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UNIVERSITAS INDONESIA
GROUP PERSONNEL:
AKWILA EKA MELIANI (1306413725)
AULIA RAHMI HARIANTI (1306370631)
MIFTAKHUL HUDA (1306370745)
SEVA JUNEVA (1206241552)
VANESSA GERALDINE (1306370410)
} JARAK 3 SPACING!
Cost index is important to estimate equipment cost in a certain year. In this
economic analysis, chemical engineering cost index used to predict the price of
equipment in the year of purchase. There are two types of cost index which are
commonly used: Marshall and Swift Equipment Cost and Chemical Engineering
Plant Cost Index (CEPCI). CEPCI is preferred in analyzing cost index of methanol
plant due to its simplicity. Capital expenditure should be known for convenience in
cost accounting and cost estimation. This expenditure is a one-time expense for the
design, construction, and start-up of a new plant or a revamp of an existing plant.
Preliminary estimate is based on the individual factors method of Guthrie, 1969,
1974.
Operating cost are cost incurred during plant operation such as the cost of
materials, labor, utilities cost, insurance, salary tax, building tax, depreciation,
distribution and marketing as well as administration. To calculate operating cost,
there are some assumptions used for calculate the operating costs. The assumptions
are as follows: plant operating life is 30 years, in one year, IGCC plant operated for
345 days, 5 days/ week, 24 hours, production capacity is 100% since the first-time
plant operated, and US$1 equal to Rp 13,200 based on Bank Indonesia (29th
November 2016). The cost of raw materials is the largest item of expense in the
manufacturing cost of product. The quantities of raw materials consumed are
calculated from material balances. Raw materials for methanol plant are coal,
MDEA, catalyst Fe2O3/Cr2O3, and NaOCl. Transportation from supplier to plant is
paid by supplier.
The income is gained from electricity and CO2. From the study, the high
case forecasts a CO2 price that begins in 2020 at $39 per ton. It increases to
approximately $53 in 2030 and $110 in 2050, representing a $55 per ton leveled
price over the period 2022-2050. The forecast of CO2 will be calculated as linear as
below and use the price of CO2 for 2020 at $39. As for electricity price, it is
necessary to sell below the buying price of PLN so that the bargaining will be done
in order to sell the product. The price given per kWh of electricity is Rp1070.3,00.
The product will be sold at Rp 1050,00 or equal to $0.08/kWh to PLN for
Sejajar!
ii Universitas Indonesia
LIST OF CONTENT
PERHATIKAN BAGIAN
YANG BOLD! } JARAK 3 SPACING!
EXECUTIVE SUMMARY................................................................................... ii
LIST OF CONTENT ........................................................................................... iv
LIST OF FIGURES ............................................................................................. vi
LIST OF TABLES .............................................................................................. vii
CHAPTER 1 CAPITAL ESTIMATE ..................................................................1
1.1 Cost Index ................................................................................................. 1
1.2 Capital Expenditure (CAPEX) ................................................................. 2
1.2.1 Direct Cost ........................................................................................ 3
1.2.1.1 Total Bare Module (TBM) Cost .................................................... 3
1.2.1.2 Land and Building Cost ................................................................. 8
1.2.1.3 Offsite Facilities Cost .................................................................... 8
1.2.1.4 Building Plant Cost ....................................................................... 8
1.2.1.5 Site Development Cost .................................................................. 9
1.2.1.6 Supporting Facilities Cost ............................................................. 9
1.2.2 Indirect Cost .................................................................................... 10
1.2.2.1 Contingency................................................................................. 10
1.2.2.2 Contractor Fee ............................................................................. 10
1.2.2.3 Engineering and Supervision....................................................... 10
1.2.2.4 Construction Expenses (COPEX) ............................................... 11
1.2.3 Working Capital .............................................................................. 11
1.2.4 Additional Cost ............................................................................... 11
1.2.5 Total Capital Expenditure ............................................................... 12
1.3 Comparison with Existing Plant ............................................................. 13
CHAPTER 2 OPERATING COST ....................................................................15
2.1 Annual Operating Cost ........................................................................... 15
2.1.1 Raw Material Cost........................................................................... 15
2.1.1.1 Operating Labor .......................................................................... 16
2.1.1.2 Utility........................................................................................... 16
2.1.1.3 Insurance ..................................................................................... 17
2.1.2 Salary Tax ....................................................................................... 18
2.1.3 Building Tax ................................................................................... 20
2.2 Maintenance Cost ................................................................................... 20
2.3 Total Operating Cost .............................................................................. 20
CHAPTER 3 ECONOMIC EVALUATION .....................................................22
3.1 Price Prediction ...................................................................................... 22
3.2 Cash Flow ............................................................................................... 23
3.2.1 Equity .............................................................................................. 23
3.2.2 Depreciation .................................................................................... 24
3.3 Profitability Analysis .............................................................................. 25
3.3.1 WACC ............................................................................................. 25
3.3.2 Rate of Investment (ROI) ................................................................ 26
3.3.3 Payback Period ................................................................................ 26
3.3.4 Break Even Point (BEP).................................................................. 27
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3.3.5 Internal Rate of Return (IRR) ......................................................... 28
3.3.6 Net Present Value (NPV) ................................................................ 28
3.3.7 Sensitivity Analysis ......................................................................... 29
3.3.7.1 Electricity Product Price Fluctuation .......................................... 29
3.3.7.2 Raw Material Cost Changes ........................................................ 30
3.3.7.3 CO2 Product Price Fluctuation .................................................... 30
3.3.7.4 Government Subsidies on TCI .................................................... 30
CHAPTER 4 CONCLUSION .............................................................................34
REFERENCES .....................................................................................................36
APPENDICES ......................................................................................................37
APPENDIX A PURCHASED EQUIPMENT COST CALCULATION .......... 37
APPENDIX B LOAN PAYMENT ................................................................... 43
APPENDIX C CASH FLOW ............................................................................ 46
APPENDIX D DEPRECIATION ..................................................................... 52
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TIDAK ADA YANG LIST OF FIGURES
BOLD!
