Momina Chudha Fuel Station Feasibility Study

MOMINA CHUDHA FUEL STATION
PROJECT PROPOSAL FOR

ESTABLISHING FUEL
STATION
PROMOTOR: W/RO MOMINA CHUDHA
PROJECT PROPOSAL SUBMITTED TO GET

FINANCIAL SUPPORT FROM BANK.
YABELO, ETHIOPIA
JENUARY, 2021
0I | P a g e
Table of Contents
Introduction.................................................................................................................................................1
Project Description..................................................................................................................................1
Background of the Promoter and the Project Profile..............................................................................3
Project Objectives.....................................................................................................................................4
Potential Positive Impacts of the Project.................................................................................................4
Market Analysis...........................................................................................................................................5
Introduction.............................................................................................................................................5
Supply and Demand Analysis...................................................................................................................6
Overview.............................................................................................................................................6
Demand Analysis.................................................................................................................................6
Supply Analysis....................................................................................................................................8
Demand –Supply Gap........................................................................................................................10
Product and Service...............................................................................................................................10
Retail sales of fuel:.............................................................................................................................11
Retail sales of Oil and Lubricants:......................................................................................................11
Modern Carwash (Labiajo) service:...................................................................................................11
Tire Repair (Gomista) Service:...........................................................................................................11
Cafeteria Service:...............................................................................................................................11
Marketing Strategy................................................................................................................................12
Technical/Operational Analysis.................................................................................................................12
Location of the project...........................................................................................................................12
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Land, Building, Civil Works and factory lay out..................................................................................13
Input and auxiliary materials.................................................................................................................13
Utilities..................................................................................................................................................14
Water....................................................................................................................................................14
Electricity.............................................................................................................................................14
Logistics.................................................................................................................................................15
Organizational structure and Man Power..............................................................................................15
SWOT Analysis.......................................................................................................................................16
Financial Analysis.......................................................................................................................................16
Investment costs and financial structure.............................................................................16
Assumptions used for financial projection............................................................................................18
Working Capital.....................................................................................................................................19
Depreciation and Amortization.............................................................................................................20
Cost and Expense Projection.................................................................................................................20
Cost of sales Forecast......................................................................................................................20
Expense Forecast............................................................................................................................21
Revenue Projection...............................................................................................................................21
Financial Statement Projection..............................................................................................................23
Income Statement Projection........................................................................................................23
Cash Flow statement Projection....................................................................................................23
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Introduction
Project Description
According to IEA (2019) report, oil demand in sub-Saharan Africa stood at 1.8 million
barrels per day (mb/d) in 2018 and made up 15% of total energy demand. South Africa
accounts for around 30% of oil demand and Nigeria for more than 20%, with the
remaining 40-plus countries collectively consuming less oil than the Netherlands
(International Energy Association 2019). Energy consumption in transport in sub-
Saharan Africa has increased by 4% per year since 2010 and was around 50 Mtoe
(million Tones) in 2018. The consumption is heavily concentrated on vehicles. The
report also mentions that road transport in sub-Saharan Africa is typically characterized
by a high degree of diesel use (almost 0.4 mb/d) which accounts for 39% of oil
consumption in road transport. In most of African countries diesel has a share of around
45% in road transport, except in countries where gasoline prices are relatively low (such
as Nigeria, with only 12% diesel). Transport fuel is subsidized in several countries in
Africa, but is still expensive relative to average incomes of the population. Poor
condition of the roads and the low affordability of fuels also lead to relatively low use of
cars and trucks, compared with the global average. As a result, the cost of transporting
goods in Africa is among the highest in the world.
The oil industry is involved in a global supply-chain that includes ordering,

transportation, import/export facilitation, inventory visibility and control, depot
administration, distribution management, customer service and information
technology. Realizing the synergies that exists in these functions, many companies have
extended the concept further upstream and downstream; the supplier of suppliers and
customer of customers. Since fuel has a considerable impact on the economy of a
country, through cost of transportation which in turn affects cost of goods, in most
African Countries, the price of fuel is regulated by the government and so is the profit
margin of Oil Companies & Retailers.
Over the past decade and half, Ethiopia- the largest economy in East and Central Africa
and second-most populous nation in Africa, home to 110 million people- has seen an
impressive double-digits economic growth, with growth averaging more than 10%
percent a year over the 2005–2017 periods. This remarkable feat puts the country as
one of the fastest-growing economies in the world.
In Ethiopia, so far, there has been no discovery of oil in commercial quantities.

However, exploration for oil and natural gas is currently taking place in different areas
of the country. The sector is currently at a very early stage of development. However, it
shows a good potential for development in the future (The World Bank 2016). Over the
past 50 years, the fuel supply chain management of Ethiopia had been regulated by
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government, including the price of fuel and the transport rate to be paid for Bulk Road
Vehicle owners. Since Ethiopia does not produce oil, to meet the country’s oil
requirement, the country imports fuels from oversea. Accordingly, the study focuses on
downstream petroleum sector of the supply chain, particularly in purchase and
distribution of petroleum product to customers.
At present, Ethiopia spends 4.5 billion USD annually on imported petroleum products
(The Reporter 2019), 22% of the country’s imports of goods is purely spent on fuel. The
fuel demand would call for significant resources and put pressure on foreign current
reserves which is currently absorbing more than 4% of the GDP roughly equals the
foreign currency and gold reserves and would increase to around 7% of GDP in 2030.
The country consumes daily 2 million liters of benzene, 8.5 million liters of diesel and
two million liters of jet fuel. The annual kerosene consumption is 760,000 metric tons.
The country’s annual fuel consumption has been growing at a rate of ten percent per
year. In 2020the fuel consumption is expected to surge to 5.4 million metric tons.
Ethiopian Petroleum Supply Enterprise (EPSE): EPSE is a government agency which is

licensed by MoMPNG as a bulk supplier. EPSE imports oil, stores and sells petroleum
products to Oil Companies. It was established in 2012 by the Council of Ministers
Regulation No. 265/2012. It is an amalgamation of the Ethiopian Petroleum Enterprise
(EPE) and the National Petroleum Reserve Depot Administration (NPRDA). The EPE,
established in 1995, was the sole entity established to meet the country’s demand for
petroleum, with the exception of liquefied petroleum gas (LPG), bitumen products, and
lubricants. The NPRDA established in 1997, was an autonomous institution responsible
for overseeing Ethiopia’s petroleum reserves to maintain the regular petroleum supply
in case of interruption or shortage (Fortune 2015). Besides being the sole importer of
fuel into the country, EPSE has a plan to build 160 retail stations across the country and
involve in retailing fuel to public, to resolve the occasional shortage of petroleum.
Retailers (Dealers) procure oil from Oil Companies and sell to bulk consumers and the
general public through fuel stations. There are more than 900 retailers in the country
and are either company owned & dealer operated (CODO) or dealer owned & dealer
operated (DODO).
Background of the Promoter and the Project Profile

