2016 Practical Worksheet V 1.0. Simp Investment Project Appraisal May 13t Practical Worksheet V 1.0 May-16 Project Ex Ante Evaluation V 1.0. Simplified Methodology for sal May 13th 2016 PROJECT FINANCIAL AND ECONOMIC ANALYSIS TEMPLATE Public Investment appraisal is an important thing and should be developed with detail and knowledge. The first step is to develop the parameters assumptions with the information of all relevant variables. 1 PARAMETERS: FINANCIAL ASSUMPTION After that, it is needed to develop the financial analysis, linking the variables (in example sales, prices and inflation) to develop the A TECHNICAL ASSUMPTIONS financial cash flow. Based in the financial analysis, the third step is to The Table of Parameters is the first step in the develop the economic analysis, using the conversion factors to put in PROJECT TIME PARAMETERS financial and economic model. In this section, the the economic terms all the variables. With this information, the next Concession state date 2009 stage is to draw the resources flow and estimate the financial and analyst should enter all the information of the Concession duration 30 years economic profit indicators. The last stage is to develop the sensitivity project. After that, he will be able to conduct the Construction starting date 2016 financial and economic analysis linking all the cells analysis and the scenario analysis to deliver more information Construction duration 3 years Days per year 365 days of the model to this parameter table. regarding the uncertainty issues. Average days per month (assume 30 days per month) 30 days TECHNICAL DESCRIPTION OF PROJECT Name of project In example, Road A, Hospital B Road A B SALES DETAILS In Dinars 2016 prices 1000 inclusive of VAT (at X%). PRODUCT FACTOR (in example Toll) Type of producct (in axemple, vehicle tolling class) Factor Product Type 1 1 Product Type 2 2 C DEMAND FORECASTING ASSUMPTIONS Gross Domestic Product (GDP) growth rate 4.00% ELASTICITIES Price Income Elasticities (ηiC) Elasticities (ηiI) Product Type 1 -0.15 1.5 Product Type 2 -0.10 1.2 D INVESTMENT COSTS, OPERATING AND MAINTENANCE COSTS ASSUMPTIONS Capital Expenditure Investment Costs Thousand Dinars, 2016 prices The Investment Plan combines information from Construction cost, VAT inclusive 12,570 /unit the market and technical analyses to establish a Start up costs, VAT inclusive 374 /unit detailed plan for annual incremental expected Concession company operating costs over construction capital expenditures during a project’s investment Independent engineer 145 /unit phase. Insurance, VAT inclusive 129 /unit Also, the Investment Plan should provide estimates Operating costs over construction of the liquidation or scrap value of all major fixed Personnel 81 /unit assets and the value of net working capital at the Operations, VAT inclusive 131 /unit Non-concession company costs Capital expenditure overrun factor 0% Investment Schedule Year 2016 Year 2017 Year 2018 Total % of completion 30% 38% 32% 100% OPERATING AND MAINTENANCE COSTS Operating costs Thousand Dinars, 2016 prices Personnel 63 /unit The Operating Plan combines information from the Operations 50 /unit market and technical analyses to establish a Heavy Maintenance and FOE* Replacement detailed plan for the operating phase of a project. Maintenance Costs 35 /unit Concession Company operating costs Running Costs 27 /unit Independent Engineer 29 /unit Insurance 4.5 /unit Total Concession Costs *FOE stands for future operating expenses MAINTENANCE COSTS FOR EXISTING ROAD Maintenance Cost f project Thousand Dinars, 2016 prices Annual Routine Maintenance 20 JD/unit Periodic Maintenance 6,250 JD/unit WORKING CAPITAL ESTIMATES Percentage Account receivable 0% of revenues Account payable 8% of operating and maintenance costs Cash balance 4% of revenues EQUITY DISCOUNT RATE rate Real discount rate for equity 15% E COST BREAK DOWN ASSUMPTIONS The Financial and Economic Model should be BREAK DOWN OF COSTS linked, providing a simplified tool that allows easy Construction cost and quick changes on the variables and their Activities impact in the profit indicators. Labour % weight Skilled labour 5% Semi-skilled labour 5% Unskilled labour 10% Machinery 15.00% Materials Portland Cement 13.65% Bituminous materials 12.53% Aggregate 7.08% Steel 10.29% Fuel 9.94% Traffic Signs and Road Markings 2.42% Lighting 0.81% Wood 2.50% Tires 1.20% Fencing 2.42% Wire 0.11% PVC materials 0.16% Other materials 1.89% Total 100% BREAK DOWN OF COSTS Start up costs % weight Skilled labour 30% Semi-skilled labour 30% Unskilled labour 10% Other materials 30% Independent engineer Skilled labour 100% Insurance 100% Personnel operation Skilled labour 20% Semi skilled labour 50% Unskilled labour 30% Operations Utilities 30% Transportation 20% Other materials 50% BREAK DOWN OF COSTS Running Costs % weight Utilities 30% Other materials 30% Transportation 40% DEPRECIATION OF PERMANENT WORKS AND PAVING Depreciation for TAXATION purposes Type of Work 1 75% of the sum of constuction cost, start-up costs and future investment costs Type of Work 2 25% of the sum of constuction cost, start-up costs and future investment costs Rate of capital allowances Type of Work 1 30 years Type of Work 2 12 years Depreciation for LIQUIDATION purposes Type of Work 1 75% of the sum of constuction cost, start-up costs and future investment costs Type of Work 2 25% of the sum of constuction cost, start-up costs and future investment costs Asset life Type