} JARAK 3 SPACING!
Figure 1.1. Cost Index ............................................................................................. 1
Figure 1.2. TCI Breakdown .................................................................................. 13
Figure 2.1. Composition of Operating Cost .......................................................... 21
Figure 3.1. Graph of CO2 Product Price 2020-2050 ............................................. 22
Figure 3.2. Graph of CCF vs Year for Payback Period Calculation ..................... 27
Figure 3.3. The Influence of Fluctuations of Product Price, Raw Material Cost and
Salary on IRR ........................................................................................................ 31
Figure 3.4. The Influence of Fluctuations of Product Price, Raw Material Cost and
Salary on Payback Period...................................................................................... 32
Figure 3.5. The Influence of Fluctuations of Product Price, Raw Material Cost and
Salary on NPV ...................................................................................................... 32
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TIDAK ADA YANG LIST OF TABLES
BOLD!
} JARAK 3 SPACING!
Table 1.1. Cost Index from 2017 to 2022 ............................................................... 1
Table 1.2. Components of Total Capital Investment (TCI) .................................... 3
Table 1.3. Calculation FOB .................................................................................... 4
Table 1.4. Total Bare Module Cost ......................................................................... 6
Table 1.5. Land Cost ............................................................................................... 8
Table 1.6. Building Cost ......................................................................................... 8
Table 1.7. Offsite Facilities Cost ............................................................................ 8
Table 1.8. Building Plant Cost ................................................................................ 9
Table 1.9. Building Plant Cost ................................................................................ 9
Table 1.10. Supporting Facilities Costs .................................................................. 9
Table 1.11. Contingency Cost ............................................................................... 10
Table 1.12. Contractor Fee .................................................................................... 10
Table 1.13. Engineering and Supervision ............................................................. 11
Table 1.14. Construction Expenses ....................................................................... 11
Table 1.15. Working Capital ................................................................................. 11
Table 1.16. Additional Cost .................................................................................. 11
Table 1.17. Total Capital Investment .................................................................... 12
Table 1.18. Comparison with Existing Plant ........................................................ 14
Table 2.1. Raw Material Costs .............................................................................. 15
Table 2.2. Cost of Indirect Labor .......................................................................... 16
Table 2.3. Water Utilities Cost.............................................................................. 16
Table 2.4. Fuel Cost .............................................................................................. 17
Table 2.5. Insurance Cost ...................................................................................... 17
Table 2.6. Salary Tax ............................................................................................ 19
Table 2.7. Building Tax (PBB) ............................................................................. 20
Table 2.8. Maintenance Cost................................................................................. 20
Table 2.9. Total Operating Cost ............................................................................ 21
Table 3.1. Calculation of CO2 Price 2020-2050 ................................................... 22
Table 3.2. Loan from Bank ................................................................................... 23
Table 3.3. Loan from Investor............................................................................... 23
Table 3.4. Overall Loan ........................................................................................ 24
Table 3.5. Total Depreciation................................................................................ 24
Table 3.6. BEP Calculation ................................................................................... 28
Table 3.7. Electricity Product Price Fluctuation Sensitivity Analysis .................. 29
Table 3.8. Operational Cost Changes Sensitivity Analysis................................... 30
Table 3.9. CO2 Product Price Fluctuation Sensitivity Analysis ............................ 30
CAPITAL ESTIMATE
700
600
500
Cost Index
400
300
JUDUL GAMBAR DAN TABLE
Capitalize Each Word! 200
100
0
1998 2000 2002 2004 2006 2008 2010 2012
Year
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Table 1.1. Cost Index from 2017 to 2022 (continued) Jika terpotong, tambah
Year Cost Index (continued) di belakang judul!
