Metallic Improved Cook Stoves Dissemination in Mountain Region of Nepal: Experience, Financial Viability, Opportunity & Challenges
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R. B. Thapa and R. M. Shrestha: Metallic Improved Cook Stoves Dissemination in Mountain Region of Nepal...
Metallic Improved Cook Stoves Dissemination in Mountain
Region of Nepal: Experience, Financial Viability, Opportunity
& Challenges
Rana Bahadur Thapa and Rajeev Man Shrestha*
Alternative Energy Promotion Center / National Rural & Renewable Energy Programme
Abstract— Nearly 75% of energy requirement is met by majority of the people will depend on biomass for satisfying
traditional biomass (CBS, 2012) that has induced enormous their basic energy needs for cooking and space heating.
stress in forest resources and increased indoor air pollution due
use of traditional stoves. In order to overcome this problem The current energy consumption pattern has implications
dissemination of mud based Improved Cook Stove (ICS) was in many sectors in Nepal e.g. raising issue in rural energy
initiated in Nepal which are not suitable in mountain region solution, agro-forestry, rural economy, health especially of
where space heating is prerequisite. AEPC1started women and children, drudgery in fuel wood collection,
dissemination of Metallic ICS on public-private-partnership education (ESAP/DANIDA, 1998). Due to extensive use of
model since 2009 in the mountain region. 8,730 numbers of biomass the forest resource has enormous stress whereas
MICS are installed in 304 VDCs of 38 districts (AEPC/ESAP,
2012) in short duration. Significant impacts are observed like
consequence of indoor air pollution especially women and
high public acceptance, improved health condition, better children is very high due to use of traditional stoves
lighting and saved time for fuel wood collection, 1.9 kg/HH of (Davidson CI, 1986).
fuel wood reduced and 2.2 kg/HH of CO2 eq. saved by single
With an aim to reduce the use of biomass consumption
MICS daily. Though the programme is designed with subsidy
approach, awareness and information dissemination are also
and reduce the impact of indoor air pollution, Improved
very crucial for creating demand. Further, the appropriateness Cook Stove (ICS) dissemination in Nepal was initiated
of the stove, its target location, proper supply mechanism and during 1950s with the introduction of Indian stove models as
quality assurance are also crucial for the successful it has better efficiency (Joshi, 2004). These stoves were
dissemination of MICS. 1 basically a mud based stoves suitable in Terai Planes and
Index Terms— Resources, indoor air pollution, space
Mid-Hills. Various organizations, programmes including
heating, quality assurance, improved health Government of Nepal (GoN) has participated in
dissemination as well as promotion of mud based ICS. The
I. INTRODUCTION mud ICS are not suitable in mountain regions where space
heating is required. In mountain region forest resource is
Forest resources and biomass (primarily fuel wood) are less and rate of plant growth is very low as a result the rate
major sources of household energy in most of the of deforestation is very high. Metallic Improved Cook
developing countries. Nepal, being one of the least Stoves (MICS) are the best solution that is more efficient
developed countries, relies heavily on fuel wood for its and also acceptable to local people as it provides space
household energy requirement. Most of the energy heating in mountain region. This paper discusses the
requirements for the 88% of people living in rural areas are experience and pros & cons of metallic improved cook
fulfilled by biomass to meet the daily need due to limited stoves dissemination in mountain region of Nepal.
access of clean energy options like electricity, LPG, biogas
and kerosene. Nearly 75% (CBS, 2012) of the energy III. LITERATURE REVIEW
requirement is still met by traditional biomass: fuel wood,
agro-residue & animal dung. 3.1 Biomass energy and end-use technology
Energy consumption in fiscal year 2009/010 was 9,911 Biomass refers to living and recently dead biological
Tons of Oil Equivalent (TOE) with ratios of 84%, 15% and materials that can be used as fuel or for industrial
1% for traditional, commercial and renewable energies production. It is commonly plant matter grown to generate
respectively (MoF, 2011). The trend of reduction in electricity or produce heat. Useful biomass energy is
traditional energy use is very negligible although the rate of basically bio-fuel, biogas, and use of solid biomass by
renewable energy and commercial energy use is increasing improved efficiency of end-use applications to trap heat or
which exceeds the rate of population growth. The share of electricity.
