PROJECT PROFILE FOR TYRE PYROLYSIS PLANT

SUMMARY
01. Name of the Project : Waste Tyre Pyrolysis Plant : VALUKA, MYMENSING : UTTARA, DHAKA

02. Location of the Project 03. Office 04. The Project :

The project shall be classified as Renewable Energy producing industry using waste tyre /rubber/polythene as raw material. It will be designed for production of 300000 Ltre of Burning oil per month. All the products of the project will be consumed by the local market. It will be designed to work 20 hours a day for one production every day and 300 working days in a year. The main machinery and equipment of the project has been proposed to be imported from China. After implementation, the project will create job opportunities for 100 personnel of various categories. Total fixed cost of the project has been estimated at Tk. 19 Crore. 05. The Proposal : Proposal to Infrastructure Development Company Ltd (IDCOL) for the following facilities: a) Term loan of Tk. 13 Crore (70% cost of the project). b) Cash Credit of Tk. 75 lac. 06. Repayment Duration: The Loan shall be paid back in 10 years at regular interval. 07. Product Mix and Capacity : The product mix and annual production capacity of the project based daily operation of 20 hours per day with 300 working days in a year is given below :

A. Main Product :

Sl. No. 01.

Item of Products Burning Oil (Green Oil) Total

Unit Ltre MT

Annual Production 3600000 3600

B. Bye Product : Sl. No. 01. 02. Item of Products Carbon Black Iron Scrap Unit MT MT Annual Production 2700 1800

08. Land : Total land area will be 1.5 acre which shall have a value of 3 crore. 09.Land Development and Road: Land development and internal road linking shall cost approximately Taka 50 Lac. 10. Boundary Wall: Construction of boundary at a height of 20 feet for the total area of 1.5 acre shall cost Taka 50 Lac. 11. Building : Building & civil works comprises Factory shed, Distillation section, Factory Office and Administration building. The building will be made of Rcc column, grade beam, lintel, CI sheet roof over iron angle truss, fitting fixing of doors and windows, plastering, painting, etc. complete. Cost of building & civil works has been estimated at Tk. 2 Crore. 12. Main Machinery : The project will be designed with most modern imported machinery. The imported machinery will include Ring Cutting Machine, Tyre Cutting Machine, Tire Ring Separator Machine, Tyres recycling Equipment, Idle, Oil Reprocessing system, etc. The CFR cost of each system of 05 MT capacities to be imported has been estimated at US$ 200000 eqvt. to Tk. 16400000 lac. So for total 6 system the cost shall be Taka 98400000 lac. Out of this 6 system 4 systems shall be imported and 2 will be made available locally. 13. Local Machinery :

In addition to the imported machinery, the project will procure some machinery from local market. These are Mild Steel Tank, Cooling Pond, Workshop Equipment, Diesel Generator, Fire fighting equipment, etc. The cost of local machinery has been estimated at Tk. 2 Crore. 14. Erection & installation : The machinery of the project will be installed by the foreign erectors to be deputed by the machinery supplier. The machinery will be installed by 5 Chinese erectors. It will require 45 days for 5 erectors to install machinery. The sponsors have to bear the following expenses: Both Way Air Ticket (@US$ 2000 x 5 persons) Accommodation (Tk. 5000/person X 5 for 45 days) Food (Tk. 1000/person X 5 for 45 days) Local Transport (Tk. 4,000 for 45 days) : : : : Tk. 8.2 lac Tk. 11.25 lac Tk. 2.25 lac Tk. 1.8 lac

It has also been estimated Tk. 20 lac for local erectors and civil, mechanical & electrical installation. 15. Employment Opportunity : The project will create job opportunities for 100 persons of various category. 16. Cost per Employment : The cost per employment has been estimated at Tk. 15 lac. 17. Contribution to GDP : The project will contribute Tk. 2358 lac per annum to the economy of the country.

18. Cost of the Project : The total cost of the project has been estimated at Tk. 22.4Crore. Cost of the project and means of finance are as follows :

(Tk. in '000')
Item Land Building and other civil works Main Machinery be Imported 4 system Main Machinery to be made locally 2 system Other Cost for Imported Machinery Local Machinery and FF system Erection & Installation Security Deposit Vehicles and Fire Truck Furniture, Fixture & Office Equipment Consultants fee Pre-operating expenses Interest during construction period Total cost of the project 20. ANNUAL COST AND PROFIT Incurred 35000 0 0 0 0 0 0 0 0 0 0 0 35000 0 0 0 0 1000 0 0 0 0 0 75600 Expenditure F/C 0 0 65600 L/C 35000 30000 32800 2521 20000 4350 10000 3000 5000 5000 35000 30000 65600 32800 2521 20000 4350 20000 3000 5000 5000 Total