2020 984.2
2021 1042.7
2022 1104.6
} JARAK 1,5 SPACING DENGAN TEKS DI BAWAHNYA!
To estimate equipment cost, all equipment is assumed to be bought in 2014.
Based on CEPCI in Table 1.1, equipment cost in 2014 can be estimated using
equation: Artinya persamaan
TABULASI 1,5 cost index at present time
CM DARI KIRI
Present cost = original cost cost index at original cost obtianed (1.1) pertama pada bab
(untuk persamaan)!
pertama!
So, in equipment cost calculation, cost each equipment in reference year is
multiplied by ratio of its CEPCI.
1.2 Capital Expenditure (CAPEX)
Capital expenditure should be known for convenience in cost accounting
and cost estimation. This expenditure is a one-time expense for the design,
construction, and start-up of a new plant or a revamp of an existing plant. As a
project for manufacturing a new or existing chemical by a new process progresses
from laboratory research through pilot plant development to a decision for plant
construction, a number of process-design studies of increasing complexity may be
made, accompanied at each step by capital-cost estimates of increasing levels of
accuracy as follows: order-of-magnitude estimate, study estimate, preliminary
estimate, and definitive estimate. The one which has been done up to this step is the
preliminary estimate.
Preliminary estimate is based on the individual factors method of Guthrie,
1969, 1974. This method is best carried out after an optimal process design has been
developed, complete with a mass and energy balance, equipment sizing, selection
of materials of construction, and development of a process control configuration as
incorporated into a P&ID. To apply the method, the f.o.b. purchase cost of each
piece of major equipment must be estimated. The equation for the total capital
investment by Guthrie method is
CTCI = 1.18(CTBM + Csite + Cbuildings + Coffsite facililities ) + CWC (1.2)
The equation above does not account for royalties or plant startup. These
additional costs should be added if they are known or can be estimated. Complete
capital investment (TCI) components can be seen on Table 1.2 below.
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SUMBER TABEL
(Source: Seider et al., 2003) ALIGN LEFT!
1.2.1 Direct Cost SUBBAB DERAJAT KEDUA TIDAK BOLD!
The direct cost in this plant includes total bare module, land and building,
offsite facilities, building plant, site development, and upporting facilities costs.
1.2.1.1 Total Bare Module (TBM) Cost SUBBAB DERAJAT KETIGA TIDAK BOLD!
The calculation of equipment or total bare module cost is begun with the
calculation of FOB itself. FOB (Free On Board) is the bases cost of the equipment.
The parameter and the formula in Process and Product Design Principles by Seider
can be seen exactly in Table 16.32 or based on the vendor (catalog). To get an
estimate of the purchase cost at a later date, multiplying the cost from an earlier
date by the ratio called cost index is needed at that date a base cost index.
From the planning, the equipment purchasing on this plant will be done on
2020. Using the design specification for all equipment, the purchase cost can be
determined and later converted into 2020 purchase cost using the cost index. The
overall calculation can be seen on the table below total bare module cost than will
be depreciated. The depreciation will be conducted in the main equipment costs
using declining balance method of depreciation within 20 years of recovery period.
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Table 1.3. Calculation FOB
Equipment Original Cost Original Cost (Marked Up $) Basis Year Basis Year Index Present Year Index FOB
Coal Storage (S-101) $ 177,600.00 177,600 2007 525.4 746.06 $ 252,189.30
Belt Conveyor (Y-101) $ 34,936.36 34,936 2007 525.4 746.06 $ 49,609.09
Belt Conveyor (Y-102) $ 34,936.36 34,936 2007 525.4 746.06 $ 49,609.09
