“Sustainable Hood-stove Market in Nepal” project

This project is made and entered into by and between Practical Action South Asia Regional Office hereafter referred as “Practical Action” and Indoor Smoke Alleviation and Environment Protection Forum-Nepal hereafter referred to as “ISAEPF Nepal”. Practical Action and DCRDC are here after jointly referred to as “the Parties”.

Practical Action is a UK based charity organisation established in 1966 with the objective of reducing poverty through wider use of appropriate technologies in developing countries. With the Head Office in the UK, Practical Action works through its Country and Regional Offices in Bangladesh, Nepal, Sri Lanka, Kenya, Sudan, Zimbabwe and Peru. Practical Action is working in Nepal since 1979. The current Nepal strategy, 2012-2017, focuses on four broad programme areas namely 1) access to energy 2) agriculture and market 3) urban water, sanitation and waste management and 4) disaster risk reduction.  In addition, Practical Action will invest in learning and the development of best practice through two cross cutting themes– making markets work for the poor and climate change. 

1.    Project Background

2.1 The issue

In Nepal, household air pollution due to inefficient burning of biomass fuel for cooking is a big problem for human health and environment.  According to World Health Organisation (WHO) (2009), household air pollution (HAP) from inefficient cooking is responsible for more than 8,700 premature deaths and the loss of more than 200,000 Disability Adjusted Life Years (DALYs) in Nepal. Over 74% of households use traditional biomass stoves for cooking. In addition to health problem, heavy use of firewood for cooking has resulted forest degradation and deforestation, and consequent wood-fuel availability, has become a serious environmental as well as social challenge for Nepal.

There are about 235,774 households in Gorkha, Dhading, Makwanpur and Rasuwa, of which 81.3% are dependent on biomass for cooking where around 77.9% household are still using inefficient tripod/mud stove.

2.2 Proposed Solutions and Targets:

The “hood-stove” technology is offered as a complete-package of a specifically designed smoke-hood and an improved biomass stove to tackle both issues of inefficient use of biomass fuel and high levels of harmful emissions. Hood-stoves have already been shown to burn biomass more efficiently, whilst removing approximately 84% of household smoke, bringing emissions close to the WHO standard of 24hr mean of 25µg/m3 for PM2.5 and 7mg/m3 for CO. The use of hood-stoves also better suits the local needs and traditional practices of using smoke for various purposes including smoking the timbers of roof structures, drying meat, space heating during cold times, as well as being a more appropriate solution for the local cooking practices and cooking pot sizes. It is proposed to combine standard chimneyless ICSs (four main stove designs) with smoke-hoods as a solution for clean cooking as follows:

•           Chitwan Model ICS with two potholes with ceramic inner liner

•           Double pothole Mid Hill ICS Design by Alternative Energy Promotion Centre (AEPC)

•           Single pothole Mid Hill ICS Design by AEPC

•           Fixed Mud-Brick Rocket Stove (AEPC/ESAP design model)

The customer will be able to choose a package of a hood-stove combined with any one of these cook stoves, depending on their preferences. This will provide greater flexibility to the households to choose the stove that best suits their needs. It is the most feasible option that meets consumers’ demands and willingness to pay and can achieve sound market transformation. An expected outcome is a hood-stove market penetration of 13% in the four hill districts equivalent to 30,000 households with annual sales of about €0.55m.

2.3 Project Objective

The overall objective of this project is to scale-up the commercialization of hood-stove technologies through a results-based financing measure to overcome the current gap between supply and demand, and weak market chain of the hood-stove. The specific objectives include:

·         create sustainable market system of hood-stoves in project districts.

·         provide support to market system actors of hood-stove mainly commercial hood-stove manufacturers/installers and local cooperatives addressing this market

·         support to install 30,000 hood-stoves in project period with creation of sustainable market system.

Expected results of the project include:

·         Reduced GHG emission: 86,202 tCO2 reduced or avoided

·         Creation of 100 jobs (88 male and 12 female) in hood-stove business

·         Promotion of around eight new hood-stove SMEs

·         Around 150 cooperatives start financing for hood-stove technology

·         Reduction in health costs for respiratory and eye-related illness by 50 percent

·         Cost of hood-stove decreased by 10 percent compared to baseline

2.    Purpose of the MoU

This MoU has been developed and finalised in a spirit of mutual cooperation and assistance to implement a project funded by GIZ EnDev to implement result based financing (RBF) measures  for “Sustainable Hood-stove Market in Nepal” project for four years period. The project will be implemented in Gorkha, Dhading, Makwanpur and Rasuwa districts. ISAEPF Nepal will implement community level interventions and do coordination works in Rasuwa district within the framework of the Practical Action except otherwise mentioned. Practical Action will provide financial and technical support within the framework of the Project/Programme and as agreed between the parties. The major areas of partnership will be as follow:

• Implementation of the project activities at the local level including social mobilization, coordination with the stakeholders and information dissemination to the target communities and other stakeholders;
• Achieve project target of 30,000 hood-stove installation and scale-up the project approach; 
• Identify the knowledge needs of target groups in the project implemented districts,  produce and provide knowledge products based on the needs of target groups; and
• To increase access of communities to the required information on the household air pollution and cookstove related issues

3.    Principles of Partnership

The principles that will guide this partnership;

·         Mutual support, trust, respect and understanding;

·         Wherever possible Practical Action and ISAEPF Nepal will complement one another’s actions and seek to add value;

·         Timely and quality achievement of project goals and objectives; and

·         Compliance to Practical Action's rules, regulations and guidelines

4.    Available Budget

A separate LoA will be prepared and singed after agreed on the work plan. The budget will be based on the LoA signed annually.

