A Report on
COMMERCIALISATION OF
BIOGAS IN NEPAL
Prepared
by
Govinda Prasad
Devkota
Universal Consultancy Services (P.) Ltd.
Banstali, Balaju
P.O. Box. No. 20506
Kathmandu, Nepal.
August
1998
CONTENTS
0. Executive Summary
1. Background
2. Biogas Development in
Nepal
3. Commercialisation of
Biogas
3.1 Potentiality of biogas
3.2 Source and Mechanism of Funding
3.3 Construction Capacity
3.4 User’s buying capacity
3.5 Cost calculation and analysis of a 8 cu.m.
3.6 Promotional Activities
3.6.1
Extension and Promotion
3.6.2
Marketing
3.6.3
Slurry Extension
3.7
Other Activities
3.7.1
Research and Development (R&D)
3.7.2
Human research Development
3.7.3
Quality Control
3.7.4 Monitoring and evaluation
4. Institutional Development
4.1 Biogas companies
4.2
Nepal Biogas Promotion Group
4.3 Manufacturers of appliances
4.4 Banks
4.5 NGO’s
4.6 Biogas support Programme (BSP)
4.7 Alternative energy Promotion Centre (AEPC)
5. Some Possible Future Activities for
Marketing of Biogas
5.1 A community trust fund concept
5.2 End Use Applications
5.3 Integrated Approach
6. Conclusions and Recommendations
6.1 Conclusions
6.2 Recommendations
Annex
1 : National Biogas Support Programme - An Epitome
References
Executive Summary
Biogas technology is becoming one of
the reliable alternative energy sources in Nepal. As a result more than 48500
biogas plants have been installed in the country. However, it is only about
3.7% of its technical potentials.
Biogas technology has been commercially
introduced since the establishment of Gobar Gas Tatha Krishi Yantra Vikash (P)
Ltd. in the year 1977. Various research have been carried out in designing and
developing a biogas plant, biogas appliances, alternative feedstocks,
maximising gas production especially in winter months and end use applications
of gas and slurry. Even though these technologies have not came into practice
and are limited only in papers, due to which the progress were not attractive
as the planners planned.
For commercialisation of biogas plants
in Nepal, this paper has analysed potentiality of biogas plants in the country,
sources and mechanisms of funding, construction capacity of the companies and
users buying capacity with cost calculations. It has also highlighted some
biogas promotional activities such as development and distribution of extension
and promotion materials, marketing and slurry extension programme. It has
focused on research and development, training, quality control and monitoring
and evaluation of the programme.
It has also highlighted the importance
of co-ordination between its partners such as Biogas Companies, Nepal Biogas
Promotion Group and other active NGOs, Biogas Appliances Manufacturers, Banks,
BSP and AEPC with their clear responsibilities for the success of the
programme.
Ultimately, emphasis has been given for
introducing a community trust fund concept, diversified end use applications of
gas as well as slurry and integrated approach of biogas system for
commercialisation of the technology in the country. In this way conclusions and
recommendations are presented.
COMMERCIALISATION OF
BIOGAS IN NEPAL
- Govinda Prasad Devkota
Executive chairman,UCS
1. Background
Biogas technology is one of the
reliable alternative energy sources used for cooking and lighting in Nepal. A
total of more than 48500 biogas plants have been installed in the country by
mid July 1998. This is only about 3.7 % of the total technical potentials of
1.3 million. The third phase of Biogas Support Programme (BSP) aims to increase
the installed number of additional of 100000 biogas plants by 2003 A. D. In
order to achieve this target, the owner will have to perceive and put to use the
benefits of their plants. As more and more companies entering in the field of
biogas it is essential for each company to find and develop its own market
segments and promotion strategies to commercialise biogas technology in the
country. Promotion activities can also be taken by other organisations such as
District Development Committees (DDC’s) and Village Development Committees (
VDC’s) for massive dissemination of the technology.
2. Biogas Development in
Nepal
Gobar Gas Tatha Krishi Yantra Vikash
(P) Ltd. was formed in 1977 for the installation of biogas plants in Nepal. As
it was hard to introduce a new technology, biogas in the rural areas, the
progress made by this company was not encouraging in comparison to the national
potentialities. However, extension , research on design of biogas plants such
as floating drum design, fixed dome design, tunnel design, plastic bag
biodigester, ferrocement gas holders, brick mortar dome, mud dome were made,
tested and experimented. The proven low cost design should come to users to
have a choice. Various biogas appliances such as gas pipe, gas tap, stoves,
lamps, water drain, gas meter were developed and tested.
