Transcript Dia 1 - lsta.lt

Feasibility Study
as a Basis for
Investment Financing
Arto Nuorkivi
ESCOBALT Project Manager,
Finland
Kaunas, Dec. 14, 2005
Purpose of Feasibility Study:
• Link between borrower and financier
• Financiar may not know anything about the borrower, the
city, the project idea, various implications of the project
• Financier wants to avoid any risk whether financial,
public, environmental, social,..
Introduction
Project Owner: location, type of business,
business volume and development
Project Environment
City: Where located, Population (time series for
past three and coming 10 years), GDP, types
of businesses?
Indicative Structure of
Feasibility Study
Project Description
Project Objectives and Contents
• What benefits you expect to achieve with the project in
energy, water, electricity, staff, maintenance, total costs
and heat quality to customers?
• What is the content of the project?
Beneficiaries
• Who will benefit from the project and why in terms of
heating comfort, cost reduction, emission reduction,
health improvement?
• How many they are in each category?
Heat Demand
• How much is the heat demand: last three years, current
year and ten years to come?
• What are the reasons to increase/decrease ?
• Market share of DH now and in ten years to come?
• Assumptions of heat load estimates?
• Outdoor temperatures in a year needed for heating?
• Space heating or/and domestic hot water?
• Heat load parameters: W/m3 and MWh/m3 year.
Heat Production and Fuels
• How is the heat produced and now: fuel, number of
sources, produced energy, efficiency, age of heat
source(s), flue gas emissions, boiler availability, boiler
connection scheme?
• Is there industrial waste heat available in the project
area?
• Are there any renewable fuels (bio, waste,…) available
in the area?
• Fuel sources, distance and way of transportation, prices,
annual costs, sulphur content, ash content?
• Lime or calcium: availability, price?
Centralized heating Network
• Network separately for primary and secondary network:
length at present, average DN, age, schematic map in
A4 or A3 size, water losses in m3?
• Planned network: average DN, schematic map in A4 or
A3 size?
• Number and type of substations, both group substations
and building level substations?
Operation and Maintenance (O&M)
• Costs of materials and number and costs of people
– used for O&M of the existing DH system?
– planned for O&M of the new DH system?
– used for O&M of the heating system to be eliminated due to the
project?
• Number of damages (interventions, leakages) in the
network in past three years?
• unit cost of repairing a damage in the network on
average?
• Maintenance costs
Project Organization
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•
•
•
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Rights and responsibilities of organization?
Names and positions of people in the organization chart?
Organization chart of project implementation in A4 size?
Organization chart of DH operation and maintenance?
Organization chart of the relation of the DH company to
the owner?
• Education level of project staff and DHE staff?
• Needs of further education?
Tariff Setting
• How the heat tariff is regulated?
• What is the level of heat tariff at present?
• Increases or decreases expected in the next years to
come?
• Plans to revise the tariff system: regulation, structure?
Economic Options to Customer
80,0
70,0
60,0
50,0
40,0
30,0
20,0
10,0
10
0
25
0
0,
50
0
0,
75
0
1,
00
0
2,
00
0
3,
00
0
4,
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0
5,
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6,
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7,
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8,
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0
0,
05
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0,
01
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0,
0,
00
5
0,0
0,
€/Gcal
• From the customer’s
point of view, which
other options are
available for heating if
not DH?
• What are costs of the
options to the customer
compared with DH in
terms of €/MWh
(€/Gcal)?
Heat capacity (Gcal/h) of consumer
DH 05
Gas 05
Gas 06
DH 06
Social Impacts
Poverty: How does the project address poverty
alleviation if at all?
Gender: How does the project address gender
issues if at all (responsibilities and right of
females, usually)?
Health: How does the project address health issues
if at all?
Ethnic considerations: How does the project
address rights of ethnic people in the region if any
at all?
Environmental Assessment
Environmental Legislation and Standards
• Laws and regulations relevant to the project case
(local, EU)?
Environmental Impacts
• Flue gas emissions with and without the project for
the next 10 years to come?
• Table of data used for emission calculation?
• Assumptions used for emission calculation?
• Environmental measures covered by the project
Financial Analysis
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•
•
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Investment costs: foreign and local separately
Table of data used for the analysis
Assumptions of the analysis
A cash flow sheet shall be an annex of the feasibility
study
• Indicative sources of financing
• Indicative financial rate of return (FRR)
• Risks and risk management
Financial versus Economic Analysis
Financial analysis from the company’s point of view: cash
flow of actual cost and benefits with and without the
project including taxes
Economic analysis from the society’s point of view: cash
flow of cost and benefits with and without the project
(economic analysis is not always necessary in the
feasibility study)
Implementation Arrangements
Project organisation
• Expertise and tasks of the project implementation
unit (PIU)?
Permissions to proceed
• Access to land, technical permits, authorizations
Procurement
• Procurement plan with procurement packages with
total costs, procurement method, time schedule of
procurement process of each package