energy access in urban and peri-urban buenos aires

Energy access inurban and peri-urban Buenos Aires

Gonzalo Bravo, Roberto Kozulj, and Raul LandaveriEnergy Economics Institute, Fundación Bariloche – IDEE/FB, Av. E. Bustillo 9500

(8400) San Carlos de Bariloche, ArgentinaE-mail (Bravo): [email protected]

This article describes the results of a study on the living conditions and the energy access of theurban poor in Argentina. The study is based on primary data collection among poor inhabitants ofVilla Fiorito and Budge, in southern Greater Buenos Aires. These data are complemented by quali-tative information. We found a notable absence of appropriate and comprehensive policies both forproviding access to clean energy and for securing its affordability. Specifically and going beyondenergy aspects, the roots of poverty are related to two unaddressed structural issues: land tenureand the availability of regular employment. Although modern energy sources (LPG and electricity) are broadly used by poor households inGreater Buenos Aires, LPG availability and affordability is found to be a key issue. Compoundingfuel availability, another barrier to access can be the high upfront cost of LPG cylinders. Often itis replaced by charcoal and kerosene by poor slum families, and these fuels are dirtier and lessefficient, thus increasing energy consumption and possibly even fuel expenditure for cooking. The study attempts to quantify unmet basic energy needs, finding that cooling, lighting, andspace-heating have the smallest satisfaction levels. The study found that 54 % of the total surveyedenergy expenditure is on cooking fuels. The study revealed some desirable actions and possible substitution between fuels. LPG shouldreplace charcoal for cooking as much as possible, since the former is a cleaner fuel and substantiallymore energy-efficient. In the longer run, natural gas network connection and a safe and affordableelectricity service should be available. Facilitating access to LPG and natural gas through subsidizedtariffs and efficient equipment would also trigger a positive impact on the environment, on thequality of life of poor people, and their perception of social inclusion. Key-words: energy and poverty; basic energy needs; useful energy analysis; household energyconsumption patterns, sources and uses

1. IntroductionThe aim of this article is to describe the living conditionsand the plight of a poor section of the urban communityin Argentina without access to clean energy sources. Itfeatures a primary data-based investigation on energy useby and access to energy sources for poor inhabitants ofVilla Fiorito and Budge, located in southern Greater Bue-nos Aires (GBA)[1]. There is a marked absence of appro-priate and comprehensive policies designed and enactedfor providing access to clean energy. Specifically and ad-ditionally in relation to energy, the roots of poverty arerelated to two unaddressed structural issues: land tenureand availability of regular employment.

Initially the general living conditions of poor inhabi-tants are assessed and described. The core objective ofthe study is to analyze energy use and energy access, ba-sically by the identification of unsatisfied energy needsof these inhabitants, and then propose policy measurestowards their fulfillment.

Even though “slums” generally represent a set of rela-tively homogeneous problems – meaning degraded com-

mon living conditions in terms of housing and servicesprovided – they can be heterogeneous in nature as well,as slums often have different origins[2], often with largevariations in their incomes. Moreover, according to ageand location, they present different characteristics of con-solidation or potential consolidation. All these mattersshould be considered when studying energy supply issues.However, the study will only deal with the access or lackof access to modern sources of energy, such as electricityand modern cooking fuels.

As a general framework it is relevant to recall the Goal7, Target 11 on slums contained in the Millennium De-velopment Goals[3] (MDGs). It is our view that actionsand policies undertaken in order to achieve the MDGsmust also provide a sound basis for sustaining the goalsin the long term [GNESD, 2007, p. 12]. Furthermore threeelements deserve mention: (1) access to modern energysources (e.g., liquefied petroleum gas (LPG) and electric-ity) is considered a prerequisite for achieving the MDGs,while providing the basis for sustainable development; (2)the importance of enacting proper policies for increasing

Energy for Sustainable Development Volume XII No. 4 December 2008

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modern energy access; and (3) the current path of energysystem development is not sustainable.

The case study consisted mainly of a 100-householdsurvey of poor residents of Villa Fiorito and Budge. Asa complement to the survey, qualitative interviews withkey informants were also carried out. Substantial help andguidance for the implementation of the field study wasprovided by the Foundation of Communities (FOC,http://www.fundacionfoc.org.ar/). The work was carriedout in stages, through close cooperation between a re-search institution – Fundación Bariloche (FB, BarilocheFoundation) – and this community-based foundation, theteam proving to be successful.

This article first provides a broad view of the phenom-ena and the local context; next, policies applied are brieflydescribed. The second section presents the methodologicalapproach of determining energy needs, followed by a de-scription of the case-study. The third section presents ex-isting information related to energy consumption by theurban poor in Argentina, emphasising the case-study find-ings. Finally some possible policy directions are discussed.1.1. Dimensions of the challenge: the genesis of urbanpovertyThe design of public policies to address urban poverty,particularly universal modern energy supply, is one of thebiggest challenges to governance. Rural poverty manifestsitself as a lack of monetary income complemented bylower levels of technology involved in both productiveactivities and life-style, and lower access to educationtriggering less learning and consumption opportunities.Poverty in urban areas reveals not only a lack of incomenecessary to have access to basic goods and services, butalso the existence of subjective perceptions and real situ-ations of social exclusion.

According to the UN Habitat’s global audit on slums[López Moreno, 2005, p. 4], three out of every ten in-habitants of cities live in inadequate housing conditions,finding it hard to access basic services. There are manyexplanations for the reasons and mechanisms triggeringurban marginality. However, some analytical work con-ducted by FB [Kozulj, 2003; 2005b; 2007b] argues thatit is a structural phenomenon and a consequence of thesame urbanization and modernization process with par-ticular features appearing at different stages.

During the first stage (construction) of cities, the rural-urban migration process coincides with an increased de-mand for qualified workers. During that stage, migrantworkers are usually hired under working conditions that,in terms of income and life-style, are better than thosethey used to have in their rural areas of origin. Eventhough at first these migrants can only live in precarioushouses, their working conditions allow them to improvethese houses or to acquire new ones in consolidated work-ing class neighborhoods.

In the second stage, the value of urban land tends toincrease as a city’s population increases. However, as theurbanization process at a specific place tends to be satu-rated, both the sons of first-wave migrants and later peo-ple coming from the countryside confront both little

chance of finding full-time jobs and more expensive land.The lack of regular employment generates unstable in-come, triggering poverty. Moreover, higher housing andland costs prevent people from settling in better and non-marginal areas [Gallie and Paugman, 2002].

Thus, both the lack of employment opportunities andhigher education requirements hinder better integration ofpoor people, especially due to the absence of qualifiedinstitutions providing the training required. It is widelybelieved that society must provide people with equal op-portunities through the educational system. However, notconsidering existing cultural differences among pupils, inpart due to lack of access to education for the earlier gen-eration, leads to early school drop-out and to social andcultural exclusion, which is the opposite of the purposeof universal education.

Therefore, as a result of the historical and cultural con-text, poverty and indigence become endemic. The situ-ation can also be viewed as an outcome of the transitionfrom “Fordism” to “flexible accumulation”, in terms ofthe stages of evolution of industrial societies worldwide,with different characteristics in each specific case. Thetransition refers to a situation where production requiresless labor and more capital, weakening the negotiatingpower of workers as well as the stability of their employ-ment. Simultaneously the mobility of capital, technologyand markets increases, aggravating the situation [Kozulj,2003; 2005a and 2007a].

Additionally, macroeconomic policies – often imposedby international financial organizations – also worsen thesituation. Focus on an adjustment of public expenditureas an instrument for controlling inflation, external debtpayment oversight and other policies aimed at improvingproductivity in microeconomic terms – expressed inmonetary rather than physical indicators – lead to seriousconsequences related to unemployment, increased crime,poverty and indigence.

