FINANCIAL FEASIBILITY STUDY - Biodiesel Production from Rape Seed in Serbia
The Client is already involved in the rape seed business and due to their own findings on the market they are interested in buying a biodiesel plant to satisfy the demand in the country as well as for bio fuel export. To produce Bio diesel, the client has best pre¬requisites: The company owned oil mill already produces rapeseed oil; limiting factor being the availability of enough rape seed. With the production of biodiesel, the client wants to enter a new market segment – using their competence in producing rapeseed oil and existing cooperation with local farmers.
To assure feedstock supply, the client made long term contracts with local farmers: The farmers are supported with seed by the client: they cultivate the seed on their own land in early autumn and deliver the harvested rapeseed in early summer.
The financial analysis is based on different technical variants, not only based on different investment, but also on operation costs, origin and price of feedstock and financing options. It also comprises an analysis of technical, market and commercial risk, as well as sensitivity analysis of different parameters and detailed analysis of competition. Ownership and organisation have also been covered. The main output of the study are the results of the discounted cash-flow analyses, planned balance sheets as well as a forecast on the profit & loss statements for a production period of 10 years for each variant. Production costs per litre biodiesel have been listed for each variant as well, based on variable and fixed costs.
The project has proved feasible, with a pay¬back period between 4 and 6 years, de¬pending on the technical and/or commercial variant assumed. This financial feasibility study was not only the main basis for the client’s decision to go for the project, but was also represented to the bank for finance.
Because of the long term contracts with the local farmers, the project will have a strong socio economic impact to the region. It safe¬guards jobs in the agricultural sector and adds to environmental awareness. Contri¬bution to CO2-reduction, as well as the improvement of the life cycle of diesel en-gines will be additional significant environ¬mental benefits deriving from this project.
The production of bio fuels from renewable sources is not only relevant for the enhancement of the regional productivity, but also fulfils the EU policy concerning sustainable development and environmental protection, as well as international treaties, such as the Kyoto-protocol.