of Work 1 30 years Type of Work 2 12 years **Estimated as a percentage of construction costs, start-up costs, and future investments 2 PARAMETERS: ECONOMIC ASSUMPTIONS INFLATION RATES, 2016 Rate % Domestic inflation rate 5.0% EXCHANGE RATE, 2016 Exchange rate, Dinars/USD 1.40 Dinars/USD % change in real exchange rate 0% NATIONAL PARAMETERS Rate % Foreign exchange premium (FEP) 9.0% Economic opportunity cost of capital (EOCK) 11% Effective tax rate (d*) 14% TAX RATES Rate % VAT on tolls 16% VAT on investment and operating costs 16% VAT on freight and transportation 16% Corporation tax* 30% *All losses are carried forward. Handling and Freight & Transportation Assumptions % of CIF price Adj. factor Port handling 10.0% 0.95 Cost of transport, port-project 10.0% 0.95 Cost of transport, port-market 10.0% 0.95 Cost of transport, market-project ( % of market price) 10.0% 0.95 NON-TRADEABLE INTERMEDIATE INPUT PARAMETERS Demand elasticity (η) Supply elasticity (ε) Other materials -1.00 2.00 Insurance services -0.20 2.00 Aggregate -1.00 2.00 Utilities (1.00) 2.00 Domestic transportation (1.00) 3.00 LABOR ASSUMPTIONS Project Supply Market Income Demand Prop. wage/month wage/month wage/month tax rate from taxed alt. Alt. sources labour sources (Wp) (Wa) (Ws) (T) (Hd) Skilled 3,500 3,000 3,200 30% 90% The Financial Analysis assesses the impact of a Semi-skilled 2,500 2,000 2,000 20% 75% project on the financial costs and funding of the Unskilled 300 450 450 5% 50% organization that makes the decision to carry it out. FINANCIAL ANALYSIS 3 PROJECTIONS OF INFLATION INDICES, EXCHANGE RATES AND INTEREST RATES year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 INFLATION AND EXCHANGE RATES Inflation indices Domestic inflation rate 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% Domestic inflation index, 0.95 1.00 1.05 1.10 1.16 1.22 1.28 1.34 1.41 1.48 1.55 1.63 1.71 1.80 1.89 1.98 2.08 2.18 2.29 2.41 2.53 2.65 2.79 2.93 3.07 3.23 3.39 3.56 3.73 3.92 4.12 4.32 4.54 Exchange rate, Dinars/USD Real exchange rate(Dinars/USD) 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 % change in real exchange rate 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Adjusted Real exchange rate(Dinars/USD) 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 4 INVESTMENT COSTS SCHEDULE A INVESTMENT COSTS SCHEDULES (nominal thousand Dinars) year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 Investment Costs Total Construction cost 3,771 5,015 4,435 13,221 Start up costs 112 149 132 393 Concession company operating costs over construction Independent engineer 44 58 51 153 Insurance 39 51 46 136 Operating costs over construction Personnel 24 32 29 85 Operations 39 52 46 138 Total Investment costs 4,029 5,359 4,738 14,126 B INVESTMENT COSTS SCHEDULES, TOTAL (real thousand Dinars) The project implementation involves the use of year 2015 2016 2017 2018 2019 resources to build, install, upgrade and / or equip Investment Costs Total infrastructure, facilities or other investment. Construction cost 3,771 4,777 4,022 12,570 Start up costs 112 142 120 374 Concession company operating costs over construction Independent engineer 44 55 46 145 Insurance 39 49 41 129 Operating costs over construction Personnel 24 31 26 81 Operations 39 50 42 131 Total Investment costs 4,029 5,103 4,298 13,430 C VALUE ADDED TAX ON INVESTMENT COSTS (nominal thousand Dinars) year 2015 2016 2017 2018 2019 Value added tax Construction cost 416 553 489 Start up costs, construction 5 6 5 Insurance, construction (other costs) 5 7 6 Operations, construction (operations) 5 7 6 VAT on investments costs 432 574 507 5 OPERATING AND MAINTENANCE COSTS A TOTAL OPERATING AND MAINTENANCE COSTS (nominal thousand Dinars) year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 Operating and maintenance costs Operating costs The Financial and Economic Model should be Personnel linked, providing a simplified tool that allows easy 72.9 76.6 80.4 84.4 88.6 93.1 97.7 102.6 107.8 113.1 118.8 124.7 131.0 137.5 144.4 151.6 159.2 167.2 175.5 184.3 193.5 203.2 213.3 224.0 235.2 247.0 259.3 Operations and quick changes on the variables and their 57.9 60.8 63.8 67.0 70.4 73.9 77.6 81.4 85.5 89.8 94.3 99.0 103.9 109.1 114.6 120.3 126.3 132.7 139.3 146.3 153.6 161.3 169.3 177.8 186.7 196.0 205.8 Major maintenance costs impact in the profit indicators. Maintenance cost 40.5 42.5 44.7 46.9 49.2 51.7 54.3 57.0 59.9 62.9 66.0 69.3 72.8 76.4 80.2 84.2 88.4 92.9 97.5 102.4 107.5 Future CapEx, FOE replacement Concession company operating costs Running costs 31.3 32.8 34.5 36.2 38.0 39.9 41.9 44.0 46.2 48.5 50.9 53.5 56.1 58.9 61.9 65.0 68.2 71.6 75.2 79.0 82.9 87.1 91.4 96.0 100.8 105.8 111.1 Independent engineer 33.6 35.2 37.0 38.9 40.8 42.8 45.0 47.2 49.6 52.1 54.7 57.4 60.3 63.3 66.5 69.8 73.3 76.9 80.8 84.8 89.1 93.5 98.2 103.1 108.3 113.7 119.4 Insurance 5.7 6.0 6.3 6.6 7.0 7.3 7.7 8.1 8.5 8.9 9.4 9.8 10.3 10.8 11.4 11.9 12.5 13.2 13.8 14.5 15.2 16.0 16.8 17.6 18.5 19.4 20.4 Total operating and maintenance costs 201.4 211.5 222.0 233.1 285.3 299.6 314.5 330.3 346.8 364.1 382.3 401.4 421.5 442.6 464.7 488.0 512.4 538.0 564.9 593.1 622.8 653.9 686.6 720.9 757.0 682.0 716.0 B VALUE ADDED TAX ON OPERATING AND MENTENANCE COSTS (nominal thousand Dinars) year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 Value added tax on: Operations, operations 8.0 8.4 8.8 9.2 9.7 10.2 10.7 11.2 11.8 12.4 13.0 13.7 14.3 15.1 15.8 16.6 17.4 18.3 19.2 20.2 21.2 22.2 23.4 24.5 25.7 27.0 28.4 