Investment Analysis for Submarine Power Cable Project Between Belakang Padang Island and Sambu Island



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Submitted Sep 8, 2021
Published Oct 6, 2021
10.24018/ejbmr.2021.6.5.1098

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PT Pertamina (Persero) Riau Islands proposed the installation of electrical power for the fuel storage tank terminal on Sambu Island with a capacity of 7 MVA. Currently, Sambu Island is still receiving electricity by operating a Diesel Power Plant (PLTD) with diesel fuel.

Seeing that the nearest electricity supply from Sambu Island is Pulau Belakang Padang Electricity, then as a business solution to be able to meet the demand of PT Pertamina (Persero), PT PLN Batam will build a submarine cable between Sambu Island – Pulau Belakang Padang to distribute electricity from the Power Plant in Batam to Sambu Island through the Belakang Padang Island.

PT PLN Batam must obtain a reference regarding the feasibility of investing in the construction of a submarine cable between Belakang Padang – Sambu Island. To get this reference, an investment analysis must be carried out to determine the business feasibility of this submarine cable development.

The business feasibility parameters to be analyzed are NPV (Net Present Value), IRR (Internal Rate of Return), BCR (Benefit to Cost Ratio) and PBP (Payback Period). To further refine the business feasibility analysis, a sensitivity analysis was carried out to see the effect of changes in investment parameters.

After conducting investment analysis, it was found that the Capital was carried out with a portion of 30% from equity and 70% loans from domestic financial institutions after comparing with foreign financial institutions, and the construction of this submarine cable was declared feasible because it met all the feasibility parameters. business, where NPV > 0, BCR > 1, IRR > Discount Rate and PBP < Loan Tenor.

With the construction of the submarine cable, PT PLN Batam will get a potential profit of Rp. 12.358.560.473, - in the first year after the operation of the submarine cable with an electricity tariff of Rp. 2,054 /Kwh. This electricity tariff is cheaper than the electricity tariff using PLTD of Rp 3,000/Kwh.

Keywords: Feasibility Analysis, Risk Mitigation, Submarine Cable, Toll Fee Tariff

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