Financial feasibility of environment friendly brick manufacturing in the context of Bangladesh

This internship report is submitted in a partial fulfillment of the requirements for the degree of Master of Business Administration, 2016.Cataloged from PDF version of Internship report.Includes bibliographical references (page 52).Brick remains the major construction material in our country as we have limited source of construction rocks. Topsoil from agricultural lands, river floodplains are used for making the green bricks which is burnt later at the kilns mainly using the imported coal and domestic fire wood. Brick kiln owners mainly use imported Indian poor quality coal for burning bricks in the seasonal brick kilns operated during November to May every year. A recent UNDP study suggests that fire wood share approximately 33 per cent of the fuel used in the seasonal brick kilns in the country. Bangladesh Brick Manufacturing Owners Association (BMOA) claims that there are approximately 8,000 brick fields that manufacture bricks of different grades in the country. About 60 per cent of the produced bricks in the country are consumed by different government departments, such as the Roads and Highways Department, Public Works Department and Local Government Engineering Department annually. The rest is consumed by private sector users. As reported by BMOA, brick making industry employs around 2 million workers during the peak-season and 0.8 million in the off-season. According to a UNDP source, the country produces over 8.66 billion bricks a year and the sector has grown at 5.3 per cent over the last decade. But there are reasons to believe that total brick production in the country is almost three times the above estimate per year. Brick kilns are major sources of greenhouse gas in Bangladesh, emitting annually 6 to 9 million tons of CO2. Such high levels of emissions are a result of the use of age-old technologies and substandard fuels such as high sulfur coal, tires and wood used in the kilns. This situation is being exacerbated by the growth of new brick fields every year. It is not easy to replace the existing brick kilns with new technology very quickly, although there is availability of proven technology capable of producing quality bricks using one-third fuel (coal) compared to conventional FCK or BTK. Installation of a fixed chimney brick kiln involves approximately Tk 3 million, while a Zigzag kiln installation requires double the amount (excluding land price or rent). A Hybrid Hoffman kiln may require an investment of Tk 80-100 million (excluding land price) to be installed. Hoffman and Hybrid Hoffman brick kilns are generally installed in the highlands, and BTK, FCK and the Zigzag brick kilns can operate both at high and low lands as they are seasonal kilns. UNDP started providing technical assistance in Bangladesh to improve the brick kiln technology with the support of the Global Environment Facilities (GEF) fund. Within this scope, seven Hybrid Hoffman Kilns are set at different locations of the country which operate round the year to produce quality bricks using significantly less amount of coal. These projects are attracting new entrepreneurs to replicate the environment-friendly brick kiln technology. The Chinese Xian Design Institute of Wall and Roof Materials is helping the efforts to implement the HHK technology viably. HHK includes among others, using pulverized coal mixed with clay to form green bricks. This technology helps to improve reduced fuel use for brick burning and Green House Gas emission. As reported, almost 80 per cent of the total energy required for burning bricks in the HHKs is met by the coal mixed with the clay used in the green bricks. The remaining 20 per cent coal is fed externally into the firing chambers of the specially designed hybrid Hoffman Kiln. And because of proper air circulation inside the kiln, almost all the coal used for brick making and for firing is burnt efficiently. The system also includes the preheating arrangements for the green bricks in the stacks put inside the properly insulated dryer chambers with the help of exhausts directed in the dryer chambers from the previous firing in the kiln. Due to the efficient drying and burning technology, HHK require only 13-14 tons of coal for making one hundred thousand quality bricks. A single unit HHK may produce 45,000-50,000 bricks every day. Thus a HHK can replace 5-7 conventional FCK or BTK or Zigzag kilns as the HHK can operate round the year. HHK requires an investment of Tk 100-110 million initially including the land price. As the HHK saves approximately 9-10 tons of coal for burning 100,000 bricks (compared to FCK or BTKs), entrepreneur may claim the carbon credit from the global carbon trading market. A rough estimate suggests that a HHK may claim approximately Tk 700,000 annually from carbon credit by producing 15 million bricks in HHK. And the carbon emission saving benefit is on top of the regular business returns from the brick production and selling. To implement environment friendly brick manufacturing project, financial feasibility is a must. As this technology is capital intensive, this report aims to identify the parameters to achieve to implement a green brick technology.Md. Asif IqbalM. Business Administratio