Supplies

Supplies (SC) This usually covers such items as water for make-up and general use, lubricating oils, water treatment chemicals, tools and wiping cloths. In general, any items that is not included in the categories of fuel or maintenance are charged to the supplies account. (Power Station Engineering and Economics by Skrotzki and Vopat, page 562). This cost is about 15% of the total cost for maintenance. (Plant Design Engineering and Economics for Chemical Engineers by Peters and Timmerhaus, p.204)

= (0.15) (LML) = (0. 15) (96,835,663.4) =P 14,489,036.14 Supervision Supervision usually includes the salary of a station superintendent, chief engineer. chemist, and efficiency engineer (Power Station Engineering and Economics by Skrotzki and Vopat, page 562,). In some classifications this itern also covers any materials that these men require. Operating Taxes (OT) The magnitude of local property taxes depends on the particular locality of the plant and the regional laws. Annual property taxes for plants in highly populated areas are ordinarily in the range of 2-4?'o of the fixed capital investment. In less populated areas, local property- taxes are about I%-2% of the fired capital investment (Plant Design Engineering and Economics for Chemical Engineers br Peters and Timmerhaus, p. 205) In the chosen locality of the plant, the local tax is about 1.50% as estimation. = (0.01-0.02) (FCI) = (0.015) (1,936,713,168 ) = P 29.050.699 02

Total Annual Income (TAI): Based on the reliable source the designers got from www.npc.gov.ph, the average price of electricity in Mindanao is P3.3557 per kw/hr. The total income would then be, = Power x total cost = (3.3557) (324, 120,000 KW)

= P 1,058,253,552

Total Annual Operating Cost (TAOC): =P 754,097,439.4 Financing Interest (FI) Interest is considered to be the compensation paid for the use of borrowed capital A fixed rate of interest is established at the time the capital is borrowed: therefore. interest is a definite cost if it is necessary to borrow the capital used to make the investment for a plant. (Plant Design Engineering and Economics for Chemical Engineers by Peters and Timmerhaus, p.247'). Annual interest rate is 0%-8% of the total capital investment hence, = (0.04) (FCI) = (0.04) (1,936,713,268) = P 77,468,530.72 Gross Earning Cost (AGE) AGE = Ti -TAOC (Plant Design Engineering and Economics for Chemical Engineers by Peters and Timmerhaus, p. 208) = Total Income - TAOC = 1,058,253,552- 7 54,097,439.4

= P -304,097,439.4 Profitability This is employed as a general for the measure of the amount of profit that can be obtained from a given venture. Profitability, therefore, is a common denominator for all business activities. The depreciation cost is based in a straight line method. Pa= Pb-Pbx Pa = AGE - (AGE x X) where X: 30% Pa = 304,097,439.4- (304,097,439.4x 0.30) Pa= 212,868,207.6 Depreciation Cost (DY): Depreciation cost is an expense due to the assumed periodic decrease in value throughout the usual life of material possessions of the manufacturing plant such as equipment’s, building and other material objects. In order to write off these cost, a decrease in value is assumed to occur throughout the usual life of the material possessions. This decrease in value is designated as depreciation is computed using straight line method; D = (v-vs)/N Where; D = annual depreciation V = Original Value of the property V5 = Salvage value at the end of the service life N = Service Life N = 30 years. Since land is not depreciable, Pay-out Time (POT) It is defined as the minimum length of time theoretically, necessary to recover the original capital investment in the form of cash floii to the project used on total income minus all cost except depreciation. =FC1 - Land cost/ Pa

Dy = (FCI) / N, N= 30 years = (2,437,869,303 - 3,825,000) / 30 = 81,138,810. i POT = 1,936,7 13,268 I 212,868,207 .6/ POT = 9.1 years ECONOMIC CONCERN AND LOCATION OF HYDRO-POWER PLANT In designing a power plant proper location or site for the said power plant should be carefully considered. According to PK Nag on his book of Power Plant Engineering for a conventional steam power plant, the following factors should be considered 1. 2. 3. 4. 5. 6.

Availability of cooling water. Availability of fuel. Distance from the center of gravity of load demand. Cost of Land. Rail and road connections. Security considerations.

There are also considerations to be made aside from the mentioned above it should also be noted that noise from the plant should not affect the residential community near the plant. As much as possible, the plant should be located miles from the mentioned community. Estimation of the Total Capital Investment Cost I. Direct Cost The value of the entire plant will be $116,000,000.00 because according to the feasibility studies we have researched from the net the value of constructing an entire hydroelectric power plant will be 750-2000 dollars per kilowatt. We assumed that in building power plant we used the highest possible value which is 2000 dollars per kilowatt where the 609/o of the money will be used in civil engineering purposes such as construction A.) Purchased Equipment Cost (EQC) A complete package hydro engine with the complete equipment having a capacity of 58,000 kW with summing up the equipment’s prices. a total of S-16.'t00,000.00.00 is obtained.