147671

223271

a. Item

Production Cost Annually Unit

MT Ltr Ltr Kg

Taka In .000 Qty Taka

9000 60000 1000 180 108,000 3660 200 63 4800 8400 500 2400 2400 30000 Total Cost 600 161023

Tyre as Raw material Diesel Lub Oil Grease Maintenance Cost Salary Misc Annual Fees & Insurance Charges Electric & Water Charges Annual Bank Installment approx Conveyance

b. Item

Annual Sales Unit

Ltr MT MT

Unit Price
Taka 52 Taka 8000 Taka 15000

Taka In .000 Qty Taka

3600000 2700 900 Total sale 187200 21600 13500 222300

Green Oil Carbon Black Scrap

Profit and Loss Annually Total Sale Total cost= Net Profit annually 222300000 - 161023000 = Taka 61277000 Annual Contribution to GDP Annual Sales Intra 222300000 131023000 = 91277000 22. Conclusion and recommendations : The project is technically feasible, financially rewarding, economically & commercially viable. Therefore, we submit our proposal to you for financial assistance.

Management Aspects
Introduction : The project will be designed for production of 3600 MT per year of Burning oil based on 20 hours each per day and 300 working days in a year. The project has been proposed to be managed by a group of 5 (five) Directors. They are qualified, resourceful and experienced. Management and Organisation : The overall management of the company will be vested with its Board of Directors. The Board will formulate policies and provide guidelines for smooth operation of the

company. The Managing Director will be the Chief Executive Officer of the company. Other members of the Board will assist him for smooth operation of the company from time to time. Qualified and experienced technical, administrative, marketing and accounting professionals will be recruited to assist key officials & management.

Technical Aspects
Purpose and design : The project will be engaged in production of Renewable Energy. It will be designed for production of 3600 MT of Burning oil along with a bye product of 2700 MT of Carbon Black and 9000 MT of scrap iron. All the products of the project will be consumed by the local market. It will be designed to work on a 20 hour production cycle per day and 300 working days in a year. The main machinery and equipment of the project has been proposed to be imported from China. After implementation, the project will create job opportunities for 100 personnel of various categories. Total fixed cost of the project has been estimated at Tk. 22.5 crore. Technology and Manufacturing Process : This is new process in Bangladesh. The process has been introduced in USA, China, INDIA, Malaysia, Vietnam, Cambodia, Thailand and Mongolia. The machinery supplier will provide necessary technology and process for the product. The machinery will be installed by Chinese erectors and trial production will be made by them. Local technician will be trained for operation of machinery. The process flow diagram is shown below : Cleaning Melting Evaporation Condensation Burning Oil/Carbon Black/Iron Scrap

Quality Control : A team of local trained chemists and technicians are always ready to produce quality products. Before store and marketing, every item will be properly tested at factory. After performing the standard test, the products will be stored for sales and marketing. Raw Materials : The annual requirement of raw material are as under : Item 1. Waste Rubber/Waste Plastic Raw Material Sourcing A study indicated that every truck and bus in the country change their tyre twice in a year in average. All cars and personal transport change their tyre once in a year. Auto rickshaw and other small size transport change twice in a year. Average weight of a waste tyre of bus and truck is about 45 kg, car or medium size transport is about 6kg, auto rickshaw 4 kg and cycle / paddle rickshaw 1 kg. Taking all these factor into consideration total waste tyre that will be available in the country every year shall be approximately 3 lac MT. Apart from waste tyre waste polythine and any other waste rubber can also be used which shall add up to further 1 lac MT per year. So the total availability of raw material shall be approximately 4 lac MT per year. Our requirement will be 2.25% of the total available raw material in the country. Sales Of the Product
a. Burning Oil: Main User is all the industry using Furnace oil. Total import of

Unit MT

Total Requirement 9000

furnace oil into Bangladesh excluding for the power Plants is approximately 1 lac MT per month. Our per monthly production capacity shall be only 300 MT which is only 0.3% of the total country requirement.
b. Coal (Carbon Black): The main user shall be the Brick field and domestic

cooking. We shall be meeting the requirement of very insignificant number of user. c. Scrap iron: The main users are the steel re rolling Mills. Shall support very insignificant number of user.

