Marcial Ocampo and his Major Achievements in Life

December 30th, 2017 No Comments   Posted in energy technology expert

Marcial Ocampo and his Major Achievements in Life

Marcial obtained his elementary education and graduated as the Grade 6 Valedictorian and continued his high school education at San Sebastian College in Manila and finished Year 4 Salutatorian.

Marcial studied at the University of the Philippines in Diliman Quezon City and finished his B.S. and M.S. Chemical Engineering degrees. He also took the Chemical Engineering Licensure Exam in August 1973 and passed as 2nd Placer with an 87.75% rating. He became a British Council scholar at the University of Leeds, UK, where he finished his M.S. Combustion & Energy and thesis in just one year.

Marcial joined the Department of Energy as a PNOC-PETRON-hire seconded as Section Chief of the Transport, Buildings & Machinery Section under the Conservation Division of DOE and conducted various energy audits of major industries throughout the country. Later on, when the DOE was abolished and replaced by the Ministry of Energy (MOE), Marcial transferred to the Petron Bataan Refinery (PBR) as Computer Systems Group head and Linear Programming (LP) model custodian. He retired from PETRON and then went on to work for PETRONAS Energy Philippines Inc. (PEPI) as EDP & Budget Manager and Executive Director of 50+ staff PCIERD-DOST upon the invitation of the DOST Secretary.

Marcial went into business providing computer hardware and General Ledger (GL) Accounting System that provided real-time transactions, month-to-date and year-to-date Income & Expense Statement, Balance Sheet Statement and Trial Balances which automated the preparation of Financial Reports for submission to SEC and BIR, as well as shareholders of any company. The GL was utilized in a number of lending investor companies that benefited from having a real-time accounting system.

Marcial was a Senior Technical Services Manager at First Gen Corporation where he was introduced to power plant modeling and simulation, and later, into project finance modeling that determines the economic feasibility of power plant projects and alternatives, and to value the privatization price of an asset of NPC for bidding to interested buyers.

He prepared a compendium of all power generation technologies (renewable, conventional, fossil, nuclear, energy storage) in power point presentation format and developed a template project finance model to calculate the first year tariff (or feed-in-tariff in the case of renewable energy), equity and project returns (IRR, NPV, PAYBACK), debt service cover ratio (DSCR), benefit-to-cost ratio (B/C), and other financial ratios to assess financial risks of the project during the planning stage of the project cycle. In addition to this deterministic (fixed) template, he prepared a version with stochastic (probabilistic) analysis using Monte Carlo Simulation (MCS).

The MCS model varied by +/- 10% the independent inputs in a random manner such as electricity tariff, availability factor, fuel heating value, debt ratio, plant capacity, all-in (overnight) capital cost, variable O&M cost, fixed O&M cost, cost of fuel, efficiency or plant heat rate and exchange rate. The MCS dependent output consists of a probabilistic distribution curve of equity and project returns (IRR, NPV, PAYBACK), net profit after tax, pre-tax WACC and electricity tariff (or feed-in-tariff for renewable energy). The shape of the distribution curve and relative position of the average value of the dependent variable is indicative of project risk.

He also prepared a manual on “How to Design a Mini-hydro Power Plant” and developed a model to “Optimize Penstock Diameter given its Thickness, Strength, Diameter, Capital and Operating Costs, Cost of Electricity and Friction Loses”.

Marcial is civic mined and patriotic, and helped the government thru the DOE in the “Crude Oil Price Hike to USD100 per barrel Impact Study in 2008” and the “Oil Price Review Study of 2012” where he developed the Oil Pump Price Calculation Excel Model to predict changes to pump price or absolute pump price given changes in FOB or MOPS import cost, ocean freight and insurance costs, exchange rate, gov’t excise taxes and port charges, brokerage and arrastre charges, VAT on importation activities, oil company margin, pumping and transshipment costs, hauling costs, dealer margin, and VAT on local activities. The pump price model can be downloaded from the DOE Website.

Later on, he was called upon by the DOE to assist in the 2012 Independent Oil Price Committee (IOPRC) review of the reasonableness of oil pump price (absolute and adjustments). His Oil Pump Price Calculation (OPPC) Model was adopted and posted in the DOE website which was later used very recently in the 2016 Oil Price Impact Study of an oil industry sector position paper submitted to the Philippine Congress.

