Hauling bulk petroleum products for an oil company

• Main Author: Santos, Pedro S.
• Format: text
• Language: English
• Published: Animo Repository 1976
• Subjects: Petroleum products > Transportation; Oil, Gas, and Energy; Transportation
• Online Access: https://animorepository.dlsu.edu.ph/etd_masteral/456
• Institution: De La Salle University

This project study explores the viability of owning and operating tank trucks for an oil company. The units are to be assigned in Poro, La Union to deliver bulk petroleum products for Petrophil Corporation from their Poro Bulk Plant to the various customers that are economically served from this same source point. The proposed project is a medium-scale business operation that will start with five units at a project cost of P493,000 which includes the pre-operating expense and capital asset requirements. The firm will employ initially a total of fifteen (15) personnel. This manpower will comprise the two departments-the Administrative and Operations departments. Management personnel and skilled laborers will be employed on the basis of their experience and exposure to the same type of operations apart from their formal educational background and skills. The remuneration will be higher than the prescribed minimum wage and the fringe benefits will include sick, vacation and maternity leaves, as well as overtime and night differential payments and a year-end bonus. As to the marketing aspect, it was established that in the Poro Bulk Plant, the demand for delivering bulk petroleum products would increase from 134,000,000 liters in 1976 to 168,000,000 liters in 1979 or an average of 8.0 percent annual growth. This simply means that for Petrophil Corporation alone, 63 tank truck units will be required in 1976, increasing to 77 units in 1979. (Currently, Petrophil has 56 units in Poro). Thus, the need to increase the delivery units by five annually. These calculations are presented in more detail in the Technical Aspect. Also, since the economy of the locale will be highly dependent on petroleum products as the primary source of energy, the continuing need to deliver these products from the bulk plant to end-users will be there for years to come. In the financial aspect, the five tank truck units are estimated to haul and deliver approximately 11,000,000 liters. The initial project cost is P493,000. The income tax rate adopted is 25 percent for the first P100,000 and 35 percent for income greater than P100,000. The yearly gross revenue for each unit is P113,000 assuming delivery rates for 1976 as approved by the Oil Industry Commission. Based on these assumptions, the project has exhibited a realization of increasing net income and increasing growth of owners' equity. The breakeven volume per tank truck unit is 1,068,000 liters per year or a 64 percent utilization factor payout period id estimated to be 4 years. The return on investment (DCFRR) is estimated at 20 percent. In the financing aspect, the project will seek a long-term loan from the Development Bank of the Philippines which offers a loan interest of 12 percent per annum. DBP will finance 75 percent of the cost of capital acquisition and working capital, payable in 10 years for the capital assets and 5 years for the working capital. Payment is scheduled in equal quarterly amortizations. In the technical aspect, the 9,000-liter diesel engine tank truck unit has been tested and proven to be the most economical to operate. Spare parts, as well as technical expertise in maintenance and repair (M&R), are readily available. Furthermore, indications are that this brand (Isuzu) will expand its distribution network all over the country, which means that customers can expect adequate spare parts and repair capabilities.