Technical, Administrative Personnel & Laborers : A. Technical : The requirement of technical and other personnel are as follows : Name of the Post 01. Plant Manager 02. Asst Manager 03.Formane 02. Shift Supervisor 03. Technician (Electric) 04. Operator 05. Helper 06. Store Keeper 08. Peon 09. Cook 09. Un-Skilled Labour 10. Cleaner Total B. Administrative : Name of the Post 01. Manager 02. Accounts Officer 03, Security Officer 03. Accountant 04. Sales Officer 05. Purchase Officer No. of Post 01 01 01 03 02 01 No. of Post 01 02 01 04 03 12 12 01 01 02 20 05 64

06. Computer Operator 08. Driver 09. Security Guard 10. Security supervisor 11. Fire security 10. Peon 11. Cleaner Total Total : 64 + 36 = 100 Nos.

02 05 14 02 03 01 02 36

Market Aspects

01. Introduction : Energy is one of the basic ingredients required to alleviate poverty and socioeconomic development. The energy prospect is generally assessed on the basis of available commercial sources of energy i.e. fossil fuel like gas, coal, oil, etc. Worldwide, there is a major transition underway in the energy sector. It is happening due to the following three major reasons : (i) A decline in fossil fuel availability, their predicted gradual extinction in the next few decades and the resultant price volatility due to demand-supply gap. (ii) The need to drastically cut global emissions for mitigating climate change (80% reduction by 2050). (iii) The need for energy security. In Bangladesh efficient utilization of renewable energy resources is yet to assume commercial dimensions and hence rational policy dissemination on renewable energy usage is essential. The renewable energy includes solar, wind, biomass, hydro, geothermal, tidal wave, etc. Renewable energy in the form of traditional biomass is the main source of primary energy in the country comprising some 35-60% of total primary energy use. The size

and economic potential of the renewable energy resources (e.g., solar photovoltaic, solar thermal power, wind power, biogas, etc.) in Bangladesh are yet to be determined and the capacity of renewable energy development is presently low. Although investment costs of renewable are generally higher compared to fossil fuel alternatives, this option becomes economically viable when all externalities (e.g. environmental cost, health hazards, etc) and lower operating cost are taken into consideration. The demand for petroleum products in Bangladesh is progressively increasing. The raw material crude oil is being imported from abroad. It is refined in the sole refinery of the country. But the capacity of the refinery is no more sufficient to meet the demand of the country. The major portion of the finished product is being imported now to meet the demand. The supply gap for each petroleum product of various solvent is quite high now a days. Bangladesh is solely dependent on imported crude oil. Insignificant quantum of fossil fuel is available from Sylhet. As such Bangladesh has to import fossil crude fuel entirely from abroad and spend huge quantum of foreign exchange. In the face of these fuel crisis, the promoter has decided to set up a burning oil manufacturing unit with the help of foreign technology and process. The basic and only raw material for the project are used types/used plastic products which are abundantly available locally. Upon implementation, following benefit will be derived : - It will be environment friendly in the sense that it will use waste tyre/ plastic products. - It will save foreign exchange. - It will save Green tree and save forest from cutting trees. 02. Major sources of Renewable Energy : Solar : Solar Photovoltaic : Solar Photovoltaic (PV) systems are in use throughout the country with over 200,000 household-level installations having capacity of about 12 MW (June 2008). Scaling-up of solar PV System assisted by the development partners are being implemented through the Rural Electrification Board (REB), Local Government Engineering Department (LGED), Bangladesh Power Development Board (BPDB) and other agencies implementing solar energy program. Renewable Energy Research Centre of the University of Dhaka has installed a model 1.1 Kw grid connected photovoltaic system. There is a strong potential for solar energy within the country. Solar Thermal Power/Concentrating Solar Power (CSP) :

The technology involves harnessing solar radiation for generation of electricity through a number of steps finally generating mechanical energy to run a generator. This technology needs to be disseminated in the country to supplement the power supply. Wind Energy : Wind Energy has also made some inroads but its potential is mainly limited to coastal areas and offshore islands with strong wind regimes. These coastal settings afford good opportunities for wind-powered pumping and electricity generation. Presently there are 2 MW of installed wind turbines at Feni and Kutubdia. Biomass : Bangladesh has strong potential for biomass gasification based electricity. More common biomass resources available in the country are rice husk, crop residue, wood, jute stick, animal waste, municipal waste, sugarcane bagasse, etc. This technology can be disseminated on a larger scale for electricity generation. Biogas : Biogas mainly from animal and municipal wastes may be one of the promising renewable energy resources for Bangladesh. Presently there are tens of thousands of households and village-level biogas plants in place throughout the country. It is a potential source to harness basic biogas technology for cooking and rural and periurban electrification to provide electricity during periods of power shortfalls. Hydro : Micro-hydro and mini-hydro have limited potential in Bangladesh, with the exception of Chittagong and the Chittagong Hill tracts. Hydro power assessments have identified some possible sites from 10 Kw to 5 Mw but no appreciable capacity has yet been installed. There is one hydro power plant at Kaptai established in the 1960s with installed capacity of 230 Kw. Other renewable energy sources include bio-0fuels, gasohol, geothermal, river, current, wave and tidal energy. Potentialities of these sources are yet to be explored.

