Energy Use
The Beijcr Instrtejltc The Scandlnavzan lnsrtciiarc The Royal S%%edrrl-~ of Afr'racsan Sfeadiec;
Academy
ofSc3e~sce.t Upgsala, Swetlen
Stockholna, Sweden
ENERGY, ENVIRONMENT AND DEVELOPMENT IN AFIUCA 10
ZIMBABWE: INDUSTRIAL AND C RCIAL ENERGY USE
Edited by
Richard H. Hosier
Published by
THE BEIJER INSTITUTE and THE SCANDINAVIAN INSTITUTE
The Royal Swedish OF AFRTCAN STUDIES
Academy of Sciences Uppsala, Sweden
Stockholm, Sweden
The series "Energy, Environment and Development in Africa"
is published jointly by the Beijer Institute and the Scandinavian Institute of African Studies, with financial support from the Swedish International Development Authority (SIDA)
.
ENERGY, ENVIRONMENT AND DEVELOPMENT I N AFRICA Other titles in this series:
1. Energy and Development in Kenya: Opportunities and Constraints. P. O'Keefe, P. Raskin and S. Bernow (Eds).
2. SADCC: Energy and Development to the Year 2000. J.T.C.
Simoes (Ed)
.
3. Energy and Development in Southern Africa: SADCC Country Studies, Part I. P. OIKeefe and B. Munslow (Eds)
.
4. Energy and Development in Southern Africa: SADCC Country Studies, Part 11. P. O'Keefe and B. Munslow (Eds)
.
5. Manufacturing Industry and Economic Development in the SADCC Countries. R. Peet.
6. Wood, Energy and Households: Perspectives on Rural Kenya. C. Barnes, J. Ensminger and P. OIKeefe (Eds).
7. Energy Use in Rural Kenya: Household Demands and Rural Transformation. R.H. Hosier.
8. LEAP: A Description of the LDC Energy Alternatives Planning System. Paul D. Raskin.
9. Zimbabwe: Energy Planning for National Development. R.H.
Hosier (Ed)
.
10. Zimbabwe: Industrial and Commercial Energy Use. R.H.
Hosier (Ed)
.
ISSN 0281-8515 ISBN 91-7106-277-7
@ The Beijer Institute and the Scandinavian Institute of African Studies 1988
Printed in Sweden by
Bohuslaningens AB, Uddevalla 1988
FOREWORD
The s t u d i e s p r e s e n t e d i n t h i s Volume were o r i g i n a l l y c a r r i e d o u t as p a r t o f t h e Zimbabwe Energy A c c o u n t i n g P r o j e c t (ZEAP). The ZEAP was a j o i n t u n d e r t a k i n g between t h e B e i j e r I n s t i t u t e o f t h e Royal Swedish Academy o f Sciences and t h e M i n i s t r y o f Water and Energy Resources and Development o f t h e Republic o f Zimbabwe. The o b j e c t i v e s o f t h e P r o j e c t were f o u r f o l d , namely:
( 1 ) To e s t a b l i s h a d e t a i l e d end-use energy a c c o u n t i n g system f o r Zimbabwe;
( 2 ) To examine r u r a l energy problems i n general
,
and t h e woodfuel problem i n p a r t i c u l a r ;( 3 1 To examine, i n d e t a i l , i n d u s t r i a l energy consumption and t h e commercial f u e l s u p p l y s e c t o r s ;
and
( 4 ) To develop a s e t o f p r o j e c t s c o n s i s t e n t w i t h t h e
Government's o v e r a l l p01 i c y d i r e c t i o n s t o address t h e energy problems i d e n t i f i e d .
The m a t e r i a l s i n t h i s Volume, which c o n c e n t r a t e on t h e t h i r d o b j e c t i v e above, a r e p u b l i s h e d f o r two reasons: F i r s t , t h e r e i s g e n e r a l l y v e r y l i t t l e i n f o r m a t i o n a v a i l a b l e on Zimbabwe energy i s s u e s . Second, t h e o v e r a l l c o n c l u s i o n s o f t h e ZEAP p r o j e c t , summarized i n Volume 9 o f t h i s s e r i e s , was o n l y a b l e t o r e f l e c t t h e " t i p o f t h e i c e b e r g " o f work t h a t - went i n t o t h e ZEAP e f f o r t .
I am most g r a t e f u l t o a l l o u r Zimbabwean and o t h e r c o l l e a g u e s who c o n t r i b u t e d t o t h i s volume ( s e e page 138). I am p a r t i c u l a r l y i n d e b t e d t o Dr R i c h a r d H o s i e r who has t a k e n r e s p o n s i b i l i t y f o r u p - d a t i n g and e d i t i n g o f t h e ZEAP m a t e r i a l t h a t went i n t o t h i s Volume.
Gordon T. Goodman E x e c u t i v e D i r e c t o r B e i j e r I n s t i t u t e
PREFACE
T h e papers published i n t h i s book represent the collective and individual thoughts of the working group on commercial and industrial energy use of the Zimbabwe Energy Accounting Project (ZEAP) and the Ministry of Water and Energy Resources and Development of the Government of Zimbabwe. The first paper is a concept paper, in which a l l the members of the group took part. Originally written in l a t e 1 9 8 3 , i t represents a n attempt to sketch o u t t h e critical questions which were then pursued throughout the remainder of the ZEAP in the areas of commercial, industrial, and urban energy use. The next three papers present findings of surveys of energy use patterns in the formal industrial, the transport, and the informal industrial sectors of the economy. The final two papers represent formal models which were developed for the analysis undertaken as part of the ZEAP. The first of these is an input-output model used for projections of future economic growth. The second of these papers represents an attempt to optimize commercial fuel supplies making use of a dynamic optimization approach.
While the concept paper has been edited to reflect what was actually carried out as part of the project, the remainder of the papers have been edited mainly for clarity.
I am greatly indebted to a l l the contributors to this volume, as it clearly would not h a v e been possible without them. Relations between members of the project team were collegial and cordial, as is reflected by the fact that most of the papers contained in this volume are CO-authored. Peter Robinson and Bonnie Ram deserve special votes of thanks for serving as the intellectual and functional backbones of the industrial and commercial energy working group.
Gordon Goodman and Lars Kristoferson both played a major role in encouraging me to bring this task through to completion, and I heartily thank them for it.
On the editing side, Lori Cole has been extremely helpful in working and reworking various revisions of these papers. Keith Adams deserves an especially large "thank you"
for finishing most of the hard work of the editing. I can only hope that the final product is worthy of the efforts of a l l of the above individuals and any others who are not directly mentioned. Any errors of omission or commission remaining at this point are solely my responsibility.
