<div dir="ltr">Dear Paul:<br><div class="gmail_extra"><br></div><div class="gmail_extra">1. I am delighted to see any promise of LPG being given a competitive run, and thank you for focusing the attention on India, where sucha discussion is immediately relevant to (a) Kirk Smith's new recommendation for increasing public expenditures on LPG (your post a few days ago) and (b) the <a href="http://niti.gov.in/content/draft-national-energy-policy-public-comments" target="_blank">Draft National Energy Policy for India</a>, promulgated by its Niti Ayog (formerly the Planning Commission, now National Institution for Transforming India) and open to public comments until this Friday, 14th July. I will follow up with posts on both subjects and urge everybody on this list to submit comments to the GOI and cc this List and GACC . </div><div class="gmail_extra"><br></div><div class="gmail_extra">2. I happen to agree with the authors - two of them from the Global LPG Partnership, one a former staffer at the UN Foundation - that "In the absence of targeted subsidies, LPG will not be the solution for the world’s poorest people." Subsidies don't fall from the sky, they have to be justified, and there are too many "not the poorest" who haven't yet transitioned to LPG and electricity. <br><br>Ergo, we can drop the first half of their sentence and declare "LPG will not be the solution for the world's poorest people." <br><br>To me, it only means the <b>anti-poor bias</b> in the readymade solution that LPG is made out to be. I too have nothing against the lower middle class in Indian cities getting to LPG - my family started around 1967 and gave up charcoal entirely only around 2008, with kerosene in spare when the LPG refill didn't happen in time (until electricity filled the emergency gap). But it is clear to me that the subsidy requirements for biomass and coal phaseout - as is being advocated by Kirk Smith and NITI for India at least - are high and their efficacy unpredictable. <br><br>Bear in mind that the price of household LPG in India is FIXED, not market-determined, as is that for kerosene and non-household ("commercial") LPG. There is a benchmark of "international price" (or import parity price), on which a retail price is determined every month, but then the household LPG is adjusted for what is euphemistically called "under-recovery by oil marketing companies" (losses on that particular product), which is variable, and the direct subsidy paid by the government to the subsidized household, which too is variable. The idea of "commercial" LPG price setting is that the private oil companies don't make a loss on their supplies. If the public sector companies get the same price for the non-subsidized LPG, at least they are not making additional losses. <br><br>Confused? Welcome to India. In short, LPG is subsidized by the Government of India by i) direct payment to the consumer, and ii) forcing the public sector oil companies to take a loss. Depending on the computed "import parity price" of LPG and the money available for direct subsidies, the oil companies run a loss. <br><br>As elsewhere, the oil companies are vehicles for political favors and price/quota manipulation. This has been going on for decades. From what I can tell, the average subsidy to household LPG is about USc 15/kg and the under-recovery of oil companies somewhat less, but these can vary. Together, for some 100 million households with subsidized LPG, the difference between a reference retail price and actual payment by the consumer is about USc 25/kg/. <br><br>And that, only because India is a significant LPG producer and the fluctuations in world LPG prices are cushioned by government price fixing. Again, my guesstimate is that the reference retail price for household LPG before subsidy and oil company losses is computed at about USc 60-65/kg and after some 20-25 USc/kg subsidy and losses marketed at 40-45 USc/kg. <br><br>What does this mean? Only that even "targeted subsidies" will not be affordable to governments in reaching "the poorest" when the bulk retail cost is <b>not 65 USc/kg but well in excess of $2/kg. </b>Even the "middle class" will not be able to afford it without subsidies. </div><div class="gmail_extra"><br></div><div class="gmail_extra">Which means, in my view ,"LPG subsidies cannot but be an instrument to take the middle class household load off the electricity distribution companies". </div><div class="gmail_extra"><br></div><div class="gmail_extra">(I had shouting matches about these 15-20 years ago, but then colleagues came around to the view that at the margin, cooking and water heating demand was turning to electricity, taxing the weak distribution systems. But that is another matter.) </div><div class="gmail_extra"><br></div><div class="gmail_extra">3. In conclusion, <b>LPG subsidies are not the answer</b> except for the urban upper middle class in most countries. Until LPG prices fall further or governments can get richer. <br><br>The bias against "solid fuels" is deeply embedded in the policy adventurers of recent generation. With the Indian Advanced Biomass Cookstoves (ABC) program aborted - as reported by Up in Smoke two years ago - new technologies and supply models have to come to the rescue. <br><br>Still, I happen to agree with Kirk Smith on his second epiphany -- that biomass stoves need a supply chain. Another problem is that small-scale financing is not managed well by national governments or national governments. This is precisely the niche opportunity for technology innovation -- not just new business models for better charcoal stoves -- that GACC ought to have focused its attention on and taken the risk. <br><br>4. I had read about your Deganga project and while I am not competent to judge on operational performance, if the consumers are happy and able