Therefore the general trend of the global economy is aprogressive reduction of wages relative to the return oninvestment capital. In the case of Argentina, the progres-sive reduction of the wages for skilled and unskilledworkers and rising structural unemployment, combinedwith macroeconomic policies, led to an alarming increasein poverty and indigence [Kozulj, 2002]. By 2001 at least41 % of the urban population was poor, while 89.3 % ofthe national poor were found in urban areas (accordingto INDEC, Instituto Nacional de Estadística y Censos, Na-tional Institute of Statistics and Census,http://www.indec.mecon.ar/principal.asp?id_tema=2).

Another complementary view from social experts[Cravino, 2006] describes the existence and growth ofslums as a complex structural phenomenon. The actualurban society is constantly growing under a private prop-erty regime which warranties permanence of existingproperty rights and production and reproduction of urbanland rents, generating an extended and growing pervasivecommercialization process that can only be moderated bygovernment intervention. In order to access urban land,sites are illegally occupied, with the insecurity such


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possession implies, until the government intervenes in or-der to formalize the new land tenure situation. This im-plies a strong contradiction: private property must beviolated in order to be accessed. Furthermore, this ten-dency is reinforced by the coexistence (often only 100 maway) of slums and private closed housing developments(called “country clubs” in Argentina), where the privati-zation process has provided extensive public services(e.g., highways and natural gas), increasing the disparityin access to these services [Rodriguez et al., 2007].

On the one hand, through social programs addressinglow-income people, slums may have access to vital re-sources, which may be less affordable in ordinary neigh-borhoods. This is because slums have better internalcommunication and better contact with social programs,which focus on these settlements. For the same reasonsthese slums also perpetuate themselves through political“clientelism”: the practice of giving preferential treatmentto a particular interest group in exchange for its support.

The principal poverty indicators suggest a worrying pic-ture of increased inequality. The threshold of indigenceor extreme poverty is defined by INDEC as the incomeneeded, at a given time, to buy a market basket of con-sumption goods for a basic amount of daily calories,avoiding malnutrition. Similarly INDEC defines the pov-erty level as the income needed to buy a larger basket offood, plus some basic goods and services. The populationthat falls below each threshold depends on the householdincome and size. The indigence threshold for 2007 wasArgentina pesos (AR$) 442 per household (US$ 147),while the poverty threshold was AR$ 955 (US$ 318). TheArgentine population in 2007 was estimated by INDECto be 39 million. The total population of the destitute wasestimated to be almost 4 million, while poor peopleamounted to 11.5 million in 2006. These numbers havefallen sharply since the economic crisis of 2001-02. Thecorresponding figures for 2002 were 10.4 million and 21.8million respectively.1.2. Energy policy initiativesThe most important observation regarding policies aimedat mitigating energy poverty in urban areas is that no gen-eral policy has been specified or defined on the subject.Certain public policy initiatives and others stemming fromprivate initiatives address specific aspects of the problem.However, none of them seems to be part of a comprehensivepolicy aimed at mitigating extreme poverty.

Regarding energy policies, the situation has been re-gressive since the new gas and electricity tariffs were es-tablished at the beginning of the 1990s. Only a fewjurisdictions have since then introduced modifications tothe tariff structures. Also, as explained below, the asym-metric devaluation of 2002 – an attempt at amelioratingnegative macroeconomic effects – led to a situation ofcross-subsidies. The complex Argentine energy policy en-vironment comprising privatization and deregulation inthe early 1990s and regulatory changes since 2002 hasprivileged the tariffs of households connected to thepower grid and to the natural gas network at the expenseof industrial, commercial and other users, including of

course households without connection to the natural gasnetwork – which includes slum-dwellers[4].

During the period 1992-2001, AR$ 1 equaled US 1.The peso was devalued at the start of 2002 to a level that,since then, has averaged AR$ 3 to US$ 1. Following de-valuation, maintaining tariffs and fuel prices in US$would have meant an increase of over 200 % comparedto people’s incomes. The government decided to freezetariffs in Argentine pesos at the 2001 value for regulatedenergy sectors (electricity and natural gas), and to levyexport duties on oil and natural gas and their products, inorder to sustain lower domestic prices for unregulated pe-troleum products. The intention was to avoid the full im-pact of devaluation – a rise in prices of domestic energy– on Argentine inflation. It also fixed the level of naturalgas well-head price for domestic supply, effectively freez-ing the wholesale price for natural gas [Kozulj, 2005a].However, it is important to note that owners of gas ex-traction licences exploit reserves already discovered; thusexploratory activity was out of both assumed contractualcommitment and business costs.

One consequence of the devaluation and freeze in natu-ral gas prices is that, while there is virtually a flat tarifffor residential natural gas consumers (and for electricityin GBA, since this is also regulated by the national gov-ernment), the ratio of prices of residential LPG to naturalgas has more than doubled. During 2001 (before devalu-ation) the price of a 10-kg LPG cylinder was AR$ 9(US$ 9). At the time of our field survey, the price hadreached AR$ 25 (about 8 US$), while NG price remainedconstant at around 0.17 AR$/m3 (about US$ 0.06/m3).Thus, urban and peri-urban households without access tonatural gas were affected far more by the devaluation thanthe rest of the population, as confirmed by the case-study(please see Note 4).

National energy policies for the poor have focused onthree main issues: regularization of electricity users in theGBA area illegally connected by means of the so-calledFramework Agreements [Kozulj and Dubrovsky, 2003;Kozulj and Di Sbroiavacca, 2004]; attempts at definingand developing a “social tariff” for electricity users; andthe “Social Gas Cylinder Plan”. All three are describedbelow.

More specific measures have also been implemented.For instance, prepayment electricity meters[5] have been in-stalled by EDENOR, the electricity distribution company ofcentral and northern GBA, in some low-income households.There have also been initiatives by neighborhood associa-tions in order to access the natural gas grid. These exam-ples will be presented in later sections, as they belong tothe case-study scope: low-income residents of GBA.

The Framework Agreements between electricity distri-bution companies[6], local authorities and the nationalgovernment, initially signed in 1994 and most recentlyupdated in 2008, were intended to provide a temporarysolution to illegal electricity consumption (through clan-destine connections). As a part of the agreements, com-mon meters for measuring the consumption of power ofthe entire slums were installed. Thus, about 700,000 GBA


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slum homes were “legalized”, resulting in significant re-duction of non-technical losses, from a general level ofabout 20 % (before 1994) down to 14 % in 1999 [WDI,GDF, ADI, 2007]. Nevertheless it is not possible to at-tribute all the reduction to this single measure. Promisesof slum “urbanization” were made, but there was no com-prehensive strategy for property allocation or for land-useplanning. Absence of long-term plans, lack of structuralmeasures, and the consequent stress on infrastructure trig-gered further interruptions and worsened service to slumsand surrounding areas.

The benefits achieved by the Framework Agreementsin terms of legalized consumption underwent several set-backs, mainly because former illegal users often cannotafford to pay their electricity bills. As previous surveys[Annecke et al., 2004; Haselip, 2003] and our case-studyindicate, the main problem that these consumers have toface is the lack of regular income coming from stableemployment. Thus, the Framework Agreements – and theprepaid meter program – can be considered a solution spe-cifically designed to favor the collection of charges byelectricity companies, but do not guarantee access in apermanent and inclusive way. A similar conclusion wasexpressed in [WEC, 2006] and [Prévôt Schapira, 2002].

Besides the virtual freezing of electricity tariffs sincethe devaluation, the Social Tariff, a special scheme aimedat reducing charges for the poorest consumers – currentlydemanded by both society in general and the governmentin particular – was also postponed.

The tariff revision procedure valid since the early 1990sconsists of a five-year price update, following long-runcost evolution and introducing efficiency gains. Further-more, the methodology for estimating the parameters forhousehold tariffs is based on socially regressive[7] criteriaestablished by the original Regulatory Framework (Na-tional Electricity Regulation Law 24.065/1992, seehttp://www.enre.gov.ar/web/web.nsf/TarifasCalculo?OpenPage). The regressive tariff does not favor low-consump-tion users, who are also, in general, those with the lowestincomes [FB, 2004]. More recent legislation appears tobe introducing slight changes (see Note 4).