W/ro Momina Chudha, the promoter of the proposed fuel station, is an energetic and
experienced businessperson. For long, she has been one of the prominent retail traders
of agricultural crops and has been operating by establishing Grinding Mill for more than
ten years. Beyond engaged in trade business, he has set bold ambition of becoming a
successful entrepreneur.
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During the previous 12 years, W/ro Momina Chudha has been working on retail trade
of cereal crops and by establishing and operating Crop Grinding Mill in Yabelo City.
Later, she also starts another business line in addition to the crop grinding and retail
sales of crops she has been operating Food store business in 2003. On the other hand
using her extensive experience in business activities W/ro Momina Chudha’s businesses
have become increasing at an increasing rate. She can also create a business lines for her
family members by making them able to run their own business besides her business
activities.
Currently, her business activities is managed in collaboration with her Son and She has
planned and completed the construction needed for starting fully organized modern
Fuel station in the Yabelo Town.
Considering the untapped market demand potential as well as government’s attractive

incentives, the current need of the fuel market and conducive economic environment,
the promoter has decided to commit his resources by investing in modern fuel station
with its full related service packages in Yabelo Wereda . To this end, she requested land
to establish the gas station. While selecting location for the would-be fuel station; daily
regular availability of vehicles, on the main road from Addis Ababa to Kenya, adequate
storage and operation space, water and power supply, market outlet for her products
and availability of labor are among the major factors considered in selecting the
appropriate location.
After acquiring 2000m2 plot of land, the promoter started building the required for fully
organized fuel station. At present, the civil work of the building that included Four Oil
reservoir tankers 50,000Litter each, cafeteria, carwash hall, oil and lubricant shop,
office and labor rest rooms has been completely constructed.
The total investment cost of the project is estimated to be Birr 18.17 million. The
promoter has so far spent a total of birr 10.6 million or 58.72% of the total investment
cost, while the rest 41.28% or Birr 7.5 million will be covered from the bank finance.
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The promoter reckons that there is a viable business opportunity for the Bank to finance
this project. In view of this rationale, the purpose of this feasibility study was, therefore,
to showcase the viability of the fuel station. In doing so, the feasibility study tries to
undertake detailed market analysis and financial projections supported by valid
underlying assumptions to ascertain its viability.
Project Objectives
The proposed project has the following objectives.
 To construct and operate Fuel station in Yabelo Town.

 To market high-quality, halal-certified, fuels, oils and lubricants
 To render other related services like carwash, tyre pumping(Gomista), and
cafeteria services.
 Be seen as a model for sustainable development by securing good returns on
investment, delivering positive social impacts within local communities.
Potential Positive Impacts of the Project

 Supply the fuel market in Ethiopia at a reasonable price
 Contribute its due share in the development of the sector in the country;
 Job creation and employment opportunities for those who will be employed by the
project, during the construction phase and operational phase;
 New opportunities for income generation for many individuals who will be
participating in the overall operational activities of the proposed business.
 Improvement of general welfare for Yabelo population as a result of increased

income;
 Increased economic activities directly or indirectly related to the project;
 Possibility of meeting the fundamental social needs for the employees and their
families (health care, schooling);
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 Possibility of meeting fundamental need of the society for transportation.
 Payment of taxes to the local and central government
Requested Credit: -.
Project financing of Birr 7.5million in general i.e, 3.5 million birr for the purchase of
fuel, birr 500,000 for purchasing oil and lubricants, birr 500,000 for car washing
machineries and equipments, birr 500,000 for purchasing of cafeteria equipments,
furniture and other required materials, birr 1.5million for constructing shade for the fuel
station(Kanopi) and birr 1 million for purchasing of generator and compressor. the
loan period is for 3 years with quarterly repayment.
S/N. Cost Items Owner Equity Bank loan Total Cost
Financial Source 10,670,000 7,500,000 18,170,000
Percentage (%) 58.72% 42.28% 100%
Purpose of the Loan: For Purchasing Machinery, equipments and part of Working
Capital
Line of Business: Promoter of the business is licensed to establish fuel satation, and
she has also completed plant, office and warehouse construction by investing 8million
birr from own source.
Collateral: The requested project financing granted against the project i.e. existing fuel
station and the building on the plot area 2,000 m2..
Market Analysis
Introduction
The overall macroeconomic policy adapted by the government of Ethiopia, which allows
a free market economy, has initiated many individuals who are able and willing to
invest in various business ventures. Besides, commitment of the government for the
development as reflected by the continuous effort to expand infrastructural facilitates in
the country led to ever-growing investment activities in every sector of the economy.
Ethiopia currently is a “Road Dependent” economy. About 90pc of freight and 95pc of
the passenger transport happens by road vehicles which are reported to consume 65pc
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of imported fossil fuels. As per Ethiopian Petroleum Supply Enterprise (EPSE), the
gasoline consumption has remained flat for the past seven years to 2017 and then goes
increasing to now, whereas the diesel consumption, although six times of gasoline
consumption, has tapered off since the year 2012.
Since Ethiopia does not produce oil, to meet the country’s oil requirement, the country
imports fuels from oversea. Accordingly, the study focuses on downstream petroleum
sector of the supply chain, particularly in purchase and distribution of petroleum
product to customers.
Supply and Demand Analysis
Overview
Given the factors that affect the demand for a particular product, there are various
methods of market analysis, which would be applied while conducting market
assessment. These are trend analysis, the per capita consumption, regression, input
output model and qualitative approaches. For this specific project, due to the presence
of reliable time series data, both on imports and local production, the trend analysis
method is applied to analyze past and effective demand; and make future projections for
the output of the project.
In Ethiopia, during the last five years the oil demand has increased on the average by
10% per year. Diesel accounts for 85%-87% of oil consumption. In the country, the fuel
demand is more of driven by demand of the transport sector. Many reports states the
importance of the sector in fulfilling most transportation needs, providing power and
serving as a foundation for petrochemical business underpins the survival of other
essential industries.
On the supply side, Ethiopia has no reasons to worry. Glitches in bilateral trade between
Sudan and Ethiopia are reported to be evened out and imports have resumed. Saudi
Arabia, Ethiopia’s second largest import destination is as strong as ever and today
largest producer of fuel oils undeterred by fall in price. No output cut is reported by
producers in these two Ethiopian trading partners and therefore supply disruptions are
not seen.
Demand Analysis
Ethiopia has been suffering from high inflation for quite some time now. Gains of high
growth have been eaten away by roaring and persistent inflation. Growing population
and declining growth in agriculture and industry suggest that high inflation is a
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combination of both - demand for basic and semi basic goods and services has been
increasing while the industry and agriculture output is falling short to meet the demand.
The consumption of petroleum is mainly driven by demand within the transport sector
which accounts above 50 % of the total fuel consumption. The demand for oil is growing
exponentially. At present, liquid bulk cargo tanker trucks are transporting fuel from
Duraleh petroleum terminal of Djibouti port and from Sudanese refinery at El Geli
located 42kms north of Khartoum to the hinterland. The government has an intention of
increasing the number of depots, but also to elevate the capacity of the existing depots.
Accordingly, in Awash NPRDA depot a project for installation of additional 30,000
cubic meter tank is undergoing.
The country currently consumes daily 2 million liters of benzene, 2.9.5 million liters of
diesel and 2 million liters of jet fuel. The annual kerosene consumption is 760,000
metric tons. The country’s annual fuel consumption has been growing at a rate of ten
percent per year. The past five year’s trend of fuel consumption as reported by EPE is
presented by the following table.
Annual fuel consumption in metric ton and its annual growth rate
Trend of consumption in metric tone
Kerosen
Diesel Gasoline e Total Consumption annual growth
2016 1,910,560 1,250,800 324,600 3,485,960
2017 2,100,200 1,295,750 535,710 3,931,660 13%
2018 2,250,600 1,354,800 618,210 4,223,610 7%
2019 2,535,100 1,410,220 695,320 4,640,640 10%
2020 2,925,800 1,492,760 762,110 5,180,670 12%
Average Growth 10%
Source: ESPE report
In 2021 the fuel consumption is expected to surge to 5.7 million metric tons. Using the
average annual fuel consumption growth rate we have forecasted the fuel demand for
the coming five years.
Fuel Demand projection for the next five years
Ethiopian fiscal forecasted

