Rapò Eta sou Evalyasyon Enèji, Out 1985

JointUNDP/WorId Bank Energy Sector ManagementAssistance Prograrn 'N~~~~~~~~~~~~~. Activity Comipletion Report No. 041/85 v. ~~~~. 9 3 ' Country: HAITI Activity: ENERGY ASSESSMENT STATUS REPORT AUUST 1985 R*,,port of the lovnt UNDP/?Mr1d Bank Energy Sector Management Assistance Program This document ks a re5tricted distribution. Itscontents maynot be disclosed without authorization fromtheCovernment, theUNDP or theWoridBank. Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized - N RGY S1CTOR NMAGEMNT ASSISTANCE PROGRAi The Jo3it UNDP/World Bank Enérgy Sector Management Assistance Program (ESMAP), started in April 1983, assists countries in,implementing the=-main investment and policî' recommendatiQns of the Energy Sector Assessment Report's -- poduced under another Joint UNDP/World Bank Program. ESMAP provides staff and consultant assistance in formulating and justifying priority pre-invest;ient and invè^stment projects and in .- S providing managemept, institutional and policy support. The report9 produced under this Program provide governments, donors and potential investors îith the informationneeded to speed up project preparationaiid implementation. ESMAP activities can be classified broadly into three groups: -~ - Energy Assessment Status Reports: these evaluate achieve- ments in the year following issuance of the original - assessment report and point out where urgent ectjon is still needed; - Project Formulation and Justification: work designed to acceletate,he preparation and implementationof investment projects; and - Institutionaland Polîcy Support: thîs work also frequently leads to the identification of technical assistance packages. The Program aims to supplement, advance and strengthen the impact of bilateral and multilateral resources already avàilable for techilcal assistancein the energy sector. - Funding of the Prograa r ffThe Program is a major international effort and, while the core finance has been provided by the UNDP and the World Bank, important financial contributionsto the Program have also been made by a number of bilateral agencies. Countries which have now made or pledged initial contributionsto the programs through the UNDP Energy Account, or through other cost-sharing arrangements with UNDP> are the Netherlands, Sweden, Australia, Switzerland,Finland, UnitedlKingdom,Denmark, Norway, and New Zealand. Further Information For further information on the Program or to obtain co-pies of completed ESMAP reports, which are ligted at the end of this document, please contacti Division for Global and 'OR Energy Assessments Division InterregionalProjects Eîiergy Department United Nations Development J rld Bank - Program - 1818 H Street, N.W. ' One United Nations Plaza Wasaington, D,C. 20433 New York,N.Y, 10017 } . \3~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 14 en Co AnON AUD ABBVATIOI AFME Agence Française pour la Maitrise de l'Energie (France) CIDA Canadian InternationalDevelopment Agency DER Directorate of Energy Resources Edh Electeicitéd'Haiti SEC &uropeanEconomie Community FAC Fonds d'Aide et de Coopération (France) FRC Federal RepuUlic of Cermany CTZ Cesellachaft f r Technische Zusammenarbeit(Federal Republic of Cermany) IDA InternationalDevelopmentAssociation IDB Inter-American Development Bank IDRC InternationalDevelopment Research Center MARNDR Ministry of Agriculture,Matural Resources and Rural Development 101ER Ministry of Mines and 8nergy Resources ODBPA Organisation for the Development of the Artibonite River Basin o01 Operat' n Double Harvest ODNO Offio- £or the Development of the Northwest OLADE Latin-AmericanEnergy Organization Petro-Canada Petro-CanadaInterationalAssistance Corporation USAID United States Agency for InternationalDevelopment WMO World MeteorologicalOrganization bbl barrel CNh gigawatt hour kW kilowatt kWh kilowatt hour Nu megawatt MWh megawatt hour toe ton of oil equivalent RNKIC COIVHRSION VACTORS 1 Kilocalorie (Kcal) 3 3.968 Britiob thermal units(Stu) 1 toe a 10.0million kcal Hnergy Source Unit toc/unit wood (airdried) solid m3 245 bagasse (5OX7umidity) tonne ai 0.225 electricity b GWh 257 LPG barrel 0.093 sasoline barrel 0.123 kerosene/jet fuel barrel 0.1.6 diesel oil barrel 0.139 fueloil barrel 0.146 coal tonne 0.610 a/ i.e., metric tonme bi Converted on the basis of thermal replacement value. Courde (G) 1 * US$0.20 F rITI FISCALYl October1 - 8éptember 30 TABLE 0P COUTETS I. INTRODUCTION ANDS8UMARY................................. 1 Developing Indigenous Energy Resourcese... .. .** *,,,. 2 Forestry 2................... ... ..................... 2 FossilEnergy Resources..................... . 2 Renewable Sourcesof EnergyOther than Wood.......... 3 Energy Demand Management ..................... , ....... 3 The Electricity Industry............................. 3 4 Households and <ommerce.,............................ 4 Institutional Development.............................. 5 Priorities for FurtherPre-Investment Work and Institutional and PolicySupport ................. 5 II. MAJOR DEVELOPMENTS IN TUE ENERCY SECTOR OCTOBER 1980 - MARCd 1985................................ 7 Recent Economic Developments ......................... 7 Energy Supply and 8........................e....... 8 Developments in the Energy Subsectors ................ 8 Fossil Fes........... .................. s.........*.,,o, 8 10 Alternative Sources of Eneriy........................ il Energy Piigs**********4*@*ee 12 institutional Development.. ........ *0Oe............. 13 III. STATUSOF ENERGYASSESSMENT RfCOMMBUDATIONS ............. 14 A. Projects vith Immediate Impact....................... 14 Institutional Development............................ 14 Indigenous Resource Development...................... 15 Forest Resources............................* ... 15 Expansion of PoverCenerating Capacity.............e 17 Hydrocarbon Exploration ............................ 19 Energy Demand Management . .. ... .. ... e 20 Pricingand FiscalPolicies........................ 20 PetroLeum ...... 4 ~~~~~20 Electroieym.. .......... ................................. 