The Social Gas Cylinder program is another instrumentaimed at promoting energy access for poor households. Itwas implemented by the Argentine government in 2004and supported by the LPG distribution companies. It wasa palliative measure aimed at defusing the crisis in thepoorest sectors. It enabled the poor to buy 10 kg gas cyl-inders at 624 sales outlets throughout the country at asubsidized price[8].

The ACIJ (Asociación Civil por la Igualdad y la Justi-cia, Civil Association for Equality and Justice) formallydenounced the plan, saying that it was not coping withits objective of mitigating household LPG price increase(as it is not a regulated market). The number of salespoints was not enough to cover those households withoutnatural gas service. Furthermore, public promotion of theprogram’s existence and conditions to benefit from it wasnot successful, while absence of technical oversight onquality, safety and maintenance of cylinders was also

observed. For instance, a liquid residue was found insideinspected cylinders, explaining its low calorific value,while problems with the cooking pans and containers usedin combination with the LPG cylinders were also reported[ACIJ, 2007].

For 2007, depending on the information source, theshare of subsidized social cylinders reached between 3 %and 9 % of total sales (51 million for the 10 kg cylin-ders[9]), suggesting that the program was not reachingmost of potential beneficiaries [ACIJ, 2007; Daher, 2006;see also Chamber of Argentine LPG Companies informa-tion at http://www.cegla.org.ar]. It is assumed that in GBAmost of the households consuming LPG are poor, hencethis analysis will focus on investigating to what extentchange in policies will be required for this fuel to helpenergy access for the poor within the area under study(see Note 4). This is not true for the country as a whole,since there are many regions, accounting for 40 % of thecountry, that are not reached yet by the natural gas network.

The price of LPG underwent a significant increase, trig-gered by the 2002 devaluation and immediate crisis inconsumption, reinforced by the lack of regulation of itsmarket. Thus, while annual household LPG consumptionremains around the same level (600,000 tonnes in 2005)– leaving the increasing household requirements unsatis-fied – LPG exports registered a record four-fold increasefrom 1992 to 2004 (according to National Energy Bal-ances published by the Energy Secretariat). Obvious com-mercial reasons lie behind this situation: there is a clearrelation between increased production and exports, whiledomestic demand remains unsatisfied. National Law No.26020 establishing the LPG regulatory framework waspassed in 2005, but it has not been enforced yet. A recentagreement between government authorities and the com-panies established an LPG cylinder price for all users ofaround US$ 12 per GJ, compared to a market price aboveUS$ 22 per GJ.

Finally, in order to illustrate the lack of success of iso-lated policies, two graphs showing total Argentine house-hold energy consumption are presented. Figure 1 showsan estimate of household energy expenditure including allsignificant sources: natural gas, LPG, kerosene and elec-tricity consumed within the home (transport energy is ex-cluded). Monthly energy consumption is presented byincome decile (d01 or the first decile comprises the poor-est 10 % of households, while d10 or the tenth decileshows the energy consumption of the richest 10 %). Asexpected, poorer households spend a greater part of theirincome on energy.

Figure 2 shows choice of cooking fuel as a function ofhousehold income (classed by quintiles, q1, poorest, toq5, richest) for urban households in the whole country.Note that natural gas or LPG is used as a cooking fuelby virtually all households, so that energy access forcooking fuel is not a major problem. At upper incomelevels, the use of LPG falls off, and other fuels disappear.Note that since the figure represents the whole of urbanArgentina, LPG consumption by high-income householdsindicates cities not reached by the NG pipeline.


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2. Study objectives, methodology and scopeIn order to complement the available information relatedto energy consumption by poor households, a combinationof qualitative and quantitative methods was applied. Case-study slums and poor residential areas were approachedin order to collect primary information on energy con-sumption patterns. This was combined with qualitativeanalysis, particularly through in-depth interviews withrelevant informants in close contact with slum reality, in-cluding health service professionals or community centrestaff. These testimonies allowed not only the adjustmentand focus of the survey questionnaire, but also comple-mented the analysis. The community-based NGO men-tioned earlier, FOC, already working within the slums,provided a unique opportunity for approaching the prob-lems faced by households for satisfying both domestic en-ergy needs and a few productive energy uses or energyservices.

FOC works with young workers who belong to the slumand have been successfully integrated into several socialand productive activities beyond the slum, coordinated bythe NGO. Moreover, the survey fieldwork was done bythree of these young collaborators, instead of the usualuniversity students or survey staff, as they were more ca-pable of getting the required information and movingwithin the slums.

The objective of the survey was gathering informationon the satisfaction levels of energy needs. Basic energyrequirements by use were estimated, adjusted to the en-vironmental and climatic conditions of the studied popu-lation, and then these parameters were contrasted withthose obtained in the survey.

The information compiled can be an important input

for policy and program design aimed at improving energyaccess for poor urban homes, and thus their quality of life.

The entire GBA metropolitan area represents one-thirdof the country’s population of 39 million. The total slumpopulation in 2005 encompassed approximately 128,000inhabitants in the city of Buenos Aires and around 1.7million people in the rest of GBA, according to the city’sHousing Institute (Instituto de la Vivienda de la Ciudadde Buenos Aires[10]). The case-study included slums andpoor neighborhoods of Villa Fiorito and Budge within theLomas de Zamora District or Municipality, adjacent to thesouth-eastern border of Buenos Aires city (see Figure 3).Only a fraction of poor people, defined broadly as thosewith per capita income below US$ 2 a day, live in slums.

The proximity of slums to Buenos Aires city providesconvenient physical access to many employment opportu-nities. Additionally, a parallel growth of both slums (cir-cles in Figure 3) and country clubs (stars, representingclosed rich neighborhoods usually with private securityservices) is identified. Remarkably, as slums grow eveninside the city, high-income housing seems to bridge theseneighborhoods. Moreover, during the last 15 years manyexpressways have been completed, and they initially im-proved access to places remote from downtown BuenosAires. These expressways are already saturated, however,by the ever-increasing number of private vehicles.

Two satellite images, downloaded using the popularsoftware Google Earth , are presented. Figure 4 showsa section of the case-study slum area. Figure 5 shows atypical middle-class neighborhood and is included forcomparison. The two sites are located barely 2 km apart.The slum lacks clearly defined streets, while the boundarybetween houses is fuzzy.

Figure 1. Average household energy expenditure in 2004 and national total household energy expenditure as % of national total household incomeSource: Authors’ estimates based on INDEC data: Annual Expenditure Survey of 2004 and the National Input-Output matrix


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3. Analysis and findingsAs was already mentioned, the objective of the study isthe identification of unsatisfied energy needs, and thenthe assessment of the most appropriate sources that shouldbe encouraged in order to fulfill the basic needs. Verylittle information was found regarding productive activi-ties carried out within the poor neighborhoods; thus, fur-ther analysis is desirable. Nevertheless it is interesting tonote the existing potential for encouraging construction-related activities. On the one hand many slum peoplework in the formal and informal construction sector (it isthe main source of income for at least 23 % of surveyedhouseholds), and on the other hand there is a need forimproving the buildings where they live. In this sectionthe existing information regarding energy consumption inpoor neighborhoods in GBA is presented giving, wherepossible, a notion of the relative importance of energy interms of income and expenditure. However, the limitationsof existing data indicate the urgent need for further infor-mation-gathering, in order to support public energy policiesand initiatives towards the well-being of the urban poor.

3.1. Fuel usage by the poor and related actionsBefore addressing the specific case-study, conducted insouthern Buenos Aires, a brief description of availablefuels in the poor GBA areas and related problems is pre-sented, followed by the Merlo prepayment meter surveyand the case of Cuartel V in the Moreno gas network(please see Figure 2).