year (in G.C) demand
2021 5,698,737.00
2022 6,268,610.70
2023 6,895,471.77
10
2024 7,585,018.95
2025 8,343,520.84
Source: ESPE report
As it can be seen from the above fuel demand forecast the annual fuel demand will raise
to 5.698 million metric ton in 2021 and it is expected to reach 8.34million metric ton by
the year 2025.
Supply Analysis
Since Ethiopia does not produce oil, to meet the country’s oil requirement, the country
imports fuels from oversea. Ethiopia buys 100% of the country’s jet fuel consumption,
800,000 metric tons and 60 percent of diesel, 1.2 million metric tons from state-owned
Kuwait Petroleum Corporation (KPC) that supplies the products directly from Kuwait
using its own fuel tanker vessels. 30%-80% percent of Ethiopia’s benzene consumption
is bought from Sudan. The remaining is bought from international oil trading firms
through an international open tender process.
Ethiopian Petroleum Supply Enterprise (EPSE) imports oil, stores and sells petroleum
products to Oil Companies. It is an amalgamation of the Ethiopian Petroleum
Enterprise (EPE) and the National Petroleum Reserve Depot Administration (NPRDA).
The EPE, was the sole entity established to meet the country’s demand for petroleum,
with the exception of liquefied petroleum gas (LPG), bitumen products, and lubricants.
The NPRDA, was an autonomous institution responsible for overseeing Ethiopia’s
petroleum reserves to maintain the regular petroleum supply in case of interruption or
shortage. Although according to world bank report Ethiopia’s fuel supply have been
showing significant increase during the recent five years it cannot be reach half of the
country’s fuel demand.
Supply from Import

The head of EPSE stated that including kerosene, benzene and aviation fuel, the east
African country has imported a total of 3.889,609 metric tons of petroleum products.
The petroleum products are purchased from the neighboring Sudan and Kuwait. The
purchase of 75 percent of benzene and 50 percent is made through direct deal made
between the government of Ethiopia and the two countries, while the rest of the
petroleum products are purchased through international bid. After purchasing the
petroleum products, the Enterprise supplies to 29 petroleum companies in Djibouti,
which bring and do the retail in Ethiopia.
Ethiopian fuel import has been growing at a rate of 10 percent every year and reached
3.5 million metric tons valued at three billion dollars. Ethiopia has imported close to
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81.8 billion birr (around $2.82 billion) fuel during the fiscal year concluded July 7,
2020, Petroleum and Supply Enterprise (EPSE). The country’s daily average
consumption is diesel 80,000 cu. M (8 million liter), benzene (gasoline) 1,600cu.m (1.6
million liter), jet fuel 2,500cu.m (2.5 million liter).
The following table shows annual fuel import quantity for the past five recent years.
Fuel import trend from 2016 to 2020

Trend of Petroleum import in metric tone
annua
l
Kerosen Total growt
Diesel Gasoline e Import h
201 1,425,80
6 0 750,800 184,600 2,361,200
201 1,560,20
7 0 815,750 215,710 2,591,660 10%
201 1,640,65
8 0 854,800 288,210 2,783,660 7%
201 1,835,10
9 0 910,220 415,320 3,160,640 14%
202 1,925,80 1,192,76
0 0 0 462,110 3,580,670 13%
11%
Source: EPSE report 2020.
Supply Projection
In 2021 the fuel supply is expected to surge to 3.9 million metric tons. Using the average
annual fuel supply growth rate we have forecasted the fuel supply for the coming five
years.
Projection of fuel supply for the next five years

forecasted
year supply
2021 3,974,543.70
2022 4,411,743.51
2023 4,897,035.29
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2024 5,435,709.17
2025 6,033,637.18
Source: EPSE report 2020.
As it can be seen from the above fuel supply forecast the annual fuel supply will raise to
3.97 million metric ton in 2021 and it is expected to reach 6 million metric ton by the
year 2025.
Demand –Supply Gap

The supply for fuel and oil sector is total obtained by importing from abroad oil
exporting countries. And it is clearly known that the prevailing fuel demand cannot be
met by import dependent supply. The average Ethiopian will have to wait for rapid
inclusive growth. The wait can be comparatively lesser if the government deploys the
profits earned on fuel sales into building manufacturing centres, agro-mechanisation,
mining sector (for oil and gas discoveries) and credit expansion.
Based on the future demand supply projections made above we can observe the gap
between the demand and the imported supply of fuel in the country. We can also
estimate demand–supply gap for the next five years. The following table shows the gap
between demand and supply of fuel for the coming five years.
Projection of demand-supply gap for fuel in Ethiopia

Year Forecasted annual forecasted annual forecasted annual
demand supply demand-supply gap
2021 5,698,737.00 3,974,543.70 1,724,193.30
2022 6,268,610.70 4,411,743.51 1,856,867.19
2023 6,895,471.77 4,897,035.29 1,998,436.48
2024 7,585,018.95 5,435,709.17 2,149,309.77
2025 8,343,520.84 6,033,637.18 2,309,883.66

Source: forecast based on the data from EPSE
As it can be seen on the above section of demand-supply gap projection of fuel the
country would need additional supply of 1.72 million metric tons of fuel oil in 2021. The
country’s total fuel demand in 2021 is estimated around 5.7million metric tons, but the
country is believed to supply 3.9million metric tons in 2021.
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Product and Service

As it is seen from other well organized fuel stations some of them also contain other
services in addition to fuel, oil and lubricant sales like car wash and cafeteria services.
Our proposed project is believed to have many products and service needed for a car.
This service can be found at one place in an area of 200m2 land build for this purpose.
We have signed supply contract with TAF Oil s.c that last for 25years for supply of
different types of fuels. The Oil Company have the responsibility to plant five fuel
pumping machineries and to regularly supply fuels and oils and lubricants. And as a
dealer we have the responsibility of to purchase above the minimum monthly purchase
amount and to get insurance coverage for the fuel stations properties. The proposed
project will have five related business lines in one place. We are currently prepared to
give the following types of product and service.
Retail sales of fuel:

We have prepared four ground fuel reservoirs each can accomodate 50,000litters our
total fuel reservoirs will expected to have 200,000litters of different types of fuels. The
types of fuels traded will be Regular Diesel(Nafta), Gasoline(Benezene) and
Kerosene(Nech Gas).
Retail sales of Oil and Lubricants:

we have built a building that has adequate rooms for office, shops in which oil and
lubricants traded cafeteria and employee rest rooms on the land of the fuel station. The
types of products traded in the shop will be different types of Oil and various types of
Lubricants that used for vehicles.
Modern Carwash (Labiajo) service:

we have built hall that is suited and used for modern carwash service on the land where
the fuel station is found. And we have requested finance from bank needed to purchase
machineries and equipment used for modern carwash service.
Tire Repair (Gomista) Service:

Most other fuel stations do not have this types of service while some have carwash, oil
and lubricant sales and cafeteria service. We are prepared to include tire repairing
service in the fuel station so that many vehicles can get these product and service at one
place.
Cafeteria Service:
As our fuel station is located five kilometers away from Yabelo city on the main road
from Addis Ababa to Kenya passengers, travelers, drivers, and others that used the road
will need cafeteria on the road. In addition to the above listed product and services we
will have cafeteria for our customers. For this purpose we have built sufficient rooms
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that use for cafeteria service. The major benefit of having cafeteria service in the fuel
station plotted land is that passengers can save their time by having all of the above
stated services including cafeteria at one place.
Marketing Strategy
The envisaged project will used different marketing strategies to expand its market
share in the market.
Product and Service: the company will ensure the products and services meet the
standards set by the National Standard Authorities and ISO.
Price:
Price is the most motivating factor which drives people to buy a product. The
government intervenes in direct and indirect way in setting prices. Ministry of Trade
examines and revises fuel prices usually every month and adjusts them, although not
regularly. Government stopped the policy of subsidizing petroleum fuels in 2008 and set
domestic prices higher than import costs beginning in Oct 2008 to repay the debt
accumulated in the Oil Stabilization Fund. The price of kerosene, which is untaxed and
also cross-subsidized to some extent, is lower than other fuel prices. Prices are
sometimes frozen for months at a time.
Ethiopian fuel margin left to station dealers fluctuates in a short period of time from
0.05Birr per litre to 0.35birr per litre depending on many different factors. According to
the supply agreement made with TAF Oil s.c we have agreed tp purchase Birr 24.35 per
litter for Gasoline (benzene), Birr 21.71 per litter for diesel and birr 21.71 per litter for
benzene. The profit margin that we agreed to add on the cost per litter of all types of
fuels is birr 0.236 per litter.
Place: place is strongly connected with availability of the product, easy accessible to the
end consumers. We have selected the place where the project is located considering the
marketing strategy and other many advantages that it will bring to us. As a result of the
potentiality of the place we can sale our products and delivers the proposed services for
many customers.
Technical/Operational Analysis
Location of the project
The envisaged project is situated at Southern part of the country in Oromia Regional
State, Borana Zone, Yabelo Wereda, Yabelo City 5kilometeres away from the city around
the area called Kela on the main road to Kenya. The area is known for its proximity to
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the Ethio-Kenya border. It is about 200kilometers away from Kenya. There are lots of
vehicles using this main road daily.
It is estimated that in addition to vehicles giving local transportation service there are an
average 1500vehicles traveling through this road. The fuel satiation is located on the
main asphalt road. In addition, the basic infrastructural facilities and utilities required
by the project including water, electricity, postal and telephone facilities are accessible
in the area making the location more preferred for the intended project.
Land, Building, Civil Works and factory lay out

The factory has acquired 2,000 m 2 plot of land from the respective regional government
during the year 2011 with no expected payment to use it for well organized fuel station.
At present, the civil work of the building that included four fuel reservoir tankers having
the ability of accommodating a total of 200,00L which is built, office building including,
warehouse, shops, cafeteria, Kitchen, employee rest room and construction of hall and
infrastructure for car wash have been built completely.
Regarding the construction costs of the buildings, gas station and carwash the promoter
has spent a total of birr 8,100,000 to complete the civil works of the project.
Input and auxiliary materials

The principal raw material for flour production is Fuels such as Diesel, Gasoline and
Kerosene. And auxiliary materials needed are oil and lubricants. The primary supplier
of fuel in the country is ESPE that supply to different oil companies, the oil companies
then supply for fuel stations. Hence the project will not face raw material shortage
because the government facilitates the supply chain of fuel as it is the backbone of
almost all sectors.
We have signed supply contract with TAF Oil s.c that last for 25years for supply of
different types of fuels. The Oil Company have the responsibility to plant five fuel
pumping machineries and to regularly supply fuels and oils and lubricants. And as a
dealer we have the responsibility of to purchase above the minimum monthly purchase
amount and to get insurance coverage for the fuel stations properties. The minimum
amount of monthly purchase and calculated for a year is presented below.
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Monthly minimum amounts must be purchased
Yearly
Unit of Monthly minimum
No. Description Measures amount amount
1 Diesel liter 600,000 7,200,000.00
2 Gasoline liter 300,000 3,600,000.00
3 Kerosene liter 200,000 2,400,000.00
Oil and
4 Lubricant liter 5,000 60,000.00
Total liter 1,105,000 13,260,000
Utilities
The utilities needed in the course of operational process of the project are electricity and
water which are briefly described below.
Water
Water is one of the major utility for the operation of the project which is expected to
serve for carwash purpose during the project’s operation proces, washing the processing
equipment, etc. The company already got water grid from the local water authority
which is sufficient for its requirement.
Electricity
The promoter has completed the process and has secured sufficient electric power from
EEPCo. The daily power requirement of the fuel plemping machine and the compressor
for tire repair is at risk with the countries electric power out rich, therefore the customer
is requesting finance from bank that will use for the purchase of Generator.
The expected utility cost of the project up on operation is summarized in the following
table.
Annual utility cost of the project.
Descriptio Unit price Cost

No. n Unit Qty. (Birr) ( Birr)
1 Electricity kWh 180,000 1.6 288,000
2 Water m3 52,000 10 520,000
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3 Telephone and internet (in lump sum) 75,000

Total 883,000
Logistics
For the time being the promoter does not plan to acquire its own vehicles which might
be needed for transportation of inputs. Rather, the supplier will cover the transportation
of fuels and the price of fuel will be determined by considering the transportation
service given by the supplier.
Organizational structure and Man Power