20 DemandManagement Actions .......................... 23 Reduction of Power Losses...................... 23 Energy Audits in Industry........................ 23 Transportacion ........................................ 24 Improving the EnergyEfficiency of Fuelwood and Charcoal Use............................... 24 B Other Projects .............. ............ .......... 26 Indigenous Resource Development 26 Agricultural WasteProcs... 26 Solar Vater Heating..... ...... ........ ........ 29 30 OtherApplications of Renevable EnergyResources... 31 Solar enry....31 oindr ......... ................ 32 EnergyDemand Ma nagement ............ 33 Conservation in the Commercial and Residential Stetorsand in Housing Dsg ..... 33 Charcoal Production ............ 33 IV. ONGOINGTECHNICAL A8ISTANCE............ 34 V. PRIORITYAREAS FOR FURTBRI PRE-INVESTNENT WORK ANDINSTITUTIONAL AND POLICY SUPPORT ...................... 37 Energy C osrain 37 BnergyConservation in Industry and Commerce.........*37 EnergyConservation inTr ansport 38 Lignite...... .............. ....... ...... ..... ....... .. 39 Prefeasibility Studyof the Use of the Maissade Ligniteas a Woodfuels Substitute in Artisanal Industries and Co _ rce 39 Forestry...... .... ............... ~ 41 Inventory of Forestry Resources and Planning of TheirUse.... 41 Agricultural Iastes ...... 42 SnergyAnalysis of Industrial SugarCane Refineries...... ............. ...................... 42 EnergyAnalysis of Artisanal SugarCane Processing U sits 42 BagasseMarket 8tudy...... 43 Testingthe Technical and Economic Feasibility of BagasseUse 43 Development of Mn-drpwr............. 44 Prefeaiibility Studiesof Selected 8ites 44 Solar Rnergy ......... , 44 Feasibility Study for the Introductiou of Solarlater Heaters ...... 44 Prefeasibility Studyfor SolarCrop-dry inng.......... 45 I. ITRODIUCTION AND SUKARY. 1.1 In October 1980, a UNDP/World Bank energyassesument mission 1/ visitedHaiti to analysemajor issuesand optionsin the sector. Haiti T s energy situation vas found to be characterized byS (a) the country's weak energyresource base; (b) the grovingintensity of energyuse of the modern sectorof the economy;(c) the subcritical site of Haiti'senergy sy:tems, which constrains the choiceof least-cost solutions; and (d) the weaknessof the country's institutional structure and the lack of tech- nical and economic capability to handlethe problems. Prepared under the Joint UNDP/World Bank Energy Sector Management Assistance Program,this statua report 2/ brieflyoutlinesthe major developments in the energy sector since 1980 (Section II). It then revieva in particularthe current situationwith respect to the specificrecommendations made in the assessmentreport (SectionIII), and summarizes ongoing technical assistance to the sector by the international donor community(Section IV). Finally,priorityareas for furtherpre-investment, institutional support, and policy developmentvork in the sector, for which the covernment of Haiti is currently seekingfundotare listedin SectionV. 1.2 The structure of Haiti't energy supply remainsvery much the same as at the time of the energy assessment, exceptfor the use, as of 1982, of imported coal in the cement industry. In 1982, woodfuels accounted for about 74Z and imported petroleum products 142 of the total supply, vith bagasse (5%), hydropower (5%) and imported coal (2Z) making up the remainôer. In spite of considerable efforts, the two nost criti- cal issues in &aiti'senergy sector continue to be the depletion of forestresources, with ensuingsoil erosionand reduction of agricultural productivity, and the increasing burdenof costlyoil importswhich use up scarceforeignexchange. The oil importbill amountedto 24% of mer- chandiseexports f.o.b. in FY82. Realizinga more sustainable energy position over the longer term requiress (a) developing of indigenous energy resourcesto the extent consistent vith efficient allocationof the country's financial and human resources, and (b) appropriate demand management and stimulation of higherefficiency in energyuse to curtail increases in energy consumptionvithout impairing economic growth. Implementing thih strategy demands, in turn,a strengthening of decision- makingand programimplementation in energysectorinstitutions. 1/ Haiti: Issuesand Optionsin the 8nergySector,June 1982. Report No. 3672-HAof the Joint UNDP/Vorld Bank EnergyAssesament Program. 2/ This reportvas prepared by Ms. U. Veimperand Mr. C.N. King, based on a missionto Haiti in February 1984. It vas subsequently updated to reflect the main developments in the energy sectoras of March 1985. Developing Indigenous EnergyResources Forestry Resources 1.3 Progress is being made in demonstrating the managementof nationalforests,in formulating plantation prograus,and in generating interest in vood productionon the part of individual farmers. More specifically, a reinforced Forestry Bureauhas initiated fuelvood species trialst with fuelwooddemonstration plantations slated for 1985. The ForestryBureauhas also starteda programte managean existing forest, which vill serve to demonstrate management techniques thatcan eventually be applied to promotefuelwoodproduction in other areas. At the same time,a majorprojectto stimulate tree-cropping by individual farmersis being implemented by non-governmental agencies. It has becomeapparent from these efforts that a better understanding of currentagroforestry practicesle requiredto formulate an effective reforestation strategy. In addition,there is a need to gain an overvievof the rate snd geo- graphicdistribution of deforestation, and to analysewoodfuel supplyand demandon a regional batis in order to determine the relativeimportance of varicus causes of deforestation, and how to address them. As a furtherstep in bringing about increased vood production, it is necessary to revievthe existing forestlegislation, and the manner in which it is being applied. In particular,the atumpage fees and the fees for fuelvood/charcoal transport permitshave to be revised. Their level has ta be adjusted to reflect the economic coat of