Richard H. Hosier February 1987
Philadelphia, Pennsylvania
CONTENTS
I. Energy Consumption in Zimbabwe's Manufacturing, 1 Mining, Transport, and Commerce: Concepts,
Issues and Problem Statement
1. Introduction 1
2. Industrial Energy Consumption 4
3. Commercial Energy Supplies 12
4. Nature of the Research and the Planning 19 Problem
5. Work Undertaken 2 2
11. Industrial Energy Consumption, Conservation 2 6 Strategies and Policy Options in Zimbabwe
1. Introduction 26
2. Overview of the Manufacturing Sector 2 8 3. Findings from the Industrial Energy Survey 3 1 4. Summary o f the IES Findings and Broad Policy 39
Issues
5. Policy Implications and Program Directions 44
111. Zimbabwe: Energy Imperatives in the Transportation 50 Sector
1. Introduction 50
2. Road Motor Transportation 5 2
3. Railroad Transport 5 9
4. Air Transport 6 3
5. Energy Conservation and Substitution Options 65 in the Transportation Sector
6. Summary 6 9
Appendix 111-1: Sources of Information 7 1 Appendix 111-2: Data Collection for the 7 1
Transportation Sector: Problems and Recom- mendations
IV. ~imbabwe's Informal Sector: Its Nature and Energy- 74 Use Patterns
1. Background, Objectives and Methodology 74 2. Characteristics of Energy Using Enterprises 7 8
in the Informal sector
3. Energy and Technical Inputs 8 3
4. Conclusion 9 4
V. Economic Modeling For LEAP: Background and Methodology
Introduction
Brief Description of ZIMOD
Structural Implications of ZIMOD Parameters Approach to Formulating Scenarios
Investment Requirements Export Prospects
Initial Conditions and Subsequent Constraints
The Zimod Scenarios
VI. A Multisectoral Dynamic Optimization Model for
~nergy/~etrochemical Decision Making in Zimbabwe and the SADCC
1. Background
2. Mathematical Modeling 3. Dynamo Model
4. Concluding Comments
List of Contributors
LIST OF TABLES
Chapter I
Sectoral Contributions to GDP and Employment in 1981
Major Categories of Exports and Imports in 1981 Sectoral Consumption of Commercial Energy in
1980
Average Energy Intensities for the Period 1970-1979
Estimated Sectoral Energy-Income Elasticities Energy Use and Intensity by Type of
Manufacturing in 1979 Coal Resources and Services Coal Production in 1980 Coal Exports in 1980
Importation of Petroleum Fuels in 1980 Electrical Generation Capacity in 1980 Electricity Supply in 1980
Prices of Commercial Fuels
Chapter I1
11-1 Energy Expenditures in the Manufacturing Sector 1967-1981
11-2 Conservation Options Implemented in the Past Five Years in the Metal Goods Subsector 11-3 Conservation Options in the Chemical Subsector 11-4 Conservation Options Implemented in the
Foodstuf fs Subsector
Chapter I11
111-1 National Railways of Zimbabwe: Traffic Figures 6 1 111-2Zimbabwe Foreign Trade: NRZ Traffic through 6 2
South Africa (RAS) and Mozambique
111-3 Air Zimbabwe Operational Activity Levels 1980- 6 4 1982
Chapter IV
IV-l Number of Enterprises Surveyed
IV-2 Location of Informal sector Energy Using Enterprises
IV-3 Employment Figures by Activity Groups IV-4 Average Monthly Rentals by Activity Groups
IV-5 Average Monthly Rentals by Urban Centers IV-6 Monthly Use of Primary Fuels by Subsector IV-7 Monthly Use of Primary Energy Use of Primary
Energy Sources by City
IV-8 Percentage of Establishments with Electricity by Subsector
IV-9 Percentage of Establishments with Electricity by City
IV-10 Average Distances (km) Fuels Transported to Processing Site
IV-11 Monthly Fuel Cost for Firms Using Fuel Source IV-12 Average Fuel Price
IV-13 Average Total Costs and Energy Expenditures as a Percentage of Total Expenditure
IV-14 Monthly Electricity Consumption by Subsector IV-15 Percentage of Respondents Offering Different
Reasons Energy Supply Difficulties IV-16 Number of Informal Operators Using Given
Appliances and Machinery
Chapter V
Technical Coefficients
Direct plus indirect Coefficients by Sector Direct plus Indirect Coefficients: Base Period
Final Demand
GDP,Employment and Import Multipliers by Sector GDP, Employment and Import Multipliers: Base
Period
Investment cost of Employment Generated Economic Growth Projections: Sectors Economic Growth Projections: Industrial
Subsectors
Economic Growth Projections: Final Demand Categories
Chapter V1
VI-1 Cost Data: Electricity Supply Projects VI-2 Available Supply and power/~nergy/~emand
Projections
I. ENERGY CONSUMPTION IN ZIMBABWE'S MANUFACTURING, MINING, TRANSPORT AND COMMERCE SECTORS:
CONCEPTS, ISSUES AND PROBLEMS
P.Robinson, P.Chitakunye, R.Hosier, R.S.Maya, C.Nhova, B.Ram and M.Taremba
1. INTRODUCTION
The broad objective of the Zimbabwe Energy Accounting Project (ZEAP), carried out in 1983184, was to strengthen energy planning capabilities, policy formation and project implementation within the Ministry of Energy and Water Resources and Development. The scope of the project was wide. An attempt was made to quantify energy use and to gather qualitative information on energy conservation, substitution and development strategies in all sectors of the economy. This information was then used to program the LEAP computer model to be located, for future use, within the Ministry (1).
The LEAP model is essentially a n energy accounting system. For this reason, comprehensive coverage of demand and supply data was necessary to make it operational. While this was reason enough to examine energy consumption in manufacturing industry, mining, transport and commerce, more policy-oriented reasons arose from the importance of these sectors in the national economy. These sectors are critical because of their potential for growth, the foreign exchange implications of the energy forms presently used, and the magnitude of the projects required to augment commercial energy supplies. These factors, spelled out in more detail below, justified this aspect of the project. It should be noted, however, that the planning of non-commercial energy has also played a central role in the ZEAP study. This, in turn, is because fuel-wood constitutes the single most important source of domestic energy and is the primary form of energy for the overwhelming majority of the population.
As can be seen from Tables 1-1 and 1-2, manufacturing and mining together contributed 31% of GDP, 24% of employment and 58% of exports in 1981. In this year, these sectors were thought to have been working at or near full capacity (2).
Although government and private services were more important in GDP and e m p l o y m e n t terms (contributing 4 2 % and 39%
respectively), this sector is dependent on primary production sectors and cannot be accorded the same significance when planning for economic growth, or energy consumption.
TABLE 1-1 SECTORAL CONTRIBUTIONS TO GDP AND EMPLOYMENT
1981
--p
GDP h p 1 oyment Sector $m Percentage Thousands Percentage
Agriculture & Forestry 738 18% 294.3 28%
Manufacturing 1098 26% 173.2 17%
Mining 217 5 % 68.2 7%
Transport &
Communications 262 6% 49.1 5%
Construction 126 3 % 47.1 4 %
Commerce & Services 1706 42% 405.8 3 9 %
Total 4147 100% 1037.7 100%
Source: Government of Zimbabwe, Monthly Digest of Statistics, Tables 8.2 and 6.1
TABLE 1-2 MAJOR CATEGORIES OF EXPORTS
-
AND IMPORTS 1981...
Exporting $m % Importing
Sector Sector
Agricul Manufac Metals
ture 408 42% Agriculture 18 2%
turing ( * ) 179 19% Capital & Intermediate
Manufacturing 579 57%
196 20% Final Manufacturing 157 15%
Mining 181 19% Energy 200 209
Petrochemicals 6 4 6%
...
Total 964 100% 1,018 100%
...
( * ) Excluding refined metals.
Source: Monthly Digest of Statistics Tables 9.1, 10.5 and 10.6
TABLE 1-3 SECTORAL CONSUMPTION OF COMMERCIAL ENERGY 1980
Sector Solid Liquid Total Comm.
Fuels Fuel S Elect. Energy
Agriculture &
Forestry 15% 13% 8 % 12%
Manufacturing
Commerce 58% 11% 49% 45%
Mining 6 % 2% 18% 11%
Transport 13% 55%
-
15%Other (households,
services etc. ) 8% 19% 25% 17%
Total 100%(61PJ) 100%(29PJ) 1 0 0 % ( 7 1 ~ ~ ) 100%(161PJ)
Source: \?or ld Bank/UNDP, 1982. "Zimbabwe: Issues and Options in the Energy Sector". Table 1.1, p2.
T h e m a n u f a c t u r i n g s e c t o r i n Z i m b a b w e c a n b e characterized as having run the course of first phase import substitution industrialization, i.e. production mainly of consumer goods based largely on imported intermediate and capital goods. Its contributions to GDP and exports are substantial. H o w e v e r , the sector f a i l s t o e m p l o y a commensurate number of people (TableI-l) and is highly dependent on imported capital and intermediate goods (Table I-2).In a situation where the balance of payments is a major constraint, themanufacturing sector can potentially become the leading edge of export growth. Conversely, the sector could dampen growth if essential capital and intermediate imports are not matched by investments which are productive in foreign exchange terms.
