World Bank Document

Report No 4693-SEY Seychelles: Issues and Options in the Energy Sector FFILECOPY Public Disclosure Authorized

January1984 Public Disclosure Authorized Public Disclosure Authorized

Repot of the jointUNDP/Wrld Public Disclosure Authorized BankEnergy Sector Assessment Program Thtsdocument has a restricteddistribution. Its contentsmay not be disclosed without authorizationfrom the Government,the UNDPor the World Bank. JOINT UNDP/WORLD BANK ENERGY SECTOR ASSESSMENT PROGRAM REPORTS ALREADY ISSUED

Country Date No.

Indonesia November 1981 3543-IND Mauritius December 1981 3510-MAS Kenya May 1982 3800-KE

Sri Lanka May 1982 3792-CE Zimbabwe June 1982 3765-ZIM

Haiti June 1982 3672-HA

Papua New Guinea June 1982 3882-PNG Burundi June 1982 3778-BU Rwanda June 1982 3779-RW Malawi August 1982 3903-MAL Bangladesh October 1982 3873-BD Zambia January 1983 4110-ZA Turkey February 1983 3877-TU

Bolivia April 1983 4213-BO Fiji June 1983 4462-FIJ

Solomon Islands June 1983 4404-SOL

Senegal July 1983 4182-SE Sudan July 1983 4511-SU Uganda July 1983 4453-UG

Nigeria August 1983 4440-UNI Nepal August 1983 4474-NEP Gambia November 1983 4743-GM Peru January 1984 4677-PE Costa Rica January 1984 4655-CR FOR OFFICIAL USE ONLY

Report No. 4693-SEY

SEYCHELLES

ISSUES AND OPTIONS IN THE ENERGY SECTOR

January 1984

This is one of a series of reports of the Joint UNDP/World Bank Energy Sector Assessment Program. Funding for this work has been provided, in part, under the supplementary "Small-Country Assessment Program" financed by the Swedish Government through the UNDP, and the work has been carried out by the World Bank. This report has a restricted distribution. Its contents may not be disclosed without authorization from the Government, the UNDP or the World Bank.

ABSTRACT

The economy of the Seychelles is highly dependent on tourism. Because of a decline in tourism, the demand for petroleum and economic growth have fallen off over the past three years. However, despite the drop in petroleum consumption, the cost of imports has not changed much, so reducing the oil import bill is a pressing priority. Substituting fuel oil for gas oil in power generation was the first step in reducing oil import costs in 1982. As the Government of Seychelles wants to develop and integrate several outer islands into the national economy, it has devised a 20-year integrated energy project to develop renewable energy technologies. This report reviews these and other energy issues, and recommands: (i) institutional reorganization; (ii) a restructuring of the Seychelles Integra ed Energy Project and ongoing technical assistance programs; (iii) technical assistance for petroleum exploration; (iv) evaluation of least cost petroleum supply options; and (v) rationalization of the petroleum pricing structure.

Abbreviations

ACCT Agence de Cooperation Culterelle Technique CID Center of Industrial Development DTCD Department of Technical Cooperation and Development GOS Government of Seychelles IDC Island Development Company MPER Ministry of Planning and External Relations NRDC National Research and Development Council ORSTOM Office pour le Recherche Scientifique et Technique d'Outre Mer OTEC Ocean Thermal Energy Conversion RDU Research and Development Unit (The name of this unit is now changed to Energy and Technology Division) SEC Seychelles Electricity Corporation SIEP Seychelles Integrated Energy Project SPTC Seychelles Public Transport Corporation UNFSSTD United Nations Financing System for Science and Technology Development WECS Wind Energy Conversion System WEL Works Enterprise Limited

This report is based on the findings of an energy assessment Mission which visited Seychelles in June 1983. The Mission comprised Messrs. Zia Mian (Mission Chief), Thorild Persson (consultant: power), Sture Haal (consultant: power system efficiency), Lars Kristoferson (consultant: biomass and renewables), A. Van Gelder (consultant: forester) and Kapil Thukral (Researcher). The Mission was assisted by Messrs. Akin Oduolowu and D. Eicher in reviewing the technical information on petroleum exploration. Secretarial assistance was provided by Mr. Jagdish Lal and Mrs. J. Regino-Suarez. The report was discussed with the Government of Seychelles in Victoria in January 1984. Currency Equivalents

Currency: Seychelles Rupees (SR) 1 US$ = SR 7.83 (1976) 1 US$ = SR 6.32 (1979) 1 US$ = SR 6.55 (1982)

Measurements

Bbl Barrel = 42 US gallons; 159 liters boe barrel of oil equivalent = 5.99 million btu GWh gigawatt hour = million kilowatt hours kJ kilojoule km kilometer = 1,000 meters kV kilovolt = 1,000 volts kW kilowatt = 1,000 watts kWh kilowatt hour = 1,000 watt hours M3 cubic meter MW megawatt = 1,000 kilowatts p.a. per annum TOE (toe) tonnes of oil equivalent = 39.68 million Btu; 10 million kcal tonne metric ton = 1,000 kg Energy Conversion Factors

Fuel TOE per Physical Units 1/

Liquid Fuels (tonnes) 2/

Avgas 1.04 LPG 1.08 Gasoline 1.05 Kerosene/Jet Fuel 1.03 Gas Oil 1.02 Marine Diesel Oil 1.10 Fuel Oil 0.98

Electricity (MWh) 3/ 0.25

Biomass Fuels (tonnes)

Fuelwood = 0.35 Coconut Husk = 0.40 Coconut Shell = 0.50 Sawmill Offcuts = 0.35 Cinnamon Residues = 0.35

1/ 1 toe = 10 million kcal = 39.68 million BTU

2/ Avgas = 1415 liters/tonne LPG = 1846 liters/tonne Gasoline = 1353 liters/tonne Kero/jet fuel = 1234 liters/tonne Gas Oil = 1184 liters/tonne Marine Diesel Oil 1175 liters/tonne Fuel Oil = 1059 liters/tonne

3/ Converted at thermal efficiency of 34%.

Table of Contents

Page No.

SUMMARY OF FINDINGS AND RECOMMENDATIONS ...... i-iv

I. ENERGY AND THE ECONOMY ...... 1 Country Situation ...... 1 Energy Use ...... 3

II. PETROLEUM SUBSECTOR REVIEW ...... 5 Supplies ...... 5 Historical Demand ...... 5 Demand Projections ...... 8 Petroleum Pricing and Import Costs ...... 8 Hydrocarbon Exploration ...... 11

III. POWER SUBSECTOR REVIEW ...... 14 Supply/Demand...... 14 Load Forecast ...... 15 Fuel Substitution ...... 17 Power Tariffs...... 18 Power Supply Options ...... 19

IV. RENEWABLE ENERGY OPTIONS ...... o .. 20 Introduction ...... 20 Biomass Resources ...... 20 Coconut Residues ...... 20 Cinnamon ...... 21 Sawmill Residues and Logging Wastes...... 21 Other Land Use Categories ... 22 Biomass Options ...... 22 Other Renewables ...... 24 Biomass Technologies ...... 25 Biogas ...... ,...... 25 Solar Crop Drying ...... 25 Solar Water Heating ...... 25 Photovoltaics ...... 26 Wind ...... 26 Ocean ...... 26 Wave/Tidal ...... 27 Mini Hydro ...... 27 Activated Charcoal ...... 28 Outer Islands ...... 28 Conclusion ...... 29

V. ENERGY INSTITUTIONS AND TECHNICAL ASSISTANCE...... 30 Energy Planning and Administration ...... 30 Seychelles Electricity Corporation ...... 31

Organization Charts Research and Development Unit, MPER ...... 33 Seychelles Electricity Corporation Limited ...... 34 Page No. Annexes

Annex I: Notes on the Energy Balance ...... 35 Annex II: Technical Assisl:ance Needs ...... 36

Statistical Annex

1. Petroleum Demand (1975-1983) ...... 41 2. Sectoral Consumptionl of Petroleum Products (1982)vo. 42 3. Petroleum Price StruCture: Effective May 1983..,,1.... 43 4. Petroleum Import Costs (January-June, 1983)...... 44 5. Sales of Electricity by Sector . .45 6. Mahe: Expected Increase in Demand (Base Load - 1982) 46 7. SEC - Conditions of Installed Units ...... 47 8. Transformer Substations on Mahe and Praslin (1983)... 48 9. Praslin: Power Demanid Projections (1981-1985) ...... 49 10. Praslin: Projected Fuel Demand for Power Generation.. 50 11. GDP by Industrial Origin (1978-81) ...... 51 12. GDP Forecasts (1982--1990)v ...... 52 13. Foreign Trade (1979--82) ...... 53 14. Proposed and Ongoing Energy Sector Projects.54

Tables in Text

1 Trends in GDP and Petroleum Demand (1976-82) ...... i 1.1 GDP Trends (1976-1982 . . ee...... vv.... , ...... e...c ,e 1 1.2 Foreign Trade ...... 2 1.3 Petroleum Import Costs...... 2 1.4 Energy Balance, 1982...... 4 2.1 Inland and Total Petrcleum Product Demand (1975-82)..,. 6 2.2 Inland Demand for Petroleum Products (1975-82) ...... 6 2.3 Inland Petroleum DemarLdby Sector (1982)...... 7 2.4 Petroleum Demand Projections . . 8 2.5 Retail Prices of Petrcleum Products, May 1983 ...... 9 2.6 Index of Relative Prices of Selected Petroleum Products ...... , 10 3.1 SEC - Power Supply/Demand Statistics (1982) ...... 14

3.2 SEC - Power Generation and Sales ...... D.--- 15 3.3 Power Demand Projections (1982-95),...... 16 3.4 SEC Average Revenue ...... 18 4.1 Annual Biomass Potential for Main Islands...... 23 4.2 Mahe - Potential Mini Hydropower Sites . . . 28

Map s

IBRD No. 17318 Power Supply System (Mahe) IBRD No. 17425 Land Use (Mahe) SUMMARYOF FINDINGS AND RECOMMENDATIONS

1. The Seychelles' economy is highly dependent on tourism, particularly from the West European nations; its economic problems are typical of those of small island, tourism-based, open economies. From 1976 to 1979, the economy grew rapidly, at an average rate of ten percent a year, but the economy has declined in the past three years, with negative growth averaging 8.7% a year. The economic downturn is due to a sharp drop in tourist arrivals and copra exports. Between 1976 and 1979, the cost of petroleum imports grew rapidly, from SR 56 million (US$7.2 million) to SR 130 million (US$19.8 million), and despite the recent declines in tourism and the volume of petroleum imports, the cost of oil imports has remained almost unchanged at SR 129 million (US$19.7 million) in 1982. 1/ However, this figure far exceeded merchandise export earnings of SR 85 million (US$13 million) in 1982; the cost of petroleum imports in that year amounted to 42% of merchandise export earnings and tourism revenues combined.

Table 1: Trends in GDP and Petroleum Demand (1976-82)

1976 1979 1982

GDP (million 1976 US$) 46.8 62.3 47.4 Population ('000) 60 63 65 Petroleum demand/capita (toe) a/ 0.37 0.44 0.43 Petroleum import costs/capita (US$) a/ 48.3 150.8 169.2 a/ Excludes bunkering.

Source: Statistics Division, Government of Seychelles.

2. The Government of Seychelles (GOS) has a twofold strategy to reverse the decline in the economy: (i) by encouraging tourism to restore its 1979 level of activity; and (ii) by diversifying the economy through the promotion of fishing and fish exports, and export-oriented industries. If this strategy is successful, GOS expects to see a five percent p.a. long-term real growth in GDP. However, it is likely that any new export-oriented industries will only have a marginal effect on GDP growth in the near future and that a growth of five percent is overly optimistic. The Government and the Mission agreed to use two growth scenarios

1/ The inland petroleum consumption's import cost in 1982 was SR 72.1 million (US$11 million) which appears to be high on a per capita basis because of a low population base. - ii -

for projecting future energy demand: a 3% p.a. base growth and a 4% p.a. optimistic growth. The use of these two growth scenarios makes little difference in the forecast. However, it should be noted that Seychelles will need to be prudent irL its foreign borrowing. Any significant increase on commercial terms could lead to a difficult external debt situation at an early stage.