Electricity is the most universalized energy service.However, its quality and reliability is not homogeneousand illegal connections aggravate the situation. In the caseof slums where some productive activities are sometimescarried out using domestic connections, the installationmay be inadequate: for instance, it is common to find carrepair workshops that use welding machines and smallelectric motors, which would be better served by three-phase supply rated at a higher power capacity. Other typesof activities – such as tailoring and commercial cooking– can also cause problems, though perhaps less severe.

Besides electricity, the most popular fuel is LPG. How-ever, given their inability to pay for the cylinders, and some-times the lack of availability, people also use charcoal

Figure 2. Percentage-wise consumption of various cooking fuels used according to quintiles of household income for all urban households in Argentinain 2006Source: Authors’ estimates based on INDEC data, as in Figure 1


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(broadly available due to the popular Argentine dish theasado[11], but quite expensive if used as basic fuel), scrapwood, cardboard and other solid waste. The applianceused with these fuels is a grill consisting of an iron con-tainer with welded legs, widely employed in the slums.It is usually lit outside the house, and when the fuel(mainly charcoal) is burning, the appliance is carried in-side for cooking and space-heating. During winter, whenspace-heating is of core importance, most domestic acci-dents take place. Acknowledgement by the authorities ofthis issue is very rare.

Note that 85 % of the households without access tonatural gas consume LPG in 10 kg cylinders, whereas theremaining 15 % use charcoal, firewood, paper, kerosene,plastic, vegetable/animal waste, etc. Additionally, it is es-timated that by the end of 2004 LPG represented between50 % and 60 % of the total basic service expenditure oflow-income households [De Dicco, 2005]. Looked at an-other way, it accounted for 22 % of the basic “welfare”payment to poor households, termed “social help plan”[Daher, 2006].

Regarding kerosene, a lack of availability was denounced

by the FECRA (Federación de Ejecutivos de Combustiblesde la República Argentina, Fuel Business Entrepreneurs’Association[12]), which comprises (automotive) servicestations, most of them outside the vertically integratedpetrol companies. The supply situation for both fuels(kerosene and LPG) reflects an oligopolistic market struc-ture and a lack of adequate monitoring and control by theregulatory entity.

Besides, charcoal prices have increased steadily since2002, thus affecting energy access even to those withoutaccess to kerosene or LPG.

Since electricity and gas are more relevant to poorhouseholds in the Buenos Aires metropolitan area thancharcoal, kerosene, and firewood, this study focuses onthe former two energy sources.

One way proposed for improving electricity access, ap-plied in South Africa, is the use of prepayment meters.The electricity distribution company serving the northernGBA area conducted a pilot project in Merlo (see Figure3) during 2002-2003, with the purpose of helping around4,300 households, many of whom could be defined as“newly poor”, to reduce their electricity bill payment

Figure 3. Greater Buenos Aires, showing principal slums and case-study locations.

High, moderate, and low levels refer broadly to socio-economic profile. Moreno, Merlo and Lomas de Zamora municipalities are mentioned in thisarticle. Both Villa Fiorito and Budge case-study areas belong to the Lomas de Zamora Municipality.Source: [Torres, 1993], cited in [Prévôt Schapira, 2002]


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problems. It was supposed that by paying in advance, theexpenditure would be more easy to monitor, avoidinglarge bills every two months, which was the previousmode of payment. One relevant feature of the area wherethe pilot project was conducted is the lack of a naturalgas connection [Annecke et al., 2004]. Energy sourcesused for cooking and heating in these households areshown in Table 1.

As Table 1 shows, there was some shift in fuel choicefollowing the introduction of prepayment meters, but thisshift was significant only for space-heating. If the situ-ation before the prepayment meter is considered, LPG wasthe most important fuel for cooking, while electricity wasthe source most used for water- and space-heating. Thisholds even if all biomass sources are consolidated (23 %for electricity versus 21 % for wood plus charcoal). Themost noticeable effect after adopting the prepayment de-vice is the use of less efficient sources (wood and char-coal) for house-heating and the slight reduction of energyservice satisfaction. Of course these comments should beconfirmed by further investigation, as external factors like

the worsened economic situation of households could bedistorting the analysis.

Note that, following the installation of the prepaymentdevices, the satisfaction of space-heating needs actuallygets slightly worse. Also, considering that the samplehouseholds use the more expensive water-heating options(electricity and LPG), there is an access issue with respectto the low-cost option, natural gas.

A more complete study of household energy consump-tion patterns should include an evaluation of applianceefficiency and building insulation. These considerationswould be better approached if basic needs were definedand then compared with real consumption, as was under-taken for the Villa Fiorito and Budge case-study.

An electricity tariff study [Bertero et al., 2005] alsoleads to a justification for subsidizing low-income house-hold LPG or kerosene consumption, instead of electricitytariff, in order to discourage thermal uses (cooking,house- and water-heating) resulting from a low electricityprice. Such uses can be discouraged by limiting electricitysubsidies to very small consumption levels, say below

Figure 4. Satellite image showing a part of one case-study slum, Villa Fiorito


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about 150 kWh a month, with geographical restrictions(e.g., exclude weekend houses). However, subsidies can

hardly be free of collateral effects. Further analysis is nec-essary to identify better which subsidies meet the mini-mum energy requirements of poor households, as well asexplore alternative market-based solutions. Subsidiesshould not encourage energy waste, while consumptionlevels above the defined threshold should be billed at in-creasing tariffs [WEC, 2006].

Turning to the case for natural gas infrastructure ex-pansion, an interesting community-based alternative wasimplemented in Cuartel V, a 91,000-home neighborhoodof the Moreno district (see Figure 3), comprising mainlylow-income families [Gas Natural BAN, 2006]. The gasnetwork program involved around 4000 families, situatedalong 70 km of gas pipes. A 3015-household survey car-ried out in August 2002 [Fidanza, 2002] concluded thatthe project was feasible, and that the households werewilling to participate in it, even though the averagemonthly income was only AR$ 339 (US$ 113) and only41 % had formal employment, which is a prerequisite forrequesting a gas connection.

This proposal was implemented in a context of reduced

Table 1. Breakdown (in percentages) of energy sources for cookingand water- and space-heating, Merlo case-study

Use ( )

Source ( )

Cooking Water-heating

Space-heating

Before/afterprepayment meter

Wood 2 3 7 14

Charcoal - - 14 17

Kerosene 1 1 10 11

Electricity - 49 23 15

LPG 97 45 14 10

None of theabove addressesuse

- 2 31 34

Total 100 100 100 100

Source: Annecke et al., 2004

Figure 5. Satellite image of a middle-class neighborhood, close to the case-study slum in Villa Fiorito


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investments in new connections from gas utilities (gas dis-tribution companies) after the 2002 devaluation, and hugedifficulties faced by potential new customers in payingthe connection charge. Connection required proven landtenure, meaning that each household must have its respec-tive property title. Some similarities with slums can befound: a clear chance of money savings, if LPG and elec-tricity are to be replaced by natural gas; the need for com-munity organization for finding better financing terms(meaning interest rates, repayment term, and income re-quirements) than those usually available; and additionalfinancing sources.

Two costs are involved, the local gas distribution net-work expansion of around AR$ 3.9 million (US$ 1.3 mil-lion); and the cost of house connection, usually chargedto the customer, totaling around AR$ 2.4 million (US$800,000). A fiduciary fund financed the connection costfor customers, while the gas utility covered the networkexpansion cost. The fiduciary fund is a legal instrumentthat allows the creation of a special fund from severalkinds of assets (money, machines, buildings, land, tools,etc.) that can only be employed for a specific purpose.

Funds were gathered (from the Buenos Aires govern-ment, World Bank and the gas utility GasBAN) first andthen they were given to a local NGO, Foundation for theSocial Home, as fund manager. Thus, with very low fi-nancing cost and with locally positive impact, like con-tracting unemployed local people for up to 80 % ofunskilled labor requirements, the project was successfullycarried out. Finally the new natural gas customers wouldpay for the cost of their own gas connection through theirfuel savings [Fidanza, 2002; Gas Natural BAN, 2006].