04. Domestic Demand Analysis : The proposed product of the project will be burning oil, a close substitute of Diesel and complete substitute of Furnace Oil. As of now, no unit for manufacture of burning oil exists in the country. As such data regarding production & consumption of burning

oil is not available in the country. In this situation demand & supply analysis of Diesel and Furnace Oil may be done to assess the market size for burning oil. The average annual diesel requirement 2.3 million ton and furnace oil is about 1.6 million ton. The total requirement is meet by import. 07. Market Share : The major market share of petroleum products is occupied by the production from BPC. A small portion of the market is occupied by Petrobangla. One or two private company is currently holding a smaller share of the market for various petro-chemical products/different solvents. So far no unit for production of burning oil has been developed in the country. The proposed project will be the first of its kind in Bangladesh. Upon implementation, its share in the total market size for Diesel and Furnace oil may be calculated as shown in Table IX. Year 2012-2013 2014-2015 2016-2017 Supply Gap (000 MT) 1600 1650 1700 Capacity MT) 3600 3.00 3.00 Share in % 0.225 0.218 0.212

It appears from above Table that the proposed project may satisfy only insignificant share of the total market size for diesel and furnace oil. Furthermore, price of burning oil being lower compared to that of diesel and furnace oil, it may be able to penetrate the domestic market. 08. Micro Level Demand Analysis : The project will be located at Valuka, Mymensing. Micro level demand analysis may be done considering the places in and around the project location. Initially, the target market may be considered are Gazipur, Valuka and Rajendrapur.
a. Readymade Garment Industries :

Burning oil will be used in boilers of readymade garment industries where gas is not available. Out of about 1000 garment units in the target areas, 100 garment unit may be assumed to be users of burning oil which are out of the reach of gas availability. On an average, one garment unit uses 100 litres burning oil for their boiler. Based on these, the total requirement of burning oil may be assessed at 2727 MT (100 x 100 x 300/1100) per annum.

Thus, the total demand for burning oil for restaurants and garments units may be calculated at 5454 MT only for Gazipur, Uttara and Rajendrapur areas. b. Textile and Dying Burning oil will be used in the boilers of textile and dying industry where gas is not available. Out of about 100 units in this area minimum 10 units is expected to use furnace oil. On an average a dying industry uses about 250 Liters per day. Based on this the total requirement will be 2500 liter per day or 750 MT per year. c. Power Plant Burning Oil will be also used by the power plants. About 4 power plants are in this area and all of them use furnace oil. Each power plant are using 25 MT per day so total use of furnace per year by these power plant shall be 25 X 4 X 365= 36500 MT 09. Market Share : In the market build up period, the project with maximum attainable production capacity of 3600 MT per year may satisfy only 9% of the total market size. Upon, implementation, once the product is established in the market and the users acceptability is achieved, its demand will spread over whole of Bangladesh. 10. Objective of Renewable Energy Policy : Harness the potential of renewable energy resources and dissemination of renewable energy technologies in rural, peri-urban and urban areas; (ii) Enable, encourage and facilitate both public and private sector investment in renewable energy projects; (iii) Develop sustainable energy supplies to substitute indigenous non-renewable energy supplies; (iv) Scale up contributions of renewable energy to electricity production (v) Scale up contributions of renewable energy both to electricity and to heat energy; (vi) Promote appropriate, efficient and environment friendly use of renewable energy; (vii) Train; facilitate the use of renewable energy at every level of energy usages. (viii) Create enabling environment and legal support to encourage the use of renewable energy; (i)

(ix) (x) (xi)

Promote development of local technology in the field of renewable energy; Promote clean energy for CDM; and Policy sets targets for developing renewable energy resources to meet five percent of the total power demand by 2015 and ten percent by 2020.

