Proceedings of the International Conference on Economics, Management and Accounting (ICEMAC 2021)

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Investment Decision Analysis of LPG Trans-Shipment Project

Authors
Vernida Mufidah1, *, Oktofa Yudha Sudrajad2
1Bandung Institute of Technology, School of Business and Management
2Bandung Institute of Technology, School of Business and Management
*Corresponding author. E-mail: vernida_mufidah@sbm-itb.ac.id
Corresponding Author
Vernida Mufidah
Available Online 10 February 2022.
DOI
10.2991/aebmr.k.220204.014How to use a DOI?
Keywords
LPG; East Indonesia; LPG Hub Terminal; Financial Model; Sensitivity Analysis; NPV; IRR
Abstract

LPG demand for East Indonesia increases year by year; currently, the demands are being supplied by Ship to Ship (STS) in East Java that causes high costs due to the far distance between terminal and destination point in East Kalimantan and Sulawesi. Company XYZ, located in East Kalimantan, has an LPG storage facility and jetty that can be utilized to be an LPG hub to cover the demand in East Indonesia. This project will build an LPG Hub Terminal in East Kalimantan with the business scheme Build, Operate and Own (BOO) with a project lifetime of ten years. The investment project analysis is conducted to determine the processing fee and limitation volume to make the project run. Based on the financial model, this project is feasible to run with an IRR of 18.87%, NPV Rp 368.376.211.074, profitability index of 6.42, and a payback period of 5.9 years. This result is assumed for processing fee 11.9 USD/MT and 707.000 MT/year, and funding scenario is 80% debt and 20% equity. Based on the analysis, the most components affecting the project are processing fee, LPG volume, interest rate, maintenance cost, and salary. The scenario analysis is conducted to analyze the lowest processing fee and volume limitation. The lowest processing fee is 10 USD/MT with an LPG volume 707.000 MT/year limitation. Meanwhile, the limitation of LPG volume to run this project is 500.000 MT/year with a processing fee of 11.9 USD/MT. If the LPG volume is less than 500.000 MT/year, the project is not feasible to run.

Copyright
© 2022 The Authors. Published by Atlantis Press International B.V.
Open Access
This is an open access article under the CC BY-NC license.

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Volume Title
Proceedings of the International Conference on Economics, Management and Accounting (ICEMAC 2021)
Series
Advances in Economics, Business and Management Research
Publication Date
10 February 2022
ISBN
978-94-6239-532-9
ISSN
2352-5428
DOI
10.2991/aebmr.k.220204.014How to use a DOI?
Copyright
© 2022 The Authors. Published by Atlantis Press International B.V.
Open Access
This is an open access article under the CC BY-NC license.

Cite this article

risenwbib
TY  - CONF
AU  - Vernida Mufidah
AU  - Oktofa Yudha Sudrajad
PY  - 2022
DA  - 2022/02/10
TI  - Investment Decision Analysis of LPG Trans-Shipment Project
BT  - Proceedings of the International Conference on Economics, Management and Accounting (ICEMAC 2021)
PB  - Atlantis Press
SP  - 121
EP  - 131
SN  - 2352-5428
UR  - https://doi.org/10.2991/aebmr.k.220204.014
DO  - 10.2991/aebmr.k.220204.014
ID  - Mufidah2022
ER  -