GAS DISTRIBUTION AND IMPLEMENTATIO N OF ELECTRIC STOVES

GAS DISTRIBUTION

In the country, the situation of the hydrocarbon sector generates concern, because it has a structure of production and refining of derivatives that does not meet the needs of the demand and therefore arises the need to cover this deficit with imports.
According to the statistics of foreign trade of the Central Bank of Ecuador, the import costs of naphtha, diesel and LPG had been increased by 136% between the years 2004 and 2006, reaching US$1,952 million. The 2007 closed with an import volume of 31.6 million barrels, according to forecasts by Petroecuador; i.e. 21% more than in 2006.

The graphic shows how the distribution of domestic gas works, while here it is just produced 620,08 tons of LPG, the rest 2,157,18 tons are imported, with a total of 2777,26 tons of LPG.

For distributors a cylinder of 15kg costs $1,60 while in Peru this price is like 650% more> $19,68 and even higher in Colombia $25,87.
Principal traders of LPG market have a very adjusted percentage of participation with a difference of approximately 6 or 7 percent.

REFINERIES AND IMPORTERS

The private companies are not involved in the import of gas primarily, because this is subsidized by the government and you can't compete. Petroecuador is the importer of gas, the marketing of the product is performed by the private sector. The private traders have the legal authority to buy and distribute.

Three large private companies move the gas market to domestic use (LPG) in Ecuador: Duragas, AgipEcuador and congas. Their power is so big in the economic and political control 90 percent of the market and 60 per cent of packaging.
The figures prove it: Duragas packaged the 36.6 percent; AgipEcuador 32.4; and Congas on 22 percent. The rest corresponds to activity in the rest of enterprises (Autogas,Austrogas, Lojagas), including the state enterprise Petrocomercial.

NUMBER OF DISTRIBUTORS

TRADER

1395 132 830

AGIPECUADOR AUSTROGAS CONGAS

BOTTLING PLANT NUMBER OF VEHICLES AMBATO IBARRA PIFO 1417 CUENCA 108 QUEVEDO SALCEDO 590 MONTECRISTI SALITRAL BELLAVISTA STO. DOMINGO PIFO ITULCACHI SANTA ELENA ISIDRO AYORA

1298 457 568 220

DURAGAS ECOGAS GASGUAYAS ESAIN

913 212 194 15

10 73 123

GALO ENRIQUE PALACIOS ZURITA YAGUACHI LOJAGAS CATAMAYO MENDOGAS RIOBAMBA

8 95 65

ESMERALDAS PENINSULA PETROCOMERCIAL SALITRAL - BOTTLING SHUSHUFINDI

CONSUMERS
Last year were recorded sales of over USD 130 million,
according to the Central Bank of Ecuador. However, in the review of the consumption levels warns that about 80% of LPG consumed in the country is imported. Only 20% of it is local production.

Figures of EP Petroecuador and Asogas show that the

dispatch and LPG demand does not grow as 5 or 10 years ago. In 2003, the annual growth of deliveries were 6.15 %. But in 2011 the variation was lower: 2.88 %.

PARTIES AFFECTED BY THE ELIMINATION OF THE SUBSIDY

PRODUCERS The elimination of gas subsidy would result in the reduction of the domestic demand of LPG homes, this reduce the imports of this well and would become in a certain way to Ecuador in a more competitive country to the level of exporter of oil derivatives, according to the impact that this has at the global level. The price would be the same as international prices, about $16, which would reduce the illegal sell and buy of gas in the borders of Ecuador. DISTRIBUTORS The elimination to the benefit of gas for domestic use would represent a great impact on the gas distributors and the production of the same cylinder, for as soon as the purchase at the national level drastically decrease, in the same way for the stores selling appliances would have beginning to commercialize electric cookers and leave aside the conventional gas.

PARTIES AFFECTED BY THE ELIMINATION OF THE SUBSIDY

DOMESTIC CONSUMERS Consumers of LPG in homes will have to acquire electric cookers to be part of this new proposal, this does not mean that it will no longer distribute the gas but if there is a drop in demand in the same, increasing demand for electrical cookers that have an average value of $500. The government shall be responsible for distributing this type of cookers among Ecuadorians and assume the initial expenditure, however for certain citizens the cost that would generate buy an electric cooker would be excessive in the long-term.

