A business plan and its feasibility report By:

Muzammil Hussain Amjad Farooq Faisal Nadeem Imran Mehar Abu-Turab L10899 (E) L10897 (E) L10922 (E)

H-NOON CNG STATION

List of contents

Mission:
To batter facilitate with great comfort

Our mission is to provide move better facilities on the way and make Pakistan more clean and green.

Vision of Hi-Noon
Hi-Noon vision is not to earn profit only but also providing great services where you feel comfort. Hi-Noon promotes entrepreneurs to come up with this business and to contribute the economy of Pakistan.

PURPOSE OF THE DOCUMENT

The objective of the pre-feasibility study is to facilitate potential entrepreneurs to facilitate investment and provide and overview about CNG Filling business. The project pre-feasibility may form the basis of an important investment decision in order to serve this objective; the document cover various aspects of the business concept development, start-up, production, marketing and finance and business management. The documents also provide sartorial information, brief on government policies and international scenario, which have some bearing on the project itself. This particular pre-feasibility is regarding CNG Filling station, which comes under Petroleum sector.
CRUCIAL FACTORS & STEPS IN DECESION MAKING FOR INVESTMENT KEY SUCCESS FACTORS Following factors are key in making this project profitable. Location of the project will play a pivotal role in the successful running of the CNG station. The daily turnover of the cars largely depends on this important factor. Selection of proper equipment is another key for carrying out the successful operation of the proposed project.

OPPORTUNITIES
The proposed project would have a number of competitive advantages: The project will provide cheaper fuel to its customers compared to the petroleum products, which are already on the higher side. Government has exempted the imposition of the sales tax and custom duties on the import of CNG kits & CNG plant and equipment.

THREATS
The proposed project will be facing the following threats.

Market saturation over a longer period of time due to a large number of entrants. Threat of increase in the prices of the natural gas by the Government. Load shedding.

INTRODUCTION TO CNG
Natural Gas is one of the most valuable natural resources abundantly available incur country. The people of Pakistan have been using the petroleum products as a fuel in their automobiles, thus spending a huge amount of foreign exchange on import of petroleum products. Moreover, the Government of Pakistan has taken certain concrete steps in order to promote the use of natural gas as a fuel substitute in the automobiles. Due to the efforts made by the Government and comparatively low prices of gas, more than 600,000 vehicles have already been converted to operate on compressed Natural Gas (CNG) fueling system all over Pakistan Due to high cost of petroleum products, lots of vehicles are switching over the CNG. At present, there are more than 6701 CNG stations operating in the country and this number is insufficient to meet the rising demand of CNG in the coming years. The total project cost for setting up the CNG filling stations has been estimated at Rs. 29.050 million. It is includes land, building, CNG equipment and machinery, spares, along with the preliminary expenses and working capital. Compressed Natural Gas (CNG) is produced when the natural gas is compressed into cylinders to be used as a fuel in the automobiles. The compressed natural gas has been used as a automobile fuel since 1940, and over the years, the technology has been modified and refined. In the recent years, the usage of CNG as an automobile fuel has significantly increased because of its low cost and environment friendly nature.

PROJECT PROFILE
1OPPORTUNITY RATIONALLE Due to the environment friendly nature and low cost of natural gas. Hydrocarbon Development institute of (HDIP) has recognizd the need and necessity to promote

the use of CNG as a fuel in automobiles. HDIP has pioneered the use of environment friendly CNG in road transport as an economically viable fuel, which can substitute the imported petroleum products. 2PROJECT BRIEF The business of CNG filling station has marked its place in the country through growth during the last few years. This growth has opened up new opportunities and more CNG filling stations are being setup all over Pakistan. The prime reason for this is the low cost of the fuel. Along with that, CNG fuel is less hazardous to the environment as compared to the traditional petroleum fuel. 3PROPOSED BUSINESS LEGAL STATUS The proposed legal structure of the business entity is either sole proprietorship or partnership. Although selection totally depends upon the choice of the entrepreneur but this financial feasibility is based on a partnership .

CNG POLICY
The Government of Pakistan has offered number of incentives for encouraging the use or CNG in the country. Some of these are summarized below. Strong Government commitment to promote usage of CNG Liberal policy of providing license for CNG retailing Deregulated market price of CNG (for the consumers) Priority of providing natural gas connection to CNG stations Exemption of import duty and sales tax till June 2005 on import of Machinery and equipment, CNG kits and cylinders.