W h i l e a g r e a t d e a l more c o u l d be said about the relationship between industrialization and development (3), the first reason to study manufacturing is that it is a key strategic sector. It has close ties to other primary sectors (agriculture and mining) and services (including commercial activities). A second, more obvious, reason is that industry is by far the largest consumer of commercial energy, as is shown in Table 1-3. Overall, manufacturing and commerce consume 45% of commercial energy, with higher proportions of total c'oal/coke and electricity consumption. Most liquid fuels are consumed in the transport sector. The goods or freight part may, however, be regarded as being a service activity to the primary production sectors. The effect of alternative development strategies in the industrial sector on the demand for energy needs was explored in the project.
Consumption of commercial energy is itself important for
at least two reasons. Firstly, as can be seen from Table 1-2, imports of energy (mainly liquid fuels but also electricity) required $200m of foreign exchange or 20% of the import bill in 1981. Together with associated petrochemicals the value of energy imports was equivalent to over 27% of exports in that year.
Secondly, investment projects to increase domestic supplies of energy for industry are generally very large and expensive both in overall capital and in foreign exchange terms. For example, the Hwange I project, is estimated to c o s t U S $369m., a s much a s 75% o f which is in f o r e i g n exchange (4). Liquid fuel/petrochemical supply options are an order of magnitude more costly. Decisions made about energy i n v e s t m e n t s w i l l h a v e a marked impact o n t h e availability of investment resources in other sectors of the economy. Conversely, conservation strategies can have a beneficial impact on other sectors of the economy far exceeding the magnitude of the immediate savings, due to the release of resources from energy projects for investment elsewhere. Both the demand for and the supply of commercial forms of energy have therefore received careful attention.
The objective of this paper is to provide background to the work which was undertaken by the "Industry" subgroup of t h e ZEAP team. I t represents a summary o f the team's thoughts and knowledge at the beginning of the project work.
The numbers and ideas in it are preliminary; more detailed assessments made by the team are in the pages which follow.
Sections 2 and 3 deal with the demand for and supply of commercial energy respectively. While an exhaustive litera- ture review is not attempted, reference is made in these sections to academic and consultancy studies that have been completed or are in progress and which have a direct bearing on our work.
The following two sections seek to lay out the approach of the ZEAP team to the study. In Section 4 , an attempt is made to characterize the nature of the research and to identify the planning problem more closely. A summary follows in section 5.
2. INDUSTRIAL ENERGY CONSUMPTION
(i) Overview.
-
The most comprehensive study of energy con- sumption in Zimbabwe completed by 1982 was by the World B ~ ~ ~ / U N D P team (IBRD/UNDP, 1981). The data for that report was assembled mainly from information given by the companies responsible for the supply of energy, rather than from those who constitute the demand for energy.While the World Bank/UNDP report provided a useful starting point, the present project aimed t o p r o v i d e consumption data on an end-use basis by sector and subsector.
It was intended to offer a more detailed picture of demand
patterns and o f t h e potential for c o n s e r v a t i o n and substitution strategies. The end-use categories identified in our study were mechanical drive, direct process heat, boilers, feedstock, in-plant transportation and handling, s t o r a g e a n d r e f r i g e r a t i o n , l i g h t i n g a n d c o o k i n g , administration and office equipment, space heating and cooking, and outside-plant transport. Despite this ten-fold breakdown, there h a v e remained considerable problems of definition and data gathering: firms had, at most, data about processes, rarely about the end-use components of those processes.
Table 1-3 shows that energy used by different fuels is in fact markedly concentrated. Manufacturing accounts for 58% of total solid fuel energy consumption and 49% of electricity, while the transport sector consumes 55% of liquid fuel energy.
(ii)Energy Intensities and Price/Income Elasticities of Demand.
-
In terms o f energy per unit o f v a l u e - a d d e d , manufacturing plus commerce ranks second and transport ranks fourth. This is shown in Table 1-4. Analysis of trends over the period 1970-1979 shows that energy intensity has been fa1 ling in a 1 l sectors (particularly transport) except agriculture. "This latter point i s explained n o t b y increasing inefficiency....
b u t a s t h e i n f l u e n c e o f bad weather conditions o n a g r i c u l t u r e i n the l a t e 1970's"(Suckling, p. 158). This acted to reduce yields and value- added. Agriculture, nonetheless, had the lowest average energy-intensity over the period.
TABLE 1-4 AVERAGE ENERGY INTENSITIES FOR THE PERIOD 1970-1979
Sector GJEnergy/S1OOO Output
Agriculture
Mariufacturing and Commerce Mining
Transport Power Other
GDP 158.6
Source: C a l c u l a t e d from J o h n S u c k 1 ing "Energy P r i c e s , Development and the Policy Response in a Small Siege Economy: Zimbabwe 1964-1981" I L O T e c h n o l o g y &
Employment Program Table 3 2 , page 1 2 3 .
The I L O study cited a b o v e is concerned with the relationship between technology and employment. Regressions
o f e n e r g y i n t e n s i t y o f o u t p u t o n l a b o r i n t e n s i t i e s w e r e t h e r e f o r e c a r r i e d o u t , w i t h t h e s e b e i n g m e a s u r e d a s o u t p u t p e r u n i t o f e n e r g y o r l a b o r i n p u t . The r e s u l t s s h o w e d p o s i t i v e r e l a t i o n s h i p s f o r a l l s e c t o r s s u g g e s t i n g " t h a t a s l a b o r p r o d u c t i v i t y r o s e , s o d i d t h e e f f i c i e n c y o f e n e r g y u s e . " I n f a c t , t h e a u t h o r c l a i m s t h a t " o u t p u t p e r u n i t o f e n e r g y i n p u t r o s e f a s t e r t h a n o u t p u t p e r u n i t o f l a b o r i n p u t "
( S u c k l i n g p. 1 5 8 ) .
I n p a r t , t h i s may b e d u e t o e n e r g y c o n s e r v a t i o n i n t h e f a c e o f r i s i n g c o s t s o f e n e r g y . C h a n g i n g r e l a t i v e p r i c e s t h e r e f o r e a l s o n e e d t o b e t a k e n i n t o a c c o u n t i n a s t u d y o f t h i s k i n d . " E v i d e n c e on f a c t o r s u b s t i t u t i o n s u g g e s t s t h a t i n t h e f o u r s e c t o r s f o r which t h e r e q u i r e d d a t a a r e a v a i l a b l e
-
a g r i c u l t u r e , m i n i n g , m a n u f a c t u r i n g a n d c o n s t r u c t i o n
-
n o t o n l y a r e e n e r g y and l a b o r s u b s t i t u t e s i n p r o d u c t i o n , b u t t h e s p e e d o f s u b s t i t u t i o n i s p r o p o r t i o n a l t o t h e m a g n i t u d e o f c h a n g e i n f a c t o r p r i c e r a t i o s . I n t h e a b o v e s e c t o r s . . . l a b o r h a s d i s p l a c e d o i l i n c o n s t r u c t i o n a n d a g r i c u l t u r e a n d , i n t u r n , h a s b e e n d i s p l a c e d b y e l e c t r i c a l power i n t h e m i n i n g and m a n u f a c t u r i n g s e c t o r s " . ( S u c k l i n g p. 1 5 6 ) .A n a l y s i s o f c o n s u m p t i o n o f d i f f e r e n t e n e r g y f o r m s i n d i c a t e s t h a t demand i s p r i c e i n e l a s t i c f o r e l e c t r i c i t y , c o a l , p e t r o l and d i e s e l . Annual g r o w t h r a t e s f o r e l e c t r i c i t y a n d l i q u i d f u e l s h a v e b e e n o f t h e o r d e r o f 9 % ( s e e S u c k l i n g T a b l e 3 7 , p. 1 4 1 : r e s u l t s o f c o a l a n d c o k e r e g r e s s i o n s a r e n o t s t a t i s t i c a l l y s a t i s f a c t o r y ) . R e g r e s s i o n s o f e n e r g y u s e on r e a l s e c t o r a l o u t p u t g i v e t h e r e s u l t s shown i n T a b l e 1-5.