RESULTS OF MISUSE OF LPG

Benefit for high income people 22% to the poor 58% uppermiddle income
Smuggling at borders with Colombia and Peru

Illicit handling

USE OF LGP IN ECUADOR

USE OF LPG USE OF LPG

95% 59%

22% 5% 4% Smuggling Vehicles Industrial and Commercial Domestic 11% USE OF LPG USE OF LPG

The cylinder of 15 kilos has a cost of $1.60 while the real value is $ 12, which means a benefit equivalent to 650% compared to its actual price. However, not all those who benefit from this grant are needy sectors. The 8% of the gas subsidy is intended to the poorest 20% of the population, while 33% of the grant is intended to the richest quintile of the population, according to a study of the Social Front.

 Explanation: The State pays USD$12.13 for each 15 kg gas cylinder while

the bottling plant pays USD$0,50, couriers pay USD$1,02 for each cylinder and the collection center pays USD$1,23 for each cylinder and finally small distributors pay USD$1,51 for each cylinder. The final price for the consumers varies from USD$1,60 to $3.

A NEW TERMINAL: EL CHORRILLO

With the operation of this plant supply will be more agile and secure to the south area of the country, which has a demand of approximately 3,000 metric tons per day of the fuel, according to sources from Petroecuador which builds the plant. Starting in the second half of this year, Ecuador will feature a modern terminal that will allow you to store and distribute 15,500 metric tons of liquefied petroleum gas (LPG), from the sector of Easter, in the north of Guayaquil, and that is part of the megaproject Monteverde-El Chorrillo. The megaproject includes a dock and a storage terminal in Monteverde (province of Santa Elena), the gas pipeline (124 kilometers) and the storage and distribution plant in El Chorillo. This whole complex will allow you to have a storage of 60,000 metric tons of LPG, which means a supply for 25 days. Once the plant of El Chorrillo is set in Guayaquil will be dismounted the current plant located in Salitral, west of the city, and that has practically been in the middle of a densely populated area.

The terminal El Chorrillo would consist of six areas that are: tanks, water reservoirs, pumping of LPG, shipping, packaging of cylinders and parking lot on tankers.

THE CHANGE: FROM GAS TO ELECTRIC COOKER

With the announcement of President Rafael Correa, with which the gas subsidy will be removed due to the hydroelectric plants functioning by the year 2016, the country should begin to prepare for that the provision is taken as a whole. The cuisine of electric induction directly heats the container using an electromagnetic field rather than through the radiant heat by the use of resistors. The use of this type of appliances would generate a high cost. To avoid affecting the popular sectors, there is a review of the rates when the plan begins running.

 The supply of electric cookers in Ecuador is limited and the prices

in the stores are not competitive with those of the cuisines that use fuel as the Liquefied Petroleum Gas (LPG). The announcement made last Saturday by President Rafael Correa, removing the gas subsidy in 2016, has encouraged consumers to see what kind of alternatives are available in the market.
For the elimination of the subsidy are two conditions to be met.

The first, which come into operation the new eight hydroelectric power plants (Coca-Codo Sinclair, Molder, Toachi Pilatn, among others). The second condition is that they carry out a national campaign of replacing gas stoves for electric cookers of induction, for greater efficiency.

COOKWARE
Cookware for an induction cooking surface will be generally the same as used on other stoves. Some cookware or packaging is marked with symbols to indicate compatibility with induction, gas, or electric heat. Induction cooking surfaces work well with any pans with a high ferrous metal content at the base. Cast iron pans and any black metal or iron pans will work on an induction cooking surface. Stainless steel pans will work on an induction cooking surface if the base of the pan is a magnetic grade of stainless steel.

