FINANCIAL FEASIBILITY STUDIES FOR PERUSAHAAN GAS NEGARA (PGN) PROJECT: A CASE STUDY OF CITY GAS PROJECT IN INDONESIA FOR THE PERIOD OF 2018-2038

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Merzy, Agus Muhammad and Daryanto, Wiwiek Mardawiyah (2018) FINANCIAL FEASIBILITY STUDIES FOR PERUSAHAAN GAS NEGARA (PGN) PROJECT: A CASE STUDY OF CITY GAS PROJECT IN INDONESIA FOR THE PERIOD OF 2018-2038. South East Asia Journal of Contemporary Business, Economics and Law, 17 (2). pp. 28-35. ISSN 2289-1560

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Abstract

Before 2013, PGN was only focused on the serving industry. This was due to the demands of the gas for households was low compared the industry. After 2013 PGN is demanded by the government to grow sustainable and professionally to serve the demands of the people. PGN has taken the opportunity to join with the Ministry of Energy and Mineral Resources (ESDM) in developing the large-scale gas pipeline design to reduce construction cost and ensuring the availability of licenses so that the construction of gas pipes for households could be cheaper. The program, which is called "Jargas", which is a municipal gas distribution, optimizes the use of natural gas through pipelines to serve households by providing natural gas as a lowcost and clean form of energy. The aims of this study are to examine prospective revenue and to measure the financial feasibility of investment in Jargas project in Serang, Bogor, and Cirebon for the period 2018 - 2038. The author is involved in this project and provides data related to this study. Capital Budgeting Model indicators: Payback Period, Return on Investment (ROI), Net Present Value (NPV), NPV Index, Discounted Payback Period, and Internal Rate of Return (IRR) analysis were used to analyze the data based on first alternative, which is using government selling price with subsidy and second alternative based on purely commercial price. The finding shows that based on first alternative, the project is not feasible, but the second alternative project is feasible. The authors believe that the findings will be beneficial for the company to implement Jargas project opportunities in order to provide a better return by using the second alternative. Keywords: Capital budgeting, financial, feasibility, city gas

Item Type: Article
Subjects: H Social Sciences > H Social Sciences (General)
H Social Sciences > HB Economic Theory
H Social Sciences > HG Finance
H Social Sciences > HJ Public Finance
Divisions: Research And Community Empowerment > Journals
Depositing User: Rizky Amalia
Date Deposited: 17 Jan 2020 10:40
Last Modified: 22 Dec 2021 04:45
URI: http://repository.ipmi.ac.id/id/eprint/425

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