depletionof forest resources, and to providethe necessaryincentive for the development of these resourcesthroughforestmanagement and plantation. In addition, the question of distinguishing between vood from the public and the private domain must be addressed,in order to promoterefcerestation on privateland. FossilEnergyResources 3/ 1.4 There is currently no production of fossilfuelsin Haiti. The Ministry of Mines and 2nergy Resources(MMER) is, however, receiving assistance .n formulating a atrategyto promote petroleumexploration. Further exploration of thé country'slargest lignitedeposit(Maissade) bas shown that under presenteconomicand technical conditions it is not economicto encouragelarge scale mining and use of that resourcein a pover plant. Therefore, the Covernment has decided to investigate the feasibility of exploiting the mine in a more labor intensive manner and use the lignite for producingbriquettes,vhich could substitute for fuelwood. 3/ In general terms, these include oil and gas, coal, lignite and peat. To date,only lignitehas been discovered in Haiti. - 3- Renewable Sourcesof HnergyOther than Wood 1.5 Èyxrogpoer, Electricited'Haiti (HdH> has completedfeasi- bility studiesfor the development of four of the larger sites (120.7MW total installedcapacity)in the Artibonite-Cuayamouc basin. Two of these sites (Guayamouc and La Chapelle) have been includedin the power expansion program to 1995 for the Port-au-Prince interconnected network. It is likv y that this program :uill change as a result of an ongoing re'iev of aIl studies prepared for sites in the Artibonitebasin, includingthe other two referred to above (Artibonite 3 and 4). EdH, which is benefitting from a high degree of coordination with donors,has also made considerable progressin evaluating and developing small hydro sites (100-2,500kW installedcapacity)to furnish pover to isdlated centers. 1.6 Bagasse. Recent evaluations confirmthat bagasse is the agri- culture vaste with the greatest energy potentialin Haiti. This la conditional on sugar cane's being an economiccrop in Haiti, where the opportunity cost of land is rapidlyincreasing.Bagassecould substitute for either petroleum products or woodfuels. A variety of further studies, ome of vhich are alreadyunderway, are nov required as part of a systematic program to developbagasse as a source of energy,both in the industrial refineries and among the artisanal sugar cane processors. These studies are listed at the end of this Section and described in SectionV. Energr Demand Management 1.7 In 1982, modern industry and transport used about 802 of the total oil supply,another12% of vhich vas consumedin pover generation. While no precisefigureson woodfuels consumption are available, it is estimated to be aboutevenlydividedbetweenindustry and commerce on the one hand, and householdson the other. As describedbeloav various energy demand managementmeasures in the differentconsumingsectors could contribute significantly to curtailing growthin energyconsumption vithoutlimiting economic development. The Hlectricity Industry 1.8 Economicstagnation, the theft of electricity and an increase in pover tariffscontributed to a significant decreasein the grovthrate of electricitysales in the Port-au-Prince interconnected network in 1980-83. The presenttariff shaould leave EdH in a good financial posi- tion throughFY88. EdH reducedpover systea lossesin the isolatedsys- teus to 15X in 1983, and steps to reduce lossesare nov being taken in the Port-au-Prince network. Losses there reached 32X in 1983, about equally attributable to technicalcauses and to theft and incomplete invoicing. - 4 - Transport 1.9 By increasing the tax on diesel, the Coveroment bas gradually brought the domesticrelativeprices for diesel and gasolineinto lino vith wvrrld-market ratios. It has also recognized the problemof under- collection of revenues (e.g.,importdutieson cars,vehicleregistration fees). Evidence from recentyears pointsto the groving,sub-optimal use of privatedieselcars. Indicators of petroleum consumption vill have to be monitored to determineto what extent the latestprice increases and any împrovedenforcement of existingfiscal measureshas dampenedthis type of demandfor petroleum productsin transport.This issue shouldbe approachedin the context of a strategy to improve the efficiencyot energy use in transport. Specifically, an effort needs to be mtade to evaluate the overall potential for cost-effec'ive energy savinga in transport, and to identifypriority measuresto achieveit. Since up to an estimated 80X of all vehicle-kilometers are drivenin Port-au-Prince, eaergyconservation in transport shouldfocus on that metropolitan area. lndustry 1.10 The Ciment d'Haiticement planthas recentlybeen converted to imported coal,which has replacedthe more bxpensive residual oil as the plant'smain energy source. There is an urgent need to systematically evaluate other opportunities for foreignexchangesavingsthroughenergy conservation measuresand substitution towardscheaper fuels in Raiti's main industrial consumera of oil, pover,and coal. This effortshouldbe extended to include industries using voodfuels. Sfiidies suggest that these artisanalindustries consume scarcewood in large quantities, and sou. of them, such as the essentialoils industry,have unused by- products which could serve as fuel. A tax on woodfuels vould stimulate actionin this area. Householda and Commerce 1.11 A program,launchedin 1983, bas the objective of developing more energy-efficient cookingstovesfor charc"al and wood in urban and ruralareas. This programshouldreceivehigh priority in the activities of the MMER. Progress on this key issue should be acceleratedby concentrating first on introducing an improved charcoal stovein selected areas of Port-au-Prince. Stove design ohould be based on a thorough understanding of consumer preferences, and field testingand modification of the stove modela chosen should be miniuizedto the extent possible. In addition, more attention should be paid to formulatinga stove production and dissemination strategy. Increasing the tax on