ELECTRIC COOKER COMSUMPTION

ELECTRIC APPLIANCE POWER(WATTS) HOURS(DAY) Cooker( two-burns) 1000 0,75(45 min) Cooker(four-burns) 1800 0,75(45 min) ENERGY ENERGY ENERGY WH(DAY) KWH(DAY) WH(MONTH) 750 0,75 22,5 1350 1,35 40,5

ITEM

POWER( WATTS)

HOURS OF USE(MONTH)

KWH MONTHLY AVERAGE COMSUPTION

ELECTRIC COOKER Current Disk Small Medium Big Spiral Disk Small Medium Big Red Point Disk Small Medium Big

1000 W 1500 W 1800 W 1200 W 1800 W 2200 W 1200 W 1800 W 2200 W

20 hrs 19 hrs 19 hrs 20 hrs 19 hrs 20 hrs 20 hrs 19 hrs 20 hrs

20 kWh 28 kWh 34 kWh 24 kWh 34 kWh 44 kWh 24 kWh 34 kWh 44 kWh

The average consumption of households with an electric induction stove would be approximately $44, 64 with a cost of $0.08 Kw/hour with an electric power of 4500 watts or 4.5 kilowatts and a daily consumption of an hour and 30 minutes what brings a result of 558 kwh in a month. The 100% energy they receive (electric cookers), only 40% was used for the cooking of food, while the remaining 60% is lost in the environment in the form of heat. In contrast, the induction cookers have a yield of between 85% and 90% because they use an electromagnetic field to heat food. This type of cuisines use special saucepans of stainless steel, cast iron that cost twice of other materials such as aluminum. In stores such as Home Vega or Home 2000 are exhibited the induction cookers but their prices range from US$800 (four burners) to USD 1 500 (five burners).

COMPARISON IN PRICES
COMPARISON IN PRICES GAS CYLINDER PRICE KW/H $ $ 1,60 0,08

While a gas cylinder cots $1, 60 for distributors and about $2, 50 to $3, 00 for consumers, the price for the kilowatts per hour is $0, 08 and with a consumption of 500 kilowatts, the price is USD$8,24, with 700 kw/h $9,10, 1000 kw/h $10,42, 1500 kw/h $12,31.

GAS STOVE
In cooking, a gas stove is a cooker/stove which uses natural

gas, propane, butane, liquefied petroleum gas or other flammable gas as a fuel source. Most modern stoves come in a unit with built-in extractor hoods
The heat of a gas stove is not distributed evenly by the pot or saucepan.

The flames are incremented upward to form a ring. Due to the fact that the flames are under a pot, the container should redistribute the heat through the pot to make the meal in its interior cooked enough. One of the ways to compensate for the uneven heat source is by adjusting the gas flames to match the size of the pot and the type of a utensil used in the kitchen.

COOKWARE
Basically with gas stoves you can use any type of cookware or utensils for cuisine but the most used are:

Copper

Aluminum Anodized

Stainless Steel

Cast-Iron

PRICES IN THE MARKET

Cooker Montecarlo Quarzo 32 inches, 5 burns Brand Price

Indurama

$ 1.009,00

Cooker 30 inches six burns Roma Quarzo 32 Inches, 6 burns Croma Cooker 30 inches six burns Asis White Quarzo CDE24KBX-8

Mabe Indurama Mabe Indurama Durex

$ 915,00 $ 775,00 $ 578,55 $ 357,60 $ 310,00

Source: Comandato and Creditos Economicos

PRICES IN THE MARKET

While the cost of a cylinder of gas for distributors is USD$1,60, they sell the cylinders to final users with a price of $2,50 and an average consumption of gas of 2 cylinders per month for households, this represents an expenditure of $5 to $10 dollars per month almost the triple in comparison with the consumption with an electric stove.
COSTS FOR A HOUSEHOLD WITH GAS STOVES COST OF A CYLINDER CYLINDERS PER MONTH TOTAL PER MONTH $ 2,50 2 $ 5,00

The prices for gas stoves are very affordable for people for example as you can see in the chart prices vary depending on cookers brands and this represents savings for Ecuadorians from electric stoves with prices up to $800 to $1500.

