Coal Power Station Feasibility

A project for a coal power station has the following features:

The cost of the plant per kW is $$400($CIF$).$

Capacity equals $50$ megawatts.

The plant must be imported, and installation costs would be approximately $$200$ per kW$.$ A local contractor would complete $75\%$ of the project, with the remainder spent on international contractors. The local contractor will hire unskilled laborers for $35\%$ of the installation work and semi$-$skilled personnel for the remaining portion.

The plant is predicted to utilize $1\mathrm{.}7$ barrels of diesel per MWh for the first five years, increasing to $1\mathrm{.}8$ barrels$/$MWh for the following five years. Imported fuel costs $$50($CIF$)$ per barrel, whereas domestic refineries offer diesel for LM $($Local Money$)2400$ per barrel. Transportation and handling costs $$10$ per barrel from port to project site. The CIF price is predicted to rise by $2\mathrm{.}5\%$ every year, while the domestic price will rise in line with inflation.

The plant would need $5$ skilled and $10$ unskilled personnel. The skilled workers earn LM$10,000$ per month. Employee salaries increase annually at an average rate of $5\%.$ The average tax rate on a salary is $10\%.$ Repair and maintenance costs are projected to be $3\%$ of the plant's total cost per year. The remaining costs would be $5\%$ of the initial investment $($including installation$)$ every year.

The official exchange rate is LM$40$ per dollar. However, the parallel market rate is LM$44$ per dollar. Unskilled workers are paid LM$3000$ per month, whereas semiskilled workers earn LM$7000$ per month. The shadow price of unskilled and semiskilled labor wages is thought to be $75\%$ of their market prices.

The facility is expected to run for $4000$ hours per year. The output would be sold to the electric utility for LM$2\mathrm{.}5$ per kWh$.$ The contract provides for a $3\%$ annual increase in the sale price. Determine the investment's economic viability and financial stability. Use a $10\%$ discount rate. Assume a yearly inflation rate of $4\%.$

$1.$ Use the available data to assess the project's feasibility.

$2.$ Your assignment must include clearly stated feasibility calculations.

$3.$ Assume any extra information is required. If you believe there is a missing variable, you can create it by assigning a value.

In this scenario, you should clearly explain your assumptions.

$4.$ In the conclusion section, write your thoughts on whether this investment is feasible or not.