Similarly experiments with various
alternative feedstocks such as Eupatorium Species, water hyacinth, night soil,
industrial wastes
( waste from paper industry, brewery
and sugar industry ) were experimented. These alternative feedstocks should
also be used in batch feeding when cattle dung is inadequate. Slurry coming
from the plant was applied to various crops such as vegetables and cereal
crops. It was also used for feeding fish pond and animals.
Research were also made on the
application of gas for running engines for agro-processing, pumping water for
irrigation and generating electricity especially on community basis. Such
implications should be replicated in several areas of the country.
As a result 41 companies have been
recognised for the installation of biogas plants and more than 48500 biogas
plants have been installed in 61 districts of the country. Government has
provided subsidy of
Rs. 7000 for the plants installed in
Kathmandu Valley, Hetauda municipality, Dang and Terai districts and Rs. 10000
for the plants installed in Hilly districts and Rs. 12000 for the plants installed
in remote districts.
Agricultural Development Bank (ADB/N),
Rastriya Banijay Bank (RBB) and Nepal Bank Limited (NBL) are providing loan for
the installation of biogas. Cost of biogas varies with the volume of the
digester ranging from Rs. 19165 ( 4 Cu.
m. ) to Rs 45376 ( 20 Cu. m.). This includes the cost of biogas appliances , GI
pipe and fittings construction charge, guarantee charge, promotion fee,
construction materials such as bricks or stones, sand, gravel , cement, rod,
labours and transportation. A gobar gas plant needs 6 - 8 kg of dung per day
per cu. m. volume.
3. Commercialisation of
Biogas
Present existing companies have little
knowledge or experience in commercialisation of biogas in Nepal. There are
several factors to be strengthen for commercialisation of biogas technology.
3.1
Potentiality of biogas
One of the report on technical biogas
potential per districts in Nepal ( Wim J. Van Nes, 1992 ) stated that until now
only technical potential of biogas in Nepal is estimated 1.3 million on the
basis of national data on the number of households and dung production.
However, if we consider economic and social potential; the real potential is
estimated about 50 percent of the technical potential.
3.2
Sources and Mechanism of Funding
Funding for biogas installation
comprises loan as well as subsidy. ADB/N , RBB and NBL provide loan for the
installation of biogas plant. The application process for a biogas loan from
the bank concentrates on the collateral of the farmers. A standard contract
between companies and farmers is made for biogas plants financed on cash.
Subsidy is provided for a plant upto 20
cu. m. capacity. The contribution of total subsidy amount of Rs. 137 million
for the year 98/99 is from the following sources. However, after 1999,
contribution from KfW is not yet confirmed.
If we see last year’s progress the following achievements
were made
Region wise Biogas Plant Installation in 1997/98
|
S.N |
Region |
Number |
Percentage |
|
1. |
Terai |
4440 |
49.3 |
|
2. |
Hills |
4341 |
48.2 |
|
3. |
Remote Hills |
218 |
2.4 |
|
|
Total |
8999 |
100 |
Financing of Biogas plant in 1997/98
|
S.N |
Bank |
Number |
Percentage |
|
1. |
ADB/N |
4736 |
52.6 |
|
2. |
NBL |
138 |
1.5 |
|
3. |
RBB |
278 |
3.1 |
|
4. |
Cash |
3847 |
42.7 |
|
|
Total |
8999 |
100 |
If we compare with the production
target of 12000 plants, only about 75% achievements were made in the year
1997/98. The model of the fixed dome design biogas plant installed by all companies
is attached with.
3.3
Construction Capacity
There was only one recognised biogas
company until 1992/93. Gradually this number increased to 11 in 1993/94 , 23 in
1995/96, 36 in 1996/97 and 41 in 1997/98.
A total of about 2000 staff including local
masons have been involved from all 41 companies for the installation of biogas
plants in the country. There are about 1030 trained masons including local
masons working with the companies involved directly for the installation of
biogas plants. Additional 600 such masons will be trained in this year. So by
this year a total of about 1300 masons will be available in the country
assuming that only 50% of 600 will join in the programme. One mason can install
3 plants in a month and assuming that he works only for 8 months in a year, on
an average , a total of 24 plants can be installed by one mason . Thus the
present construction capacity of biogas plants by all companies accounts to
more than 25000 in a year which is more that 100 percent of last years’ production
capacity.
