Integrated policy framework and policy incentives and relevant

issues within Brick sector

Bhishma PanditEnergy Efficiency ExpertGIZ/Integration/ Energy Efficiency Centre FNCCINepal Energy Efficiency ProgrammeComponent No.3, Industrial Energy Efficiency component

Firing technology transformations

AcknowledgementsFNCSIFNBAVSBK AssociationsNEEP/GIZ/IntegrationFNCCI/Energy Efficiency Centre

ContentsKey issues within the brick sectorFocused issuesGeneral overview and sector intensityClay Brick making process .Firing technology Policy issuesGovernment approachIndian experienceBarriersWay forward…..

Key issuesSevere labour shortageFuel. 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% IndianFired solid brick, hallow or perforated brick or

compressed brick ????

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

Focused Issues- GeneralTechnological issues and energy

efficiency issuesResearch and Development issues- Ash

from boilersEnvironmental issues

Dust EmissionDegradation of Top soilProminent industrial CO2emission within Nepal

Social issues- Child worker, educations, child health

Child educational formal& informal Adult education Occupational health and safety issues

Kiln Type VSBK MC-BTK FC-BTKForced 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).

Coal and production CO2

emissionBrick 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 emissionsAround 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

overviewBiggest industrial density within NepalBiggest energy user( around 40% is fuel cost out of

total turnover) among production industryTraditional 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)

Parameter ValueNumber of Registered Establishments

429( 826 FNBI)- 701 is operational – 553 fixed , 157

moveable, 85 without registration, 499 members

Quantity of Bricks Sold 753 million piecesValue of Sales 2.3 billion RupeesPersons Employed 42,003( 139450- FNBI)FNBI source 102620 Male, 36830 womenValue of Output 2.5 billion RupeesTotal Value Added 1.8 billion Rupees

Reference: CBS-2008 Indicators of Nepal’s Brick Sector (Registered Establishments Only)

Brick making process1. Manual – Workers2. 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 rateDrying processNatural sun drying process , less energy consumption…But problem is weather depended

Losses due to rainDrying land

Firing TechnologyStill clamp kilnsMoveable BTK( Bull Trench Kilns) – out from

this firing seasonsFixed 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

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 butOperating practices, awareness?

VSBK- 25- 30?

Coal is main source

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

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

67%

19%

10%

3%

Fixed Chimney (BTKs)Moveable BTKsWithout regis-trationVSBK

Source : FNBI

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 development, Incentive to cleaner technologies, Financing , recommendation of license , tax issues

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

Policy/Budget/others

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 and financial support.

Board meeting Decided to extend the period for documenting the replacement of MCBTKs year till to Magh End of 2069

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 developmentFinancingAdvocate for policy change.

holistic approach

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/DANIDASDC- VSBK programme.KfwCO2 Emission- CDM project

Indian and regional experienceA 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

RecommendationsThe 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.

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. Widespread adoption of tunnel kiln technology is not foreseen in the immediate future.

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

Thank youbpandit@integration.org9801088900