The organizational structure of the project is designed by including all the necessary
personnel under the right divine at the top of the organizational structure. There will be
a general manager with the responsibility of supervising the overall activity of the plant.
Depending up to the nature of the center and the amount of work to be performed there
will be auxiliary unit under the general manager. Employees under each unit will be
supervised by the unit head that is accountable to the general manager. Most of our
employees will work in a shift basis as the project’s operation is aimed for 24 hours
operation all day.
We will hire 26 employees in addition to the general manager. We have classified the
employees based on the type and nature their tasks. We have six different groups of
workers namely, 5 person under fuel station, 4 in cafeteria, 4 in car wash, 2 at shops of
oil and lubricant, 2 at tire repair and the last group of worker is not traceable for specific
group they are expected to work for the entire projects operation as deemed it is
necessary, this group will have 11 workers excluding the managers and these seven
employees will be, finance personals, securities, cashiers and janitors.
Planned employees of the project and salary expense.
Total
monthly Annual
Monthly salary salary
S/No Position Quant. Salary expense expense
General and
1 deputy manager 2 4,500 9,000 108,000
18
Finance and
2 administration 1 3,500 3,500 42,000
Sales and
3 marketing 2 3,000 6,000 72,000
4 Fuel mans 5 3,000 15,000 180,000
5 Car Washing 3 2,700 8,100 97,200
6 Tire repair 2 2,300 4,600 55,200
Waiters and
7 cooking 4 2,000 8,000 96,000
8 Cashiers 3 2,200 6,600 79,200
9 Cleaners 3 1,500 4,500 54,000
10 Security Guards 3 1,500 4,500 54,000
Sub-total 28 21,700 69,800 837,600
SWOT Analysis
Strength
The business is very lucrative and financially viable;
Priority sector of the Country ;
The project financial indicators- income, profit and cash flow, are positive:
The project has important socio-economic benefits in job creation and
income tax to the government.
The market has positive acceptance for the products of the project.
Weakness
Working capital gap
Technical expert turnover
Financial Analysis
Investment costs and financial structure
The project’s total investment cost is expected to be covered through owner’s equity and
bank loan sources. Accordingly, out of the total investment cost of birr 18.17million, birr
10.67million (58.72%) is anticipated to be covered from owner equity sources while the
remaining birr 7.5 million (41.28%) is to be raised in the form of bank loan. Thus, the
19
total investment cost and the financing structure of the project is presented by the
following two tables:
Investment cost of the project
S/N. Investment Items Amount
1 Fixed Investment
1.2 Building and civil work 9,600,000
1.3 Machinery and equipment

1,000,000.00
1.4 Generators 500,000
1.5 furniture& equipment 500,000
11,600,000
Sub total
2 Pre operating cost 30,000
3 Working capital 6,540,600
Grand Total 18,170,600
Financing Structure of the project

S/ Cost Items Owner Bank loan Total Cost
N. Equity
1 Fixed Investment
1.1 Building and civil work 8,100,000 1500000 9,600,000
1.2 Machinery and equipment 1,000,000 1,000,000
1.3 Generators 500000 500,000
1.4 Office furniture& equipment 500000 500,000

Sub total 8,100,000 3,500,000 11,600,000
2 Pre operating cost 30,000 30,000
3 Working capital 2,540,000 4,000,000 6,540,000

Grand Total 10,670,000 7,500,000 18,170,000
Percentage % 58.72% 41.28% 100%
20
As it is shown on the above table the total investment cost is expected to be birr
18.1million. Out this 58% of the total investment cost (birr 10.67million) is covered by
the promoter’s own source and the remaining 41.28% of the total investment cost (birr
7.5million) will be covered by finance from bank.
Assumptions used for financial projection
 Working day per year 365 days

 Project life 7 years.
 The current Average purchasing cost of a litter of fuel is birr 24.85 for Gasoline (benzene),
birr 23.45 for Diesel and birr 23.45 for kerosene, and this price is expected to increase by
birr one annually; the expected annual purchasing cost increment will be 4.6% for diesel
and kerosene and for purchasing cost of Gasoline 4.1%.
 We will add a profit margin of birr 0.796 on the purchasing cost of a litter of all types of
fuels and it is expected to increase by 50% annually during the project’s life.
 We are assumed to sell a total of 30,000 liters of fuels in a day; we will expect to sale
20,000L OF diesel, 8,000L of Gasoline and 2,000L of Kerosene in a day. And it is
expected to increase by 20% annually for the projected period.
 We will assume to have a daily average sales of Oil and Lubricant of 500L Oil at a price of
250Birr per Litter and 200kiliograms (200L) of lubricants at a price of 300 Birr per kg.
The unit price of oil and lubricant is expected to increase by 15% annually.
 The daily average sales volume (quantity) of oil and lubricant is expected to increase by
20% yearly. And the unit price of oil and lubricant will increase by 15% annually.
 We will add a profit margin of 38% on the cost of a single unit of oil and lubricant.
 It is expected that an average of 100 cars will use tire repair service in a day at a price of
birr 50 for a single car. And the average number of car that use tire repair service and tire
repair price is expected to increase by 25% and 15% respectively annually.
 It is expected that about 30 cars will be washed by our car washing service in a day at a
price of birr 300 for a single car. And the number of car that uses car wash service and car
wash price is expected to increase annually by 25% and 15% respectively.
 We have planned to generate an average daily sale income of birr 7,000 from cafeteria
service. And it is expected to increase by 20% annually during the projected period.
 The cost of sales for the cafeteria is estimated to be 60% of its sales income.
21
 Depreciation and amortization rates applied are 5% for Building and 10% for Machinery
and Equipments.
 Bank Profit rate will be 25% only once calculated on the total financed amount. And the
profit and principal will be repaid at equal installment amount during three years period.
 Profit Taxes will be 30% of the before tax profit of the project.
 Initial Working Capital required will be Birr 7,224,150.
 Monthly Employee benefits and allowance is assumed to be 20% of the monthly salary
expense.
 Salary and employee benefit will increase by 10% annually.
 Annual Utility Expense is expected to be Birr 883,000 and expected to increase by 5%
during the project period.
 Other Miscellanies expense for first year is assumed to be birr 100,000 and expected to
increase by 5% annually.
 Repair and Maintenance expense will be birr 150,000 during the first year and expected
to increase by 5%.
 Annual Insurance expense will be birr 720,000 and increases by 5% annually.
Working Capital
The initial working capital of the project will be used for purchasing Fuels, Oil and
Lubricants, for three months salary expense, for one fourth of Utilities, cafeteria and
office Supplies and Equipment and for other miscellanies expenses.
Initial working capital breakdown

Quantity(Quintal Unit
S/N Description of working capital ) Cost Total Cost
1 cost of sale:
Diesel 100,000 21.71 2,171,000
Gasoline 50,000 24.35 1,217,500
Kerosene 50,000 21.71 1,085,500
Oil and Lubricant 500,000
Sub total 4,974,000

Three month salary and benefit
2 expense 209,400.00
3 Prepaid insurance 720,000.00
22
4 Utilities 220,750.00
5 Supplies & Equipment 1,000,000.00
6 other miscellanies 100,000
Total Initial Working Capital needed 7,224,150.00
Depreciation and Amortization

Depreciation and Amortization Schedule
Rat
Description\Years e 2021 2022 2023 2024
480,000 480,000 480,000 480,000
Buildings and civil works 5%
150,000 150,000 150,000 150,000
Machinery and equipment 10%
Total annual depreciation expense 630,000 630,000 630,000 630,000
Cost and Expense Projection
Cost of sales Forecast