3. In 1979, the GOS established the Research and Development Unit (RDU) within the Ministry of Planning and External Relations (MPER). Al- though this unit is not formally responsible for energy matters outside the areas of renewable energy and adaptive research, it is considered responsible for energy planning in the absence of any other body. Re- sponsibilities for the oil and power subsectors also lie within the MPER, but coordination is lacking; important issues relating to petroleum supplies and pricing, the power sector and energy-related land use have not been given appropriate priority. Various other energy planning" activities have been started or proposed in Seychelles in an ad hoc fashion, and there is a danger of duplication. The Mission therefore recommends that the energy planning role of the RDU be formalized and that it be provided with technical support. 1/ The Mission sees the first task of the unit and its support to be the evaluation of existing and proposed technical assistance projects, with the aim of redefining their scope to avoid duplication and ensure that the work is designed according to stated objectives.

Petroleum Supplies

4. The current inland consumption (excluding bunkering) of petroleum products is about 1,100 bbl/day (28,100 toe/year) with middle dis- tillates taking more than 75% (Table 2.2). Immediate steps should be taken to relieve the burden of oil imports on foreign exchange resources. First, the possibilities of regional cooperation with neighboring countries such as Mauritius and Madagascar or Uganda and Burundi to pool imports should be investigated in order to reduce import and transport costs. Second, the relative retail prices of petroleum products which encourage the use of diesel and kerosene should be changed to reflect relative import costs. Third, although passenger cars appear to be operating efficiently, the efficiency of the public transportation system could be improved by modernizing the fleet (introducing fuel efficient mini-buses) and reorganizing the routes and schedules.

1/ The GOS has formally asked the Mission for such support. - iii -

Hydrocarbon Exploration

5. Except for some airmag surveys done in deep waters, all exploration work in Seychelles has been concentrated offshore within the 200 meter isobath line. Amoco drilled three offshore wells, two of which seem to be lacking in thick prospective marine sections and probably have poor source rocks. The third well did show about 4,000 ft. of poten- tially prospective marine jurassic sediments. While the prospects for oil are uncertain, the area does nevertheless justify an attempt to encourage further exploration. The Mission recommends that a two-stage approach be followed. First, a fact-finding mission should be sent to evaluate the work done so far and determine the scope and extent of further assistance needed; depending on the findings of this mission, an exploration promotion team could be organized to prepare a promotional package for sale to the oil industry. In exploration, the GOS should not undertake any drilling itself and, indeed, should normally not even finance geophysical surveys.

Power

6. Until 1982, all power generation came from gas oil. In 1982 all five sets at the 'B' Station (4 x 2.5 MW and 1 x 5 MW) 1/ were converted to fuel oil to reduce fuel costs. As a result, the Seychelles Electri- city Corporation (SEC) has reduced fuel costs by about 20%. Currently, it is planned to retire four old sets at the 'A' Station and replace them with a new SMW slow speed diesel unit (fuel oil-based). Although this will improve the firm capacity and reliability of the generation system, some old units at the 'A' Station may have to be kept in operational condition until the generation system is further expanded. While future system expansion should take into consideration the possible contribu- tions of biomass gasification and mini-hydropower, these options are likely to make only a marginal contribution, and the system will continue to rely on petroleum-based thermal generation. Plans to expand the generation system should also consider the possibility of using coal. Attempts also should be made to reduce peak demand by restructuring the tariffs for the commercial/industrial sector which has a declining block- base. For domestic users, demand related tariffs should be considered.

7. SEC seems to be overstaffed with respect to: (a) its establishment of a department in an attemmpt to sell services in competition with private contractors; (b) insufficient training and experience in operations and maintenance on the part of the technical staff; and (c) socio- political pressures to keep the redundant staff on payroll. The mission recommends that this situation be remedied by providing technical and

1/ Firm capacity at the 'B' Station is only 7.5 MW because one unit is always under maintenance. - iv -

economic assistance to the SEC in three areas: (i) doing a tariff study to determine an efficient tariff structure; (ii) a training program for operating diesel power stations; and (iii) developing a system maintenance plan for oil diesel generators. Furthermore, the proposal by SEC to assign energy planning activities to an energy unit within the SEC should be reconsidered, particularly if the recommended reorganization of RDU is implemented.

Biomass and Renewables

8. Biomass currently is the only domestic alternative to imported oil. 1/ However, the Mission believes the impact of biomass and other renewable energy sources on the granitic group of islands will not be significant because of: (i) the limited number of end-use options; and (ii) the limited accessibility of biomass due to the difficult terrain on Mahe. Certain applications, such as producer gas and mini-hydro schemes, however, should be evaluated to determine this potential and to find ways of substituting these for imported oil. Steam turbines using coconut husks and shells as fuel may be used on outer islands as an alternative to gasifier units. Steam turbines are not only a proven technology, but also easy to use, while the commercial viability of producer gas systems under variable load conditicns is still not established. For the outer islands the contribution of biomass for power generation and crop drying is, however, more promising. To properly evaluate energy supply options, the Mission recommends that energy studies in progress within the SIEP include the establishment of an adequate data base, an evaluation of land-use options from a combined energy/agricultural perspective, an evaluation of possible energy conservation activities and studies on the feasibility of selected renEwable energy sources. With respect to ongoing programs on producer gas and biogas, priority should be given to tests on outer islands.

1/ A major biomass and renewable energies study, known as the SIEP (Seychelles Integrated Energy Project), is currently underway. I. ENERGY AND THE ECONOMY

Country Situation

101 The Republic of Seychelles comprises about 100 islands with a total land area of 400 sq. km. About 88% of the total population (65,000) lives on Mahe. Thirty-two of the islands are granitic and rugged, and none are more than 60 km. from Mahe; the other islands are coralline and are more widely spread. The temperature varies relatively little during the year (Mahe averages 30°C), but rainfall varies considerably from island to island. Through the Island Development Company (IDC), the GOS plans to develop permanent settlements of 100-500 people on eight coralline islands 1/ over the next ten years.

1.2 The economy of Seychelles is open, with imports accounting for 76% of GDP in 1982. Following their independence in 1976, the Seychelles experienced a ten percent real growth in GDP, primarily caused by an expansion in tourism which lasted until 1979. The share of tourism-related activities 2/ grew from 14.7% of GDP in 1976 to 19.5% in 1979. Tourism began to decline in 1980 3/ due to the recession in western Europe (which had supplied more than 62% of the tourists to Seychelles since 1977), and was further affected by an attack of mercenaries on Mahe international airport in November 1981, Between 1979 and 1982, GDP fell 8.7% a year.

Table 1.1: Seychelles - GDP Trends (1976-1982) (1976 prices)

Growth % p.a. 1976 1979 1982 a/ 1976-79 1979-82

GDP (SR million) 366.4 488.1 371.1 10.0 (8.7) b/ a/ Preliminary estimate. b/ Brackets indicate negative figures.

Source: Statistics Division, Government of Seychelles.

1/ Desroches, Coetivy, Farquhar, Cosmoledo, Astove, Providence, Marie- Louise and Desnoef.

2/ Hotels, restaurants, handicrafts, air transport and allied services, taxis, car rentals and recreation services.

3/ Number of tourist arrivals. 37,721 in 1975; 64,995 in 1978; 78,852 in 1979; 71,762 in 1980; 60,425 in 1981; and 47,280 in 1982. 1.3 The Seychelles' balance of payments is characterized by a growing deficit. Between 1979 and 1982, the terms of trade worsened as prices for major export products fell sharply (by 30% for copra, 25% for fish). Table 1.2 shows the country's major export products and balance of trade.

Table 1.2: Seychelles - Foreign Trade (SR Million)

1979 1982

Domestic Exports 30.9 20.3 Re-exports 83.7 64.9 Total Exports 114.6 85.2 Total Imports 534.8 638.6 Trade Balance (4 2 0.2)a/ (5 53.4 )a/

a/ Brackets indicate negative figures.

Source: Annex Table 11.

1.4 Commercial energy needs are met entirely from imported petroleum. The petroleum import bill for inland use (excluding bunkers) rose from SR 23.0 million (US$2.9 million) in 1976 to SR 60.2 million (US$9.5 million) in 1979. In 1982, petroleum imports for domestic consumption (inland) were about SR 72.1 million (US$11.0 million). The inland petroleum import bill far exceeded the value of domestic exports (SR 20.3 million or US$3.1 million in 1982) but was only 29.1% of earnings from merchandise exports and tourism (1982). Although the petroleum import bill is relatively small, its growing burden on the narrow export base of the economy is a cause for concern to the GOS. This cost can be reduced to some extent by fuel substitution in the power and hotel industries, conservation measures in the transport sector, and by pooling the procurement of products with other countries in the region.

Table 1.$: Petroleum Import Cost

1979 1982 SR Million US$ Million SR Million US$ Million

Total petroleum imports 130.2 20.6 129.0 19.7 Bunkering 70.0 11.1 56.9 8.7 Net Inland Imports 60.2 9.5 72.1 11.0 Inland petroleum imports as percent of total imports 10.7 11.3

Source: Statistics Division, Government of Seychelles. - 3 -

1.5 The Government is concerned about the current decline in the economy and has outlined a strategy to reverse this trend through: (i) encouraging tourism to restore its 1979 level of activity (about 79,000 tourist arrivals) by 1985/86, 1/ and then to increase tourist arrivals to 100,000 by 1988 (these can be handled by existing facilities) and sustain it at that level; and (ii) diversifying the economy by pro- moting fishing and fish exports, and by encouraging export-oriented industries. The Government is hopeful that if it achieves these targets, the economy will grow at about five percent a year. However, it is likely that any new export-oriented industries will have only a marginal effect on GDP. For projecting future energy demand, therefore, the Mission agreed with the GOS to use: (i) a base real growth in GDP of three percent a year; and (ii) an optimistic growth of four percent a year beyond 1985.

Energy Use

1.6 Because of the size and openness of the economy, the energy sector is small and simple. Although indigenous biomass potential of the granitic group of islands is estimated to exist at 10,000 toe, because of difficult access and high collection/transport costs, uses for these sources are limited. Data are scarce, but the Mission estimates that fuelwood in the country represents about nine percent of total energy use, mainly by the household sector. The total easily accessible potential of biomass is estimated at about 6,000 toe which would represent about 19% of current estimated energy use. Maintaining this level of utilization would require costly and difficult collection procedures. Commercial energy imports are entirely petroleum-based, and per capita inland consumption (excluding bunkers) is estimated at 2.9 boe. This consumption level is higher than in countries in a similar income group, such as Fiji (2.2 boe) and Mauritius (1.1 boe). The public and private transport sector, with 44% of total demand, dominates net commercial energy use. Power generation is entirely thermal-based and uses about 44% of oil imports. The estimated energy balance for 1982 is shown in Table 1.4; as data on local resources are poor and not readily available, the Mission recommends that the Ministry of Planning and External Relations (MPER), which is responsible for the energy sector, regularly gather and refine the information needed to draw up the balance.

1.7 The major issues in the energy sector are: (i) how to reduce the growing burden of petroleum imports through alternative import arrangements and conservation; (ii) how to promote and accelerate exploration activities for oil and gas; (ii ) how to encourage fuel substitution and develop new options for powe! generation; and (iv) how to redefine and restructure the Research and Development Unit (RDU) within the

1/ The Government expects the number of tourist arrivals to be about 47,000 in 1983, and about 56,000 in 1984. - 4 -

MPER to establish priorities and an appropriate work program for the energy sector.

Table 1.4: Seychelles Energy Balance, 1982 a/ ('000 toe)

Fuelwood Other Total Electri- Petroleum Total Biomass Biomass city Products Energy

Gross Supply Production 2.00 0.88 2.88 2.88 Imports 53.62 53.62 Re-exports (Bunkering) (25.51) (25.51)

Total Supply Available 2.00 0.88 2.88 28.11 30.99

Conversion Power Generation 12.31 (12.31) Conversion Losses (8.12) (8.12) Transmission and Distribution Losses (0.35) (0.35)

Net Domestic Consumption 2.00 0.88 2.88 3.84 15.80 22.52

Sectoral Consumption Domestic 2.00 2.00 1.18 2.58 5.76 Government /Commercial/ Industry 0.88 0.88 2.64 0.42 3.94 Transport 11.81 11.81 (Public Transport-SPTC) (1.04) (1.04) (Inland Aviation) (0.37) (0.37) Street Lighting 0.02 0.02 Other 0.99 0.99 a/ See Annex I (Notes on Energy Balance). II. PETROLEUM SUBSECTOR REVIEW

Supplies

2.1 The principal source of petroleum product supplies is Bahrain, although imports in small quantities also come from Kenya and the Repub- lic of South Africa (RSA). Petroleum imports come in General Purpose (GP) Tankers, except for LPG 1/ which is imported in 48-kg cylinders from the RSA. The tanker, which arrives once every six weeks, is sometimes shared with Mauritius, Djibouti and the Reunion. The Seychelles receives 8,000-10,000 tonnes of petroleum products per shipment at a freight cost of US$18.25/long ton for clean products (except avgas). Imports and distribution are directly handled by the Shell Company of the Islands (Seychelles) Limited, which is the only company operating in the country. The company operates five retail outlets on Mahe and two on Praslin. Total storage capacity on Mahe is 22,308 tonnes, representing 159 days cover of consumption at the current level. 2/ In the Mission's view, the current distribution system and storage facilities are adequate and work well.

