 3,044.9 B. Monitor/Control of Wood Products Flows 444.6 376.3 313.3 162.9 1,297.1 C. Mprove ESficiency of lous*hold ftel Use 1. Facilitate thet Comercializacion of Charcoal and Firewood Stoves - 220.8 221.7 169.3 80.4 692.2 2. Introduce Use of Kerosene/LPG stoves ..2.i.1 174.6 127.6 70.8 935.9 Subtotal Improve Efficiency of Zousahold fuel Us. 383.7 396.3 296.9 lS.2 1,228.0 D. Project Management 336.Q 783.0 153 . 169.7 737.0 Total PROJECT COSTS 1,976.8 1,805.8 1,539.6 964.8 6,307.0 Wed Jun 25 11:01:37 1997 Expenditure Accounts by Years (US$ '000) Totale !?ne1¶d{ft onelI'¶pnciae 2. Zares-mt Costs A. goods 1. office equipment 121.0 32.9 40.4 4.0 198.4 3. boacs 9.8 30.4 20.8 - 61.0 4. mocor cycles 33.8 39.8 59.2 50.8 183.6 5. cars 316.2 189.7 162.6 - 668.6 6. promocional equipment 55.3 145.8 91.4 53.7 346.3 7. laboratorV 30.7 - - - 30.7 10. training equipment and materials -21.- 139.9 104 7 336.9 Subtotal goods 659.2 578.6 479.2 108.6 1,825.6 C. Civil Works 123.1 - - - 123.1 D. Consultant serzicaJ L. National expert 7.4 15.2 31.2 32.1 85.9 2. Studies 34.4 53.2 127.6 150.0 365.2 3. International Expert 466.7 493.3 312.2 66.9 1,339.2 4. Monitoring, database, and extension services 36.9 76.4 10S.0 115.0 333.3 5. NGO 104.6 184.1 183.1 175.1 646.9 6. training ...2 s g.c4 jL3 -.-I .S Z2L.5 Subtotal Consultant services 74a5 9176. 772L4 552.5 2.990.9 Total Znvesen t Costs 1,530.7 1,496.2 1,251.6 661.1 4,939.6 rs. Recurrent Costs D. Repayment PPP 210.0 - - - 210.0 C. Operating Costs 190.8 261.0 262.6 257.0 971.4 S. Operacing Costs Government Staff 45.3 48.6 4 .4 46.7 186.0 Total Recurrent Costs 446.2 309.W 30.3.0 303?. 1.367.4 Total PROJZCT COSTS 1,976.8 1,805.8 1,559.6 964.8 6,307.0 Wed Jun 25 11:01:38 1997 SAR - Household Energy Project Annex 3.4 Page 1 REPUBLIC OF CHAD HOUSEHOLD ENERGY PROJECT Activity Schedule Chad Household Energy Project Time Table year 1 gear 2 year 3 year 4- A. Establish village-based natural resource management system 1. Create National Capacity to Design . . . . . . Firewood/Charcoal Exploitation Plans 2. Create Rural Firewood/Charcoal Markets 3. Monitor Efficiency of Exploitation Plans B. Monitor/Control of Wood Products Flows C. Improve Efficiency of Household Fuel Use 1. Facilitate the Commercialization of Charcoal and Firewood Stoves' 2. Introduce Use of Kerosene/LPG stoves D. Effective Project Management reporting mid-term evaluation audit SAR - Household Energy Project Annex 3.5 Page I REPUBLIC OF CHAD HOUSEHOLD ENERGY PROJECT Procurement and Consulting Services Consulting services will be required as follows: (a) consultants in stove marketing and stove technology for the demand management component; (b) a number or specialists to prepare the forest management plan -- including a forestry economist, a specialist in forest inventory, an agro-socio-economist; a sociologist; a specialist in forestry management; and a specialist in geographical information systems; (c) a specialist in forestry regulation and a consultant lawyer for the preparation of legal documents, the definition of procedures for the creation of rural markets and the setup of mechanisms for periodic revision of tax rates on wood: (d) a specialist in tax colilection and the administrative monitoring of rural markets; (e) specialists in communication and dissemination of information to rural areas; (f) an agro-socio-economist, a sociologist and a forest management specialist to help AEDE in training and technical supervision; (g) a technical specialist in artisanal charcoal production; (h) an expert in energy planning and conservation to conduct a training seminar for DPENR management; and (i) a specialist in training agents for rural development to assist DFPE in improving the capabilities of its agents. The following table provides an overview of the short-term services required: Specialist inputs (months) Year I Year 2 Year 3 Year 4 Total Woodfuel Master Plan Forestry economist 2.0 2.0 Forestry inventory specialist 1.0 1.0 GIS specialist 1.5 1.5 Agro-socio-economist 3.0 3.0 Forest management specialist 1.5 1.5 Create Rural Markets Rural communication specialist 2.5 1.5 1.0 5.0 Agro-socio-economist 2.0 1.0 1.0 4.0 Sociologist 2.5 2.0 1.5 6.0 Forest management specialist 1.0 1.0 2.0 Charcoal specialist 2.0 1.5 3.5 Training specialist 1.0 1.0 2.0 Monitoring & Control Control specialist 2.5 1.5 1.0 5.0 Reglementation specialist 1.0 1.0 Improve Efficiency of Household Fuel Use Stove technologist 1.5 1.5 1.0 3.0 Marketing specialist 1.5 1.5 4.0 TOTAL 17.5 15.0 8.5 3.5 44.5 SAR - Household Energy Project Annex 3.6 Page 1 of 2 REPUBLIC OF CHAD HOUSEHOLD ENERGY PROJECT Performance Indicators Key performance indicators of the project agreed upon during appraisal include the following: Progress in the Creation of Rural Wood