to generate the revenues you need to continue and expand, that to me is satisfactory result. <br><br>I hope you press GACC not just for Spark+ grants but also to stop marketing LPG -- oil companies don't need GACC or Kirk Smith to market for subsidies -- and instead propose a program for Junto and other "cooks like gas" options <br><br>I hope my answer meets your expectation. I repeat -- there is no way that every poor household will be able to make a complete transition to LPG and electricity (or outsourcing the cooking) unless costs fall below those to India (unlikely) and the government can justifiably subsidize such transition before reaching tax revenue per capita of about $500 per year for all expenses of the government, before loans and grants (also unlikely). <br><br></div><div class="gmail_extra">Those "implementation scientists" who are dreaming of Tier 4 stoves (as of now, just LPG and electricity) are only in the business of selling dreams for research grants. You are different -- asking for implementation grants. Good luck. <br><br>Nikhil<br><br>PS: Back in 2012, I had prepared a draft concept note for a non-negotiable "energy voucher" scheme with liberalized electricity and LPG markets (of course biomass fuels and stoves are non-regulated) with the idea that these vouchers can be flexibly used for pico-PV products, LPG stoves and cylinders, LPG fuel, pressure cooker, efficient electrical appliances, AND advanced biomass stoves that have proven acceptable to the users. Nothing came of that concept, but I still believe not only that LPG needs competition from alternatives but also that national oil companies ought to get in the business of biomass and solar stoves. What use is making losses or depending on fickle governments and donors if you can brand and sell your own competing device with perfect liberty in pricing (against your own loss-making product!)</div><div class="gmail_extra"><br></div><div class="gmail_extra"><br></div><div class="gmail_extra"><br clear="all"><div><div class="gmail-m_3162986203244636136gmail_signature"><div dir="ltr"><div><div dir="ltr"><div><div dir="ltr"><div><div dir="ltr"><div><div dir="ltr"><div><div dir="ltr"><div><div dir="ltr"><div><div dir="ltr"><div><div dir="ltr"><div><div dir="ltr"><div><div dir="ltr"><div><div dir="ltr"><div><div dir="ltr"><div><font face="georgia, serif">------------------------------<wbr>------------------------------<wbr>------------<br>Nikhil Desai</font></div><div><span style="font-family:georgia,serif;font-size:small">(US <a href="tel:(202)%20568-5831" value="+12025685831" target="_blank">+1) 202 568 5831</a></span><font face="georgia, serif"><br><i>Skype: nikhildesai888</i><br></font><br></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div>
<br><div class="gmail_quote">On Tue, Jul 11, 2017 at 6:57 PM, Paul Anderson <span dir="ltr"><<a href="mailto:psanders@ilstu.edu" target="_blank">psanders@ilstu.edu</a>></span> wrote:<br><blockquote class="gmail_quote" style="margin:0px 0px 0px 0.8ex;border-left:1px solid rgb(204,204,204);padding-left:1ex">
<div bgcolor="#FFFFFF">
Nikhil and all,<br>
<br>
Your meaningful comments below were NOT "off-topic" for this Stoves
Listserv. And my reponse here certainly is "on-topic" and responds
to your statement:
<blockquote type="cite">"Clean energy" has so far bypassed the poor,
and the risk is, so will this "clean fuel" mania. Unless biomass
stove community gets its act together and offers a competitive
choice. Kirk Smith's challenge is loaded. </blockquote>
Juntos Energy Solutions NFP (Not For Profit) is offering a
competitive choice. I have submitted it's proposal to the GACC
program for Spark+ (currently being evaluated) and to other places
in the search for assistance for implementation. The attached
document is exactly what I sent to GACC Spark+, except for deletion
of some confidential information about business negotiations
currently in progress.<br>
<br>
You can also read this as a partial update on the "Case Study.. .
Deganga" found at <a class="gmail-m_3162986203244636136m_-8383509204362200969moz-txt-link-abbreviated" href="http://www.drtlud.com/deganga2016" target="_blank">www.drtlud.com/deganga2016</a> . This document is
being placed at the <a href="http://drtlud.com" target="_blank">drtlud.com</a> website. This is a major success
story, and it is time to scale-up.<br>
<br>
I have nothing against LPG stoves reaching additional tens of
millions of households. But LPG authorities (Kirk Smith and the LPG
organization) and the World Bank's May 2017 publication cited by
Nikhil (below) have stated:<br>
<blockquote type="cite">
<div style="font-size:12.4706px;font-family:sans-serif"><font size="+1"> In the absence of targeted subsidies, LPG will
not be the solution for the world’s poorest people. </font></div>
</blockquote>
The proposal by Juntos NFP DOES include poorest of the poor. And it
will give LPG a run for its money in terms of acceptance and
financial viability and very clean combustion (which will get even
better).<br>
<br>
Looking forward to comments.<br>
<br>
Paul (Executive Director of Juntos NFP)<br>
<br>
<pre class="gmail-m_3162986203244636136m_-8383509204362200969moz-signature" cols="72">Doc / Dr TLUD / Prof. Paul S. Anderson, PhD
Email: <a class="gmail-m_3162986203244636136m_-8383509204362200969moz-txt-link-abbreviated" href="mailto:psanders@ilstu.edu" target="_blank">psanders@ilstu.edu</a>
Skype: paultlud Phone: <a href="tel:(309)%20452-7072" value="+13094527072" target="_blank">+1-309-452-7072</a>
Website: <a class="gmail-m_3162986203244636136m_-8383509204362200969moz-txt-link-abbreviated" href="http://www.drtlud.com" target="_blank">www.drtlud.com</a> </pre><blockquote type="cite"><div dir="ltr"><div class="gmail_quote"><div dir="ltr"> </div></div></div></blockquote></div></blockquote></div> </div></div>