1) Introduction:

A 300 MW combined cycle power plant to generate electricity. The plant will use furnace oil as
fuel and will consists of gas turbines from GE Franc. The plant will produce electricity at cost of
almost 8.1 PKR per unit.

2) Infrastructure:

a) The plant will require two boilers with the capacity of 511.96 mBtu/h.
b) 2 turbine rooms.
c) Control room.
d) Two chimneys as the outlet for the residual steam.
e) Pipelines to accommodate the combined cycle for the power plant.
f) Condensing chambers.
g) Maintenance Inventory Building.

3) Staff:
 4) Time period:

The project will be completed in 10 months and begin its operations afterwards.

5) Market demand:
As Pakistan is facing the problem of the shortfall of energy since a very long time, this power
plant is highly required to add more electricity for the country. Electricity demands get lower
with the fall of temperature and gets minimum in winter season. And increases in summer
season

6) Factors affecting demand and supply of product:

The electricity supply can be affected due to certain reasons like poor infrastructure of wire
network at certain places in Pakistan and electricity theft.

7) Type of market:

We compete in monopolistic market. As we are sole seller in some certain area

But we do have identical power plants in Pakistan,

8) Future expectations:
We expect that in future our production will increase. As well our price of one unit will also
increase.

9) Project’s Fixed costs:

The fixed cost for the project will be the cost of the area rented, the cost of the administration
and taxes on the equipment

10) Project’s variable cost:

This cost can be given by the value of fuel used to generate steam, cost of the
maintenance and workers’ wages.

11) Plant Capacity:

The production basis for a typical tiny unit would be as under: Working hours/day : 8 (1
shift) Working days in a year : 365 Production capacity : Processing of 3 MW electricity per
day. The unit has been assumed to operate at 70%, 80% and 90% of its installed capacity in
the first, second and third year and onwards of its operation.
 12) Total Capital Requirement:
The total capital requirement including fixed capital and working capital is estimated at Rs
38.10 lakhs as follows. Of this, the project cost comprising fixed capital and margin money
on working capital is Rs 34.70 lakhs.

A. Fixed Capital: (Rs in lakh)

Land Rented
Building Rented
Machinery 25.00
Miscellaneous fixed assets 5.50
Preliminary and pre-operative expenses 2.00
Total (A) 32.50
====

B. Working Capital:
Raw materials & Consumables 1 week 1.20
Finished goods 1 week 1.70
Working expenses 1 month 0.80
Receivables 1 week 1.90
Total (B) 5.60
====
Total (A)+(B) 38.10
Note: Working capital may be financed as:
Bank Finance ….. Rs 3.40 lakhs
Margin Money ….. Rs 2.20 lakhs
Rs 5.60 lakhs
===========

Means of Finance:
The project cost of Rs 34.70 lakhs including margin money for working capital may be
financed as under:
Promoter’s contribution (35%) …. Rs 12.15 lakhs
Term Loan (65%) …. Rs 22.55 lakhs
Rs 34.70 lakhs
===========
Operating Expenses:
The annual operating expenses are estimated at Rs 80.30 lakhs (70% capacity utilization) as
given below:
1. Raw materials & consumable 59.00 (in lakhs)
2. Utilities 1.50
3. Wages & Salaries 7.50
4. Overheads 1.30
5. Selling expenses @ 0.5% on annual sales 4.50
6. Interest on term loan (13.50%) 3.00
7. Interest on Bank Finance for working capital (12.75%) 1.00
8. Depreciation @10% 2.50
80.30
=====

Profitability:
Based on the sales realization and the operating expenses, the profit would be Rs
9.10 lakhs per year (70% capacity utilization). This works out to a return on
investment of 22%. The plant will break even at 49% of the rated capacity.

Highlight:
The major highlights of the project are as follows:
Total capital requirement Rs 34.70 lakhs
Promoter’s contribution Rs 12.15 lakhs
Annual sales realization (70% cap.) Rs 89.40 lakhs
annual operating expenses (70% cap.) Rs 80.30 lakhs
Annual profit (pre-tax) Rs 9.10 lakhs
Pre-tax Return on Sales 10%
Break Even Point 49%
No.of persons employed 50