Maintenance cost 0.0 0.0 0.0 0.0 5.6 5.9 6.2 6.5 6.8 7.1 7.5 7.9 8.3 8.7 9.1 9.6 10.0 10.5 11.1 11.6 12.2 12.8 13.4 14.1 14.8 0.0 0.0 Future CapEx, FOE replacement 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Running costs, operations (other costs) 4.3 4.5 4.8 5.0 5.2 5.5 5.8 6.1 6.4 6.7 7.0 7.4 7.7 8.1 8.5 9.0 9.4 9.9 10.4 10.9 11.4 12.0 12.6 13.2 13.9 14.6 15.3 Insurance, operation (other costs) 0.8 0.8 0.9 0.9 1.0 1.0 1.1 1.1 1.2 1.2 1.3 1.4 1.4 1.5 1.6 1.6 1.7 1.8 1.9 2.0 2.1 2.2 2.3 2.4 2.6 2.7 2.8 VAT on operations and maintenance 13.1 13.7 14.4 15.1 21.5 22.6 23.7 24.9 26.1 27.4 28.8 30.2 31.8 33.3 35.0 36.8 38.6 40.5 42.6 44.7 46.9 49.3 51.7 54.3 57.0 44.3 46.5 C MAINTENCANE COSTS FOR EXISTING INFRASTRUCTURE WITHOUT THE PROJECT (nominal thusand Dinars) year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 Maintenace Cost for M12A Annual Routine Maintenance 19.0 20.0 21.0 22.1 23.2 24.3 25.5 26.8 28.1 29.5 31.0 32.6 34.2 35.9 37.7 39.6 41.6 43.7 45.8 48.1 50.5 53.1 55.7 58.5 61.4 64.5 67.7 71.1 74.7 78.4 82.3 86.4 Periodic Maintenance, performed every 5 yrs starting at 2011 5,952.4 0.0 0.0 0.0 0.0 7,596.9 0.0 0.0 0.0 0.0 9,695.8 0.0 0.0 0.0 0.0 12,374.6 0.0 0.0 0.0 0.0 15,793.4 0.0 0.0 0.0 0.0 20,156.9 0.0 0.0 0.0 0.0 25,725.8 0.0 D MAINTENCANE COSTS FOR EXISTING INFRASTRUCTURE WITHOUT THE PROJECT (real thousand Dinars) year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 Maintenace Cost for M12A Annual Routine Maintenance 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 Periodic Maintenance, performed every 5 yrs starting at 2011 6,250.0 0.0 0.0 0.0 0.0 6,250.0 0.0 0.0 0.0 0.0 6,250.0 0.0 0.0 0.0 0.0 6,250.0 0.0 0.0 0.0 0.0 6,250.0 0.0 0.0 0.0 0.0 6,250.0 0.0 0.0 0.0 0.0 6,250.0 0.0 6 TAX DEPRECIATION (nominal thousand Dinars) year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 CapEx, nominal (exclusive of VAT) Construction cost 3,354.9 4,462.0 3,945.4 Start up costs, construction 107.6 143.1 126.5 Future CapEx, FOE replacement 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 CapEx 3,462.4 4,605.1 4,071.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Asset base Depreciation Type of Work 1 9,104.50 303.5 303.5 303.5 303.5 303.5 303.5 303.5 303.5 303.5 303.5 303.5 303.5 303.5 303.5 303.5 303.5 303.5 303.5 303.5 303.5 303.5 303.5 303.5 303.5 303.5 303.5 303.5 Type of Work 2 3,034.83 252.9 252.9 252.9 252.9 252.9 252.9 252.9 252.9 252.9 252.9 252.9 252.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total Annual depreciation 556.4 556.4 556.4 556.4 556.4 556.4 556.4 556.4 556.4 556.4 556.4 556.4 303.5 303.5 303.5 303.5 303.5 303.5 303.5 303.5 303.5 303.5 303.5 303.5 303.5 303.5 303.5 7 ECONOMIC DEPRECIATION AND ESTIMATION OF RESIDUAL VALUES (nominal thousand Dinars) year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 CapEx, real (exclusive of VAT) Construction cost 3,771.00 4,776.60 4,022.40 Start up costs, construction 112.20 142.12 119.68 Future CapEx, FOE replacement 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Total 3,883.20 4,918.72 4,142.08 Asset base Depreciation Residual values Type of Work 1 9,708.00 323.60 323.60 323.60 323.60 323.60 323.60 323.60 323.60 323.60 323.60 323.60 323.60 323.60 323.60 323.60 323.60 323.60 323.60 323.60 323.60 323.60 323.60 323.60 323.60 323.60 323.60 323.60 970.80 Type of Work 2 3,236.00 269.67 269.67 269.67 269.67 269.67 269.67 269.67 269.67 269.67 269.67 269.67 269.67 0.00 8 REVENUES year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 Revenues on different products gross of VAT (nominal million Dinars) Product Type 1 0.0 0.0 0.0 1,349.7 1,491.6 1,648.4 1,821.7 2,013.2 2,224.8 2,458.7 2,717.2 3,002.8 3,318.5 3,667.3 4,052.8 4,478.9 4,949.7 5,470.1 6,045.1 6,680.6 7,382.9 8,159.0 9,016.8 9,964.7 11,012.2 12,169.8 13,449.2 14,863.0 16,425.5 18,152.3 20,060.5 0.0 Product Type 2 0.0 0.0 0.0 2,626.9 2,876.9 3,150.6 3,450.4 3,778.7 4,138.3 4,532.0 4,963.2 5,435.5 5,952.7 6,519.1 7,139.4 7,818.7 8,562.6 9,377.4 10,269.6 11,246.8 12,316.9 13,488.9 14,772.3 16,177.9 17,717.3 19,403.1 21,249.3 23,271.1 25,485.4 27,910.3 30,566.0 0.0 Revenues, gross of VAT 0.0 0.0 0.0 3,976.6 4,368.5 4,799.0 5,272.1 5,791.9 6,363.1 6,990.7 7,680.4 8,438.3 9,271.2 10,186.4 11,192.2 12,297.6 13,512.4 14,847.5 16,314.8 17,927.4 19,699.8 21,647.9 23,789.1 26,142.6 28,729.5 31,572.9 34,698.5 38,134.2 41,910.9 46,062.6 50,626.5 0.0 Revenues on different products gross of VAT (real thusand Dinars) Product Type 1 0.0 0.0 0.0 1,165.9 1,227.1 1,291.5 1,359.4 1,430.7 1,505.8 1,584.9 1,668.1 1,755.7 1,847.8 1,944.9 2,047.0 2,154.4 2,267.5 2,386.6 2,511.9 2,643.7 2,782.5 2,928.6 3,082.4 3,244.2 3,414.5 3,593.8 3,782.5 3,981.0 4,190.0 4,410.0 4,641.6 Product Type 2 0.0 0.0 0.0 2,269.3 2,366.8 2,468.6 2,574.8 2,685.5 2,800.9 2,921.4 3,047.0 3,178.0 3,314.7 3,457.2 3,605.9 3,760.9 3,922.6 4,091.3 4,267.2 4,450.7 4,642.1 4,841.7 5,049.9 5,267.1 5,493.6 5,729.8 5,976.2 6,233.1 6,501.2 6,780.7 7,072.3 9 WORKING CAPITAL REQUIREMENT (nominal thousand Dinars) year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 Accounts receivable, (AR) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Accounts payable, (AP) 0.0 0.0 0.0 16.1 16.9 17.8 18.6 22.8 24.0 25.2 26.4 27.7 29.1 30.6 32.1 33.7 35.4 37.2 39.0 41.0 43.0 45.2 47.4 49.8 52.3 54.9 57.7 60.6 54.6 57.3 0.0 0.0 Cash balance, (CB) 0.0 0.0 0.0 159.1 174.7 192.0 210.9 231.7 254.5 279.6 307.2 337.5 370.8 407.5 447.7 491.9 540.5 593.9 652.6 717.1 788.0 865.9 951.6 1,045.7 1,149.2 1,262.9 1,387.9 