The total monthly expenditure of all participatinghouseholds in natural gas substitutes (for thermal serv-ices) is about US$ 33,000, accounting for 14 % or theirincome. LPG makes up about 68 % of that figure, fire-wood 12 %, kerosene and electricity 8 % each; and char-coal 2 %. If piped natural gas replaces LPG, theexpenditure is estimated to come down to US$ 7,500 permonth, or 3 % of local family income, a saving of 78 %[Fidanza, 2002; Gas Natural BAN, 2006].

Although it is considered a positive approach towardsservice provision [Zanca, 2007], this strategy should becarefully monitored, as the fiduciary fund faces the sameobstacle as the so-called “framework agreements” forelectricity service provision to slums: a future lack of con-tinuity in household income. Finally, it must be empha-sized that the alternative of community participation andthird-party financial assistance should not absolve theconcessionaire, which is the main entity responsible forpublic service supply, of its obligation.3.2. Case-study description3.2.1. Characterization of neighborhood and energyconsumptionA characterization of energy consumption of dwellers ofpoor urban areas in Budge and Fiorito is presented below(see Figure 3). A total of 106 dwellings were surveyed inNovember 2007; they were inhabited by 109 householdswith 538 people (an average of 4.9 people per household).

Regarding energy consumption for productive activi-ties, the sample indicated that less than a fourth of thehouseholds work within the slum limits. The main activitywas the sale to neighbors of household products or arti-cles, including: prepared food (13 %) cooked with char-coal or wood fuel, because the taste and flavor arepreferred; and clothing-related shops (7 %) includingsmall handcrafted finished leather products, cloth-mend-ing and sewing, both for retail sales to neighbors and forresale to bigger shops.

Although these are all low-income households, their en-ergy needs are mostly met by high-quality fuels, namelyelectricity and LPG. All households use electricity and92 % use LPG. The other fuels consumed are charcoal(23 % of households), kerosene (7 %), natural gas(4 %)[13] and biomass (wood) waste (4 %). No firewoodas such is used in this area.

Charcoal is used mostly to supplement LPG consump-tion. In the case of cooking, its use is culturally deter-mined and it is also used for the preparation of take-awayfood, which, in some households, contributes significantlyto family earnings.

Firstly, useful energy consumption in the householdssurveyed is addressed, since it is considered a better in-dicator – as compared with final or net energy – of energyuse to meet specific needs. The useful energy is theamount of energy effectively used for a particular service,for example cooking, once the losses derived from thedevice or appliance have been deducted. That is, usefulenergy is final or net energy minus conversion losses de-rived from use. The objective is to identify the level ofsatisfaction of needs with the associated energy require-ments. Thus, the advantage of useful energy analysis isto introduce in the comparison and discussion, not onlythe heating value of fuels, the hours of functioning andcapacity of the appliances, but also the efficiency of theequipment. It is possible to employ this approach becausethe survey covers homogeneous socio-economic house-holds, with very similar appliances for every energy use(e.g., the 10 kg LPG container) within the same geo-graphical area. The survey asked for both which equip-ment is employed for each energy use[14] and which fuelsthe households purchase on a regular basis. Informationregarding the frequency of use of every appliance wasalso surveyed.

In other words if we only consider the net energybought for cooking using a bag of charcoal in a burner(assumed to have a 10 % efficiency), and compare it withthe net energy bought for cooking using a 10-kg LPGcylinder (assumed 45 % efficiency), we would lose im-portant information directly related to satisfaction ofneeds. However, it is our intention to determine the degreeto which different energy needs are satisfied. The extentto which the need is not satisfied will be larger in thosecases with smaller energy consumption, poorer fuel qual-ity, and more inefficient appliances; the last two stronglydepend on fuel choice while the last also depends on ap-pliance design. Please see Appendix A for examples oftypical appliances, hours of use and assumed efficiencies.


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Table 2 expresses net energy in the usual commercialunits. Table 3 is a matrix showing estimated useful energyconsumption by fuels and uses in the households sur-veyed. Useful energy consumption totaled 8.127GJ/household per year, which represents an annual usefulenergy consumption of 1.645 GJ/person.

Thus, as shown in Table 2 the average surveyed house-hold uses 1.75 MWh per year of electricity, with foodpreservation being the largest end-use consumption; 12LPG cylinders of 10 kg for cooking and another 3 forwater heating; and finally 17 bags of charcoal (4 kg each)for cooking and space-heating.

Table 3 shows that the largest component of useful en-ergy use is cooking, which accounts for 34 % of thehousehold total, followed by food preservation (21 %)and water-heating (21 %). Space-heating and space-cool-ing energy consumption are relatively low: 12 % and1.2 % of the total, respectively. Other appliances (mainly

irons, washing machines, sound systems and TV sets) use10 % of the total, and lighting, 0.5 %.

The main contribution to useful energy needs is elec-tricity, which contributes 51 % of the total consumptionin the household, followed by LPG, 39 %, and charcoal,5 %. The use of electricity for heat, mainly water-heatingand space-heating, is relatively high, unlike in the case oftypical middle- and upper-income households. Manyslum-dwellers are illegally connected to the electricitygrid, or do not pay the electricity bill. The distributioncompany cannot discontinue the service without causingserious conflicts with the community. Nevertheless only15 % of the surveyed homes declared being directly orindirectly illegally connected to the grid.

As indicated net (or final) energy consumption is theamount of energy reaching the house. Net annual energyconsumption in this sample totals 17.18 GJ/household (seeTable 4). The largest component of end-use consumption

Table 2. Fuel consumption by end-use: Villa Fiorito and Budge case-study – November 2007 (per household per year)

Source ( )Use ( )

LPG NG KE CH BR EE

kg m3 liters (l) kg kg kWh

Lighting 215.0

Cooking 124.3 5.2 2.8 47.9 7.0 5.4

Water-heating 25.0 9.9 5.7 12.9 307.0

Space-heating 3.8 2.7 3.1 41.4 0.8 182.9

Food preservation 746.6

Space-cooling 28.9

Other uses 261.6

153.1 17.8 11.6 102.2 7.7 1,747.4

Source: Authors’ estimates

Note

LPG = liquefied petroleum gas; NG = natural gas; KE = kerosene; CH = charcoal; BR = biomass residues; EE = electricity

Table 3. Useful energy consumption by fuels and end-uses: Villa Fiorito and Budge case-study – November 2007(MJ/household/year)

Source ( )Use ( )

LPG NG KE CH BR EE Total

Lighting 42 42 0.5 %

Cooking 2,566 92 34 84 4 17 66.8 34.4 %

Water-heating 515 172 67 34 883 1,675 20.6 %

Space-heating 80 46 42 2803 1 528 23.4 12.0 %

Food preservation 1,746 1,746 21.5 %

Space-cooling 92 92 1.2 %

Other uses 796 796 9.8 %

Total 3,157 310 147 402 8 4,103 8,127 100.0 %

38.9 % 3.8 % 1.8 % 4.9 % 0.1 % 50.5 % 100.0 %



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is LPG with 41 % of the total. This is followed by elec-tricity (37 %), and charcoal (16 %).

The average efficiency of energy consumption obtainedby dividing total useful energy by total final energy(8,127/17,179) is 47.3 %. This relatively high value, ascompared with household consumption in Latin America,is a consequence of the high share of electricity and LPGin the consumption pattern of the households surveyed.Biomass waste and charcoal are the fuels with the lowestefficiencies.3.2.2. Unmet basic energy needsIn order to determine unmet basic energy needs of thehouseholds, a set of appliances and an energy consump-tion level – considered necessary for a basic quality oflife for the families – is defined. Below this threshold,deprivations or unfulfilled needs might be recorded. Thisbasic level of energy consumption by use is called basicenergy requirement[15], and it is estimated in useful en-ergy. The key assumptions defining basic energy needsare shown in Appendix A.

