Projekti i Zbatimit te HEC. GURAKUQ Raporti Teknik Plan... · Web viewInvestment value funded by own capital 30% Investment value funded by bank loan 70% Loan amortization schedule:

Hydropower exploitation of Dushar – Zerec stream Business Plan

FOR THE CONSTRUCTION AND OPERATION BYFOR THE CONSTRUCTION AND OPERATION BY CONCESSION OF THE HYDROPOWER PLANTSCONCESSION OF THE HYDROPOWER PLANTS

ON THE DUSHAR-ZEREC STREAMON THE DUSHAR-ZEREC STREAM

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Content:

1. Estimate of theHPPs’ Budgets

2. Main data.

3. Funding Sources:- Percentage of funding by bank loan and own capital- Loan amortization schedule.

4. Financial Plan

5. Profit and Loss Statement- Chart Presentation- Statement for 35 years

6. Cash Flow Statement:- Chart Presentation- Statement for 35 years

7. Project’s rentability:- Net Present Value - NPV- IRR (Internal Rate of return)- Payback Period - Benefit/Cost Ratio- Levelised Discount Cost - LDC

8. Sensitivity Analysis- Sensitivity Analysis to the discount rate- Sensitivity Analysis to the water treated and traded- Sensitivity Analysis to the initial investment-

9. Conclusions

1. ESTIMATE OF THE HPPs’ BUDGETS

Page 2


The following table represents a summary estimation of the investment cost of HPP 1.

No. Description Value (EUR)1 Water Intake 47,243 2 Decanter L = 40 m 14,598 3 Deviation Channel L = 1500 m 81,795 4 Pressure Basin 19,682 5 Turbine Penstock L = 172.5 M 37,836 6 Powerhouse 26,281 7 Connection to the Grid 10 kV 1,429 8 Ricontruction of existing roads and construction of new ones 857 9 Environment 3,629

SUM 233,349 Mobilisation Works 1% 2,333

SUM 235,683 Contingency Fund 5% 11,784

SUM 247,467 VAT 20% 49,493

TOTAL of CIVIL WORKS 296,960 Surveillance and Test Costs 1.3% 3,860

TOTAL 300,821 TECHNOLOGIC MACHINERIES AND EQUIPMENT 144,120 DESIGN OF THE IMPLEMENTATION WORKS 4,286

TOTAL INVESTMENT FOR HPP 1 449,226

Civil Works Equipment Connection to Grid

Engineering VAT

246,038

120,100

1,429 8,146

73,513

The following table represents a summary estimation of the investment cost of HPP 2.

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No. Description Value (EUR)1 Water Intake 42,538 2 Intake of water from Qinami stream 37,014 3 Decantor L = 40 m 14,598 4 Pressure Deviation L = 1900 ml 120,461 5 Pressure Basin 18,985 6 Turbine Penstock L = 760 M 97,296 7 Powerhouse 29,415 8 Connection to the Grid 35 kV 125,714 9 Ricontruction of existing roads and construction of new ones 1,286

SUM 487,308 Mobilisation Works 1% 4,873

SUM 492,181 Contingency Fund 5% 24,609

SUM 516,790 VAT 20% 103,358

TOTAL of CIVIL WORKS 620,148 Surveillance and Test Costs 1.3% 8,062

TOTAL 628,210 TECHNOLOGIC MACHINERIES AND EQUIPMENT 342,000 DESIGN OF THE IMPLEMENTATION WORKS 8,571

TOTAL INVESTMENT FOR HPP 2 978,781


Engineering VAT

391,076

285,000

125,714

16,633

160,358

The following table shows a summery of bill of quantities for the construction of the two hydropower plants as well as the respective chart:

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HPP 1 HPP 2 HPP 1 + HPP 21 Water Intake 47,243 42,538 89,781 2 Decanter L = 40 m 14,598 - 14,598 3 Deviation Channel L = 1500 m 81,795 - 81,795 4 Intake of water from Qinami stream - 37,014 37,014 5 Decantor L = 40 m - 14,598 14,598 6 Pressure Deviation L = 1900 ml - 120,461 120,461 7 Pressure Basin 19,682 18,985 38,667 8 Turbine Penstock L = 760 M + L = 760 M 37,836 97,296 135,133 9 Powerhouse 26,281 29,415 55,696

10 Connection to the Grid 10 kV + 35 kV 1,429 125,714 127,143 11 Environment 3,629 - 3,629 12 Ricontruction of existing roads and construction of new ones 857 1,286 2,143

SUM 233,349 487,308 720,657 Mobilisation Works 1% 2,333 4,873 7,207

SUM 235,683 492,181 727,864 Contingency Fund 5% 11,784 24,609 36,393

SUM 247,467 516,790 764,257 VAT 20% 49,493 103,358 152,851

TOTAL of CIVIL WORKS 296,960 620,148 917,108 Surveillance and Test Costs 1.3% 3,860 8,062 11,922

TOTAL 300,821 628,210 929,031 TECHNOLOGIC MACHINERIES AND EQUIPMENT 120,100 285,000 405,100

VAT 20% 24,020 57,000 81,020 TOTALI MACHINERIES AND EQUIPMENT 144,120 342,000 486,120

DESIGN OF THE IMPLEMENTATION WORKS 4,286 8,571 12,857 TOTAL INVESTMENT 449,226 978,781 1,428,008

No. DescriptionValue (EUR)


Engineering VAT

637,114

405,100

127,143

24,780

233,871

2. MAIN DATA- Capacity: 1’865 kW

Page 5


HPP 1 550 kW HPP 2 1’315 kW

- Annual electricity production: 10’000’000 kWh HPP 1 3’000’000 kWh HPP 2 7’000’000 kWh

