EXECUTIVE SUMMARY

After a series of plant design including flowsheeting, heat exchanger

network, utility design, equipment sizing, control design, HSE analysis, and plant
layout, the final stage of design is economic analysis, to make judgement about the
feasibility of the project. In this analysis, all costs involved in all phases of process
are calculated considerably to the determination of the cost of product. The applied
tax cost and prediction profit of the product sale will also be included in
determination of the product cost. Calculation to be done consists of capital
investment (CAPEX), operating expenditure (OPEX), cash flow analysis,
profitability and sensitivity analysis. The economic calculation follows general
assumptions provided in the beginning of this report.
Diesel Oil will be produced in this plant located in Bekasi Regency, Wset
Java. The plant also will be completed with the office as the working place for the
direct labors and indirect labors such as stakeholder, marketing team, HSE
manager, human resources and so on. The total area of the land is 113,026 m2. Each
day, the plant will produce 74 tonnes diesel oil. Hence, the plant will be operating
for 300 days in a year with the total annual production 22,377 tonnes.
Estimation of capital investment and operational cost is needed for
economic analysis. Capital investment is estimated using Modular Guthrie method,
by which all cost are mostly estimated according to the total bare-module cost of
process equipments. The total main equipment cost is calculated to be USD 96,670
and the total supporting equipment cost is calculated to be USD 86,625. By adding
the cost of plant startup and working capital, the total capital investment is
estimated to be USD 61,973,107.
Operational cost is estimated with the span of direct production cost
including raw material cost, catalyst cost, labor salary, utility cost, and maintenance
cost, fixed cost including tax and insurance, plant overhead cost, and general
expenses. The average operating expenditure (OPEX) is estimated to be USD
3,421,757.
The capital is depreciated over the period of life span by MACRS method.
Process equipment and supporting equipment is depreciated through 7 years and 7
years General Depreciation System (GDS), with the method of double declining
balance followed by straight line.
Cost breakdown is held to know the share of each expense to the product
price. The major share is 38.74% for capital investment, 35.80% for utility, and
10.05% for maintenance. WACC as the weight average of capital needs to be
calculated to determine the value of MARR in profitable analysis. The value is
13.42%. The equity from this plant will be fulfilled by bank loan with the amount
of 70% and investor 30%. The bank chosen is BCA and Maybank Indonesia which
has the lower rate among other banks. With the assumption of constant loan
payment throughout the years, the total loan interest is USD 34,596,487.
To do the economic analysis, a cash flow must be created with revenue as
inflows and capital investment and operating cost as well as tax income as outflows.
There are two products of this plant, consisting of diesel fuel and gasoline fuel. The
diesel fuel will be sold to Pertamina main fuel terminal at a price of 0.4608 USD/L
with a capacity of 3108 kg/hour. The gasoline fuel will be sold at 0.5672 USD/L
with a capacity of 773.4 kg/hour.
Profitability analysis to evaluate the feasibility of this project. The value of
internal rate of return (IRR) to 14.72% with return on investment (ROI) of 8.01%.
The net present value (NPV) is USD 41,16,061. With such revenue, the payback
period is 5.93 years and the BEP value can be calculated to be 145,567 tonnes
diesel, 41,052 tonnes gasoline. Based on the value of profitability parameter, the
plant has not been an interesting investment for investor.
Sensitivity analysis used to see the variable effect towards the cash flow,
typically with NPV, IRR, and PBP. The variables to be analysed are the ones with
the highest share in cost breakdown. They are gasoline price, oxygen price, and
maintenance cost. The result shows that gasoline price is the most sensitive among
others, and can be the concern for enhancing profitability parameter. The economic
aspect can be enhanced with the aid of government in the form of incentive,
typically in reducing electricity utility cost, increasing product price, and reducing
loan interest.