PROJECT EVALUATION OF CONSTRUCTING A NEW POLYPROPYLENE PLANT IN THE ANNEX AREA OF TOWN B REFINERY

• Main Author: Rizki, Muhammad
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/55654
• Institution: Institut Teknologi Bandung

The petrochemical industry continues to play an important role in Indonesia expanding economy. Polypropylene (PP) market attracts attention to the existing and new players in the petrochemical sector. The supply of PP from domestic is deficit estimated at over 1000 KTA where over 50% of PP used in Indonesia is still imported. With a large enough import quota to meet PP needs in Indonesia, PT. XYZ still has a large enough market share to expand the plant. In addition, PP import activities created an import burden of 817 million USD. Therefore, investment analysis on constructing a new PP plant by PT. XYZ and project feasibility through sensitivity analysis should be assessed. External and internal environment affects business condition. PESTLE framework is used to mitigate threats and leverage opportunities, while Porter’s five forces is used to assess what industry they compete in and how to position themselves for success. On the other hand, the internal environment which consists of VRCN framework is used to gain a deeper understanding of activities leading to competitive advantage. Technical feasibility is conducted to obtain the most suitable technology for PP plant development. Project evaluation uses the project life assumptions for 20 years operations. The gross revenue at the end of the project will be around 530 million USD. PT. XYZ will use full equity to run this project. The plant will have turnaround every 5 years. PT. XYZ will receive positive NPV around 519 million USD, IRR 29%, PI 1.36, and PBP 5.87 years. The sensitivity analysis uses 10% addition and reduction of total CAPEX, product price, and propylene import. Sensitivity analysis indicates that the project is more sensitive to PP product price.