11. Institutional Arrangements : An independent institution, Sustainable Energy Development Agency (SEDA), shall be established under the Companies Act, 1994, as a focal point for sustainable energy development and promotion, sustainable energy comprising renewable energy and energy efficiency. SEDA Board will comprise of representatives of stakeholders including business community, academics and/or representative from Bangladesh Solar Energy Society, NGOs, financial institutions and implementing agencies. The responsibilities of SEDA as a company shall be to : Provide coordination of sustainable energy planning, including action plans linking together the activities of several agencies or organizations; (ii) Promote awareness of renewable energy and other clean energy technologies and integrate their development within overall national energy policy and development; (iii) Support demonstration of new technologies and new business models for renewable energy and other clean energy technologies; (iv) Support establishment of small and medium renewable energy enterprises and providers; (v) Enable systematic development of renewable energy projects and opportunities through energy audits; (vi) Create market opportunities and start-up business models for sustainable energy technologies in Bangladesh, such as energy services companies and rural energy providers; (vii) Develop financing mechanisms and facilities by using grant, subsidy and/or carbon/CDM fund for public and private investments in all form of sustainable energy. (viii) Collect data and assess the renewable energy resource base, especially ion the context of rural energy master plan; (ix) Provide fund for the development of standardized renewable energy configurations to meet common energy and power applications, such as solar biogas and bi-diesel for mechanical irrigation and improved community practices for forest management and conversion and use of fuel wood by using grant, subsidy and/or carbon/CDM fund; Stimulate market development for sustainable energy technologies, such as (i)

(x)

improved cook stoves and household biogas digester (xi) Provide financial support in the research and development of renewable energy technology; (xii) Implement policies for mitigation of environmental issue arising out of use of Renewable Energy; and (xiii) Solicit and processing of grid connected renewable energy projects. 12. Investment and Fiscal Incentives : a) b) c) d) e) f) A renewable energy financing facility shall be established that is capable of accessing public, private, donor, carbon emission trading (CDM) and carbon funds and providing financing for renewable energy investments. Power Division, MOF and SEDA will formulate a detailed program for providing fiscal incentives including customs and VAT exemptions fore import and domestic manufacture of sustainable energy equipment. In addition to commercial lending, a network of micro-credit support system will be established especially in rural and remote areas to provide financial support for purchases of renewable energy equipment. GOB will facilitate investment in renewable energy and energy efficiency projects. SEDA, in co-operation with local government offices, will set up an outreach program to develop renewable energy programs. SEDA will consider providing subsidies to utilities for installation of solar, wind, biomass or any other renewable/clean energy projects. Private sector participation including joint venture initiatives in renewable energy development will be encouraged and promoted. GOB/SEDA may assist in locating the project(s) and also assist in acquiring land for renewable energy project(s). Renewable energy project investors both in public and private sectors shall be exempted from corporate income tax for period of 15 years. Renewable energy project investors both in public and private sectors shall be allowed to get the fiscal incentives provided . Accelerated depreciation upto 80% may be allowed in the first year. An incentives tariff may be considered for electricity generated from renewable energy sources which may be 1.25 times the highest purchase price of electricity by the utility from private generators. To promote solar water heaters, rates of both electricity and gas may be refixed to discourages electricity and gas use for water heating.

g) h) i) j) k)

13. Marketing Strategy :

The sponsors will adopt appropriate strategies for marketing the products. They will keep constant watch on the international and local oil market for modification of the strategies. 14. Product Quality : Product quality is a pre-requisite to ensure sale of product into the market. The product quality will be stringently maintained by way of production with modern and automatic machinery. The sponsors will ensure equipments and manpower for continuous testing of on-line and finished products. It will be used as close substitute of diesel and complete substitute of furnace oil which is now being extensively used by the industries. 16. Product Pricing : As a new product, it will be price wise competitive for better penetration into the domestic market. For effective replacement of Furnace oil, its price must be lower than that of Furnace oil. Otherwise, it will be difficult to get requisite market share for the project. To be competitive as well as to have better market share, the sponsor will fix up the sale price at Tk. 52.00 per litre as against the current price of Furnace oil which is Tk. 60.00 per litre. The sale price is lower by tk. 08.00 per litre. The sale price will be most competitive and attractive for the buyers provided the quality product is available in the market. 17. Environmental Effect : It will protect environment from the adverse effect of burning waste rubber/scrap tyre where non-visible pollutants like Co2, Co and sulpher being emitted in the surrounding area causing air pollution effecting there by affecting the environment and human beings. The project with their automatic machinery will process used tyre without the presence of oxygen & air and will not produce Co2 & black smoke injurious to environment. Moreover, the artificial coal being produced as bye product shall be used for domestic cooking and thereby will save fire wood and in turn will save green forest.