Historical Demand

2.2 Between 1975 and 1979, petroleum demand increased at 16.2% a year, primarily from increasing tourist arrivals (1.2). Tourist arrivals peaked in 1979 at about 79,000, as did petroleum imports at 75,778 toe (including imports for bunker). International bunkering and tourism moved in parallel during 1975 and 1979, increasing at 19.3% and 20.6% p.a. respectively. The major increases were in jet turbo fuels, which increased from 14,714 toe in 1975 to 25,342 toe in 1979, and in marine diesel oil for bunkers, from 8,824 toe to 22,663 toe. With the slump in tourism after 1979, the frequency of airline flights and ship calls to the Seychelles declined sharply. As a result, the demand for jet turbo- fuel and marine diesel oil fell by 30.4% p.a. and 9.2% p.a. between 1979 and 1982. As the decline in tourism averaged 16% p.a., total international bunkering uplifts (including airlines) declined by 19.0% p.a. over the period, and in 1982 they constituted about 48% of total petroleum demand.

1/ Mix of propane (50%) and butane (50%).

2/ This capacity includes black oil storage of 6,800 tonnes (for power use) and storage of 3,578 tonnes at the international airport. In addition, the SEC has a storage capacity of 1.6 million liters (about 1,350 tonnes) on Mahe and 0.2 million liters (about 160 tonnes) on Praslin. -6 -

Table 2.1: Inland and Total Petroleum Product Demand (1975-1982)

1975 1979 % Growth p.a. 1982 % Growth p.a. '000 toe % '000 toe. % 1975-79 '000 toe % 1979-82

Inland Demand 18.0 43.3 27.8 36.7 11.5 28.1 52.4 0.4 International Bunkers 23.5 56.7 48.0 63.3 19.5 25.5 47.6 (19.0) Total Demand 41.5 100.0 75.8 100.0 16.2 53.6 100.0 (10.9)

Source: Shell Company of the Islands (Seychelles) Limited and MPER.

2.3 Table 2.2 gives a breakdown of the internal consumption of petroleum products by fuel type between 1975 and 1982. Total consumption increased from 18,000 toe in L975 to 28,000 toe in 1979 (11.5% p.a. growth), and further to 28,116 toe in 1982. Between 1979 and 1982, the inland demand for petroleum increased only marginally, at 0.4% p.a. because of the increase in powEr generation and household use of kerosene. Gas oil (diesel oil), LPG and gasoline registered major drops of 4.1%, 4.0% and 4.3% p.a., respectively. The only increase was in kerosene demand, at 2.7% p.a.

Table 2.2: Seychelles - Inland Demand for Petroleum Products (1975-82)

1975 1979 1982 % Growth p.a. a/ toe % toe % toe % 1975-79 1979-82

LPG -- -- 149 0.5 132 0.5 -- (4.0) Avgas 147 0.8 374 1.3 371 1.3 26.3 (0.3) Gasoline 4,054 22.6 5,822 21.0 5,105 18.1 9.5 4(4.3) Kerosene 1,752 9.8 2,270 8.2 2,456 8.7 6.7 2.7 Gas Oil 12,009 66.8 19,158 69.0 16,917 60.2 12.4 (4.1) Fuel Oil ...... 3,135 11.2

Total 17,962 100.0 27,773 100.0 28,116 100.0 11.5 0.4

a! Figures in brackets represent negative growth.

Source: Shell Company of the Islands (Seychelles) Limited; MPER.

2.4 In 1982, fuel oil was imported for the first time as a partial replacement for gas oil in power generation. The combined demand of fuel -7- oil and gas oil increased by 1.5% p.a. Slightly more than 60% of the gas oil imported into Seychelles was used for power generation that year. The use of gas oil by the power company is expected to decline as the fuel substitution program introduced by the SEC progresses. The demand for petroleum in power generation represented about 44% of internal demand and about 23% of total oil imports. The oil use by industry is small, accounting for less than one percent of total consumption (Table 2.3). Gasoline is used mostly by private motorists.

Table 2.3: Inland Petroleum Demand by Sector (1982)

Se ctor toe percent

Transport 11,446 41.3 Public Transport 1,043 3.8 Private Transport 10,403 37.5

Power Generation 12,306 44.3 Indus try 416 1.5 Households 2,588 9.3 Others 989 3.6

Total 27,745 100.0

Source: Mission estimates.

2.5 Details on the passenger car fleet by size and fuel use are not available. For 1981, the total passenger car registrations are estimated at 5,500 (including self-drive hire cars and taxis). As new registrations in the past have averaged around 450 vehicles per annum, most of the cars are old. If one assumes that the entire fleet runs on gasoline, and the average mileage is about 10,000 km/annum, the average consumption is estimated at about nine km/liter. There are no significant causes for concern in the urban traffic which moves quite freely. As for public transport, the Seychelles Public Transport Company (SPTC) accounts for about six percent of diesel oil use (1982). Its fleet is five years old, has a high breakdown rate and the company has problems with the supply of spares (two to three year lag in orders and supplies). The average consumption currently is 3.5 km/liter which can be improved if the fleet is modernized with fuel efficient mini-buses, and routes and schedules are reorganized. - 8 -

Demand Projections

2.6 As indigenous economic resources are limited, economic growth will depend largely on external factors, especially tourism. Under the base growth scenario, the Mission projects petroleum demand to grow at 5.5% a year until 1985, and at: 4.4% thereafter. Total petroleum demand would be about 63,000 tonnes (including re-exports) in 1985, and 78,000 tonnes in 1990. The petroleum product demand mix will change considerably as power generation shifts from using gas oil to fuel oil.

Table 2.4: Petroleum Demand Projections ('000 tonnes)

1982-1990 1990 (% Growth p.a.) a/ 1982 Base Optimistic Base Optimistic Actual 1985 Growth Growth Growth Growth

Avgas 0.4 0.4 0.5 0.5 3.8 3.8 LPG 0.1 0.2 0.2 0.2 5.5 5.5 Gasoline 5.1 5.6 7.2 7.7 4.4 5.3 Turbo Jet Fuel 8.5 15.0 18.0 19.0 9.8 10.5 Kerosene 2.5 2.6 3.0 3.1 2.5 2.9 Gas Oil 16.9 10.7 12.4 13.1 (3.8) (3.1) Marine Diesel Oil 17.0 18.0 23.0 25.0 3.9 5.0 Fuel Oil 3.1 10.5 13.7 14.5 20.3 21.1

Total 53.6 63.0 78.0 83.1 4.8 5.6 a/ Brackets indicate negative growth.

Source: Mission estimates

2.7 Under the optimistic growth scenario, the Mission projects demand to increase at 5.6% p.a. to give a GDP elasticity of 1.63, which is close to the 1976-1979 level. This will bring the total imports in 1990 to 83,100 tonnes which is about 14% higher than import levels in 1979 (72,800 tonnes). Turbo jet fuel is projected to increase at 10.5% p.a. (1982-1990), which assumes that tourism will be able to repeat its performance of the 1970s and that airlines will schedule new flights to the Seychelles. -9-

Petroleum Pricing and Import Costs

2.8 A detailed build-up of petroleum import costs is shown in Annex Table 3, Current platform costs (c.i.f. plus ocean losses) for importing gasoline, kerosene and gas oil are US$39.33/bbl, US$42.49/bbl and US$38.85/bbl, respectively. These costs compare favorably with costs in other developing countries. 1/ Nevertheless, Seychelles may be able to reduce its freight 2/ and procurement costs by pooling import requirements with other nations in the region (Mauritius, Comoros, Djibouti, Madagascar and the Reunion). 3/ The Mission recommends that the Govern- ment explore and identify the least-cost supply option, which would require a technical review of: (i) an offshore processing deal for the group of countries based on joint crude oil purchases, together with possible refinery locations for such a deal; (ii) the least-cost transport options and tanker size; and (iii) the administrative organization to arrange and implement the pooling of petroleum purchases by the participating countries (Annex II).

Table 2.5: Retail Prices of Petroleum Products, May 1983 (SR/liter)

Mogas Gas Oil Gas Oil (95 Octane) Kerosene (Retail) (Power Generation)

Platform Cost 1.62 1.75 1.60 1.60 Duty 2.53 0.06 1.87 1.10 Marketer's Margin 0.37 0.10 0.20 0.20 Retail Margin 0.12 0.09 0.08 _ Retail Price 4.64 2.00 3.75 2.90 Retail Price (US$/US gallon) 2.68 1.16 2.17 1.68

Source: GOS

1/ The landed costs for major petroleum products consist of: (i) f.o.b. Bahrain, (ii) GP(general purpose vessel)-AFRA including premium for clean products; (iii) insurance at 0.101% of cost and freight; and (iv) ocean losses at 0.5% of c.i.f.

2/ This at times includes up to 35% of the premium on the AFRA rates for clean products.

3/ Another possibility may be to procure supplies via Dar-Es-Salaam, Tanzania. Burundi and Uganda have plans to import petroleum products from the Middle East and transport them through Tanzania, as an alternative to importing those refined in Kenya. This scheme could be more economical if the same tanker that brought supplies for Uganda and Burundi to Dar-Es-Salaam could also bring supplies for other island nations (including the Seychelles). - 10 -

2.9 Although the current consumer prices of various petroleum products are higher than their c.i.f prices, (Tables 2.5 and 2.6), they do not reflect relative import costs and the international product supply/ demand balance. For example, the f.o.b. posting price of kerosene at the export refinery in Bahrain is 7.5% higher (average 1983 import parity was eight percent higher than gasoline) than that for gasoline (95 octane); in the Seychelles, the retail consumer price of kerosene is about 57% lower (Table 2.6). This disparity was more pronounced before May, 1983 when the Government subsidized kerosene. This gives false signals to the consumers about the availability and relative costs of kerosene and gas oil. The disparity between prices in Seychelles and Bahrain has encour- aged the use of kerosene, especially for cooking, and is the prime reason why kerosene use has continued to increase even during the economic slump.

2.10 Gas oil is retailed at about 19% below the price of gasoline. The price to SEC is 37.5% below that of gasoline. As a result, gas oil has accounted for more than 71% of total inland demand (1981). The decision to replace gas oil by f uel oil for power generation in 1982 caused the demand for gas oil to fall to about 60% of the total demand mix.

Table 2.6: Index of Relative Prices of Selected Petroleum Products (June 1983) (95 octane gasoline = 100)

Seychelles Bahrain Average Im- Seychelles Postings port parity Prices

95 Octane Gasoline 100.0 100.0 100.0 Kerosene 107.5 108.0 43.1 Gas Oil (Retail) 97.4 99.0 80.8 Gas Oil (Power Generation) 97.4 99.0 62.5

Sources: Platt's Oil Gram (June 22, 1983); GOS.

2.11 The relative retail prices of petroleum fuels should be based on relative import parity costs and signal the realistic relative product supply/demand situation at the refining centers. A change in the relative prices of currently controlled products (gasoline, gasoil and kerosene) will encourage the use of fuel oil by the SEC. As the SEC is the only user of fuel oil in the country, it could test the international supplies/costs by inviting tender bids directly from independent suppliers to obtain best tenns and prices. Concerns regarding the high cost of power to the productive sector from increases in the gas oil price are unfounded. Currently, the Government levies a SR 0. 7 6/liter duty on fuel oil sold to the power company. In the Mission's view, this - 11 - duty should be eliminated to improve the competitiveness of exports, import substitution and tourism. A direct duty or sales tax on products intended for the domestic market may be a better option. This will also improve the financial position of the SEC.

2.12 LPG is currently imported from the RSA in 48 kg bottles. The ex-refinery cost is about US$388/tonne which compares with the Baharain f.o.b. price of US$240/tonne. The f.o.b. cost from RSA is US$4 39/tonne (excluding the cost of empty bottle return to the RSA which is US$61/tonne). Freight charges from RSA are US$646/tonne. In the Mission's view the current import system is expensive (landed cost US$1147/tonne). If the LPG is imported in bulk and is bottled locally, this cost can be reduced to about US$6 97/tonne. The Mission recommends that the Government consider changing the existing system. The investments required for the new arrangements would be a 120 m3 LPG storage tank and a filling station which will be paid out in a little over one year.