The f i g u r e s may a p p e a r r a t h e r l o w i n r e l a t i o n t o o t h e r s t u d i e s , t h i s b e i n g d u e t o t h e u s e o f r e a l r a t h e r t h a n m o n e t a r y o u t p u t i n t h e c a l c u l a t i o n s . " T h e n e g a t i v e e l a s t i c i t y f o r p o w e r i s e x p l a i n e d b y t h e l a r g e i m p o r t s o f e l e c t r i c p o w e r f r o m 1 9 7 5 o n w a r d s " ( S u c k l i n g p . 1 1 0 ) . A l t h o u g h t h e f i g u r e f o r t r a n s p o r t i s l e s s e a s y t o e x p l a i n , i t may b e d u e t o t h e e f f e c t o f t h e war and f u e l r e s t r i c t i o n s o n t h e volume o f t r a f f i c ( b o t h goods and p a s s e n g e r s ) .
TABLE 1-5 ESTIMATED SECTORAL ENERGY-INCOME ELASTICITIES
...
S e c t o r E s t i m a t e d E l a s t i c i t y 1971- 79
...
A g r i c u l t u r e 0 . 2 4
M a n u f a c t u r i n g & Commerce 0 . 6 3
Mining 0.57
T r a n s p o r t - 0.27
Power - 2.56
O t h e r 0 . 8 6
...
GDP 0 . 6 6
...
S o u r c e : S u c k l i n g o p . c i t . , T a b l e 3 6 , p . 140
The figures obtained by Suckling indicate a high price inelasticity of demand. While the import price per barrel of oil rose by roughly 1000% over the period 1970-80 (5), the quantity of oil rose by about 50%, thus
". . .
suggesting that a positive income effect exceeded a negative price effect in consumption" (Suckling p. 154). The overall impact of the international oil price rises of 1973 and 1978 was in fact rather limited in comparison with other developing countries. This was mainly "due to the use of petroleum products being largely confined to transport (6); the major role that oil plays in overall energy consumption; and the very unequal distribution of income in favor, both of those active in the commercial economy, and, within this sector itself, of high income recipients" (Suckling p. 156).The final point about income distribution is crucial when planning for future growth. The figure of 0.66 for the real GDP energy-income elasticity indicates that energy use w i l l expand by 0.66% for each 1% increase in GDP. However, this result is based on the economic structure prevailing in the 1970's. Rising living standards and reductions in income disparities are likely to result in disproportionately large increases in energy demand. This may be somewhat mitigated if energy prices continue to be increased by the Government at a faster rate than the general level of inflation.
The above comments are expected to apply to household, transportation and agricultural demand and to have particular relevance to liquid fuels. Energy-income elasticities may, h o w e v e r , p o s s i b l y m o v e in the opposite d i r e c t i o n for manufacturing and mining if future investment is associated with more energy efficient equipment than in the past and if other conservation measures prove effective. On the other hand, a large-scale shift to domestic sources of energy may not necessarily be more energy efficient than previously.
However, it would be justified in terms of foreign exchange savings. This uncertainty about the magnitude of the energy- income elasticities is crucial for planning purposes. It provided much of the rationale for the detailed end-use approach adopted in this study.
(iii) Manufacturing.
-
The manufacturing sector alone accounts for roughly twenty-five percent of GDP. This attests t o the economic d i v e r s i t y encountered i n the Zimbabwean economy. The manufacturing capacity is one of the largest in Sub-Saharan Africa. It is strongly linked to the two major primary sectors of the economy: agriculture and mining.Of the subsectors delineated within the manufacturing sector, food products comprise the largest portion of value- added. This is £01 lowed by iron and steel, chemical and non- electric machinery, cotton ginning and textiles, and drink and tobacco. As can be seen from this list, most of the manufacturing is l inked to the primary production found within the economy. Since 1964, the manufacturing subsectors that have experienced the greatest growth are textiles, metal
and metal products, foodstuffs, and chemical products.
In his review o f Zimbabwe manufacturing, Wield (1981) points to two facets of the Zimbabwean manufacturing industry that are particularly relevant to a discussion o f energy consumption. The first is that, after UDI, there were virtually no productivity gains in the manufacturing sector.
Wield attributes this to three factors: excess capacity being used in an inappropriate manner; the expansion o f labor-intensive investment; and the generally low levels of capacity utilization following 1974, This trend carries over to energy productivity. While energy consumption in the economy as a whole has increased a t an average compound growth rate of 3.2% per year from 1972 to 1979, energy consumption in the manufacturing sector has increased at a rate of 5.8 percent per year (IBRD, 1982). During the same period, the volume of industrial production increased at an average compound growth rate of slightly less than 3.8 percent per year. In other words, the manufacturing sector is actually producing less per unit of energy consumed than it was in 1970. This could very possibly b e linked to the second point raised by Wield. Due to the sanctions and import restrictions during UDI, little or n o machinery was i m p o r t e d d u r i n g t h a t period. Out-dated and r u n - d o w n machinery may need replacing to achieve an improvement i n efficiency, but it would be facile to suggest that to be the o n l y approach. Energy efficiency varies across sectors i n other countries, where, even in the highly industrialized economies, there are instances of "outdated" equipment i n use.
Energy consumption in the manufacturing sector centers on two energy supplies: coal and electricity. Coal supplies about seventy percent of the energy used in manufacturing and electricity accounts for another thenty-five percent. This m i x r e f l e c t s t h e i m p o r t a n c e o f t h e m e t a l p r o c e s s i n g i n d u s t r i e s i n t h e f u e l c o n s u m p t i o n p a t t e r n s o f t h e m a n u f a c t u r i n g sector. G i v e n Z i m b a b w e ' s n a t u r a l c o a l e n d o w m e n t s , i n d u s t r y s h o u l d m o v e t o w a r d s increased substitution of coal for electricity where careful analysis, focussing on foreign exchange costs and savings, shows this to be justified. The environmental consequences of increased coal use need also to be taken into account. (7)
The Uor ld B a n k / u ~ ~ P Mission reviewed energy efficiency in the manufacturing sector and found that energy intensity of production in fertilizer, metal and mineral production is high. Upon reviewing the seven largest energy-consuming manufacturing plants, the Mission found that electricity consumption in these plants could be reduced by roughly fifty percent for an annual saving of Z$47.3 million. To achieve these savings, through the conversion to a coal-based electrolytic hydrogen plant and the replacement of outdated generating facilities,would cost around 2$319.3 million.
This does not seem feasible given the acute shortage o f foreign exchange. However, the Mission did suggest that these improvements be considered in more detail. They might
well become attractive in the face of rising energy costs and an economic tariff for electricity, instead of one based on historical capital costs.
The World BankIUNDP finding that the seven large plants a l o n e consume m o r e than 8 5 % o f the energy used b y the manufacturing sector obviously has important implications for the formulation of energy conservation measures. In a more detailed study of energy intensities in subsectors o f the manufacturing sector, Peet et al. (1983) examined energy use in "Light" and "Heavy" manufacturing as shown in Table 1-6.
The index they use is somewhat different to that given in Table 1-4, being total energy purchases (electricity, coal and coke and other) divided by gross output. The figures range from 0.009 for printing and publishing to 0.142 for basic metal industries, i.e. 14.2% of the value of gross output in the basic metal industries subsector is made up by energy purchases.
