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The Charcoal Storage Disaster. the Lusaka Charcoal Supply Stabilization Project

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The Charcoal Storage Disaster. the Lusaka Charcoal Supply Stabilization Project 6£ 9907033 & * _ STOCKHOLM SE9907033 ENVIRONMENT SEI INSTITUTE CF TIB mw;vr B I-GRG6H ggB The Charcoal Storage Disaster The Lusaka Charcoal Supply Stabilization Project Kalumiana, O.S. Department of Energy, Zambia, ECESViED pn»2;5 OSTI The Charcoal Storage Disaster The Lusaka Charcoal Supply Stabilization Project Kalumiana, O.S. Department of Energy, Zambia Hibajene, S.H. Ministry of Energy and Water Development, Zambia Ellegard, A. Stockholm EnvironmentInstitute Stockholm Environment Institute Box 2142 S-103 14 Stockholm Sweden Tel:+46 8 412 14 00 Fax: +46 8 723 03 48 E-mail: [email protected] WWW: http://www.sei.se/ Responsible Editor: Karin Hultcrantz Stockholm Environment Institute © Copyright 1998Stockholm Environment Institute. No part of this report may be reproduced in any form by photostat, microfdm, or any other means without written permission from the publisher. ISBN: 91 88714 60 8 ISSN: 1400-4348 Ill TABLE OF CONTENTS EXECUTIVE SUMMARY.......................................................................................................v ACRONYMS, UNITS AND ABBREVIATIONS ..............................................................vii 1. BACKGROUND TO THE STUDY..................................................................................... 1 1.1. Introduction................................................................................................................. 1 1.2. Project objectives....................................................................................................... 2 1.3. The energy resource base in Zambia....................................................................... 2 1.4. Woodfuel production and use.................................................................................. 3 1.5. Long-term trends and seasonal fluctuations in charcoal prices...........................4 2. METHODOLOGY.................................................................................................................7 2.1. Urban market surveys............................................................................................... 7 2.2. Surveys in charcoal production areas...................................................................... 8 2.3. Charcoal storage......................................................................................................... 8 3. CHARCOAL MARKETS AND PRICES..........................................................................10 3.1. Market organization, charcoal source and volume of trade...............................10 The Lusaka north markets ...................................................................................10 The Lusaka east markets ...................................................................................... 11 The Lusaka south/west markets ..........................................................................12 3.2. Charcoal price...........................................................................................................13 3.3. Charcoal licensing.................................................................................................... 16 3.4. Reasons to produce charcoal...................................................................................18 3.5. Potential for producing charcoal for storage....................................................... 18 4. EXPERIMENTAL CHARCOAL STORAGE .................................................................20 4.1. The storage depot....................................................................................................20 4.2. Charcoal purchase and transportation...................................................................21 4.3. Labour and material related to storage.................................................................21 4.4. Charcoal sale............................................................................................................ 22 5. CONCLUSIONS AND RECOMMENDATIONS ..........................................................26 6. REFERENCES...................................................................................................................... 28 APPENDIX A: Employment levels in some Zambian industries, 1990 ...........................29 APPENDIX B: Average prices of local charcoal, May 1994 to June 1995 ......................30 APPENDIX C: Measures of inflation rate in Zambia 1975-1995 .......................................31 APPENDIX D: Rainfall data....................................................................................................32 IV LIST OF TABLES Table 1. Zambia’s estimated energy resource base................................................................3 Table 2. Estimated and projected charcoal production and consumption in Zambia, 1969 to 2010...................................................................................................................... 4 Table 3. Some characteristics of production areas ................................................................8 Table 4. Some characteristics of ten Lusaka charcoal markets .........................................11 Table 5. Charcoal producer prices (ZMK), during the project time.................................. 13 Table 6. Transportation charges for charcoal to Lusaka. June and December 1994 and June 1995. Running ZMK per bag........................................................................13 Table 7. Average prices (running ZMK) of charcoal in 9 charcoal markets during May 1994 to June 1995 ............................................................................................................ 14 Table 8. Average charcoal cost components in June 1994 and 1995 for local charcoal (ZMK per bag)..................................................................................................................15 Table 9. Removal licenses sold at Woodlands Forest Station in 1994, and January to June 1995 ...........................................................................................................................17 Table 10. Reasons citedby producers for making charcoal................................................ 18 Table 11. Charcoal produced at five kilns in November 1994 and remaining unsold up to March 1995 ............................................................................................................. 18 Table 12. Breakdown of total costs of charcoal storage project, August 1994 to June 1995 ................................................................................................................................... 20 Table 13. Number of bags sold from storage, February to June 1995 ...............................22 LIST OF FIGURES Figure 1. Charcoal prices in Zambia 1978-1995, current prices........................................... 5 Figure 2. Long-term trends in charcoal price using fixed 1995 ZMK as the basis............ 6 Figure 3. Sketch of Lusaka showing location of charcoal markets covered during surveys.................................................................................................................................7 Figure 4. Charcoal production areas around Lusaka ...............................................................9 Figure 5. Price development of one bag of charcoal in running and fixed ZMK...........16 Figure 6. Cost components per bag of charcoal sold from storage and of a ’’free market ” bag at the end of the project.................................................................. 24 Figure 7. Charcoal left waste at the depot in July 1995 .......................................................25 Figure 8. Deviation from normal rainfall in Zambia 1970-1994 .......................................32 Figure 9. Rainfall in Zambia in 1994/95 compared to normal (31 stations).....................32 Kalumiana, Hibajene and Ellegard V EXECUTIVE SUMMARY The majority of urban households in Zambia depend on charcoal as their most important energy source. While charcoal is generally in good supply and distributed in a free market environment, seasonal increases in charcoal price do occur, causing hardship among urban low-income households. Increase in urban charcoal price is mostly due to heavy rainfall, and reduction of urban charcoal prices is due to lack of rainfall. The projectpresented in this report was initiated as a result of the energy policy adopted by the Ministry of Energy and WaterDevelopment in Zambia in May 1994. One of the policy objectives was to stabilize the seasonal fluctuations in charcoal prices. It was proposed that storage of charcoal could be a means by which to stabilize these fluctuations. If charcoal were bought during the dry season when supply is usually good, and released during the rainy season when supply is restricted and prices increase, this could help to reduce the price fluctuations and the financial hardships for the low-income urban population. The aims of the project were to study the charcoal price development andmarket structure, assess the possibility to purchase "excess" charcoal during the dry season and finally to implement an experimental storage facility. While the experimental storage could never be large enough to actually affect thecharcoal price structure other than very locally, several important aspects of charcoal storage could be learnt, for example: • the structure of the market in which charcoal producers and traders operate • logistics of charcoal storage • commercial risks of charcoal storage • the role of government in charcoal
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