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8/6/2019 Exampe of Writing Presentation on Case WASTE CONCERN Project
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We are
Group No:2
Name Roll No.
Tania Rahman 11-101
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Picture behindthe scene
Iftekhar Enayetullah and Maqsood Sinha had earned an international
reputation for their innovative approach to dealing with the vast
quantities of waste that had threatened to overwhelm the overcrowdedcity of Dhaka.
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1. Waste Generation is rapidly
increasing.
2. Waste collection is inadequate.
3. There is a shortage of land for final
disposal of waste.
4. Organic waste is not utilized.
5. Citizens lack the political will to do
something about it.
3000 ton
waste daily
1,400 600 800200
Daily Volume of
Waste(tons)
Daily Volume of Waste(tons)
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Paper
Glass
Metal
Plastic
Textile
Wood/Grass
Ash/Soil
Food Waste
Others
10%
1.40%
0.50%
2.
0%
2.50%
22%
40%
18%
3%
Physical Composition of Solid Waste
Series1
70-75% of waste from
Dhaka city was organic
and suitable for
composting.
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Dhaka City
Corporation, responsible for
enormous amount of waste butonly collected 42% of it each day.
Another 58%...??!!!
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Insufficient instutional
structures.
Inefficient organizationalprocedures.
Use of inappropriate
technologies.
Deficient capacity ofinstitutions involved.
Plays an important role in
SWM especially in resource
recovery. Activities disrupt oparation
of landfills & transfer
stations.
An eyesore & thereforeopposed by authorities.
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Source Segregation of Waste
Vegetables MarketDoor to Door CollectionDoor to Door Collection
Composting
Small Scale/ Medium Scale/ Large Scale
Decentralized Compost Plant
Transfer Stations
Landfill
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Collection of waste
Sorting of waste
Piling of waste using windrow method
Piling of waste using Box method
Turning
Temperature monitoring
Packaging
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Community Response
Sustainability
Positive
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Background asengineer NOT
businessman
Creates problem:
Distribution
Sales
Marketing
Agreement &
Support
Alpha Agro
UNDP(CDM)
Map Agro
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many nations together in 1992to sign the United NationsFramework Convention onClimate Change (UNFCCC).1992
new agreement that wouldestablish legally bindinglimitations on greenhousegases2012
The Kyoto Protocol
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The CDM of the Kyoto Protocol has created opportunities for generating
huge amount of economic and environmental benefits for Bangladesh.
CDM project is implemented with a capacity of composting 700 tons of
waste per day along with a LFG and utilization through its 3 planned recycling
plants with a daily recycling capacity of130 tons
This initiative will also reduce 15,600 tons of CO2 e/year and save 52,195
m3/year area of landfill.
CleanDevelopmentMechanism (CDM)
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Carbon Financing : Carbon CreditsIndustrialized
country
Developing country
Emission reduction
credits (CER)
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Waste
City
Authorities
Collecting
transport
Baseline Situation CDM project
Methane Emission (Green House Gas) No Methane Emission
The project is recycling organic vegetable waste and instead of disposing in
landfill, it is converted into compost.
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Whether or not to enter into a partnership with one of anumber of large foreign firms interested in making a majorinvestment in their growing recycling firm?
Whether Potential investor would be willing to fund only thecomposting plant or whether they might fund the LFG
extraction project as well?
If the LFG composting plant was implemented, what will bethe choice of investors whether to use the processedmethane for power generation or just flare it for same
release into the atmosphere?
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Whether or not to enter into a partnership with one of
a number of large foreign firms interested in making a
major investment in their growing recycling firm
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The Japanese Suitor
The Dutch Suitor
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Initial
Proposal
Purchase years of CERs at approximately US$4.50
each(approximately 80% of 2004s CER value including a
prepayment to get Waste Concerns proposed business off the
ground)
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Sale of Compost
tons of compost generated/day 175
operational days/year 320
tons of compost /year 56,000
US$/tons of compost $43
Annual Revenue from Sale of Compost $2,408,000
Total Annual Revenue $3,362,000
Carbon Credits Generated from Composting
tons of waste sorted/day 700
carbon CreditsGenerated/day 350
operational days/year 320
carbon credits/year 112000
assumed price/carbon credit $4.50
Annual Revenue $504,000
Carbon Credit Generated from LFG Extraction
average carbon credits/year 100,000
assumed price/carbon credit $4.50
Annual Revenue $450,000
Total Annual Revenue from Carbon Credits $954,000
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Room to negotiate credit price.
