.

Table of -
Il. Grand Summary of the Project-„-—--—
I - I -Purpose of the Document--

I .2.Crucia1 Factors & Steps in Decision Making for Investment--—--

—--• 2. Objectives Of the
2.1. General 2.2. Specific
3. Project Implementation
3.1. Action Plan
3.2, Land Use Plan-----4.
Estimated Cost of Projeet—--—
4_ l, Viable Economie
4.2. Proposed
5, Proposed
6, Market Supply---—--—--—-—

7.1.

7.3. Income
8. Project Cost--
—
8.1. Project Financing-
—
8.2.

6. I. Target
6.2. Market
62,
62.2.
6.3, Market
7. Regulations

7.2. Guidelines for Setting up of motor —fuel filling

8.3. Building—-—--
—--—--—-—--
8.4.
8.5. Suppliers--—--—--—--—----
8.6.
Furniture and
 3.2. Land
Use
4, Estimated Cost of Project-4.1. Viable
Economic
4.2.
Proposed
Capacity--—--
—--—-—
5,
Proposed
6. Market
6. I.
Target 6,2, Market
6.2. L
Past
6.2,2,
Forecasted

8.1.

6.3. Market
7. Regulations and
7.1.
 7,2, Guidelines for Setting up of motor —fuel filling satiation-m
7-3, Income
8. Project Cost-—--—

8.2.
8.3.
8.4.
8,5, Suppliers-e
8.6. Furniture and
8.7. Office Equipment---—--—--—-—
8.8. Manpower Requirement-—--—--—-----—--—-----

2
 7:30

9, Basis for
Financial
9.1. Inflation 9.2. Revenue Assumption-
mm-—
9.2, L Number of cars-e--
—-m-—--—--
92.2. Accounting
92.3. Taxable
92.4. First Year Allowanee-—-—--—-—-—- 9.2.5-
Multiple Shift

92.6. Amortization for Primary Expense-—-—- 92.7.

Working Capital—e- 9.2.7. I .Aceounts Recei

9, 2.7.2 ,Advance to Employee—--—--—-—--—-—

Utilizes and Power Expenses-—---—
9.2.7-4.Accounts Payable--
9.2.7.5. Value Added Tax
9 2.7 • 9.2.7.7. Ratio/
financial Analysis---—-
—-—--—- —
9.2.7.8. Alternative
Investment
Opportunity-mm-m

10, Financial
10.1, Profitability•—
10.2. Break-even

Analysis---— 10.3. Pay-Back 10.4. Internal Ratc

of Return and Net Present Value—-m-m--- 10.5. Economic
 Benefits----„--—--—--—--—--—--—- I I. Monitoring and

10. I . Monitoring---

Home Books Audiobooks

o
 92.5. Multiple Shift 92.6. Amortization for Primary
9.2.7- Working Capital—
9.2.7- I -Accounts Recei
— 9.2.7.2 .Advanee to
Employee—--—--—-—--—--— —
9.2.7.3 .Aceumulated Utilizes and Power Expenses-—--—--—--—
9.2.7.4.Aceounts Payable-----„--—

9, 2.7.7 Ratio/ financial Analysis---—-—--—--—

9.2
.7-8.
Alternative
Investment Opportunity-n
10. Financial Evaluation„—-—--—--—--—-—--
10.1.

10.2, Break-even 10.3, Pay-Back Period--

10.4. Internal Rate of Return and Net Present 10.5. Economic

1 L Monitoring and Evaluation---—-----

10. l .
10.2.
 I- Grand Summary of the Proj ect
Project N Project Proposa] for Éslab[ishment Ofa Station and Mole' Building in Addis Aboha

2 P rajeet Owner The proposed legal structure of the business entity is registered as Mohamed Linet
IJSi'flûti,

4 Addis A baba HO le Stib—CiIy,

This profile the estitihlishrnetit Of Station LPG fillit•e eenlers iòr all type of car in the
city. Gasoiine /E%cnpene) LPG (Liquelied petroie-um Gas). Gas Oil (Naphtha)
kerosene. fuel (Avgas and lei IVI l. 111 addition Ihe provision oi Fuels. Lubricanls and
"ther speeiuli7..•d providing area Iil.. Modern car wash and Lublicant change. AISO
Motel. & lub sbœp. supenmrket.
& eaifel•erja building Will added by Otit Our 10 the offer services ,