- Concessionarie Fee 2.5%- Selling Price: 0.067 EUR/kWh- Price Increase 1% per year- Inflation 3%- Discount rate 12% - Concession term 35 years - Construction Period 16 months- Initial Invesstment 1’428’008 EUR

HPP 1 449’226 EUR HPP 2 978’781 EUR

- Bank Loan: 70% of initial investment- Loan Interest: 10%- Loan Payment: 10 years- Own Capital: 428’40252 EUR- Bank Loan: 999’60548 EUR- Annual Operative Expenses: 5% of initial investment

DESCRIPTION INVESTMENT (EUR) CAPACITY (kW) PRODUCTION (kWh)

Specific Capital Cost

(EUR/kW)

Specific Production

Cost (EUR/kWh)

HPP 1 449,226 550 3,000,000 816.78 0.15 HPP 2 978,781 1,315 7,000,000 744.32 0.14 TOTAL 1,428,008 1,865 10,000,000 765.69 0.14

Construction Schedule:

I II III IV V VI VI VII VIIIHYDROPOWER PLANT 1HYDROPOWER PLANT 2

2 MONTH PERIODHYDROPOWER PLANT

Electricity selling price and revenues calculation:

The electricity selling price based upon the decision no.27, dated datë 19.01.2007 is determined by Energy Regulatory Entity by the following formula:

Selling price (Euro/kWh) = Average price of electricity import realized the previous year (Euro/kWh) X Coeficient 1.04

Based on ERE decision this price is 9.37 EUR/kWh with an exchange rate of 140 ALL/EUR it results 6693 EUR/MWh. In order to calculate the revenues the selling price for the first year is assumed 6693 EUR/MWh with an annual increase for the following years of 2% less then the supposed inflation rate of 3%. So the price increase is assumed 1% per year. Also in order to calculate the revenues it is taken into consideration the concessionaire fee of 2.5% of the annual electricity generated.

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3. FUNDING SOURCES

The funding sources of the project are bank loan and own capital. The following table summerizes the funding sources by value and percentage:

Description ValueTotal value to be funded - EUR 1’428’008From which:

Investment value funded by own capital - EUR 428’40252

Investment value funded by bank loan - EUR 999’60548

In %Total value to be funded 100%

Investment value funded by own capital 30%

Investment value funded by bank loan 70%

Loan amortization schedule:

The conditions of the bank loan of a total value of 999’60548 EUR are shown in the following table:

999,605.4810.00%

10111,067.28

12

Bank Loan - EURAnnual Interest - %Payment ScheduleAnnual PaymentGrace Period

Balance at the beginning Payment Interest Balance at the EndPM P I PM - P

1 Janary 999,605.48 8,330.05 999,605.48

2 February 999,605.48 8,330.05 999,605.48

3 March 999,605.48 8,330.05 999,605.48

4 April 999,605.48 8,330.05 999,605.48

5 May 999,605.48 8,330.05 999,605.48

6 June 999,605.48 8,330.05 999,605.48

7 July 999,605.48 8,330.05 999,605.48 8 August 999,605.48 8,330.05 999,605.48 9 September 999,605.48 8,330.05 999,605.48

10 October 999,605.48 8,330.05 999,605.48 11 November 999,605.48 8,330.05 999,605.48

12 December 999,605.48 8,330.05 999,605.48

YEAR I 0.00 99,960.55

No. Month

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1 Janary 999,605.48 9,255.61 8,330.05 990,349.88

2 February 990,349.88 9,255.61 8,252.92 981,094.27

3 March 981,094.27 9,255.61 8,175.79 971,838.66

4 April 971,838.66 9,255.61 8,098.66 962,583.06 5 May 962,583.06 9,255.61 8,021.53 953,327.45 6 June 953,327.45 9,255.61 7,944.40 944,071.84

7 July 944,071.84 9,255.61 7,867.27 934,816.24 8 August 934,816.24 9,255.61 7,790.14 925,560.63

9 September 925,560.63 9,255.61 7,713.01 916,305.02

10 October 916,305.02 9,255.61 7,635.88 907,049.42

11 November 907,049.42 9,255.61 7,558.75 897,793.81

12 December 897,793.81 9,255.61 7,481.62 888,538.21

YEAR II 111,067.28 94,869.96

1 Janary 888,538.21 9,255.61 7,404.49 879,282.60 2 February 879,282.60 9,255.61 7,327.35 870,026.99 3 March 870,026.99 9,255.61 7,250.22 860,771.39

4 April 860,771.39 9,255.61 7,173.09 851,515.78 5 May 851,515.78 9,255.61 7,095.96 842,260.17

6 June 842,260.17 9,255.61 7,018.83 833,004.57

7 July 833,004.57 9,255.61 6,941.70 823,748.96

8 August 823,748.96 9,255.61 6,864.57 814,493.36

9 September 814,493.36 9,255.61 6,787.44 805,237.75

10 October 805,237.75 9,255.61 6,710.31 795,982.14

11 November 795,982.14 9,255.61 6,633.18 786,726.54 12 December 786,726.54 9,255.61 6,556.05 777,470.93

YEAR III 111,067.28 83,763.241 Janary 777,470.93 9,255.61 6,478.92 768,215.32 2 February 768,215.32 9,255.61 6,401.79 758,959.72 3 March 758,959.72 9,255.61 6,324.66 749,704.11 4 April 749,704.11 9,255.61 6,247.53 740,448.50 5 May 740,448.50 9,255.61 6,170.40 731,192.90 6 June 731,192.90 9,255.61 6,093.27 721,937.29 7 July 721,937.29 9,255.61 6,016.14 712,681.69 8 August 712,681.69 9,255.61 5,939.01 703,426.08 9 September 703,426.08 9,255.61 5,861.88 694,170.47 10 October 694,170.47 9,255.61 5,784.75 684,914.87 11 November 684,914.87 9,255.61 5,707.62 675,659.26 12 December 675,659.26 9,255.61 5,630.49 666,403.65