Offers to be consultantindevelopingnew CER projects which will addpersonalincome as well as revenue forWaste Concern
Advantages
No upfront payments. Didnot matched with Waste Concern's
goal of promoting CDM projectsthroughoutcountry andconvertingwaste into resource to benefit poor.
Problems
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1. The WWR would assume control of the entire dumpsite
operation, helping it to run smoothly and predictably. They would
introduce specialized heavy equipment to improve efficiency end
increase capacity.
2. They would build a power plant for LFG extraction.
3. They would seed a controlling share of the joint venture, typically
80%.
Terms and
Conditions
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-Long record of success andinnovation,contributing anintegrated, end-
to-end process. -Welltechnology,values and reputation.
-Giving up majority ofcontrol.
WWR
Increased offer to $5.00 per credit
Focused on profit.
Didnot matched with Waste Concern's goalJapanese suitor
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Assumptions Royalty to DCC 5%
Depreciation 5%
Discount rate 12%
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year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Total Income
1,017,553 1,535,122 1,460,441 1,499,255
1,048,37
5
1,005,63
1 705,552 631,330 398,359 242,937 347,823
TOTAL EXPENDITURE235,800 235,800 235,800 235,800 157,200 157,200 78,600 78,600 78,600 78,600
Gross Margin 1,017,553 1,299,322 1,224,641 1,263,455 812,575 848,431 548,352 552,730 319,759 164,337 269,223
Royalty to DCC (5%) 50,878 64,966 61,232 63,173 40,629 42,422 27,418 27,637 15,988 8,217 13,461
EBIT 794,655 1,062,336 991,389 1,028,262 599,926 633,989 348,914 353,074 131,751 (15,900) 83,742Depreciation 172020 172020 172020 172020 172020 172020 172020 172020 172020 172020 172020
EBITDA 966,675 1,234,356 1,163,409 1,200,282 771,946 806,009 520,934 525,094 303,771 156,120 255,762
Unlevered net income 794,655 1,062,336 991,389 1,028,262 599,926 633,989 348,914 353,074 131,751 (15,900) 83,742
Add:Depreciation 172020 172020 172020 172020 172020 172020 172020 172020 172020 172020 172020
Less:CNW 0 71103.05 1919 1940.7 -22544 -2137.2
-
15003.9
5 -3711.1
-
11648.5
5 -7771.1 5244.3
Less:Capital Expenditure 3,096,360 344,040
Net cash flow before debt (2,129,685) 819,213 1,161,490 1,198,342 794,490 808,147 535,938 528,805 315,420 163,891 250,518
NPV 1894644
IRR 40.03%
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Cash Flow Calculation of extraction project (without upfront fee)
year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Total Income
1,422,061 1,460,441 1,499,255 1,048,375
1,005,63
1 705,552 631,330 398,359 242,937 347,823
TOTAL EXPENDITURE235,800 235,800 235,800 235,800 157,200 157,200 78,600 78,600 78,600 78,600
Gross Margin - 1,186,261 1,224,641 1,263,455 812,575 848,431 548,352 552,730 319,759164,337 269,223
Royalty to DCC (5%) - 71,103 73,022 74,963 52,419 50,282 35,278 31,567 19,918 12,147 17,391
EBIT - 943,138 979,599 1,016,472 588,136 626,129 341,054 349,144 127,821 (19,830) 79,812
Depreciation 172020 172020 172020 172020 172020 172020 172020 172020 172020 172020
EBITDA - 1,115,158 1,151,619 1,188,492 760,156 798,149 513,074 521,164 299,841152,190 251,832
Unlevered net income - 943,138 979,599 1,016,472 588,136 626,129 341,054 349,144 127,821 (19,830) 79,812
Add:Depreciation 172020 172020 172020 172020 172020 172020 172020 172020 172020 172020
Less:CNW 0 71103.05 1919 1940.7 -22544 -2137.2
-
15003.9
5 -3711.1
-
11648.5
5 -7771.1 5244.3
Less:Capital Expenditure 3,096,360 344,040
Net cash flow before
debt(FCF) (3,096,360) 700,015 1,149,700 1,186,552 782,700 800,287 528,078 524,875 311,490 159,961 246,588
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NPV 901005.81
IRR 22.00%
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year 2004 2005 2006 2007 2008 2009 2010 2011 2012
LFG Revenue
1,017,553 1,535,122 1,460,441 1,499,255 1,048,375 1,005,631 705,552 631,330 398,359
Compost Revenue 430000 1075000 2408000 2408000 2408000 2408000 2408000 2408000 2408000
Total Revenue 1,447,553 2,610,122 3,868,441 3,907,255 3,456,375 3,413,631 3,113,5523,039,330
2,806,359
LFG expenditure235800 235,800 235,800 235,800 235,800 157,200 157,200 78,600 78,600