3.4 User’s buying capacity
It is
dependent on the economical status of the farmers , operation cost of
biogas and the price of competing fuels in the area . Rich farmers ,can easily
buy a biogas plant either on loan or cash.
National Sample Census of Agriculture
1981/82 reflected that less than 1 hector of land holding households have
cattle of 62% and buffalo of 64%. The biggest group in the Terai has 1-2
hectors land having cattle of 16% and buffalo of 14%. By land holding area this is the group who can
buy biogas plants. Besides land holdings we should also consider the service or
business of the owner. Most of the people in
Nepal (71%)use fuel wood ,followed by agriculture waste (15%) , animal
waste (9%), kerosene (2%) , Biogas (2%) and electricity and LPG (0.5%).
3.5 Cost calculation and analysis of a 8 cu.m.
The cost of a 8 cu. m. Biogas plant
built in hills costs Rs. 25920/-
( quotation of 1997/98) as follows.
1. Appliances and charges from company
|
Particulars |
Amount (Nrs) |
|
Biogas appliances |
2415/- |
|
GI pipe of its fittings |
3200/- |
|
Construction charge |
4500/- |
|
Guarantee charge |
600/- |
|
Promotion fee |
500/- |
|
Sub
total |
11215/- |
2. Construction materials and labour
cost
|
Particulars |
Quantity |
Amount (Nrs) |
|
Brick or stone |
1700
pc |
5100/- |
|
Sand |
80
bag |
1200/- |
|
Gravel |
40
bag |
480/- |
|
Labour |
30
mandays |
1800/- |
|
Rod - 8 mm |
13.5
kg |
365/- |
|
Cement |
18
bag |
5760/- |
|
Sub
total |
|
14705/- |
Total cost is Rs. 25920/-
It is assumed that life of biogas plant
is 25 years and present value of firewood and kerosene is Rs. 1.25 per kg and
Rs. 10.50/Litre respectively and plant nutrients present in the dung is N =
0.5%, P=0.25% and K = 0.5%.
It is also assumed that the maintenance
cost of the plant is Rs. 400/year and produces 2.2 m3 of gas per day.
Government has provided a subsidy of Rs. 10,000 for 8 cu.m. plant installed in hills.
A.
Saving and expenditure
-
Annual savings
Savings
of fire wood ( 6kg/day at the rate of Rs. 1.25 /kg) = 2700/
Saving of kerosene (2.5lit/month at the
rate of Rs 10.50/lit) = 315/-
Saving of chemical fertiliser
(estimated 17500 kg gobar) = 2000/-
Total savings = 5015/-
Price of NPK saved is based on price of
urea, DAP and MoP and 45% subsidy in urea. i.e Rs. 20.31/kg of Nitrogen, Rs.
15.94 /kg Phosphorus and Rs. 10/Kg of Potassium.
-
Annual expenditure
Total investment cost is Rs. 25920/-
The running cost
- Labour cost - 15 minutes in a day @
Rs. 70/Day = 800/-
- Operation and maintenance cost is
estimated = 400/-
- Miscellaneous cost = 100/-
Total expenditure = 1300/-
B. Pay back period : Pay
back period is calculated as follows
Total
investment cost - Subsidy
Pay
back period with subsidy =
Annual saving
- Annual expenditure
25920-10000
15920
= = =4.3 years
5015-1300
3715
25920
Pay
back period without subsidy = = 7
years
3715
3.6 Promotional Activities
An important part of any marketing
strategy for biogas installation is the quality of the products as well as
services provided by the company.To create a good market of biogas technology
in Nepal, the following activities should be conducted .
3.6.1 Extension and Promotion
Promotion of biogas relates to
activities to be undertaken before construction of biogas plants where as
extension is concentrated on activities after installation. To commercialise
biogas; following promotional materials to be developed and distributed.
Promotional materials
·
Biogas poster
showing its advantages and benefits
·
Radio and T.V.
advertisement and programme
·
Publication of
calendars and bulletins
·
Leaflet on slurry
use
Extension materials
·
User’s repair and
maintenance manual
·
Construction manual
·
Instruction service
guidelines/ operation manual
3.6.2 Marketing
To increase the number of biogas plants
it is felt that other organisations can also play an important role in mobilising
the demand for biogas installation . It can be done by
·
NGO Networking for
biogas promotion
·
Publication of
biogas bulletins
·
Awareness creation
to users
·
Orientation
/workshop/seminar/meeting
3.6.3 Slurry Extension
It is believed that the owners will
have to perceive and put to use the benefits of their plants by maximising the
benefits of biogas and slurry use. It will help to increase the effective
market of biogas plants through proper application of gas as well as slurry .