YEAR IV 111,067.28 72,656.511 Janary 666,403.65 9,255.61 5,553.36 657,148.05 2 February 657,148.05 9,255.61 5,476.23 647,892.44 3 March 647,892.44 9,255.61 5,399.10 638,636.84 4 April 638,636.84 9,255.61 5,321.97 629,381.23 5 May 629,381.23 9,255.61 5,244.84 620,125.62 6 June 620,125.62 9,255.61 5,167.71 610,870.02

No. Month

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7 July 610,870.02 9,255.61 5,090.58 601,614.41 8 August 601,614.41 9,255.61 5,013.45 592,358.80 9 September 592,358.80 9,255.61 4,936.32 583,103.20 10 October 583,103.20 9,255.61 4,859.19 573,847.59 11 November 573,847.59 9,255.61 4,782.06 564,591.98 12 December 564,591.98 9,255.61 4,704.93 555,336.38

YEAR V 111,067.28 61,549.781 Janary 555,336.38 9,255.61 4,627.80 546,080.77 2 February 546,080.77 9,255.61 4,550.67 536,825.17 3 March 536,825.17 9,255.61 4,473.54 527,569.56 4 April 527,569.56 9,255.61 4,396.41 518,313.95 5 May 518,313.95 9,255.61 4,319.28 509,058.35 6 June 509,058.35 9,255.61 4,242.15 499,802.74 7 July 499,802.74 9,255.61 4,165.02 490,547.13 8 August 490,547.13 9,255.61 4,087.89 481,291.53 9 September 481,291.53 9,255.61 4,010.76 472,035.92 10 October 472,035.92 9,255.61 3,933.63 462,780.32 11 November 462,780.32 9,255.61 3,856.50 453,524.71 12 December 453,524.71 9,255.61 3,779.37 444,269.10

YEAR VI 111,067.28 50,443.051 Janary 444,269.10 9,255.61 3,702.24 435,013.50 2 February 435,013.50 9,255.61 3,625.11 425,757.89 3 March 425,757.89 9,255.61 3,547.98 416,502.28 4 April 416,502.28 9,255.61 3,470.85 407,246.68 5 May 407,246.68 9,255.61 3,393.72 397,991.07 6 June 397,991.07 9,255.61 3,316.59 388,735.46 7 July 388,735.46 9,255.61 3,239.46 379,479.86 8 August 379,479.86 9,255.61 3,162.33 370,224.25 9 September 370,224.25 9,255.61 3,085.20 360,968.65 10 October 360,968.65 9,255.61 3,008.07 351,713.04 11 November 351,713.04 9,255.61 2,930.94 342,457.43 12 December 342,457.43 9,255.61 2,853.81 333,201.83

YEAR VII 111,067.28 39,336.331 Janary 333,201.83 9,255.61 2,776.68 323,946.22 2 February 323,946.22 9,255.61 2,699.55 314,690.61 3 March 314,690.61 9,255.61 2,622.42 305,435.01 4 April 305,435.01 9,255.61 2,545.29 296,179.40 5 May 296,179.40 9,255.61 2,468.16 286,923.80 6 June 286,923.80 9,255.61 2,391.03 277,668.19 7 July 277,668.19 9,255.61 2,313.90 268,412.58 8 August 268,412.58 9,255.61 2,236.77 259,156.98 9 September 259,156.98 9,255.61 2,159.64 249,901.37 10 October 249,901.37 9,255.61 2,082.51 240,645.76 11 November 240,645.76 9,255.61 2,005.38 231,390.16 12 December 231,390.16 9,255.61 1,928.25 222,134.55

YEAR VIII 111,067.28 28,229.60

No. Month

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1 Janary 222,134.55 9,255.61 1,851.12 212,878.95 2 February 212,878.95 9,255.61 1,773.99 203,623.34 3 March 203,623.34 9,255.61 1,696.86 194,367.73 4 April 194,367.73 9,255.61 1,619.73 185,112.13 5 May 185,112.13 9,255.61 1,542.60 175,856.52 6 June 175,856.52 9,255.61 1,465.47 166,600.91 7 July 166,600.91 9,255.61 1,388.34 157,345.31 8 August 157,345.31 9,255.61 1,311.21 148,089.70 9 September 148,089.70 9,255.61 1,234.08 138,834.09 10 October 138,834.09 9,255.61 1,156.95 129,578.49 11 November 129,578.49 9,255.61 1,079.82 120,322.88 12 December 120,322.88 9,255.61 1,002.69 111,067.28

YEAR IX 111,067.28 17,122.871 Janary 111,067.28 9,255.61 925.56 101,811.67 2 February 101,811.67 9,255.61 848.43 92,556.06 3 March 92,556.06 9,255.61 771.30 83,300.46 4 April 83,300.46 9,255.61 694.17 74,044.85 5 May 74,044.85 9,255.61 617.04 64,789.24 6 June 64,789.24 9,255.61 539.91 55,533.64 7 July 55,533.64 9,255.61 462.78 46,278.03 8 August 46,278.03 9,255.61 385.65 37,022.43 9 September 37,022.43 9,255.61 308.52 27,766.82 10 October 27,766.82 9,255.61 231.39 18,511.21 11 November 18,511.21 9,255.61 154.26 9,255.61 12 December 9,255.61 9,255.61 77.13 (0.00)

YEAR X 111,067.28 6,016.14

No. Month

4. FINANCIAL PLAN

In order to compile the profit and loss statement, cash flow statement and to evaluate the investment, the following is taken into consideration:

1. Construction period of the hydropower plants is 16 months;2. Concession term 1s 35 years including the construction period; 3. annual average electricity generation – 10,000,000 kWh;4. the investment will be realized as follows:

a. during the first year of construction will be invested 169,734,107 EUR; and b. during the second year of construction will be invested 30,186,989 EUR.

