COST REDUCTION STRATEGY IN DISTRIBUTION PIPELINE IN PERSPECTIVE OF CAPITAL BUDGETING: A CASE STUDY IN AREA “C” GREENLAND INTERNATIONAL INDUSTRIAL CENTER (GIIC)

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Arifin, Mohammad Ardian and Daryanto, Wiwiek Mardawiyah (2018) COST REDUCTION STRATEGY IN DISTRIBUTION PIPELINE IN PERSPECTIVE OF CAPITAL BUDGETING: A CASE STUDY IN AREA “C” GREENLAND INTERNATIONAL INDUSTRIAL CENTER (GIIC). International Journal of Business, Economics and Law, 17 (3). pp. 7-16. ISSN 2289-1552

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Abstract

The oil and gas sector in Indonesia has become a solid pillar for the country's economy. Revenues from the oil and gas sector have provided more than 15% of the average income for the Indonesian government. However, the contribution of the oil and gas sector to state revenues has decreased significantly, from 14.11% in 2014 to 4.46% in 2015. Due to the downward trend, companies engaged in the sector must struggled to survive. The most common problem faced by companies in this field were the lack of resources and also the increasing costs of development and management of infrastructure. PT Perusahaan Gas Negara ("GAS") which was engaged in natural gas distribution business and became a subsidiary of oil and gas state-owned company was also affected by the condition. GAS revenue began to decline in 2015, which previously stood at USD 2,896 million in 2014, down to USD 2,571 million in 2015, followed by a decline to USD 2,499 million in 2016. In 2016, at the time where companies were tried to optimize their costs of development and management of infrastructure, options were raised for GAS whether to install steel, polyethylene, or polyamide pipeline system for the future project. The purpose of this study is to analyze and decide which option generates the most cost efficiency for the GAS on the project located in specific area of Greenland International Industrial Center (“GIIC”) West Java using the primary data that were collected in year 2017. Capital Budgeting Model indicators: Payback Period, Return on Investment (ROI), Net Present Value (NPV), Profitability Index, Discounted Payback Period, and Internal Rate of Return (IRR) were used to analyze the data. The findings showed that polyethylene pipeline system was the most cost efficiency option. The authors believe that the findings will be beneficial to be implemented in the other projects. Keywords: cost reduction, distribution pipeline, Greenland International Industrial Center (GIIC).

Item Type:	Article
Subjects:	H Social Sciences > H Social Sciences (General) H Social Sciences > HB Economic Theory H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management H Social Sciences > HF Commerce > HF5601 Accounting H Social Sciences > HG Finance
Divisions:	Research And Community Empowerment > Journals
Depositing User:	Rizky Amalia
Date Deposited:	17 Jan 2020 09:37
Last Modified:	19 Feb 2021 04:40
URI:	http://repository.ipmi.ac.id/id/eprint/421

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