Brick sector in Nepal - Overview and policy issues

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This is a presenatation about Nepalese brick sector prepared in the context of GIZ's Nepaleses Energy Efficiency Programm 2012. It discuss the current status of Nepal's brick industries and related policy issues. Furthermore, it shows what technologies and measure could reduce the energy intensity and environmental impact of this sector.

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Brick sector in Nepal - Overview and policy issues

  1. 1. Integrated policy framework and policy incentives and relevant issues within Brick sector Bhishma Pandit Energy Efficiency Expert GIZ/Integration/ Energy Efficiency Centre FNCCI Nepal Energy Efficiency Programme Component No.3, Industrial
  2. 2. Firing technology transformations Acknowledgements FNCSI FNBA VSBK Associations NEEP/GIZ/Integration FNCCI/Energy Efficiency Centre
  3. 3. Contents  Key issues within the brick sector  Focused issues  General overview and sector intensity  Clay Brick making process .  Firing technology  Policy issues  Government approach  Indian experience  Barriers  Way forward…..
  4. 4. Key issues  Severe labour shortage  Fuel. price gone up 100- 175% last five years.  Leased land ,disincentives to invest on modernization- modernization owner have to buy the land- high land cost – move the remote location – transportation cost!  Seasonal business- Weather dependency.  Skilled Manpower(Firing, stacking) working within the kilns is 90% Indian  Fired solid brick, hallow or perforated brick or compressed brick ????
  5. 5. Key issues  Tax issues - VAT- problems  Six months business  Weather dependency – Rain loosing significant losses  Poor account keeping.  Quality bricks- it is not fixed , depends on skill of work  Low income peoples are working, not committed workers  Unseen cost – donations, local road construction , VDC demand and other local activities.  VAT Act 2052- It mentions that there exists a threshold limit for compulsory registration under VAT Actfor the industries with the turnover of Rs. 2,000,000 over last 12 months or turnover of Rs. 200,000 in any month. All the brick industries basically have turnover of more than Rs.2,000,000 annually. The existing rate for VAT is 13%.  Industrial Policy, 2067- Those industries who adopt environment friendly technology and save energy them self will be provided technical and financial support  The Industrial Enterprises Act2049 (1992)Section 15:Sub section After an industry comes into operation, 10 percent of the gross profit shall be allowed as a deduction against taxable income on account of expenses related with technology, product development and efficiency improvement
  6. 6. Focused Issues- General  Technological issues and energy efficiency issues  Research and Development issues- Ash from boilers  Environmental issues  Dust  Emission  Degradation of Top soil  Prominent industrial CO2emission within Nepal  Social issues- Child worker, educations, child health
  7. 7. Kiln Type VSBK MC-BTK FC-BTK Forced Draught, Zigzag Stacking Forced Draught, Straight Line Natural Draught, Straight Line Specific Energy Consumption (MJ/kg of fired bricks) 0.83 1.25 0.91 0.92 1.16 SPM Emission (mg/Nm3) 101 840 116 125 238 Mass Emission Load (kg SPM/1000 bricks) 0.33 8.06 0.87 1.82 2.51 Sources: IEM (2003); IEM (2005); VSBK is best among all for energy and environmental performance, It consumes around 30% less coal as compared with normal Fixed chimney BTK with straight line firing. ( BTK is talking 12 TON for 1 lakhs brick where as VSBK consumes 8 TON for same).