traditional energy use is decreased from 89% to 88% in Although fossil fuels have their origin in ancient
2004/05, 87% in 2008/09 and 84.4% in 2009/010 (WECS, biomass, they are not defined biomass because they contain
2010). carbon that has been out of the carbon cycle for a very long
time. Their combustion disturbs the carbon dioxide content
II. PROBLEM STATEMENT in the atmosphere.
Although the Government of Nepal has put considerable A bio-fuel is a type of fuel whose energy is derived from
efforts to develop new and alternative energy sources, the biological carbon fixation. It includes fuels derived from
biomass conversion, as well as solid biomass, liquid fuels
and various biogases. (Wikipedia, 2013).
* Corresponding author: rajeev.shrestha@aepc.gov.np,
rajeev_mshrestha@hotmail.com
Rentech Symposium Compendium, Volume 3, September 2013 9
R. B. Thapa and R. M. Shrestha: Metallic Improved Cook Stoves Dissemination in Mountain Region of Nepal...
Biogas is methane produced by the process of anaerobic schools, hotels /restaurants, police/army barracks and small
digestion of organic material by anaerobes. It can be scale industries.
produced either from biodegradable waste materials or by
This has high efficiency (35-40%) thus saves remarkable
the use of energy crops fed into anaerobic digesters to
amounts of fuel.
supplement gas yields. It can be recovered from mechanical
treatment waste processing systems. (Wikipedia, 2013).
3.2 Improved end-use appliances
It is a method of saving or conserving use of biomass
consumption by increasing efficiency of end-use appliances.
In case of cooking, efficiency of cooking stoves is improved
by means of improved stove models called improved cook
stoves. Generally, the efficiency of improved cook stoves is
increased by 10-20 percentages comparing with traditional
stoves. (ESAP & CRT/N, 1999)
Different types of improved stoves are developed
through research and development and then disseminated
under government support programs.
Fig. 2: Institutional improved cooking stove
Here are some major improved cooking technologies
available in Nepal: 3.2.3 Rocket stoves
3.2.1 Mud brick ICS This is an efficient cooking stove using small diameter
fuel wood which is burned in a simple high temperature
This is most widely used ICS technology that uses clay, combustion chamber containing an insulated vertical
rice husk, cow and few metal rods. This technology is chimney that ensures complete combustion prior to the
available in three models one pothole, two pothole and three flames reaching the cooking surface. The models have 25-
pothole. This type of technology is well accepted by users 30% efficiency. This can be fixed as well as a portable type
because it is cheap, can be built locally through wide model suitable to any parts of the country.
availability promoters2 to provide installation and after sales
services (ARECOP & CRT/N, 2000). It has more than 15%
of efficiency. This is suitable in the mid-hills as well as in
northern part of Terai districts of the country (CRT/N &
ESAP/DANIDA, 1999).
Fig. 3: Fixed & portable rocket stoves
3.2.4 Bee hive briquette stove
This is a portable type of model suitable for burning bee
hive briquette in order to provide cooking solution. It has
two compartments separated by a grid and aeration is
happened through natural draught. Some models have air
flow control mechanism. These models are made up of clay
or metal with capacity to use 90% of briquette. This being a
costlier solution is not suitable in rural parts but suitable in
urban and semi-urban parts of the country.
Fig. 1: 1, 2, and 3 pothole mud ICS
3.2.2 Institutional mud brick ICS
This is a larger version of mud-brick improved stove
suitable for institutional purposes. This is widely used in
2
Promoters are stove entrepreneurs trained for installing ICS as well as Fig. 4: Bee hive briquette stove
promote the technology in the rural area.