He assisted a foreign consultant prepare a historical analysis of the short-run marginal cost (SRMC = variable O&M cost + fuel cost) and long-run marginal cost (LRMC = annualized capital cost + fixed O&M cost + regulatory cost + SRMC) for all power plants in the country in order to assist a client prepare his competitive bid offers in the Wholesale Electric Spot Market (WESM) as well as prepare their capacity expansion plans.

Marcial also assisted the Philippine Congressional Committee on Dam Safety in improving the Dam Water Release Protocol by providing Dam Water Release Simulation Model to predict dam height (meters) and volumetric release rate (cubic meters per second) every hour of the simulation given the initial dam height and volume, power generation and water discharge, dam strapping table (volume vs. height), rainfall data (mm per hour) and area of the dam watershed and upstream drainage area with rainfall data or equivalent upstream dam release rate. This model answered the question: “How many hours and rate of pre-emptive discharge is necessary to increase a dam’s storage capacity in order to have sufficient space to absorb an incoming storm and thus avoid a catastrophic dam spill that will inundate downstream low land areas”. The model accurately predicted the volumetric release rate at the height of the storm when the dam spilling level was breached. It also recommended how many days and rate of pre-emptive discharge is needed to avoid the dam spill during the height of Typhoon “Ondoy” and “Peping” that inundated the provinces of Pangasinan and Tarlac resulting in PhP 40 billion of damage and lost properties and lives.

He also assisted the economic team that studied the proposed excise tax increase in gasoline, diesel, kerosene, LPG, fuel oil, lubes & greases, and other petroleum products such as waxes & petrolatums to predict the price disturbance to be inputted into the input-output matrix of the Philippine economy to predict impact on GDP, inflation and employment.

Marcial also developed a Delivered Coal Price Calculation (DCPC) Model to calculate the impact of increasing the excise tax on coal from the current level of 10.00 PHP/MT to 300.00 PHP/MT, and to use his template project finance model for coal-fired power plants (PC, CFB, subcritical, super-critical and ultra-super-critical) to determine the impact of the excise tax increase in equity and project returns (IRR, NPV, PAYBACK) or determine the first year tariff to meet target equity and project IRR.

Marcial continued to develop his overall skills in energy & power and became an International Consultant at the United Nations Development Programme (UNDP) and travelled to Jakarta, Beijing, Shanghai, New Delhi and Chennai conducting mid-term and full-term project evaluation of wind diesel hybrid, 3rd generation fuel cell bus, biomass energy and India tea manufacturing.

Later, Marcial applied his energy & power expertise to join Sinclair Knight Mertz (SKM) as Senior Power Generation Engineer as part of the “Energy City”, an On-shore LNG Refrigerated Terminal and Re-gassing Facility project team at Limay, Bataan proposed by Atlantic Gulf & Pacific Company (AG&P). This project has been revived recently by the Araneta energy group.

Marcial then joined the SMC GLOBAL POWER HOLDINGS CORPORATION as Energy & Power Consultant and finished a number of feasibility studies for an industrial park, coal-fired power plant using clean coal technology (CFB) and a coal mine project where he converted the coal-mine production plan into a project finance model to determine the cost of delivered coal to another SMC power plant in Mindanao. He provided in-house financial modeling expertise on solar PV, wind, mini-hydro, large hydro, natural gas-fired CCGT and coal-fired clean coal technology (CFB).

Currently, Marcial is finishing the terminal (final) project evaluation of a UNDP-funded project being implemented by the Philippine Climate Change Commission (CCC) on “Low Emission Capacity Building (LECB) Project for the Philippines”.

Marcial is also developing a 50 MW Grid-Connected Solar PV Power and Energy Storage Project in a 50ha project site in Central Luzon in a vast titled estate to provide alternative income to the land owner. He will be soliciting shortly proposals from interested industrial partners to co-develop the project and said partner will provide the technical and financial know-how that will provide beneficial interest to the land owner by way of land rental and share of net income after tax.

Marcial is now available for new endeavors this coming New Year – January 1, 2018.