charcoal, as proposedin para. 1.3, vill requireselective subuidies to ensurethat the energyneedsof loverincomehouseholda are met. 1.12 A 1983 prefeasibility study on the residential use of solar water heating systemsconcludedthat they are competitive vith electric or LPG heaters. A feasibility study is nov requiredto !atermine hov to overcomethe institutional, financial, and promotional constraints to a more extensive use of solarvater heaters. This studyohouldaddressthe potential market for thesehe& ers in the commercial and industrial sec- tors as vell as in residences. Institutiokial Development 1.13 The Directorate of Energy Resources(DER) is receivingtech- nical assistance, including the services of a resident adviserin energy policy, to stre.then its energy planning capability. Planning the developuent of the energy sector as a whole vill help the Government focus scarce resourceson the issues which need to be addressedmost urgently in order to solveHaiti'stvo main energyproblems, the high oil importbill and the shortageof wood. In vie, of the severe financial and manpowerconstraints in Haiti,the-technical, economic, and financial expertiserequired for this planningshould be concentrated in a small administrative unit. Its specific purposeshouldbe to formulate clear- cut programa, esttblishing priorities in sectorinvestments, and monitor their implementation. In pursuing these goals, the DER shoulit help coordinate externalassistanceto the sector. To be effectivein this role, the DER should continuebuildingup strongworking relationships vith other energysectoragencies(e.g.,the Forestry Bureauand EtH). Priorities for FurtherPre-Investment Work and Institutional and PolicySupport 1.14 To reinforceongoing efforts to alleviatethe country'skey energy problemas, the Oovernment of Haiti is currently seekingfunds for the following pre-investment,institutional support, and policy development activitiesu, listedin orderof prioritys (a) energy audits in about 20 industries, both modern and artisanal, vhich are the largestconsumers of oil, electricity, coal or wood, and formulation of an implementation programfor energyconservation and substitution (e.g.,vith imported coal) in these industries (para.5.2); (b) definitionof an energy demand managementstrategy for the transport eaccor(para. 5.3); (c) a prefeasibility study to evaluatethe technical and economic viabilityof using the Maissade lignite as a substitutefor voodfuels in artisanalindustries,commerce,and households (para. 5.7); (d) rapidevaluat ion of the yearlyrate of forestcover degradat ion throughinterpretation of aerialphotographs and LAND8ATimages (para. 5.11); -6- (e) a study of the feasibility of using bagasse from industrial sugar cane refineries(para. 5.15), a bagasse market study (para.5.17),and the settingup of pilot projects to test the technical and economic feasibility of bagasseuse (para.5.18); (f) a feasibility studyfor the use of bagassefrom artisanal sugar cane processing units (para.5.16); (g) detailedregionalsurveysof forestry resources and their use, building on the work undertaken in (d) above (para.5.12); (h) prefeasibility studiesof selected mini-hydopover sites (para. 5.19); (i) a feasibility studyfor the introduction of solarvaterheaters in the residential, commercial and industrial sectors (para. 5.20);and (j) a prefeasibility srudy for solardryingof crops, particularly coffee(para.5.21). -7- Il. MAJOR DBVSLOPNHNTS Il TaS HNERCYSECTO, 0CTOB1 1980 - MARCS 1985 RecentEconomic Developments 2.1 In recent years, underlying structural changes in the Haitian economy have continuedto favor a shif t towards urban activity,i.e. manufacturing (172 of CDP in FY83) 4/ and services(41% of CDP), as opposed to agriculture (32%). 5/ Industry's share in total merchandise exportehas doubledin the last twentyyears while agricultural exporte declinedin relativeterms. For FY82-84,agriculture accountedfor 43% of merchandise exports,and industry57%. Per capita income in Haiti (US$320) is one of the lowest in the Western Hemisphere. Since most gaitians alreadylive near subsistence levels,the world recession in the earl7 1980s affectedHaiti's amall, open economyparticularly severely. Falling international prices for agricultural commodities and a sluggish demand in foreignmarkets for productsof the light assembly industry contributedto a reduction in export earnings. This situationwas exacerbatedby a domestic financial disequilibrium due to expanded Covernment expenditures. 2.2 A stabilization program adopted in mid-PY82 vas relatively succesaful but too short to returnthe economyto full equilibrium.The public sector deficit felU from 13.52 of CDP in FY81 to 9.9% in FY83. CDP# which had declined in FY81-82, grev slightly (0.2%in real terme)in FY83. However, financial difficulties racurred at the end of FY83 due to extrabudgetary expendituresand continuedin FY84 in spite of a new stabilisation program for FY84-85. Tbas, the overall public sector deficit for FY84 remaine high at 9.02 of GDP. This renewed financial deterioration developed in the face of a relative economic recovery, real CDP grovingat 2.6X in FY84, led by a modestexpansion in agriculture and a good performance by the exportassembly industry. The deficithas been financedprincipally throughmoney creation, vhich has spilledover into the balance of payments and vorsened Haiti't reserve position. Net international reserveshave fallen steadilysince FY80, reachingminus US$51 million by end of FY84. Haiti faces formidable constraints to longer-term development, ouch as the publicsector's financial and insti- tutional limitations, and a scarcityin foreign exchangeand domestic savings. The Covernment's currentdevelopment strategyle tc increase production and employment through short-term industrialization for export; the developmentof an integratedindustrialbase; the far- 4/ Haiti'sFiscalYear beginson October1. 5/ The rest of GDP (grossdomesticproduct) in that year was accounted for by construction (62) and net importduties(4%). 