Of the Service iii2.

uired
Financial The capital is estlmated to Birr 32.000.000.081 ET13 among illisETH i'. fi
ru•rezed hy the contribution ofthe pro motet- the rçrnaining

8 Capitai 32.0Cl ETH

iiiilLiOfi. CCSI
(Hitti 29.44
capital Wlâieli is
9 E mplaym enl The total man tequired for the envisioned proJeet will he employees at
c»rluni

Technology machinery equipment and techno Ogy of establishment of the Fuel Station and
Motel i Idi can securçd frum local fo•rc count:rie••
M arkci Sharg on the cash How At2tcmçnt, I % and thÇ calculatcd net
revent w aluc at discount rate Elirré 399

I
Project Provide service and sou'" of revenue, employment opportunity, savygenera:e the country
beneiit. for the foreign exchang.e. for local communaty stimulate local econ•omyr and Technology tt
ei'y country %iitsfer.

l
Table I Cjfûi"d oflT.e project
 Introduction
bOth
economically and in detnography. This pushes for more petrol staticns around the
country; especially around capital City Addis Abaha demand supply gup is

And (hc pcoplc of (hc capital City around sub•city Bok Bulbula ccnter nccd a tbŕțț•
ăiȚns market requisite petrol with full facilities und Motel building service for
the arca. Our mission [s to suecessfully build, pronunc and provid•e quality pelro
stalion and Motel. We plan ic create an envircnłnent surpasses
111'
standard Icv•cl for Other petrol station in arva. The client of this petrol station
developmenl will have every need met to ensure a total and comprehensive comfon.
Petrăleum pmduets among the most natural resourees abundantly
available in out country while the country is making il timctianal Still- Elhiopia and
people evgrywhere use produ.cts a fucl in their automobiles%

country, thus making petroleum producls essenlial commodity thal is needed for the
daily operations Of individual, industrial netivities, Ethiopia hełng nan-oil producing
nation, hawever slill relies on impcrled petroleum praduets for Ihe servicing of the
econotny. Such pctrolcułn utilized by alnłost wcrylxŔly on daily basis

Due to increasing level of standard of living more iËtWopian are inereasing the
number of cars on the rond, the need for constant power supply aid un interrupted
production Of goocls and services and als0 more Ethiopłuns are
increasing
dctnand for fucl in order to enjoy the usage of thcir generating sets and industrial

The Iola] pt•ojecled cost for setting up a standard motor. filei tilling statiotl in the eity
stale has heen estimaled at Birr millian it ineludes land, building mel
dispensers and equipmeni's. spares along with Îhc plț.•liminary and working capital.
entrepreneurs to facilitate investment and provide an overview about petrol filling

investment decision and in order to sene this objective The document covers •various
aspects of the business concepl development start up, The documenl also provides
sectorial information brief on government and international scenario. Which
This is
"fuel filling station which comes under "petroleum sector"
Crucial Factors & Steps in Decision Making for Investment
Key sue,eess firiors
Following factors arc the key in making this project profitablc:•
Will a
station. The daily turnover ofthe ears largely depends on this important factor.
Selection Of proper equipment is another key for carrying out Of operations
Of proposed project.
A. Opportunities
The
The project increase the number of fuel station and provide fuel to more customers
reducing The problem offuel scarcity in the area and reducing the Addis Ababa
beulg a state capi%ll and to hub Of central
part of the country, City is a good location because of the high rate of
in Out