Markets and Management Plans: evolution of the retail prices of fuelwood and charcoal in the N'Djamena market; number of rural markets set up within the supply basin for wood energy in N'Djamena; rate that rural markets sufficiently cover forested areas within the priority zones identified by the wood management plan for N'Djamena; producer price of wood and charcoal in green zones compared to yellow & red zones; and of woodfuels supplied from green zones compared to the other zones, including how much of urban demand these sales represent. Monitor of Wood Products Flow: monthly change in the rate GOC recovers taxes on wood for energy, based on the data of various monitoring stations to be set up in N'Djamena; and amount of tax revenues collected annually in the rural markets, benefiting local communities. Effectiveness of increasing the Efficacy of Household Fuel Use Program: monthly sales of improved firewood, charcoal, kerosene, and LPG stoves in N'Djamena; increase in the share of households actually using improved stoves in N'Djamena; estimated real savings that accrue to households from the use of improved stoves; and increased supply and use of modem fuels. Project Management: extent to which AEDE will be able to autofinance; implementation according to project documents. A table with more fully developed indicators on a year-by-year basis is presented on the next page: Performance Monitoring Indicators RM = Rural Market Development objectives Targets Key Indicators Year I Year 2 Year 3 Year 4 implement - Enactment of all relevant - All required civil servants - Decrees enacted on land - Decrees enacted on land - Decrees enacted on land e appropriate legal and regulatory texts seconded granting for RM established granting for fM granting for RM established .4 t institutional and - Regular updating of tax - Wood fuel flow control duing YI established during Y2 and during Y4 0 4 regulatory reforms levels system fully operational - Decree enacted updating Y3 - Decree enacted updating in the household - Monthly amount of tax - Full set of guidelines for woodpile tax levels - Decree enacted updating wood fuel tax levels energy sector revenues RM establishment available - Tax revenue increase wood fuel tax levels - 75% auto-financing of - Auto-financing of AEDE - Tax revenue increase - 50/. Auto-financing of - Tax revenue increase AEDE operating costs operating costs AEDE operating costs - 75% Auto-financing of _______ ____ __ _______ _____ _ _______ ______ _______ _____ _ A EDE operating c ss _ _ _ _ _ _ _ _ prorot:e establis sustainable - N umnber of Rral Markets - Infrmation campaign on - pN'D,amenvo wood fuel - Feasibility stuies of - 100 RMs fully onerationa sustaiaable use production of wood established nqw regulation, tax and RM Master Plan completed and Project extension in - Improved kilns used in all of natural fuels for urban - Number of charconlers launched fully operational Moundou, Sahr, and RMs resourects supply in 100 using improved kilns - N'Djamena wood fuel - 30 new RMs established Abechd completed - RM supplying over 40% of villages - Market share of RM in Master Plan worked - Number of charcoalers - 30 new KMs established N'Djamena charcoal market N'Djamena charcoal suprply launched using improved kilns in - Number of charcoalers - RM forest management promote rural - Appropriate RM forest progress using improved kilns in techniques fully operational and private management techniques - RM forest management progress sector developed techniques updated - RM supplying 20%Y of development - NGO for RM N'Djamena charcoal development hired market - First group of RM markets established - First training sessions for charcoalers organized - improve the -Number of improved - Suitable wood fuel, LPG - Promotion campaign - Use of improved wood - Market established for efficiency of stoves in use and kerosene stove models launched fuel stoves in progress fully private sector operation household energy - LPG sales developed - Use of improved wood - Use of LPO and kerosene - 28,000 improved wood use - Change in N'Djamena - NGO for improved stoves tuel stoves in progress stoves in progress; fuei stoves sold - reduce household wood fuel demand dissemination hired - Use of LPG and kerosene - Increase in LPG sales 4,000 LPG stoves and 8,000 accelerate expenditures for Savings in cooking fuel - Product marketing stoves in progress - Feasibility study kerosene stoves sold poverty cooking expenditures strategies defined - Increase in LPG sales completed on local - 138,000 tons of standing alleviation - Private operators - Report on consumer panel production of LPG and wood saved identified cooking fuel expenditures kerosene stoves - 10% reduction in cooking - Consumer panel in place - Report on consumer