1,525.4 1,676.4 1,842.5 2,025.1 0.0 Change in AR 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Change in AP 0.0 0.0 0.0 16.1 0.8 0.8 0.9 4.2 1.1 1.2 1.3 1.3 1.4 1.5 1.5 1.6 1.7 1.8 1.9 2.0 2.0 2.2 2.3 2.4 2.5 2.6 2.7 2.9 -6.0 2.7 -57.3 0.0 Change in CB 0.0 0.0 0.0 159.1 15.7 17.2 18.9 20.8 22.8 25.1 27.6 30.3 33.3 36.6 40.2 44.2 48.6 53.4 58.7 64.5 70.9 77.9 85.6 94.1 103.5 113.7 125.0 137.4 151.1 166.1 182.6 -2,025.1 10 INCOME STATEMENT (NOMINAL thousand Dinars) year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 Revenues, gross of VAT 0.0 0.0 0.0 3,976.6 4,368.5 4,799.0 5,272.1 5,791.9 6,363.1 6,990.7 7,680.4 8,438.3 9,271.2 10,186.4 11,192.2 12,297.6 13,512.4 14,847.5 16,314.8 17,927.4 19,699.8 21,647.9 23,789.1 26,142.6 28,729.5 31,572.9 34,698.5 38,134.2 41,910.9 46,062.6 50,626.5 0.0 VAT on products 0.0 0.0 0.0 548.5 602.5 661.9 727.2 798.9 877.7 964.2 1,059.4 1,163.9 1,278.8 1,405.0 1,543.8 1,696.2 1,863.8 2,047.9 2,250.3 2,472.7 2,717.2 2,985.9 3,281.3 3,605.9 3,962.7 4,354.9 4,786.0 5,259.9 5,780.8 6,353.5 6,983.0 0.0 Total operating and maintenance costs 0.0 0.0 0.0 201.4 211.5 222.0 233.1 285.3 299.6 314.5 330.3 346.8 364.1 382.3 401.4 421.5 442.6 464.7 488.0 512.4 538.0 564.9 593.1 622.8 653.9 686.6 720.9 757.0 682.0 716.0 0.0 0.0 VAT credit on operating and maintenance costs 0.0 0.0 0.0 13.1 13.7 14.4 15.1 21.5 22.6 23.7 24.9 26.1 27.4 28.8 30.2 31.8 33.3 35.0 36.8 38.6 40.5 42.6 44.7 46.9 49.3 51.7 54.3 57.0 44.3 46.5 0.0 0.0 Earning before interest and taxes 0.0 0.0 0.0 3,239.8 3,568.2 3,929.5 4,326.9 4,729.2 5,208.4 5,735.6 6,315.7 6,953.7 7,655.7 8,427.9 9,277.3 10,211.6 11,239.4 12,369.8 13,613.3 14,980.9 16,485.2 18,139.7 19,959.4 21,960.9 24,162.1 26,583.1 29,245.9 32,174.3 35,492.5 39,039.6 43,643.5 0.0 Income tax deductible expenses Total annual depreciation 0.0 0.0 0.0 556.4 556.4 556.4 556.4 556.4 556.4 556.4 556.4 556.4 556.4 556.4 556.4 303.5 303.5 303.5 303.5 303.5 303.5 303.5 303.5 303.5 303.5 303.5 303.5 303.5 303.5 303.5 0.0 0.0 Gross profit 0.0 0.0 0.0 2,683.5 3,011.8 3,373.1 3,770.5 4,172.8 4,652.0 5,179.2 5,759.3 6,397.4 7,099.3 7,871.5 8,720.9 9,908.1 10,935.9 12,066.3 13,309.8 14,677.4 16,181.7 17,836.2 19,655.9 21,657.4 23,858.6 26,279.7 28,942.4 31,870.9 35,189.0 38,736.1 43,643.5 0.0 Loss carried forward 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Taxable income 0.0 0.0 0.0 2,683.5 3,011.8 3,373.1 3,770.5 4,172.8 4,652.0 5,179.2 5,759.3 6,397.4 7,099.3 7,871.5 8,720.9 9,908.1 10,935.9 12,066.3 13,309.8 14,677.4 16,181.7 17,836.2 19,655.9 21,657.4 23,858.6 26,279.7 28,942.4 31,870.9 35,189.0 38,736.1 43,643.5 0.0 Corporation income tax 0.0 0.0 0.0 805.0 903.5 1,011.9 1,131.2 1,251.8 1,395.6 1,553.8 1,727.8 1,919.2 2,129.8 2,361.4 2,616.3 2,972.4 3,280.8 3,619.9 3,992.9 4,403.2 4,854.5 5,350.9 5,896.8 6,497.2 7,157.6 7,883.9 8,682.7 9,561.3 10,556.7 11,620.8 13,093.1 0.0 Net income 0.0 0.0 0.0 1,878.4 2,108.3 2,361.2 2,639.4 2,921.0 3,256.4 3,625.5 4,031.5 4,478.1 4,969.5 5,510.0 6,104.6 6,935.7 7,655.1 8,446.4 9,316.8 10,274.2 11,327.2 12,485.3 13,759.2 15,160.2 16,701.1 18,395.8 20,259.7 22,309.6 24,632.3 27,115.3 30,550.5 0.0 11 CASHFLOW STATEMENT FROM THE FINANCIAL POINT OF VIEW (NOMINAL thusand Dinars) year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 Inflows Revenues, gross of VAT Product Type 1 0.0 0.0 0.0 1,349.7 1,491.6 1,648.4 1,821.7 2,013.2 2,224.8 2,458.7 2,717.2 3,002.8 3,318.5 3,667.3 4,052.8 4,478.9 4,949.7 5,470.1 6,045.1 6,680.6 7,382.9 8,159.0 9,016.8 9,964.7 11,012.2 12,169.8 13,449.2 14,863.0 16,425.5 18,152.3 20,060.5 0.0 Product Type 2 0.0 0.0 0.0 2,626.9 2,876.9 3,150.6 3,450.4 3,778.7 4,138.3 4,532.0 4,963.2 5,435.5 5,952.7 6,519.1 7,139.4 7,818.7 8,562.6 9,377.4 10,269.6 11,246.8 12,316.9 13,488.9 14,772.3 16,177.9 17,717.3 19,403.1 21,249.3 23,271.1 25,485.4 27,910.3 30,566.0 0.0 Total Revenues 0.0 0.0 0.0 3,976.6 4,368.5 4,799.0 5,272.1 5,791.9 6,363.1 6,990.7 7,680.4 8,438.3 9,271.2 10,186.4 11,192.2 12,297.6 13,512.4 14,847.5 16,314.8 17,927.4 19,699.8 21,647.9 23,789.1 26,142.6 28,729.5 31,572.9 34,698.5 38,134.2 41,910.9 46,062.6 50,626.5 0.0 VAT on product revenues 0.0 0.0 0.0 -548.5 -602.5 -661.9 -727.2 -798.9 -877.7 -964.2 -1,059.4 -1,163.9 -1,278.8 -1,405.0 -1,543.8 -1,696.2 -1,863.8 -2,047.9 -2,250.3 -2,472.7 -2,717.2 -2,985.9 -3,281.3 -3,605.9 -3,962.7 -4,354.9 -4,786.0 -5,259.9 -5,780.8 -6,353.5 -6,983.0 0.0 Change in AR 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Residual values 970.8 Net inflows 0.0 0.0 0.0 3,428.1 3,765.9 4,137.1 4,544.9 4,993.0 5,485.4 6,026.5 6,621.0 7,274.4 7,992.4 8,781.4 9,648.5 10,601.4 11,648.6 12,799.5 14,064.4 15,454.7 16,982.6 18,662.0 20,507.9 22,536.7 24,766.8 27,218.0 29,912.5 32,874.3 36,130.1 39,709.1 44,614.3 0.0 Outflows Investments costs The financial cash flow statement of a project is a profile of the project’s receipts Construction cost 3,771.0 5,015.4 4,434.7 Start up costs 112.2 149.2 131.9 (inflows) and expenditures (outflows) over time. The cash flow statement is organized Concession company operating costs over construction in two main sections; the first one typically contains the expected financial receipts Independent engineer 43.5 57.9 51.2 generated by the project, while the second one contains the expected financial Insurance 38.7 51.5 45.5 expenditures incurred to generate the receipts of the project. The project’s total operating costs over construction expenditures, also known as total outflows, are subtracted from its receipts (inflows) Personnel 