Economic Benefit

ドキュメント内 FACT-FINDING IN EAST KALIMANTAN RAILWAY FOR COAL TRANSPORT (Page 40-44)

7. PRELIMINARY PROJECT JUSTIFICATION AND BUSINESS SCHEME

7.1.3 Economic Benefit

The economic benefit, which is the sum of the benefits expected from both of the Public Sub-program and Private Sub-program, is assumed to be the net increase of the coal production in East Kalimantan.

Besides, there are indirect benefits such as the employment and economic development opportunities, deterrent to environmental destruction, taxation to SPCs and community contribution from SPCs.

These indirect benefits are not counted in the economic evaluation of the Program.

(1) Benefits of Coal Transport (a) Economic prices of coal

In order to evaluate the expected program benefits, economic prices of export coal and non-export coal are examined. The economic prices of export coal are estimated on the basis of the economic parity border prices calculated from the projected world market prices of coal in the long-term range for the period from 2010 to 2039. The economic prices of non-export coal are valued by applying the conversion factors to their financial prices at the current market.

Table 7.4 summarizes projection of the economic coal prices for both export and domestic use. Further details on the projection are given in Appendix 2 hereto.

Table 7.4 Estimated Economic Coal Prices (a) For Export

Year Economic Price Notes

2004 37.01 US$/ton

2010 35.27 US$/ton Base year

2011 to 2039 Prices are reduced by 0.8% p.a.

Source: Estimate of the Study Team 6,200 kcal/ton FOB

(b) For Non-Export

Year Economic Price Notes

2004 28.80 US$/ton

2010 27.44 US$/ton Base year

2011 to 2039 Prices are reduced by 0.8% p.a.

Source: Estimate of the Study Team 5,200 kcal/ton FOB

(b) Net increase of coal production

The net increase of coal production will accrue primarily increased mining sites. The net increase of coal production is defined as the difference of the coal production between a) the without-the-Program condition and b) the with-the-Program condition.

The coal production in East Kalimantan in 2003 is reportedly 60 million tons, all of which are now transported by barge under the without-the-Program condition. It is targeted to increase over 170 million tons in 2020 under the with-the-Program condition. To realize such large increase, one can hardly expect any decrease of the barge transport. This is simply because the coal transport in East

Kalimantan has only two choices; barge and coal rail. Therefore, it is quite reasonable to assume that the net increase of the coal production under the Program equals the freight capacity of the coal rail. In other words, one can introduce full freight in normal years for each rolling stock of the coal rail.

Applying the coal production increase rate for the entire East Kalimantan discussed in Appendix 2, the net increase of coal production in East Kalimantan is assumed as illustrated in Figure 7.1.

0 2 4 6 8 10 12

2010 2015 2020 2025 2030 2035 2040

Year

Million ton

Export Non-Export Total

Figure 7.1 Assumption of Net Increase of Coal Production in East Kalimantan

(c) Benefits from net increase of coal production

Applying the economic coal prices discussed earlier, the economic benefit from the coal production increase is calculated, as shown in Table 7.5. The annual benefits of the Program are estimated to be US$ 84.7 million with 10% of the discount rate.

Table 7.5 Expected Economic Benefit under the Program Coal Transport

(Mt)