5. Electricity selling price willbe 9.37 EUR/kWh for the first year and for the following years there is forecasted a price increase of 1% per year;

6. Annual operative expenses (staff cost, maintenance expenses, administrative expenses) in order to have a normal operation of the HPPs is assumed 5% of the initial investment for the first years, followed by a yearly increase of 3% for the following years (inflation rate);

7. Interest expenses are based on the loan amortization schedule;

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8. Depreciation is assumed linear for the utilization period of the assets (buildings, machineries and equipment, grid lines etc.);

9. Tax on profit is assumed 15%;10. In the 25th year of operation there is forecasted a reinvestment. This reinvestment is

60% of the investment in the equipment and is indexed with the inflation rate of 3%;11.The discount rate in order to evaluate the feasibility of the project is assumed 12%.

5. LOSS AND PROFIT STATEMENT

The profit and loss statement is compiled based on the above-mentioned assumptions. The following table represents the sales, operative expenses and profit for the whole concession term. Also there is given the chart presentation of the operative expenses (which include personnel expenses, maintenace expenses, electricity expenses, intrests, etc.) for the operation period as well as the chart presentation of total operative expenses and net profit.

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34

Annual Operative Expenses by item

Operative Expenses Interest Depreciation Profit Tax

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34

Shpenzime Operative Net Profit

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Year

kWhPrice

(EUR/kWh) Sales (EUR)Operative Expenses EBITDA Interest EBTDA Depreciation EBT Profit Tax Net Profit

1 2 3 4 = 2 * 2 5 6 = 4 - 5 7 8 = 6 - 7 9 10 = 8 - 9 11 = 15% * 10 12 = 10 - 11

1 4,875,000 0.067 326,277 47,600 278,677 99,961 178,716 22,669 156,047 23,407 132,640

2 9,750,000 0.068 659,079 71,400 587,679 94,870 492,809 34,004 458,805 68,821 389,984

3 9,750,000 0.068 665,670 73,542 592,127 83,763 508,364 34,004 474,360 71,154 403,206

4 9,750,000 0.069 672,327 75,749 596,578 72,657 523,921 34,004 489,918 73,488 416,430

5 9,750,000 0.070 679,050 78,021 601,029 61,550 539,479 34,004 505,475 75,821 429,654

6 9,750,000 0.070 685,840 80,362 605,479 50,443 555,036 34,004 521,032 78,155 442,877

7 9,750,000 0.071 692,699 82,773 609,926 39,336 570,590 34,004 536,586 80,488 456,098

8 9,750,000 0.072 699,626 85,256 614,370 28,230 586,140 34,004 552,136 82,820 469,316

9 9,750,000 0.072 706,622 87,813 618,809 17,123 601,686 34,004 567,682 85,152 482,530

10 9,750,000 0.073 713,688 90,448 623,240 6,016 617,224 34,004 583,220 87,483 495,737

11 9,750,000 0.074 720,825 93,161 627,664 - 627,664 34,004 593,660 89,049 504,611

12 9,750,000 0.075 728,033 95,956 632,077 - 632,077 34,004 598,073 89,711 508,362

13 9,750,000 0.075 735,314 98,835 636,479 - 636,479 34,004 602,475 90,371 512,104

14 9,750,000 0.076 742,667 101,800 640,867 - 640,867 34,004 606,863 91,029 515,834

15 9,750,000 0.077 750,094 104,854 645,240 - 645,240 34,004 611,236 91,685 519,550

16 9,750,000 0.078 757,594 107,999 649,595 - 649,595 34,004 615,591 92,339 523,252

17 9,750,000 0.078 765,170 111,239 653,931 - 653,931 34,004 619,927 92,989 526,938

LOSS AND PROFIT STATEMENT

Electricity Sales

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Year

kWhPrice

(EUR/kWh) Sales (EUR)Operative Expenses EBITDA Interest EBTDA Depreciation EBT Profit Tax Net Profit

1 2 3 4 = 2 * 2 5 6 = 4 - 5 7 8 = 6 - 7 9 10 = 8 - 9 11 = 15% * 10 12 = 10 - 11

18 9,750,000 0.079 772,822 114,577 658,245 - 658,245 34,004 624,242 93,636 530,605

19 9,750,000 0.080 780,550 118,014 662,536 - 662,536 34,004 628,532 94,280 534,253

20 9,750,000 0.081 788,356 121,554 666,801 - 666,801 34,004 632,798 94,920 537,878

21 9,750,000 0.082 796,239 125,201 671,038 - 671,038 34,004 637,034 95,555 541,479

22 9,750,000 0.082 804,202 128,957 675,245 - 675,245 34,004 641,241 96,186 545,055

23 9,750,000 0.083 812,244 132,826 679,418 - 679,418 34,004 645,414 96,812 548,602

24 9,750,000 0.084 820,366 136,811 683,556 - 683,556 34,004 649,552 97,433 552,119

25 9,750,000 0.085 828,570 140,915 687,655 - 687,655 49,426 638,230 95,734 542,495

26 9,750,000 0.086 836,856 145,142 691,713 - 691,713 49,426 642,288 96,343 545,945

27 9,750,000 0.087 845,224 149,497 695,728 - 695,728 49,426 646,302 96,945 549,357

28 9,750,000 0.088 853,676 153,981 699,695 - 699,695 49,426 650,269 97,540 552,729

29 9,750,000 0.088 862,213 158,601 703,612 - 703,612 49,426 654,187 98,128 556,059

30 9,750,000 0.089 870,835 163,359 707,476 - 707,476 49,426 658,051 98,708 559,343

31 9,750,000 0.090 879,544 168,260 711,284 - 711,284 49,426 661,858 99,279 562,580