Light manufacturing as a whole has an intensity index of 0.017, while heavy manufacturing without basic metals is 0.040, and with basic metals is 0.072. Mining and quarrying has an index of 0.074. Heavy manufacturing is therefore 4.2 times as energy intensive as the light variety, or, without basic metals, is 2.4 times as energy intensive.
"In terms of total energy use, light manufacturing, with 59.5 percent of gross output in 1979, used 26.0 percent of all energy purchased by manufactures. Heavy manufacturing, with 40.5 percent of gross output, purchased 74.0 percent of a l l energy (basic metals alone, with 12.0 percent of gross output purchased 46.1 percent of all energy). The table also shows the type o f energy used
-
we assume that "other" is mainly petroleum products. Coal use is dominated by the metal industries. Several industries are heavily dependent o n petroleum: wood and wood products, printing and publishing, metal products and machinery, for example. Light manufacturing as a whole uses mainly petroleum (42.3% of e n e r g y p u r c h a s e d ) a n d e l e c t r i c i t y ( 3 1 .l%). H e a v y manufacturing predominantly uses coal and coke (43.0% of purchases), then electricity (38.3%), but, without basic metals, heavy manufacturing uses mainly electricity (51.6%).In Zimbabwe, the basic metals industry uses 74.0 percent of all coal purchased by manufacturing, demonstrating the strong relationship between basic metals and the coal industry."
(Peet et al. p. 34-37).
(iv) Transport.
-
Although the transportation sector's share o f GDP is very small (about 5%) (Snamprojetti and Little, 1983), the sector is very important from an energy viewpoint.It accounts for some 12% of total energy consumed in Zimbabwe and some 55% o f a l l the petroleum-based energy consumed in Zimbabwe.
TABLE 6 ENERGY USE AN0 INTENSITY BY TYPE OF MANUFACTURING I N 1979
...
% Energy Purchases Tot.Energy Gross Energy
Type o f I S I C Coal/ Purchases Output(*) I n t e n s i t y
Manuf. No. D e s c r i p t i o n Elec. Coke Other (ZQ) (Z$m) Index
31 Food ,beverages ,tobacco 31.3 2 7 5 41.2 10.1 528.3 D19
32 T e x t i l e s , a p p a r e l ,tobacco 54.6 23.1 22.3 3.7 301.0 .012 L i g h t 33 Wood (and p r o d u c t s ) , f u r n i t u r e 23.3 1.0 75.6 1.9 53.6 .036 343 P r i n t i n g ,p u b l i s h i n g 37.2 0.7 62.0 0.4 4 5 4 a 0 9 355 Rubber,356 P l a s t i c p r o d u c t s 3 7 8 12.4 49.8 1.1 53.3 .021
39 Other 31.1 9.5 59.3 0.2 21.0 .011
T o t a l l i g h t manufacturing 3 5 8 2 1 8 42.3 17.4 1002.8 .017
341 Paper (and p r o d u c t s ) 57.5 19.6 22.9 1.7 3 5 6 a 4 7 351 Chemicals,352 P e t r o l e m 75.9 6.7 17.3 7 8 141.4 .056 Heavy 353 Coal products,354 Nonmetallic
products,36 Min.products 31.4 34.2 34.3 4.3 45.8 0.093
37 Basic m e t a l i n d u s t r i e s 30.2 60.3 9.5 30.8 217.5 .l42 38 M e t a l p r o d u c t s ,machinery 28.2 7.4 6 4 5 4.9 241.7 .020
T o t a l heavy manufacturing 38.3 43.0 1 8 8 49.4 682.0 4 7 2 Heavy manuf. minus b a s i c m e t a l s 51.6 14.3 34.0 18.6 464.5 0 4 0
...
T o t a l manufacturing 37.6 37.4 24.9 6 6 8 1684.7 a 4 0
...
23 Mining,quarrying ( e x c l . c o a l ) 65.0 10.7 24.3 25.3 341.3 .074
...
(*) E x c l u d i n g goods n o t produced on t h e premises.
Sources: Zimbabwe, Central Statistical Of fice, The Census of Production 1979180, Table 3 and 4 , 1 n t e r n a t i o K l S t a n d a r d Industrial Classification of Economic Activities (ISIC 1968).
Although the drought situation and the world economic recession have forced activity levels to fall between 1982 and 1983, the National Railways of Zimbabwe (NRZ) h a v e resumed pre-independence levels of activity. The Railways are the most important form of freight transport in Zimbabwe.
At present, NRZ owns 107 steam locomotives, of which some 8 7 (80%) are effective, 337 diesel locomotives, of which 248 (74%) are effective, and 12 new electric locomotives. The highest ever freight traffic was achieved in 1980, when 6.9
billion ton-km of goods were moved by NRZ. But due to the depressed economic situation, the freight tonnages for the 1981, 1982 and 1983 fiscal years were 6.6, 6.3 and 6.3 billion ton-kilometers respectively.
SADCC transportation plans call for the electrification of the railroad through to Beira as well as the overall expansion of rail transport throughout the region. So far, stage 1 of the electrification of the Zimbabwe railroad system (Harare to Dabuka) has been completed. As more sections of the system get electrified, there will be a reduction of diesel fuel and coal usage for rail transportation. This will lead to a more rational use of energy resources. For economic and political reasons, Zimbabwe is keen to route most of its traffic through Beira and Maputo. At present, due both to the limited capacity of the Mozambique system and to Zimbabwe's historical reliance on South Africa, some 50-55% of Zimbabwe's overseas trade is still conducted through the South African route.
Road transportation accounts for the largest share of fuel consumed by the transportation sector. In 1982, it accounted for 20% of the total diesel fuel consumed in Zimbabwe, compared to 15% for NRZ (Snamprojetti). The total diesel vehicle fleet is at present estimated at 39,400 vehicles. The Otto cycle engine fleet numbers 294,350 vehicles according to the Central Vehicle Registry. Although the foreign currency shortage is restricting the importation of new vehicles, the vehicle fleet is generally in a sound condition. Because the average passenger car density in Zimbabwe is about 35 cars/1000 people, pub1 ic passenger transport is the most important form of transportation. This fact, coupled both with the high level of industrialization and the high-input commercial farming sub-sector makes automotive gas oil (diesel) the most important liquid fuel in the economy. Diesel consumption is liable to continue growing more rapidly than petrol consumption.
Final ly, air transportation, provided by Air Zimbabwe and several other smaller companies, accounts for the smallest percentage of liquid fuel use of any segment in the transportation sector. Although load factors have decreased slightly from 60.5% in 1980/81 t o 60.46% in 1981/82, passenger traffic has been increasing slowly (402,300 passengers carried in 1980/81 and 447,411 in 1981/82
-
AirZimbabwe Annual Report). Freight tonnages have also shown increases, but load factors have decreased by 4.6% for the same period. As regional co-operation and tourism grow in the SADCC and PTA, air traffic will no doubt increase, requiring more aviation fuels. At present, the market is depressed. Due to higher fuel prices in Zimbabwe, most international airlines are reluctant to refuel at Harare with the result that there are significant fluctuations in sales of jet aviation fuel.
3. COMMERCIAL ENERGY SUPPLIES
(i) Coal and Coke Supplies.
-
Zimbabwe's coal reserves are quite extensive. Given the large quantity of indigenous coal reserves, the country would do w e l l to substitute coal for oil wherever it is technically feasible and economically sensible to do so. However, increased coal utilization is likely to have negative environmental consequences. While coal may therefore lower costs in energy terms (or at least foreign exchange costs), the savings that result may have to be expended in the. future in offsetting environmental damage.The figures in Table 1-7 show that Zimbabwe possesses ample coal reserves for millennia given current consumption levels of 3 million tons per year.