Coal Crusher (SR-101) $ 99,386.66 199,387 2006 499.6 746.06 $ 297,747.01
Coal Crusher (SR-102) $ 199,386.66 199,387 2006 499.6 746.06 $ 297,747.01
Mixer (M-101) $ 30,000.00 30,000 2007 525.4 746.06 $ 42,599.54
Slurry and Coal Handling $ 21,500.00 21,500 2007 525.4 746.06 $ 30,529.67
Gasifier (R-101) $65,275,078.06 65,275,078 2007 525.4 746.06 $ 92,689,616.93
Absorber (T-401) $ 914,162.49 914,162 2007 525.4 746.06 $ 1,298,096.81
Rich MDEA Pump (P-401) $ 14,300.00 14,300 2007 525.4 746.06 $ 20,305.78
Stripper (T-402) $ 157,362.00 157,362 2013 657.3 746.06 $ 178,611.74
MDEA Tank (T-403) $ 16,500.00 16,500 2007 525.4 746.06 $ 23,429.75
Lean MDEA Pump (P-402) $ 22,500.00 22,500 2007 525.4 746.06 $ 31,949.66
Expander (K-501) $ 158,923.80 158,924 2007 525.4 746.06 $ 225,669.37
Heater (E-501) $ 116,000.00 116,000 2007 525.4 746.06 $ 164,718.23
WGS Reactor (R-501) $14,199,300.97 14,199,301 2007 525.4 746.06 $ 20,162,791.17
Separator CO2 Compression
V-601 $ 11,000.00 11,000 2004 444.2 746.06 $ 18,475.15
V-602 $ 9,000.00 9,000 2004 444.2 746.06 $ 15,116.03
V-603 $ 29,000.00 29,000 2004 444.2 746.06 $ 48,707.20
Gas Turbine (K-703) $51,418,330.61 51,418,331 2010 550.8 746.06 $ 69,646,259.50
Steam Turbine (K-704) $ 6,948,400.00 6,948,400 2012 620.5 746.06 $ 8,354,429.18
HRSG $ 100,000.00 100,000 2006 499.6 746.06 $ 149,331.47
Pump (P-701) $ 20,500.00 20,500 2007 525.4 746.06 $ 29,109.69
Compressor CO2 Compression
K-601 $ 1,314,000.00 1,314,000 2007 525.4 746.06 $ 1,865,859.99
K-602 $ 1,737,100.00 1,737,100 2008 575.4 746.06 $ 2,252,312.87
K-603 $ 1,781,900.00 1,781,900 2009 521.9 746.06 $ 2,547,239.54
K-604 $ 1,632,400.00 1,632,400 2010 550.8 746.06 $ 2,211,089.95
K-701 $ 1,760,100.00 1,760,100 2011 585.7 746.06 $ 2,242,001.38
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Table 1.3. Calculation FOB (continued)
Equipment Original Cost Original Cost (Marked Up) Basis Year Basis Year Index Present Year Index FOB
Air Compressor (K-801) $ 1,224,400.00 1,224,400 2012 620.5 746.06 $ 1,472,160.94
Desalination Unit (D-801) $ 150,000.00 150,000 2006 499.6 746.06 $ 223,997.20
Water Tank (T-804) $ 50,000.00 50,000 2006 499.6 746.06 $ 74,665.73
Pump (P-801) $ 15,200.00 15,200 2006 499.6 746.06 $ 22,698.38
Cooling Water System $ 100,000.00 100,000 2006 499.6 746.06 $ 149,331.47
Slag Handling System $ 532,000.00 1,100,000 2006 499.6 746.06 $ 1,642,646.12
Sulfur Handling $ 5,709,000.00 5,709,000 2007 525.4 746.06 $ 8,106,693.07
Generator & Transformer $ 50,000.00 9,922,000 2007 525.4 746.06 $ 14,089,088.92
Wire and Cable $ 10,000.00 10,000 2006 499.6 746.06 $ 14,933.15
Combustor (R-701) $ 600,000.00 600,000 2007 525.4 746.06 $ 851,990.86
Sulfur Combustor (R-702) $ 600,000.00 600,000 2006 499.6 746.06 $ 895,988.79
Heat Exchanger
E-201 $ 106,667.10 106,667 2012 620.5 746.06 $ 128,251.50
E-202 $ 81,951.62 81,952 2012 620.5 746.06 $ 98,534.77
E-203 $ 122,882.10 122,882 2012 620.5 746.06 $ 147,747.65
E-301 $ 122,637.40 122,637 2012 620.5 746.06 $ 147,453.44
E-302 $ 94,472.67 94,473 2012 620.5 746.06 $ 113,589.49
E-303 $ 123,876.80 123,877 2012 620.5 746.06 $ 148,943.63
E-401 $ 100,899.20 100,899 2012 620.5 746.06 $ 121,316.45
E-405 $ 101,372.80 101,373 2012 620.5 746.06 $ 121,885.88
E-406 $ 121,767.00 121,767 2012 620.5 746.06 $ 146,406.91
E-407 $ 121,012.10 121,012 2012 620.5 746.06 $ 145,499.25
E-601 $ 112,842.30 112,842 2012 620.5 746.06 $ 135,676.27
E-602 $ 105,752.90 105,753 2012 620.5 746.06 $ 127,152.31
E-603 $ 98,839.72 98,840 2012 620.5 746.06 $ 118,840.23
E-604 $ 106,748.50 106,749 2012 620.5 746.06 $ 128,349.37
E-605 $ 106,776.70 106,777 2012 620.5 746.06 $ 128,383.28
E-606 $ 115,394.50 115,395 2012 620.5 746.06 $ 138,744.92
E-701 $ 110,757.70 110,758 2012 620.5 746.06 $ 133,169.85
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Table 1.3. Calculation FOB (continued)