panel fuel expenditures cooking fuel expenditures increase monetary - Wood fuel revenue - RM tumovers of more - RM tumovers of more - Average RM turnover over incomes in villages generated at village level than 0.25 million F than 0.50 million F I million F CFA/market | CFAImarket CFAlmarket - Village collective t - Wood fuel tax revenue - Wood fuel tax revenue investment realized out of O generated at village level generated at village level woodpile tax revenue t - First RM village l collective investments X - ensure efficient - Semi-annual work - Semi-annual work - Semi-annual work - Semi-annual work - Semi-annual work implementation of programs; satisfactory programs; satisfactory programs; satisfactory programs; satisfactory programs; satisfactory audit; c the Project annual audits; monitoring audit; monitoring system in audit; monitoring system in audit; monitoring system in monitoring system in place Monitoring - improve system in place place place place - PCR knowledge of - Regular publication of - Design of Infonmation, - Mid-term review - Main household energy - Regular publication of X household energy main household energy follow up and evaluation - SIEP fully operational indicators published twice a main household energy sector performances indicators systems (SIEP) on sector - Main household energy year indicators fully operational performances atnd Impacts indicators published twice a and auto-finianiced completed year SAR - Household Energy Project Annex 3.7 Page 1 of I SELECTED DOCUMENTS IN PROJECT FILE 1. Chad: Household and Biomass Energy Study: Final Report (I.S. Limited) 2. Demonstration de Methodes de Carbonisation a Haut Rendement: Partie I - Rapport de Mission du 10 au 29 avril 1995 (Johan Lejeune, 1995) 3. Etude Sur les Consultations Rurales (M.A. Abdel-Hamid, Agala Ahmat, B.A. Bakhit, 1996) 4. Evaluation du Projet Energie Domestique: Note de Preparation de la Mission d'Evaluation (Michel Matly, 1996) 5. Projet d'Energie Domestique: Manuel d'Execution (1997) 6. Projet Strategie de l'Energie Domestique: Etude de Marche des Systemes de Cuisson et de l'Electrification Solaire Domestique (SEED-Michel Matly, 1995) 7. Strategie Pour l'Energie Domestique Urbaine Cas de N'Djamena: Preparation du Plan d'Action Detaille - Rapport de Mission a N'Djamena du 08/10/94 au 28/10/94 (Francois Haaser, 1994) 8. Stategie Pour l'Energie Domestique Urbaine: Preparation d'un Plan d'Action Detaille (ESMAP, PNUD/BM-Amos Allemane N'Djal-Amava, 1994) 9. Strategie de l'Energie Domestique: Etude du Cadre Institutionnel (SEED- Gerard Madon, 1995) 10. Strategie Pour l'Energie Domestique: Plan d'Action Detaille (Comite Directeur de Suivi, 1994) SAR - Household Energy Project Annex 3.8 Page I of 2 IMPLEMENTATION MANUAL (MANUEL D'EXECUTIOA) TABLE OF CONTENTS Part 1 Objectives, Expected Results and Project Components .................... ... I I.A. Objectives .2 I.B.Expected Results ...................................... ............. 5 I.C. Project Components ............................................ 8 Part II Institutional Arrangements ............................................. 10 II.A. Public Entities ........ . .......................................... 11 II.B. The AEDE Agency .................16............................. 16 II.C. Technical Asssistance .................................... 19 Part III Implementation of the Village-based Resource Management Component ..... ... 22 III.A. Year 1 Activities .23 III.B. Year 2 Activities .27 III.C. Year 3 Activities .30 III.D. Year 4 Activities .......... 32 Part IV SAR - Household Energy Project Annex 3.8 Page 2 of 2 Implementation of the Control/Regulation of Woodfuel Commerce Component ... 34 III.A. Year 1 Activities............. 35 III.B. Year 2 Activities ................................................ 38 III.C. Year 3 Activities ................................................ 41 III.D. Year 4 Activities ................................................ 43 Part V Implementation of the Household Fuel Use (Demand Side Management) Component ... .................................................. 46 III.A. Year 1 Activities ................................... .............. 47 III.B. Year 2 Activities ................................................ 50 III.C. Year 3 Activities ................................................ 53 III.D. Year 4 Activities ................................................ 56 Part VI Annexes............... ...58 SAR - Household Energy Project Annex 4. 