Threats
The proposed project will be following threat:-
The processing Of license may take time because Of in country,
Threat of likely increase in the prices of the petroleum facilitated by the government as
a result ofthe planned deregulation and removal of fuel subsidy,
2. Objectives of the project
2 General Objectives
The general objective of the project is to establish the file' station with full facility
packages (ltuulertt car wash, luh_ & grewse change, shop, supermarket, cafeteria and
restaurant) and Moiel center With a capacity of serving 302 cars per day.
2.2. specillc Objective
The tnat'ket deiiiatid Station Center is to
Currently, the expeclcd demand of this service is assumed to increase at high average
growth pale. Like any business enterprise and establishments of its kind. The project
is basically planned with an Objective or generating profit for the promoter. Beyond
that, it is also aimcd to promotc thc following objectives.
TO fuel StatiOii tii'i•d Motel 02 titer,
Implementing a cos1-efTec1ive promotional strategy that will
maximize awareness for 11K' quality petrol station and other facilities,
Aiming ai exceeding the customer's expectations,
Providing high quality pctrol station at minimized costv
Provide direct and indirect employment to a large segment ofthe population and
reduce unemployment,
Increase Government revenue Through different forms of taxes which in (urn
uscd facilitate social and economic development.
3. Project Implementation Schedule
The project's implementation is expected io take 24 months. The major actlvities
includc Bank loan proccssing construction of the building; cleaning thc arca around
the building, Of e-AUiPi'i'i•eitt'S and Start rendering The time schedule
for the above nwtured major activities is presented below.
Table 2: General Project ImplementatGon schedule

Lund proec"iag J March, 1

Lund March.
Site cleariagand leveling April.
Fence Wo:rk
Site April. July,
Bank loan suoeessiag

ing 2021. April

EVregalu1i'H1 for service Jun-
 Service

. Action Plan Template

PR NAME PROJECT MANAGER
Project Proposal fur the Establishment of a Fuel MOHANED UMER USMAN,
Station and Motel Buildi in Addis Ababa
Action kes n_sihle Prio S P m 111 N
ri ta ot
t es
u
s
Goral I: Site
V isil s•enues The Prom 2021
olef
Identi venue o 'ons •The Prom
cner
Land R uesl Prix essin Prom A- arc 2021
oler tediu
m
Land The Prom arch 2021
Si I-ease A Prom
over
2: Site clewing and The Prom ig ebmury, pt•il, 202 t
levelin And Si contrael oler h 2021
Fence Work The Prom Hig 2 priL, 202
olei h 0 1
2
1
Site Development The Prom ebruuty prii_ 2021
c,'ter 02 1
Goal g: gunk loun ebpau - 2021
W

•Ihe Prom oler

'ocessin 2021
Pmvidin ' the motets e u it He Prom an LIO
oler 2021
Cion14:Building Ind •The Prom 2021 April ,202
constvvction Oter
2
PIA' alinn for The 0222
Service evectilion Plorno(er 2
Hig
0
h
2
3
3.2_ Land Use Plan
•lie project shall have an overall plot coverage 5,000 1112,
T ahle Building BIERks und Areas
Block No. Block
glock I Fuel Punin Ärea
Block 2 Shppping Area
Area
Block Motel Building Area
Park and Greenery uea
Total
Facility Floor Functions Area Covered

Maiii Fuel Pii'ii Fuel

Truck Fuci Pump round Fucl Pump

Shopping Aiea Shop

oilet.s and both 100111
Block .8
"I-vice Area und Modern car wash, 111b, 1.1001712
& chan . Ofticc
Parking and Greenery
area
Block*
Motel Building

3rd Bedroom Service

•i. Estimated Cost of Project

The cost Of project has been estimated us 32,00 million including land, Civil works,
Fuel dispenser, equipment, underground tanks, motel building, modern wash, and
office equipment, preliminary expenses, and also petroleum licensing and other
COSI, The diesel
comprise dual hose dispensers and e,cleetie control panels.
 Tilble-5 Project
Fixed investment 29.440000
Working capital

Total investment

The pn:tposed pre-feasihi lity is based on the assumption dehl and 300/0 equity_
The project seems to be viable with the following returns on investment.