This has provided a boost to the industry, and so far more than 600,000 vehicles have been converted to CNG and 6702 CNG station are operational. According to International Association for National Gas Vehicles (IANGV) statistics, Pakistan is ranked third in the CNG-using countries after Argentina and Brazil.

MARKET ANALYSIS
The commercial application of CNG technology new forms an important element of Governments petroleum policy, which is reflected in the efforts made by the government for installing 670 CNG stations in the country and converting 900,000 vehicles on CNG fueling system till February 2006. TARGET CUSTOMERS The target customers for the proposed project would be the vehicles running on CNG fuel. MARKET DEMAND At present there are more than 600,000 vehicles, which have been converting to CNG fuel, and a large number of vehicles are further being converted. Due to the increasing prices of petroleum products, the trend of converting cars cars to CNG fueling system has been on a rise, However there exist a large number of people who where reluctant to convert their vehicles form petrol to gas due to safely concerns, Recently, many care manufactures have started manufacturing the cars with built-in CNG fueling system. This changed has led to enhancing the confidence in the minds of the general public regarding the safety concerns, and now, more people are inclined towards purchasing these factory-fitted CNG fueling system cars.

MARKET SUPPLY Total number of CNG stations in Pakistan is only 670, which is quite low for meeting the growing demand of CNG. Apart from these 670 CNG stations, many new CNG stations are being setup across the country. INDUSTRY GROWTH There has been a tremendous growth in the CNG sector over the years. The total number of vehicles on CNG was 100,000 and CNG filling stations was 150 at the end of year 2000. The number of CNG vehicles has increased to 210,000 vehicles.

COST OF PROPOSED SCHEME

Cost of proposed scheme Fixed cost Working capital Total cost Amount 47.588 3.160 50.748

Financial plan Loan Sponsors capital T. Cost of project Debt/Equity Ratio Debt Fixed cost Total cost 32.05 30.05 Equity 67.95 69.95 15.250 32.388 47.588

COST OF THE PROJECT

Particulars
Land Building Machinery Generator Furniture & Fix Sui Gas Installations Pre-operating exp Electric Estimated fixed cost Permanent working capital Total cost of project 25.786

Cost already Met

15.200 8.736 0.000 0.000 0.000 0.350 0.650 0.850 25.786

Cost to be met G. Total

Sponsors
0.000 1.130 3.250 0.500 0.375 0.172 0.325 0.800 6.552 3.160 9.712

Loan
0.000 4.000 9.750 1.500 0.000 0.000 0.000 0.000 15.250 0.000 15.250

Total
0.000 5.130 13.000 2.000 0.375 0.172 0.325 0.800 21.802 3.160 24.962 15.200 13.866 13.000 2.000 0.375 0.522 0.975 1.650 47.588 3.160 50.748

MEANS OF FINANCING Amount Loan Sponsors Capital 15.250 32.338

47.588

Debt/Equity Ratio Debt % Fixed cost Total cost 32.05 30.05 Equity % 67.95 69.95

DETAIL OF LAND
Address: G.T Road, RENALA KHURD, DISTT, OKARA. Area: Total area 160 Marlas Value of Land: = Rs. 15,200,000/-

DETAIL OF BUILDING
Total cost for the construction of building is as follows. Description Building Area Canopy Earth Filling Tough Tile Boundary Wall TOTAL 2700 LUMP SUM LUMP SUM LUMP SUM Area LUMP SUM 900 Rate Amount 5.300 2.430 1.500 2.200 2.436 13.866

CNG EQUIPMENT
The following equipment is required for the CNG STATION: Gas compressor Electric control panel Storage cascade Priority panel for vehicle priority CNG dispensor high flow dual hose

GAS COMPRESSOR
The purpose of compressor the gas enabling it to discharge the gas for refueling. This compressor requires an input pressure of natural gas as follows:Without free water Content of H2s Low heat value Dust content Steam content Total content of sulphur (S) <20mg/Nm3 >or=33.4 M.j/Nm3 <or=5mg/Nm3 <or=16mg/Nm3 <or=270mg/Nm3

