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The household energy market in urban Mali
[top] [end]Demand for household energyMali has about 10 million inhabitants of whom about 26% live in cities (World Development Report 1996), and therefore buy their energy requirements. Only 10% of the energy requirements are presently covered by electricity, gas or liquid fuel; kerosene (paraffin), diesel. This means that 90% of the energy used comes from fuelwood, and increasingly from agricultural residues such as millet stalks, rice husks, straw and animal dung.The average household consumes about 6kg of wood per day. Urban households, in the major towns such as Bamako, Sikasso, Koulikoro, Gao and other district capitals, burn about one million tonnes per year. The use of charcoal has increased rapidly in the towns over the last decade, and total annual consumption is now approaching 60 000 tonnes per year. This requires 300000 tonnes of wood to be converted. The rate of increase of consumption of wood and charcoal can be assumed to be equal to the population growth of 2.5% per annum. Fuelwood is also needed commercially: by hospitals and health centres, and in fish-smoking, meat-roasting, large institutional kitchens and restaurants, in roasting, frying and grilling food in markets, in beer-brewing, dyeing cloth (bogolan), pottery firing, and to make the charcoal used by smiths. [top] [end]The supply of energyIn most rural areas, household members gather their own fuelwood with any available means of transport such as animal-drawn carts or boats. By contrast, fuelwood for cities needs to be marketed and transported. The consumption figures shown in Table 1 illustrate the supply to major cities.Table 1: Consumption of wood and charcoal in Mali's cities
(a) assuming 5kg wood required to make 1kg of charcoal But supply is distributed unequally within the country. In the south, the regrowth of trees exceeds fuelwood demand, and in the north, demand exceeds supply. However, there is no redistribution of fuel from the surplus areas in the south to the deficit areas in the north, as transport costs make the fuel too expensive for the poorer communities of the north. In Mopti (see Figure 1), fuelwood is transported from as far as 150km away, in part from the last forest reserves of the area. Theoretically, the northern regions of Tombouctou, Gao and Kidal have no productive forests and must be supplied from other regions. In the long run, it is feared that population increase will outstrip the available supply because the regrowth is minimal, especially in dry years.
Table 2: Forest area by region and potential production
Scarcity of forests and soil degradation exists around the major urban areas, but it is difficult to ascertain whether, on the whole, supply falls short of demand. This is because price increases are hidden, as suppliers vary the quantity at a constant price rather than raising the price. [top] [end]Strategic issues and the National Household Energy StrategyThe problem for the market is to supply adequate amounts of fuel-wood energy at affordable prices. The average household spends about 10% of its annual household income on fuelwood, and with increasing transportation costs, prices will continue to rise. Policy measures, like control of illegal cutting and transport taxes, have been introduced with the intention of making fuelwood scarcer, higher-priced and more valued, in order to make people use it economically.The National Household Energy Strategy is the result of a number of years of market and policy studies of the household energy sector. The goal of the Strategy is to reduce annual consumption by some 300 000 tonnes of fuelwood each year by the year 2000 from the consumption levels of 1995. This programme provides for legislation to regulate forest production and to increase supply to the cities, while simultaneously promoting measures to reduce effective demand. Measures on the demand side include the reduction of wood/charcoal consumption by the (partially subsidized) distribution of 240 000 improved wood/charcoal stoves, and 20 000 kerosene or gas stoves. On the supply side, an increase in availability to the cities of 200 000 tonnes of fuel-wood is planned, by the recovery of dead forests, better management of forest reserves by village associations, more efficient marketing and better control of entry points.