32 9,750,000 0.091 888,339 173,307 715,032 - 715,032 49,426 665,606 99,841 565,765

33 9,750,000 0.092 897,222 178,507 718,716 - 718,716 49,426 669,290 100,394 568,897

34 9,750,000 0.093 906,195 183,862 722,333 - 722,333 26,756 695,576 104,336 591,240

LOSS AND PROFIT STATEMENT

Electricity Sales

Page 13


6. CASH FLOWS STATEMENT

Cash flow of the project which is funded 70% by bank loan and 30% by own capital of concessionaire is shown in the following table:

EUR

Years Cash Flow at the beginning

Cash Inflow Cash Outflow Net Cash Cumulative Cash

0 - - 1,212,386 (1,212,386) (1,212,386) 1 (1,212,386) 326,277 386,589 (60,312) (1,272,699) 2 (1,272,699) 659,079 346,158 312,921 (959,778) 3 (959,778) 665,670 339,527 326,143 (633,635) 4 (633,635) 672,327 332,960 339,367 (294,269) 5 (294,269) 679,050 326,459 352,590 58,322 6 58,322 685,840 320,027 365,814 424,135 7 424,135 692,699 313,664 379,035 803,170 8 803,170 699,626 307,373 392,253 1,195,423 9 1,195,423 706,622 301,156 405,466 1,600,889

10 1,600,889 713,688 295,014 418,674 2,019,563 11 2,019,563 720,825 182,210 538,615 2,558,177 12 2,558,177 728,033 185,667 542,366 3,100,544 13 3,100,544 735,314 189,206 546,108 3,646,651 14 3,646,651 742,667 192,829 549,837 4,196,489 15 4,196,489 750,094 196,539 553,554 4,750,043 16 4,750,043 757,594 200,338 557,256 5,307,299 17 5,307,299 765,170 204,229 560,942 5,868,241 18 5,868,241 772,822 208,213 564,609 6,432,850 19 6,432,850 780,550 212,294 568,256 7,001,107 20 7,001,107 788,356 216,474 571,882 7,572,988 21 7,572,988 796,239 220,756 575,483 8,148,472 22 8,148,472 804,202 225,143 579,059 8,727,530 23 8,727,530 812,244 229,638 582,606 9,310,136 24 9,310,136 820,366 234,243 586,123 9,896,259 25 9,896,259 828,570 745,563 83,007 9,979,266 26 9,979,266 836,856 241,485 595,370 10,574,636 27 10,574,636 845,224 246,442 598,782 11,173,418 28 11,173,418 853,676 251,522 602,155 11,775,573 29 11,775,573 862,213 256,729 605,484 12,381,057 30 12,381,057 870,835 262,067 608,769 12,989,826 31 12,989,826 879,544 267,538 612,005 13,601,831 32 13,601,831 888,339 273,148 615,191 14,217,022 33 14,217,022 897,222 278,900 618,322 14,835,344 34 14,835,344 906,195 288,198 617,996 15,453,340

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Cash flow in chart for is as follows:

(1,500,000)

-

1,500,000

3,000,000

4,500,000

6,000,000

7,500,000

9,000,000

10,500,000

12,000,000

13,500,000

15,000,000

16,500,000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35

Net Cash Cumulative Cash

7. PROJECT’S FEASIBILITY

Some of the main criteria to evaluate and to determine the profitability and the feasibility of the project are:

1. Payback period method;2. Vnet Present Value -NPV;3. Internal Rate of Return - IRR;4. Levelised Discount Cost - LDC;5. Benefit/Cost Ratio.

1. Payback Period method

The method of payback period is the easiest method (criteria) to calculate and it expresses the time required to repay the initial investment with the future cash flows.

The pauback period of the investment is about 5 years which is lower than 35 years of the concession term. This is the case when the cash flow is not discounted.

Page 15


-1,500,000

0

1,500,000

3,000,000

4,500,000

6,000,000

7,500,000

9,000,000

10,500,000

12,000,000

13,500,000

15,000,000

16,500,000

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34

The main disadvantage of the payback period method is that it does not consider the time value of money and the cash flows after the payback period. The following chart represents the payback period for the discounted cash flows. The discounted payback period is 7 years.

-1,500,000

-1,000,000

-500,000

0

500,000

1,000,000

1,500,000

2,000,000

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34

2. Net Present Value - NPV of the Project

The Net Present Value – NPV of the project represents the difference between the discounted cash flows and the initial investment. It is calculated with the following formula:

NPV=∑t=1

35 [ CF t(1+i)t ]−I 0

Page 16


CFt - cash flow at time tI0 - Initial Investmentt - number of years under considerationi - discount rate

The Net Present Value analyzis the profitability of a project and if the NPV is greater than 0 the project should be accepted because the discounted cash flows cover the initial investment and add value to the investment. It is one of the most reliable measures of the project’s profitability. For the base case disocunt rate of 12%, the Net Present Value of the project is 1,808,995 EUR.

3. Internal Rate of Return – IRR of the Project

The Intrernal rate of return – IRR is the discount rate for which the sum of the discounted cash flows equals the initial investment, I0. In other words, IRR is the discount rate for which NPV = 0.

The internal Rate of Return is an indicator of the efficiency of the project. GenerEURy the investment is considered profitable if the IRR is higher than the interest rate that can be earned by the same amount of money invested in an alternative investment (for example another project, securities – treasury bills, bonds; money held in a deposit, etc.). The project is considerd acceptable if the internal rate of return is greater than the established minimum acceptable rate of return.

For the project IRR = 24.06% > 12% (discount rate or minimum acceptable rate of return).

4. Levelised Discount Cost - LDC

Another wellknown method especiEURy in the electricity generation sector is the method of long-term marginal unit cost of electricity generation or Levelised Discount Cost - LDC. This cost is calculated using the following formula:

LDC=∑i=0

35 C i(1+ri )

i

∑i=0

35 Ei(1+ri )

i

Ci – represents the sum of the investment cost, operative costs and depreciation costs. Ei - generated electricity;ri - discount rate.