8- reaching re-organization of agriculture; the mobilizationof domestic savings; and attracting foreigninvestment. Energy Supply and Demand 2.3 The structure of Haiti's energy balance remains essentially unchanged since the assessment report. Although there are no accurate figures on woodfuelconsumption, wood remainsthe singlemost important source of energyfor the country. Petroleum productimportecontinue to impose on scarce foreign exchange. They amounted to about 242 of merchandise exportsf.o.b.in FY82,up from 202 in FY80. This, however, reflectea decreasein the value of merchandise exportsrather than an increase in the oil import bill. In fact, the petroleumimport bill actually declined an average of 1.9X per year since PY80, to about US$41.8 million in FY82. Total petroleumproduct consumption dropped from about 220,000 toe in 1980 to 200,000 toe (1.5 million bbls.) in 1982. 61 Mich of this reduction vas due to Cimentd'Haiti's converting its pover plant from fuel oil to a new source of energy for Haiti, imported coal. The cementplanthas its ovn port facilities for handling the coal, of which it consumed 36,800tonnes(22,450toe) in FY82. 2.4 Electricity sales in EdH'smixed hydro-thermal systemsupplying the Port-au-Prince area amounted to 220 Ciih(56,500 toe on a thermal equivalent basis) in 1982, and 225.0 CWh (57,800 toe) in 1983. Their averagegrowtth rate decreased from 11.0%per year in 1978-80to 4.52 per year in 1980-83. This can be attributedto economic stagnation, an increasein the theft of electricity, and reduced power generationin 1982-83due to an exceptionally dry year. Sales in the provinces, how- ever, have grown steadilyat the high average annual rate of 18.72 in 1978-83, reaching28.0 Gih (7,200toe) and 32.0 Gih (8,200toe) in 1982 and 1983, respectively. With the addition of the Varreuxdieselunits in Port-au-Prince, and soma small hydro and diesel units in the provinces, MdH's total installed capacitycurrently ameunts to 146.6 MW. Of this total, 120.4 MW (83.7 MW effective capacity in a dry season)serve the Port-au-Prince area,where the maximumdemandreached61.3 Mi in 1983. Developments in the EnergySubsectors FossilFuels 2.5 There are currentlyno contractswith private companiesfor hydrocarbon exploration, but the Ministryof Mines and Energy Resources (MMER), in conjunctionvith the IDB, is establishinga basis for 61 One tonneof oil equivalent (tee)- 10.0millionkcal. -9 - promoting exploration. The largestlignitedeposit (Maissade) has been furtherexplored, but mining it for pover generation vas not found to be economic under present technicaland economic conditions. The MMER intendeto investigate the possibility of expîoiting the Maissade deposit for the use of the lignite as a voodfuels substitutein artisanal industries, in the commmercial sector,and in households. A varietyof factorsvill have to be considered in order to determine whetherthis use of lignite is technicall. and economically viable. These include the potential market, lignite combustion characteristics, the processing needed to make the ligniteinto a usable fuel, the modification required to convert existingwoodfuelscombustion equipmentto lignite,mining methods, and transport. ElectricitY 2.6 Feasibility studies for the Guayamoucand La Chapellehydro- electricsites having been completed, these projectshave been included in FdM's expansionprogramfor the Port-au-Prince area as shown in the folloving table. It is likelythat the specific projectschosenfor the expansionprogram shown here as vell as the sequence of the various projectsvill change as a result of an ongoing review of all studies preparedfor the Antibonite basin. The review includesthe teasibility studies of Arzibonitesites 3 (12.6 NU) and 4 (29.5 Mi), vhich vere completed in 1983-1984. Tbh resulting updating of EdH's expansion programshouldbe available in mid-1985. Table 2.1: EdH'sPiOER SYSTEN EXPANSION PROGRAN, AS OF JULY1984 T=otal Yer of Capaclty Operation MW (8ogUoning of year) Carrefour Power Plant: Diesel Units Nos. 4 & 5, medium speed 15.6 1986 Slow Speed Diesel Plant: Units Nos. 1 & 2 20.0 1988-89 Guayamouc Hydrool.ctric Project 22.0 1990 Coal Ftred Steam Plant: Unit No. 1 20.0 1992 Carrefour Plant: Unit No. 6, medium speed 7.8 1993 La Chapelle Hydro-eloctric Project 56.6 1994 Coal Flred Steam Plant: Unît No. 2 20.0 1995 The Guayamoucdam vill reduce siltation at Peligre by about 40% over a period of thirty years. EdH has also made considerable progreso in evaluating and developing smallhydro sites. The companyvievethe small hydropover option as the best alternative for reducingthe high cost of povergeneration in isolated centers. - 10-, 2.7 Energy lossescontinueto presenta significant problem in the pover sector. EdH did reduce lossesin the isolatedsystemefrom 26X in 1978 to 15% in 1983, mainly by network renovations. In the Port-au- Prince network,however, losses grew from 271 to 32X during the same period. In 1983, EdH initiated a program to reduce losses in iort-au- Prince to 17X in 1987. The programinvolves both networkrenovation and improved management practices, and is starting to produceresults, Woodfuels 2.8 The Forestry Bureauhas starteda programunder an IDA project (Cr. 1257-HA) to test fuelwood speciesand plantpilot standsof trees in order to evaluate the technicaland economic feasibility of fuelwood plantations. The Bureauis also developing its management of 20,000ha of pine forestat La Selle, in the southeast. Althoughthe forest is to be managedfor the production of timber,the main orientation of the program is to demonstrate forest management techniques to be eventually applied for fuelwood production in other areas. Under USAID's Operation Oiutreach, non-governmental organizations have taken the lead in rural reforestation, promoting tree cropping by individual farmers. 2.9 The rate an geographicdistribution of,deforestation remain uncertain, The Ministry of Agriculture, Natural Resourcesand Rural Development (MARNDR) has suggested that the extent of naturalregenera- tion may have been underestimated in past evaluations of deforestation. To properly address the wood s8 ply problem,Haiti's forest resources need to be inventoried so that their evolutioncan be monitored. As MARNDR has also stressed, currentagroforestry practices and the grovth characteristics of and farmner'preferences for native speciesmuet be -ietter understood in order to be able to formulate an effective reforestation strategy. 