Wednesday, April 29, 2009

Trolley Bus Development in Ring Road of the Kathmandu Valley

Rapid and unplanned urbanization and migration of rural people in Nepal has resulted in a rapid growth in the demand for transport in the urban areas over the past few years, especially in the capital city Kathmandu. The number of vehicles registered in Kathmandu alone in the past 10 years has increased by 211 percent. Needless to say, the increase in vehicles is putting immense pressure on the existing infrastructure and triggering numerous adverse effects. The environmental impact of these vehicles is mainly felt in terms of air pollution, primarily Greenhouse Gases (GHGs), from tail pipe exhausts and noise pollution. GHGs not only cause global warming but also impacts the health of the local populace adversely. The adverse health impact from the air pollution includes increased incidence of chronic bronchitis and acute respiratory illnesses, exacerbation of asthma, and impairment of lung function. Chronic bronchitis and asthma lead to chronic obstructive pulmonary disease (COPD).

Different studies have indicated that the air quality in Kathmandu, especially the PM10 (particulate matter less than 10 microns) has a major impact on respiratory diseases leading to COPD. Various studies indicate that transport sector contributes the highest CO2 emissions in Nepal. In addition, as most of these vehicles are fossil fuel based, the government is spending the scarce foreign currency reserve to import fuel for these vehicles. Pollution can also be detrimental to our cultural heritage and can also have severe effects on the tourism industry. Electric based vehicles have a convincing potential to counter escalating pollution levels and adverse impacts thereof, and are currently being promoted in the country, especially in the mass transport system. The fleet of about 600 battery powered three wheelers, called "Safa Tempos", in the country are testimony to this new found public awareness of the benefits of clean energy. The concept of electric public transportation is not new to Nepal. In 1975, Chinese support enabled the operation of a 32 fleet trolley bus system between Tripureshwor in the city center (in Kathmandu) and Suryabinayak in the town of Bhaktapur in the Kathmandu Valley. Although an amalgam of problems led to the termination of Nepal’s one and only trolley service in late 2001, the system has recently been partially revived by a consortium of three municipalities: Kathmandu, Thimi and Bhaktapur.

In an effort to address the current transport related problems in the Kathmandu valley, a prefeasibility study for the development of a trolley bus system in the Kathmandu valley Ring Road has been undertaken under the PREGA project. The project is being initiated at a time when the government policy is favorable for electric vehicles; this has the potential to contribute to the overall sustainable development of the Nepali economy. The project is expected to make a positive impact on poverty reduction through employment generation, support the tourism sector, and promote environment protection, positive health impact etc.

As an immediate 100% replacement of all diesel buses from the Ring Road is an unrealistic target, the trolleybuses are planned to be introduced in phases over three different periods during the project life. It is proposed that 50 trolleybuses will be introduced in the initial stage; followed by 25 trolley buses introduced in three, five year intervals. This would mean that an additional 75 buses would be added in the system during 2011, 2016 and 2021, resulting in a total of 125 trolley buses on the Ring Road by 2021.

In terms of replacing diesel buses, the 50 trolleybuses introduced in 2005 would replace about 34 diesel buses and 33 diesel minibuses. Ultimately, introduction of the total 125 trolleybus fleet during the project period (2005-2025) would replace about 85 diesel buses and 83 diesel minibuses from the Ring Road. Apart from other benefits, implementation of the trolleybus transportation system in the Ring Road would ultimately help reduce about 128,927 tons of CO2 equivalent emissions during the project period alone.

The project investment scheme will also be staggered over the project period. Investments are required at different intervals as additional numbers of trolleybuses are introduced over the project period 2005-2025. The initial investment, amounting to NRs 522.49 million (US$ 6.97 million) will be made in 2005 for the 50 trolley buses. The additional 75 trolleybuses, to be introduced at three five year intervals, require an additional investment of NRs 211.56, NRs 185.41 and NRs 211.56 million (US$ 2.82, 2.47 and 2.82 million) during the years 2011, 2016 and 2021 respectively. The total investment required for the infrastructure needed to implement the trolley bus project along the Ring Road amounts to about NRs 1,131 million (US$ 15.08 million). However, this cost can be reduced to NRs. 969.5 million (US$ 12.93 million) if the trolleybuses are assembled locally with imported components i.e., chassis from India and electrical components from China.