1 Page 1 REPUBLIC OF CHAD HOUSEHOLD ENERGY PROJECT Basic Assumptions and Demand Scenario (i) All tables range from year 1998 through 2017, although some of the middle columns are not printed for space limitations. (ii) The border price oe kerosene is taken as the economic value. The border price is CFAF 166, which is of the same order of magnitude of other landlocked Sahelian countries. However, the official price structure in Chad allows for a retail price of CFAF 260, based on imports from Yaounde, Cameroon. Even allowing for a higher purchase price due to low quantities, and allowing for high transport cost provisions, the official price structure is too high. Prices are projected according to World Bank commodity forecast figures. (iii) All costs and benefits are discounted at 12%. SAR - Household Energy Project Annex 4.2 Page 1 of 7 REPUBLIC OF CHAD HOUSEHOLD ENERGY PROJECT Resource Management Component - Economic Analysis Part a: Project Alternatives al. Cost Comparison of Supply Alternatives a2. Project Costs for Resource Management Component a3. Road and Fluvial Transport Project Alternatives a4. Wood Plantations Project Alternatives Fuel Subsitution Project Alternative Part b: Cost-Benefit Analysis Natural Resource Management Component bl. Economic Analysis (costs, benefits, stove use projections, sensitivity analysis) b2. Forest Resource and Productivity (forestry classes and average productivity) Cb (c REPUBLIC OF CHAD HOUSEHOLD ENERGY PROJECT COST COMPARISON OF SUPPLY ALTERNATIVES Discounted Alternatives Description Costs $ thou Project Natural resource management by villages through $4,870 community participation Transport and mine wood from resource rich areas by 9 Road transport trucks $10,904 Wood Plantations Institute a program of planting trees $48,291 Fuel Substitution Project Mine wood until there is no more, then use substitute $53,050 petroleum fuels Fluvial transport Transport and mine wood from resource rich areas by $54,044 river boats Note: Discounted costs at 12 percent, and over a twenty year period Cb 0 0D 0 REPUULIC OF CIIAD HoUSEI1oLD ENERGY PROJEC1 PROJECT COSTS FOR RESOUCE MANAGEMENT COMPONENT 1999 2000 2001 2002 2003 2006 2011 2016 RMP Project Costs thou $ Investment costs 1,140 1,106 944 495 Recurrent Costs 403 286 284 279 Variable costs thou $ Costsofoperationofruralmarkets 7 20 51 73 95 117 117 117 Control costs 200 111 Total Costs thou $ 1,551 1,422 1,280 848 295 228 117 117 NPV (@12%) 4,870 oh REPUBLIC OF CIIAUO IHOuSEIIOmI) ENERCY IPROJECT ROAD AND FLUVIAL TRANSPORT PROJECT ALTERNATIVES (US$ thousand) Transport costs F.CFA/t.km US$/t.km - by truck 180 0.32 of which vehide costs 86 0.15 of which labor costs 94 0.16 - Supply for 100% from Sahr in 2004 and before then over an increasing distance F.CFA/bag US$1t. - by boat, for a distance of about 500 km 2,000 87.41 of which barge costs 100 4.37 of which labor costs, margin 1,900 83.04 (data from limited survey) 1999 2000 2001 2002 2003 2006 2011 2016 2018 Road Transport US$ fthou Transport costs 2,172 2,315 2,529 2,789 3,004 3,771 4,659 5,508 5,873 Additional transport costs 143 357 617 832 1,599 2,487 3,336 3,701 Total costs 143 357 617 832 1,599 2,487 3,336 3,701 Net Present Value (US$) 10,904 Average price increase of woodfuels (%) 1.3% 3.3% 5.8% 7.9% 13.2% 15.7% 16.1% 16.1% Fluvia/ Transport Need for transport (t) 0 0 0 0 0 0 236,420 278,959 297.175 Transport costs 0 0 0 0 0 0 20.666 24,385 25,977 Total costs 0 0 -0 0 0 0 20,666 24,385 25,977 3 Net Present Value (US$) l54044 REPUBLIC OF CIIAD IIOUSEIIOLD ENERGY PROJECur WOOD PLANTATIONS PROJECT ALTERNATIVE Tree Species t/ha/yr cost/ha cost/ha/yr 0 Prosopis (Julidlora) 7.5 750 5 1399 2000 2001 2002 2003 2006 2011 2016 2018 Need for additional supply by 2004 Total stock natural resource (t) 4,902,338 4,423,963 3,917,036 3,379,783 2,810,315 887,867 0 0 0 (b Total demand forwood (1) 451.490 478,375 506,927 537,253 569,468 678,698 911,583 1,228,195 1,384,918 Total ha planted - case I 9,000 9,000 9,000 9,000 9,000 9,000 6,000 6,000 6,000 Total planted wood available 1) 67,500 202,500 405,000 675,000 1,012,500 2,430,000 2,573,553 1,717,298 1,188,253 Investment Cosis $ thou 6,750 6,750 6.750 6,750 6,750 6,750 4,500 4,500 4,500 Operating Cosis $ thou 45 90 135 180 225 360 525 675 735 Total Costs 6,795 6,840 6,885 6,930 6,975 7,110 5,025 5,175 5,235 Net Present Value (12%) 48,291 1) total accumulated production avaiable minus demand for that year for plantation wood FUEL SUBSTITUTION PROJECT ALTERNATATIVE 1999 2000 2001 2002 2003 2006 2011 2016 2018 Kerosene required (t) 0 0 0 0 0 0 47,842 58,977 64,096 Value of kerosene (US$ thou) 0 0 0 0 0 0 20,374 25.116 27.296 Total incremental costs (USS thou) 0 0 0 0 0 0 20,374 25,116 27,296 CD Net Present Value (12%) $53,050 o : Notes: * o 1) starting from when a wood deficit ocrcurs % REPUBLIC OF CIIAD HOUSEIIOLD ENERGY PROJECT t ECONOMIC ANALYSIS FOR RESOURCE MANAGEMENT PROJECT 1999 2000 2001 2002 2003 2006 2011 2016 2018 Basic data - Demand with (ton) 451,490 441,290 436,793 432,154 441.313 539,159 745,152 1,025,845 1,165.324 Resulting costs per rural market 62 40 41 31 10 New rural markets 25 35 30 25 20 0 0 0 0 Supply from rural markets 10% 24% 36% 46% 54% 60% 60% 60% 60% Efficiency tax control (outside rural markets) 10% 30% 45% 50% 55% 55% 55% 55% 55% Costs .l 1.422 20 4 2X 22 I 1in 117 Project Costs thou S t544 119 1.228 775 Investment costs 1,140 1,106 944 495 Recurrent Costs 403 286 284 279 Vaniable costs thou $ 73 29.2 51.1 . 