Returns
Internal rate of retun (Project)
Internal rate of' return (equity) 45.1%
Net Present Value
Payback period — based on cash 7 years
inflows
4. I. Viable Economie Size
A minimum of 302 cars is requircd to bc filled daily in order to opcratc at brcakevcn
points. Considering the market trends and number of vehicles in use in the city this
ranges of feet of govemment vehicles fleet of transporters playing within the city,
Addis and other neighboring towns and villages, Also the heavy vehicular traffic af
traveleB from other parts ofthe country io the City is estimated that the project would
bc able to attract and scrvc at 'cast 302 vchiclcs per day. This docs not includc thc
increasing number of motor cycles, three wheeler motor and those who purchase
for their generating sets.
4.2. Proposed Capacity
The equipment for dispensing petroleum products that has been considered for
preparing this prefeasibility study is of German Origin. This equipment relatively
more efficient and effective of the all types of equipment available in the market.
Various other types of equipment are also available al lower prices. The chosen
equipment is capable Iviueling vehicles per hour. Twin hose dispenser
and at
5; Proposed Location
The proposed location for the motor. fuel filling station in Addis Ababa is as follows:
Ille Project may also Be established in commercially viable area of the eity_
Bole Bulbul", because of its preferable residential area a number af individuals
whose havc middle inco•mc in thc city. near to bole international airport, and
oornmereiai area. Therefore the sum of this makes the area with high traffic
flow.
Also the area is on the root from Addis to Adama. no question. sinee the main
root to Pjibouti.
6. Market Analyses
The efficient distribution of petroleum products has always been part of the government
petroleum policy
6.1. Turgel customers
The target customs for the proposed project would be: - ,
Owners of generating set for private and commercial usage _
Private and commercial motor cycles and three wheel Bajajs taxy The
private and commercial vehicles running petrol fuel,
Com mereial and private Transport,
Construc on cornpufii ex,
Power Generalionv

Petroleum is one of the most items in world. Petroleum is a necessity product and the nature of
its demand is Unlike other businesses whose demand is impacted by price and other economic
variables, the consumption of petroleum products Ethiopia continues io increase even in ihe
face of any economic slowdowns.
Demand for petroleum such as filels Lu8ricunts in Ethiopia are massively growing at an
average tute of 10!•'. over the five years 2004). of 2009, the overall Of demand
for & and respectively. In Ethiopia more Chan half of among overall size of
demand for
Ilihricants amounts billion liters and 28 million liters respeetively are eonsumed in Addis
Ahuha arpd its neighbor
Ai present there 110,000 vehicles ill Ethiopia with than 70 Of
(410,000/ registered in Addis Ababa? However, the number of fuel stations in the
 1
Sii

4.

811 7
 2 SUO" i

Market Supply
Tolal number of petrol stations Ihal are fully operalional in the city is quite low far
meeting glowing demand for petroleum ploducis Apart from these, stations are
iiiåtiY Stations that i'iOI liiiiCtiOiiiiig While few Others spring up_ There has been a
tremendous growth in the downstream petroleum sector over the years. There are
710.000 vehicles in Ethiopia with more than 70 pereertl of lhetn registered in Addis
Abåba. However, the number of fuel stations in the cgpital stood of thc fuel stations
arc very old and havc small sloragc capacity." Of 10 Construct
Jiti'@le," they said. The above growth rates present an opportunity for the new entrants
to cam profits hy setting up petrol filling 10 meet the growing demand,

7. Regulations and Licenses

Obtaining a license from Ministry of Petroleum und Natural Resources and Department
of Petroleum Resources (DPR) are pre-requisites for setting —up the
1110ior Fuel lilling station?
Licensing
Bid i.k•cunents will be prepared and can tw collected; from the Ministry
(MOMPNG).
The notice will stay at least for days
The eeginning and ending dates Will speeutied.
Evaluation will based on the scoot caldsset at beginning, The winner will be
notified oiliciallyio bidders,
Signing date w i" he fixed with the winner.
Signing with ihe Minister and authorin•d company representative will be
folloued.
If there is only one interest
Negotiation will be carried between the eomcxatty team and Ministry of Mines
team,
When IS reached and arljeles Of the PPSA, rcport will thc M inistcrx (MOM