24.3 32.3 28.6 to provide the net cash flow from the project. Operations 39.3 52.3 46.2 Operating and maintenance costs Operating costs Personnel 72.93 76.58 80.41 84.43 88.65 93.08 97.73 102.62 107.75 113.14 118.80 124.74 130.97 137.52 144.40 151.62 159.20 167.16 175.52 184.29 193.51 203.18 213.34 224.01 235.21 246.97 259.32 0.00 Operations 57.88 60.78 63.81 67.00 70.36 73.87 77.57 81.44 85.52 89.79 94.28 99.00 103.95 109.14 114.60 120.33 126.35 132.66 139.30 146.26 153.58 161.25 169.32 177.78 186.67 196.01 205.81 0.00 Major maintenance costs Maintenance cost 0.0 0.0 0.0 0.0 0.0 0.0 0.0 40.5 42.5 44.7 46.9 49.2 51.7 54.3 57.0 59.9 62.9 66.0 69.3 72.8 76.4 80.2 84.2 88.4 92.9 97.5 102.4 107.5 0.0 0.0 0.0 Future CapEx, FOE replacement 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Concession company operating costs Running costs 0.0 0.0 0.0 31.3 32.8 34.5 36.2 38.0 39.9 41.9 44.0 46.2 48.5 50.9 53.5 56.1 58.9 61.9 65.0 68.2 71.6 75.2 79.0 82.9 87.1 91.4 96.0 100.8 105.8 111.1 0.0 Independent engineer 0.0 0.0 0.0 33.6 35.2 37.0 38.9 40.8 42.8 45.0 47.2 49.6 52.1 54.7 57.4 60.3 63.3 66.5 69.8 73.3 76.9 80.8 84.8 89.1 93.5 98.2 103.1 108.3 113.7 119.4 0.0 Insurance 0.0 0.0 0.0 5.7 6.0 6.3 6.6 7.0 7.3 7.7 8.1 8.5 8.9 9.4 9.8 10.3 10.8 11.4 11.9 12.5 13.2 13.8 14.5 15.2 16.0 16.8 17.6 18.5 19.4 20.4 0.0 VAT credit on Investment and operating costs -431.5 -573.9 -507.5 -13.1 -13.7 -14.4 -15.1 -21.5 -22.6 -23.7 -24.9 -26.1 -27.4 -28.8 -30.2 -31.8 -33.3 -35.0 -36.8 -38.6 -40.5 -42.6 -44.7 -46.9 -49.3 -51.7 -54.3 -57.0 -44.3 -46.5 0.0 Change in AP 0.0 0.0 0.0 16.1 0.8 0.8 0.9 4.2 1.1 1.2 1.3 1.3 1.4 1.5 1.5 1.6 1.7 1.8 1.9 2.0 2.0 2.2 2.3 2.4 2.5 2.6 2.7 2.9 -6.0 2.7 -57.3 Change in CB 0.0 0.0 0.0 159.1 15.7 17.2 18.9 20.8 22.8 25.1 27.6 30.3 33.3 36.6 40.2 44.2 48.6 53.4 58.7 64.5 70.9 77.9 85.6 94.1 103.5 113.7 125.0 137.4 151.1 166.1 182.6 Corporation income tax 0.0 0.0 0.0 805.0 903.5 1,011.9 1,131.2 1,251.8 1,395.6 1,553.8 1,727.8 1,919.2 2,129.8 2,361.4 2,616.3 2,972.4 3,280.8 3,619.9 3,992.9 4,403.2 4,854.5 5,350.9 5,896.8 6,497.2 7,157.6 7,883.9 8,682.7 9,561.3 10,556.7 11,620.8 13,093.1 Net outflows 3,597.5 4,784.7 4,230.6 1,168.5 1,117.7 1,237.6 1,368.9 1,540.6 1,696.6 1,870.9 2,062.0 2,271.5 2,501.2 2,753.0 3,029.2 3,408.0 3,740.3 4,104.8 4,504.7 4,943.4 5,424.9 5,953.2 6,533.1 7,169.6 7,868.2 8,635.1 9,477.1 10,401.5 11,339.4 12,459.1 13,218.3 Net cash flows before financing -3,597.5 -4,784.7 -802.5 2,597.4 3,019.3 3,307.3 3,624.1 3,944.8 4,329.9 4,750.1 5,212.4 5,720.9 6,280.2 6,895.4 7,572.1 8,240.6 9,059.2 9,959.7 10,950.0 12,039.2 13,237.1 14,554.6 16,003.6 17,597.2 19,349.8 21,277.3 23,397.2 25,728.6 28,369.7 32,155.2 -13,218.3 12 CASHFLOW STATEMENT FROM THE FINANCIAL POINT OF VIEW (REAL thusand Dinars) year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 Inflows Revenues, gross of VAT PV @ EOCK Product Type 1 0.0 0.0 0.0 1,165.9 1,227.1 1,291.5 1,359.4 1,430.7 1,505.8 1,584.9 1,668.1 1,755.7 1,847.8 1,944.9 2,047.0 2,154.4 2,267.5 2,386.6 2,511.9 2,643.7 2,782.5 2,928.6 3,082.4 3,244.2 3,414.5 3,593.8 3,782.5 3,981.0 4,190.0 4,410.0 4,641.6 0.0 11,483 Product Type 2 0.0 0.0 0.0 2,269.3 2,366.8 2,468.6 2,574.8 2,685.5 2,800.9 2,921.4 3,047.0 3,178.0 3,314.7 3,457.2 3,605.9 3,760.9 3,922.6 4,091.3 4,267.2 4,450.7 4,642.1 4,841.7 5,049.9 5,267.1 5,493.6 5,729.8 5,976.2 6,233.1 6,501.2 6,780.7 7,072.3 0.0 20,432 Revenues 0.0 0.0 0.0 3,435.2 3,594.0 3,760.2 3,934.1 4,116.2 4,306.8 4,506.3 4,715.1 4,933.7 5,162.5 5,402.1 5,652.8 5,915.4 6,190.2 6,477.9 6,779.1 7,094.5 7,424.7 7,770.4 8,132.3 8,511.3 8,908.1 9,323.6 9,758.6 10,214.2 10,691.2 11,190.7 11,713.8 0.0 VAT on product revenues 0.0 0.0 0.0 -473.8 -495.7 -518.6 -542.6 -567.8 -594.0 -621.6 -650.4 -680.5 -712.1 -745.1 -779.7 -815.9 -853.8 -893.5 -935.1 -978.5 -1,024.1 -1,071.8 -1,121.7 -1,174.0 -1,228.7 -1,286.0 -1,346.0 -1,408.9 -1,474.6 -1,543.5 -1,615.7 0.0 -4,402 Change in AR 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0 Residual values 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 224.6 0.0 9 Net inflows 0.0 0.0 0.0 2,961.4 3,098.2 3,241.5 3,391.5 3,548.4 3,712.7 3,884.7 4,064.7 4,253.2 4,450.5 4,657.0 4,873.1 5,099.4 5,336.4 5,584.4 5,844.1 6,115.9 6,400.6 6,698.6 7,010.6 7,337.3 7,679.4 8,037.6 8,412.6 8,805.3 9,216.6 9,647.2 10,322.7 0.0 27,522 Outflows Investments costs Construction cost 3,771.0 4,776.6 4,022.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 10,215 Start up costs 112.2 142.1 119.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 304 Concession company operating costs over construction Independent engineer 43.5 55.1 46.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 118 Insurance 38.7 49.0 41.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 105 operating costs over construction 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0 Personnel 24.3 30.8 25.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 66 Operations 39.3 49.8 41.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 106 Operating and maintenance costs Operating costs Personnel 0.0 0.0 0.0 63.0 63.0 63.0 63.0 63.0 63.0 63.0 63.0 63.0 63.0 63.0 63.0 63.0 63.0 63.0 63.0 63.0 63.0 63.0 63.0 63.0 63.0 63.0 63.0 63.0 63.0 63.0 0.0 0.0 394 Operations 0.0 0.0 0.