2.13 The Mission recommends that the MPER develop an in-house capability to review international petroleum prices to ensure that domestic prices do not get out of line. Essentially this means recruiting a local economist 1/ for the reorganized RDU and obtaining the services of a petroleum supplies/pricing specialist to train the economist (Annex II). The local staff, in addition to working on petroleum prices, should also be responsible for energy economic work at the unit. The technical assistance on petroleum supplies/pricing is required on a regional basis for about five man-months.

Hydrocarbon Exploration

2.14 Petroleum exploration was initiated in 1977, with the award of 43 blocks under the petroleum exploration license to: (i) Amoco, Burmah Oil, Norcon and Hematite Petroleum (26 blocks); (ii) Siebens (12 blocks); and (iii) Oxoco (5 blocks). Seismic, gravity and magnetic surveys were done between 1977 and 1980. Amoco later acquired the interests of Burmah Oil, Norcon and Hematite and became the sole right holder for exploration on the 26 blocks (almost 18,000 sq. km). Sieben's interests were passed on to Dome and then to Sovereign Oil Company, while Oxoco's interests were passed on to Santa Fe. After conducting the minimum obligatory geophysical surveys, these two companies relinquished their interests in 1981. Amoco is now the only operator. It drilled the only three wells

1/ In addition to working on petroleum prices, he would be responsible for energy project evaluation and monitoring petroleum supplies. - 12 - in the country in 1980/81 1/ about 125 km west of Mahe, but all were dry holes. Although no significant hydrocarbon shows were found, the results were interesting enough for Amoco to remain active in the area. It has not yet surrendered 13 blocks which, according to the Petroleum Agree- ment, should have been surrendered in June, 1982. Amoco has also signed up for geophysical surveys on an additional 300 blocks (230,500 sq. km). Hunting was hired to conduct an airmag survey of 23,000 line km in May-June 1982. Amoco is now planning a seismic survey (6,000-7,000 line km) of more than 90 of the original 300 blocks and has the option of selecting 25 blocks in 1984 for exploration under a new Petroleum Agreement.

2.15 The Government has some data from seismic surveys that were done between 1977 and 1980 covering over 5,000 line/km, and from the three wells drilled by Amoco. The data obtained by the Mission shows that the three wells all passed through a Cretaceous volcanic section at about 5,000 to 7,000 feet and then into Cretaceous and Jurassic sediments. One well got as far as the Triassic zone. The 5,000 feet of Tertiary post- volcanic sediments are almost all "shelf carbonates", probably porous, water-saturated limestones lacking in cap rocks and unprospective for oil and gas. Prospects for oil and gas are confined to pre-basalt sediments. The situation is similar to that of Mauritius, but there the two Texaco wells never got through the volcanics to prove older sediments. The fact that such sediments have been proved in the Seychelles is encouraging. The Owen Bank well is shown to have about 4,000 ft. of marine Jurassic sediments below the volcanic layers. The other two wells, Reith Bank and Seagul Shoals, seem to lack thick marine sections and are mostly sand and siltstones, probably with poor source rocks.

2.16 The Seycelles arch:Lpelago has small areas of a shallow continental margin less than 200 meters deep which dip sharply into the deep ocean basin with water depths exceeding 1,000 meters. The three wells drilled by Amoco, and all the previous seismic exploration done by Amoco, Siebens and Oxoco have been concentrated on the shallow water areas, although airmag surveys crossed into deep waters as well. Data available to the Mission are not adequate enough to evaluate the hydrocarbon potential in the Seychelles' exclusive economic zone (EEZ), nor was the Mission in the position to evaluate the promotional, technical assistance and training needs of GOS in the petroleum sector. It is therefore recommended that a fact-finding petroleum Mission visit the country to evaluate its petroleum potential, the exploration and promotional work done so far, the scope and extent of further assistance needed, and the possible sources of such assistance. However, the Mission tentatively believes a comprehensive data package is needed on the geology and struc- tural characteristics of the basin around the Seychelles (including the thickness of the sediments in the basin) before any further interest in exploration work can be generated. Preparing and distributing such a

1/ Owen Bank No. 1 (14,302 ft.); Reith Bank No. 1 (8,956 ft.); Seagul Shoals No. 1 (12,741 ft.). - 13 - report to the oil industry could advance the GOS' interest in attracting more oil companies and accelerating the exploration program. However, in addition to the data now held by GOS, this work would require the system- atic evaluation and integration of other airmag, seismic and well drilling data produced over the past few years. 1/ In the Mission's view, GOS should not undertake any drilling itself and, indeed, should normally not even carry out geophysical surveys. However, the possibility of some complementary airmag or seimic survey for the promotional package cannot be ruled out completely pending the proposed petroleum Mission.

1/ The proposed fact-finding petroleum mission should evaluate in some detail the components of such a promotion package. However, the Mission believes that the package would require the services of a geologist and a geophysicist for several months each, depending on how much data is actually available with GOS. The package might take about six months to prepare and cost about US$300,000 (including the cost of drafting and printing). In addition, further technical assistance and follow-up work might also be necessary for generating new data. - 14 -

III. POWER SUBSECTOR REVIEW

Supply/Demand

3.1 The Seychelles Electricity Corporation (SEC) was created in 1980 under the Companies Act of 1972. The parastatal SEC was formed from the Electricity Division of the Department of Works. Under the Electricity Supply Act, the company is empowered to supply electricity to all the islands of Seychelles. However, current supplies of power are limited to Mahe and Praslin, which house about 95% of the country's population. At present, 67% of all households are connected to electric power supplies. The Government hopes to expand this to about 76% by 1986. This expansion would extend the supply of power to about 80% of the households on Mahe and 60% of the households on Praslin and La Digue and would require SR 23.3 million (US$3.6 million) in additional investments.

3.2 Mahe has two power stations with a combined installed capacity of 17.4 MW. The firm capacity, however, is only about 9.9 MW, due to the size and age of units. Peak demand in 1982 was 9.3 MW (Table 3.1) and 9.8 MW in 1983. The current firm capacity of 9.0 MW is inadequate to meet this demand level which is a matter of concern to the SEC and the Mission. Peak loads nornally occur during morning and evening hours (10:00-12:00 AM and 7:00-8:00 PM). Mahe has a transmission/distribution grid along most of its coast, with several cross-country links (IBRD Map No. 17318). Praslin first received public electricity supply in June, 1981 (seven percent of the population lives on this island). Before 1981, hotels and other institutions had their own generators which were unreliable and expensive to operate and maintain. Praslin now has an installed capacity of 2.1 MW, which is more reliable. Generation losses in Praslin are high because of low capacity utilization. However, transmission losses are expected to fall below the 1982 level of 10.4% when peak demand and load factor increase to 0.51 MW and 52.2% in 1985 (Annex Table 9). On Mahe, generation and transmission losses can be reduced by installing capacitors out in the network. This measure will reduce the extra power generation which is currently needed for high reactive power on the transmission system. Data on transformer substations in the transmission/distribution systems of Mahe and Praslin are given in Annex Table 8.

Table 3.1: SEC - Power Supply/Demand Statistics (1982)

Mahe Praslin

Installed Capacity (MW) 17.4 2.0 Peak Demand (MW) 9.3 0.34 Load Factor (%) 62.3 45.6 Power Generation (GWh) 50.8 1.4 Generation Losses (%) 4.3 21.5 Transmission Losses (%) 8.2 10.4

Source: SEC - 15 -

3.3 Electric power sales increased rapidly between 1976 and 1979, at 14% p.a. However, the rate declined to 2.0% p.a. after 1979, reflecting the reversal in economic growth. Table 3.2 shows the breakdown of power sales among domestic, commercial/industrial, and government/street lighting sectors. The share of sales to the Government and street lighting sectors remained unchanged at 15%, while that of commercial and industrial sectors declined marginally from about 55% (1979) to 54% in 1982. This gives an estimated 1.4% p.a. growth in the commercial and industrial sectors. Through SIEP, the SEC should try to encourage electricity conservation and demand pattern control by educating the consumers and im- posing restrictive peak tariffs.

Table 3.2: SEC - Power Generation and Sales

Average Annual 1976 1979 1982 Growth Rate (%) _GWh %7. GWh GWh x l976-/9 1979-82

Generation 34.5 48.3 52.2 11.9 2.6

Total Sales 28.9 100.0 42.8 100.0 45.4 100.0 14.0 2.0 Domestic 8.1 28.0 12.8 30.0 14.1 31.0 16.5 3.3 Commerce and Industry 17.3 59.9 23.5 55.0 24.5 a! 54.0 10.7 1.4

Govt. and Street Lighting 3.5 12.1 6.4 15.0 6.8 a/ 15.0 22.9 2.0 a/ Mission estimates.

Source: SEC

Load Forecast

3.4 The Mission prepared power demand forecasts for Mahe up to 1986 based on programs currently planned by GOS: (i) to increase tourism to the 1979 level by 1985/86; (ii) to supply power to about 80% of all households by 1986; and (iii) to construct various hotels, hospitals, schools, government office buildings etc. (Annex Table 6). The optimistic growth scenario assumes that all these objectives will be achieved as planned, leading to a demand for power generation of 62.1 GWh by 1986 (demand growth of 5.5% and 7.0% p.a. for the domestic and commercial and industrial sectors). However, all these targets may not be met. The Mission projects a base growth scenario demand of 58.3 GWh by the 1986 (demand growth of 4.4% and 5.0% p.a. for the domestic and commercial and industrial sectors). The Mission has based its projections of demand growth beyond 1986 on the historical income elasticity of demand for - 16 - power of 1.4, 1/ and an annual average load factor of 0.60. 2/ Under these assumptions, electricity demand on Mahe is projected to increase at 4.2% p.a. under the base growth scenario and 5.6% p.a. under the optimistic growth scenario (Table 3.3). On Mahe, the SEC plans to install a new 5 MW slow speed diesel unit in the next two years and retire all units at Station 'A'. This will only increase the firm capacity to 10 MW, which is lower than the projected demand of 11.1 MW under the base case scenario (1986). It may be necessary for the SEC to maintain some of the old units at Station 'A' in an operative condition (which are very expensive to maintain) to meet any emergency until the system is appropriately expanded. For this the SEC should start preparing a generation expansion plan for the Seventh Unit.

3.5 The current generating capacity of 2.1 MW on Praslin is sufficient (Table 3.3) to meet projected power demand up to 1990. For La Digue, current plans are to supply power by laying a sub-marine power cable (about 9 km) and take power from Praslin. The maximum demand on La Digue is roughly 100 kW. The cost of cables is estimated at Ff5.1 million plus the cost of a standby 200 kW diesel unit on La Digue. The French Government is expected to finance this project. In the Mission's view, this does not appear to be a least cost option and its economics need to be carefuly and appropriately evaluated. A better alternative may be to install an independent diesel generating station on La Digue. A diesel station on La Digue need not effect the environment adversely. The Mission recommends thai: the Government reevaluate the comparative technico/economic aspects of the proposal before going ahead with the project. The most appropriate option for the smaller islands (La Digue, Providence and Long Island) may be to install small generating stations based on biomass; this possibility should be evaluated.

Table 3.3: Power Demand Projections (1982-95) a/

M4ahe Praslin, La Digue Base Case Scenario High Growth Scenario and other Islands MW GWh 14W GWh MW GWh

1982 9.3 50.8 9.3 50.8 0.3 1.4 1986 11.1 58.3 11.8 62.1 0.6 3.0 1990 13.1 68.7 14.7 77.2 0.7 3.5 1995 16.1 84.4 19.3 101.4 0.9 4.5 a/ These projections do not include possible siting of a BBC relay station in 1987/88 which would require about 2-3 MW of power.

Source: Mission estimates.

1/ Income electricity of power demand may be lowered to 0.8-1.0 if solar water heating replaces power use for water heating in the hotels.

2/ Based on load factors of 0.61 for 1983 and 0.59 which SEC is currently using for its 1985 forecast. - 17 -

3.6 The major power sector issues are: (i) reducing the cost of fuel for generation; (ii) the current tariff structure; (iii) SEC's staffing which appears to be excessive; and (iv) power supply options such as mini-hydro and biomass technologies.