291.9 2278 1168 116.8 116.8 Costs of operation of rural markets 7.3 29.2 51.1 73.0 94.9 116.8 116.8 116.8 116.8 Control costs 200.0 111.0 1 0 Benefits thou $ Il 117 468 X113 1.70 2.7 2.894 3 028 Transport savings 7,583 5 -9 252 629 732 1,265 2,000 2,416 2,550 o Avoided productivity losses ) 2,556 47 126 215 310 382 465 478 478 478 d: Dry zone farming 1,639 22 80 137 196 254 305 301 301 301 Fruit trees 2,966 67 149 252 364 432 530 560 560 560 Increased pastoral optput 507 6 24 41 59 77 95 95 95 95 ) only 50% of the benefits are acaunted o Net Benefits thou $ -1,498 -1,305 .-812 91 819 1,502 2,360 2,777 2,911 Economic rate of relurn ERR 25.1% Net Present Value US$ thou NPV $5,269 tn REPUBLIC OF CHAD HOUSEHOLD ENERGY PROJECT FOREST RESOURCES AND PRODUCTIVITY 0 Yield Standing ha t/ha/y tVy stock (t) Water 12,774 0.7% Inundated grassland 132,379 7.3% Dry soudanian woodland 68,115 3.7% 3.50 238,402 2,384,015 Dry acacia bushland 278,069 15.3% 0.57 158,499 1,584,993 Moist acacia bushland 82,538 4.5% 1.37 113,077 1,130,766 Wet semi-desert wooded grassland 50,265 2.8% 0.30 15,080 150,796 Dry semi-desert wooded grassland 67,880 3.7% 0.15 10,182 101,820 Sand/bare soil 117,100 6.4% Savana 704,277 38.7% Cultivated land 197,375 10.9% Mud/silt 61,043 3.4% Reeds 17,740 1.0% Non classified 27,939 1.5% Total 1,817,493 100.0% 0.29 535,239 5,352,391 Of which, forest cover 546,867 30.1% 0.98 535,239 5,352,391 0.98 9.79 (b x o4 SAR - Household Energy Project Annex 4.3 Page 1 of 3 REPUBLIC OF CHAD HOUSEHOLD ENERGY PROJECT Demand-Side Management Component (DSMP) Economic Analysis al. Cost-Benefit Analysis Demand-Side Management Component b i. Market Data for Improved Stoves REPUBLIC OF CIIAD HOUSEIIOLD ENERGY PROJECT O ECONOMIC ANALYSIS FOR DEMAND MANAGEMENT COMPONENT 1999 2000 2001 2002 2003 2006 2011 2016 2018 Costs thou $ 433 4 6 2 4 m 234 368 Q Q Project Costs 4- _L i1 1N Investment costs 390 390 308 166 Recurrent Costs 43 23 24 25 Differential Cost of Stoves _ Z_7 135 136 24!i 68 0 a firewood local 0 9 15 21 25 27 32 0 0 charcoal 1) local 0 -16 -21 -26 -29 -20 4 0 0 kerosene and LPG foreign 0 56 84 140 140 238 333 0 0 Benefits: Fuel savings thou $ 15 681 1 12. 22 1.580 2.071 2.325 firewood 15 -68 -55 -50 -54 -132 -169 -169 -159 charcoal 0 685 1,386 2,080 2,540 2,803 3,386 4,141 4.504 kerosene 0 -157 -392 -627 -783 -856 -992 -1,150 -1,220 LPG 0 -101 -252 -403 -503 -552 -644 -751 -799 0 Net Benefits thou $ -418 -102 278 675 1,064 1,018 1,211 2,071 2,325 Economic rate of return ERR 75% Net Present Value NPV $ thou 6,123 1) Due to subsitution away from charcoal to kerosene and LPG less households will use charcoal in the "with" case x~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ (b REPUBLIC OF CHAD HOUSEIIOLD ENERGY PROJEC' MARKET DATA FOR IMPROVED STOVES 1999 2000 2001 2002 2003 2006 2011 2016 2018 Without project S ()W0) olhouseholds using 103A 1QJ 1130 11 2n4 140. 1754 2186 2387 L' firewood 54.9 56.3 57.6 58.9 60.1 63.5 67.5 67.8 66.3 dcharVcoal 47.0 50.3 53.8 57.6 61.6 75.5 105.9 148.5 170.0 O keroser i.00 1i.03 1.0W 1.09 1.13 1.23 1.43 1.65 1.75 LPG 0.50 0.51 0.52 0.53 0.54 0.57 0.63 0.70 0.73 Enetgy Demand (I ot fuels) firewood 102,856 105.338 107,778 110,164 112,482 118,871 126,397 126,930 124,080 (c charcoal 45,322 48.49% 51,889 55,522 59,408 72,778 102,074 143.164 163,909 wood for rcharoal making 348,632 373.037 399,149 427.090 456.986 559,827 785,187 1,101.265 1.260,838 kerosene 200 206 212 219 225 246 285 331 351 _, LPG 60 61 62 64 65 69 76 84 87 r NOTE: extrapolated trorn data codedced in 1995,1996 Energy Demand (G.) 3,016.59 21§JLZ4 3.292.95 2M0542 9 3594450 1118 5.100.A17 6.343.638 6921384 firewood 1.645,723 1,685,413 1,724.446 1,762,621 1,799,716 1,901,937 2,022,345 2.030,874 1,985,277 charcoai 1,359,666 1,454,843 1.556,682 1,665.649 1,782.245 2,183,326 3,062.228 4,294,934 4,917.270 kerosene 8,500 8.755 9,018 9,288 9.567 10,454 12,119 14,049 14,905 LPG 2,700 2,754 2,809 2,865 2.923 3,101 3,424 3,781 3,933 With project U ('OW) ot households using 1034 108.1 113. jiLl 123.4 148A 124i 218.6 238. firewood - tr. stove 54.9 S5.8 54.2 52.5 51.8 54.4 56.9 55.5 53.2 firewood - impr. slove 2.0 5.0 8.0 10.0 10.9 12.7 14.7 15.6 charcoal - Itr. stove 47.0 42.4 36.2 30.4 27.9 35.7 52.9 77.2 89.5 charcoal - impr. stove 4.0 10.0 16.0 20.0 24.0 35.7 51.2 59.2 kerosene 1.00 2.63 5.06 7.49 9.13 