Rentech Symposium Compendium, Volume 3, September 2013 10
R. B. Thapa and R. M. Shrestha: Metallic Improved Cook Stoves Dissemination in Mountain Region of Nepal...
3.2.5 Metallic improved cook stoves renewable energy technologies including ICS.
(APEC/NRREP, 2012) Mainly ICS program was focused in
This is similar to mud-stoves but made from metal to
mid-hill region till 2008. Although, ICS programme was
provide clean cooking and to allow space heating as well.
named national program, it could not internalize the program
Two pothole and three pothole are the two models available
in Terai and mountain regions for a long time. In 2009,
in the market. Some models have three potholes and a slot
dissemination of Metallic Improved Cook Stoves (MICS)
for baking bread with water tanks. Adjustable air vent in the
was started in order to provide clean cooking solution to
main door allows regulation of air flow and damper in flue
mountainous people. Similarly, clean cooking solution to
pipe allows transfer of heat efficiency towards cooking pots.
Terai region was initiated from July 2010, with the
This model is good for cooking, water heating and space
development of Portable Rocket Stoves.
heating and saves up to 40% fuel wood consumption.
3.4 Evolution of metallic cook stoves
Due to requirement of space heating along with cooking
solution, available technology was not accepted by
consumers of high hills and mountain region. The program,
claimed as national programme was highly accused for not
covering all the geography of the country. Mud-brick ICS
dissemination was widely accepted by only the people of
mid-hill region. It was only in 2009, AEPC/ESAP initiated
to disseminate clean cooking solution in high hills and
mountain region of Nepal by introducing metallic cook
Fig. 5: 2 & 3 pothole metallic ICS stoves (MICS). The first MICS model disseminated was
3.3 History of ICS in Nepal adopted from Kathmandu University, which had been
promoted in Jumla & Humla earlier. The cost of MICS is
The Indian models, the Hyderabad and Magan Chulo, high due to high cost of raw materials as well as the
were the first Improved Cook Stoves in Nepal, during 1950s transportation cost. Thus, providing subsidy is pre-requisite
(Joshi, 2004). An agro-engineering workshop in the for the dissemination of MICS.
Department of Agriculture developed a mould-based ICS in
1960s that model was disseminated through the 1970s. Some 3.5 Policy review
NGOs and GOs were involved for the dissemination and Through 5th five year plan, the government started to
research of ICS like Peace Corps, Women Training Centre, address energy related issues and it is continued till now.
RECAST and UNICEF (Joshi, 2004). In sixth 5-year plan of (GoN-NPC) There was only indirect subsidy in ICS
National Planning Commission addressed the fuel wood dissemination like creating demand, providing training to
consumption issues together with introduction of community promoters etc till the end of 2008. Considering high
forestry in 1980s. The Government of Nepal (Then HMG/N) investment associated in MICS, requirement of subsidy was
initiated dissemination of ceramic pre-cast (pre-fabricated) envisaged. As a result, Subsidy Policy 2009 came up with
stoves with support from FAO and UNDP (Sulpya, 1991). subsidy arrangement to MICS. As per the policy, per unit
These models were not feasible due to frequent breaking installation of 2 pothole and 3 pothole MICS gets subsidy
while transporting from one place to other. (Shrestha G. R., amount of NRs 2,700 (US$ 31) and NRs 4,000 (US$ 46)
2000) respectively which covers about 50 percentage of investment
By 1998, 95,000 ICS were installed throughout the cost. (AEPC, 2009) The government initiatives and efforts
country. Major contribution was from Community Forest in creating favorable environment is an instrumental for
Development Projects (CFDP) as they supported about successful dissemination of renewable energy technologies
57,000 ICS installation (Shrestha, Thapa, & Bajracharya, including MICS. Providing subsidy to any sector is not
2009). considered a sustainable option, but during initial phase of
dissemination it is necessary. The subsidy provision from
National ICS Programs was initiated with support from government is considered as a quality confirmation
Energy Sector Assistance Programme (ESAP) of DANIDA incentives to the sector.