The average household comprises five people living ina house made of cement blocks or bricks and a corrugatediron roof, with a kitchen/dining-room, one bedroom anda bathroom. For the estimate of useful energy, a type ofequipment technology as is normally used in the neigh-borhoods surveyed has been considered. In the case oflighting, incandescent lamps have been considered. Forthe estimate of basic useful consumption of water-heating,a level of 30 liters (l) per household per day has beentaken into account, with an annual average inlet (cold)water temperature of 15º C and a hot water temperatureof 60º C throughout the year.

For an average household, basic annual requirementsof useful energy total 7.147 GJ/household (see AppendixA). Then, these basic requirements for each household areadjusted according to the peculiarities of each of thehouseholds surveyed, according to the following criteria:

cooking and water-heating, according to the numberof people in the household;lighting, space-heating and space-cooling, according tothe number of rooms (kitchen/dining-room and bed-

rooms) in the house; andrefrigerator and other devices, same basic requirementsas average household.

Thus, basic requirements in terms of useful energy foreach of the households surveyed are estimated, and arethen compared with useful energy consumption as esti-mated from survey data.

The level of satisfaction of energy needs can be deter-mined in two ways. First we can determine the numberof families whose energy consumption falls below our es-timate of the threshold to cover basic energy needs, foreach end-use.

Most households – 70 % of the sample – have three ormore end-uses with unfulfilled basic requirements. Fur-thermore, the uses with smallest satisfaction levels arespace-cooling, for which the basic threshold is not reachedby 85 % of the households; followed by lighting (72 %);space-heating (71 %); water-heating (54 %); and cooking(47 %)[16]. Refrigerators shows the highest level of basicrequirement satisfaction, with 93 % of all householdshaving a unit, while only 20 % of families do not reachthe basic threshold for other devices.

Another way of looking at the level of satisfaction isthe degree to which the total energy consumption of theentire sample falls short of the minimum if all householdswere meeting their basic energy needs for each use. Herewe eliminate the energy use of households that consumemore than the minimum. The procedure is described be-low and the results are shown in Table 5.1. They are estimated by use, and by comparison with

basic useful energy consumption standards that willfulfill a quality of life considered basic or minimum.Therefore, a level of real useful consumption higherthan the level of the basic requirement does not meanthat consumption has reached an optimum or desiredlevel.

2. Unmet basic energy needs (UBEN) are determined foreach use of energy, irrespective of the rest of the uses.This is so because there can be no substitution betweenneeds or uses.

3. Consequently, the UBEN of a household and of the

Table 4. Net energy consumption by fuels and final uses: Villa Fiorito and Budge case-study – November 2007

(MJ/household per year)

Source ( )Use ( )


Lighting 775 775 4.5 %

Cooking 5,699 180 96 1,302 54 21 7,357 42.8 %

Water-heating 1,147 343 197 352 1,105 3,149 18.3 %

Space-heating 172 96 109 1,126 4 657 51.8 12.6 %


Space-cooling 105 105 0.6 %

Other uses 942 942 5.5 %

Total 7,022 620 402 2,784 59 6,293 17,179 100.0 %

40.9 % 3.6 % 2.3 % 16.2 % 0.3 % 36.6 % 100.0 %



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total sample are estimated by adding up the differencesbetween the levels of real useful energy consumptionand basic requirements for each use, only when con-sumption levels are below basic requirements.

4. Basic energy needs are considered unsatisfied onlywhen consumption levels are lower than 90 % of thebasic requirements for the use.

Table 5 shows that 24 % of the overall basic energy re-quirements are unsatisfied.

The shortfall is highest for space-heating (where 55 %of basic requirements are unfulfilled); space-cooling(53 %), water-heating (31 %) and lighting (25 %). Cook-ing, refrigeration and other devices have considerablylower proportions of unfulfilled requirements.

Although total useful consumption and total basic re-quirements reflect only aggregate energy use, they reveal,to a certain extent, the general situation of a householdregarding energy shortages. Thus, the household with thehighest unfulfilled requirement has a UBEN of 74 %,while 36 % of the households have unsatisfied requirementsranging between 25 % and 50 % of their total needs.3.2.3. Energy expenditure dimensionThe main expenditure items declared in the survey arefood (87 % of households) and travel (9 %). By asking“Which are the two largest expenditure items?” and “Howmuch do you spend on each?”, we intended to find quali-tative information and reduce the strategic answer prob-lem, arising from asking for the monthly income. Otheritems mentioned are, in order of relevance, medicine, nap-pies and cellular phone service. Energy sources like LPG,kerosene and electricity were mentioned only twice, al-though their high price was frequently declared to be aproblem. Results are shown in Table 6.

Daily energy cost for the poorest households wasaround AR$ 6 for the bag of charcoal, used for coveringvery poorly main thermal daily needs. By thermal wemean cooking, and home- and water-heating, especiallyaddressed as they present feasible fuel substitution options– unlike lighting or electrical appliances. Those families– the majority – consuming LPG spent around AR$ 2daily to cover thermal energy needs, which can be reducedto almost half an Argentine peso if natural gas is used.

These three figures (AR$ 6, 2 and 0.5) give a compara-tive idea of the expenditure needed by the families forenergy supply. If compared with the lower values (AR$ 10and 2.33) in Table 6, which reflects a slum family situ-ation, then expenditure on energy (e.g., charcoal) con-sumed just for basic energy uses can reach as much ashalf of the family’s main two expenditure items.

A more detailed picture (see Table 7), using averagetariff for electricity – without considering whether it ispaid or not – and natural gas, and real field study pricesfor other fuels bought by slum households, contains awarning about the share of income necessary to buy ex-isting levels of energy at current prices.

The poor profile of surveyed families is illustrated bythe 54 % of total energy expenditure spent on cooking.The importance of most basic energy uses or services re-flects a relatively low standard of living. It is expected

that as income increases other less basic needs would beaddressed. Regarding the sources, LPG represented 52 %of total expenditure while electricity took 22 %, and char-coal accounted for 21 % of the total expenditure on en-ergy. These shares must be considered with care, as theyinvolve averages, hiding most poor slum households’ con-sumption patterns. Finally when the relative efficienciesof the appliances are considered together with energyprices, the finding of which energy sources should be ad-dressed in order to improve their quality of life is unam-biguous. The substitution of charcoal and kerosene byLPG should be encouraged, not only to reduce family ex-penditure but also to reduce energy consumption levels(in net energy terms), and to make the energy choicecleaner and safer.

Moreover, the total energy expenditure represented, inDecember 2007, 14 % of the cost of the indigence-levelbasic basket of food (AR$ 442) mentioned earlier. Simi-larly it accounted for 6 % of the officially defined povertyincome (AR$ 955), 41 % of the most important (in termsof number of beneficiaries) social welfare plan for house-holds in Argentina (AR$ 150), and 27 % of the unem-ployment subsidy (AR$ 225).

To cast light on these figures some further descriptionis needed. Following macroeconomic reforms of the1990s, many people became unemployed. In 2002, a so-cial welfare program called Heads of Household (Jefes yJefas de Hogar) was established. It provided a lump-summonthly subsidy to unemployed poor families, in order toafford some relief from the structural unemployment situ-ation. Later on, an unemployment insurance was estab-lished. The figures described belong to specific monetaryincomes, which are in turn related to the cost of a basicenergy basket, in order to understand the incidence of theenergy-related expenditure on poor families. By this weintend to illustrate the infeasibility (unviability) of the ef-forts towards improving the energy situation of the urbanpoor without a clear and focused subsidy policy. Unfor-tunately this is not compatible with the current situationof price distortion, triggered by generalized and poorlyfocused subsidies.