2.10 An analysisof the fuelwoodproblemin the Northwest7/ con- cludedthat the existingsystemof land tenure is a key factorin vwod- fuel supply,as it createsdisincentives to tree planting. It vas also fouad that the demand of artisanalindustries led to cutting trees for fuel,whereasfamilies cookedfor the most part vith deadwood. The study on the Northwestproposedthat voodfuel supply and demand be analyzed more closely on a regionalbasis. This would determinethe relative importance of the variouscausesof deforestation in different areas,and identify actionsto be taken regionally to addressthem. 2.11 As a component of the IDA Forestry Project,the International Development ResearchCenter (IDRC) has been providing assistancefor a two-year programto developimproved cookingstovesfor charcoal and wood in urban and rural areas. In coordination vith the MARMDR,the DER has 7/ Haiti: Bois de feu et residusvegetaux, Analysede la situation et projects proposes, published by SEMA-ENERGIE for AINE,January1983. - il - been undertaking this vork which involvessurveysof cookingpractices, the design of improved stoves,and cycles of field testingand design modificationto identify models which save fuel and meet consumer preferences.The programas designed shouldbe viewedas part of a long- term effort to addressboth ruraland urban needs. ThA urban market for stoves vill be easier to develop than the rural one because: (a) the urban populationis already accustomedto using purchasedstoves for cooking, (b) there is a monetaryincentive to swvtchto modelswhich are more fuel efficientthan the traditionalones, and (c) urban areas already have a well-established artisanalproduction and dissemination structure for stoves. In view of this, progress on the dissemination of more efficientstoves should be acceleratedby concentrating first on introducing an improved charcoal stove in selectedareas of Port-au- Prince. The number of design testingcycles should be minimized,and more attention should be paid to formulatinga stove productionand dissemination strategy. To this end, vorking contacts should be in- creased vith artisans who could produce the stoves and vith Iaitian socialgroups and non-governmental organizations who can assist in dis- seminating them. Alternative Sourcesof Energy 2.12 Vork carriedout sincethe energyassessment has confirmed that bagasse is the agricultural vaste vith the greatestenergy potentialln ati7. Haiti is currently a net importer of sugar. Its sugar industry is beset vith numerous problems,the lack of cane being the main one hamperingits industrial sugar refineries(as opposed to the artisanal cane processors). This is largelydue to the disincentive effect of an inadequate price structure for cane. Other probleisincludethe absence of adaptive research on cane and of an extension serviceto cane farmers, the inefficiency of a marketing system unresponsive to demanA, inadequacies in infrastructure (irrigation, drainage, roads, etc.), and the lack of any organizational structurein the sector (e.g., regional associations of cane farmers). There is therefore a need to rationalise the sugar sectorthroughthe definition and application of a consistent set of Government policies. 2.13 Energy audits of the Darbonneand Cap Haitienrefineries vere carried out in 1984. Preliminary results of this DER-AFME analysis confirmthat there is a theoretical energy potential which can not be developed unless the refineries' throughput te significantly increased sad their operationsare streamlined. The supply of cane to these refineries must be assured on an economicbasis before this source of energycan be exploited. The artisanalprocessors of sugar cane in the Leogane Plainvere also studiedrecently by the DER, vith assistance from USAID. It vas found that a few iow-coetmeasures could improve the operationalefficiencyof these units, reduce their consuhptionof fuelwood, and perhapsresultin a surplusof bagasse, available for other energyuses. More vork needs to be done to formulate a generalstrategy for developingthe energy potentialof bagasse,as part of an overail effortto rationalize the sugar sector. Such a strategy needs to take - 12 - in-o accountthe currentframework of incentives in the sector,and the gains in economic efficiency which could be achieved by reorganizing the processing units. 70r example, two possible coursesof actionwhich need to be analysed ares (1) the'integration of guildivesvith mills or refineries, and (2) maximising the i.put of cane to the more efficient processing units by phasingout the least efficient ones. The general strategy shouldalso addressthe need to improvethe energy efficiency of individual refineries and artisanal units on the basis of energyaudits, and to analysethe alternative uses of the surplus bagasse. 2.14 With respect to solar energy, a prefeasibility study on the residentialuse of solar vater heaters has shown that the foreign exchange component of a projectto installabout 1,350of them over five yearswould be recovered in tvo to four years. Ixperience in solarvater heatingin a few developing countries suggests that this foreignexchange componentcould be reduced, thereby shorteningthe payback period. Accordingte measurements taken since the assessment, Haiti has limited vind ener£g but speedsare nevertheless sufficient for pumpingvater at selected sites. In 1984, the DER coordinated a study on the use of low and medium enthalpy geothermalenergy at some of the more promising geothermal sites. The study concludedthat, from au economicpoint of viev,development of those sitesis not varranted at this time. -nerpyPricing 2.15 With respect to petroleumproduct prices,retail prices have been adjusted in line with international market product costs. In addition,the Covernmentbas increasedtaxes on diesel oil, so that domestic relativeprices for gasoline and dieselhave been realignedto world market ratios. An agreement has been reachedto exempt 2Ed from this tax on dieseloil. 