Equipment Original Cost Original Cost (Marked Up) Basis Year Basis Year Index Present Year Index FOB
E-702 $ 56,788.73 56,789 2012 620.5 746.06 $ 68,280.10
E-703 $ 3,235,600.00 3,235,600 2012 620.5 746.06 $ 3,890,333.18
E-704 $ 53,378.14 53,378 2012 620.5 746.06 $ 64,179.36
E-705 $ 143,015.60 143,016 2012 620.5 746.06 $ 171,955.23
E-706 $ 62,562.19 62,562 2012 620.5 746.06 $ 75,221.83
Boiler Utility $ 160,000.00 160,000 2012 620.5 746.06 $ 192,376.47
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Table 1.4. Total Bare Module Cost (continued)
Sub-process Equipment Required Unit Number Unit Price TBM Factor Total Bare Module
E-301 1 $ 147,453.44 2.7 $ 398,124.28
E-302 1 $ 113,589.49 2.7 $ 306,691.63
E-303 1 $ 148,943.63 2.7 $ 402,147.81
E-401 1 $ 121,316.45 2.7 $ 327,554.41
Heat Exchanger
E-405 1 $ 121,885.88 2.7 $ 329,091.89
E-406 1 $ 146,406.91 2.7 $ 395,298.66
E-407 1 $ 145,499.25 2.7 $ 392,847.99
E-601 1 $ 135,676.27 2.7 $ 366,325.93
K-601 1 $ 1,865,859.99 2.7 $ 5,037,821.98
K-602 1 $ 2,252,312.87 2.7 $ 6,081,244.75
K-603 1 $ 2,547,239.54 2.7 $ 6,877,546.75
K-604 1 $ 2,211,089.95 2.7 $ 5,969,942.86
K-701 1 $ 2,242,001.38 2.7 $ 6,053,403.72
Air Compressor (K-801) 1 $ 1,472,160.94 2.7 $ 3,974,834.54
CO2 Compression
V-601 1 $ 18,475.15 3.15 $ 58,196.71
V-602 1 $ 15,116.03 3.15 $ 47,615.49
V-603 1 $ 48,707.20 3.15 $ 153,427.69
Gas Turbine 1 $ 69,646,259.50 1 $ 69,646,259.50
Steam Turbine (K-703) 1 $ 8,354,429.18 1 $ 8,354,429.18
Slag Handling 1 $ 1,642,646.12 1 $ 1,642,646.12
Sulfur Combustor (R-701) 1 $ 8,106,693.07 1 $ 8,106,693.07
Generator & Transformer 1 $ 14,089,088.92 1 $ 14,089,088.92
Sulphur Reactor
Piping 1 $ 79,590,963.40 1 $ 79,590,963.40
Elbow 1 $ 10,023.14 1 $ 10,023.14
TOTAL $ 381,137,191.01
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CONTINGENCY COST
No Type of Cost N Based Cost (US$) Cost (US$)
1 Contingency 15% $381,137,191 $57,170,579
Total Contingency Cost $57,170,579
1.2.2.2 Contractor Fee
Cost of contractor fee uses 3% of CTBM (Total Bare Module Cost). Based on
Table 1.12, cost for contractor fee is US $11,434,116.
CONTRACTOR FEE
No Type of Cost N Based Cost (US$) Cost (US$)
1 Contractor 3% $381,137,191 $11,434,116
Total Contractor Fee Cost $11,434,116
1.2.2.3 Engineering and Supervision
Cost of engineering and supervision uses 8% of CTBM (Total Bare Module
Cost). Based on Table 1.13, cost for engineering and supervision is US
$30,490,975.
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CONTRACTOR FEE
No Type of Cost N Based Cost (US$) Cost (US$)
Engineering and
1 8% $381,137,191 $30,490,975
Supervision
Total Contractor Fee Cost $30,490,975
1.2.2.4 Construction Expenses (COPEX)
Cost of construction expenses uses 10% of CTBM (Total Bare Module Cost).
Based on Table 1.14, cost for construction expenses is US $38,113,719.
CONTRACTOR FEE
No Type of Cost N Based Cost (US$) Cost (US$)
Construction
1 10% $381,137,191 $38,113,719
Expenses
Total Contractor Fee Cost $38,113,719
1.2.3 Working Capital
Cost of working capital uses 17.6% of CTPI (Total Permanent Investment
Cost). Based on Table 1.15, the cost of working capital is US$ 150,680,366.
WORKING CAPITAL
No Type of Cost N Based Cost (US$) Cost (US$)
1 Working Capital 17.6% $797,914,246 $150,680,366
Total of Working Capital $150,680,366
1.2.4 Additional Cost
Beside the market research cost, there are some additional costs that will be
included in the CAPEX that includes the components mentioned in Table 1.16.
Installation Price
Water Installation Rp15,000,000
Internet Installation Rp500,000
Hydrants Installation Rp10,000,000
TOTAL Rp25,500,000
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The above costs are based on the Indonesias Law of Industry No 14 2001 and the
service companies such as Telkom, Telkomsel, and PDAM. There are other costs
that are still need to be calculated. The calculation will be in the Total CAPEX
sub-chapter.