For the base case disocunt rate of 12%, LDC = 0.0474 EURcent/kWh

Page 17


5. Benefit/Cost Ratio

This measure is calculated as a ratio of the present value of cash inflows to the present valu of cash outflows including the inistial investment. This ratio should be greater than 1 in order for the project to be acceptable.

For the discount rate 12% the benefit/cost ratio is B/C = 1. 495 > 1.

8. SENSITIVITY ANALYSIS

The main parameters to be change for the i nvestment are: discount rate, electricity generated, sale price, initial investment, interest rate. In order to have a more reliable feasibility (profitability) analysis it is necessary to perform the sensitivity analysis. The sensitivity analysis will be performed for the financial criteria NPV, IRR, LDC dhe B/C against the above-mentioned parameters.

Sensitivity Analysis against the discount rate

Discount Rate NPV

12.00% 1,808,99513.00% 1,529,54914.00% 1,288,20415.00% 1,078,48016.00% 895,16517.00% 734,04418.00% 591,68619.00% 465,27920.00% 352,51221.00% 251,46722.00% 160,55023.00% 78,42324.06% 0

1,80

8,99

5

1,52

9,54

9

1,28

8,20

4

1,07

8,48

0

895,

165

734,

044

591,

686

465,

279

352,

512

251,

467

160,

550

78,4

23

0

12.0% 13.0% 14.0% 15.0% 16.0% 17.0% 18.0% 19.0% 20.0% 21.0% 22.0% 23.0% 24.1%

NPV (EUR)

Page 18


Discount Rate LDC

12.00% 0.04713.00% 0.04914.00% 0.05115.00% 0.05316.00% 0.05417.00% 0.05618.00% 0.05819.00% 0.05920.00% 0.06121.00% 0.06322.00% 0.06523.00% 0.06724.06% 0.068

0.04

7

0.04

9

0.05

1

0.05

3

0.05

4

0.05

6

0.05

8

0.05

9

0.06

1

0.06

3

0.06

5

0.06

7

0.06

8

12.0% 13.0% 14.0% 15.0% 16.0% 17.0% 18.0% 19.0% 20.0% 21.0% 22.0% 23.0% 24.1%

LDC (Eurcent/kWh)

Discount Rate B/C

12.00% 1.49513.00% 1.43714.00% 1.38315.00% 1.33316.00% 1.28617.00% 1.24218.00% 1.20119.00% 1.16220.00% 1.12621.00% 1.09222.00% 1.06023.00% 1.03024.06% 1.000

1.49

5

1.43

7

1.38

3

1.33

3

1.28

6

1.24

2

1.20

1

1.16

2

1.12

6

1.09

2

1.06

0

1.03

0

1.00

0

12.0% 13.0% 14.0% 15.0% 16.0% 17.0% 18.0% 19.0% 20.0% 21.0% 22.0% 23.0% 24.1%

B/C Ratio

Sensitivity analysis against electricity generated

One of the main parameters expected to change in the case of hydropower plants projects is annual electricity generation. The following tables show the change of financial criteria when the variation of electricity generation is in the range of ± 30%.

Page 19


415,

550

647,

791

880,

031

1,11

2,27

2

1,34

4,51

3

1,57

6,75

4

1,80

8,99

5

2,04

1,23

6

2,27

3,47

6

2,50

5,71

7

2,73

7,95

8

2,97

0,19

9

3,20

2,44

0

70% 75% 80% 85% 90% 95% 100% 105% 110% 115% 120% 125% 130%

14.8

0%

16.3

5%

17.8

9%

19.4

3%

20.9

7%

22.5

1%

24.0

6%

25.6

0%

27.1

5%

28.7

0%

30.2

5%

31.8

0%

33.3

5%

70% 75% 80% 85% 90% 95% 100% 105% 110% 115% 120% 125% 130%

Sensitivity analysis of NPV Sensitivity analysis of IRR

1.12

2 1.18

8 1.25

2 1.31

5 1.37

6 1.43

6 1.49

5

1.55

2

1.60

8

1.66

3

1.71

7

1.76

9

1.82

1

70% 75% 80% 85% 90% 95% 100% 105% 110% 115% 120% 125% 130%

0.06

3

0.06

0

0.05

7

0.05

4

0.05

1

0.04

9

0.04

7

0.04

6

0.04

4

0.04

3

0.04

1

0.04

0

0.03

970% 75% 80% 85% 90% 95% 100% 105% 110% 115% 120% 125% 130%

Sensitivity analysis of B/C Sensitivity analysis of LDC

Sensitivity analysis against initial investment

In order to obtain a complete sensitivity analysis of the financial measures against the initial investment, the variation of the initial investment is in the range (70-130)%.