  8. 8. Coal and production CO2 emission  Brick production / day /kilns– 40,000 – 60,000 / day (BTK)- 120 working days minimum.(Source: FNBI)  4-5 billons bricks/year-(Source: FNBI)  Coal Consumption/ day/kiln : 4 ton /day (BTK) – 8 Ton/ day Carbon dioxide emissions Around total coal consumption in brick sector: 350,000 Tons(source: FNBI)  Average coal consumption per lakh brick  8-9 ton for Induced Zig Zag kilns (Improved ) but they need additional electricity and Diesel for operations.  12-14 ton for traditional natural draught FCBTKs.  2 tons coal saving / day/ kilns – 4 tons CO2/ day/ kilns – 150,000 Tons emssion reduction /year for the sector
  9. 9. overview  Biggest industrial density within Nepal  Biggest energy user( around 40% is fuel cost out of total turnover) among production industry  Traditional business – New entrepreneurs are coming.  Unorganized sector as compare with other industries.  Traditional account keeping system, Account keeping is complicated due to unseen cost and they are not competent as well..  Most of Manpower is Migratory.  Person employed : 42003(CBS-2008), 102620 Male, 36830 women(139450)
  10. 10. Parameter Value Number of Registered Establishments 429( 826 FNBI)- 701 is operational – 553 fixed , 157 moveable, 85 without registration, 499 members Quantity of Bricks Sold 753 million pieces Value of Sales 2.3 billion Rupees Persons Employed 42,003( 139450- FNBI) FNBI source 102620 Male, 36830 women Value of Output 2.5 billion Rupees Total Value Added 1.8 billion Rupees Reference: CBS-2008 Indicators of Nepal’s Brick Sector (Registered Establishments Only)
  11. 11. Brick making process 1. Manual – Workers 2. Extruders- Good but some problems  Chinese extruders, Motor failures – Power reliability in Nepal  Load Shedding – DG operation  Market – looking for handmade bricks  Opportunity –  Hallow bricks promotions – less energy, soils  Uniform size and shape  High production rate Drying process Natural sun drying process , less energy consumption… But problem is weather depended Losses due to rain Drying land
  12. 12. Firing Technology  Still clamp kilns  Moveable BTK( Bull Trench Kilns) – out from this firing seasons  Fixed chimney BTK  Induced draught kilns with improved stacking(Zig-Zag), minimized stack heat loss- Kathmandu- Electricity – DG are in operation.  Natural draught kilns with traditional firing practices.  Other BTK- between fixed chimney and moveable • VSBK technology
  13. 13. CURRENTLY AVAILABLE FIRING TECHNOLOGIES , NepalClamp kiln- Phase out but !!! For decorative brick BTK (Bulls Trench Kiln) Phase out But !!!! Rice husk kilnsHoffman Kiln- ? Less nos. Fixed Chimney- Nos. is rising but Operating practices, awareness? VSBK- 25- 30? Coal is main source
  14. 14. There are non firing bricks which are being producing by some of the brick industries Total investment :Rs.15,389,500 Ecotech Building System Pvt. Ltd. Hydraform Brick Need massive consumer awareness and government initiations for government building and Government bids and procurement
  15. 15. Number of Registered Kiln under Brick associations : 499(22 district) other district where there is no associations, is assumed to be around 826( As per FNBI), 701 operational 68% 19% 10% 3% Fixed Chimney (BTKs) Moveable BTKs Without registration VSBK Source : FNBI
  16. 16. Policy issues Ministry of Industry(Department of Cottage and Small Industries, ), Ministry of Environment, Science and technology , Ministry of Finance, Department of Inland Revenue and MOLD, VDC,DDC, Municipalities  Moveable kilns BTKs phased out form year 2012 in Nepal.  Moveable kilns BTKs phased out form Kathmandu valley in year 2004.  Ministry of Environment has stack emission standards but lack of regular monitoring ???? Local environmental lab!!! Lack of Equipment SPM levels for different kilns and chimney height- 40 ft- VSBK, 17-30 m- BTKs  There is no such policy regarding surrounding dust emission and minimum dust level intensity within kilns area.  Ministry of Environment, science and technology, Ministry of local development, Ministry of Finance & Ministry of Industry , lack of co-ordinations – Registration, HR