1.2.5 Total Capital Expenditure
Capital investment on the plant same with capital expenditure. First, the
total capital investment should be calculated before being analyzed. The total
capital investment of a chemical plant is stated as a one-time expense for the design,
construction, and start-up of a new plant. With using equation such as shown before,
TCI value shown in Table 1.17 can be obtained.
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In Figure 1.2 is shown the breakdown of TCI. Direct cost is the highest cost in TCI.
16%
Direct Cost
5%
Indirect Cost
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Table 1.18. Comparison with Existing Plant
Raw
Electricity Year Lifetime CAPEX OPEX PBP
Plant IRR Material/day
Production (MW) Operating (years) (US$x1000) (US$x1000) (years)
(ton)
IGCC Plant (own) 501 2020 30 868,459 1,199,672 7.12% 12 4,800.00
Conoco Phillips IGCC Plant 518.24 2006 30 1,059,883 1,067,802 10.60% 15 5202.36
Shell IGCC Plant 473.176 2006 30 1,179,524 955,101 9.40% 13 5151.096
China IGCC Plant 450 2014 25 501,000 882,000 8.00% 10 2097
As for the comparison above, for almost the same electricity production, IGCC plant has lower CAPEX and OPEX compared to
IGCC Plant in Conoco Phillips and Shell in USA, and slightly higher OPEX.
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CHAPTER 2
OPERATING COST
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2.1.1.2 Utility
Utilities are including water needed for the labor and boiler fuel. The steam
and process water generate by the reverse osmosis, so they exclude the utility price.
The consumption of utilities can be estimated from the material and energy balances
for the process, together with the equipment flow sheet.
Fuel Price
Solar 8,448 rp/liter
Based on the needed, the solar that consumed by the boiler is 850,000 liters/year.
So, the solar fuel price per year is Rp 7,180,800,000 or US$ $544,000.00.
2.1.1.3 Insurance
Insurance cost consists of health and safety insurance, plant equipment
insurance, and building insurance. Health and safety insurance normally is 1% from
employee fee, plant equipment insurance is 0.5% from equipment costs, and
building insurance is 0.5% from construction cost. Its shown in Table 2.5.
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Amount of
1 2 1 2 1 2
people
Salary per
10,000,000 6,000,000 10,000,000 5,000,000 20,000,000 10,000,000
person
Insurance
per person
890,000 534,000 890,000 445,000 1,780,000 890,000
(0.89% of
Salary)
Total
890,000 1,068,000 890,000 890,000 1,780,000 1,780,000
Insurance
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Table 2.6. Salary Tax
Production Cleaning Production Planning and Production Planning and Supply Process
Description Security
Staff Service Supply Chain Staff Chain Manager Engineer
Amount of
36 2 4 2 1 2
people
Salary per person 3,500,000 3,100,000 3,100,000 5,000,000 10,000,000 6,000,000
Salary Tax per
- - - 853,650 3,957,300 1,474,380
year per person
Total Salary Tax - - - 1,707,300 3,957,300 2,948,760
Amount of people 1 2 1 2 1 2
Salary per person 10,000,000 6,000,000 10,000,000 5,000,000 20,000,000 10,000,000
Salary Tax per year per
3,957,300 1,474,380 3,957,300 853,650 10,164,600 3,957,300
person
Total Salary Tax 3,957,300 2,948,760 3,957,300 1,707,300 10,164,600 7,914,600
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Cost Amount
Raw Mat Cost $86,227,629.26
Utility fuel $544,000.00
Maintenance $38,113,719.10
Water for people $2,529.16
PBB $3,843.30
Total salary tax $2,374.90
Total insurance $1,608.74
Salary $272,151.52
Utility fuel $56,830.00
Comm $446.97
Total Operating Cost $125,228,757.98
PBB Total
Total
salary
insurance
tax Salary Comm Support
0.00% 0.00%
0.00% 0.22% Utility fuel 0.00% facility
0.05% 0.00%
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ECONOMIC EVALUATION
$120.00
$100.00
$80.00
$60.00
$40.00
$20.00
$-
2015 2020 2025 2030 2035 2040 2045 2050 2055
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to the value of depreciated assets. Liability decline can be seen in the Table 3.4.