2.16 The averageelectricity tariffhas increased by 12.5Sper year over the last threeyears. Etd's petroleum productbill grew from US$8.1 to US$15.5million from 1l82 to 1983 due to reducedhydropover avail- ability. As a resultof this,of the failureof thermalgenerating units at Varreux, and of reduceddemauddue to the economicrecession, EdH had a rate of return of zero in FY83. The fuel surcharge vhich vas set in FY83 vas incorporated into the basic tariff at the beginningof FY84, raising it to USC14.0/kWheAssuming annualtariffincreases in line vith local inflation (about 0l per year), a gradualincreasein the grovth rate of sales from 7% per year in FY84 to 1 in FY88 ms economic conditionsimprove, and reasonableincreasesin operatingcosts, the projected annual average tariffs for FY84-88vill about equal long-run marginalcosts. This would vould leave EdH in a satisfactory financial position for that period. In particular, EdH vould be able to generate internally about 272 of the financingin its construction program and vorkingcapitalneeds. -13 - 2.17 vith rOspect to woodfuels,the average price of charctal has increased an average of about 43X in nominal terms from 1980 to early 1984. Hovever, much of this cean be linkedto an increase of about 37X in the consumer price index for that same period. The Oovernment proposes to recover the economic cost of depletion of forest resources by increasingthe tax on charcoal,i.e., the fees for wood cutting and transport permiti. This vould also provideincentives for forestmanage- ment and the establishment of plantations. At the same time, selective subsidies vill be required to ensurethat the energyneeds of the poorer population are met. Institutional Development 2.18 Significant progresscontinues to be made in strengthening key energy sector institutions.The Ninistry of Mines and Energy Resources (MME) has been restructured, and the Directorate of Energy Resources (DER) in particularis benefittingfrom capable new management. DER staff are receiving trainingin energy planning(USAID project) and are to receivetrainingin geological exploration (IDB project). Steps are being taken to develop an energy planning capabilityand to improve coordination with otherenergy sectoragencies. 2.19 In the forestry sector,some progress has been made in staffing the Forestry Bureau in the MAiRf. The Bureau is being further reinforced through the recruitment of both short and long-termforestry consultants. The creation of a tvo-year forestry curriculumat the techuicallevel is already underway, and vill significaitly improve forestry training. In the electricity %ector,UdR standsout as or* of the better organizedenergy agencies,reflectingcontinuedand vell coordinated technical assistance in operations, planning, and training. - 14 - III. STATUS0O SUSRCYASSESSIENT REGONNENDATIONS 3.1 The energy assessmentreport recommended one set of actions which would have an immediate impacton Haiti's most crucialenergy prob- lems and anotherset which shouldbe considered as longer-term measures. The following sectionreviewsthe currentsituation with respectto those recommended actions, whichare presented here in the same two groupings. A. Projects with Immediate Impact 3.2 Institutional Development Recomendation (a) Define the Government's objectivesin the energy sector, and decideon a strategy and on programs to achievethem. Createan Advisory Committee, made up of the heads of energy agencies,technicalexperts, and representatives of aid agencies. Establishan Energy Statistical Unit, and strengthen the capabilities of the individual energy agencies, particularly the Directorate of EnergyResources and the Forestry Bureau. Statue The Ministryof Mines and EnergyResources(MMER) is in the process of building up a long-termenergy planning capability. Its organizationhas been streamlined and the responsibilities of its admin- istrative units have been clearlydefined. The first steps are being taken to increase coordination among energy sectoragencies. Iithin the MMER, the Direc- torateof EnergyResources (DER)whose management has been considerablystrengthened, has initiated the collectionof energy data. As describedin Section IV of this report,DER staff are receivingtraining under a USAID project (energyplanning)and are to receive training under an IDB project (geological exploration).It has been proposedthat an Economic EvaluationUnit be establishedin the Ministry of Planning.Civen the ongoingreinforcing of the DER, this capabilitywith respect to the energy sector shouldbe builtup withinthe MMER instead. The IDA ForestryProject (Cr. 1257-HA) providesfor reinforcement of the Forestry Bureauand for training in forestry. As of January 1985, several forestry and researchofficersand a volunteerforesterhave been assignedto the project. The recruitment of a long-term forestry advisor and of a short-term - 15 - consultantis underway. With respect to forestry training and eduç4tion,the project is to finance graduate-level studies abroad, the introduction of forestry and conservation education in grade schools, and the creation of a two-yearforestry curriculum at the technicallevel. The two-year training of 20 technicians has startedat existing facilities of the Faculty of Agricultureand VeterinaryMedicine at Damien. This vill strengthen the Bureau'scapacity to establishnurseriesand to produce seedlingsin orderto createfuelvood plantations on publiclands. la the pover subsector, EdR has benefitted from con- tinued technicalassistancesince 1977 and a high degree of coordination with donors. EdH has a vell organizedtrainingunit, and its trainingneeds seem taken care of by existing and proposed programs. 