Compost
Expenditure 494520 978270 1978020 1978020 1978020 1978020 1978020 1978020 1978020
Total Expenditure 730320 1214070 2213820 2213820 2213820 2135220 2135220 2056620 2056620
NI 717,233 1,396,052 1,654,621 1,693,435 1,242,555 1,278,411 978,332 982,710 749,739
PV 788956.3 1396052 1654621 1693435 1242555 1278411 978332 982710 749739
NPV 5544411
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Year 2005 2006 2007 2008 2009 2010 2011 2012
LFG Revenue1,422,061 1,460,4411,499,255 1,048,375 1,005,631 705,552 631,330 398,359
Compost Revenue 1075000 2408000 2408000 2408000 2408000 2408000 2408000 2408000
Total Revenue 2,497,061 3,868,441 3,907,255 3,456,375 3,413,631 3,113,552 3,039,330 2,806,359
LFG expenditure235,800 235,800 235,800 235,800 157,200 157,200 78,600 78,600
Compost Expenditure 978270 1978020 1978020 1978020 1978020 1978020 1978020 1978020
Total Expenditure 1214070 2213820 2213820 2213820 2135220 2135220 2056620 2056620
NI 1,282,991 1,654,6211,693,435 1,242,555 1,278,411 978,332 982,710 749,739
PV 1282991 1654621 1693435 1242555 1278411 978332 982710 749739
NPV 4642394
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Combined NPV for WWR 5544411
Combined NPV for Japanese 4642394
4000000
4200000
4400000
4600000
4800000
5000000
5200000
5400000
5600000
Combined NPV with
upfront fee
Combined NPV
without upfront fee
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Whether Potential investor would be willing to fund
only the composting plant or whether they might
fund the LFG extraction project as well
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NPV with only composting plant 479123.63
NPV of composting plant plus LFG
extraction project (without upfront
fee) 1380129
NPV of composting plant plus LFGextraction project (with upfront fee)
6023534.93
NPV of composting plant < NPV ofcomposting plan plus LFG extraction project
Potential investors might fund the
LFG extraction project
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If the LFG composting plant was implemented,
what will be the choice of investors whether to
use the processed methane for power
generation or just flare it for same release into
the atmosphere.
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LFG Extraction Project
Value without electricity
generation
(2545761)
Value without electricity
generation
1894644
Investors should choose to use the
processed methane for power
generation
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Waste Concern should enter into a Joint venture with WWR (Dutch Suitor)as major investment partner in their growing recycling firm.
But it should negotiate with the terms and conditions of the proposal aboutcontrolling share of the firm.
Potential investor should invest both in the and LFG extraction project aswell as composting plant.
Investors should choose to use the processed methane for power generation.Because in LFG Extraction Project, value without electricity generation isnegative
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The NPV of combined value of compost plant and LFG is greater with WRR.
Combined NPV for WWR 5544411
Combined NPV for Japanese 4642394
WRR is willing to make an upfront investment as well as contribute its proven
technology, it will cover the need ofWaste concerns initial capital requirement.
WWR contains a long record of success and innovation, contributing anintegrated, end-to-end process.
The goal ofWaste Concern matches with the goal ofWWR
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Potential investor should invest both in the and LFG extraction
project as well as composting plant.NPV of composting plan plus
LFG extraction project is higher than NPV of composting plant
alone.
NPV with only composting plant 479123.63
NPV of composting plant plus LFG
extraction project (without upfront
fee) 1380129NPV of composting plant plus LFG
extraction project (with upfront fee)
6023534.93
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Investors should choose to use the processed methane for
power generation. Because in LFG Extraction Project, valuewithout electricity generation is negative
Value without electricity
generation
(2545761)
Value without electricity
generation
1894644
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