Th. PSA will be endorsed the Council ofMinisters,

TheC0L1neil of Minislerss chaired by the PM will Ibe PPSA After the approval
Of the Council, the Minister and the authoriRed rcp•rgsc ntativc will sign
thc agrgcmgnt,
 12. Guidelines for Selling up of motor —fuel filling satiation
Basic principle the governing eansidevalion is to minimize as much as possible
intcrfcrcncc to normal flow of traffic on thc road by vchiclcs using thc amenity and also
to CiiSUi•e _
General conditions of inactive: •
The clear distance between two adjacenl fuel filling station (these will also
include fuel filling —cutn-servic•s stationb should not be less than 300 meters,
2. Fuci filling station should bc wcll distribution both sides of thcy road, so that
vehicles iiOt to Cut the to fuel filling station. The tilel filling station on opposite
sides shall Sc staggered.
Silting of fuel filling stations near existing cheek barriers should he avoided.
They should be at leasi I km away flxnn the "heck barrier
4. The distance bctwccn thc tangcnt point of the curves of the side road and thc tilel
filling station measured in a direction parallel to thc center line of the road
should not he less than 100 meters and the station should be located only in the
outbound direction, However on expresswa,y and arterial road having dual
carriageway. The distance frotn the junction should not be less than 300 meter.
Income Tax
'The income of the petrol filling station is not exempted from the ineomc tax. The
investor has 10 pay tax on hieher income according ta the nature of the business entity.
The current projecl is being operated as a private owned company, So the income tax is
payable at the prevailing ratc.
8. Project Cost

Table-9 pn.iject costs

Items
Latid S _
Building civil works
Dispensers underground tanks & other equipment
406,349.21

Futiiitiiite
Lice nses'permits
Preliminary
Worklng Capltal 00

Total
 8,1, Project Financing
The total cost of the project is Birr 32_00 million the working capital of Birr 7S4,380_ The
Of project will eon tribute Ot 9,600 ,OOIJ ETH ind the bunk finance the
remaimng amount ofBirr@/o will 22.400.000.

8.2. Location

government. the Edling station must be situated in a wtnmetvial area. Fuel filling station is rot
allowed 10 be installed in the residential areas. SOCK) tn2 of lurid with at least feel front
requited for it'ßtiilliitg fuel Station. The for [and leas hiiS

city based on the eos,l: city, In, repot-I prices of land in

Addis A has been considered prices rnay considerably vary ill the other places.

8.3, Building
'livere are certain civil wolks required to be carried out ai the pn»posed location. The civil
works will be etrried out on an area of ASOCI rnX The resq or the area will he floored With

includes the rollOWitig.

Office
Shed for dispenser

Underground tanks and svwec c able s

Elocyring

The total cost oreonstruetion is estimated al Birr details ror the said cost is as

Table•10 construction famounl in nairaj

i p tin n
Motel Building that comprises Oflioz. shed and
Restaurant arareteria, supermarket
Undergmund lunks gus piping 2.32+71.43
Flooring 1112}
C ontinye ncies 66720.23
Total
8.4, Equipment
The following equipment is requited for a niel station
 The purpose of compressor is to cornpress the fuel enabling it to discharge the Firo[ for
retileling_ this compressor æquires In input pressure of or IS PSIGs front the mam ges
supply with the outfit pressure of 3,625 PSIG with this discharge pæssure rhe equ(pment can
50 per hour. Electric control pawcl, electöc pawl is rcqu'tvd to opcr•tc the cmnpressoc
pnvnty panel vehicle priority during rush hours ihe compressor is directly connected to the
by passing the storage with the help of priority panel. This •re enable to facilitating the
refueling of at a faster rule Fuel dispenser high dud bosc gas is flied into vehicles the help of
dispenser. Th's dual Inrs•• dispenser is in eapahleofhandling two vehicles al a lime,
There are various forging manufactures ptvwiding the fuel tilling station equipment m this
pre-feasibility report C'veu-nu•n origin compressor has selected this equipment is selevied
because of its low electrically consumption higher outlet plessure It is low mainlenanee,
durable working. longer periods EK'1ween overhauls and good market repute and presencev
Suppliers
Products will sourced directly from an oil company acerediled marketers with reliable and high
quality products and delivery time suppliers such as capital Oil Lihyu, Total arad like
petroleulil and host of other will also highly reco•lnmended_

SK Furniture and Fixtures

Furniture and fixtures mainly include table's sofas fans & lig'lts carpet and fire extinguishers_
It is estirnaied that the furtive und fixtures of Bilt 4811.000 would he