Table 5. Unsatisfied basic energy needs: total for all surveyedhouseholds (MJ of useful energy)

Use Basicrequirement

(A)

Unfulfilledrequirement

(B)

B/A

Lighting 5,359 1,340 24.9 %

Cooking 271,318 21,270 7.8 %

Water-heating 178,827 55,603 31.1 %

Space-heating 191,388 105,722 55.2 %


Ventilation 18,700 9,965 53.0 %

Other uses 59,581 2,428 4.1 %

Total 883,750 208,303 23.6 %



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4. Recommendations and policy directionsThis article has emphasized the need for public policiesfor coping with both the housing or land tenure issue anda broad macroeconomic employment policy, which are themain structural obstacles towards improving the qualityof life of the urban poor, especially slum inhabitants, byincreasing their access to modern energy sources and serv-ices. On the other hand it has provided some illustrationof possible improvements of poor urban-dwellers well-be-ing, e.g., subsidizing LPG price, and in the longer runreaching the natural gas network to these households,once the tenure of their homes is formalized. Furthermore,in the case of water and gas supply, limitations arisingfrom house quality and tenure, as well as legal status, aredifferent from those pertaining to the electricity customersconnected to the overhead supply grid. As stated earlier,there are no comprehensive schemes for formalizing ille-gally occupied land or houses. Some progress was madewhen the “Framework Agreements” were signed, but timeproved that they were just expressions without action.

In general terms, the growing importance of large cities,as a consequence of the economic growth pattern that hasexisted since the industrial revolution, triggers policiesthat attempt to attack the poverty problem, although theirmain purpose is to ensure governance. As Cravino [2006]pointed out, new sources of tension regarding the housingproblem arise, while focused actions do not succeed inthe fight against poverty. The best proposal is probablythe design and implementation of both effective actionsagainst increased unemployment and better housing policies.

Combining our findings on unsatisfied energy needs,in terms of end-uses and fuel sources, with the monetarydimension, some conclusions can be drawn. As a firststep, the availability of LPG for the poorest householdsshould be secured and monitored by the authorities, as itis the basic fuel for cooking food. LPG should replacecharcoal immediately and as far as possible for slum-dwellers. This will improve their well-being not only be-cause of the access to a less expensive energy carrier, butalso in terms of net energy purchased, as the inefficientcharcoal appliances are replaced by high-efficiency gascooking appliances.

The case-study has revealed some desirable actions andpossible substitution between fuels. In the longer run –together with a land tenure/housing policy – natural gasnetwork connection should be available, as well as a safeand affordable electricity service. Cheaper and betteravailable natural gas will allow meeting space- and water-heating needs, which are largely unsatisfied, improvingthe quality of life of poor urban-dwellers. For exampleby providing natural gas access, energy expenditure forthermal uses could be reduced six-fold, avoiding electric-ity waste or electricity theft arising simultaneously fromsocial exclusion and inefficient use of energy. Facilitatingaccess to efficient appliances and tariff subsidies up to acertain consumption limit[17] would trigger positive im-pacts on the environment, on the quality of life of poorpeople, and their perception of social inclusion.

This longer-term strategy could be feasible by buildingdistribution grids in these neighborhoods and subsidizing,

Table 6. Expenditure on the two main items mentioned (in AR$): Villa Fiorito and Budge case-study – November 2007

Minimum Maximum Average Standard deviation

Daily expenditure on the main item 10 100 32.72 14.00

Daily expenditure on the second main item 2.33 35 19.36 8.47


Note

US$ 1 = AR$ 3

Table 7. Estimation of annual expenditure on energy: Villa Fiorito and Budge case-study – November 2007 total survey (in AR$)

Source ( )Use ( )


Lighting 20.3 20.3 2.8 %

Cooking 310.8 1.3 5.3 71.9 3.0 0.5 392.8 53.8 %

Water-heating 62.6 2.5 10.8 19.4 28.9 124.2 17.0 %

Space-heating 9.4 0.7 5.9 62.1 0.3 17.2 95.7 13.1 %

Food preservation 70.3 70.3 9.6 %

Space-cooling 2.7 2.7 0.4 %

Other uses 24.6 24.6 3.4 %

Total 382.8 4.5 22.0 153.4 3.3 164.6 730.5 100 %

52.4 % 0.6 % 3.0 % 21.0 % 0.4 % 22.5 % 100 %

Source: Authors’ estimates from http://www.montamat.com.ar/ and field study prices, December 2007

Notes

Lower heating value of fuels was used for comparisons. For biomass residues the same price per energy unit as charcoal was used, for simplicity. Relative prices in terms of AR$ perGJ are: LPG 54.45 (AR$ 25 per 10 kg cylinder); NG 7.40 (0.27 per m3); EE 29.08 (104.7 per MWh); CH and BR 55.17 (6 per bag of 4 kg); and KE 54.45 (1.9 per l).


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partially or totally, investments in facilities and connec-tions to the dwellings. Participation of slum-dwellers inconstruction activities and community coordinated actionsmight be a successful complement to actions towards theimproved energy access. Nevertheless, it must be stressedthat the alternative of community participation and third-party funding should not absolve the concessionaire ofthe public service of its main responsibility.

Energy-saving measures are not considered to have asignificant impact on the improvement of supply and en-ergy consumption of these households, at least on a short-term basis, although they might succeed in the long run.There are no simple measures for improving the efficiencyof cooking with LPG. Regarding electricity use, beforeany measure is proposed, illegal users must become nor-mal metered customers, otherwise they have no incentiveat all to reduce consumption. Nevertheless, while compactfluorescent lamps would reduce lighting energy use, thesavings would be relatively small. Although 88 % of thelamps used are incandescent, lighting represents only4.5 % of the total consumption of these households. Im-provement of refrigerator efficiency might take place ashouseholds replace existing units, but the second-handmarket might reduce the adoption of new devices. Finallyit is the increase in personal income that will allow house-holds to have access to better and more efficient units.

Furthermore, meeting basic energy needs would prob-ably lead to a significant increase in energy consumption,both net and useful. Nevertheless, if energy efficiencymeasures are implemented, this increase could be moderated.

Substituting charcoal by gas (LPG in the short run andnatural gas in the long run) for space-heating wouldgreatly improve the efficiency of energy consumption forthis use and its quality. All saving measures in space-heat-ing and -cooling must be closely related to improvementsin construction characteristics of the houses, since thesehave a high impact on energy consumption on these uses.Once again the issue of land/property tenure appears as amajor barrier in getting access to clean energy, meaningnormalizing the present status of dwellings is fundamen-tal. This is a major barrier as the utilities, such as elec-tricity and natural gas, are unable to supply energy tohouseholds without formal property tenure.

In conclusion a first policy measure should aim at mak-ing the “social gas cylinder” available and affordable toall potential LPG consumers, during an initial transitionperiod, as improving the use of LPG is considered a firststep towards natural gas provision in the longer term. Cur-rently, government policy includes export duties for cer-tain products in order to encourage domestic sales. LPGis among the products covered by this policy. However,given that LPG supply remains inadequate, the govern-ment could negotiate a reduction in LPG export dutieswith producers, with the commitment that exports shouldbe subject to the fulfillment of domestic market needs.

In order to provide natural gas, relevant actors – dis-tribution companies, the regulatory agency, neighborhoodassociations – must coordinate actions in order to do thefollowing.

1. Identifying the conditions required for the dwellingsto be connected to the network and for the householdsto become legal users.

2. Determining the time-span of the social tariff – similarto the one proposed, but poorly enacted, for electricity– once the gas network has been paid off. This tariffmust acknowledge typical thermal energy uses of poorhouseholds. The precise threshold of gas consumptionshould consider the higher requirement in winter.

3. Surveying the supply options for standard natural gasappliances for poor households. This would require co-ordination with suppliers of cooking stoves, water-heaters and space-heaters[18].

4. Analyzing the feasible monetary contribution of thehouseholds, providing finance for connection fees atlow interest rates, linked with the savings from theLPG purchased earlier.

5. Considering the potential collaboration of poor resi-dents in the tasks involved, as they might be unem-ployed and have technical expertise.

This will require at least a two-year-long survey (beforeimplementation) and then minimum and maximum annualconnection goals should be set.