3.3 Indigenous Resource Development ForestResources Recoamendation (a) Complete a national inventoryand mapping program, showing currentlandcover and use. Statue In 1978-79,the HaitianNational Geographic Institute had a series of aerial photographs taken. The Ser- vice de l'Amenagement du Territoire has used them as the basis for maps shovingland use, soil distribu- tion, and erosion. The mape can serve as a first step in evaluatingthe evolutionof the country 's forestryresources. This vork is proposedas a pri- ority for furthertechnical assistance in para. 5.11. I*conusndation (b) Identifyand eventuallyestablishforest plantations of fast groving specieswhich vill supply a significant portionof the nation's needs for charcoal and fuelwood. Establish trial plantation programato identifysuitabletree speciesand to demonstrate resultsfor wood pro- ductionand erosioncontrol. Statue The main reforestation efforts in Haiti are those bWing made under an IDA projectand a USAID project. The International Development ResearchCenter (IDRC) - 16 - and the IDA Forestry Projectare assisting the Fores- try Bureau in conducting trials of native and importedspecies. These speciestrialsare underway at Duvalierville (250 ha.) and in the North near Jean Rabel. The fuelwooddemonstration plantations which have been initiated at Duvaliervilleare to be expandedin 1985, and similarplantations are to be initiatedin 1985 at the Jean Rabel site. A third site for species trials and demonstration plantings is being selected. It vill probably be in the CentralPlateauarea. The programis to be extended to as many as ten trial and demonstration sites in all, covering the main ecological zones of the countryand possiblyincluding four trial plantations started by the FAO fifteenyearsago. The USAID funded Outreach Project entails providing seedlings and technical assistance to individual farmers to promote tree-cropping based on farmer ownership of the trees. The projectis being imple- mented by non-governmental agencies: Operation Double Harvest (ODH), the Pan American Development Foundation, CARE, and various private voluntaryor- ganizations. Over five million seedlingshave been planted, and over 10,000farmersreached. While the projecthas concentrated its activities in the Cul de Sac Plain, it is nov extendingthem to the rest of the country. ODH's nursery near Port-au-Prince, vhich has a researchand improvement capability, has been providingmost of the seedlings,but regional nurseriesare to be established. The US$8 million project has also initiated about 18 trials of local and exoticspecieson plots in farmers' fields. The Office for the Developmentof the Northwest (ODNO),with assistance from the FederalRepublicof Germany in a "food for vork" program, continuesto plant hedges and trees in crop fields in the North- vest. Five hundred hectaresvere planted in 1983. The main emphasisis on erosioncontrol, but the pro- gram also seeks to producewood for fuel. The IDA project is also to become more involvedin agrofor- estryby studying currentpractices (e.g., intercrop- ping of trees and food crops) and the uses of native species by farmers. lsco.uundation (c) Identify severalblocksof partially forested land suitable for vood production which could be improved by immediate institution of basic forestmanagement practices. - 17 - 8tatuo Under the IDA Forestry Project,the pine forestof La Selie in the Southeast is to be surveyed, and a com- prehensivemanagementplan ia to be prepared and initiated for the 20,000ha of forest on the 30,000 ha ares. There has been some selective thinning on a fev hectares to train field managers prior to initiating improvement on a larger scale. In addition, commercial exploitation has benn startedon 250 ha according to a cutting plan which i8 provisionalwhile the comprehensive plan is being formulated. lecosmdatiom gd) Reduce erosion and sedimentation at Peligre by controlling grasingand cultivation, planting grasses on steep slopes,and carrying oUt reforestation of the Artiboniteheadwaters,in conjunctionvith orderly agricultural development. Statue The most significant measure that has been taken to reducesedimentation at Peligrehas been the carrying out of a feasibility study for a dam on the Cuayamouc River, discussedbelow. The Organization for the Development of the Artibonite River Basin (ODBFA)has been recently establishedto implement integrated rural developmentprojects in the Central Plateau Area. This is to includeforestation and the rein- forcementof river banks. As the organization la nev, there it little indicationto date as to %hat the scopeof its activities vill actually be. Expansion of PowerCenerating Capacity -ecaaoadatiom (a) Furtherinvestigate the feasibility of developing the remaining hydropotential in the Artibonite-Guayamouc basin. 8tatus Feasibilitystudies for four sites in this basin (Gùayamouc, la Chapelle, Artibonite 3, and Artibonite 4) have been completed. Guayamoucand La Chapelle are provisionally scheduled to begin operating in 1990 and in 1994, respectively, as part of the expan- sion program for EdH's interconnected netvork. The feasibility study for Guayamoucconcludedthat the - 18 - two dams originallyenvisaged(GuayamoucI and Il) could be combined into a larger one. The proposed power plantwould have an installed capacity of.22 MW and produce75 GWh per year of firm energy. This dam vould reduce siltationof Peligre by trapping over 30 years 40% of the sediments which vould otherwise settle in the Peligre reservoir. The generationof electricity at Guayamouc is a secondary, but signifi- cant benefit,as the reservoiris large enouggh for the dam to provide peak energy to the interconnected system all year long. The best solutionat the La Chapellesite appearsto be to instail a capacityof 56.6 MV, at a cost of about US$2,400per installed kW, and generate197 GVh per year of firm energy.Tue feasibility studiesfor the Artibonite sites 3 (12.6 MW) and 4 (29.5 MW) were completedin 1983-1984, which makes it possible to further optimize tha expansionprogram. EdH has appointeda Board of Consultants to reviev the feasibility reportsfor the Cuayamouc, la Chapelle, and Artibonite 3 and 4 hydro- electric projecte. The Boardwill also comparethese projects with a coal-fired steam pover plant and, on the basis of its analysis, revise EdH's system expansion plan. The resulteof this vork shouldbe available by mid-19