SX OffieeEquipment
Some equipment required for the proposed project. A provision of Birr 200, 000 h as. mad c i
red •Office equipment,
Manpower Requi
Manpower requirement for the fuel filling sqation irxludes manager, eashier_ disTer1ser_
operators, accountant. wulch'iiari and _The Iotal staff strength would 28 for two
shifts,
Table I I human resource requiremenl
Des ignation NO ofemployees For shift Salary per month
Manager
Liepuiy Manager 10.000 1200000.00
Acco t 6,0110

Cashier 2 ,sno
ispenser 800.000
Operuto r 2 5 .soo 132.000

2
2,suo
Motel Cleaner
Total
19
9. Basis Financial projections

inflation rate has been consideæd while making the projections [Or cost of sales,
operational expense and salaries the prices for electricity, operational expenses and starf
salaries are increased by year a result of inflation.

9.2. Revenue Assumption

9,241, Number ofCars fuel Slat:iOiiS iti Addi* the
Based the Of

— 12 Delailcd projected increased in cars for years financial

Years Niiiiibei' Of

463
4

The average number of ears in first yeals is estimated al 302 day starling from 220
cars per day in the first month and going up 10 cats per day in the month in the
day ycav,
Ababa is increasing at a rate of till year because the ptoject would be in its growth stage. An
increase has been considered from sixth yeare Because al that time the project would be at
its maturity stage.
9.22. Accounting Profit the assets has charged at the following rates
arc for calculation of accounting profit_
Table • IS Depteciäilioti
Description O eweciatiogn Rates
Building
Fuel plant equipment
Molel & Offiee equipment
Furniture fixture
9.23.
Vor the purpose of calculating taxahle profit depreciation is calculated on the rates as per the
inoome tax law which is us follow s, Table • [4 Tax adjustments
Land
B wilding
plant & equipment
 Motel Office equiptnent
Furnitu1V iislute

9.2.4. First Year All"" ance

Other Ihan Ille normal depreciation allowance year allowance is also provided
r.ewiy insta[lCd plant and equipment for Ibe purpose of providing benefit to the entrepreneur
first year is
equipment.
9 Multiple Shift Allowance
In addition hoi-mal depreciaIiOn and first :fiiuliiplier shift is plant basis,
proposed project fuel planl will run on shin basis while So multiple shift
allowance ealeu[uted and added to the depn•ciation of plant and equipment for all of
the
yeui-S. Multiple shift allowance hue hecii taken as Of [lie riot-mal dep•ivciutioti
9 ,2.6. Amarti7ntiun for Primary E.qpense
Preliminary expense an•munting to Birr is amortized at the rate of per

92.7. working Capital

Working L%tpital is calculated on the basis of following assumptions_
9.23.

nueilily io reputable companies on agreed terms and conditions. Therefore

estimated al Ional sales

21
9v Basis for Financial projections

inflation rate has been considered while making the pryjec'ions cost of sales
ehpense and salaries prices for electricity, expenses and salaries are by
every yearas a result of

Revenue Assumption
9.2,L Number ofCat•s
AddiS Ababa,
for
 for 5 years financial period
Number or curs

Tlae average number Of in years is al 302 curs day starting from

221) cats per day first month und going up cats per day in the 12 month the ycgus_ to
day year,
Ababa is increasing at a rate till year because the projecl would be i" its growth stage. An
increase of lws been consideted from sixth year, because at that time the project would be its
maturity stage.

Accounting Profit

assets been charged following are for Of

Table IN Depteciuion rates
Descrip'ion
Building
Fuel plant equipment
Matel A: Office equipment
Furniture & lixture
9, 23. Taxable Profit
For the purpose of calculating taxable depreci ation is calculated on lates as per
the ineome lax law which is as Table 14 Tax adjustments

B u i lililtg
Fuel Planr & equipment
Motel Oilice equipment
Fumitorc & fixture

92.4.
Other than the normal depreciation allowance year is also provided on the newly installed
plant an-d equipmen for lhe purpose ofproviding benefit (he enlrepæneur. The first yetir
allowance is cticulated as of written down value of tuel plant and