9.97 11.56 13.40 14.22 LPG 0.50 1.31 2.52 3.73 4.54 4.96 5.75 6.67 7.08 Assumplions: additional kerosene and LPG users switch from cdcoal inproved charcoal stoves alter project increase at 7.5%yr, inproved forewood stoves at 3%yr; Iracitional firewood user make up lor Mhe rest Energy Demand (l of fuels) firewood 102.506 106,939 109,073 111,346 113,750 121,992 130,402 130,917 127.840 charcoal 45.322 44,042 42,881 42,000 42,896 54,561 80,068 116.245 134,636 wood for charcoal making 348.632 338,783 329,854 323,080 329,967 419,697 615,907 894,191 1,035.661 kerosene 200 526 1,012 1,499 1,825 1.994 2.312 2,680 2,843 LPG 60 157 302 448 545 595 690 800 849 EnergyDemand (GJ) _010.96_ 3.065 3.088.221 321253ti2 .2Q02.229 3700.24 4.617.800 _31.Q 60 924& firewood 1,640.100 1,711,021 1,745,173 1,781,535 1,819,998 1,951,873 2,086,440 2.094,665 2,045,439 tt charcoal 1.359.666 1,321,255 1,286,432 1,260,013 1,286,872 1,638,820 2.402,036 3,487,346 4,039.077 0 kerosene 8,500 22,355 43,018 63,688 77,567 84,759 98,259 113.909 120,847 (5 LPG 2,700 7,074 13,609 20,145 24,523 26,796 31,064 36,012 38,205 C4 :' Balance: with - without 0 Addamona fuel oum ton (toffuels) firewood -351 1,601 1,295 1,182 1,268 3,121 4,006 3,987 3,760 charcoal 0 -4,453 -9,008 -13,521 -16,512 .18,217 -22,006 -26,920 .29,273 wood for charcoal making 0 -34,253 469,295 -104,009 -127,019 -140,130 -169,280 -207.074 -225,178 kerosene 0 320 800 1,280 1,600 1,746 2,027 2,350 2.493 LPG 0 96 240 384 480 527 614 716 762 SAR - Household Energy Project Annex 4.4 Page I of 2 REPUBLIC OF CHAD HOUSEHOLD ENERGY PROJECT Avoided C02 Emissions Avoided C02 emissions have not been incorporated in the analysis, although they are a real, though global benefit, that can be obtained by implementing the project. A total of some 1.05 million tons of carbon will be avoided over a 20 year period, mainly from a reduction of woodfuel consurnption, and of better wood management and carbonization techniques. As a first order estimate, emissions related to the fuel consumption of the with/without situation are calculated, assuming that there is no difference in deforestation (this is a very conservative estimate, as the "with" situation will be characterized by a reduced deforestation, and thus reduced emissions. Current GEF guidelines prescribe a willingness to invest in C02 mitigation activities to the tune of about US$10 per avoided ton of C02. Applying this value to the flow of avoided emissions gives a net benefit of about 2.9 million (NPV). Alternatively, an equivalent avoided cost of about $6.2 per ton of C02 would be applied to the project if GEF were willing to finance the total project costs. The following table shows this in more details: REPULIBIC OF CIIAD IIOUSEIIOLD ENERGY PROJECT (Qa AVOIDED C02 EMISSIONS emission (kg C02/kg fuel) 1/ wood 0.20 charcoal 2.94 kerosene 1.94 natural gas 5.10 I/ this inecorporates eniissions in combustion, conversion, and takes into account C02 and CH4 (on a C02 equiv. basis) 1999 2000 2001 2002 2003 2006 2011 2016 2018 NRM component Net emission savings are obtained from - reduction in deforestation (more biomass cover) --- not accounted for ------ - reduction in charcoal conversion ---- implicit in charcoal consumption ------ DSM Component Without the project (tof C02) 153.92 161748 174.215 185.36 197.258 237.840 325,482 446.417 506.853 firewood 20,099 20,583 21,060 21,526 21,979 23,228 24,698 24,802 24,245 charcoal 133,134 142,453 152,425 163,095 174,511 213,784 299,843 420,546 481,483 t kerosene 388 399 411 423 436 477 552 640 679 LPG 306 312 318 325 331 351 388 428 446 With the project (lo fC02) 153857 152.090 150.780 1S0.320 154.54a Q1Q 268j08 _zi. 40a 12 C firewood 20,030 20,896 21,313 21,757 22,227 23,838 25,481 25,581 24,980 W charcoal 133,134 129,373 125,963 123,376 126,006 160,272 235,199 341,469 395,493 a^ kerosene 388 1,019 1,961 2,903 3,536 3,864 4,479 5,193 5.509 LPG 306 802 1,542 2,283 2,779 3,037 3,521 4.081 4,330 Net Emissions (t of C02) 69 11,658 23,435 35,049 42,710 46,829 56,802 70,092 76,541 N' Total Project costs (DSMtNRM) US$ Thou 1,984 1,884 1,689 1,173 431 473 485 117 117 70 Total emission savings ton C02 69 11,658 23,435 35,049 42,710 46,829 56,802 70,092 76.541 ' Total savings over project life ton of C02 1,154,620 Emission savings coefficient 16.4% Marginal cost of avoided emission US$/t of C02 6.15 NPV Environmental Benefits US$ Thou 2,941 valued at $10 per ton of C02 SAR - Househoid Energy Project Annex 4.5 Page lof 2 REPUBLIC OF CHAD HOUSEHOLD ENERGY PROJECT User Fee Structure User Fee Structure Lower fee in managed area 600 500 CL LA: U-L 200 100 0 village EL canton -I] treasury REPUBLIC OF CIAD IIOUSEIIOLD ENERGY PROJECT , CALCULATION OF USER FEE 1999 2000 2001 2002 2003 2006 2011 2016 2018 Basic data Total