The cost of sales projection includes the purchasing cost of fuels multiplied by the cost per
litter of fuel, cost of sales of oil and lubricant and cost of sales for cafeteria service. The
cost of sales for carwash and tire repair service is not included in the cost of sales forecast,
all related costs and expenses that arises from carwash and tire repair services are
included under the utility, salary and benefit and other expenses of the proposed project.
Cost of sales projection for project period
Description 2021 2022 2023 2024 2025 2026 2027
Cost per liter

of Diesel 23.45 24.53 25.66 26.84 28.07 29.36 30.71
cost per liter

of gasoline 24.85 25.87 26.93 28.03 29.18 30.38 31.63
cost per liter

of kerosene 23.45 24.53 25.66 26.84 28.07 29.36 30.71
cost of sale of
diesel 171185000 214871412 269706596.3 338535719.7 424930035.4 533372180.4 669488760.9
cost of sale of
gasoline 72,562,000 90,644,450 113,233,047 141,450,723 176,700,243 220,733,944 275,740,842
cost of sale of
kerosene 17,118,500 21,487,141 26,970,660 33,853,572 42,493,004 53,337,218 66,948,876
23
total cost of
fuel sold 260,865,500 327,003,004 409,910,303 513,840,015 644,123,282 807,443,342 1,012,178,479
cost of sale of
oil and
lubricant 41,865,500 57,774,390 79,728,658 110,025,548 151,835,257 209,532,654 289,155,063
cost of sales
for cafeteria 1,533,000.00 1,839,600.00 2,207,520.00 2,649,024.00 3,178,828.80 3,814,594.56 4,577,513.47
Total Annual 386,616,993. 491,846,481.6 626,514,586. 799,137,367.4 1,020,790,590. 1,305,911,055.

Cost of Sale 304,264,000.00 60 2 88 2 81 55
Expense Forecast
At the first year of operation, the total Operating and administration Expense of the
proposed project is estimated to be Birr 3.48 million which would fluctuate in some
years and would reach to birr 4.89 million at the end of the projected period. The major
expense during operation is Salary and employee benefit expense which is to be paid for
28 employees.
Description 2021 2022 2023 2024 2025 2026 2027
Salary expense 837,600 921,360 1,013,496 1,114,846 1,226,330 1,348,96 1,483,859

3
Employee 167,520 184,272 202,699 222,969 245,266 269,793 296,772
benefits
total Salary 1,005,12 1,105,63 1,216,19 1,337,81 1,471,59 1,618,75 1,780,63
and benefits 0 2 5 5 6 6 1
Depreciation 630,000 630,000 630,000 630,000 630,000 630,000 630,000
repair and 150,000 157,500 165,375 173,644 182,326 191,442 201,014

maintenance
Utility expense 883,000 927,150 973,508 1,022,183 1,073,292 1,126,957 1,183,304
Insurance 720,000 756,000 793,800 833,490 875,165 918,923 964,869
Miscellanies 100,000 105,000 110,250 115,763 121,551 127,628 134,010

expense
Total 3,488,12 3,681,28 3,889,12 4,112,89 4,353,92 4,613,70 4,893,82
expenses 0 2 8 4 9 6 9
24
Revenue Projection
Sales income, volume, and price projection for the project period
Description 2021 2022 2023 2024 2025 2026 2027
Fuel sales
revenue:
7,300,000 8,760,000 10,512,000 12,614,400 15,137,280 18,164,736 21,797,683
Sales volume of
Diesel(Litter)
2,920,000 3,504,000 4,204,800 5,045,760 6,054,912 7,265,894 8,719,073
Sales Volume of
Gasoline(litter)
730,000 876,000 1,051,200 1,261,440 1,513,728 1,816,474 2,179,768
Sales Volume of
Kerosene(litter)
24.25 25.72 27.45 29.52 32.10 35.41 39.78
Price per liter of
Diesel
25.65 27.06 28.72 30.72 33.21 36.42 40.69
Price per litter
of Gasoline
24.25 25.72 27.45 29.52 32.10 35.41 39.78
price per litter
of kerosene
176,995,80 225,330,852 288,533,588 372,424,30 485,929,489 643,171,198 867,126,992
Sales income of 0 5
diesel
sales income of 74,886,320 94,828,226 120,763,844 155,006,157 201,100,025 264,653,550 354,796,135
gasoline
sales income of 17,699,580 22,533,085 28,853,359 37,242,431 48,592,949 64,317,120 86,712,699
kerosene
Total sales 269,581,7 342,692,1 438,150,79 564,672,8 735,622,46 972,141,86 1,308,635,8
income of 00 64 1 93 3 8 26
fuel
182,500 219,000 262,800 315,360 378,432 454,118 544,942
sales volume of
oil (litter)
73,000 87,600 105,120 126,144 151,373 181,647 217,977
sales volume of
lubricant(kg)
250 288 331 380 437 503 578
price per litter
of oil
300 345 397 456 525 603 694
price per kg of
lubricant
45,625,000 62,962,500 86,888,250 119,905,785 165,469,983 228,348,577 315,121,036
sales income of
oil
21,900,000 30,222,000 41,706,360 57,554,777 79,425,592 109,607,317 151,258,097
sales income of
lubricant
67,525,00 93,184,50 128,594,61 177,460,5 244,895,57 337,955,89 466,379,134
Total sales 0 0 0 62 5 4
income of oil
and lubricant
10,950 13,688 17,109 21,387 26,733 33,417 41,771
No. of car
washed
36,500 45,625 57,031 71,289 89,111 111,389 139,236
No. of car tire
repair
25
price per car for

car wash 300 345.00 396.75 456.26 524.70 603.41 693.92
price per car for
tire repair 50 57.50 66.13 76.04 87.45 100.57 115.65
Income from
car wash 3,285,000.00 4,722,187.50 6,788,144.53 9,757,957.76 14,027,064.29 20,163,904.91 28,985,613.31
Income from
tire repair 1,825,000.00 2,623,437.50 3,771,191.41 5,421,087.65 7,792,813.49 11,202,169.39 16,103,118.50
Income from
cafeteria 2,555,000.00 3,066,000.00 3,679,200.00 4,415,040.00 5,298,048.00 6,357,657.60 7,629,189.12
Total annual 344,771,700. 446,288,288. 580,983,937. 761,727,540. 1,007,635,964 1,347,821,493 1,827,732,880.

revenue 00 60 35 17 .12 .85 60
Financial Statement Projection
Income Statement Projection

Projected Income statement
Description 2021 2022 2023 2024 2025 2026 2027
Total Annual 344,771,7 446,288,2 580,983,9 761,727,540 1,007,635, 1,347,821,4 1,827,732,8