Page 20


2,25

0,27

3

2,17

6,72

7

2,10

3,18

1

2,02

9,63

4

1,95

6,08

8

1,88

2,54

1

1,80

8,99

5

1,73

5,44

8

1,66

1,90

2

1,58

8,35

5

1,51

4,80

9

1,44

1,26

2

1,36

7,71

6

70% 75% 80% 85% 90% 95% 100% 105% 110% 115% 120% 125% 130%

27.6

2%

27.0

1%

26.4

1%

25.8

1%

25.2

2%

24.6

4%

24.0

6%

23.4

8%

22.9

2%

22.3

6%

21.8

0%

21.2

6%

20.7

2%

70% 75% 80% 85% 90% 95% 100% 105% 110% 115% 120% 125% 130%

Sensitivity analysis of NPV Sensitivity analysis of IRR

1.70

0

1.66

2

1.62

6

1.59

1

1.55

8

1.52

6

1.49

5

1.46

5

1.43

7

1.41

0

1.38

4

1.35

8

1.33

4

70% 75% 80% 85% 90% 95% 100% 105% 110% 115% 120% 125% 130%

0.04

2

0.04

3

0.04

4

0.04

5

0.04

6

0.04

6

0.04

7

0.04

8

0.04

9

0.05

0

0.05

1

0.05

2

0.05

370% 75% 80% 85% 90% 95% 100% 105% 110% 115% 120% 125% 130%

Sensitivity analysis of B/C Sensitivity analysis of LDC

Also the sensitivity analysis is performed for NPV, IRR and B/C against the variation of the initial investment and the quantity of electricity generated when the dsicount rate is 12%, for the variation of sale price and production and initial investment as well as the variation of the interest rate and debt ratio. The following tables show NPV, IRR, LDC and B/C against the simultaneous change of the initial investment and the quantity of electricity generated, sale price and the quantity of water treated and traded, initial investment and the quantity of electricity generated as well as against the change of interest rate and debt ratio.

Page 21


NPV0.053542857 0.060235714 0.067 0.073621429 0.080314286

(kWh) 1,808,995 80% 90% 100% 110% 120%8,000,000 80% 136,861 508,446 880,031 1,251,617 1,623,202 9,000,000 90% 508,446 926,480 1,344,513 1,762,547 2,180,580

10,000,000 100% 880,031 1,344,513 1,808,995 2,273,476 2,737,958 11,000,000 110% 1,251,617 1,762,547 2,273,476 2,784,406 3,295,336 12,000,000 120% 1,623,202 2,180,580 2,737,958 3,295,336 3,852,714

Electricity sale price (EUR/kWh) Electricity generated

NPV0.053542857 0.060235714 0.067 0.073621429 0.080314286

(EUR) 1,808,995 80% 90% 100% 110% 120%1,142,406 80% 1,174,217 1,638,699 2,103,181 2,567,662 3,032,144 1,285,207 90% 1,027,124 1,491,606 1,956,088 2,420,569 2,885,051 1,428,008 100% 880,031 1,344,513 1,808,995 2,273,476 2,737,958 1,570,809 110% 732,939 1,197,420 1,661,902 2,126,383 2,590,865 1,713,609 120% 585,846 1,050,327 1,514,809 1,979,291 2,443,772

Electricity sale price (EUR/kWh) Initital Investment

NPV56.0% 63.0% 70.0% 77.0% 84.0%

(%) 1,808,995 80% 90% 100% 110% 120%8.00% 80% 2,027,422 1,949,528 1,871,634 1,793,739 1,715,8459.00% 90% 2,002,367 1,921,340 1,840,314 1,759,288 1,678,26210.00% 100% 1,977,311 1,893,153 1,808,995 1,724,837 1,640,67811.00% 110% 1,952,256 1,864,965 1,777,675 1,690,385 1,603,09512.00% 120% 1,927,200 1,836,778 1,746,356 1,655,934 1,565,512

Debt Ratioo (%)Interest Rate

NPV8,000,000 9,000,000 10,000,000 11,000,000 12,000,000

(EUR) 1,808,995 80% 90% 100% 110% 120%1,142,406 80% 1,174,217 1,638,699 2,103,181 2,567,662 3,032,144 1,285,207 90% 1,027,124 1,491,606 1,956,088 2,420,569 2,885,051 1,428,008 100% 880,031 1,344,513 1,808,995 2,273,476 2,737,958 1,570,809 110% 732,939 1,197,420 1,661,902 2,126,383 2,590,865 1,713,609 120% 585,846 1,050,327 1,514,809 1,979,291 2,443,772

Electricity generated (kWh)Initital Investment

80%

90%

100%

110%

120%

0

700,000

1,400,000

2,100,000

2,800,000

3,500,000

80%90%

100%110%

120%

3,500,000-4,000,0002,800,000-3,500,0002,100,000-2,800,0001,400,000-2,100,000700,000-1,400,0000-700,000

Page 22


IRR0.053542857 0.060235714 0.067 0.073621429 0.080314286

(kWh) 24.06% 80% 90% 100% 110% 120%8,000,000 80% 12.93% 15.42% 17.89% 20.36% 22.82%9,000,000 90% 15.42% 18.20% 20.97% 23.75% 26.53%

10,000,000 100% 17.89% 20.97% 24.06% 27.15% 30.25%11,000,000 110% 20.36% 23.75% 27.15% 30.56% 33.97%12,000,000 120% 22.82% 26.53% 30.25% 33.97% 37.68%


IRR0.053542857 0.060235714 0.067 0.073621429 0.080314286

(EUR) 24.06% 80% 90% 100% 110% 120%1,142,406 80% 20.10% 23.26% 26.41% 29.56% 32.70%1,285,207 90% 18.98% 22.10% 25.22% 28.34% 31.47%1,428,008 100% 17.89% 20.97% 24.06% 27.15% 30.25%1,570,809 110% 16.83% 19.87% 22.92% 25.97% 29.04%1,713,609 120% 15.80% 18.80% 21.80% 24.82% 27.86%


IRR56.0% 63.0% 70.0% 77.0% 84.0%

(%) 24.06% 80% 90% 100% 110% 120%8.00% 80% 26.20% 25.45% 24.71% 23.99% 23.29%9.00% 90% 25.92% 25.14% 24.38% 23.64% 22.91%10.00% 100% 25.64% 24.84% 24.06% 23.29% 22.54%11.00% 110% 25.37% 24.54% 23.74% 22.95% 22.18%12.00% 120% 25.10% 24.25% 23.42% 22.61% 21.83%