9.23. Multiple Shi"

In addition 10 normal allowance multiplier shift allowance
is also provided for the plant and mtw•liinexy which operate on double or triple shin basis.
In Ibis project fuel "'ill two shih basis dunng while years, So multiple shift
allowance is calculated and added 10 ihe depreciation of plum and equipment for all of the
ten years_ Multiple shift allowance has been taken as the normal allowance.
9.2.6. Arnortizution for Primary Expense
Preliminary espense amounling 10 Birr is amonize,d al rate of per
annum.
Working Capital
WOrking capital is calculu\.l on 6usis offollowing assumptions.
9.2.7.1. Accounts Rcqeivables
Mosljy the sale of petrol is on cash basis: however some fuel filling stations a credit facility
to reputable companies on agreed terms and conditions Thervfore recoverable acv estimaled
at of local sales amount.
9.2.7.2. Ad' aneeto Employee
Advance to employees calculated on the bases of 30 days of hoth payroll and staff

9.2.7.3. Accumulated Utilizes and Pouer Expenses

Normally, il would lake 20 days deposit Llliliires {eleclrically) water and telephonej hills.
Therefore; utility expenses for 20 days taken us the for working eapita[

payable ,
With 30 days. The same has beetl taken as the basis for calculating the amouni of sales iam
pa yahle.
9.2.7.6. VAT

sale lhe•se tunds are deposited after ewery 30 days in favor of

government Illtough the rederaj Inland Revenue service.
7.7,
The ligules iOr the rate of return on investment and retun on equity are average for the live
years make il more reasonable.
9.2.7.8. Alternative Investment Opportunity
The of is the portion of investment in this project. If any investor does nut have
enough resources for the acquisition of Land he.'she also has another a llerative Course of
filling without
investments only In purchase equipment and install Ibis equipment for installing that
new equipment will be made By the investor and the spu•ce will he provided the
Of ibe existing Station. The investor pay commission Otl ihe

lease fwiljicy from any leasing company on or (he equipment.

10. Financial Evaluation
10.'. Profitability
Accocditlg the projected income statement, ihe project will start genelating pmflt in
second year of operation, Important ratios such as profil 10 sales, nel profil 10 equity
(Rerutn on equity) wnd net profit plus interest on total investnent Cietujm on investment/
show increasing iretid during the life-time Of the The income statement di'id the other
indica10rs of pnfitability show the pa'ject is viable.
Faerory overhead eosr inel"des •anges o/' supervisors. insw,lnee ed ,/gctu.ry
workevs sociu/ eos/s o u saluries pfd.i.reep Puho.r el., socio' OAS's. moterials hy
h crfive

10.2. Br.ak-even Analysis

capaci!y is estimated by using income statement pmjection.

Sales — Vériab'e Cost

The and income statement pmjecj/0" are used to projecc the

periodL
The projeeÜs iniliai investment will be ru[ly recovered within 10 yearsv
10.4, internal ofkelnrn Ser Present Value
Based cm the cash now stalemenl„ the calculated IRR of the ptojeet is -23.1% and the net

present discount rate is Birr

IOS. Economic Benefits
The PIVjeci can create employment for 28 pelN"Ls. In addition 10 supply the domestic
needs, 'he pmjeel will generate Birr 316,917.46 in terms of tav revenue. The estahlisbmenl of
sue". factory "ill have a foreign exchange saving effect to die country by substituting the
curtvnt imports,

J j. Monitoring and Evaluation

11.1. Monitoring
With bodies did decisiOit> in line iVith i_iP O:ih project well
guidelines beoyeeT7 st*keholder bodies the ptyect owner. The proje€t owner shall monilor
all activities [Land request processing. IL•and approval. Bank loan pnwessirv, Sile
Building and consliuelion work, Preparation for service and neeutionl

23
required to make the proeess of the project from beginning to end deliver required
cornrnetciål service efficiently and effectively

11.2. Evaluation
The project promoter evaluates on-going prcwess of the at each phase of implementation.
Even ifjoinl evaluation conducted at the end of the projeet_ the engineering estimation Of
bill Of quantity is the basic tool Of project sUCC&s evaluation. This evaliLtatiOii witl be
based the agnxd project