Financial feasibility study on conversion of oil palm trunk sap into bioethanol and fuel pellets
2014
Zulkafli, H. | Wan Asma I. | Muhammad Faisal, M.Y. | Rohana, A. R. | Rafidah, J. | Puad, E.
The Third Industrial Master Plan (2006-2020) was introduced by the Government of Malaysia to promote energy generation from palm biomass to ensure higher contribution of the total factor production. Based on the UNEP-FRIM-UMP finding, the most environmental sound technological products from waste palm trees into an energy resource were bioethanol from oil palm trunk sap and fuel pellets manufactured from the sap squeezed residues. This paper highlights the financial feasibility on conversion of oil palm trunk sap into bioethanol and fuel pellet for a period of 15 years. The analysis assumed that the capacity of the plant will be for the production of 100 tons of bioethanol per day and a total of 700 tons of fuel pellets per day could be derived. The total revenue for both productions is RM2,117 million with a total cost of RM1,552 million. Profit and loss statement shows that the production of bioethanol and fuel pellet will generate a profit with net income of RM565 million within 15 years. Based on the net present value (NPV) of RM 211 million (USD 70.3 million) was obtained with a 39 % internal rate of return (IRR), cost benefit ratio (BCR) of 1.28 and payback period of 4 years; investment for development of the plant is considered acceptable in investment decisions. Considering land availability and source of material supply, the plant is more suitable to be established in Sabah rather than Peninsular Malaysia. In overall, the business proposal for converting WPT into renewable energy looked promising due to the demand of green products globally.
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