·
Awareness creation
at farmers level about compost pit,composting
procedure, protecting compost pit , storage
of compost and importance of slurry use in crop
production.
·
Slurry feeding in
fish pound.
·
Multiuses of gas for
running engines , refrigerators, hatching
etc.
·
Multiuse of slurry
for making gobar batteries, feeding animals
and making pictures on puplus leaves decomposed in the slurry.
3.7
Other Activities
Before commercialising any product, in
depth research and development to be carried out, trained man power to be
developed, quality of the services as well as products to be maintained and
follow up or monitoring and evaluation activities to be performed.
3.7.1 Research and Development
(R&D)
For effective dissemination of the
technology research to be carried out in the following areas .
·
Cost effective
designs and smaller size such as 5, 7, 9 and
12 cu.m. biogas plants to be designed and disseminated.
·
End use applications
of biogas and bioslurry.
·
Integrated approach of
biogas with other relevant technologies.
·
Alternative
feedstocks besides cattle dung
·
Maximisation of gas production especially in
winter months.
·
Waste water and
sewage treatment plants in urban areas.
3.7.2
Human Resource Development
Regarding human resource development
some professional institute should conduct both technical and management
training to concern groups as follows
·
Biogas construction to new masons of companies.
·
Refresher training to existing masons of companies .
·
Biogas supervisors training to new supervisors.
·
Biogas supervisor training to existing supervisors.
·
Management and marketing training to managers of the
companies.
·
Orientation training to new company staff.
·
Annual programme to staff of existing companies.
·
Extension training to staff of both , NGO’s and line
agencies.
·
Biogas plants operation training to female users.
·
Loan appraisal training to Bank Staff.
·
Slurry extension training to users.
·
Motivators training especially to female users.
Besides these courses, it is also
recommended to organise seminar, workshop and observation tour to the staff of
line agencies in order to exchange ideas and see the programme made by others
both inside and outside the country.
3.7.3 Quality Control
The quality of biogas plant is a major
concern for commercialising the technology. A non functioning biogas plant will
damage the reputation of the technology. So it is necessary to safeguard the
quality of biogas installed by various recognised biogas construction companies
in Nepal. This is applicable not only on newly constructed biogas plants but
also on after sales service and maintenance. In Nepal each company is providing
a guarantee of three years on the structural parts of the plants and one year guarantee
on appliances and fitting works. Each company technicians will visit each
installed biogas plants once a year starting 6 months after completion of the
installation . There are 73 parameters for ensuring the quality of plant
construction and its proper functioning. These parameters are categorised as
penalty equal to subsidy, penalty from Rs. 10 to Rs. 700, no penalty and
providing bonus to companies.
Each company after providing
maintenance report of all biogas plants, technicians randomly select the plants
constructed by each company for controlling. The sampling is made on the basis
of existence of the companies in the area, geographical locations, plant size,
installer and controller of the plants and plants installed in cash or loan.
Informations were collected on the basis of observation in presence of company staff, interview with the owners
and taking measurements of the plants.
Such quality control should be done by a capable institute.
3.7.4
Monitoring and Evaluation
In addition to above activities, on
going monitoring and evaluation of the biogas activities and benefits should be
carried out. These may includes; annual survey, studies to evaluate the effects
of biogas plants and linkages with health, deforestation, evaluation of loan repayment,
after sales services and training. This will help in improving and changing the
policies if needed.Such activities should be done by government as well as
donor agencies.
4. Institutional Development
In order to commercialise biogas technology there should be
a market oriented, autonomous and adequately structured sector with maximum
involvement of private sectors.
4.1
Biogas Companies
There are altogether 41 recognised
biogas construction companies by the mid July 1998. However most of them
expressed that they are lack of working capital. This constraints is more
serious when the plants are installed in cash. There is also unhealthy
competition between companies to companies for the installation of biogas
plants. Similarly biogas construction is a seasonal work from November to July
and the off season to be utilised in other production activities by company
staff to generate additional income otherwise after sales service could be done
during off seasons.
4.2
Nepal Biogas Promotion Group (NBPG)
NBPG has been established as an umbre