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 Comtechnics LLC became Forest Stewardship Council™ Certificate holder on 19 July 2012. Use certificate code RA-COC-006013 to find us on the site info.fsc.org.

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INVESTMENT PROJECTS

Implementation of the project leads to construction of a new biofuel plant with the production capacity of 100 000 tons of wood pellets per year and a CHP to supply the biofuel plant with heating and electrical energy as well as sales of electricity to the local network.

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INVESTMENT PROJECTS

SUMMARY

Implementation of the project leads to construction of a new biofuel plant with the production capacity of 100 000 tons of wood pellets per year and a CHP to supply the biofuel plant with heating and electrical energy as well as sales of electricity to the local network.

Company “Comtechnics” has an experience of production and sales of wood pellets and other kinds of biofuel. The company owns several biofuel plants in the Republic of Belarus and established relations with reliable customers in the European Union.

The world consumption volume of wood pellets accounted 16 Mt in 2010, 60% of which was the share of USA, Sweden, Denmark, Italy and Germany together (Poyry Management Consulting Ltd., 2012). There are around 53 wood solid biofuel production plants with the total capacity of 160 000 tons pre annum in the Republic of Belarus. Major producers of wood pellets in Belarus, ProfitSystem LLC and Postavy Furniture Center LLC, manufacture 9 000 and 7 200 tons of pellets per annum, respectively. JSC “Pinskdrev” plans to renew production of wood pellets with the capacity of 80 000 tons per annum in 2012. Average capacity of a wood pelletizing plant accounts to 4 400 tons per annum in Belarus.

According to experts, world demand for wood pellets in 2015 will reach 37 Mt of pellets, including 24 Mt in the European Union (Poyry Management Consulting Ltd., 2012). Further growth of demand for wood pellets without substantial change in price is expected from consumers in the European Union. Low-scale productions (less than 3 t/h) become unprofitable and close down in Belarus as the cost of raw materials and fuel and energy resources rise. Therefore, scale of production and cost of raw materials shall become the major factors for effective functioning of wood palletizing plants.

The new plant shall produce a volume enough to load no less than a ship lot of wood pellets per month. Construction and commissioning of the plant will take a time period of a year. Only qualified specialists shall be involved in the work at the plant. Averagenumberofemployeesshallaccountto 59 persons.

Construction of a CHP with the pellet plant increases project’s sustainability and optimizes the main product costs structure towards a decrease in the share of costs for fuel and electricity. Electricity generated at the CHP shall also be sold to the local unit of Republic Unitary Enterprise “Belenergo” at the tariff 30% higher that the basic tariff for legal persons in accordance with the Decree of the President of the Republic of Belarus dated No. Electricity sales to the local network increases earning of the organization from хх to хх and IRR of the project from х% to х% as well as payback period from x to x years.

Investmentvalue

Total value of investment refers to 13,5 million euro which includes technological and construction projecting, building works, purchase and commissioning of equipment and machinery, working capital.

Sourcesoffinancing

The project shall be financed as follows:

·Investor I – 1 million euro

·Investor II – 8,5 million euro

·Credit from European Bank for Reconstruction and Development – 4 million euro

Possible credit terms:

·Credit amount – 4 million euro.

·Interestrateof 9%

·Principal debt repayment grace period of a year

·Interestchargeofa month

·Credit repayment and interest payment within 3 years

·Interest amount of 0,75 million euro

·Total credit value of 4,75 million euro

Assessmentofprojectsfeasibility

The project can be assessed as feasible.

Horizon of assessment is 6 years. The project is characterized as follows:

·Paybackperiod- 4,12 years.

·Discounted payback period (discount rate – 5% ) - 4,4 years.

·Internal rate of return - 22%.

·Profitability ratio1,63

·Net present value – 5,6 million euro (recovery value not included).

The project is characterized with a high elasticity of NPV with regard to the sales volume. To keep NPV positive within 6 years, sales volume shall not fall 19% lower that the estimated, investment value shall not be 50% higher than the planned, costs shall not be 160% higher than the calculated.

Project management

Comtechnics LLC

Belarus, 220002, Minsk, 57-1N Kropotkina Str.

Tel.:+375 17 237 81 98
Fax:+375 17 286 77 16
Mob.:+375 29 640 38 18
E-mail: info@comtechnics.by

URL: www.comtechnics.by

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