GAS STOVES VS. INDUCTION ELECTRIC

GAS STOVES

Advantages With the using of butane gas saves almost 40% of electric energy over electric stoves Does no produce CO2, it's a clean energy Direct fire heats food faster The fire is easy to control with obsevation As food is heated faster, the conserve better texture and nutrients

Advantages It's safer for children at home Oven's heat can be well controlled It's easy to clean when it's vitroceramic It's recommendable in cooking food of low boil.

INDUCTION ELECTRIC

TYPES OF STOVES
fast, secure, consume less energy and be very clean . This type of plates directly heats the pan, saucepan or casserole, which should be a ferromagnetic material, avoiding losses of energy They are more expensive than the traditional ceramic hobs and you can't cook with any container.

CERAMIC HOBS

GAS STOVES

work through few burners the gas comes in contact with the flame support all kinds of kitchenware

INDUCTION COOKING

work with any container you can take advantage of the residual heat that leaves once off and are easy to clean, Although they are cheaper, they consume more energy.

PLAN FOR CHANGING STOVES AND COOKWARE

About $ 2,300 million is estimated investment that regime will assume in the process of replacing gas stoves to electrical induction between 2015 and 2017, with the purpose of eliminating the subsidy to the LPG (liquefied petroleum gas). According to Fernando Ceron, of the direction of Cost Reduction Industry of the Ministry of Industries, "the project includes $1,300 million in the change of 3 and a half million kitchens for 3 years, more the improvement of the networks of the power grid, which are approximately $ 1,000 million more". "The government is going to issue a bond to the people who qualify with the electrical consumption ,they are going to be exchanged in the chain stores and distribution, which is going to be paid to the industry," he explained. Espinosa said that the Executive plans to provide a bonus of $ 370 to $ 300 equivalent to the kitchen and $ 70 for the electrical installation and the special utensils.

PLAN FOR CHANGING STOVES AND COOKWARE

On the value of the subsidy that will deliver the regime, Gonzalez made it clear that this is a proposal for a certain segment of the population and will depend on the type of cuisine that will be marketed. Appointments are anticipated with municipalities to which the new buildings include a socket of 220 volts in the kitchens. Induglob, manufacturer of the brands and Global Indurama, currently develops a "conversion kit" that allows you to transform the gas cookers to the new induction technology that drives the national government in the migration project of the energy matrix. With this technical initiative is replacing the dash of the burners of a gas stove by the new induction system, powered with electricity. The kit will transform the kitchen with combustion system to gas to the new system, it is a new instrument of special burners with induction technology that will be replaced by the current that are gas. In the induction system, the cooking is done using magnetism and its operation depends on the use of electrical energy. These kitchens have the capacity to heat faster than other systems with gas or electric; in addition, this system requires the use of utensils of cast iron or stainless steel which depletes the entire heat by optimizing energy waste.

FINDINGS AND CONCLUSIONS

As a conclusion we can say that the abolition of the subsidy from the gas in Ecuador will be a measure that will generate controversy to economic and social level. While it is true, the elimination of the subsidy of the gas will contribute with direct revenues for the financing of the General Budget of the State, increasing the presence of social projects, health, educations or homes, on the other hand, there are thousands of users of gas that would be affected (Taxi Drivers, industries, etc.) due to the increases in the cost of gas, this because it is quite true one of the main uses of gas is the preparation of food, there are thousands of people who use this input as a generator of energy, in that way the increase in the cost of their main input, will increase the finished product or service that they offer and the same could increase the cost of living too.

FINDINGS AND CONCLUSIONS

On the other hand, it must be remembered that the origin of the gas is the oil , therefore you need a non-renewable source to continue with the use of the input, for this reason the government has undertaken several hydropower projects that allow them to increase the supply of another natural source as electricity, for this reason the aim is to take advantage of this hydroelectric productivity to reduce the ecological effects that have been committed, and in turn use energy friendly, free of pollution and over all cheap. With the implementation of induction cooking, government would save approximately $700 million dollars from gas subsidy but on the other hand would invest $2300 million in changing gas stoves for electric and its cookware. With this measure, there would be scads of low and middle income people that could not afford electric stoves in the long-term and this would affect directly households economy.