Unit Benefit

(US$/ton) Benefit (US$ million) Year

Export Domestic Export Domestic Export Domestic Total 2010 5.1 2.7 35.3 27.4 178.4 74.8 253.3 2011 5.5 2.6 35.0 27.2 190.7 72.0 262.7 2012 5.7 2.6 34.7 27.0 199.3 71.1 270.4 2013 5.9 2.7 34.4 26.8 204.6 72.0 276.6 2014 6.1 2.8 34.2 26.6 206.7 74.5 281.2 2015 6.1 3.0 33.9 26.4 206.1 78.5 284.6 2016 6.0 3.2 33.6 26.2 203.0 83.7 286.6 2017 5.9 3.5 33.3 25.9 197.6 90.0 287.6 2018 5.8 3.8 33.1 25.7 190.3 97.2 287.5 2019 5.5 4.1 32.8 25.5 181.4 105.1 286.5 2020 5.3 4.5 32.6 25.3 171.0 113.7 284.7 2021 4.9 4.9 32.3 25.1 159.5 122.7 282.2 2022 4.6 5.3 32.0 24.9 147.0 132.1 279.1 2023 4.2 5.7 31.8 24.7 133.9 141.6 275.4 2024 3.8 6.2 31.5 24.5 120.3 151.1 271.4 2025 3.4 6.6 31.3 24.3 106.4 160.5 266.9 2026 3.0 7.0 31.0 24.1 92.5 169.4 261.9 2027 2.6 7.4 30.8 23.9 78.8 178.1 256.9 2028 2.1 7.9 30.5 23.8 65.5 186.5 252.0 2029 1.7 8.3 30.3 23.6 52.7 194.6 247.3 2030 1.4 8.6 30.0 23.4 40.8 202.0 242.8 2031 1.0 9.0 29.8 23.2 29.7 208.7 238.4 2032 0.7 9.3 29.6 23.0 19.8 214.6 234.4 2033 0.4 9.6 29.3 22.8 11.2 219.5 230.6 2034 0.1 9.9 29.1 22.6 4.0 223.2 227.2 2035 0.0 10.0 28.9 22.5 0.0 224.5 224.5 2036 0.0 10.0 28.6 22.3 0.0 222.7 222.7 2037 0.0 10.0 28.4 22.1 0.0 220.9 220.9 2038 0.0 10.0 28.2 21.9 0.0 219.2 219.2 2039 0.0 10.0 27.9 21.7 0.0 217.4 217.4

Total 0.0 0.0 3,191.2 4,542.0 7,733.2

NPV 0.0 0.0 1,505.4 1,035.2 2,540.6

(2) Other Indirect Benefits

(a) Employment and economic development opportunities

Construction and operation of the railways and coal ports will give vast opportunities to professionals and local laborers to obtain employment. The recruited manpower will reinvigorate local economies through their housing and daily needs.

Another major benefit of the Program is the increase in economic opportunity, increased employment in transportation and service industries.

(b) Benefit to Regional Community

It is assumed that 1% of sales revenue is to be transferred to the regional community every year. The regional community will gain US$35 million in total for all over 30 years. With 10% of the discount rate, its contribution is computed to be US$10 million in a present value.

Note that all of the social impact when the Program is implemented, including household resettlement, will be compensated by the public sector and be neutralized before the commissioning. In this report, such social impact related to the project development is not counted in the public benefit discussions.

(c) Corporate Income Tax

The corporate income tax to be paid by SPCs during the commercial operation years is also counted as public benefit. In the base case discussed later, total amount of the corporate income tax to be paid by SPCs would be as large as US$402 million and its present worth is US$114 million with 10% of the discount rate for 30 years of the operational years from 2010.

Assumptions of the corporate income tax are given later in Sub-section 7.3.4 (2) (i).

7.1.4 Economic Evaluation (1) NPV and EIRR

The NPV and EIRR are calculated based on the aforementioned economic costs and benefits. The cost and benefit flow of the Program, which is composed of the Public Sub-program and Private Sub-program, during the useful life is given in Table 7.56.

The three measures for the Program are:

NPV = US$401.9 million

EIRR: 26.5%

These results indicate that the investment on the Program can expect sufficient economic returns.

(2) Sensitivity

The sensitivity analysis demonstrates the consequences of major changes in the values of costs and benefits parameters on the economic viability of the Program. The results of the sensitivity analysis showed that the Program remained economically viable under a combination of stringent sensitivity tests.

If, for example, it is assumed that the capital cost is 10% greater than the base case and economic prices of coal is 10% less than the same, the economic viability of the Program is sustained, as summarized below.