Total Depreciation
Year
Equipment Supporting Equipment Building
1 $ 370,274,787 $ 1,688 $ 3,525
2 $ 33,324,731 $ 1,520 $ 3,419
3 $ 29,992,258 $ 1,368 $ 3,317
4 $ 26,993,032 $ 1,231 $ 3,217
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Total Depreciation
Year
Equipment Supporting Equipment Building
5 $ 24,293,729 $ 1,108 $ 3,121
6 $ 21,864,356 $ 997 $ 3,027
7 $ 19,677,920 $ 897 $ 2,936
8 $ 17,710,128 $ 808 $ 2,848
9 $ 15,939,115 $ 727 $ 2,763
10 $ 14,345,204 $ 654 $ 2,680
11 $ 12,910,683 $ 589 $ 2,599
12 $ 11,619,615 $ 530 $ 2,521
13 $ 10,457,654 $ 477 $ 2,446
14 $ 9,411,888 $ 429 $ 2,372
15 $ 8,470,699 $ 386 $ 2,301
16 $ 7,623,629 $ 348 $ 2,232
17 $ 6,861,267 $ 313 $ 2,165
18 $ 6,175,140 $ 282 $ 2,100
19 $ 5,557,626 $ 253 $ 2,037
20 $ 5,001,863 $ 228 $ 1,976
21 $ 4,501,677 $ 205 $ 1,917
22 $ 4,051,509 $ 185 $ 1,859
23 $ 3,646,358 $ 166 $ 1,804
24 $ 3,281,723 $ 150 $ 1,749
25 $ 2,953,550 $ 135 $ 1,697
26 $ 2,658,195 $ 121 $ 1,646
27 $ 2,392,376 $ 109 $ 1,597
28 $ 2,153,138 $ 98 $ 1,549
29 $ 1,937,824 $ 88 $ 1,502
30 $ 1,744,042 $ 80 $ 1,457
The detail value of depreciation is shown in Appendix.
3.3 Profitability Analysis
In profitability analysis, different methods are used for each alternative
equipment lines with its alternative location. The method will be used are WACC,
Rate of Investment (ROI), Payback Period, Net Present Value (NPV), Break Even
Point (BEP), and Internal Rate of Return (IRR).
3.3.1 WACC
Before the new business is started or developed, first thing to do is an
experiment about the business that will be held, which will be advantageous or not.
To determine a project feasible or not to do, it is necessary a feasibility analysis of
investment. Investment is called feasible if it gives more profit than the expected.
Expected minimum profit are commonly known as the MARR, while profits are
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calculated on the investment feasibility analysis are known as the IRR. MARR is
calculated using WACC (Weighted Average Cost of Capital).
WACC = E/V Re + D/V Rd (1 tax rate) (3.2)
Where,
E = market value of the firms equity
D = market value of the firms debt
V=E+D
Re = cost of equity
Re = Rf + ex (Rm - Rf)
Rf = risk-free rate
Rm = market return
ex = stock's beta
Based on this calculation, WACC is 10.51%. MARR can be taken as high
as WACC which is 10.51%. Some of the usual investment parameters analyzed are
given in the sensitivity analysis.
3.3.2 Rate of Investment (ROI)
A rate of investment is the gain or loss on an investment over a specified
period, expressed as a percentage increase over the initial investment cost. Gains
on investments are any income received from the security plus realized capital
gains. The gross profit is $49,093,587.18 and invested capital or also called total
capital investment (TCI) is $868,459,176.49. The calculation is shown below.
gross profit
%ROI = (invested capital) x100% (3.3)
$77,348,108.18
% = ( $868,459,176.49 ) 100% = 8.9%
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interpolation formula is used to get payback period data below by Equation 3.4 with
(+) is positive and () is negative.
PBPCFF Year at highest () 0CCF Highest ()
CCF Year lowest (+) ofCCF Year highest ()
=
CCF Lowest (+)CCF Highest ()
(3.4)
$1.50
BILLIONS
$1.00
$0.50
CCF
$-
0 10 20 30
$(0.50)
$(1.00)
YEAR
Total fixed cost is the cost that is worth to be stable and not affected by the
number of production or cost variables. Variable costs are costs that depend on the
level of production of goods. BEP can be seen from the previous calculation, where
the payback period appears on 11.51 years. Based on the assumption in cash flow
calculation, a certain percentage of products has been obtained that is sold every
year, so the interpolation of the amount of product sold between the 11th and 12th
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year when the payback period occurs will be done. The calculation is shown in
Table 3.6.
where:
CFn = net cash inflow during the period t
TCI = total initial investment costs
r = discount rate, and
n = number of time periods
The IRR obtained from the project is 7.12%. The IRR will be used for comparation
working capital with the minimum probability.
3.3.6 Net Present Value (NPV)
Net Present Value (NPV) is the difference between the present value of cash
inflows and the present value of cash outflows. NPV is used in capital budgeting to
analyze the profitability of a projected investment or project. NPV can also be
interpreted as the present value of the cash flows generated by the investment. In
calculating the NPV is necessary to determine the relevant interest rate. This value
is calculated from WACC which is calculated as 10.51% based on capital
expenditure and tax rate. Equation 3.7 is the formula for calculating NPV.
