Integrated Investment Appraisal of a Steel Manufacturing / Electricity Co-generation Electricity Project

The purpose of this paper is to examine the financial and economic appraisal of a co-generation power plant that utilizes waste heat (flue gas, also known as Corex gas) from a steel-manufacturing factory to generate electricity. It describes how an independent power producer (IPP) generates electricity for supply to industrial consumers and the state electricity board in the state of Karnataka, India. The 260-MW electricity-generating plant is promoted by a local company and its foreign partner on a build-own-operate (BOO) basis, and is financed through a modern project finance arrangement. A financial model is built based on the FAST modeling standard, and the outcomes of the financial analysis reported. The FAST financial modeling standard is also applied to the economic and stakeholder analysis. The diverse classes of related risk and key risk variables are identified, and risk mitigation measures considered. Lastly, an economic analysis is conducted, project externalities evaluated, and economic risk factors tested. Conclusions are then presented, based on the outcomes of the completed project analysis. Keywords: Investment Appraisal, Cogeneration, steel manufacturing, electricity generation, India, project finance, FAST modeling.