in 1999 under Alternative Energy Promotion Centre
(AEPC), later on Norwegian Government joined in ESAP. IV. METHODOLOGY
The first phase of ESAP was concluded in March 2007 and
the second phase of ESAP concluded in July 2012. This paper is based on secondary data and number of
(AEPC/ESAP, 2007) During the initial phase of National years of experience of the authors. The data were gathered
ICS program, few other partner organizations have from published and unpublished sources especially from
remarkable contribution in the sector like Centre Rural AEPC disaggregated database, prevailing policies/
Technology (CRT/N), Dhaulagiri Community Resource guidelines/ manuals, periodic reports, national and
Development Centre (DCRDC), Namsaling Community international journals, article of newspapers, case studies
Development Centre (NCDC) and Center for Self-Help etc. Qualitative and quantitative analysis methods were used
Development (CSD). to analyze data. Simple excel spread sheet was used to
analyze quantitative data.
Since July 2012, National Rural and Renewable Program
is implemented under AEPC to promote and disseminate
Rentech Symposium Compendium, Volume 3, September 2013 11R. B. Thapa and R. M. Shrestha: Metallic Improved Cook Stoves Dissemination in Mountain Region of Nepal...
V. RESULTS AND DISCUSSIONS • The Programme has to be GESI3specific and should
give primary focus to the rural women,
5.1 Lesson learned marginalized community with the appropriate
With more than three years of MICS dissemination in strategies to build capacity at local level.
high hill and mountain region few lessons have been drawn • It is important that ICS promotion gives priority for
which are summarized below: improvement of kitchen environment, health of
women and children. It saves fuel wood and time
5.1.1 Dissemination approach
and provides comfort. Normally getting rid of the
• Demand driven approach of MICS Programme smoke problem is perceived as the immediate
dissemination in high hill and mountain region is a priority of most rural people particularly women.
sustainable approach. • The ICS program generates local employment and
• Private Public Participation model is followed. income generating opportunities.
(Shrestha, Subedi, & Bista, 2010) 5.1.4 Cost effectiveness and financial analysis
• Networking and collaboration among key
stakeholders working at central, district and local • The average manufacturing cost of a two pothole &
level is necessary. three pothole (with & without water tank) MICS is
• Users’ education, training on O&M, awareness and NPR 6,500; NPR 8,500 & NPR 7,000 respectively.
information are crucial for creating demand for However, the subsidy rate is NPR 2,700 & NPR
MICS. Users’ Training on MICS operation & 4,000 (both with & without water tank) respectively
maintenance is very vital. for two pothole & three pothole MICS (AEPC,
• The programme has realized that only subsidy on 2009). This in turn makes three pothole cheaper
technology is insufficient to attract the potential than two pothole on part of users’ contribution.
MICS users. There should be proper supply chain Thus users’ are purchasing three pothole MICS
management along with appropriate user awareness even though their requirement can be fulfilled
campaigns. through two pothole MICS.
• The geographical distance between manufacturers, • The cost shared by GON, as quality assurance
suppliers, demand creator, target beneficiaries, discount reflects only as a token which covers up to
installers, after sales service providers must be 60% of manufacturing cost. Further, users’ have to
narrowed down in order to attract more potential bear additional larger chunk for transporting the
users. stove to their respective households. This has
• The programme should not be implemented on discouraged many potential users from adopting
isolation rather it should be integrated with other MICS even though they are willing to install it.
community development activities having strong • The cost benefit analysis, taking a case from
social mobilization part. Dolakha district, is carried out considering with &
• MICS promotion activities coupled with Indoor Air without government subsidy. The analysis revealed
Pollution Free VDC Campaigns, kitchen that payback period of the investment in MICS by
improvement, fuel wood management, as well as the user is quite low. Considering the life of MICS
household sanitation would add its value and as 14 years, (Shrestha B. P., 2012) the payback
increases demand. period of MICS without subsidy is around 6 years
while the same with subsidy (with current subsidy
5.1.2 Useful technology rate) is 3 years only. Similarly, economic analysis
• Appropriate stove model is required to cater diverse shows that payback period of MICS without
needs and preferences of the users based on subsidy and with subsidy is 6 months and 5 months
cooking practices, feeding habits, socio-economic, respectively.
cultural and geographical conditions are paramount. 5.1.5 Environmentally friendly
• Further, efficient and affordable models are equally
important for creating larger demand. • The different models of MICS, disseminated by
• Strengthen the technology testing facility so that AEPC, are successful to reduced fuel wood
more and more certified efficient stove designs are consumption by 31.5% per person per day
developed & disseminated benefiting target compared with the traditional stoves operational in
beneficiaries. the targeted region (Dhoubhadel, 2012).
