Financial feasibility study on conversion of oil palm trunk sap into bioethanol and fuel pellets

Zulkafli H., . and Wan Asma I., . and Muhammad Faisal M.Y., . and Rohana A. R., . and Rafidah J., . and Puad E., . (2014) Financial feasibility study on conversion of oil palm trunk sap into bioethanol and fuel pellets. [Proceedings Paper]

The Third Industrial Master Plan 2006-2020 was introduced by the Government of Malaysia to promote energy generation from palm biomass to ensure higher contribution of the total factor production. Based on the UNEP-FRIM-UMP finding the most environmental sound technological products from waste palm trees into an energy resource were bioethanol from oil palm trunk sap and fuel pellets manufactured from the sap squeezed residues. This paper highlights the financial feasibility on conversion of oil palm trunk sap into bioethanol and fuel pellet for a period of 15 years. The analysis assumed that the capacity of the plant will be for the production of 100 tons of bioethanol per day and a total of 700 tons of fuel pellets per day could be derived. The total revenue for both productions is RM2 117 million with a total cost of RM1 552 million. Profit and loss statement shows that the production of bioethanol and fuel pellet will generate a profit with net income of RM565 million within 15 years. Based on the net present value NPV of RM 211 million USD 70.3 million was obtained with a 39 internal rate of return IRR cost benefit ratio BCR of 1.28 and payback period of 4 years; investment for development of the plant is considered acceptable in investment decisions. Considering land availability and source of material supply the plant is more suitable to be established in Sabah rather than Peninsular Malaysia. In overall the business proposal for converting WPT into renewable energy looked promising due to the demand of green products globally.

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Abstract

The Third Industrial Master Plan 2006-2020 was introduced by the Government of Malaysia to promote energy generation from palm biomass to ensure higher contribution of the total factor production. Based on the UNEP-FRIM-UMP finding the most environmental sound technological products from waste palm trees into an energy resource were bioethanol from oil palm trunk sap and fuel pellets manufactured from the sap squeezed residues. This paper highlights the financial feasibility on conversion of oil palm trunk sap into bioethanol and fuel pellet for a period of 15 years. The analysis assumed that the capacity of the plant will be for the production of 100 tons of bioethanol per day and a total of 700 tons of fuel pellets per day could be derived. The total revenue for both productions is RM2 117 million with a total cost of RM1 552 million. Profit and loss statement shows that the production of bioethanol and fuel pellet will generate a profit with net income of RM565 million within 15 years. Based on the net present value NPV of RM 211 million USD 70.3 million was obtained with a 39 internal rate of return IRR cost benefit ratio BCR of 1.28 and payback period of 4 years; investment for development of the plant is considered acceptable in investment decisions. Considering land availability and source of material supply the plant is more suitable to be established in Sabah rather than Peninsular Malaysia. In overall the business proposal for converting WPT into renewable energy looked promising due to the demand of green products globally.

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Item Type:	Proceedings Paper
Additional Information:	Available at Perpustakaan Sultan Abdul Samad Universiti Putra Malaysia 43400 UPM Serdang Selangor Malaysia. TP339 B615 Call Number
AGROVOC Term:	Oil palm
AGROVOC Term:	Trunks
AGROVOC Term:	Pellets
AGROVOC Term:	Fuels
AGROVOC Term:	Biomass
AGROVOC Term:	Renewable energy
AGROVOC Term:	Financial analysis
AGROVOC Term:	Malaysia
Geographical Term:	MALAYSIA
Depositing User:	Ms. Suzila Mohamad Kasim
Last Modified:	24 Apr 2025 05:14
URI:	http://webagris.upm.edu.my/id/eprint/12131

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