Fuel Substitution

3.7 Until 1981, all power was generated by diesel engines operating on light gas oil. In 1982, the power generation equipment was modified and fuel oil was used for power generation for the first time on Mahe (2.2 million liters). The cost of modification is estimated at SR 3.5 million (US$533,000). The SEC estimates that fuel oil use in 1983 will increase to 10.8 million liters and gas oil will decline to 3.1 million liters. In financial terms, this shift is expected to save the SEC about SR 4 million (US$611,000) over 1982 purchases of fuel. On an import parity basis, more than US$300,000 p.a. will be saved in foreign exchange cost for fuel imports (1983 prices). The calorific value 1/ of fuel oil is about 10% higher, while its cost 2/ to SEC is about 20% lower than that of gas oil; as a result, fuel costs for generation have decreased from about SR 1.0/kWh (US$0.15/kWh) in 1980 to SR 0.715/kWh (US$0.11/kWh) in May 1983. 3/ The net conversion efficiency has increased by 0.5% since 1980, and the payback period for this substitution is less than one year (in financial terms). Although fuel oil can be substituted for light gas oil on Praslin, SEC has no plans to do so before 1985. This change could be achieved at an additional cost of SR 440,000 (US$67,200), with estimated fuel savings of about SR 564,300 (US$86,200) 4/ in 1985 (in financial terms and in 1982 prices); the payback time would be less than one year. The Mission therefore recommends that fuel oil be introduced on Praslin when demand reaches the appropriate level.

Power Tariffs

3.8 With the second round of escalations in petroleum prices in 1979, the cost of fuel to the SEC increased and the fuel adjustment clause in the tariffs was invoked. Four fuel cost adjustments were made in 1979 alone, ranging from S¢3.64/kWh (US¢0.58/kWh) to S¢23.94/kWh

1/ Calorific value - Fuel oil: 41,733 KJ/liter; Gas oil: 38,014 KJ/liter.

2/ Fuel oil: SR 2,30/liter; Gas oil: SR 2.86/liter.

3/ Costs are based on data supplied by the SEC and GOS.

4/ In 1982 prices; assuming the transport cost of fuel oil to Praslin is SR 0.17/liter (US$4.13/bbl), which is the same as for gas oil. - 18 -

(US¢3.79/ kWh). As a result, average unit revenues in 1979 increased by 20%, and in 1980 by another 68%.

Table 3.4: SEC Average Revenue (1975-1982)

Year SR/kWh sold Percent Increase

1975 0.42 20.0 1976 0.46 9.5 1977 0.53 15.2 1978 0.54 1.9 1979 0.65 20.4 1980 1.09 67.7 1981 1.27 16.5 1982 1.30 2.4

Annual Average Increase 1975-1979 11.5 1979-1982 26.0

Source: SEC

3.9 Tariffs on Mahe and i?raslinare uniform. Between 1975 and 1979, the average cost of electricity to the consumer increased by 11.5% p.a. which closely followed OPEC price increases in the marker crude oil postings (11.8% p.a.). Power prices during 1979-82 increased 26% p.a., compared to a 23.6% increase in the cost of marker crude oil (Arabian Light). It appears, therefore, that the SEC has followed a sound policy of passing the fuel cost increases on to the customers.

3.10 SEC has two tariff categories. Although fuel costs have declined for both categories,tariffs have remainedunchanged because SEC has informed that its maintenance and other costs have absorbed the sur- pluses generated through the lower cost of fuel. In 1981, the domestic category tariffs were a lifeline block of 50 kWh at SR 1.26/kWh (US¢19.24/kWh),subject to a fixed minimum monthly charge of SR 10. All additional power to domestic consumers was sold at a marginally higher rate of SR 1.31/kWh (US¢20.0/kWh). The industrial and commercial tariffs are decreasing block-based. The first 500 kWh is sold at SR 1.46/kWh (US¢22.3/kWh),followed by SR 1.31/kWh (US¢20.0/kWh)for the next 500 kWh, and the balance at SR 1.26/kWh (US¢19.24/kWh). The current tariff structure encourages a wide variation between the base load and peak load demands. If future investmentsin new generationcapacity are to be de- layed, a suitable tariff struzture should be devised on time-of-daybasis to encourage conservation. In restructuring tariffs, both categories should be brought under a demand related change. To do so a tariff study - 19 - is needed by the SEC, for which it would need two man-months of assistance. The terms of reference for this assistance are shown in Annex II.

Power Supply Options

3.11 The GOS plans to identify and develop alternative power supply options to reduce gas oil- and fuel oil-based power generation. In the Mission's view, the options showing the most potential are mini hydropower schemes and biomass technologies. Based on current end uses of electricity, about 16% of the power is used for water heating; this function could be replaced through the use of solar collectors. The Mission recommends that a coal-based thermal generation option also be considered for the next expansion of the generation system. - 20 -

IV. RENEWABLE ENERGY OPTIONS

Introduction

4.1 Biomass, solar and mini-hydro are the promising domestic energy resources. Given the small area and difficult terrain of the granitic group of islands, biomass can only play a limited role in the foreseeable future. Biomass and other promising renewable energy sources can cer- tainly make an important contribution on the outer islands where the energy needs are small and scattered. In 1980, the GOS prepared a three phase, twenty-year program for developing energy resources (SIEP - The Seychelles Integrated Energy Project). Although the program is considered a master plan for deveLoping energy resources on all islands, its main focus is on the long-ter-n substitution of renewable energy options such as solar, wind, Ocean Thermal Energy Conversion (OTEC) and biomass technologies. Technical assistance for selected parts of this project is being provided by several external aid agencies, including the UN Financ- ing System for Science and Technology Development (UNFSSTD), Agence de Cooperation Culterelle Technique (ACCT), Commonwealth Science Council (CSC), UK Overseas Development Association (UKODA), and West Germany. As most of these renewable energy options would primarily address the scattered energy needs of the outer islands (which are expected to house no more than 2,000 people over the next decade), the emphasis and priorities of SIEP for the Seychelles need to be reviewed and rationalized, taking into account the immediate and short run energy needs of the main islands. The Mission recommends that technical assistance be provided to review and restructure the scope of this project and the supporting technical assistance.

Biomass Resources and Potential

4.2 In addition to current supplies of domestic fuelwood, there are three major sources of biomas3 fuels on the main islands: (i) coconut residues; (ii) cinnamon stemwood; and (iii) sawmill residues and logging wastes. Other land use categories could produce biomass, but the yield would be low or inaccessible. The only available data suggests the maximum potential supplies of biomass to be about 27,000 tonnes or 10,000 toe a year.

Coconut Residues

4.3 Coconut plantations cover about 3,500 ha on the main islands, or 18% of the total area. About 100 trees/ha are planted, yielding an average annual production of 30 nuts per tree over a lifespan of 30 years. One coconut palm tree contains about 1 m3 of wood, 30% of which could be used for timber and the remaining part for fuel. Coconut shells have alternative applications (copra drying), while the husks are left in the field and could be available for fuel production, together with stemwood - 21 - from replanted coconut plantations. The Mission estimates that with a 30-year replantation cycle and the collection of husks and stemwood, about 12,000 tonnes 1/ of biomass a year (4,400 toe) could be made easily accessible. This would require a change in the collection system whereby the whole nut is transported out of the plantations and then the husk is removed. A large replantation scheme, which would improve productivity by introducing new, faster-growing coconut species, would make larger amounts of stemwood available. The Mission estimates that about 17,500 tonnes of stemwood a year could be made available if replantation were done after 15 years. If gasifier systems prove technically and economically feasible, dependence on imported petroleum for power generation can be reduced further by using additional coconut residues which are easily accessible.

Cinnamon

4.4 Large areas of the national parks 2/ are under cinnamon cover. After felling, leaves and bark are taken out for processing and the stems are left to rot in the forest. RDU estimates that about 2,000 tonnes of stemwood (700 toe) could be used as fuel, if collected; in the Mission's view, cinnamon stemwood is relatively easy to collect from national park areas. Currently, the cinnamon industry uses offcuts from the sawmill as the main fuel for drying, and these could be replaced by cinnamon stemwood. However, before deciding on this, the economics of additional costs incurred for collecting and cutting stemwood should be evaluated.

Sawmill Residues and Logging Wastes

4.5 There are no more than about 2,200 ha of managed forest in the Seychelles. Mahe (1,550 ha), Praslin (450 ha) and Curieuse Island (200 ha) have their own management plans, but the yearly production is uncertain and depends on the market situation. Managed forests are government controlled, and mainly designed for logging purposes. Logging is costly and difficult as roads cannot be justified because of the steep slopes, small catchments (varying from 1-10 ha) and low standing volume per ha. Most of the logs are sold to the parastatal Seychelles Timber Company (SEYTIM) which operates the sawmill on Mahe. The capacity of the mill is 10,000 m3 a year, but production in 1981 and 1982 was only 1,500 m 3 a year. As the efficiency of the sawmill (ratio of finished product to logs) is about 35%, approximately 1000 m3 or 750 tonnes of sawmill residues are available for use as fuel.

1/ All biomass is expressed in equivalent tonnes of wood (air dried, 20% moisture content).

2/ This land use category covers 3,106 ha on Mahe, 543 ha on Praslin and 283 ha on La Digue. - 22 -

4.6 If logging residues, currently about 1,500 m3 of branches and twigs, 1/ were collected, some 1,000 tonnes of biomass could be made availablie from forestry operations. However, due to the steep decline in the charcoal market over the past two years caused by a subsidy on kerosene (when kerosene was 2-3 times cheaper than charcoal on an energy equivalence basis), its use has been limited. Current offcuts from the sawmill are used in drying cinnamon. If the cinnamon industry can meet its energy requirements from cinnamon stemwood, these offcuts can be used by the sawmill to meet its own energy needs and export surplus power to the SEC system. The possibilily of this application should be investigated. Expanding current forestry practices significantly by felling old trees for fuel production and replanting new, faster growing species would be expensive, as present logging, transport and handling costs are about SR 150-200/tonne (US$22.91-30.55/tonne). Assuming the sawmill is used at 50% capacity, 2/ about 3,300 m3 (2,200 tonnes) of sawmill wastes and 5,000 m3 (2,500 tonnes) of 'Logging residues could be used as fuel for power generation.

Other Land Use Categories

4.7 The coconut, cinnamon and forest land use categories together cover about 40% of the area on the granite islands. Estimating the production capacity of the remaining land (some 12,000 ha) is difficult. Mountains are usually steep and sometimes consist of bare rock or have only bush cover. An estimated average biomass production would be one tonne a year per hectare, as agricultural waste is negligible. Total production is estimated at 12,000 tonnes per year. The Mission estimates that only about 3,500 tonnes are easily accessible.

Biomass Options

4.8 According to Mission estimates, the current maximum amount of biomass available is about 27,000 tonnes a year, equal to some 10,000 toe. This assumes, however, that costly and difficult collection procedures would be established. The present use of biomass excluding domestic fuelwood amounts to some 900 toe. No data are available on domestic fuelwood use, but it is known to be the dominating biomass use on the Seychelles. Based on the development of the kerosene market and a conservative extrapolation from 1977 census data, the Mission estimates the current use of fuelwood on Mahe to be not more than 6,000 tonnes of wood (2,000 toe).

1/ Currently 50% of standing tree volumes.

2/ Considering past trends wien the sawmill was used only up to 30% capacity at most, and likely further economic activity, the sawmill capacity utilization is not likely to exceed 50% over the next decade. Furthermore, Mahe's 1,550 ha of managed forests will not be able to sustain 5,000 m3 of logging for more than a few years. - 23 -

4.9 Considering the pressing demand for land for non-energy uses (particularly food production), the limited production potential and high costs of producing biomass, a large-scale substitution of biomass for oil is not likely to occur. However, introducing agroforestry practices on agricultural land is a future possibility, but this would require a large-scale replantation of the present coconut plantation in order to produce in sufficient quantities. Viewed from an energy efficiency standpoint, food and biomass could be advantageously produced together on an agroforesty basis. Using modern agroforestry methods now being de- veloped, producing biomass would conservatively yield 3-5 tonnes per ha a year; 1/ considering modern agroforestry is adopted on only 50% of the 3,500 ha land having coconut plantations at present on the main islands, by 1990 easily accessible biomass for fuel purposes could increase by 1,800 toe p.a. to 3,000 toe p.a. Proper land use data is required, however, to determine how to optimize these possible biomass production systems. The Mission therefore recommends that land-use expertise be provided to the GOS to assure that the recently proposed integrated land- use study for the Seychelles takes sufficient account of the needs of the energy sector.

Table 4.1: Annual Biomass Potential for Main Islands (toe)

Current Potential Projected Potential Currently easy access ditticult easy access Used access

Coconut shells 630 husks 1,400 stem 3,000 a/ 6,100 b/ Cinnamon 700 1,400 e/ Logging wastes 10 g/ 250 900 f/ Sawmill residues 250 800 T/ Small-scale fuelwood 2,000 Managed forests 350 d/ 350 d/ Other land use 1,000 T/ 3,200 T/ Agroforestry 6,000 c/ a/ According to replantation with 30 years productive lifetime. b/ Assuming a major replantation scheme, available only for a limited number of years. c/ Based on a 5 tonne/ha yield of biomass for energy on 3,500 ha of land presently used for coconut. d/ Based on estimates in 4.6 and 4.7. e/ Assuming a doubling of cinnamon production. T/ Assuming that the sawmill is used to 50% capacity; 5,000 m3 /year. g/ Maximum figure charcoal production.