supply zone ha 546,867 546,867 546,867 546,867 546,867 546,867 546,867 546,867 546,867 Demand for charcoal wood tons 348,632 373.037 399,149 427,090 456,986 559,827 785,187 1,101,265 1,260,838 Demand for firewood tons 102,858 105.338 107,778 110,164 112.482 118,871 126,397 126,930 124,080 total demand tons 451,490 478,375 506,927 537,253 569,468 678,698 911,583 t,228,195 1,384,918 Without project Area contributing to supply ha 500,750 451,886 400,106 345,228 287,060 90,691 0 0 0 - if clear-cut (100% deforestation) 100% 46,117 48,864 51,780 54,878 58,168 69,326 90,356 112,678 t23,082 Total production wo tons 4,902,338 4,423,963 3,917,036 3,379,783 2,810,315 887,867 0 0 0 With project tons Total production w 5,353,828 5,353,828 5,353,828 5,353,828 5,353.828 5,353,828 5,353,828 5,353,828 5,353,828 Balance: with - without tons Production shorifall 451,490 929,865 1,436,792 1,974,045 2,543,513 4,465,961 5,353,828 5,353,828 5,353,828 Demand deficit 0 0 0 0 0 0 911,583 1,228,195 1,384,918 Substitution fuels M Kerosene for charcoal useful GJ 0 0 0 0 0 0 408,297 572,658 655,636 Kerosene for firewood useful GJ 0 0 0 0 0 0 303,352 304,631 297,791 Kerosene tons 0 0 0 0 0 0 47,842 58,977 64.096 Costs of substitution thou $ 0 0 0 0 0 0 20,374 25,116 27,296 Productivity losses Productivity losses thou$ 0 0 0 0 0 0 87 118 133 Avg productivity loss $/t 0.10 User fee User fee = PVI(Cs of subs)I(Dem def)J US$/t 3.35 FCFA/stere 574 2 User Fee Calculalion Sensiltivity User Fee 5,000.000 700 4,000,000 600 3.000.000 N.4 o 2,000,000 -- Total Wood Energy 300 1,000,000 Demand (1)20 0 0 "4 ('4 ~~ ~~~~ ~~~ ~~~ ~~~ ~~~~~~0 0.2 0.4 06 0.8 I SAR - Household Energy Project Annex 4.6 Page 1 REPUBLIC OF CHAD HOUSEHOLD ENERGY PROJECT Financial Analysis 1999 2000 2001 2002 2003 2006 2011 2016 2018 NRM Component Total Dema ton 451,490 451,139 445,722 438,928 434,426 507,335 700,264 962.157 1,092,133 -firewood '102,858 102,506 106,939 109,073 111,346 119,461 129,245 131,654 129,663 - charcoal 45,322 45,322 44,042 42,881 42,000 50,424 74,232 107.965 125,121 Supply from rural market 10% 24% 36% 46% 54% 60% 60% 60% 60% Fee collection efficiency - rural markets 25% 70% 73% 76% 79% 90% 90% 90% 90% - city gate 10% 30% 33% 36% 40% 53% 65% 65% 65% Maximum fe USS thou 1,500 1,388 1,278 1,182 1,109 1,242 1,714 2,355 2,673 Fee collection efficiency 11% 35% 42% 48% -54% 69% 76% 76% 76%- Total fee col USS thou 162 492 533 568 602 856 1,298 1,783 2,024 - firewood rural markets 4.5 30.1 49.0 66.4 82.8 112.8 122.0 124.3 122.4 city gate 32.4 81.7 79.0 74.8 71.5 88.8 117.5 119.7 117.9 - charcoal rural markets 15.2 102.4 155.2 200.8 240.2 366.2 539.1 784.0 908.6 city gate 109.7 277.9 250.2 226.1 207.5 288.3 519.1 755.0 875.0 Financial Benefits Proceeds B USS thou - rural villages 10.7 71.6 110.3 144.3 174.4 258.6 357.0 490.5 556.8 -canton 7.1 47.7 73.5 96.2 116.3 172.4 238.0 327.0 371.2 - treasury (rural markets) 2.0 13.3 20.4 26.7 32.3 47.9 66.1 90.8 103.1 - treasury (city gate) 142.1 359.6 329.1 300.8 279.0 377.1 636.6 874.7 992.8 - treasury total 144.1 372.9 349.6 327.6 31:1.3 425:.0 702.7 965.5 1,096.0 - treasury accumulated 144 517 867 1,194 1,505 2,604 5,653 9.923 12,047 Effective us F.CFA/stere 187 205 222 238 290 318 318 318 RMP 1,544 1,393 1,228 775 Costs of control 0 0 0 O 0 200 111 0 0 0 DSM 433 413 331 190 Total Costs to Treasury 1,977 1,806 1,560 965 200 111 0 0 0 Total Project Financial Benefits -NRM 144 373 350 328 311 425 703 966 1,096 - DSM none Net cash flow -1,833 -1,433 -1.210 -637 111 314 703 966 1,096 Accumulated cash flow -1,833 -3,266 4,476 -5,113 -5.002 4,313 -1,543 2,726 4,851 1 1 1 1 1 1 1 0 0 NPV USS thou -1,755 FIRR 8.9% payback tim year 14 Average Effective Fee - charcoal FCFA/kg 1.58 4.80 5.27 5.69 6.10 7.42 8.15 8.15 8.15 -wood FCFA/kg 0.21 0.62 0.68 0.74 0.79 0.97 1.06 1.06 1.06 Price increase charcoal 2.0% 6.0% 6.6% 7.2% 7.7% 9.3% 10.3% 10.3% 10.3% Price increase firewood 0.9% 2.6% 2.9% 3.1% 3.3% 4.0% 4,4% 4.4% 4.4% Average (ch +w) 1.2% 3.7% 4.0% 4.2% 4.5% 5.6% 6.6% 7.1% 7.3% C'had at a glance Sub- POVERTY and SOCIAL Saharan Low- Chad Africa Income Development diamond' Populabon mid-1995 (millions) 6.4 589 3.188 GNPpercapita 1995 (USS) 180 490 460 Lifeexpectancy GNP 1995 (billions USS) 1.1 289 1,468 Average annual growth, 1990-95 Population (%) 2.5 2.8 1.8 1 GNP Labor force (%) 2.7 2.8 1.9 i Gross per primary Most recent estimate (latest year available since 1989) capita enrollment Poverty: headcount index (% of population) Urban population (% of total population) 21 31 29 Life expectancy at birth (years) 48 52 63 Infant mortality (per 1,000 tive births) 117 92 58 Access to safe water Child malnutrition (% of children under 5) .. .. 