COMPRESSOR SPECIFICATIONS:
MODLE MEDIA INTAKE PRESSURE OUTLET PRESSURE INTAKE TEMP OF GAS OUTLET TEMP. OF GAS Water<30c DISPLANCEMENT CAPACITY WORKING TEMP STAGES TYPE OF DRIVEN COMPRESSOR SPEED POWER OF SHAFT LUBE OIL CONSUMPTION ENRIC-W-4.75/1.250 PURE NATURAL GAS 15PSIG 25PSIG <Or=45c <OR=45C (After water cooling and when intake temp of gas<30c, Temp of cool. 5.0M3/min) 5.0m3/MIN 570Sm3/h (When intake temp of gas is 20c, 0.1013 Mpa) <50C 4 STAGES DIRECT DRIVEN 740 Rpm 126 Kw NON OIL LUBRICATION FOR CYLINDERS AND PACKING SEAL KTTS. 15 TON/II 0.1~0.3 MPA 0.1~0.3 MPA BY GEAR OIL PUMP EXPLOSION-PROOF ELECTRIC MOTOR JBO 200HP 6.5 TON

CAPICATY OF CIRCULATING WATER PRESSURE OF CIRCULATING WATER

PRESSURE OF OIL PUMP LUBRICATING DRIVING UNIT DRIVEN BY WEIGHT OF COMPRESSOR

ELECTRIC CONTROL PANNEL

Electric control panel is required the gas compressor. This panel will be mounted in the control room.

STORAGE CASCADE
Storage cascades/cylinders are used to store the natural gas.

PRIORITY PANNEL
During rush hours, the compressor is directly connected to the dispenser, bypassing the storage cascade/cylinders with the help panel, facilitating the refueling of vehicles at a faster rate.

CNG DISPENSER HIGH FLOW DUAL HOSE

Gas is filled into the vehicles with the help of dispenser; this dual hose dispenser is capable handing two vehicles at a time. There are various foreign manufactures providing the CNG filling station equipment. This equipment is selected because of its low electricity consumption, higher outlet pressure, low maintenance, durable working, longer periods between overhauls and good market repute and presence. Different gas pressures are available in different areas of Pakistan from the main gas supply line. The pressure of 15 PSIG is not easily available at ever location. Where the gas pressure of 15.

PSIG is not available, in that situation, the model with inlet pressure of 8 PSIG is used, which has been manufactured to operate at a lower gas pressure. However, the consumption of electricity increase. The total capacity of the selected equipment is 400m3/Hr with a total power load of 93 KW. All the CNG filling station equipment is foreign manufactured and imported on the specific requirement of the sponsor by the authorized agent. Usually, the equipment is delivered within 12 to 16 weeks form the receipt of purchase order and initial payment.

GENERATOR
Diesel generator 2,000 Million

Generator is most essential for uninterruptible supply of CNG to the vehicles during the shutdown of electricity 24 hours a day.

SUI GAS INSTALLATION

Demand notice payable against installation of SUI GAS is as under demand notice 350,000 /The parity also has to draw a bank guarantee in favor of the SUI SOTHERN GAS COMPANY amounting to Rs. 6,200,000 /- Which is proposed to be arranged with ASKARI BANK LIMITED, DHA LAHORE BRANCH.

ELECTRIC INSTALLATION
Electric installation includes all the electrical fitting (Electric Fixtures) within the premises and transformer to be erected by the WAPDA. TRANSFARMER 200MW INTERNAL WIRING& FITTING 650,000 /1,000,000 /1,650,000

PAKISTAN IS THE WORLDS 3RD LARGEST CNG USER

Pakistan has become a leading country in Asia and the third largest user of CNG in the world after Argentina and Brazil. About 700,000 vehicles have been converted to Compressed Natural Gas (CNG) in the country by March 2005 as compared to 450,000 vehicles during the same period last year, showing an increase of 56%. According to an economic survey launched in press conference here on Saturday some 700 CNG stations are operating in the country while 200 are under construction. Referring to natural gas, the survey said the average production of natural gas per day stood at 3,681 million cubic feet during July-March, 2004-05, as compared cubic feet over the same period last year, showing an increase of 14.7% The overall production of gas has increased to 1,003,198 million cubic feet during July-March 2004-05 as compared to 882,684 million cubic feet daily in the same period last year.

WORKING CAPITAL REQUIRMENT

DESCRIPTION Current Assets. Stores & spares Guarantee Margin Cash & Bank Balance ` Total Current Assets 1.500 0.390 1.650 3.540 RUPEES MILLIONS

LESS: Accrued expenses Creditors TOTAL WORKING CPITAL REQUIRED 0.245 0.135 3.160