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0 0.0 0.0 313 Major maintenance costs Maintenance cost 0.0 0.0 0.0 0.0 0.0 0.0 0.0 28.8 28.8 28.8 28.8 28.8 28.8 28.8 28.8 28.8 28.8 28.8 28.8 28.8 28.8 28.8 28.8 28.8 28.8 28.8 28.8 28.8 0.0 0.0 0.0 0.0 112 Future CapEx, FOE replacement 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0 Concession company operating costs Running costs 0.0 0.0 0.0 27.0 27.0 27.0 27.0 27.0 27.0 27.0 27.0 27.0 27.0 27.0 27.0 27.0 27.0 27.0 27.0 27.0 27.0 27.0 27.0 27.0 27.0 27.0 27.0 27.0 27.0 27.0 0.0 0.0 169 Independent engineer 0.0 0.0 0.0 29.0 29.0 29.0 29.0 29.0 29.0 29.0 29.0 29.0 29.0 29.0 29.0 29.0 29.0 29.0 29.0 29.0 29.0 29.0 29.0 29.0 29.0 29.0 29.0 29.0 29.0 29.0 0.0 0.0 181 Insurance 0.0 0.0 0.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 0.0 0.0 31 VAT credit on Investment and operating costs -431.5 -546.6 -460.3 -11.3 -11.3 -11.3 -11.3 -15.3 -15.3 -15.3 -15.3 -15.3 -15.3 -15.3 -15.3 -15.3 -15.3 -15.3 -15.3 -15.3 -15.3 -15.3 -15.3 -15.3 -15.3 -15.3 -15.3 -15.3 -11.3 -11.3 0.0 0.0 -1,255 Change in AP 0.0 0.0 0.0 13.9 0.7 0.7 0.7 3.0 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 -1.5 0.7 -13.3 0.0 14 Change in CB 0.0 0.0 0.0 137.4 12.9 13.5 14.1 14.8 15.5 16.2 16.9 17.7 18.6 19.4 20.3 21.3 22.3 23.3 24.4 25.5 26.7 28.0 29.3 30.6 32.1 33.6 35.2 36.8 38.5 40.3 42.2 0.0 197 Corporation income tax 0.0 0.0 0.0 695.4 743.4 792.9 844.1 889.7 944.6 1,001.6 1,060.7 1,122.1 1,185.9 1,252.3 1,321.4 1,429.8 1,503.0 1,579.4 1,659.1 1,742.5 1,829.6 1,920.7 2,015.8 2,115.3 2,219.3 2,328.1 2,441.9 2,561.0 2,692.9 2,823.2 3,029.4 0.0 7,305 Net outflows 3,597.5 4,556.8 3,837.3 1,009.4 919.6 969.7 1,021.5 1,094.9 1,148.3 1,206.0 1,265.9 1,328.1 1,392.7 1,460.0 1,530.0 1,639.3 1,713.5 1,790.9 1,871.8 1,956.3 2,044.6 2,136.9 2,233.3 2,334.2 2,439.7 2,550.0 2,665.3 2,786.0 2,892.6 3,026.9 3,058.4 0.0 18,374 Net cash flows before financing -3,597.5 -4,556.8 -3,837.3 1,952.0 2,178.7 2,271.8 2,369.9 2,453.6 2,564.4 2,678.7 2,798.8 2,925.1 3,057.7 3,197.0 3,343.2 3,460.1 3,622.9 3,793.5 3,972.3 4,159.6 4,356.0 4,561.7 4,777.3 5,003.1 5,239.7 5,487.6 5,747.3 6,019.3 6,323.9 6,620.3 7,264.3 0.0 9,147 The Economic Analysis is similar to the Financial NPV_Fin @ 12% real DR 3,327.21 Analysis in the sense that it also measures changes in the wealth generated by a project. However, the economic analysis is concerned with society as a ECONOMIC ANALYSIS whole and not only on the welfare of the owners of the project. Then, the starting point for the economic analysis is the incremental expected net 13 CONVERSION FACTORS cash flows to total capital from the financial A LABOUR CONVERSION FACTORS ESTIMATION OF CONVERSION FACTOR AND ECONOMIC VALUE OF LABOR Economic Demand opportunity As such, the concept of a conversion factor, Supply price Income tax prop. From cost of labour defined as the ratio of the economic price to the Local labour Project wage rate Alternative wage rate rate (T) taxed alt. Ws(1-T) WaHdT (EOCL) CFs financial price. If the conversion factor specific to labour project’s inputs and outputs and the economic sources costs of capital and foreign exchange are known, it (Wp) Alt. sources (Wa) (Ws) (Hd) is easy to translate the financial appraisal of a Skilled 42,000 36,000 38,400 30% 90% 26,880 9,720 36,600 0.871 project into its economic valuation. Semiskilled 30,000 24,000 24,000 20% 75% 19,200 3,600 22,800 0.760 For a given good or service, the term Commodity Unskilled 3,600 5,400 5,400 5% 50% 5,130 135 5,265 1.463 Specific Conversion Factor (CSCF) is used. While commodity specific conversion factor values may Share of Ext. between Labour and Govt. Labour benefits be different when calculated at project sites, Govt. benefits (Wp*T - Ext.% to Ext.% to economic parameters such as economic cost of (Wp*(1-T) - Ws*(1- Total benefits Local labour (HdWaT)) labour Gvt. capital and foreign exchange are national T)) Skilled 2520 2880 5400 47% 53% parameters that remain constant, at given time, Semiskilled 4800 2400 7200 67% 33% across projects in the overall economy. Unskilled -1710 45 -1665 103% -3% Total= 5610 5325 10935 51% 49% B CONVERSION FACTORS: NON TRADEABLES ITEMS B1 OTHER MATERIALS Demand Price (Pd) = 50Demand elasticity (η) = -1.00 W s Ps +W dP d = 45 d m VAT = 16% Supply elasticity (ε) = 2.00 W P d*= 2 Supply price (Ps) = Pd/(1+VAT) = 43.10 Wd = 0.33 Ws*(T Distortions + NT Distortions)= 4 % NT = 60% Ws = 0.67 Value of FEP = 2 %T = 40% Value of NTP = 4.5 d*= 14% Pze = W zs Pz m (1 + kz) + W zd Pzm[1 + (tz – d * )] EV = 45 minus W zs {Σ i aizo Pmi d i + Σ j ajzo [W j s Pmj d j + W j d Pmj ( d * )]} CF = 0.909 plus (Pzm ´ Tz ´ FEP) + (Pzm ´ NTz ´ NTP) B2 UTILITIES Inputs Ax Input Distorted price Undistorted price Demand Supply Weight on Weight on Import Duty VAT Tradable Non-tradable Quantity/Unit Output Elasticity Elasticity Demand Supply Effective tax Distortions Distortions Tradable inputs [a] Pi [b] Pim[c] (η) [d] (ε) [e] (Wd) (Ws) T [f] t [g] di [h] [i] [j] Primary energy 1 39,332 30,824 10.0% 16.0% 27.6% 8,507 Materials 1 23,368 18,313 10.0% 16.0% 27.6% 5,054 Depreciation and amortization 1 15,356 10,590 25.0% 16.0% 45.0% 4,766 Return to capital 1 16,706 14,401 16.0% 16.0% 2,304 Non-tradable inputs Pj Financial contracts 1 10,801 9,311 -0.5 1.0 0.33 0.67 16.0% 16.0% 1427.72 Transport cost 1 2,151 1,855 -2.0 1.0 0.67 0.33 16.0% 16.0% 272.00 Administrative and general expenses 1 3,813 3,287 -0.5 1.0 0.33 0.67 16.0% 16.0% 504.02 Other operating expenditures 1 6,231 5,372 -0.5 1.0 0.33 0.67 16.0% 16.0% 823.68 Labour (semi-skilled) 1 30,608 30,608 7345.85 Total 20,632 10,373 s s d Pd = FV= 174,329 Demand elasticity (η) = -1.00 W P +W Pd = 158,299 d m Ps = Pm= 150,284 Supply elasticity (ε) = 2.00 W P d*= 