5.    Role of Practical Action

Practical Action will be responsible for overall management taking lead in project management, contract management, funding, internal monitoring, supervision, guidance and coordination of the programme to meet the quality and standards of the outputs. Specifically, Practical Action will:

·         Coordinate as the Lead organization for overall coordination of partners and parties involved in the implementation of the RBF Measure;

·         Prepare annual work plan and budget,

·         Carryout monitoring and evaluation of the project and RBF measures

·         Monitor project activities including detecting risks of corruption and fraud and implementation of risk mitigation measures in case of any unusual incidents.

·         Transparently approve eligible hood-stove technologies proposed by potential hood-stove manufacturer/installer;

·         Establish adequate reporting mechanisms among the partners;

·         Establish a communication and public information plans;

·         Review performance reports submitted by FIs, NGOs and IVAs;

·         Maintain a database of hood-stoves sold under this Project

·         Conduct supervision missions;

·         Reporting to EnDev program;

·         Provide technical guidance, financial and administrative support and control;

·         Provide overall programme management, on- going technical support in project implementation and facilitate and support the project implementation activities; and

·         Release funds as per signed LoA (the agreed amount and schedules);

6.    Role of ISAEPF Nepal

Under the direct supervision and management of Practical Action Nepal, ISAEPF Nepal  will be responsible to implement the project activities at field level in Rasuwa district. Specifically ISAEPF Nepal  will undertake following roles and responsibilities:

• Encourage to establish at least three formally registered hood-stove SMEs in the project district
• Mobilize the smoke-hoods manufacturers/installers, District Cooperative Associations and local cooperatives as per the project objectives mainly to install at least 7,500 hood-stoves in the project district
• Coordinate to organize district level capacity building events, meetings and workshops
• Support the local hood-stove manufacturers/installers for developing marketing materials and doing marketing of hood-stoves to achieve targeted number of interventions.
• Coordinate with district and local level stakeholders
• Closely monitor the field activities and mobilise local resources where needed for the project
• Provide monthly technical and financial reports to Practical Action
• Provide/update regular information on project activities and impact            
• Help to form District Project Advisory committees and make linkages with government/non-government line agencies and other related concern authorities at district level
• Monitor and collect impact stories in regular basis

Details of the activities, responsibility of the partner NGOs and work division among partners are described in Annex-1 and Annex-2, and in Project Implementation Manual. It is responsibility of ISAEPF Nepal to timely inform, invite and engage the Project Manager, Practical Action in all major decisions during all steps, processes and consultation.

7.    Period of this MoU

The terms of the present MoU shall commence on 1^st January 2015 for a period of 43 months (from 1^st January 2015 to till the end of July 2018). A separate Letter of Agreement (LoA) will be signed annually, which includes project activities and budget details.

8.    Modifications to the Terms

Any difference of opinion concerning this MoU will be resolved through amicable dialogue between the Parties. Both parties agree to review and update the MoU in every 6 months. Any modifications to this MoU will only be done by mutual agreement and formally signed-off by each of the two parties.

9.     Arbitration

Any disputes arising out of or in connection with this agreement should be raised with the other party. If attempts at negotiation fail, both parties agree to submit their position for arbitration by a third party acceptable to both signatories of the MoU. The decision rendered in this arbitration shall constitute final adjudication of the disagreement.

10.   Termination

This agreement may be terminated at any time by mutual agreement or if one or both parties are in breach of the agreed terms of the contract or MoU.

11.   Force Majeure

If the performance of this MoU and the project should be rendered wholly or substantially impossible or is otherwise frustrated by forces majeure - any event beyond the reasonable control of the party so affected – then the party shall immediately notify the other party in writing. As from that date the obligations of both parties under this MoU will be immediately suspended pending renegotiation at the earliest possible opportunity.

12.   Financial Arrangements

Practical Action will provide a standard reporting format for the periodic financial reporting. ISAEPF Nepal will follow the agreed reporting format while reporting and forecasting of budget for following period. Practical Action will release the funds needed for the period of three months in the first quarter for the Project based on mutually agreed-upon activities plan. Practical Action will release the funds for the next period only after spending of 80% of previous funds. Any unspent budget can be realigned as per Practical Action's guidelines and with due approval from Practical Action for related activities. Other necessary arrangement will be based on the attached Appendix I: Admin and Finance Procedural Guide.

13.   Ownership of Movable Goods

By the end of the Project equipment s procured for the use of the Project Management shall be managed as per Practical Action/Donor guidelines. Intellectual property right of all the knowledge products will be remain to Practical Action and partner can also use it on the basis of approval from Practical Action.