• Appropriate stove accessories must be provided to • Further, these MICS models are also successful to
address the need based on cooking requirements to reduce time consumed in fuel wood collection and
attract the needy population. cooking activities by more than 40 minutes per day
(Dhoubhadel, 2012).
5.1.3 Widely public acceptance • Likewise, these models have also succeeded
significantly in reducing CO2 emissions annually,
• Continuous Monitoring, follow up and technical
almost 30 % compared to their traditional
supervision on MICS performance and operation
counterparts (Dhoubhadel, 2012).
are crucial for the wider public acceptance of any
MICS program.
3
GESI – Gender Equality & Social Inclusion
Rentech Symposium Compendium, Volume 3, September 2013 12R. B. Thapa and R. M. Shrestha: Metallic Improved Cook Stoves Dissemination in Mountain Region of Nepal...
5.2 Opportunities this de-motivation is high cost associated with it. Thus, it is
the major challenge on part of the programme on how to
Before the implementation of the MICS dissemination,
ensure after sales services to the users.
AEPC has generated a data on potential number of
households (HHs) eligible for subsidy as per the criteria
stated in the subsidy delivery mechanism. This data reflected VI. CONCLUSION & RECOMMENDATION
that, 1,214,866 HHs of 1,557 VDCs in 57 districts are Metallic Improved Cook Stoves are feasible solution in
potential for MICS dissemination. During three years of mountain region of Nepal and other parts of world. It is
MICS dissemination, AEPC is only able to reach 8,730 HHs widely acceptable by the users at local level however
of 304 VDCs in 34 districts. These data show that there is information dissemination is necessary. It is not only an
still huge market for MICS dissemination. energy solution but also improves health conditions of
Further, the field experiences have shown that, these women and children and helps to preserves natural resources
MICS have reduced smoke along with space heating which as well remarkably.
produced the healthy kitchen environment. This has also Though there is enough market, conducive policy,
increased in men participation in the kitchen work, participation of private sector & financial and technical
traditionally women being sole responsible. assistance from development partners the result is not as per
5.3 Challenges expectation. The programme should review its dissemination
approach frequently, update the user friendly & fancy
Despite of successful dissemination of MICS in high hill technology. The programme has opportunity with its
and mountain region, there are many challenges in the financially viable, widely accepted & environment friendly
sector. Some are highlighted hereunder: technology dissemination. However, there are challenges
like subsidy driven incurring high monitoring cost that have
5.3.1 Subsidy driven
chances of deviation / fraud cases. The programme should
One of the major challenges is provision of subsidy. In a make avail the repair & maintenance service as well as
long run, subsidy driven programme and projects has great motivate private sector to provide required after sales
impact on its products once the source of subsidy limited or service. The programme can be accelerated with the
exhausted. Donor agencies and the government cannot improvement in the above outlined issue as there is enough
support by providing subsidy forever. The market will be target beneficiaries waiting for the improved & efficient
distorted and ultimately the whole sector will be technology.
unsustainable if the subsidy is not gradually complemented
by credit financing or other mechanism. ACKNOWLEDGEMENT
5.3.2 High monitoring cost The authors would like to acknowledge the people
directly & indirectly involved in MICS sector. We would
As the system being very small units and unique features also like to thank AEPC/ESAP for opening up new sector
like scattered settlements, lack of accessibility has resulted which has benefited Nepalese people. The MICS users
high monitoring cost in dissemination of MICS. Random should also be acknowledged for taking the initial risk by
sampling method is being adopted in monitoring systems using the new technology which contributed in generating
though its accumulated cost is very high from programme field level data.
perspective. Looking from suppliers' perspective, the cost of
providing transportation, installation and after sales services REFERENCES
is quite high which results reduction in enthusiasm to keep
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business (Thapa, 2012). Centre.
