1. RED CERAMICS FUEL SUBSTITUTION LA PAZ - BOLIVIA

2. History The fuel substitution project of the Red Ceramics Association (ACR) in Alpacoma, La Paz, was developed by ACR since 1995. The Association with 40 members has also 40 ovens (kilns) for the manufacture of construction bricks. ACR is settled in the outskirts of La Paz, in the western hangs of the valley, located close to the poorest residential areas. The fuels used in the ovens, before implementation of the fuel substitution project, were sawdust, used lubrication oil and scrap wood. The severe air pollution and the incompliance of the environmental regulations implied the risk of closure for the red ceramists. ACR, with contribution of its members, contracted the consulting engineering services for the design studies and technical specifications of the natural gas distribution system. In 1996 ACR members requested to E+Co a credit of US$ 160,000. Overview and Strategy

3. E+Co proposed to Caja Los Andes S.A. FFP (CLA), a micro credit second story bank of La Paz, a co-financing operation. CLA carried out the evaluation of the creditworthiness of the borrowers and accepted the basis of the technical and economical evaluation of the project, made by E+Co. Only 30 out of the 40 ACR members ratified their interest in an E+Co individual loan, to extend the natural gas distribution system to Alpacoma and to carry out in- doors installations of natural gas, as well as to purchase appropriate burners. The ACR members obtained the municipal permits, the environmental declaration and the technical approval of the installations by the pertinent authorities. This was particularly arduous given the fact that ACR members have mostly only low grade education and cultural barriers with the administration, due to their autochthonous ethnic origin and their condition of rural immigrants in La Paz. Overview and Strategy

4. Technology The technology of natural gas use as fuel for ovens in the brick manufacture is mature and standard, well regulated by law and supervised by the gas distribution company (YPFB in La Paz) and the regulatory agency (Superintendencia de Hidrocarburos). The project includes a tap from the main gas pipeline to the project area, foreseen with pressure regulation devices, measurement equipment and emergency shut off valves. The secondary gas pipeline, as well as the in-doors installations, are of steel pipe and each individual oven has pressure regulation devices, flaring installations and measurement and control devices. Each brick producer has his own mobile burner, adapted to the existing kiln. Overview and Strategy

5. Red Ceramics Alpacoma – La Paz, Bolivia Bricks Inside the Oven Bricks and Brick Producers

6. Red Ceramics Alpacoma – La Paz, Bolivia Gas Pipeline in Place of Sawdust Pressure Regulation and Measurement Cabinet Brick Producers in the Western Hangs of La Paz

7. The social benefits targeted in this project were primarily focused in preserving the jobs of 30 families, facing closure threat, because of environmental restrictions to the use of sawdust and used lubrication oil. The second objective of the project was the improvement of the income of the families and the improvement of the working and living conditions, with the reduction of noxious gas emissions in the working and living areas around the project zone. The environmental benefits are directly related with the use of clean fuel, not only for the immediate neighborhood of the Red Ceramics Association, but also for large and densely populated urban areas of La Paz affected by the gas emissions, since decades. Social and environmental impacts