Debt Ratioo (%)Interest Rate

IRR8,000,000 9,000,000 10,000,000 11,000,000 12,000,000

(EUR) 24.06% 80% 90% 100% 110% 120%1,142,406 80% 20.10% 23.26% 26.41% 29.56% 32.70%1,285,207 90% 18.98% 22.10% 25.22% 28.34% 31.47%1,428,008 100% 17.89% 20.97% 24.06% 27.15% 30.25%1,570,809 110% 16.83% 19.87% 22.92% 25.97% 29.04%1,713,609 120% 15.80% 18.80% 21.80% 24.82% 27.86%


80%90%

100%110%

120%

15.00%

19.53%

24.06%

28.59%

33.12%

80%90%100%110%120%

28.59%-33.12%

24.06%-28.59%

19.53%-24.06%

15.00%-19.53%

Page 23


B/C7.496 8.433 9.370 10.307 11.244

(kWh) 1.495 80% 90% 100% 110% 120%8,000,000 80% 1.041 1.148 1.252 1.352 1.448 9,000,000 90% 1.148 1.265 1.376 1.483 1.586

10,000,000 100% 1.252 1.376 1.495 1.608 1.717 11,000,000 110% 1.352 1.483 1.608 1.727 1.841 12,000,000 120% 1.448 1.586 1.717 1.841 1.959


B/C7.496 8.433 9.370 10.307 11.244

(EUR) 1.495 80% 90% 100% 110% 120%1,142,406 80% 1.367 1.500 1.626 1.746 1.860 1,285,207 90% 1.307 1.435 1.558 1.674 1.786 1,428,008 100% 1.252 1.376 1.495 1.608 1.717 1,570,809 110% 1.201 1.322 1.437 1.547 1.653 1,713,609 120% 1.155 1.272 1.384 1.491 1.594


B/C56.0% 63.0% 70.0% 77.0% 84.0%

(%) 1.495 80% 90% 100% 110% 120%8.00% 80% 1.590 1.555 1.521 1.489 1.4589.00% 90% 1.578 1.542 1.508 1.475 1.44310.00% 100% 1.567 1.530 1.495 1.461 1.42911.00% 110% 1.556 1.518 1.482 1.448 1.41512.00% 120% 1.545 1.506 1.470 1.435 1.402

Interest RateDebt Ratioo (%)

B/C8,000,000 9,000,000 10,000,000 11,000,000 12,000,000

(EUR) 1.495 80% 90% 100% 110% 120%1,142,406 80% 1.367 1.500 1.626 1.746 1.8601,285,207 90% 1.307 1.435 1.558 1.674 1.7861,428,008 100% 1.252 1.376 1.495 1.608 1.7171,570,809 110% 1.201 1.322 1.437 1.547 1.6531,713,609 120% 1.155 1.272 1.384 1.491 1.594


80%

90%

100%

110%

120%

1.100

1.300

1.500

1.700

1.900

80%90%

100%110%

120%

1.700-1.900

1.500-1.700

1.300-1.500

1.100-1.300

Page 24


LDC7.496 8.433 9.370 10.307 11.244

(EUR) 0.047 80% 90% 100% 110% 120%1,142,406 80% 0.041 0.043 0.044 0.045 0.046 1,285,207 90% 0.043 0.044 0.046 0.047 0.048 1,428,008 100% 0.045 0.046 0.047 0.048 0.050 1,570,809 110% 0.047 0.048 0.049 0.050 0.051 1,713,609 120% 0.049 0.050 0.051 0.052 0.053


LDC7.496 8.433 9.370 10.307 11.244

(kWh) 0.047 80% 90% 100% 110% 120%8,000,000 80% 0.054 0.056 0.057 0.058 0.059 9,000,000 90% 0.049 0.050 0.051 0.053 0.054

10,000,000 100% 0.045 0.046 0.047 0.048 0.050 11,000,000 110% 0.042 0.043 0.044 0.045 0.046 12,000,000 120% 0.039 0.040 0.041 0.042 0.043


LDC56.0% 63.0% 70.0% 77.0% 84.0%

(%) 0.047 80% 90% 100% 110% 120%8.00% 80% 0.045 0.046 0.047 0.048 0.0499.00% 90% 0.045 0.046 0.047 0.048 0.04910.00% 100% 0.045 0.046 0.047 0.049 0.05011.00% 110% 0.046 0.047 0.048 0.049 0.05012.00% 120% 0.046 0.047 0.048 0.049 0.051

Interest RateDebt Ratioo (%)

LDC8,000,000 9,000,000 10,000,000 11,000,000 12,000,000

(EUR) 0.047 80% 90% 100% 110% 120%1,142,406 80% 0.052 0.047 0.044 0.041 0.0381,285,207 90% 0.054 0.049 0.046 0.042 0.0401,428,008 100% 0.057 0.051 0.047 0.044 0.0411,570,809 110% 0.059 0.054 0.049 0.046 0.0431,713,609 120% 0.061 0.056 0.051 0.048 0.044

Initital InvestmentElectricity generated (kWh)

80%

90%

100%110%120%

0.030

0.040

0.050

0.060

0.070

80%90%

100%110%

120%

0.060-0.070

0.050-0.060

0.040-0.050

0.030-0.040

Page 25


9. CONCLUSIONS

Based on the above analysis it results that the project for the construction an operation by concession of the HPPs’ on the Dushar - Zerec stream is a feasible project because:

1. Net Present Value (NPV): NPV = 1,808,995 EUR > 0

2. Internal Rate of Retur (IRR) : IRR = 24.06% > 12%

3. Benefit/Cost Ratio: B/C = 1.495

4. Payback period: PBP = 5 years

5. Discounted Payback period: PBPd = 7 years

Levelised Discount Cost - LDC: LDC = 0.047 Eurocent/kWh

Page 26

Projekti i Zbatimit te HEC. GURAKUQ Raporti Teknik Plan... · Web viewInvestment value funded by own capital 30% Investment value funded by bank loan 70% Loan amortization schedule:

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