COST-BENEFIT ANALYSIS: PROFITS OF ESTABLISHING AND EXPLOITING PRIVATE ONE-PURPOSE CNG STATIONS IN TEHRAN

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ATABI F.; ABEDI Z.; ESFAHANIAN V.; MAHOUTCHI SAEID K.

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Journal: ENERGY ECONOMICS REVIEW Year:2007 | Volume:4 | Issue:14 Page(s): 97-119

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Title

COST-BENEFIT ANALYSIS: PROFITS OF ESTABLISHING AND EXPLOITING PRIVATE ONE-PURPOSE CNG STATIONS IN TEHRAN

Author(s)

ATABI F. | ABEDI Z. | ESFAHANIAN V. | MAHOUTCHI SAEID K. | Issue Writer Certificate

Keywords

COST BENEFIT ANALYSISQ3

CNG STATIONQ3

PRIVATE SECTIONQ3

INTERNAL RATE OF RETURNQ3

DEPRECIATIONQ3

NET PRESENT VALUEQ3

Abstract

One of the methods to contain gasoline and diesel consumption and to reduce air pollution in urban areas is employing natural gas vehicles (NGV) where significant economic savings due to decreased consumption of fossil fuels is foreseeable. Furthermore, NGVs emit less pollutant in comparison with fossil fuel vehicles. In order to materialize the goals pursued by the Article 44 of the Constitution, the Fuel Optimization Company (IFCO) has been entitled to build, operate and commission CNG STATIONs to private sector through allowing specific financial facilities (e.g. supplying free equipment for the stations) in the framework of the provisions of the Sub-Article 13 of the 2007 National Budget Program. To this end, the first phase of the plan, the construction of the CNG STATIONs, is under way in such big cities as Tabriz, Esfehan, Islamshahr, Tehran, Karaj, Mashhad, Ahvaz, Shiraz, Ghom, Kerman, Kermanshah and Yazd and the second phase is planned to commence in other big cities in near future. The present study examines the feasibility of such projects from economic point of view. Studies show that the required investment for building a CNG refueling station is 14,209 million rials of which 3,430,000,000 rials is allotted by the government in the framework of financial aids to procure needed equipment. Monthly revenue of a CNG refueling station with 4 dispensers (8 nozzles) which, on average, can fill a vehicle with the CNG tank capacity of 15 cubic meters within 6 minutes is about 61,320,000 rials. Also, the annual cost of the station is estimated at 1,366,560,000 rials. The economic assessment of this project was calculated using the COMFAR EXPERT III software. The INTERNAL RATE OF RETURN (IRR) was 3/56. Considering the banks' interest rate which is between 16% and 27%, the project proves to be economically unfeasible. Moreover, the NET PRESENT VALUE of this project was 628,751,624 rials and the payback period was 10/62 years. If annual revenue of a firm increases by 81% from 2,102,400,000 to 3,811,975,444 then the IRR of a private CNG refueling station equals 20%.

Cites

DETERMINING THE APPROPRIATE MARGINS OF CNG FUEL STATIONS IN IRAN IN THE CONTEXT OF THE STRATEGY FOR REMOVAL OF FUEL SUBSIDIES

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APA: Copy

ATABI, F., ABEDI, Z., ESFAHANIAN, V., & MAHOUTCHI SAEID, K.. (2007). COST-BENEFIT ANALYSIS: PROFITS OF ESTABLISHING AND EXPLOITING PRIVATE ONE-PURPOSE CNG STATIONS IN TEHRAN. ENERGY ECONOMICS REVIEW, 4(14), 97-119. SID. https://sid.ir/paper/99641/en

Vancouver: Copy

ATABI F., ABEDI Z., ESFAHANIAN V., MAHOUTCHI SAEID K.. COST-BENEFIT ANALYSIS: PROFITS OF ESTABLISHING AND EXPLOITING PRIVATE ONE-PURPOSE CNG STATIONS IN TEHRAN. ENERGY ECONOMICS REVIEW[Internet]. 2007;4(14):97-119. Available from: https://sid.ir/paper/99641/en

IEEE: Copy

F. ATABI, Z. ABEDI, V. ESFAHANIAN, and K. MAHOUTCHI SAEID, “COST-BENEFIT ANALYSIS: PROFITS OF ESTABLISHING AND EXPLOITING PRIVATE ONE-PURPOSE CNG STATIONS IN TEHRAN,” ENERGY ECONOMICS REVIEW, vol. 4, no. 14, pp. 97–119, 2007, [Online]. Available: https://sid.ir/paper/99641/en

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