  17. 17.  Directive to replace all MC-BTK in the country within two years (by the end of 2011) with modern kilns, where the category has been defined to include VSBK, FC-BTK, and Tunnel Kilns(2009)  (Industrial Promotion Board meeting 15/12/2009, 183Decide to replace the MBTK within 2 years by VSBK/Fixed Chimney/Tunnel Kiln. Mandatory to use the VSBK/Fixed Chimney/Tunnel Kiln for new registration, compulsory)  Need major policy intervention since highest no. of industry in Nepal– Industrial Act- 2049 – Dhafa – 5 and 3 kha – production Industry .  Firing technology should not have any issues within the policy- VSBK, BTKs , tunnel and others (Some may not need firing process)  Registration /licensing / licensing Renewable process issues within Department of Cottage and small scale industries- policy reform required in IEE, incentive recommendations, human resource development and training for capacity building . Policy issues
  18. 18. Policy/Budget/oth ers Statement Policy statement The Industrial Enterprises Act 2049 ( 1992) Section 15: Sub-section K granted for a reduction of up to 50 percent from the taxable income for the investment of any industry on process or equipment, which has objective of controlling pollution. Fiscal Year Budget 2002/04, 219 Excise license fee will be waived to industries, which adopt modern technology and meet the environmental standard. Excise duty on brick factories, which do not meet environmental standard and pollute the atmosphere, has been doubled from Rs. 100,000 to Rs. 200,000. The Industrial Enterprises Act 2049 (1992) Section 16: Sub-section N Efficiency improvement Industrial Promotion Board meeting 15/12/2009, 183 Decide to replace the MBTK within 2 years by VSBK/Fixed Chimney/Tunnel Kiln. Mandatory to use the VSBK/Fixed Chimney/Tunnel Kiln for new registration, compulsory. Industrial Policy,2067 Those industrial who adopt environment friendly technology and save energy them self will be provided technical Board meeting Decided to extend the period for documenting the replacement of MCBTKs year till to Magh End of 2069
  19. 19. Government approach  Government procurement – Hallow bricks? Perforated bricks? Unfired and compressed brick , brick sizing, unfired bricks, compressed bricks- Market.  Technological transformation: Bridging with funding agencies, environmental groups and private sector  Tax awareness and training within the sector and should understand practical barriers  Energy & Emission monitoring and tax incentives  Technology transformation should be by government bodies.  Social aspects like Formal education school, child healths within kilns area and cooperation with brick associations and Brick industry owner Planned relocation of brick industry clusters: Technology transfer and dissemination: Skill development Financing Advocate for policy change. holistic approach
  20. 20. Funding agency!!  World Bank did one round table discussion with brick stakeholders- Policy , financing and stepwise approach is key, new technology need support  SCP  ESPS/DANIDA  SDC- VSBK programme.  Kfw  CO2 Emission- CDM project
  21. 21. Indian and regional experience  A paper on “ A road map for cleaner brick production in India”- green tech knowledge solutions, Entech Switzerland, ENZEN, Clean air task force .for government of india Recommendations  The FCBTKs and DDKs should be replaced by zigzag, VSBK or other cleaner kiln technologies by 2020.  Zig-zag kilns are the logical replacement for FCBTKs, because of low capital investment, easy integration into the existing production process, and possibility of retrofitting FCBTKs into Zig-Zag firing. The Zig-Zag kiln performance strongly depends on the kiln operation practices; also, Zig-Zag natural draught kilns appear toper form better than Zig-Zag forced draught kilns.
  22. 22.  VSBK appears to have a limited market, mainly because of its inability to produce good quality bricks from all types of clays and its low productivity under Indian conditions. Incorporation of features of Vietnamese VSBKs into Indian VSBKs may help in improving the VSBK technology package. VSBK dissemination needs to be properly targeted.  The tunnel kiln technology is capital intensive, and the current technological know how and experience is limited in India. Adoption of the tunnel kiln also requires extensive modifications in brick moulding, drying and material handling.
  23. 23. Way-forward • Demonstration Programs for improved energy performance and environmental friendly and production friendly technology(BTKs) • Stacking training for Nepalese •Firing training for Nepalese • More Trainings & Awareness Programs from government bodies •Policy reformation and implementation of incentives guided by different policies • Monitoring Regulatory Impacts •Government initiations on government procurements • Consumer Awareness Programs
  24. 24. Thank you bpandit@integration.or g 9801088900

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