TABLE 7 COAL RESOURCES AND SERVICES
Resources Reserves Total Coal Resources Area (106 Tons) (106 Tons) (106 Tons)
Zambezi Basin 26,529 2,001 29,530
Sabi-Limpopo Basin 477 193 672
Total 27,006 2,194 30,202
Source: IBRD, 1982
Although the figures in Table 1-7 are rough estimates, they do indicate the extent o f Zimbabwe's coal deposits
-
more than 30 thousand million tons. Of this enormous potential, there is only one area being mined in the Zambezi basin at present. This operation at Hwange is run by the Wankie Colliery Company Ltd., and accounts for Zimbabwe's annual production of 3.2 million tons. The production o f steam coal and coking coal for 1980 are summarized in Table 1-8. Roughly fifty percent of the coal produced in Zimbabwe is steam coal and another forty percent is used for coke production. The remaining ten percent is discarded o r otherwise lost at the point of extraction
.
Roughly one- third of the coal produced comes from deep pit mines. The remainder is taken from open-pit mining. The Hwange thermal generation plant is designed to make use of the lower-quality coal taken from the open pit.The last two rows in Table 1-8 provide the annual growth rates in the production of each category mentioned. h3ile the production of steam coal has decreased over the past two decades, the production of coking coal has increased. This is due to increased production on the part of the iron and steel industry. The decrease in demand for steam coal can be traced to the decision made by the railways to switch to liquid-fuel powered locomotives. Steps are currently being taken to refurbish the old steam locomotives. Steam Coal exports are limited by relatively high transportation costs.
TABLE 1-8 CCW PRODUCTION: 1980 ('000 TONS) AND AVERAL;E ANNUAL GRCY6EH
...
Steam Coal Coking Coal Total
Coal Local ExportsTotal Local Exports Total Suppl. Rejects Prduced
Source: IBRD, 1982,81
The exports of coking coal go mainly to South Africa where they are used in the iron and steel industries. Table 1-9 summarizes the country's total coal exports by country of destination. A f t e r S o u t h A f r i c a , t h e m o s t i m p o r t a n t destination for Zimbabwean coal is Zaire, where it is used in mineral processing. These exports are at a small fraction of t h e i r p r e v i o u s l e v e l s . A p a r t f r o m e x p o r t s a l e s to multinational oil firms, they do not seem likely to expand in the future.
TABLE 1-9
COAL
EXPORTS 1980 ('000 tons)...
Country of Steam Coking Total
Destination Coal Coal Cost
...
Botswana 2 2
Malawi
-
Mozambique 9 9
South Africa
-
175 175Zaire l 42 4 3
Zambia
-
...
Total 12 217 229
( i i ) P e t r o l e u m - B a s e d F u e l s .
-
A s w a s a r g u e d e a r l i e r , petroleum fuels are essential to the continued operation of the transport sector in Zimbabwe. Unfortunately there are no known petroleum reserves in Zimbabwe: all petroleum must be imported. F u r t h e r m o r e , s i n c e t h e r e i s n o f u n c t i o n a l refinery, it must a l l be imported as refined products ready for retail sales. All this means that Zimbabwe has, and will continue to have, a large, but necessary, petroleum-fuel import bill.T a b l e 1-10 summarizes e s t i m a t e s o f Zimbabwe's p e t r o l e u m c o n s u m p t i o n f o r 1 9 8 0 . A s t h e f i g u r e s r e f l e c t , g a s o i l o r d i e s e l c u r r e n t l y a c c o u n t s f o r n e a r l y 5 0 p e r c e n t o f a l l p e t r o l e u m i m p o r t s , a n d p e t r o l a c c o u n t s f o r a n o t h e r 35 p e r c e n t . T h i s r a t i o o f r o a d t r a n s p o r t f u e l s , w h i c h i s c u r r e n t l y 6 0 : 4 0 ( d i e s e l f u e l t o p e t r o l ) , i s t h e i n v e r s e o f w h a t i t was t w e n t y y e a r s a g o . T h i s c h a n g e h a s come a b o u t l a r g e l y i n r e s p o n s e t o t h e r e l a t i v e p r i c e d i f f e r e n c e s between p e t r o l a n d d i e s e l f u e l a n d r e s u l t i n g c h a n g e s i n t h e c o m p o s i t i o n o f t h e v e h i c l e f l e e t . The d e e p e r r e a s o n s f o r t h i s and t h e l i k e l y t r e n d need f u r t h e r i n v e s t i g a t i o n . Power p a r a f f i n i s t h e l e a s t i m p o r t a n t p e t r o l e u m f u e l . I t i s u s e d o n l y f o r t h e p o w e r i n g o f s p e c i a l i z e d h e a v y m a c h i n e r y . I t s i m p o r t a t i o n h a s d e c r e a s e d s i n c e 1973 i n r e s p o n s e t o e f f o r t s t o d i s c o u r a g e i t s u s e .
A s t h e s e f u e l s a r e i m p o r t e d i n t o t h e c o u n t r y , t h e i r t o t a l v a l u e f o r 1 9 8 0 was Z$166.5 m i l l i o n , a f i g u r e t h a t i s e q u a l t o n e a r l y t w e n t y p e r c e n t o f t h e v a l u e o f 1980 e x p o r t s . U n t i l t h e r e h a b i l i t a t i o n o f t h e B e i r a - M u t a r e p i p e l i n e , a l l o f t h i s f u e l was i m p o r t e d t h r o u g h S o u t h A f r i c a v i a r o a d o r r a i l . A l t h o u g h t h e p i p e l i n e was o r i g i n a l l y e s t a b l i s h e d t o pump c r u d e o i l t o t h e F e r u k a r e f i n e r y , i t h a s b e e n r e t r o f i t t e d t o pump d i f f e r e n t r e f i n e d f u e l s o n a r o t a t i n g s c h e d u l e . T h i s t r a n s p o r t a t i o n a l t e r n a t i v e s h o u l d r e s u l t i n c o n s i d e r a b l e s a v i n g s o v e r t h e i m p o r t a t i o n t h r o u g h S o u t h A f r i c a , p r o v i d e d t h a t t h e s e c u r i t y i s s u e c a n b e s a t i s f a c t o r i l y r e s o l v e d . Due t o t h e c h a n g e i n t h e f u e l - m i x c u r r e n t l y i n demand i t may n o t p r o v e t o b e e c o n o m i c a l l y f e a s i b l e t o r e f u r b i s h t h e r e f i n e r y , w h i c h h a s b e e n m o t h b a l l e d s i n c e 1 9 6 4 ( 8 ) . The r e f i n e r y w a s d e s i g n e d t o p r o d u c e a m i x t u r e o f 60% p e t r o l , 40% d i e s e l , t h e r e v e r s e o f t h e c u r r e n t mix.
TABLE 1- 10 IMPORTATION OF PETROLEUM FUELS 1980 ( 1000 B ~ R E L S )
...
AV. Turbo J e t Gas Power L i g h t i n g
Gas F u e l P e t r o l O i l P a r a f f i n P a r a f f i n L.P.B. T o t a l
I n l a t e 1982, t h e B e i r a - M u t a r e p i p e l i n e was s a b o t a g e d , l e a v i n g t h e c o u n t r y w i t h o u t p e t r o l e u m s u p p l i e s f o r s e v e r a l m o n t h s . T h i s p e t r o l e u m c r i s i s b r o u g h t i n t o s h a r p f o c u s a number o f f e a t u r e s o f Zimbabwe's c u r r e n t l i q u i d f u e l s u p p l y s y s t e m . I n p a r t i c u l a r , i t f o c u s e d a t t e n t i o n o n t h e h i s t o r i c a l d e p e n d e n c e o n S o u t h A f r i c a and t h e v u l n e r a b i l i t y o f t h e Mozambique s t o r a g e s y s t e m a n d p i p e l i n e t o s a b o t a g e . The i n c i d e n t was a s a l u t a r y r e m i n d e r o f t h e n e e d f o r b o t h s h o r t - t e r m and l o n g - t e r m s t r a t e g i e s t o e n s u r e c o n t i n u i t y o f s u p p l y i n l i q u i d f u e l s . The e f f e c t o f t h e c r i s i s on i n d u s t r y w a s o n e o f t h e i s s u e s t h a t t h e ZEAP t e a m e v a l u a t e d i n d i r e c t l y .