The estimated cost of an imported trolleybus is NRs 5.5 million (US$ 0.073 million) whereas the cost of a locally manufactured trolleybus is estimated at NRs 4.2 million (US$ 0.056 million). As the cost of imported trolley buses is substantially higher, the assembly of trolleybuses locally has been found as a cost effective option besides the appurtenant benefits thereto in the form of backward linkage. In addition, an annual operation cost of NRs. 1.18 million (US$ 0.015 million) per trolleybus per year has been estimated. The project can be financed in two ways: one time lump sum payment for the abatement during the life usually through Global Environment Facility (GEF) or payment each year upon delivery of abatement through the Clean Development Mechanism (CDM).

CDM is a mechanism within the Kyoto Protocol that allows industrialized Annex I countries to implement projects that reduce emissions in non-Annex I countries (developing countries) and get credits for meeting their commitments to reduce emissions. In order to make the project commercially feasible and attract private investors, the FIRR needs to be at least 14%. Calculations suggest an incremental cost of about NRs 155 million (US$ 2.06 million) for imported trolleybuses, and NRs 63 million (US$ 0.84 million) for locally assembled ones. If the lifecycle costs of baseline and project case are considered, the incremental cost becomes Rs. 427.02 million (US$ 5.69 million) for imported trolley bus and Rs. 207.48 million (US$ 2.77 million) for locally assembled. However, the economic analysis indicates that the project will be beneficial to the society if implemented. But the financial calculation suggest that additional income like sell of CERs would be needed on top of the revenue from passenger service to be financially viable.

The abatement cost of CO2 varies depending upon the funding mechanism. Receipt of payment for the total GHG abatement during the life time of the project at the beginning of the project through one time lump sum payment makes the abatement cost of CO2 more economical compared to the abatement cost through CERs paid annually. If the project were to be implemented with imported trolleybuses, then the abatement cost would be US $ 16 per ton of CO2 eq mitigated. For locally assembled trolleybuses, this would be around US $ 6.5. On the other hand, if the project were to be paid for CERs generated each upon delivery, the cost of CO2eq would be around US $ 57 per ton of CO2eq mitigated for imported trolleybuses, while the cost of CO2eq would be around US $ 23 for locally assembled trolleybuses. Similarly, the abatement cost is US$ 44 per ton of CO2eq for imported trolleybuses, and US$ 21.5 per ton of CO2eq for locally assembled if the incremental cost computed on the basis of through lifecycle analysis. From the above results it is evident that the cost of CO2eq is higher if the payment for the generated CERs is to be made annually, and that, the project would be even more attractive if the trolleybuses could be manufactured locally.

On the other hand, a detailed monitoring plan needs to be developed for CDM funded projects. For certain projects, monitoring the performance and GHG impacts can be an important component of a project’s total transaction costs. The latest draft simplified baseline and monitoring methodologies for selected small-scale CDM project categories, which also includes "Emission Reductions in the Transport Sector", requires monitoring to track the number of trolley buses operated and the annual units of service for a sample of the vehicles. An effective and efficient record keeping system can be established in the company based on the overall kilometers covered, total passengers traveled, the total number of trolleybuses as well as diesel buses in operation etc. This data can be reported on an annual basis and can be electronically archived.

A half-day workshop to gather stakeholder comments regarding the draft report was held on November 3, 2003 in Kathmandu. The overall consensus was that the project should be investigated further by conducting a detailed feasibility study. Questions pertaining to how the local costs would compare to the initial investments, how to raise the preliminary capital, the need to incorporate health impacts to strengthen the study, development of a concrete substantiation of benefits in order for EVs to be eligible to claim subsidies, involvement of the private sector in future trolleybus operations, and the need for a strong management system were suggested by workshop participants to further substantiate the study.

Source: Clean Air Initiative for Asian Cities

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