Source: Mission estimates; all figures rounded.

1/ Tests are proposed to establish the feasibility of growing leucaena or casuarina as an intercrop with coconut to increase biomass yields on the outer islands. - 24 -

Other Renewables

4.10 The Research and Development Unit has responsibility for monitoring several renewable energy projects, the general framework of which is set by the SIEP. One of the main objectives is to investigate the feasibility of integrated energy packages using locally available biomass, wind and solar energy sources for outer islands. Long-term options for small site-specific renewiable energy sources for the outer islands are being investigated within Phase I of SIEP, through the New and Renew- able Energy Project (UNDP/81/TOl/A/71/06) and the Biogas Project. At present, only diesel generators are used for power supply on those islands.

4.11 Funding for these projects has been provided by the Interim Fund for Science and Technology for Development (IFSTD), covering work on gas- ifers, solar water heaters, photovoltaic battery chargers and wind- mills. In addition, the project includes the mapping of wind and solar resources, together with planning and training support.

Biomass Technologies

4.12 Tests with producer gas have been going on since 1981. Two units are located at the RDU Pointe La Rue Test Station, one a movable Swedish design with an output of 30 kVA, the other a 50-kVA German unit. Despite some technical prob]ems, test results with wood and coconut shells have been positive, and results with coconut husks seem quite promising although still inconclusive. After completing the tests at the RDU station, the Mission recommends that the movable unit be placed on an outer island where the IDC has an active settlement program, and the stationery unit at the Mahe sawmill. This would generate information on day-to-day running and maintenance experience which would be useful in evaluating the viability of the program. Discussions should also be held with IDC and the Mahe sawmill to ensure a smooth transition and commit- ment. There are several alternative technologically proven systems for power production in the 10-50 kW range that use biomass as fuel. These include steam turbines and reciprocal engines, sterling engines, etc. The Mission recommends that these technologies also be tested by the GOS, with a view to future applications in the Seychelles.

4.13 The possible impact of producer gas on the energy balance for Mahe would necessarily be lim:ited because of the high extraction cost of the biomass resources. For example, about 6,000 tonnes of wood would be required each year to provide ten percent (5 GWh) of Mahe's current power production; this corresponds to more than a fivefold increase in forestry operations or a large scale use of coconut industry residues. However, as the possibilities for outer islands with limited power requirements and adequate biomass resourcEs are promising, the Mission supports the current producer gas program. - 25 -

Biogas

4.14 In the Mission's view, biogas can have only limited site-specific applications, such as for cooking on Mahe where most livestock is scattered in small family size holdings. Two pilot biogas units are being tested in Mahe, one large 100 m3 unit at a state farm with some 40 cattle, and one smaller 4 m3 unit at a duck farm. The Mission recommends that a biogas test unit be installed at two piggeries of 300 pigs on Coetivy. A 5 m3 biogas unit producing about 50 kWh of power per day here would save an estimated US$12,000 worth of petroleum imports each year, as well as provide additional benefits through better fertilizing and minimal hygienic and fresh water contamination risks.

Solar Crop Drying

4.15 Copra and cinnamon drying are the most promising applications of solar drying. However, solar heater designs for these applications have not been tested. At present, both industries use fuels that are available at no cash charge. 1/ Coconut shells are used in copra drying; in cinnamon processing, one factory uses off-cuts from the Mahe sawmill, while a few small farmers use wood. A hybrid system consisting of a solar collector air-preheater and a hot air generator using shells and sawmill off-cuts for heating might be economical and should be investigated for application in Seychelles.

Solar Water Heating

4.16 Solar water heating would be an attractive alternative, given its short payback time and the high cost of producing electricity. About 16% of the electricity on Mahe is used for heating water (mainly in hotels and a brewnry). Some hotels also use oil directly for water heating. About 100 m of imported solar water heaters have been installed on Mahe; the collector area is distributed roughly equally between some 35 private houses 2/ and two hotels. 3/ In the Mission's view, the payback time on installing a solar water heater is less than two years. If the

1/ The only costs are incurred in collecting coconut shells or sawmill off-cuts.

2/ As most households do not have hot water facilities, solar water heaters would raise the standard of living rather than reduce electricity consumption.

3/ A solar water heating system using two solar collectors which was installed at a cost of SR214,000 in the kitchen and laundry of the 104-bed Coral Strand Hotel on Beauvalon Beach (Mahe) in October 1980 is claimed to have paid for itself in electricity savings in only 10.3 months. This system should be monitored for at least one year to verify these results. - 26 - solar conditions permit (based on the results of ongoing measurements) up to 4,000 m2 of solar ccillectors could be installed at a cost of US$600,000 in various hotels within a year to save 4 GWh of gas oil/fuel oil-based power. The investors could save a maximum of SR 3 million (US$450,000) in gas oil and fuel oil costs each year. The RDU has recently finished developing a domestic design for solar collectors that is being evaluated for possible domestic production. Although the cost of this unit is claimed to be lower than that of imported units, the limited size of the local market and the high costs of establishing adequate production, maintenance and repair facilities may not justify its local production. A decision on local production should, therefore, be care- fully evaluated.

Photovoltaics

4.17 Radio communication systems and several low voltage appliances such as refrigerators and fluorescent lamps that use photovoltaic power could be used on the outer islands and scattered settlements which have good solar insolation patterns. The French are now considering setting up a photovoltaic demonstration unit on Coetivy. The cost of a PV unit was US$9,000-11,000 per peak kW in 1982; and assuming fuel-oil transport costs for power generation on the outer islands to be SR 0.40/liter (US$10/bbl) in 1982 prices, fuel costs for fuel oil based power generation would be at least SR 0.7/kWh. However, the Government of Seychelles and IDC should work out the logistics of transporting fuel oil to the outer islands to decide on the cost-effectiveness of PV and other alternative energy systems. This planning should cover the cost of procuring extra barges or tankers for inter-island fuel oil transport and set-up costs of storage facilities and generators. This may make PV systems cost effective on some of the outer islands.

Wind

4.18 The limited wind data available suggest that modest wind regimes exist on Seychelles with average annual speeds of 4-4.5 m/sec. The Is- land Development Company (IDC) has expressed some interest in developing the wind potential. In the Mission's view, a few applications such as using wind for water pumping mnay be feasible on outer islands.

4.19 The British Government is financing a project to assess the wind energy potential on the outer islands by mapping their wind regimes. The British Government also is conducting a pilot project to integrate a wind turbine generator into the power system of one of the outer islands. Wind speed recording equipment procured from France will be installed on Denis Island to measure wind speeds for one year. The Mission supports this program.

Ocean

4.20 Ocean Thermal Energy Conversion (OTEC) No action is planned for an OTEC system for main island of Mahe, except for oceanographic data collection which will be done free of charge by Office pour le Recherche - 27 -

Scientifique et Technique d'Outre Mer (ORSTOM) from France. As Mahe is located in the middle of a continental shelf, sites suitable for OTEC are not found closer than 60 km from the shore, where the ocean depth drops from 10-15 m to 1200-1500 m within 3-5 km., and where the ocean temperature drops from 25-30°C on the surface to 4°C at the bottom. In the Mission's view, the Government should not take any further action until the technical and economic viability of OTEC technology has been proven internationally. However, integration of energy production and mari- culture activities may be relevant for outer islands because the OTEC sites are within 1 km of the outer islands.

Wave/Tidal

4.21 A preliminary assessment of possible wave energy resources on Mahe and Praslin was made by Crown Agents (UK) in 1982, but no estimate of generation capacity could be made because wave measurement equipment was not installed. The Mission agrees with the Government's view that wave power and tidal power do not present much potential because wave heights are small, the mean tidal range being only 0.9 m.

Mini-Hydro

4.22 A prefeasibility study by Tata Consulting Engineers (India) in August, 1982, identified eight sites with a combined potential of some 2 MW -- enough to meet about ten percent of Mahe's power needs. The Mission believes these resource figures are exaggerated; a more realistic assessment would probably show that mini-hydropower could meet about five percent of Mahe's power demand. The site at Grand Anse appears to be the most promising. Conditions for mini-hydro development at several of the other proposed sites are not good, as catchment areas are small. The Tata study showed power generation costs to be more than SR 1.20/kWh (US 183 mills/kWh) at all sites; however, the Mission believes this cost could be lower if resource figures were estimated realistically because civil engineering costs (accounting for 65% of set-up costs) would fall considerably. GOS has requested the Norwegian Government to do a detailed feasibility study and to provide monitoring equipment (including civil works) for the sites identified in the Tata report. So far no re- sponse has been received. The Mission recommends that an economic ana- lysis and evaluation of the potential of a site be done before developing that site.

Activated Charcoal

4.23 The Center for Industrial Development (Belgium) and Carbon International (West Germany) funded an activated charcoal prefeasibility study, the first phase of which was completed in August 1982 at a cost of SR 165,000. The study suggested that the following could be economically feasible: (i) manufacturing high quality activated carbon from coconut shell for export; (ii) production of charcoal from sawmill and forestry residues for domestic consumption and power generation; and (iii) production of pyrolisis oil as a by-product of processes (i) and (ii) for use as liquid fuel. The second phase, expected to cost SR 400,000, will test - 28 - the quality of the three products and establish their economic feasibility and obtain contracts for exporting high quality activated carbon. Al- though this project is not cf primary interest for the energy sector, it is important for its export potential. The Mission recommends that further work on this project be restricted to non-energy issues, i.e. the creation of an export market for high quality activated carbon. Such an alternative use for coconut shells may, however, have consequences for copra drying that will have to be considered.

Table 4.2: Mahe - Potential Mini Hydropower Sites

Project Capacity Production (kW) (GWh/year)

Mamelles 150 0.42 Grande Anse 250 0.83 L'Islette 150 0.63 Mare aux Cochons 350 1.33 Grand St. Louis 200 0.64 Cascade 300 1O01

Source: Hydroelectricity Power Development on Island of Mahe: Prefeasibility report by Tata Consulting Engineers (1982).

Outer Islands

4.24 About half of the flat land on the Seychelles is on the outer coralline islands. The potential for agricultural and fishing developments seems promising if the problems of manpower, transport and infra- structure development can be solved. IDC is carrying out an ambitious development program for several outer coralline islands. It plans to settle 100-500 people on eight outer coralline islands over the next ten years. The settlers will engage in animal husbandry, reafforestation, farming and fishing. To encourage such settlements, roads, air-strips, houses, community centers, water and electricity supplies, communication equipment, coconut driers and fishing boats will be provided. Major settlements on two islands already have been established: (i) Coetivy, which has about 100 inhab:'tants and will eventually house 500; and (ii) Farquhar, which has about 60 inhabitants and will house 200.

4.25 The biomass production situation on most outer islands is favor- able, and in most cases large enough to carry a major fraction of the energy needs of these islancs. Several of the biomass and other renewable energy options now being studied, such as producer gas, biogas, wind, etc., if successful, may have their most viable applications on the outer islands. However, the large scale supply of biomass from the outer islands to the granitic islands is far too costly to be viable. - 29 -

4.26 In the Mission's view, developing renewable energy sources for the outer islands should be given high priority because petroleum transport costs for power generation to the islands are high. The main end uses for power on the outer islands will be deep-freezers to store fish, communication equipment, and domestic cooking and lighting. The Mission recommends that a close working relationship be established between the RDU and the IDC to ensure that the objectives of their two programs are integrated at an early stage.

Conclusion

4.27 The impact of biomass and other renewables on Seychelle's energy balance cannot be estimated at present. However, in the short and medium term, this impact will be limited. In the long run, biomass technologies and other renewables could make an important contribution. The major sources would be solar water heating, micro-hydro and biomass technologies. To encourage the use of solar water heaters, duties on these units should be abolished. The impact of biomass and other renewable energy sources on the country's energy balance will be limited by: (i) the number of end-use options available; and (ii) the accessibility of biomass due to the difficult terrain on Mahe. The most promising sites for biomass and renewables are on the outer islands, where energy requirements are small and small-scale units can be used.