50,095 %T = 63.9% Wd = -96,864 0.33 Ws(T Distortions + NT Distortions)= %NT = 36.1% Ws = 0.67 Value of FEP = 8,639 d*= 14% Value of NTP = 54,297 EV = 268,004 Pze = W zs Pz m (1 + kz) + W zd Pzm[1 + (tz – d * )] CF = 1.5373 minus W zs {Σ i aizo Pmi d i + Σ j ajzo [W j s Pmj d j + W j d Pmj ( d * )]} plus (Pzm ´ Tz ´ FEP) + (Pzm ´ NTz ´ NTP) C CONVERSION FACTORS: TRADEABLE ITEMS C1 IMPUT 1 (In example, PORTLAND CEMENT) Economic IMPORTABLE PROJECT INPUT (55% RATED) Financial value CF for NT Services Value of FEP Value CIF Price (KTk) 100 9 (+) Import duty 55.0% 55 (+) Excise duty 0.0% 0 (+) Value added tax (VAT) 25 (+) Handling 5.0% 5 0.95 (+) Freight & transport, port-market 5.0% 5 0.95 Market Price 190 (+) Freight & transport, market-project (% of market price) 5.0% 9 0.95 Project-site price 199 CF = C2 IMPUT 2 (In example, STEEL AND MACHINERY (EXEMPTED FROM DUTY)) Economic IMPORTED PROJECT INPUT (NO DUTY) Financial value CF for NT Services Value of FEP Value CIF Price (Dinars) 150 14 (+) Tariff 0% 0 (+) Excise Duty 0% (+) Value added tax (VAT) (+) Handling 5% (+) Freight & Transport, port-project 5% Project-site Price CF = C3 IMPUT 3 (In example, WOOD) Economic EXPORTABLE PROJECT INPUT Financial value CF for NT Services Value of FEP Value FOB Price (Dinars) 50 5 55 (-) Handling 10% -5 0.95 -5 (-) Freight & transport, port-market (% FOB) 10% -5 0.95 -5 Market Price 40 45 (+) Freight & transport, market-project (of market price) 10% 4.0 0.95 4 Project-site price 44 49 CF = 1.109 D CONVERSION FACTOR FOR PROJECT ITEMS CONVERSION FACTPOR OF CONSTRCUTION Construction cost Activities % weight CF Weighted CF Labour Skilled 5% 0.871 0.0436 Semiskilled 5% 0.760 0.0380 Unskilled 10% 1.463 0.1463 0.2278 Machinery 15% 1.000 0.1500 Materials Portland Cement 14% 0.000 0.0000 Bituminous materials 13% 0.859 0.1076 Aggregate 7% 0.781 0.0553 Steel 10% 0.000 0.0000 Fuel 10% 0.859 0.0854 Traffic Signs and Road Markings 2% 0.770 0.0186 Lighting 1% 0.859 0.0070 Wood 3% 1.100 0.0275 Tires 1% 0.859 0.0103 Fencing 2% 0.859 0.0208 Wire 0% 0.859 0.0009 PVC materials 0% 0.770 0.0012 Other materials 2% 0.909 0.0172 0.5018 31.23% Total weighted CF 0.7296 0.7296 68.77% 100.00% 100% CONVERSION FACTOR FOR START UP COSTS % weight CF Weighted CF Skilled labour 30% 0.871 0.2614 Semi skilled labour 30% 0.760 0.2280 Unskilled labour 10% 1.463 0.1463 0.6357 69.98% Other materials 30% 0.909 0.2727 0.2727 30.02% Total weighted CF 0.9083 0.9083 100.00% CONVERSION FACTOR FOR PERSONEL OPERATIONS skilled labour 20% 0.871 0.1743 Semi skilled labour 50% 0.760 0.3800 Unskilled labour 30% 1.463 0.4388 Total weighted CF 0.9930 CONVERSION FACTOR FOR OPERATIONS Utilities 30% 1.5373 0.4612 Transportation 20% 0.0000 0.0000 Other materials 50% 0.9089 0.4544 Total weighted CF 0.9156 CONVERSION FACTPOR FOR RUNNING COSTS Utilities 30% 1.537 0.4612 Other materials 30% 0.909 0.2727 Transportation 40% 0.000 0.0000 Total weighted CF 0.7339 E SUMMARY OF CONVERSION FACTORS CF Comment on conversion factors Revenues 1.000 Are Consumptin Benefits. There is an asumption that price reflects demand curve Change in AR 0.000 Is a transfer VAT on Products 0.000 Is a transfer Residual values 0.730 based on the value of the assets depreciated, and estimated by adjusting for FEP, NTP and taxes Construction cost 0.730 Is a weighted conversion factors of, labour, machinery and tradable and non tradable. Is estimated by adjusting for FEP, NTP and taxes Start up costs 0.908 is largely a project development activity, and is estimated by adjusting for FEP, NTP and taxes Concession company operating costs over construction Independent engineer 0.871 is skilled labour Insurance 0.993 In non traded and is estimated by adjusting for FEP, NPT and taxes operating costs over construction Personnel 0.993 Is non traded and is estimated by adjusting for taxes and other labour conditions as reflected in the wage difference in the market wages, supply and project wages Operations 0.916 Weighted averaged of non tradable, and is estimated by adjusting for FEP, NTP and taxes Operating and maintenance costs Operating costs Personnel 0.993 Is non traded and is estimated by adjusting for taxes and other labour conditions as reflected in the wage difference in the market wages, supply and project wages Operations 0.916 Weighted averaged of non tradable, and is estimated by adjusting for FEP, NTP and taxes Major maintenance costs Maintenance cost 0.730 Weighted averaged of non tradable, and is estimated by adjusting for FEP, NTP and taxes Future CapEx, FOE replacement 1.000 Is traded and importable, and the factor is estimated by adjust for taxes, FEP and NTP Concession company operating costs Running costs 0.502 Weighted averaged of non tradable, and is estimated by adjusting for FEP, NTP and taxes Independent engineer 0.871 is skilled labour Insurance 0.993 In non traded and is estimated by adjusting for FEP, NPT and taxes VAT credit on Investment and operating costs 0.000 Is a transfer Change in AP 0.916 Average of all conversion factors on operating cost items Change in CB 1.000 No distortions Corporation income tax 0.000 Is a transfer Total withholding taxes 0.000 Is a transfer Net VAT (receivable)/ payable 0.000 Is a transfer 14 ECONOMIC BENEFITS Year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 A QUANTITIES SOLD Product Type 1 - - - 1,166 1,227 1,292 1,359 1,431 1,506 1,585 1,668 1,756 1,848 1,945 2,047 2,154 2,268 2,387 2,512 2,644 2,783 2,929 3,082 3,244 3,415 3,594 3,782 3,981 4,190 4,410 