(iii) Electricity Supplies.
-
With per capita electricity consumption at 928 kllh and a peak-demand of 1080 MW in 1980, Zimbabwe has one of the largest electrical systems in Africa.As has been indicated, most electricity is consumed by the manufacturing industry with a smaller amount going to the mining, agriculture and domestic sectors. Most o f this electricity is generated at the Kariba complex, with minor amounts supplied by thermal generating systems. The relative abundance of inexpensively generated hydroelectricity and a historical-cost-based tariff structure has made electricity supply prices among the lowest in the world.
E l e c t r i c a l generation for c a l e n d a r year 1 9 8 0 is summarized in Table I-ll. The total generation capacity is limited by the age of several generation facilities which are in need of repair or replacement. Current plans would have the generation capacity increasing to over 3000 MtJ by 1990 through the addition of new thermal and hydro sites. Actual electrical generation and supply for 1980 are summarized in Table 1-12.
TABLE I-ll ELECTRICAL GENERATION CAPACITY
1980 ...
Total Capacity Effective Capacity Projected Capacity
(M\?) (MW) 1990 (MW)
...
Hydro 666.0 633 .O 1266 .O
Thermal 485 .O 418.4 1765 .O
...
Total 1151 .O 1051 .O 3031 .O
...
Source: IBRD, 1982
In 1980, n e a r l y s e v e n t y percent o f Zimbabwe's electricity supply was generated by the Zimbabwe half of the Kariba complex. The Central African Power Corporation (CAPCO) manages the country's electricity supplies, including the imports from Zambia which cost $18.6m in 1980. The electricity is then sold to the Electricity Supply Commission (ESC) or one of the municipal distributors and transmitted to the final consumers. The imports from Zambia w i l l remain available until Zambian consumption increases to absorb it.
At t h i s point, Zimbabwe w i l l h a v e t o h a v e sufficient i n s t a l l e d capacity t o meet not o n l y the increase in consumption requirements, but also to replace the Zambian supplies that will no longer be available.
TABLE 1- 12 ELECTRICITY SUPPLY I N 1980
S o u r c e GP& % o f T o t a l
...
Hydro
Domestic 5001 . O 6 8 . 8 %
I m p o r t e d Zambia 1756.0 24.1%
I m p o r t e d O t h e r -17 . O - 0.2%
T o t a l Hydro 6 7 4 0 . 0 92.7%
...
Thermal
CAPCO S u p p l i e s O t h e r S u p p l i e s T o t a l Thermal
T o t a l E l e c t r i c i t y S u p p l i e s 7272 . O 100 .O %
- T r a n s m i s s i o n L o s s e s - 329.5 - 4 . 5 %
...
Net E l e c t r i c i t y Consumption 6942.5 95.5%
...
S o u r c e : IBRD(1982).
( i v ) S u p p l y o f A l t e r n a t i v e F u e l s .
-
E n e r g y p o l i c y a n d t h e f o r c e d r e s t r i c t i o n o n s u p p l y o f l i q u i d f u e l s d u r i n g t h e p e t r o l e u m c r i s i s h a v e e n c o u r a g e d i n d u s t r i a l u s e r s t o a d o p t s u b s t i t u t i o n f u e l s w h e n e v e r p o s s i b l e . A l t h o u g h c u r r e n t l y s u p p l y i n g o n l y a r e l a t i v e l y s m a l l p r o p o r t i o n o f o v e r a l l e n e r g y n e e d s , t h e c o n s u m p t i o n a n d s u p p l y o f t h e s e f u e l s i s i m p o r t a n t f o r c o n s i d e r i n g f u t u r e a l t e r n a t i v e s . A t p r e s e n t , t h e i s s u e o f t r a n s i t i o n from e l e c t r i c i t y t o c o a l i s c l o u d e d b y t h e n e e d t o f i n a n c e t h e Hwange p r o j e c t w h i c h h a s a l r e a d y gone a h e a d .S i n c e S e p t e m b e r 1 9 8 0 e t h a n o l , p r o d u c e d a t t h e p l a n t a t T r i a n g l e S u g a r E s t a t e s , h a s b e e n u s e d a s a p e t r o l f u e l e x t e n d e r . A l l f u e l a v a i l a b l e a t t h e pumps i s now " b l e n d e d "
w i t h a n o m i n a l c o n t e n t o f 1 6 % e t h a n o l a l t h o u g h t h i s i s n o t a l w a y s a c h i e v e d due t o s u p p l y p r o b l e m s . I t i s e n v i s a g e d t h a t t h i s p r o p o r t i o n w i l l b e i n c r e a s e d t o 20%; a h i g h e r p r o p o r t i o n would r e q u i r e e n g i n e m o d i f i c a t i o n . I n 1980 t h e e q u i v a l e n t o f 9 , 0 0 0 TOE ( 1 5 , 0 0 0 m l ) was p r o d u c e d a t a c o s t o f r o u g h l y 34.7 c e n t s p e r l i t e r , s l i g h t l y l e s s t h a n t h e c o s t o f p e t r o l i m p o r t e d t h r o u g h D u r b a n a t 36.26 c e n t s p e r l i t e r ( W o r l d B a n k / u N ~ P T a b l e 2 p a g e 76 and p a g e 2 4 ) . More r e c e n t f i g u r e s s u g g e s t t h a t a t p r e v a i l i n g e x c h a n g e r a t e s e t h a n o l i s m o r e e x p e n s i v e t h a n p e t r o l .
C o a l t a r f u e l i s a s u b s t i t u t e f o r d i e s e l and h e a v y o i l s f o r f i r i n g f u r n a c e s . I t i s m a r k e t e d b y a company c a l l e d C o a l T a r F u e l s M a r k e t i n g which i n t u r n o b t a i n s c r u d e t a r s u p p l i e s f r o m t h e c o u n t r y ' s t w o c o k e p l a n t s a t ZISCO a n d Hwange. I t
r e f i n e s t h i s a t d e p o t s a t Kwekwe a n d B u l a w a y o . C u r r e n t p r o d u c t i o n i s r u n n i n g a t l e s s t h a n 1 0 0 0 t o n s p e r m o n t h . I n 1 9 8 1 / 8 2 , a n n u a l p r o d u c t i o n was 1 0 . 9 t h o u s a n d t o n s (G.T.
Matanda " C o n v e r s i o n t o C o a l F u e l s " M I E D O c t o b e r 1 9 8 2 ) .
P r o d u c e r g a s f r o m c o k e i s now u s e d b y a number o f c o m p a n i e s , m a i n l y f o o d s t u f f s m a n u f a c t u r e r s , w h i c h h a v e i n s t a l l e d l o c a l l y d e s i g n e d and b u i l t g a s i f i e r s . The r a n g e o f a p p l i c a t i o n o f t h i s t e c h n o l o g y i s l i m i t e d , i n t h a t it i s b e s t s u i t e d t o s u p p l y i n g e n e r g y t o o v e n s i n t h e 2 0 0 - 1 0 0 0 ~ ~ r a n g e , c o n s u m i n g 1 6 J / h r a n d o p e r a t i n g c o n t i n u o u s l y . S o f a r , l e s s t h a n t e n g a s i f i e r s h a v e b e e n i n s t a l l e d , b u t i t i s c l a i m e d ( b y t h e m a n u f a c t u r e r s NE1 C o c h r a n e ) t h a t a s a v i n g o f o v e r $ 2 m i l l i o n p.a. o f f o r e i g n e x c h a n g e f o r s u b s t i t u t e d i m p o r t e d p e t r o l e u m h a s a l r e a d y b e e n a c h i e v e d .