Revenue 00 89 37 964 94 81
Income
Total cost of 304,264,0 386,616,9 491,846,4 626,514,587 799,137,36 1,020,790, 1,305,911,0
sales 00 94 82 7 591 56
Gross Profit 40,507,7 59,671,2 89,137,4 135,212,95 208,498, 327,030,9 521,821,8
00 95 56 3 597 03 25
Total operating 3,488,120 3,681,282 3,889,128 4,112,894 4,353,929 4,613,706 4,893,829
and
administration
expenses
Operating 37,019,5 55,990,0 85,248,3 131,100,05 204,144,6 322,417,1 516,927,9
Income 80 13 28 9 67 97 96
before
Interest
expense
Interest (Bank 156,250 625,000 625,000 468,750
profit )Expense
Operating 36,863,3 55,365,0 84,623,3 130,631,3 204,144,6 322,417,1 516,927,9
Profit before 30 13 28 09 67 97 96
tax
Profit Tax 12,884,16 19,359,75 29,600,16 45,702,958 71,432,634 112,828,01 180,906,79
(35%-18000) 6 5 5 9 9
Net Income 23,979,1 36,005,2 55,023,1 84,928,35 132,712,0 209,589,1 336,021,1
65 58 63 1 34 78 98
Cash Flow statement Projection

Projected Cash flow statement
Descript Initial
ion Investme 2021 2022 2023 2024 2025 2026 2027
26
nt
Net 23,979,16 36,005,2 55,023,1 84,928,3 132,712,0 209,589,1 336,021,1
Income 5 58 63 51 34 78 98
Add:
Depreciati
on 630,000 630,000 630,000 630,000 630,000 630,000 630,000
Cash flow
after
adjustme 24,609,16 36,635,2 55,653,16 85,558,3 133,342,0 210,219,17 336,651,1
nt 5 58 3 51 34 8 98
less:Princi
pal
Repayme
nt 2,500,00 2,500,00 1,875,00
of loan 625,000 0 0 0
Cash
balance
at the -
end of 18,170,00 23,984,16 34,135,25 53,153,16 83,683,3 133,342,0 210,219,17 336,651,1
the year 0 5 8 3 51 34 8 98
Discount
Rate 18%
NPV 291,546,319
IRR 179.95%
Income Profitability
The project will generate net profit throughout its life. The project will earn gross revenue of Birr
40.5 million and after tax profit of Birr 23.9 million during the first year of operation and during
the last year of the projection period it will get gross profit of Birr 521.8 million and after tax
profit of Birr 336 million. And the revenue increases from year after year and the total annual
income ranges from Birr 344.7 million in the first year of operation to Birr 1.8 billion in the
seventh year.
Cash-Flow Statement
The project will generate a positive cash flow throughout its life including. The net cash flow is
positive starting from the first year and it ranges from Birr 23.9 million to Birr 336.6 million
after loan repayment.
NPV and IRR
The projected cash flow discounted at 18% costs of capital shows that NPV of Birr 291.5 million
and IRR of 179.95% which is much better than the cost of capital (prevailing interest rate 18%).
27
Sensitivity Analysis
Scenario One
Scenario One: Revenue to Decrease by 10%
Income Statement Projections
Description/ 2021 2022 2023 2024 2025 2026 2027
Item
Total Annual 310,294,53 401,659,4 522,885,5 685,554,7 906,872,36 1,213,039,3 1,644,959,5
Sales Income 0 60 44 86 8 44 93
Total cost of 304,264,00 386,616,9 491,846,48 626,514,5 799,137,367 1,020,790,5 1,305,911,0
sales 0 94 2 87 91 56
Gross Profit 6,030,530 15,042,4 31,039,0 59,040,1 107,735,0 192,248,7 339,048,5
66 62 99 00 54 37
Total 3,488,120 3,681,282 3,889,128 4,112,894 4,353,929 4,613,706 4,893,829
operating and
administration
expenses
Operating 2,542,410 11,361,184 27,149,934 54,927,30 103,381,071 187,635,04 334,154,70
Income before 5 8 8
Interest
expense
Interest (Bank 156,250 625,000 625,000 468,750 0 0 0
profit )Expens
e
Operating 2,386,160 10,736,18 26,524,9 54,458,5 103,381,0 187,635,0 334,154,7
Profit before 4 34 55 71 48 08
tax
Profit Tax 817,156 3,739,664 9,265,727 19,042,49 36,165,375 65,654,267 116,936,148
(35%-18000) 4
Net Income 1,569,004 6,996,52 17,259,20 35,416,0 67,215,69 121,980,7 217,218,5
0 7 61 6 81 60
The project will earn gross profit of Birr 6 million and after tax Profit of Birr 1.5 million during 2013 the
five months of operation in this scenario.
Cash flow Statement Projection
Initial
Investm
Description ent 2021 2022 2023 2024 2025 2026 2027
1,569,00 6,996,52 17,259,2 35,416,0 67,215,69 121,980,7 217,218,56
Net Income 4 0 07 61 6 81 0
Add:
Depreciation 630,000 630,000 630,000 630,000 630,000 630,000 630,000
Cash flow
after 2,199,00 7,626,52 17,889,2 36,046,0 67,845,6 122,610,7 217,848,5
adjustment 4 0 07 61 96 81 60
less:Principal
Repayment 2,500,00 2,500,00 1,875,00
of loan 625,000 0 0 0
Cash balance -
at the end of 18,170,00 1,574,00 5,126,52 15,389,2 34,171,06 67,845,6 122,610,7 217,848,5
the year 0 4 0 07 1 96 81 60
Discount Rate 18%
NPV 133,305,156
28
IRR 82%
Scenario Two
Scenario Two: Expense to increase by 10%
Description 2021 2022 2023 2024 2025 2026 2027
/Item
Total 344,771,70 446,288,2 580,983,93 761,727,54 1,007,635,9 1,347,821,4 1,827,732,8
Annual 0 89 7 0 64 94 81
Sales
Income
Total cost of 334,690,4 425,278,6 541,031,130 689,166,04 879,051,10 1,122,869,6 1,436,502,16
sales 00 93 6 4 50 1
Gross 10,081,3 21,009,5 39,952,80 72,561,49 128,584,8 224,951,8 391,230,71
Profit 00 96 8 5 60 44 9
Total 3,836,932 4,049,410 4,278,040 4,524,183 4,789,322 5,075,076 5,383,211
operating
and
administrati
on expenses
Operating 6,244,368 16,960,18 35,674,767 68,037,311 123,795,538 219,876,76 385,847,508
Income 5 8
before
Interest
expense
Interest 171,875 687,500 687,500 515,625 0 0 0
(Bank profit
)Expense
Operating 6,072,49 16,272,6 34,987,26 67,521,68 123,795,5 219,876,7 385,847,5
Profit 3 85 7 6 38 68 08
before tax
Profit Tax 2,107,373 5,677,440 12,227,543 23,614,590 43,310,438 76,938,869 135,028,628
(35%-
18000)
Net 3,965,12 10,595,2 22,759,72 43,907,0 80,485,10 142,937,8 250,818,8
Income 0 46 4 96 0 99 80
The project will earn gross profit of Birr 10 million and after tax Profit of Birr 3.9 million during 2013 the
next five months of first year of operation in this scenario.