B.) Purchased Equipment Installation Cost (PEIC) PEIC = (0.20) (EQC) PEIC = (0.20) ($46,400,000.00) PEIC = $ 9,280,000.00 C.) Instrumentation and Control (IAC) IAC = (0.0ee) (EQC) IAC = (0.099) ($46,400,000.00) IAC = $ 4,593,600 F.) Electrical Installation (EI) EI = (0.10) ($46,400,000.00) EI = s 4,640,000.00 G.) Yard Improvements (YI) YI = (0.001) ($46,400,000.00) YI = $ 46,400.00 H.) Land Cost (LC) The land in a site chosen by the designers has a price of $ 2,300 per hectare with the 70 hectares used in this design; the amount of the land then is about $160,000.00 TOTAL DIRECT COST (DC) = $ 65,121,000.00 II. Indirect Cost A.) Engineering and Supervision (EAS) EAS = (.01XDC) EAS = (0.01) ($65,121,000.00) EAS = $ 651,210.00 C. Contractor's Fee (CF) CF = (0.04) ($65,121,000.00) CF = $2,604,840 00 TOTAL INDIRECT COST TIC = 3.156.050 00

III. Fixed Capital Investment (FCD FCI = Total Direct Cost + Total Indirect Cost FCI = $ 65,121,000.00+ $ 3,256,050.00 PCI = $68,377,050.00 IV. Working Capital (WC) WC = (0.15) (TCI) WC = (0.1 5) ($80,443,588.24) WC = 12,066,538.24 V. Total Capital Investment (TCI) TCI = FCI + WC TCI = $68,377,050.00 + 0.15TCI TCI = $68,377,050.00/0. 85 TCI = $80,443,588.24 VI. Annual Operating Cost A.) Labor It is assumed that the labor cost would be just the same as the steam power plant considering they have the same number of employees. The following data is the employees in a power plant with their corresponding annual salary. Employee Plant Manager Administration and Finance Division Manager Section Chief HR Specialist Property Officer (2) Senior Nurse Senior Security Officer Finance Section Chief Senior Accountant Senior Financial Specialist Cashier Senior Financial Analyst Plant Technical Services Division Manager

Salary (Peso) 812,351 689,772 511,272 385,452 770,904 340,908 385,452 514,272 452,796 452,796 340,908 340,908 689,772

Principal Engineer B (2) QA/Safety Principal Engineer B Principal Engineer C IS/IT Specialist Operations Plant Operations Manager Plant Superintendent (2) Principal Engineer B (2) Equipment Operator C (2) Equipment Operator D (4) Maintenance Mechanical Plant Maintenance Manager Plant Superintendent Senior Mechanic (2) Senior Welder Electrical Plant Superintendent Senior Electrician (2) Senior Technician (2) TOTAL TOTAL WITH 13th MONTH FEE B. Maintenance Labor and Material (MLM) MLM = (o.o5XFCI) MLM = (0.05X $68,377,050 00) MLM = $ 3,418,852.5 C. Supplies (SC) SC = (0.15x MLM) SC = (0.15) ($ 3,418,852.5) SC = $512,827.875 D. Supervision Supervision = P 2,442,540 Supervision = $ 61,063.5

905,592 452,796 385,452 385,452 689,771 1,028,544 905,592 414,936 698,976 698,772 514,272 592,752 296,376 514,272 592,752 197,584 P15,955,456 $398,886.4 $432,126.933

E. Operating Taxes (OT) In the chosen 1oca1i4, for the plant, the local tax is about loo as estimation. OT = (0 02) (FCI) OT = (0.02) ($68,377,050.00) OT = $1,367,547.00 Total Annual Income (TAI). Based on the reliable source the designers got from www.npc.gov.ph. the average price of electricity in Mindanao is P3.3557 per kW/hr. The total income would then be. TAI = (3. 3 5 57) (36,000kw) (24hr) (365days) TAI = P 1,058,253,552.00 TAI = $ 26,456,339.9 Total Annual Operating Cost (TAOC): TAOC = $5,792,411.808 VII. Financing Interest (FI) Annual interest rate is 09,'0-89,6 of the total capital investment. Hence FI = 0 04 (TCI) FI = (0.04) ( $80,443,588 00) FI = $3,217,743.52 VIII. Gross Earning Cost (AGE) AGE = TAI -TAOC AGE = $ 26,456,339.9 - $5,792,411.909 AGE = $20,663,926.99 IX Profitability Depreciation Cost (DY): D = (v-vs)/N

Where; D = annual depreciation V = Original Value of the property Vs = Salvage value at the end of the service life Vs = 0 N = Senvice Life N = 30 years. Since land is not depreciable, V = FCI - Land Cost V = $68,377, 050.00 - $161,000.00 V = $68.216.050 00 Vs = $50,000 DY = ($68, l77, 050.00 -$50,000)/30 DY = $2,277.568.333 A.) Annual Profit (AP) Annua1 Profit = AGEB (Annual Gross Earnings before tax) AP = AGE6-xAGEs X = 35% (Section 24 of the National Internal Revenue Code of the Philippines) Thus AP = ($20, 663,926.99) - ($20, 66 3,926.99) (0.35) AP = $14,464,748.89 B.) Pay - out Time (POT) POT = Depreciable FCI / (AP) POT = 568.216,050 00 I ($14,464,748.89) POT = 4.8 years or approximately 5 years. C.) Rate of Return (ROR) ROR = (AP/TCI) x 100 ROR = (14,464,748.89 / $80,443,588.24) x 100 ROR = 17.9835%