C
NPV = Tt=1 (1+r)
t
t C0
(3.7)
where:
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Deviation vs IRR
20.00%
15.00%
10.00%
IRR
5.00%
0.00%
-60% -40% -20% 0% 20% 40% 60% 80% 100% 120%
-5.00%
Deviation
Figure 3.3. The Influence of Fluctuations of Product Price, Raw Material Cost and Salary on IRR
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Deviation vs PP
50.00
30.00
20.00
10.00
0.00
-60% -40% -20% 0% 20% 40% 60% 80% 100% 120%
Deviation
Figure 3.4. The Influence of Fluctuations of Product Price, Raw Material Cost and Salary on
Payback Period
Deviation vs NPV
$0.40
Billions
$0.20
$-
NPV
$(0.40)
$(0.60)
Deviation
Figure 3.5. The Influence of Fluctuations of Product Price, Raw Material Cost and Salary on NPV
Based on figures above, the fluctuation in product price and raw material
price will change the parameter of economic profitability such as IRR, NPV and
payback period significantly. For IRR analysis, the value of sensitivity is taken to
the rate of target IRR (at least equal to WACC). As shown in figure above, the
influence of fluctuations of product price and raw material cost on IRR, the IRR
which reach more than 10.51% is gained by reducing the raw material cost to -50%
or adding the product price of CO2 until 35% or 100% of electricity price. The price
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of CO2 at that point is the same as the price in 2037. If the product is sold based on
nowadays price the profit might not gained. If the product price of CO2 or raw
material price is fluctuated by 30%, the NPV value is negative and IRR<MARR,
which indicates deficit, these are the most sensitive parameter.
If this is compared to the price in US, which existing IGCC is mainly there,
the cost of electricity is about $0.2/kWh, which is 2 times of price of electricity in
Indonesia. And by the survey conducted by Ministry of Mineral Resources in
Indonesia, IGCC is not ready by now, and projected to be ready by 2030 or forth.
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CONCLUSION
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REFERENCES
Branan, Carl. 2005. Rules of Thumb for Chemical Engineers 4th Edition.
Amsterdam : Elsevier Inc.
Brownwell, L. E. & Young, E. H. 1959. Process Equipment Design: Vessel Design,
New York,United States of America, John Wiley & Sons Inc.
Chemical Industries Health and Safety Council. 1977. Hazard and Operability
Studies. London: Chemical Industries Association.
G. Speigth, James. 1980. Chemical And Process Design Handbook. New York :
McGraw-Hill.
Kletz, T. A. 1986. Notes on the Identification and Assessment of Hazard. London:
The Institution of Chemical Engineers.
Lees, F. P. 1981. Some Features of and Activities in HAZOP Studies. The
Chemical Engineer.
Perry, RH, Green, DW. 1999. Perrys Chemical Engineering Handbook. McGraw-
Hil.
Rawlings, Ekerdt. 2002. Chemical Reactor Analysis and Design Fundamentals.
Austin, Texas : Nob Hill Publishing.
Richardsons, Coulson. 1983. Chemical Engineering Design Volume 6,
Amsterdam, Elsevier Inc.
Seider, W. D., Seader, J. D. & Lewin, D. R. 2003. Product and Process Design
Principles, John Wiley and Sons, Inc.
Tica, H Gueguen, et al. 2011. Start-Up of Combined Cycle Power Plants. IFAC
World Congress. Workshop on Hierarchical and Distributed MPC:
Algorithms and Applications Start-Up: Milano.
Wallas, Stanley M. 1988. Chemical Process Equipment Selection and Design.
Butterworth-Heinemann
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APPENDICES
APPENDIX A
PURCHASED EQUIPMENT COST CALCULATION
APPENDIX B
LOAN PAYMENT
APPENDIX C
CASH FLOW
APPENDIX D
DEPRECIATION
Year 1 Year 2
Description Initial Value Year-1
Depresiasi Salvage Value Depresiasi Salvage Value
Building 1 (Plant) $ 85,227 $ 2,557 $ 82,670 $ 2,480 $ 80,190
Building 2 (Office & Canteen) $ 28,636 $ 859 $ 27,777 $ 833 $ 26,944
Conblock $ 3,636 $ 109 $ 3,527 $ 106 $ 3,421
TOTAL $ 117,500 $ 3,525 $ 113,975 $ 3,419 $ 110,556
Building 1
$ 1,269 $ 41,030 $ 1,231 $ 39,799 $ 1,194 $ 38,605
(Plant)
Building 2
(Office & $ 426 $ 13,786 $ 414 $ 13,372 $ 401 $ 12,971
Canteen)
Conblock $ 54 $ 1,751 $ 53 $ 1,698 $ 51 $ 1,647
TOTAL $ 1,749 $ 56,567 $ 1,697 $ 54,870 $ 1,646 $ 53,223
Year 27 Year 28
Description
Depresiasi Salvage Value Depresiasi Salvage Value