S o l a r h e a t i n g o f w a t e r i s n o t p a r t i c u l a r l y w e l l s u i t e d t o i n d u s t r y a s t h e r e q u i r e d t e m p e r a t u r e s t e n d t o b e h i g h e r t h a n t h o s e t h a t c a n b e a t t a i n e d u s i n g t h i s t e c h n o l o g y . N o n e t h e l e s s , t h e r e a r e some p o t e n t i a l a p p l i c a t i o n s i n t h e f o o d s t u f f s i n d u s t r y and o t h e r s u b s e c t o r s which h a v e l a r g e h o t w a t e r n e e d s f o r p e r s o n n e l ( c a n t e e n s , a b l u t i o n b l o c k s e t c . ) . S o l a r c o l l e c t o r s h a v e a l r e a d y b e e n i n s t a l l e d i n t h e s e r v i c e s s e c t o r e . g . h o t e l s i n o u t l y i n g t o u r i s t a r e a s , r u r a l s c h o o l s and h o s p i t a l s .
( v ) E n e r g y P r i c e s a n d P r i c i n g P o l i c y .
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The demand f o r e n e r g y a n d m o r e p a r t i c u l a r l y f o r e n e r g y s u b s t i t u t i o n t e c h n o l o g i e s i s c r i t i c a l l y d e p e n d e n t o n c u r r e n t and e x p e c t e d r e l a t i v e p r i c e s . The IJor l d Bank/UNDp r e p o r t q u o t e s t h e f o l l o w i n g c o m p a r a t i v e u n i t c o s t s o f d e l i v e r e d e n e r g y f o r l a r g e p r i v a t e consumers i n t h e M i d l a n d s i n 1980.(9)TABLE 1- 13 PRICES OF COMMERCIAL FUELS
P r i c e p e r 10' ~ t u
Wankie Coal $ 2 0 / t o n $0.67
Coal T a r F u e l $ 0 . 0 8 2 5 / l i t e r s $2.99
E l e c t r i c i t y $0.007715-$0.015/kik $2.26- $3.37
D i e s e l $ 1 . 5 0 / ~ s $10.56
A t p r e s e n t , p r i c e s o f t h e t h r e e m a j o r e n e r g y s o u r c e s a r e d e t e r m i n e d i n m a r k e d l y d i f f e r e n t w a y s , n o n e o f w h i c h a r e b a s e d o n t h e w e l f a r e e c o n o m i c s d i c t u m o f m a r g i n a l c o s t p r i c i n g . I n a c c o r d a n c e w i t h a n a g r e e m e n t w i t h t h e G o v e r n m e n t , c o a l a n d c o k e p r i c e s a r e s e t i n s u c h a way t h a t t h e Wankie C o l l i e r y Company e a r n s a 12.5% r e t u r n o n i n v e s t e d c a p i t a l ( p l u s u p t o a f u r t h e r 5 % f o r e x p l o i t i n g e x p o r t m a r k e t s ) . T h i s g u a r a n t e e d r e t u r n t o a s u b s i d i a r y o f a S o u t h A f r i c a n m u l t i n a t i o n a l h a s come u n d e r c r i t i c i s m from a number
of points of view, including the implicit incentive it gives to the increase in capital intensity of the mining operation.
The price of petroleum-based fuels is determined b y import prices and duty levels. While, in principle, excise could be used to attain appropriate relative prices from an e n e r g y p o l i c y p o i n t - o f - v i e w , i n p r a c t i c e , o t h e r considerations ( s u c h a s r e v e n u e raising) m a y lead t o distortions.
Until recently, the price of electricity has been based o n t h e h i s t o r i c a l r e p l a c e m e n t c o s t s o f Kariba power.
Electricity tariffs have therefore been among the lowest in the world. In particular, the agriculture and manufacturing sectors have enjoyed preferential treatment relative to other consumers. For this reason, manufacturing has largely switched from imported liquid fuels to electricity where it is possible to d o so. The issue now is whether a further switch to coal-coke/C~~/producer gas should take place. Coal and coke-derived fuels presumably have a lower foreign exchange cost component than electricity as long as Zimbabwe continues to import power from Zambia.
With the new thermal plant at Hwange, electricity tarif fs have been substantial l y increased in order to meet the debt service costs of the project. In itself, this is expected to encourage consumers to seek alternatives to electricity for their energy needs.
One of the controversial aspects of the new electricity tariff is that, in the calculations on which it is based, coal to the Hwange plant is charged at $7.50/ton, well above its opportunity cost which is about $l/ton (the cost o f moving the coal from the mining pits to the power plant in view of the fact that this coal was previously discarded by the colliery). As pointed out in the World B ~ ~ ~ / U N D P report,
"this implies that the electricity consumers will subsidize the coal and coke consumers" (p. 12). This raises very clear questions of social equity. (10)
Evidently, there are a range of important issues to b e considered in the sphere of energy pricing policy. The issues were too wide ranging to be fully investigated by the ZEAP team, but the Energy Pricing Study being supported by the World Bank should give sufficient attention to them.
(vi) Existing Energy Supply Studies.
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Given the size o f investments and quantity of foreign exchange necessary to ensure adequate supplies of energy for an expanding economy, careful consideration of investment options is crucial.Government has therefore commissioned major studies in the three main commercialized energy subsectors: coal and coke, liquid fuels, and electricity. Some brief comments about the status of the three studies are, however, in order here.
The Merz and McClel lan "Power Development Plan" was com- pleted in 1981/82 and was later updated. It contains a thorough investigation of electricity demand and forecasts of supply options. The report establishes a range of scenarios and uses anoptimizationmodel for e a c h t o a r r i v e a t a l e a s t -
cost recommended power development strategy. In this exercise, an attempt is made to price resources at their opportunity costs. While there may be scope to quibble about the actual values selected for the shadow prices, the methodology would appear to be sound and the coverage satisfactory. One notable exception is the omission of the option of importing electricity from Cabora Bassa in Mozam- bique.
\Jith respect to the "Coal Utilization" study (Montan, 1983), the preliminary reports appeared far from satisfactory both in terms of coverage and methodology. For example, the coal study report fails to give serious consideration to the Sengwacoal-fields and the previously proposed conversion of the Sable nitrogenous fertilizer plant to a coal feedstock.
At the very least, one might h a v e expected a thorough analysis of the reasons for rejecting these before new proposals were given active consideration. More seriously from an economist's point-of-view, the report fails to distinguish between domestic and foreign costs and gives a p u r e l y financial a n a l y s i s o f t h e i n v e s t m e n t options identified. Given that one of the prime motivations for considering further coal exploitation and high-technology coal conversion techniques at this time would be foreign exchange saving, it is scarcely credible that the consultancy report running into many hundreds of pages should not have given a proper economic analysis prominence.
The "Liquid Fuels Supply" (Snamprojetti and Little, 1 9 8 3 ) s t u d y w o u l d a p p e a r t o s u f f e r f r o m t h e s a m e deficiencies. While the coal study gives active con- sideration to coal-conversion technologies, the liquid fuels study appears to totally ignore this possibility. This high- l i g h t s a more g e n e r a l p r o b l e m with the approach that Government has taken: namely, the three energy forms are being treated as being isolated from one another. In fact, decisions regarding one form of energy supply w i l l have important ramifications for the supply of other forms of energy.
4. NATURE OF THE RESEARCH AND THE PLANNING PROBLEM
(i) Energy Planning.
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An adequate supply of different forms of energy cannot be regarded as a national objective in its own right. Rather energy planning should be directed to ensuring that just sufficient energy is available, as and when required, to meet the needs of the productive sectors of the economy. This, in turn, should be contributing to economic development in pursuance of the overall objectives (growth, employment generation, income redistribution etc.)set out in the Transitional National Development Plan. From this perspective, energy is part of the "infrastructure"
needed for development. By aiming to match supply and demand, the energy sector will not be directly constraining development. By doing so in a least-costway, it w i l l n o t b e
