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

 

How to evaluate economic feasibility of a power plant project – use project finance model

November 9th, 2009 3 Comments   Posted in financial models

How to evaluate economic feasibility of a power plant project – use project finance model

If you are preparing a pre-feasibility study or a detailed feasibility study of a small or a large scale power plant project, it is best to use my latest state-of-the-art power plant and project finance model.

It includes a modeling of the plant capacity and heat rate degradation, overhaul cycle and plant operating hours, gross and net generation, distribution losses and net sales, gross revenue (direct customers, sales to grid, sales to spot market), fuel costs, variable and fixed O&M costs, property taxes, property insurance, business interruption insurance, regulatory costs (permits, fees, licenses, fines), DSRF expense, depreciation and amortization, loan interest, income before tax, corporate income tax, income after tax, cash flows (add back depreciation less principal repayment plus/minus non-tax deductible adjustments), project IRR and payback (100% equity), equity IRR and payback (e.g. 30% equity, 70% debt), debt service cover ratio, levelized tariff, generation cost and net profit, and financial ratios (current ratio, quick ratio, A/R turnover, days sales in receivables, inventory turnover, liabilities to equity ratio, number of times interest earned, return on assets, net profit to assets ratio, net profit to sales ratio, return on owner’s equity). More »