[2] AEPC/ESAP. (2012). AEPC/Energy Sector Assistance Programme
5.3.3 Chances of deviation/fraud cases Database
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Document. GoN-AEPC/Energy Sector Assistance Programme.
design/engrave number, identity of user, address and [4] APEC/NRREP. (2012). Programme Document. GoN-AEPC/National
sometimes supplier is another challenge in the dissemination Rural & Renewable Energy Programme.
of MICS. Although there are penalty provision in policy and [5] ARECOP, & CRT/N. (2000). Action Programme for Strengthening
programme, it is being hurdle to decide and implement. Improved Cook Stoves in Nepal.
[6] CBS. (2012). Census. Central Bureau of Statistics.
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Improved Cooking Stoves Activities in Nepal.
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Himalayas. Environ Sci Technology 1986 , 20(6):561–7.
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maintenance centers in high hill and mountain region. Once Impact Assessment on MICS use on Women's Time Allocation &
the systems are not working or the users are not able to Drudgery.
repair them, the systems are either thrown or sold in scrap [10] ESAP, & CRT/N. (1999). Desk Study on Women's Energy Need and
Some Fuel Cooking Systems in Nepal.
values. [11] ESAP/DANIDA. (1998). Concept paper on National ICS Porgramme
5.3.5 De-motivation in after sales services [12] GoN-NPC. Periodic Plans. National Planning Commission
[13] Joshi, P. D. (2004). Development Activities on Improved Cook Stoves
Private companies are unwilling to provide after sales in Nepal.
[14] MoF. (2011). Economic Survey. Ministry of Finance.
services although it is envisaged. The major reason behind
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[15] Shrestha, B. P. (2012). Report on Determining Life of Metallic [19] Sulpya, K. M. (1991). Biomass Production and the Conservation of
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[16] Shrestha, G. R. (2000). ICS Programme in Nepal: Present Status, [20] Thapa, R. B. (2012). Monitoring of Solar Photovoltaic Project Issues
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[18] Shrestha, S., Thapa, R., & Bajracharya, K. (2009). National ICS [23] Wikipedia. (2013, January 27). Retrieved from
Dissemination in the Mid-hills of Nepal-Experiences, Opportunities http://en.wikipedia.org/wiki/Biogas
and lesson learnt.
ANNEX I: FINANCIAL ANALYSIS – CASE OF DOLAKHA
LIFE OF METALLIC IMPROVED COOK STOVES (MICS)
Lifetime operating hours 25,995 Hours
Lifetime @ 5 hours/day (in year) 14 Year
GIVEN DATA
Project name: MICS
Bank loan 1,000
Other loan 1,000
Discount rate 10%
Bank loan interest rate 15% Maturity period (year) 5 Annual installment 298.32
Other loan interest rate 16% Maturity period (year) 6 Annual installment 271.39
CASH FLOW TABLE FOR FINANCIAL ANALYSIS
Year 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14
Total investment (10,000)
Subsidy 4,000
Annual income
2,774 2,774 2,774 2,774 2,774 2,774 2,774 2,774 2,774 2,774 2,774 2,774 2,774 2,774
from fuels saving
Annual O & M
(875) (875) (875) (875) (875) (875) (875) (875) (875) (875) (875) (875) (875) (875)
costs
Bank loan
1,000 (298) (298) (298) (298) (298) - - - - - - - - -
repayment
Other loan
1,000 (271) (271) (271) (271) (271) (271) - - - - - - - -
repayment
Net Cash flow
(8,000) 1,329 1,329 1,329 1,329 1,329 1,628 1,899 1,899 1,899 1,899 1,899 1,899 1,899 1,899
without subsidy
Net Cash flow (4,000) 1,329 1,329 1,329 1,329 1,329 1,628 1,899 1,899 1,899 1,899 1,899 1,899 1,899 1,899
Cumulative Cash
flow:
Without subsidy (6,671) (5,341) (4,012) (2,683) (1,354) 274 2,173 4,072 5,971 7,870 9,769 11,668 13,567 15,466
With subsidy (2,671) (1,341) (12) 1,317 2,646 4,274 6,173 8,072 9,971 11,870 13,769 15,668 17,567 19.466
NPV without subsidy 3,677 The project is financially viable
NPV with subsidy 7,677 The project is financially viable
IRR without subsidy 17.0%
IRR with subsidy 35.3%
Payback period (without subsidy) 5.83 Year
Payback period (with subsidy) 3.01 Year
Rentech Symposium Compendium, Volume 3, September 2013 14R. B. Thapa and R. M. Shrestha: Metallic Improved Cook Stoves Dissemination in Mountain Region of Nepal...