4.28 Although the Mission supports the studies being done within the SIEP framework, the RDU's local staff should not involve itself in the testing and development of new technologies. It should limit itself to monitoring and adapting appropriate technologies. These include the establishment of an adequate data base, evaluation of land-use options from a combined energy/agricultural perspective, evaluation of possible energy conservation activities, and studies on the feasibility of a selection of renewable energy sources. However, the future role of SIEP needs to be redefined and rationalized. The Mission recommends that RDU be provided with technical assistance to help evaluate all existing and proposed energy projects, with the aim of redefining their scope to avoid duplication and ensure that the work is designed to meet the objectives of the Government's energy strategy. - 30 -

V. ENERGY INSITUTIONS AND TECHNICAL ASSISTANCE

Energy I'lanning and Administration

5.1 Energy planning in the Seychelles is under the Ministry of Planning and External Relations (MPER). In mid-1979, the MPER set up a small Research and Development Unit (RDU) to perform industrial and adaptive research and develDpment. With the petroleum price increases of 1979 and a slump in tourism, the Government recognized a need to formulate an energy program to reduce oil imports and develop local substitutes. The Seychelles Integrated Energy Project (SIEP) was formu- lated in 1979/80 to do energy management programs, and develop renewable options in hydro, biomass, biogas, solar, wind and ocean-based systems as substitutes for petroleum. In 1981, the UN Financing System for Science and Technology for Development (UNFSSTD) approved US$400,000 for work on renewable options under the SIEP. Additional technical assistance was provided by the Commonwealth Science Council, the German Ministry of Co- operation (GTZ), the UKODA, UNIDO, and India (Tata Consulting Engin- eers). To date the program has only dealt with renewable technologies.

5.2 The RDU is formally responsible for renewables, although it also deals with overall energy planning and policy. The unit has suffered from a shortage of manpower, poor coordination and inadequate support which have prevented it fran meeting its policy objectives. It currently is organized and staffed (Figure 1) to focus only on long-term renewable options as outlined in the 3IEP. The development of these options is not expected to make a major contribution to fuel substitution in the country in the foreseeable future. The immediate, pressing needs in the energy sector are to: (i) develop a balanced energy strategy emphasizing the conservation and fuel substitution options, to supply the country's energy needs at least cost; (ii) develop an appropriate and adequate data base; (iii) develop fuel substitution options in power generation and energy use in hotels; (iv) institute a conservation program; and (v) rationalize petroleum prices. The Mission recommends that the re- sponsibilities of RDU be formally redefined to cover all aspects of energy sector work which fall under the MPER and that it be renamed. The Mission also recommends that technical assistance and necessary support be provided to GOS in redefining the role of RDU and restructuring its organization.

5.3 The GOS has proposed a Seychelles Energy Planning Study (SEPS) for: (i) establishing a reliable energy data base; (ii) preparing energy supply/demand analyses and forecasts; (iii) formulating broad energy policy guidelines; and (iv) analyzing and developing programs for manpower and external assistance. The International Development Research Center (IDRC) has been approached for possible funding of about US$90,000. Once the RDU is reorganized and obtains technical assistance in the form of an energy planner/economist, this work should be able to be done completely in-house. The Mission recommends that the GOS consider developing a long-term, internal institutional capability to do - 31 - this kind of work; whatever technical assistance is made available should be used to develop institutional capabilities in the RDU. The GOS should also establish a national energy committee to coordinate, monitor and advise on energy policy at the national level. The membership of this committee should be drawn from relevant ministries, major energy users and suppliers.

Seychelles Electricity Corporation (SEC)

5.4 The SEC was established in 1980 as a parastatal body responsible for supplying electricity to all the islands in the Seychelles archi- pelago. It is administered by the Ministry of National Development (MND) under the Electricity Supply Act. Its activities include: (i) installing, operating and maintaining all generating stations in Seychelles; (ii) installing, operating and maintaining high/low voltage and underground/overhead public transmission and distribution systems; (iii) providing consumer services and contracting services in the private sector; and (iv) selling, installing, maintaining and repairing electrical appliances at the customers' locations.

5.5 In May 1983, SEC employed 381 persons, including 61 in Finance, 145 in Generation, 123 in the Distribution and 54 in the Installation Division. These divisions seem to be overstaffed for the size of the system. The reasons for this overstaffing are: (i) inability of SEC to contract most of its functions to competent contractors; (ii) inadequate experience and training of SEC staff; and (iii) political pressures to retain the staff even when it is not needed. The company is also expected to establish an Energy Division to investigate and implement energy economy, including substitution and education schemes; and to develop renewable sources for generating electricity. In view of manpower constraints, the creation of this unit appears to be an unnecessary duplication of the work that is supposed to be done by the proposed reorganized energy unit in the MPER. The Mission recommends that the functions defined for the Energy Division remain the responsibility of the RDU.

Investment Implications

5.6 The Mission recommends that: (i) a training course for technical staff (foremen, shift supervisors and shift operators) be arranged under a technical assistance program; and (ii) help be provided to develop a system maintenance plan for oil diesel generators. Terms of reference for these programs are shown in Annex II.

5.7 The major energy sector investment programs in the 1980s would include oil and gas exploration and power system expansion and development and new and renewable sources such as: (i) solar water heating; (ii) micro-hydro; and (iii) to a limited extent biomass technologies. The plan of action for both these subsectors remains to be defined. The investment needs of capital projects, therefore, are not clear at this time. As for technical assistance, the Mission estimates that about US$800,000 will be required for a hydrocarbon exploration promotion - 32 - package, institution/restrucl:uringand developing arrangements for petroleum supplies. The GOS has about US$1.5 million in commitments from various bilateral and multilateral sources (Annex Table 14). However, there is a need to redefine the role and deployment of these resources within the framework of recommendations made in this report. The Mission has defined the scope for this work in Annex II-Part II, and recommends this for immediate Government attention. - 33 -

Figure 1

Research and Development Unit Ministry of Planning and External Relations

Chief Research & Development OfiFicer

Secretary

Chemistry and Mechanical Engineering Biophysics| Appropriate & Petrolebum Engineering ,Technology

Process Engineer Senior Laboratory Technician (UN) (GTZ)l (Biochemistry/Physiology)

Laboratory Laboratory Technician Techcn] Figure 2

Organization Chart

Seychelles Electricity Corporation Ltd.

Board of Directors

|_General Manager

IFinanceDivision| 61 employees

Chief Engineer

Future ______

| Energy Generation IDistribution Installation| Division] Division Division Division

145 employees 123 employees 54 employees - 35 -

ANNEX I

Notes on the Energy Balance

1. Fuelwood The Mission estimates are based on extrapolations from 1977 census data and include small quantities of charcoal.

2. Biomass Includes (i) 200 toe off-cuts produced in the Mahe sawmill that are used in the cinnamon factory; and (ii) 630 toe of coconut shells used for copra drying (RDU estimates).

3. Electricity Only SEC's power sales on Mahe and Praslin are in- cluded. Captive power generation data on La Digue is not available.

4. Petroleum Total imports include aviation and bunker sales: (i) 8,531 toe of jet fuel; and (ii) 16,976 toe of marine diesel oil. - 36 -

ANNEX II Page 1 of 5

Technical Assistance Needs

I. Promotional Package for Hydrocarbon Exploration 1/

(a) Funding: to be determined (b) Starting Date: (c) Scope: to (i) prepare the technical part of a 'promotional package' for presentation to the oil industry; (ii) assist GOS in selecting blocks to be offered to oil companies to maximize the attractiveness of GOS' proposal; (iii) prepare and organize the technical data relating to each block offered, for reproduction and sale to oil companies; and (iv) assist GOS in determining the appropriate exploration work program for each block being offered.

(d) Estimated Cost: US$300,000

II. Mission to Evaluate Technical Assistance to GOS on Energy Program and Policies

(a) Funding: To be determined (b) Starting Date: (c) Scope of Work: 3 man-months for an energy specialist in cooperation with existing staff, to restructure and coordinate proposed and present energy sector assistance programs: (i) to review SIEP in a coordinated, policy-oriented framework in accordance with the scope of the proposed Energy Unit of MPER; (ii) to suggest to GOS possible options to current technical assistance packages and coordinate ongoing and planned energy projects; and (iii) to review the role of biomass/renewable energy options in the future and integrate them in the energy planning of the country.

(d) Estimated Cost: US$45,000

1/ This is the Mission's tentative estimate of possible technical assistance requirements for hydrocarbon exploration. The scope may need to be redefined after a Bank fact-finding mission has assessed the potential and assistance needs in more detail. - 37 -

ANNEX II Page 2 of 5

Organization

(a) Funding: to be determined (b) Starting Date: (c) Scope of Work: 2 man-months for a manpower specialist to: (i) identify personnel needs, mainly those with qualifications in technical fields and/or economics; (ii) identify training programs and equipment (micro computers, etc.) requirements taking into account ongoing and proposed energy projects and options; (iii) redefine the role and organizational structure of RDU in the energy sector; and (iv) establish links with other government and parastatal institutions to coordinate all energy related activities in the country.

(d) Estimated Cost: US$30,000

III. Energy Planning and Policy

(a) Funding: to be determined. (b) Starting Date: (c) Scope of Work: 6 man-months for a resident Energy Planner/Econom- ist to: (i) set up a system to collect energy consumption data (petroleum products, electricity) on a monthly/quarterly basis from major energy consuming institutions such as hotels, hospitals, airport, industries, etc., and diesel/gasoline sales at gas stations; (ii) develop a strategy and guidelines to monitor and review domestic energy prices (kerosene, charcoal, electricity); (iii) review impact of current gas oil and fuel oil substitution program for power generation; (iv) help the Government to prepare long term energy plan and policy; (v) assist in developing and implementing a petroleum pricing monitoring system, petroleum pricing policy; and (vi) train the local counterpart staff to continue this work after his departure.

(d) Estimated Cost: US$90,000 - 38 -

ANNEX II Page 3 of 5

IV. Technical Assistance for Land-Use Planning

(a) Funding: to be determined (b) Starting Date: to be considered with the proposed Land-Use Evaluation Study. (c) Scope of Work: 18 man-months for one Photogramnetry expert and one Land-Use Evaluation expert to: (i) review current land-use practices and plans with a view to explore possibilities for integrat- ing energy aspects with forestry and agricultural practices; (ii) take part in the planning and execution of the proposed Land- Use Evaluation Study; (ii:i)as part of the output from this study, propose plans for coordination of energy, agricultural and forestry policies and practices; and (iv) assist GOS with training, formula- tion of policies and reviEw of programs.

(d) Estimated Costs: US$270,000

V. Petroleum Supply Arrangements

A. Investigations

(i) Funding: to be determined (ii) Starting Date: (iii) Scope of Work: One man-month to visit the regional countries in order to determinie the economics and possibility of pooling participating countries' petroleum needs for joint pro- curements and recomEnend a least cost fuel supply option on a regional basis.

B. Implementation

(i) Funding: to be determined (ii) Starting Date: (iii) Scope of Work: 4 man-months for a petroleum supplies specialist to: (i) identify possible crude oil suppliers and prepare crude suppLy contracts; (ii) investigate freight costs by tanker size and shipping company; (iii) collect relevant information on capacities and characteristics of refineries in Eastern Africa; (iv) advise on administrative arrangements necessary to implement a regional procurement system; and (v) set up a center to handle such arrangements; and (vi) train regional staff in petroleum pricing mechanism, how to monitor least cost supply options and continue procurement activities after the departure of the expert.

(iv) Estimated Cost: US$650,000 - 39 -

ANNEX II Page 4 of 5

VI. Seychelles Electricity Corporation

A. Assistance in Tariff Study and its Implementation

(i) Funding: to be determined (ii) Starting Date: April 1984 (iii) Scope of Work: to improve the system efficiency, a demand cost-related tariff structure for both small and large power users is needed. Two man-months for this will be sufficient including measuring the demand load both at large and small customers to generate necessary data. The introduction of new tariff structure would be complemented with the purchase and installation of demand meters at castomers' premises. The specialist should also advise the company how to make the customers aware of the benefit of the new system.

(iv) Estimated Cost: Study and statistics US$50,000 meters US$30,000

B. Training for Operators

(i) Funding: to be determined (ii) Starting Date: May 1984 (iii) Scope of Work: A course to be arranged in Mahe to train the foremen, shift supervisors and shift operators in running the diesel units in an optimal way to help improve the system efficiency. A specialist in electrical and mechanical aspects of diesel units will be needed initially for about two man-months with a possible follow-up of another two man- months.

(iv) Estimated Cost: US$60,000

C. Generation System Maintenance Plan

(i) Funding: to be determined (ii) Starting Date: April 1984 (iii) Scope of Work: The SEC owns a number of old diesel generators whose efficiency can be improved by developing an efficient maintenance system plan for electrical and mechanical components. The mission considers that about 3 man-months of a specialist in diesel generation system maintenance will be adequate.

