Center for Executive Education (CEE)
Post Graduate Diploma in Project Management
Engr. Dr. Syed Irfan Nabi ; Ahsan Mustaqeem
PGD Project Report
Frequently changing governmental policies and economic factors such as the sudden and significant depreciation of the rupee against the dollar, inflation and increase in interest rates have collectively impacted consumers and businesses. The buying power of the customer has reduced, hence, decreasing customer demand while at the same time business, especially those who solely or mainly rely on imports as raw material, have drastically increased product prices to account for the depreciation of the rupee. The significant reduction in demand has also played a role in further escalation of prices to maintain profits due to a disruption in current economies of scale. The above factors have pushed businesses to reduce COGS, Factory Overheads and other expenses to account for a reduction in sales. In such circumstances, companies are exploring avenues to reduce expenditures. One focus area where expenditures could be reduced is of decreasing the cost of electricity by using an On-Grid Solar Power Plant. In this report, we explore the feasibility of setting up an On-Grid Solar Power Plant at XYZ Pharmaceuticals Pakistan and estimate the savings that we would make on an operational level. This study also accesses the most suitable mode of financing for the project in great depth along with the project’s expected return after 10 years. The three modes of financing that shall be assessed are:
1) Equity financing 2) 100% SBP financing 3) 100% Commercial financing The financial prospects of net metering shall also be accessed in the financial feasibility. The conclusive financial analysis dictates that the project is viable if financed via 1) Debt financing via SBP and Net Metering 2) Debt financing via SBP and no Net Metering 3) Debt financing via Commercial Loan and Net Metering.
The remaining three scenarios wouldn’t be feasible as the NPV was either negative or barely positive. One outcome of the model developed by the team is that it can be adopted for other industries to see if the project is viable for them or not and another discernable outcome is that if the interest on the loan is significantly lower than the cost of equity especially as is in Pakistan then debt financing would be the appropriate mode of project financing.
Tullah, H., Aziz, M. S., & Patel, N. S. (2019). Feasibility analysis of 700KW on-grid solar power system (Unpublished PGD Project Report). Institute of Business Administration, Pakistan. Retrieved from https://ir.iba.edu.pk/pgd-research-projects/30
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