NPV = US$ 114.2 million EIRR: 15.1%

Table 7.6 Economic IRR Costs (US$ million) Coal Transport

(Mt)

Coal Price

(US$/ton) Benefit (US$ million) Year

O&M Others Total Export Domestic Export Domestic Export Domestic Total Net Benefit

2009 336.6 336.6 0.0 -336.6

2010 14.9 150.3 165.2 2.7 35.3 27.4 178.4 74.8 253.3 88.1 2011 14.9 156.3 171.2 5.5 2.6 27.2 190.7 72.0 262.7 91.5 2012 14.9 161.7 176.6 5.7 2.6 34.7 27.0 71.1 270.4 93.9 2013 14.9 166.6 181.5 5.9 2.7 34.4 26.8 204.6 72.0 95.1 2014 14.9 171.0 185.9 6.1 2.8 34.2 26.6 206.7 74.5 281.2 95.4 2015 14.9 174.9 189.8 6.1 3.0 33.9 26.4 206.1 78.5 284.6 94.8 2016

Capital

5.1

35.0

199.3

276.6

14.9 178.3 193.2 6.0 3.2 33.6 26.2 203.0 286.6 93.4 14.9 181.4 5.9 3.5 33.3 197.6 90.0 287.6

83.7

2017 196.3 25.9 91.3

2018 14.9 184.0 198.9 5.8 3.8 33.1 25.7 190.3 97.2 287.5 88.6 2019 14.9 186.2 201.1 5.5 4.1 32.8 25.5 181.4 105.1 286.5 85.4 2020 14.9 188.1 203.0 5.3 4.5 32.6 25.3 171.0 113.7 284.7 81.7 2021 14.9 189.7 204.6 4.9 4.9 32.3 25.1 159.5 122.7 282.2 77.7 2022 14.9 190.9 205.8 4.6 32.0 24.9 147.0 132.1 279.1 73.3 2023 14.9 191.9 206.8 4.2 31.8 24.7 133.9 141.6 275.4 68.7 2024 14.9 192.6 207.5 3.8

5.3 5.7

6.2 31.5 24.5 120.3 151.1 271.4 63.9 2025 14.9 193.0 207.9 3.4 6.6 31.3 24.3 106.4 160.5 266.9 59.0 2026 14.9 193.0 207.9 3.0 7.0 31.0 24.1 92.5 169.4 261.9 53.9 2027 14.9 207.9 2.6 7.4 30.8 23.9 78.8 178.1 256.9 49.0 2028 14.9 193.0 207.9 2.1 7.9 30.5 23.8 65.5 186.5 252.0 44.1 2029 14.9 193.0 207.9 1.7 8.3 30.3 23.6 52.7 194.6 247.3 39.4 2030 14.9 193.0 207.9 1.4 8.6 30.0 23.4 40.8 202.0 242.8 34.8 2031 14.9 193.0 207.9 1.0 9.0 29.8 23.2 29.7 208.7 238.4 30.5 2032 14.9 193.0 207.9 0.7 9.3 29.6 23.0 19.8 214.6 234.4 26.4 2033 14.9 193.0 207.9 0.4 9.6 29.3 22.8 11.2 219.5 230.6 22.7 2034 14.9 193.0 207.9 0.1 9.9 29.1 22.6 4.0 223.2 227.2 19.3 2035 14.9 193.0 207.9 0.0 10.0 28.9 22.5 0.0 224.5 224.5 16.6 2036 14.9 193.0 207.9 0.0 10.0 28.6 22.3 0.0 222.7 222.7 14.8 2037 14.9 193.0 207.9 0.0 10.0 28.4 22.1 0.0 220.9 220.9 13.0 2038 14.9 193.0 207.9 0.0 10.0 28.2 21.9 0.0 219.2 219.2 11.2 2039 14.9 193.0 207.9 0.0 10.0 27.9 21.7 0.0 217.4 217.4 9.5 Total 336.6 447.0 5,559.3 6,342.9 3,191.2 4,542.0 7,733.2 1,390.3 NPV 336.6 140.5 1,661.6 2,138.7 1,505.4 1,035.2 2,540.6 401.9

193.0

Discount rate = 10% p.a. EIRR = 26.5%

7.2 LIKELY ORGANIZATION AND BUSINESS SCHEME

ドキュメント内 FACT-FINDING IN EAST KALIMANTAN RAILWAY FOR COAL TRANSPORT (Page 40-44)

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