Energy Conservation in the Steel Industry Project Context 1. Bulgaria is an energy-poor country with an energy-intensive industrial infrastructure. Natural gas is imported from Russia, and 4.6 billion cubic meters (BCM) were consumed in 1993, down from the maximum consumption level of 6.6 BCM in 1990. As industrial output has declined more than gas consumption in the industry, the gas-intensity of industrial production has increased over the later years. The problem is compounded by the fact that gas in many cases continues to flow to industrial customers that are in arrears with their gas payments. 2. Bulgaria has not developed a gas distribution system for small consumers; in 1993 30% of the gas consumption was for district heating, 70% for the industry. Nearly all of the gas to industry is used in three sectors: chemical industry, steel industry, and cement industry. The consumption in these industries are concentrated to a limited number of large plants where energy is an input factor of major importance for the plants' economic viability.
3. Natural gas is an important input factor for the Kremikovtzi steel plant outside Sofia; it uses about 370 mill. m3 of gas per year for process heat and for an on-site gasfueled power plant. Kremikovtzi is a conventional integrated steel plant of about 1.7 million tons crude steel capacity, with an additional capacity of about 0.5 million tons from an electric arc furnace. The plant produced about 1.6 million tons of crude steel in 1994, constituting about 75% of total Bulgarian crude steel production. Proposed Project Objective 4. A Consultant from ESMAP, working on a Bulgarian gas strategy project, has advised the Kremikovtzi steel plant management that before it pursues plans to replace the existing, unefficient on-site gas power plant, an overall energy audit should be made. This energy audit (the conservation project) will establish how much natural gas and electricity is required when the steel production process is optimized taking into account the high energy value of process waste gases, and when the plant's energy demand has been analyzed with the purpose of minimizing use of expensive fuels. Bulgarian authorities has requested the World Bank to seek funding for this energy conservation project. 5. The proposed ESMAP energy conservation project (energy audit) will form the basis for informed management decisions to minimize investments and energy consumption, which may have a significant impact on the plant's natural gas requirements, and thus on Bulgaria's gas imports. 6. The consultant performing the work would investigate the overall energy supply and the energy requirements of the steel plant. Blast furnaces and coke oven plants are significant energy consumers and waste energy producers within steel plants. It is possible to adjust operating parameters for these plants to save energy, and incentives to do so depend on the cost of energy (which has drastically increased in Bulgaria over the last few years). It is also possible to save energy by introducing a pure oxygen blowing process. Other parts of a steel plant are solely energy consumers, such as reheating furnaces for rolling mills, where optimizations may significantly influence the consumption. Organization, Staffing, and Financing 7. An ESMAP Project Manager will be assigned within the World Bank's Industry and Energy Department. ESMAP will hire an internationally recognized consultancy firm (Consultant) to perform major parts of the study work. The ESMAP Project Manager and the Consultant will work closely with the Kremikovtzi plant management and with the Bulgarian Ministry of Industry. The ministry's involvement is important for dissemination of experience to other steel and metal industries. Project Schedule Field Work Week 5-6 ......................................................................................................... * ........................................... j Analysis & Report Writing iWeek7-10 - .................................................................................................................................................... - Review Results wlcounterpart Week 11-12 - .................................................................................................................................................... - j Finalization of ESMAP Report iWeek12-15 Budget Questionnaire, Response & Review Week 1-4 8. ESMAP is requested to cofinance this study which is budgeted to US$ 124,000. A French consultant trust fund will provide US$ 65,000, with a required ESMAP cofinancing of US$ 59,000. Annex 1 Budget Bulgaria - Energy Conservation in the Steel Industry Budget Line Description US$ 11.01 ESMAP Supervision 16,800 11.50 Consultant Fees 65,000 11.60 Consultant Travel 13.01 Administrative Support 15.00 ESMAP Staff Travel 16.00 Bank Staff Travel 17 .OO Local Costs 2 1 .OO Sub-contract 32.00 Training 52.00 Reporting Costs 53.00 Sundries 99.00 Unallocated Costs Sub-Total 123,660