Initial
Descripti Investm
on ent 2021 2022 2023 2024 2025 2026 2027
Net 3,965,12 10,595,24 22,759,72 43,907,09 80,485,10 142,937,89 250,818,
Income 0 6 4 6 0 9 880
Add:
Depreciati
on 693,000 693,000 693,000 693,000 693,000 693,000 693,000
Cash flow
after
adjustmen 4,658,12 11,288,24 23,452,72 44,600,0 81,178,10 143,630,8 251,511,8
t 0 6 4 96 0 99 80
29
less:Princi
pal
Repaymen
t 2,500,00 2,500,00
of loan 625,000 0 0 1,875,000 0 0 0
Cash
balance
at the -
end of 18,170,0 4,033,12 20,952,72 42,725,09 81,178,10 143,630,8 251,511,8
the year 00 0 8,788,246 4 6 0 99 80
Discount Rate 18%

164,401,75
NPV 4
IRR 95%
Scenario Three
Scenario Three: Revenue to decrease by 10% and Expense to increase by 10%
simultaneously.

Description/ 2021 2022 2023 2024 2025 2026 2027
Item
Total Annual 310,294,5 401,659,4 522,885,5 685,554, 906,872, 1,213,039, 1,644,959,
Sales Income 30 60 44 786 368 344 593
Total cost of 334,690,4 425,278,6 541,031,1 689,166, 879,051,1 1,122,869, 1,436,502,1
sales 00 93 30 046 04 650 61
Gross Profit - - - - 27,821,26 90,169,69 208,457,4
24,395,87 23,619,2 18,145,58 3,611,25 4 5 31
0 33 6 9
Total 3,836,932 4,049,41 4,278,04 4,524,18 4,789,32 5,075,076 5,383,211
operating 0 0 3 2
and
administratio
n expenses
Operating - - - - 23,031,94 85,094,61 203,074,22
Income 28,232,80 27,668,6 22,423,6 8,135,44 1 8 0
before 2 43 27 3
Interest
expense
Interest 171,875 687,500 687,500 515,625 0 0 0
(Bank
profit )Expen
se
Operating - - - - 23,031,9 85,094,6 203,074,
Profit 28,404,6 28,356,1 23,111,1 8,651,0 41 18 220
before tax 77 43 27 68
Profit Tax -9,959,637 - - - 8,043,179 29,765,116 71,057,977
(35%-18000) 9,942,65 8,106,89 3,045,8
0 4 74
Net Income - - - - 14,988,7 55,329,50 132,016,24
18,445,04 18,413,49 15,004,2 5,605,1 62 2 3
30
0 3 32 94
The project will earn gross profit of Birr 38.8 million and after tax Profit of Birr 13 million during the
first year of operation in this scenario.

Initial
Descript Investm
ion ent 2021 2022 2023 2024 2025 2026 2027
- - - -
Net 18,445,0 18,413,49 15,004,2 5,605,1 14,988,7 55,329,5 132,016,
Income 40 3 32 94 62 02 243
Add:
Depreciati 693,00
on 693,000 693,000 693,000 0 693,000 693,000 693,000
Cash flow
after - - - -
adjustmen 17,752,0 17,720,4 14,311,2 4,912,1 15,681,7 56,022,5 132,709,
t 40 93 32 94 62 02 243
less:Princi
pal
Repaymen
t 2,500,00 2,500,0 1,875,0
of loan 625,000 0 00 00 0 0 0
Cash
balance
at the - - - - -
end of 18,170,00 18,377,0 20,220,4 16,811,2 6,787,1 15,681,7 56,022,5 132,709,
the year 0 40 93 32 94 62 02 243
Discount Rate 18%
NPV 6,160,591
IRR 21%
So as to check whether the request could absorb unforeseen changes, sensitivity analysis is
conducted by varying both the revenue it generates and its associated Cost of sales and
operating expenses.
The normal assumed scenario with three sensitivity analysis scenarios will have the following
results.
Scenario NPV IRR%

At Normal condition Birr 291,546,319 180%
A decrease in revenue by 10% Birr 133,305,156 82%
An increase in operating cost by
10% Birr 164,401,754 95%
Revenue to Decrease by 10% and
Expense to Increase by 10%
Simultaneously Birr 6,160,591 21%
As can be observed from the table above, the project is more sensitive to a decrease in revenue
than increase in costs and expense.
31
32

Momina Chudha Fuel Station Feasibility Study

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Momina Chudha Fuel Station Feasibility Study

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MOMINA CHUDHA FUEL STATION

PROJECT PROPOSAL FOR

PROMOTOR: W/RO MOMINA CHUDHA

PROJECT PROPOSAL SUBMITTED TO GET

Background of the Promoter and the Project Profile..............................................................................3

Potential Positive Impacts of the Project.................................................................................................4

Supply and Demand Analysis...................................................................................................................6

Demand –Supply Gap........................................................................................................................10

Product and Service...............................................................................................................................10

Retail sales of fuel:.............................................................................................................................11

Retail sales of Oil and Lubricants:......................................................................................................11

Modern Carwash (Labiajo) service:...................................................................................................11

Tire Repair (Gomista) Service:...........................................................................................................11

Location of the project...........................................................................................................................12

Land, Building, Civil Works and factory lay out..................................................................................13

Input and auxiliary materials.................................................................................................................13

Organizational structure and Man Power..............................................................................................15

Investment costs and financial structure.............................................................................16

Assumptions used for financial projection............................................................................................18

Depreciation and Amortization.............................................................................................................20

Cost and Expense Projection.................................................................................................................20

Cost of sales Forecast......................................................................................................................20

Financial Statement Projection..............................................................................................................23

Income Statement Projection........................................................................................................23

Cash Flow statement Projection....................................................................................................23

The oil industry is involved in a global supply-chain that includes ordering,

In Ethiopia, so far, there has been no discovery of oil in commercial quantities.

Ethiopian Petroleum Supply Enterprise (EPSE): EPSE is a government agency which is

Background of the Promoter and the Project Profile

Considering the untapped market demand potential as well as government’s attractive

 To construct and operate Fuel station in Yabelo Town.

Potential Positive Impacts of the Project

 Improvement of general welfare for Yabelo population as a result of increased

 Increased economic activities directly or indirectly related to the project;

 Possibility of meeting fundamental need of the society for transportation.

 Payment of taxes to the local and central government

S/N. Cost Items Owner Equity Bank loan Total Cost

Financial Source 10,670,000 7,500,000 18,170,000

Percentage (%) 58.72% 42.28% 100%

Supply and Demand Analysis

Fuel Demand projection for the next five years

Ethiopian fiscal forecasted

Supply from Import

Fuel import trend from 2016 to 2020

Projection of fuel supply for the next five years

Demand –Supply Gap

Projection of demand-supply gap for fuel in Ethiopia

2021 5,698,737.00 3,974,543.70 1,724,193.30

2022 6,268,610.70 4,411,743.51 1,856,867.19

2023 6,895,471.77 4,897,035.29 1,998,436.48

2024 7,585,018.95 5,435,709.17 2,149,309.77

2025 8,343,520.84 6,033,637.18 2,309,883.66

Product and Service

Retail sales of fuel:

Retail sales of Oil and Lubricants:

Modern Carwash (Labiajo) service:

Tire Repair (Gomista) Service:

Land, Building, Civil Works and factory lay out

Input and auxiliary materials

Monthly minimum amounts must be purchased

Annual utility cost of the project.

Descriptio Unit price Cost

3 Telephone and internet (in lump sum) 75,000

Organizational structure and Man Power