Regarding electricity, a plan for the normalization ofelectricity users can be implemented, by means of a setof complementary measures: first, contractual obligationof distribution companies to really include the resident asa new customer; second, definition of a feasible socialtariff for basic electricity consumption within a broadertariff revision in order to eliminate current regressive fea-tures; third, effective cooperation of distribution compa-nies with a broad survey on devices used and legalownership condition of the dwellings, social situation ofthe customer, etc., in order to create a reliable nationaldatabase; and fourth, a consensual process of monitoringand oversight.

Within the strategy outlined an action aimed at substi-tuting inefficient equipment (most of the electrical heatersand incandescent lamps), as part of a rational use of en-ergy (RUE) plan affecting all users, can be developed.Distribution companies could finance new equipment un-der efficiency criteria determined by IRAM (the ArgentineInstitute for Standardization and Certification, no longerknown by its original full name) standards, with the par-ticipation of the manufacturers and the regulatory agen-cies. This would certainly require a careful articulation ofactions and the participation of impartial and well-trainedtechnicians. This proposal can contribute from the pointsof view of both energy efficiency and conservation, andmay help to reduce expenditure on energy, thus alleviatingpoverty.

In addition to the efforts made by distribution compa-nies, the Argentine Census Bureau (INDEC) should in-clude in its Permanent Home Survey data collection aboutdevices used in each type of household, the fuels con-sumed and the estimated energy expenditure, as well asa characterization of the households in order to identifypoverty indicator trends so as to comply with the Millen-nium Development Goals (MDGs), as energy is considered


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a prerequisite necessary to reach all the considered goals,particularly Goal 7 Target 11 related to improving slum-dwellers’ lives. This would be very useful for the follow-through of key energy consumption indicators. On theother hand, national censuses should include an annex forthe survey of energy-consuming devices, and the process-ing of the additional data could be financed by the regu-latory agencies or by other public funds.

The strategy described would contribute to povertymitigation as energy expenditure by the urban poor is re-duced in the future, improving their well-being as moreenergy needs are satisfied. If this is accompanied by plansfor the improvement of precarious houses, securing hometenure and unemployment reduction, it could definitely bean important step towards fulfilling the MDG.

Notes

1. The Greater Buenos Aires (GBA) area includes both Buenos Aires city and the urbanand peri-urban surroundings.

2. A slum created by people being displaced from a disappeared industrial area is differentfrom a typical slum in the border of the city made up of migrants from rural areas insearch of employment and housing. Some Argentine slums originated from populationdisplaced by large construction projects. The slums studied are very old and were notcaused by any of these specific situations.

3. Goal 7, Ensure environmental sustainability; Target 11, Have achieved by 2020 a sig-nificant improvement in the lives of at least 100 million slum-dwellers, the indicator formonitoring progress being the proportion of households with access to secure tenure.

4. Resolution No. 356/2008 (August 2008) of the electricity regulatory agency (ENRE)partially reversed this trend. However, the unit electricity price remains higher for amonthly consumption of 100 kWh, compared to a consumption of 325 kWh, while tariffincreases for consumption above 300 kWh a month. The price increase for very highelectricity use – 600 kWh a month – is only about 20 % on average. Additionally, EnergySecretariat Resolutions Nos. 1070, 1071 and 1080 (all from 2008) established a fundin order to finance subsidies for new LPG cylinders. A single and unique price is si-multaneously established and fixed, aimed at providing subsidized LPG access to alarger share of the population. Nevertheless, the subsidized LPG is still more expensivethan network-distributed natural gas (NG): US$ 12 per GJ compared to US$ 1.5 or 2per GJ of NG.

5. The metering machines are not prepaid, the electricity is prepaid: the meters allow thepurchase of prepaid electricity.

6. There are three companies providing electricity distribution and metering services inthe GBA and La Plata metropolitan areas: EDENOR, EDESUR, and EDELAP.

7. Regressive as opposed to progressive means lower-income customers pay more perkWh than higher-income customers. Thus, a higher share of (lower) income is spenton electricity.

8. National Law No. 26020 LPG Regulatory Framework, Resolution 792/2005 establishinga reduced price (30 % reduction – around US$ 2) for the 10 kg cylinder; and BuenosAires city Local Law No. 1353 (Decree No. 2406/004) “Social Cylinder Program” (aAR$ 10 refund – US$ 3.3 – for every 10 kg cylinder bought by destitute households),both enacted within the framework of the Socio-Economic Emergency National Law No.25561.

9. Nationwide 4.5 million households use LPG. Of the total, 1.42 million are in BuenosAires province. Virtually all the latter are poor households.

10. La Nación newspaper June 17, 2006 at http://www.conicet.gov.ar/diarios/2006/ junio/054.php(last visited on August 13, 2008)

11. Asado is the typical Argentine way of cooking beef: charcoal is mostly used and some-times substituted or complemented by firewood. The cheaper version of asado consistsof choripán (Argentine sausage sandwich) and burgers.

12. El Dia newspaper June 12, 2007 athttp://www.eldia.com.ar/edis/20070612/ economia3.htm# (last visited on August 13, 2008)

13. It should be borne in mind that these homes are somehow outside the targeted popu-lation, as their consumption profile is clearly better than the average. Nevertheless itwas decided to keep them among the studied sample, as the situation is illustrative,considering both the widespread use of natural gas in Argentina and the viability ofthis energy source in slum areas and its proximity to them.

14. An exhaustive database for every appliance was collected, assessing its efficiency,hours of use, capacity, etc. Particularly, the approach considered a maximum and aminimum level of use per year; then, consistency was examined employing other in-formation (frequency of use, amount of energy bought).

15. Unfulfilled requirements or needs for each use are quantified, for each of the householdsand for the sample total, by comparing basic requirements and real useful energyconsumption (as recorded by the survey). For each use, the appliances necessary forthe fulfillment of basic needs, and the power or capacity and number of hours of useper year for an average household are defined. Estimated from [Bravo, 2004].

16. This does not mean that the households do not get enough to eat, rather that theychoose dishes that require less energy to cook.

17. The authors think that around 50-100 kWh/month will be a low enough level. But existinglegislation across Argentine provinces gives a very broad range of electricity consump-tion for the social tariff: starting from 80 kWh/month (Córdoba and Jujuy provinces) upto 180 kWh/month (San Luis province). For more details please see [Bertero et al.,2005]. Although the definition is site-specific, further research and detailed estimationsare needed.

18. In Colombia, the spread of natural gas began from the lowest income strata, whileutilities supplied the required devices. Thus, the 1996-1997 policy was successfullyimplemented, with results that went beyond original expectations.

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Appendix A. Basic energy consumption by fuels and final uses: average case-study household

Uses and devices Power Unit Hours/year kWh/year Efficiency Useful MJ/year

Lighting

1 Bedroom 40 W 548 21.9 0.045 4.2

Kitchen/dining-room 120 W 1,278 153.3 0.045 25.1

Bathroom 40 W 548 21.9 0.045 4.2

Outside 80 W 1,095 87.6 0.045 12.6

Sub-total 280 W 284.7 46.1

Cooking

LPG cooking stove 0.196 kg/hr 420 0.450 1,700

LPG oven 0.224 kg/hr 130 0.450 599

Sub-total 0.420 kg/hr 2,299

Water-heating

Useful energy estimate 1,378

Space-heating

LPG stove 9400 kJ/hr 315 0.450 1,336

Food preservation

Refrigerator 250 W 2,555 638.8 0.650 1,495

Space-cooling

Fan 75 W 360 27.0 0.900 87.9

Other devices

Iron 625 W 98 60.9 0.800 175.9

Washing machine 250 W 130 32.5 0.800 92.1

Audio system 40 W 840 33.6 0.900 108.9

TV set 40 W 980 39.2 0.900 125.6

Sub-total 955 W 506.6

Total 7,147


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energy access in urban and peri-urban buenos aires

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