ANNEX II: ECONOMICAL ANALYSIS – CASE OF DOLAKHA
LIFE OF MICS
Lifetime operating hours 25,995 Hours
Lifetime @ 5 hours/day (in year) 14 Year
GIVEN DATA
Project name: MICS
Bank loan 1,000
Other loan 1,000
Discount rate 10%
Bank loan interest rate 15% Maturity period (year) 5 Annual installment 298.32
Other loan interest rate 16% Maturity period (year) 6 Annual installment 271.39
CASH FLOW TABLE FOR ECONOMICAL ANALYSIS
Year 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14
Total
(10,000)
investment
Subsidy 4,000
Annual
women’s
24,283 24,283 24,283 24,283 24,283 24,283 24,283 24,283 24,283 24,283 24,283 24,283 24,283 24,283
income from
fuels saving
Annual O &
(875) (875) (875) (875) (875) (875) (875) (875) (875) (875) (875) (875) (875) (875)
M costs
Bank loan
1,000 (298) (298) (298) (298) (298) - - - - - - - - -
repayment
Other loan
1,000 (271) (271) (271) (271) (271) (271) - - - - - - - -
repayment
Net Cash
flow without (8,000) 22,838 22,838 22,838 22,838 22,838 23,137 23,408 23,408 23,408 23,408 23,408 23,408 23,408 23,408
subsidy
Net Cash
(4,000) 22,838 22,838 22,838 22,838 22,838 23,137 23,408 23,408 23,408 23,408 23,408 23,408 23,408 23,408
flow
Cumulative Cash flow:
Without subsidy 14,838 37,677 60,515 83,353 106,191 129,328 152,736 176,144 199,552 222,960 246,368 269,776 293,184 316,592
With subsidy 18,838 41,677 64,515 87,353 106,191 133,328 156,736 180,144 203,552 226,960 250,368 273,776 297,184 320,592
NPV without subsidy 162,127 The project is financially viable
NPV with subsidy 166,127 The project is financially viable
EIRR without subsidy 285.5%
EIRR with subsidy 571.0%
Payback period (without
0.67 Year
subsidy)
Payback period (with
0.53 Year
subsidy)
ANNEX III: ASSUMPTIONS AND FACTS USED IN FINANCIAL AND ECONOMICAL ANALYSIS
SN Particulars Before (TCS) After (MICS) Reduction Remarks
1 Fuel cost/kg (NPR) 4.00 4.00 - Transportation cost only as there is no tradition of trading fuel wood
2 Fuel consumption per day 7.30 5.40 1.90
3 Fuel cost/ day (NPR) 29.20 21.60 7.60
4 Annual fuel expenses 10,658.00 7,884.00 2,774.00
5 Total cost (NPR) 500.00 10,000.00 (9,500.00) Three pothole MICS is considered
6 Subsidy (NPR) - 4,000.00 (4,000.00) Three pothole MICS is considered
7 O & M cost (NPR) 125.00 1,000.00 (875.00)
8 Users' investment including O & M (NPR) 625.00 7,000.00 (6375.00)
9 Life time of stove (operating hours) 18,000.00 25,995.00 (7995.00) TCS life assumed
10 Time saving in fuel wood collection (minutes) 34.00 24.00 10.00
11 Cooking time (minutes) 140.00 111.00 29.00
12 Women's annual income (NPR) 57462.00 81,745.00 (24,283.00)
Source: Authors
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