Contact Details:

Marcial T. Ocampo

+63-9156067949 (GLOBE mobile)

+63-2-9313713 (PLDT home landline)

mars_ocampo@yahoo.com (email)

energydataexpert@gmail.com (email)

 

Delivered Coal Price Calculation (DCPC) Model – an excel model

December 20th, 2017 No Comments   Posted in coal pricing formula

Delivered Coal Price Calculation (DCPC) Model – an excel model

A logical extension to the oil pump price calculation (OPPC) model is the delivered coal price calculation (DCPC) model developed again by Marcial Ocampo.

The need for such calculation model is to enable the user of the DCPC model to estimate the impact of the revised excise tax on coal (local and imported) which is levied currently at PHP 10.00 per metric ton (MT), and will be progressively increased to PHP 50, then 150 and finally 300 per MT under the new tax reform law (TRAIN) recently passed by both houses of Congress and Senate and signed into law by President DU30.

The excel model was developed by Marcial from his DOE and power industry experience and his excel modeling expertise in doing oil, coal, gas, geothermal, hydro, renewable energy pricing calculations and project finance modeling.

Once the model determines the delivered price of coal, this coal price is then used in the project finance model for a coal-fired power plant using various technologies such as traditional sub-critical pulverized coal (PC) and the cleaner coal technologies such as circulating fluidized bed (CFB), integrated gasification and combined cycle (IGCC). As boiler steam pressure has been raised to increase thermal efficiency, the use of super-critical and ultra-super-critical steam generation technologies have further raised the thermal efficiency of pulverized coal, CFB and IGCC technologies.

Since the excise tax is levied on a metric ton of coal (which includes the pure coal and attendant moisture (water) and ash), the use of local coal with lower heat content (BTU) and higher moisture and ash content as compared with imported coal with higher heat content and lower moisture and ash content will invariably raise the cost of generated electricity because of the effect of lower heat content and lower thermal efficiency when using low BTU coals.

The DCPC model is developed as follows:

Imported Coal Cost:

Description:                                          Indonesian / Baramulti Steam Coal

Tonnage:                                                  22,468.60 MT

Bill of Lading / Airway Bill No.:          113/BM/BJM-PHIL/VIII/2004

Estimated / Actual Date of Arrival:     9/20/2004

Port of Entry:                                      BCFTPP Port

CUSTOMS DUTY:

FOB Value = FOB$ = 60.00 $/MT * 22,468.60 MT = 1,348,116.58 USD

Freight = FRT$ = 15.00 $/MT * 22,468.60 MT = 337,029.15 USD

Insurance = INS$ = 0.50% of FOB = 0.50% * 1,348,116.58 = 6,740.58 USD

Other Charges = OTH$ = 0.00 USD

Dutiable Value in US$ = FOB$ + FRT$ + INS$ + OTH$ = 1,691,886.31 USD

Dutiable Value in PHP = 1,691,886.31 USD * 50.00 PHP/USD = 84,594,315.53 PHP

Customs Duty = 84,594,315.53 PHP * 3.00% = 2,537,829.47 PHP

TAXABLE VALUE:

Dutiable Value (DV) = 84,594,315.53 PHP

Bank Charges (BC) =  0.0585% of Dutiable Value = 49,487.67 PHP

Customs Duty (CD) = 2,537,829.47 PHP

Brokerage Fee (BF) = 0.1408% of Dutiable Value = 124,127.20 PHP

Arrastre Charges (AC) = 66.00 PHP/MT * 22,468.60 MT = 1,482,928.24 PHP

Wharfage Fee (WF) =  40.00 PHP/MT * 22,468.60 MT =  898,744.39 PHP

Customs Docs Stamps (CDS) = 2,120.00 PHP

Import Processing Fee (IPF) = 8,000.00 PHP

Excise Tax (ET) = 10.00 PHP/MT * 22,468.60 MT = 224,686.10 PHP

LANDED COST (LC) = DV + BC + CD + BF + AC + WF+ CDS + IPF + ET

=  89,922,238.59 PHP

VALUE ADDED TAX (VAT) = 12% of LC = 12% * 89,922,238.59 PHP

= 10,790,668.63 PHP

Tax Paid Landed Cost (TPLC) = 89,922,238.59 PHP+ 10,790,668.63 PHP

100,712,907.22 PHP

TPLC (PHP/MT) = 100,712,907.22 PHP / 22,468.60 MT = 4,482.38 PHP/MT

TPLC (USD/MT) = 4,482.38 PHP/MT / 50.00 PHP/MT = 89.65 USD/MT

SUMMARY

Customs Duty (CD) = 2,537,829.47 PHP

Excise Tax (ET) = 224,686.10 PHP

Customs Docs Stamps (CDS) = 2,120.00 PHP

Import Processing Fee (IPF) = 8,000.00 PHP

TOTAL DUTIES & TAXES =  CD + ET + CDS + IPF = 2,772,635.56 PHP

Delivered Price of Coal = 4,482.38 PHP/MT = 89.65 USD/MT

The next step is to correct for variance with agreed heating value, moisture, ash and other important parameters that will affect the coal-fired power generating plant. These price adjustments are included in the coal supply contract to adjust the delivered price of coal and convert it into a PARITY PRICE of a reference coal of given heating value, moisture, ash and other important specs.

You may download the delivered coal price calculation (DPCC) model by clicking this link:

Coal Parity Pricing and Specifications

CONCLUSION:

Since the excise tax is levied on the weight of the whole coal irrespective of its heating value or energy content and other specs such as moisture and ash, the revised excise tax which will reach a maximum rate of 300 PHP/MT will be highly punitive of lower rank coal such as lignite (low BTU, high moisture, high ash) and sub-bituminous coals with moderate BTU, moisture and ash compared to imported coal.

The resulting impact on the price of generated electricity from lower quality domestic coal will be significant compared to that of the better quality imported coal (higher BTU, low moisture, low ash).

Further, using lower quality domestic coal also has a further disadvantage as it has lower thermal efficiency because of its lower heat content and higher moisture and ash, which magnifies further the impact.

The next step is to run the project finance models for each technology (PC, CFB, IGCC using sub-critical, super-critical and ultra-super-critical pressures) to determine the cost of electricity to achieve a given desired equity or project returns (IRR, NPV, PAYBACK).

By comparing the base scenario of existing price of coal with current excise tax rate of 10.00 PHP/MT with the proposed coal tax of 50, 150 and 300 PHP/MT, we can predict the electricity price increase impact for each of the coal-fired power generation technologies currently in use and proposed in the future, and arrive at the average grid price due to higher coal-generated electricity price, and thus the over-all electricity price impact of the excise tax adjustment on domestic and imported coal supplies.

You may run the demo models for subcritical PC, CFB, IGCC and higher pressures (supercritical, ultra-super-critical):

ADV Coal-Fired CFB Thermal Model3_50 MW – demo5b

ADV Coal-Fired CFB Thermal Model3_135 MW – demo5b

ADV Coal-Fired PC Subcritical Thermal Model3 – demo5b

ADV Coal-Fired PC Supercritical Thermal Model3 – demo5b

ADV Coal-Fired PC Ultrasupercritical Thermal Model3 – demo5b

Email me:

energydataexpert@gmail.com

 

Oil Pump Price Calculation (OPPC) Model – an Excel Model

December 17th, 2017 No Comments   Posted in Oil Pricing Formula

Oil Pump Price Calculation (OPPC) Model – an Excel Model

  • Calibrate Model by Calculating % Gross Margin (%GM) from Pump Price Less All Costs:
  • %GM = {[PP – OPSF – TPLC * (1 – % biofuel)] / (1 + VAT2) – [(TS + PL + DE) * (1 – % biofuel) + BF + HF + DM]} / {TPLC * (1 – % biofuel)}
  • Calculate Pump Price (PP) using the % Gross Margin and Other Cost Inputs:
  • PP = TPLC * (1 – % biofuel) + [TPLC * (1 – % biofuel) * %GM + (TS + PL + DE) * (1 – % biofuel) + BF + HF + DM] * (1 + %VAT2) + OPSF

To download excel model and IOPRC 2012 report, click the following link of DOE:

  • Calculation of TPLC and PP
  • MOPS$ = Mean of Platts Singapore (imported cost of fuel)
  • FOB$ = Freight on Board in US$ = MOPS * 300,000
  • FRT$ = Ocean Freight in US$ = FOB$ * 2.00%
  • INS$ = Ocean Insurance in US$ = FOB$ * 4.00%
  • CIF$ = Cargo, Insurance & Freight in US$ = FOB$ + FRT$ + INS$
  • CIF = CIF in Pesos = CIF$ * (FOREX, P/$)
  • CD = Customs Duty = CIF * 3.00% (now zero due to ASEAN AFTA)
  • BF= Brokerage Fee = 5,300 + (CIF – 200,000) * 0.00125
  • BC = Bank Charges = CIF * 0.00125
  • AC = Arrastre Charge (gasoline) = 122 * (0.75 * 158.9868 / 1000) * 300,000
  • AC = Arrastre Charge (diesel) = 122 * (0.80 * 158.9868 / 1000) * 300,000
  • WC = Wharfage Charge (gasoline) = 36.65 * (0.75 * 158.9868 / 1000) * 300,000
  • WC = Wharfage Charge (diesel) = 36.65 * (0.80 * 158.9868 / 1000) * 300,000
  • IPF = Import Processing Fee = 1,000 per import entry
  • CDS = Customs Documentary Stamp = 256 per import entry
  • ET = Excise Tax (gasoline) = 4.35 * 158.9868 * 300,000
  • ET = Excise Tax (diesel) = 1.63 * 158.9868 * 300,000
  • LC = Landed Cost = CIF + CD + BF + BC + AC + WC + IPF + CDS + ET
  • VAT1 (on import) = 10% * Landed Cost (Nov 2005 – Jan 2000)
  •                             = 12% * Landed Cost (Feb 2006 – present)
  • TPLC (Tax Paid Landed Cost) = LC + VAT1 (imports) = LC * (1 + %VAT1)
  • TPLC (P/L) = TPLC / (300,000 * 158.9868)
  • Summary to BOC = CD + IPF + CDS + ET + VAT1
  • Summary to BOC (P/L) = Summary to BOC / (300,000 * 158.9868)
  • OCGM = Oil Company Gross Margin (P/L) = TPLC * (1 – % biofuel) * % gross margin
  • OOCC = Other Oil Company Costs (P/L) = (TS + PL + DE) * (1 – % biofuel) + BF
  • TS = Transshipment = 0.38 P/L (for oil tanker ships and barges)
  • PL = Pipeline = 0.000 P/L (for FPIC)
  • DE = depot = 0.27 P/L (gasoline)
  •                    = 0.28 P/L (diesel)
  • BF = Biofuels = 10% * (P/L of ETHANOL) = 2.63 P/L (gasoline)
  •                        =  2% * (P/L of CME Biodiesel) = 1.28 P/L (diesel)
  • HF = Hauler’s Fee (P/L) = 0.21 P/L (gasoline and diesel)
  • DM = Dealer’s Margin (P/L) = 1.72 (gasoline)
  •                                                 = 1.47 (diesel)
  • TLC = Total Local Costs (P/L) = OCGM + OOCC + HF + DM
  • VAT2 (local costs) = 10% * Total Local Cost (Nov 2005 – Jan 2006)
  •                                = 12% * Total Local Cost (Feb 2006 – present)
  • PP = TPLC * (1 – % biofuel) + [TPLC * (1 – % biofuel) * %GM + (TS + PL + DE) * (1 – % biofuel) + BF + HF + DM] * (1 + %VAT2) + OPSF

The pump price (PP) component called the oil company gross margin is given by:

  • OCGM (oil company gross margin) = TPLC * (1 – % biofuel) * %GM
  •  = fixed O&M + variable O&M + marketing expense + depreciation + profit margin

The OCGM is used to cover the fixed and variable costs of the oil company plus the marketing expenses and depreciation cost of its invested capital assets and provide profit margin that recovers its capital investments and thus determine the IRR of the investment made by the oil company:

  • (Capital Investment) = sum ( profit margin(t) * sales volume(t) / (1 + IRR)^t )
  • Thank You !!!
  • Prepared by:
  • Marcial T. Ocampo
  • TWG Member, IOPRC 2012