38 Access to safe water (% of population) 33 47 75 Illiteracy (% of population age 15+) 52 43 34 Chad Gross primary enrollment (% of school-age population) 59 71 105 Lonm u Male 80 77 112 Low-ncome group Female 38 64 98 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1975 1985 1994 1995 Economic ratlos- GOP (millions USS) 608.8 727.1 761.2 938.8 Gross domestic investmentUGDP 23.0 8.2 15.1 15.4 Opennessofeconomy Exports of goods and non-factor services/GDP 20.5 16.9 24.3 27.7 Gross domestic savings/GDP 8.8 -19.4 -5.5 -3.4 Gross national savings/GDP 4.9 -18.7 -7.6 -5.7 Current account balance/GDP -22.0 -30.4 -21.8 -22.1 Ie n Interest paymentsWGDP 0.2 0.3 0.6 1.7 Savings Investment Total debtWGOP 15.2 2e.4 104.7 93.2 Total debt service/exports 6.4 17.6 6.8 10.1 Present value of debt/GDP .. .. 53.0 47.4 Present value of debttexports .. .. 210.0 169.7 Indebtedness 1975-84 1985-95 1994 1995 1996-04 (average annual growth) - Chad GDP -1.8 3.2 5.2 5.5 5.2 Low-income group GNP per capita -3.7 0.8 2.5 2.9 2.8 Exportsofgoodsandnfs -1.6 0.8 -13.5 28.2 7.4 STRUCTURE of the ECONOMY 1975 1985 1994 199S Growth rates of output and Investment(%) (% of GDP) Agriculture 45.5 45.2 40.4 40.3 20 T Industry 20.8 17.6 16.7 16.6 Manufacturing 19.2 15.9 15.0 14.9 1 + \ Services 33.7 37.3 42.9 43.1 90s 92 94 95 Private consumpton 87.9 102.7 90.3 93.3 General govemmentconsumption 25.3 16.7 15.2 10.1 GOI +GOP Imports of goods and non-factor services 36.7 44.5 44.8 46.4 1975-84 1985-95 1994 1995 1 (average annual grwth) I Growth rates of exports and Imports (%) Agriculture -1.5 4.9 13.3 5.7 30 Industry -2.2 1.6 -4.6 5.0 Is Manufacturing ,, 1.9 -5.2 5.0 | " Services -1.2 1.9 0.8 3.3 0 I Private consumpton .. 2.7 3.0 8.1 1 90 ' General govemment consumption .. 1.6 *35.1 -10.2 Grossdomesticinvestrnent .. 2.5 7.1 17.3 -30 Imports of goods and non-factor services -4.5 -0.1 -28.6 25.5 Expotts I Inpors Gross national product -1.8 3.2 5.4 5.1 E I Note: 1995 data are preliminary estimates. 'The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond wlil be incomplete. Chad PRICES and GOVERNMENT FINANCE 1975 1985 1994 1995 Domestic prtces nfaton (% (% change) so - Consumer prices 41.3 6.5 l Implicit GDP deflator 8.6 -4.2 38.2 66 25 / Government finance i (% of GDP) 94 95 Current revenue 6.5 7.4 9.0 j 25 Currentbudgetbalance -1. 1 7.8 4.1 GOPdef. I CPI Overall surplus/deficit -8.9 -21.8 -18.1 TRADE 1975 1985 1994 1995 I (millions US3) [ Export and import levels (mill. USS$ Total exports (fob) 88 148 205 j 400 Cotton 44 52 103 Meat 26 41 39 30° t Manufactures 5 0 1 Total imports (cif) 185 245 228 200 Food .. 4. .5 Fuel and energy .. 19 8 a Capital goods .. 54 83 85 Export price index (1987= 100) .. .. 113 124 a s g 91 s2 93 94 95 Import price index (1987=100) .. .. 133 92 [lExPorts U Imports Terms of trade (1987=100) . . 85 135 BALANCE of PAYMENTS 1975 1985 1994 1995 r (millions USS) currnt account balance to GDP ntio (%) Exports of goods and non-factor services 102 94 185 260 0 Imports of goods and non-factor sevices 227 320 342 436 [o 1 921 92 s i 94 95 Resource balance -125 -226 -157 -176 I .| . Netfactorincome -1 -2 -8 -13 -10 i Net current transfers -8 7 -8 -9 Current account balance, 20-L before official transfers -134 -221 -173 -199 _ Financing items (net) 121 199 245 181 U Changes in net reserves 12 22 -72 19 -30 Memo: _ Reserves including gold (mill. US9;) 3 37 89 103 Conversion rate (hocal/USS) 214.3 449.3 555.2 508.5 EXTERNAL DEBT and RESOURCE FLOWS 1975 1985 1994 1995 (millions USS) Composition of total debt, 1994 (mIll. USS) Total debt outstanding and disbursed 93 192 797 875 IBRO 0 0 0 0 F G IDA 11 40 320 379 7 30 Total debt service 7 18 26 32 E IBRD 0 0 0 0 147/ \ B IDA 0 5 3 '320 Composition of net resorce ftows Ofricial grants 27 126 109 129 \1i Official creditors is 5 45 70 N Private creditors 0 -4 -1 -1 Foreign direct investment 20 54 7 1 250 C Portfolio equity 0 0 0 0 43 World Bank program Commitments 5 0 56 67 A - IBRD E - Bdaltera Disbursements 5 4 19 42 B - IDA 0 - Other multilatoral F - Pnrate Principal repayments ° 4 1 1 C - IMF G - Short-term Net flows 5 0 18 41 l Interest payments 0 1 2 3 Net transfers 5 -1 16 38 International Economics Department 9/27196 lBL' 2'-63 CHAD WOOD RESOURCE AROUND N'DJAMENA INCREASING WOODFUEL RELATED DEFORESTATION - A' WiL, Al -seIFR SNGRANI FAt ELc A DA, 0 L -, l, LL ' AE' iFS C A / >\ 0 .... ~~~~- - -- - - . / O N AIG L I A P o mpTA L, -E ANE : s T,, LAil. \ 45 oo 8- ----------googal .,;_ 1- - ' - AF 1 30' 30~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~, J~ , . s " . & i ' '' ' ' s i ' ~ Mos-eyc 0/ NIGER / C ' ~ ~~~~ ~~~~~~~~~~~~~~~~~~~~~ C H A-D 7 I" i~~~~~~~~~~~~~~~~~~~~~~~~~~~~~NI A, L -1 00, 1' 00 (LI E, I FE!iCAIn N / ~~~~~ ~~~~ ~ ~ ~ ~~~~~~~~CAMERON I KP,.- 5' ' . 4Mo.ngougsi N$ -A O~~~~~~~~~~~~~~~~~~EV RIP 15000 19.- As30 IA, - 'Y~~~~~~---i ''0152(2~ ~ ~~~ll~ IY1