(iv) Estimated Cost: US$45,000 - 40 -

ANNEX II Page 5 of 5

D. Power Factor Improvement Program

(i) Funding: to be determined (ii) Starting Date: Many 1984 (along with tariff study) (iii) Scope of Work: Currently the power factor on the SEC power system is between 0.8 and 0.85 which can be improved by installing capacitors initially on the 11 kV network. The installation will reduce the losses in the generating sets and also in the network. The total installed capacity of capacitors needed is roughly estimated at 1000-1500 kVA. The optimal size and location for each capacitor should be determined and the units purchased and installed.

(iv) Estimated Cost: U,$60,000-70,000 - 41 -

Statistical Annex Page 1 of 14

Table 1: Petroleum Demand (1975-1983) (tonnes)

1975 1976 1977 1978 1979 1980 1981 1982 1983 (Jan-Nov)

Inland Market LPG - - 34 109 138 145 139 122 127 Avgas 141 281 377 424 360 374 374 357 388 Mogas 3,861 4,483 4,791 5,264 5,545 5,537 5,359 4,862 4,303 Jet A-1 ------161 106 Kerosene 1,701 1,809 1,926 2,050 2,204 2,319 2,364 2,384 2,197 Gas Oil 11,774 15,707 19,268 18,100 18,782 20,903 21,209 16,585 11,143 Fuel Oil ------3,135 8,088 Others 301 344 390 567 595 374 434 827 806

Total 17,778 22,624 26,786 26,514 27,624 29,652 29,879 28,434 27,158

Re-Exports Avgas ------55 - Jet A-1 14,285 15,884 17,580 19,960 24,604 21,598 10,190 8,122 10,831 Marine diesel oil 8,022 9,038 2,189 16,507 20,603 11,086 14,408 15,371 22,228 Fuel oil ------933 Total 40,685 39,546 46,555 62,981 72,831 62,336 54,477 52,743 61,150

Source: Shell Company of the Islands (Seychelles)Ltd. Statistical Annex Page 2 of 14

Table 2: Sectoral Consumption of Petroleum Products (1982) (toe)

Transport Public Private Power Indus- Avia- Shipping Trans- Trans- Domestic Generation try tion Bunkers port port Others Total

LPG 132 132

Avgas 371 371

Gasoline 5,105 5,105

Kerosene 2,456 2,456

Jet Fuel 8,531 8,531

Fuel Oil 2,118 989 3,107

Gas Oil 10,188 388 1,043 5,298 17,960

Marine Diesel Oil 28 16,976 17,004

Total 2,588 12,306 416 8,902 16,976 1,043 10,403 989 53,623

Source: SEC; SPTC; Shell Company of the Islands (Seychelles) Limited; National Agro-Industries Limited; and Mission estimates. - 43 -

Statistical Annex Page 3 of 14

Table 3: Petroleum Prices Structure: Effective May 1983 1/ sSR/ lIter)

Premium Kero- Gas Oil Fuel Oil Gasoline sene f.o.b. 1.524 1.646 1.490 Freight 0.086 0.093 0.100 Insurance 0.002 0.002 0.002 Ocean losses 0.008 0.009 0.008 c.i.f. 1.62 1.75 1.60 Marketers Operating Margins 0.37 0.10 0.20

Wholesale cost 1.99 1.85 1.80 1.54

Duty 2.53 0.06 1.87 Wholesale Duty Paid Price 4.52 1.91 3.67

Retail Price, Mahe (Ex pumps) 4.64 2.00 3.75 Retailers' margin, Mahe 0.12 0.09 0.08

Retailer's margin, Praslin/La Digue and Average Transportation Cost 0.76 0.17 0.22 Retail Price, Praslin/La Digue (Ex pumps) 5.28 2.08 3.89

Major Consumers

(1) Seychelles Electric Corporation - Duty 1.10 0.76 Discount 0.04 - Net price paid by SEC (Mahe) 26O Transportation Cost to Praslin 0.17 Net price paid by SEC (Praslin) U3

(2) Works Enterprise Ltd & Other Govt. Divisions 4.52 1.91 3.67 Discount 0.02 0.02 0.02 Net price 45U 189 (3) USTS (DFSC) Duty Free 2.07 1.865 Transport Charges 0.026 0.026

1/ Fuel oil build-up in May 1983 was:

Cost item SR/liter c.i.f. 1.308 Losses (0.5%) 0.006 Pipeline charge 0.005 Landed cost T3TV Inventory financing (@ 13.5% p.a. interest) 0.023 Platform price 1.34 Gross margin 0.20 Duty 0.76 Price to SEC 273U

Source: Shell Company of the Islands (Seychelles) Limited. - 44 -

Statistical Annex Page 4 of 14

Table 4: Petroleum Import Cost (January - June 1983) 1/ (US¢/AG)

Mogas Kerosene Gasoil

FOB (Bharain) 95.25 102.73 94.69 Freight a/ 5.09 5.59 5.82 Insurance (0.101% of C & F) 0.10 0.11 0.10 Ocean loss (0.5% of c.i.f.) 0.50 0.54 0.50

Import Parity (US$/AG) 100.94 108.97 101.11 SR/liter 1.75 1.89 1.75

1/ Average actual costs for first six months. 2/ The historical annual average freight costs were:

Year US$/tonne

1979 28.18 1980 29.71 1981 26.43 1982 18.70 1983 (lst 6 months) 18.20

Source: GOS and Shell Company of the Island (Seychelles) Ltd. - 45 -

Statistical Annex Page 5 of 14

Table 5: Sales of Electricity by Sector ('000 kWh)

Commerce & Government & Total Domestic Industry Street Lighting

1975 23,869 7,305 13,844 2,720 1976 28,879 8,111 17,308 3,460 1977 33,362 9,635 19,331 4,396 1978 37,933 11,395 21,236 5,302 1979 42,799 12,808 23,612 6,380 1980 44,406 13,940 24,689 5,777 1981 44,420 13,520 30,520 1/ 380 2/ 1982 45,380 14,100 30,900 1/ 380 2/

1/ Includes sales to Commerce, Industry and Government sectors. 2/ Only street lighting.

Source: SEC - 46 -

Statistical Annex Page 6 of 14

Table 6: MAHE - Expected Increase in Demand (Base load - 1982) ('000 kWh)

Consumer 1983 1984 1985

1. Sheraton Hotel - - 50 2. Independence House 920 1,300 1,300 3. Sey, Monetary Authority 150 500 500 4. NAIL - 25 50 5. Housing Developments 150 200 250 6. Victoria Hospital 60 65 150 7. Polytechnic 15 30 30 8. Seychelles Telephones 125 125 125 9. Schools, Churches, Ministry of Education and Information 5 6 7 10. Hotel Development 5 5 5 11. Additional load due to increase in existing installations _/ 300 350 400

Projected Generation 53,700 54,580 54,840 Expected Total Peak load (MW) 10.0 10.2 10.6

1/ In the Mission's view, additions to generating capacity will not be needed until 1985.

Source: SEC - 47 -

Statistical Annex Page 7 of 14

Table 7: SEC - Condition of Installed Units (as of May 31, 1983)

Capacity (MW) Total Hours Run Years in Service

Mahe Power Station A Set 2A 1.00 26,937 14 3A 0.46 51,059 16 4A 0.46 38,547 15 5A 0.46 36,117 15

Power Station B Set 1B 2.50 39,158 11 2B 2.50 52,375 11 3B 2.50 42,415 7 4B 2.50 26,375 5 5B 5.00 9,114 2

Praslin Set 1 0.69 7,154 2 2 0.69 5,446 2 3 0.69 4,035 2

Source: SEC - 48 -

Statiscal Annex Page 8 of 14

Table 8: Transformer Substations on Mahe and Praslin (1983)

Transformer Primary Secondary Number of Transformers Capacity Phase Voltage Voltage Mahe Praslin (kVA) (kV) (V)

10 1 11 240 1 2 25 1 1]. 240 120 5 50 1 11 240 49 9 100 Split!! 1]. 240 3 - 25 3 11 415 2 - 50 3 11] 415 27 4 100 3 11 415 39 7 200 3 11] 415 19 1 300/315 3 11 415 12 5 500 3 11 415 19 - 1000 3 11 415 10 - 7500 3 32S 11,000 4 -

1/ 3 phase input, 1 phase output.

Source: SEC. - 49 -

Statistical Annex Page 9 of 14

Table 9: Praslin - Power Demand Projections (1981-1985)

---- Actual------Projections------1981 I/ 1982 1983 1984 1985

Installed Capacity (MW) 2.1 2.1 2.1 2.1 2.1

Peak Demand (MW) 0.24 0.34 0.40 0.48 0.51

Load Factor 2/ (%) 43.9 45.6 50.0 50.4 52.2

Units Generated ('000 kWh) 452.9 1,359.1 1,752.0 2,120.0 2,332.0

Transmission Losses (%) 17.5 10.4 9.5 9.0 8.5

Generation Losses (%) 32.1 21.5 18.0 15.0 12.0

1/ Generation began in June 1981. 2/ With respect to peak demand.

Source: SEC - 50 -

Statistical Annex Page 10 of 14

Table 10: Praslin - Projected Fuel Demand for Power Generation

1981 1982 1983 1984 1985

Gas Oil Demand ('000 liters) 159.3 467.8 543.5 657.5 723.3

Gas Oil Cost ('000 SR) 482.6 1,417.5 1,646.9 1,992.8 2,192.0

Equivalent Fuel Oil Demand ('000 Liters) 495.1 599.1 659.0

Fuel Oil Cost ('000 SR) 1,222.9 1,479.7 1,627.7

Fuel Cost Savings ('000 SR) 424.0 513.1 564.3

Source: Mission estimates; SEC. Statistical Annex Page 11 of 14

Table 11: GDP by Industrial Origin (1978-81) (1976 Prices)

- 1978…------1979 1980 - …-- --- …1981 --…- (SR Million) (%) (SR Million) (%) (SR Million) (%) (SR Million) (%)

GDP 420.5 100.0 488.1 100.0 477.1 100.0 417.5 100.0

Agriculture, forestry and fishing 35.7 8.5 36.1 7.4 32.4 6.8 28.8 6.9

Mining, manufacturing and construction 52.6 12.5 67.8 13.9 68.7 14.4 71.0 17.0

Tourism related 79.1 18.8 95.2 19.5 75.9 15.9 61.8 14.8 i

Other transport and distribution 140.8 33.5 159.7 32.7 165.6 34.7 154.9 37.1

Government services 58.9 14.0 68.3 14.0 78.7 16.5 50.9 12.2

Finance and services 53.4 12.7 61.0 12.5 55.8 11.7 50.1 12.0

Annual GDP gq wth rate (7)" 6.6 16.1 (2.3) (12.5)

1/ Brackets indicate negative growth rate.

Source: Statistics Division. - 52 -

Statistical Annex Page 12 of 14

Table 12: GDP Forecasts (1982-1990) (1976 Prices, SR Million)

1990 Base Growth High Growth 1982 1985 Scenario Scenario

GDP 371.1 1/ 399.6 463.3 486.2

Ave rage annual growth rate (%) 2.5 3.0 4.0

1/ Preliminary estimate.

Source: Mission estimates - 53 -

Statistical Annex Page 13 of 14

Table 13: Foreign Trade (1979-1982) (SR Million)

1979 1982

Domestic Exports 30.9 20.3

-- Copra 19.9 8.9 -- Cinnamon Bark 1.8 3.0 -- Frozen Fish 6.1 7.3 -- Guano 1.8 -- Others 1.4 1.1

Re-exports 83.7 64.9

-- Bunkers (Petroleum) 78.1 60.9 -- Others 5.6 4.0

Total Exports 1].4.6 85.2 Total Imports 534.8 638.6 Trade Balance 1/ (420.2) (553.4)

1/ Brackets indicate negative figures.

Source: Statistics Division. - 54 -

Statistical Annex Page 14 of 14

Table 14: Proposed and Ongoing Energy Sector Projects

…----…Funding (US$)------External Project External Agency Agency GOS Total

New and Renewable Energies Project (within SIEP) UNFSSTD 398,000 80,680 478,680

Energy Survey for the Seychelles IDRC 104,370 15,300 119,670

SEPS The Beijer up to Institute 500,000 - 500,000

Producer Gas Government of Project Germany (GTZ) 416,000 - 416,000

3iogas Project CSC 20,000 - 20,000

(i) Carbon Interna- tional (Germany) Activated carbon (ii) CID (Belgium) 61,000 24,000 85,000

Total 1,499,370 119,980 1,619,350

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