4,642 - Product Type 2 - - - 2,269 2,367 2,469 2,575 2,685 2,801 2,921 3,047 3,178 3,315 3,457 3,606 3,761 3,923 4,091 4,267 4,451 4,642 4,842 5,050 5,267 5,494 5,730 5,976 6,233 6,501 6,781 7,072 - Total sales - - - 3,435 3,594 3,760 3,934 4,116 4,307 4,506 4,715 4,934 5,163 5,402 5,653 5,915 6,190 6,478 6,779 7,094 7,425 7,770 8,132 8,511 8,908 9,324 9,759 10,214 10,691 11,191 11,714 - B PRICES year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 CF Product Type 1 1.0 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0 Product Type 2 1.0 0.00 0.00 0.00 0.00 4.36 4.60 4.86 5.13 5.42 5.72 6.05 6.38 6.74 7.12 7.52 7.94 8.39 8.86 9.35 9.88 10.43 11.01 11.63 12.28 12.96 13.68 14.45 15.25 16.10164147 C SUMMARY OF ECONOMIC BENEFITS year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 PROJECT ECONOMIC BENEFITS Total Sales Product Type 1 0 0 1,166 1,227 1,292 1,359 1,431 1,506 1,585 1,668 1,756 1,848 1,945 2,047 2,154 2,268 2,387 2,512 2,644 2,783 2,929 3,082 3,244 3,415 3,594 3,782 3,981 4,190 4,410 4,642 0 Product Type 2 0 0 2,269 2,367 2,469 2,575 2,685 2,801 2,921 3,047 3,178 3,315 3,457 3,606 3,761 3,923 4,091 4,267 4,451 4,642 4,842 5,050 5,267 5,494 5,730 5,976 6,233 6,501 6,781 7,072 0 15 ECONOMIC RESOURCE FLOW STATEMENT year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 PV @ EOCK Economic Benefits Product Type 1 0 0 0 1,166 1,227 1,292 1,359 1,431 1,506 1,585 1,668 1,756 1,848 1,945 2,047 2,154 2,268 2,387 2,512 2,644 2,783 2,929 3,082 3,244 3,415 3,594 3,782 3,981 4,190 4,410 4,642 0 0 12,746 Product Type 2 0 0 0 2,269 2,367 2,469 2,575 2,685 2,801 2,921 3,047 3,178 3,315 3,457 3,606 3,761 3,923 4,091 4,267 4,451 4,642 4,842 5,050 5,267 5,494 5,730 5,976 6,233 6,501 6,781 7,072 0 0 22,680 CF VAT on revenues 0.000 0 0 0 550 575 602 629 659 689 721 754 789 826 864 904 946 990 1,036 1,085 1,135 1,188 1,243 1,301 1,362 1,425 1,492 1,561 1,634 1,711 1,791 1,874 0 0 5,668 Residual values 0.730 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 164 0 6 Net Resource Inflows 0 0 0 3,985 4,169 4,362 4,564 4,775 4,996 5,227 5,470 5,723 5,989 6,266 6,557 6,862 7,181 7,514 7,864 8,230 8,613 9,014 9,433 9,873 10,333 10,815 11,320 11,848 12,402 12,981 13,588 164 0 41,100 Resource Outflows Investments Costs Construction cost 0.730 0 2,751 3,485 2,935 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 7,453 Start up costs 0.908 0 102 129 109 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 276 Concession company operating costs over construction Independent engineer 0.871 0 38 48 40 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 103 Insurance 0.993 0 38 49 41 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 104 Operating costs over construction Personnel 0.993 0 24 31 26 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 65 Operations 0.916 0 36 46 38 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 97 Operating and maintenance costs Operating costs Personnel 0.993 0 0 0 0 63 63 63 63 63 63 63 63 63 63 63 63 63 63 63 63 63 63 63 63 63 63 63 63 63 63 63 0 0 391 Operations 0.916 0 0 0 0 46 46 46 46 46 46 46 46 46 46 46 46 46 46 46 46 46 46 46 46 46 46 46 46 46 46 46 0 0 286 Major maintenance costs 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Maintenance cost 0.730 0 0 0 0 0 0 0 0 21 21 21 21 21 21 21 21 21 21 21 21 21 21 21 21 21 21 21 21 21 0 0 0 0 82 Future CapEx, FOE replacement 1.000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Concession company operating costs Running costs 0.502 0 0 0 0 14 14 14 14 14 14 14 14 14 14 14 14 14 14 14 14 14 14 14 14 14 14 14 14 14 14 14 0 0 85 Independent engineer 0.871 0 0 0 0 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 0 0 158 Insurance 0.993 0 0 0 0 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 0 0 31 VAT credit on Investment and operating costs 0.000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Change in AP 0.916 0 0 0 0 13 1 1 1 3 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 -1 1 -12 0 12 Change in CB 1.000 0 0 0 0 137 13 13 14 15 15 16 17 18 19 19 20 21 22 23 24 26 27 28 29 31 32 34 35 37 39 40 42 0 197 Corporation Income Tax 0.000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Net Resource Outflows 0 2,990 3,787 3,189 302 166 166 167 191 189 190 191 192 192 193 194 195 196 197 198 199 201 202 203 204 206 207 209 211 189 193 30 0 9,340 Net Resources Flows 0 -2,990 -3,787 796 3,867 4,196 4,397 4,608 4,805 5,038 5,280 5,532 5,797 6,074 6,364 6,668 6,986 7,318 7,667 8,031 8,413 8,813 9,232 9,670 10,129 10,609 11,113 11,639 12,191 12,792 13,395 134 0 31,760 NPV_Econ @11% real EOCK 35,253 IRR_Econ = 42% 16 SENSITIVITY ANALYSIS A Sensitivity test: Base product type 1 price ENPV FNPV 35,253 3,327 0.0 18,921 -1,613 0.5 27,087 857 1.0 35,253 3,327 1.5 43,419 5,797 2.0 51,585 8,268 2.5 59,751 10,738 3.0 67,917 13,208 3.5 76,084 15,678 4.0 84,250 18,149 4.5 92,416 20,619 5.0 100,582 23,089 5.5 108,748 25,559 6.0 116,914 28,030 6.5 125,080 30,500 B Sensitivity test: Growth rate in GDP ENPV FNPV 35,253 3,327 2.0% 23,275 124 2.5% 25,840 824 3.0% 28,668 1,586 3.5% 31,794 2,418 4.0% 35,253 3,327 4.5% 39,089 4,323 5.0% 43,351 5,414 5.5% 48,093 6,614 6.0% 53,378 7,934 C Sensitivity test: Capital expenditure overrun factor ENPV FNPV 35,253 3,327 -25% 37,499 5,811 -20% 37,050 5,314 -15% 36,601 4,817 -10% 36,152 4,321 -5% 35,702 3,824 0% 35,253 3,327 5% 34,804 2,830 10% 34,355 2,334 15% 33,906 1,837 20% 33,457 1,340 25% 33,008 844 30% 32,559 347 35% 32,110 -150 40% 31,660 -647 45% 31,211 -1,143