[top] [end]Supply and demand of energy-saving equipmentLet us look at the magnitude involved: to reduce annual urban energy consumption from its current levels by 10%, about 100 000 improved stoves would need to be introduced (assuming a daily consumption of 3kg instead of 6kg). The introduction of 100 000 stoves would save, theoretically, 300 tonnes of wood per day, or about 110 000 tonnes a year. These stoves would need to be replaced after three or four years. However, this 110 000 tonnes represents only the expected increase in consumption over five years, and in order to achieve a net impact a much larger number of improved stoves would need to be distributed.At present, there are about 300 people trained to produce improved stoves (Figure 2). Their production capacity is mainly constrained by the availability of sheet steel for metal stoves. Producing 100 000 stoves would require about 25 000 empty metal drums. At present, the number of drums which can be obtained on the market barely exceeds 5000 per annum. The market price of a drum, determined by wholesale traders who buy and sell for profit, is about 5500F. At about 6000F per drum, the blacksmith can make 3 to 4 stoves, which he can sell at 2500 to 3000F apiece, leaving him with 1000 to 1200F reward for his labour, and a monthly income of 80 000F or $170 (production of 20 days and 4 stoves per day assumed). If the price per drum and thus per stove increases, his sales, which even presently do not amount to much, will decline further, as consumers are unwilling to spend more than 3000F on a stove. Selling prices have to be maintained at low levels in order to capture the large market segment of low-income consumers. Some experiments have shown that demand outstrips production by a ratio of 3:1 when stoves are sold at a subsidized price of 1500F (instead of 2500-3000F).
[top] [end]ChallengesIn order to even achieve the moderate objective of 110 000 tonnes wood savings per year, the main obstacle is the difficulty in obtaining cheap raw material. Feasibility studies are under way to determine whether metal sheets can be imported at a cost low enough to permit semi-mechanized mass production in regional metal workshops, in order to satisfy the requirements of the period. There are about 25 producer associations in as many urban centres throughout the country, which have the human capacity to produce stoves and the financial capacity to purchase raw materials and equipment. However, the scale of the interventions needed to achieve a real impact and satisfy demand have not been realized during the planning of the projects in this sector and a strategy is now needed to overcome the supply bottleneck.Efforts are now being concentrated on creating a network of the actors in the sector. The major components of the network are:
[top] [end]Role of the Household Energy Strategy (SED)The Stratégie Energies Domestique (SED) intends to distribute 240000 metal stoves over the next four years (Figure 3). Although there are limits to what artisans can produce, the major factor is the low availability of raw materials.The Household Energy Strategy has passed on the task of stoves distribution in each region to a selected NGO whose role is to guarantee supply and distribute the subsidy to consumers. Despite new orders from these NGOs going into the thousands, production cannot keep pace because producers do not want to reduce their profit margins by paying higher prices for raw materials, even for large orders, and essentially want to continue selling at the retail price.
[top] [end]Effects of subsidiesThe market in Bamako is affected by competition between different stove model promoters. Appropriate Technology International (ATI), an internationally operating NGO which is financially supported by USAID, produced and disseminated the Kenyan Jiko. The organization contracted the largest stove manufacturer in town, which has subsequently dropped the production of the improved Malian stove. The Kenya Jiko is not adjusted to the pot sizes used in Mali and, unless subsidized, it is more expensive and less efficient than other types of improved stoves which are being disseminated. Both the Improved Stove Project (Project Foyer Améliorés, organized by GTZ) and the Household Energy Strategy (Stratégie d'Energie Domestique, SED) have recommended that the Kenyan Jiko should be adjusted to the local conditions and have suggested that the subsidy should be removed.The Household Energy Strategy itself has recently reduced its 1000F subsidy on each wood/charcoal stove to 500F and expects to remove the subsidy completely in 1999. This subsidy has boosted demand for stoves and sales to about 45 000 in 1997/98, but it has put some of the trained blacksmiths out of production because they cannot or will not sell the stove at a price which is lower than that to which they are accustomed and the high demand has increased the raw material costs. [top] [end]Summary and resumeThe establishment and maintenance of networks as support systems is an important condition for establishing more efficient household (and commercial) energy markets and making a long-term impact on the energy situation.Subsidies for individual projects may produce an artificial market, allowing consumer access to low-cost energy but this may end as soon as the project is over. If it is desired that energy and energy appliances are supplied by the market, then subsidies - if it is necessary initially to introduce them - should be removed as soon as possible. Decentralized production systems where supply sources are close to demand seem a better solution to consumer demand. The question thus arises which legitimate support for household energy systems is necessary and whether market forces should not be let to prevail. Some critics of improved stove distributions systems argue that consumers are slow in adopting the stoves because there is no perceived need to reduce their energy consumption and costs'. Absolute cost to the consumer is part of the problem: if no credit possibilities exist, customers are obliged to buy energy and energy appliances in small quantities at retail prices. [top] [end]Contents: Boiling Point 41: Household energy: the urban dimension
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01 August 2007; Last edited:
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