The valuation of investment projects is a fundamental question within the economic context of any country. For Cuba, immersed in a process of economic reform where structural and functional modifications are taking place in the midst of a crisis situation, this matter becomes even more relevant, since it is closely related to the fight for efficiency and the search for competitiveness, key aspects to survive and develop. For a company to be successful in all its areas and achieve optimal and constant development, investment projects is the main tool to achieve this.
Companies currently include the use of investment projects to achieve their objectives, whether these be specific or general, depending on the needs of the investment and the goal that is to be met. The evaluation of the effectiveness of the projects already carried out is as important an aspect as the premeditated study that is usually carried out in our companies to decide to invest or not, since this process can help us define how effective a project was already carried out. What benefits and difficulties did it provide us both personally from the point of view of our knowledge and at the business level, in addition to allowing us to achieve the necessary experiences for the realization of future investment projects.
From this it is that the present work sets out to evaluate the effectiveness of an investment in the sugar sector in Sancti - Spíritus through a comparative analysis of the forecasts made and the actual results. For this, it was necessary to carry out the ex ante evaluation of the project, taking into account the methodology used by MINAZ for this. After having carried out the comparative process between the forecasts and the actual results of the assembly of two turbo power generators, he concluded that it was totally profitable and that it is necessary that the ex-evaluation be carried out in all the entities. investment post.
INTRODUCTION
For a company to be successful in all its areas and achieve optimal and constant development, investment projects is the main tool to achieve this. Companies currently include the use of investment projects to achieve their objectives, whether these be specific or general, depending on the needs of the investment and the goal that is to be met.
Investment projects represent a premeditated vision of operations for the company, since these include a detailed study of the operations or resources with which it can be operated and thus avoid unnecessary expenses or a waste of time.
The valuation of investment projects is a fundamental question within the economic context of any country. For Cuba, immersed in a process of economic reform where structural and functional modifications are taking place in the midst of a crisis situation, this matter becomes even more relevant, since it is closely related to the fight for efficiency and the search for competitiveness, key aspects to survive and develop.
Today, the use of economic-financial evaluations in the economy is essential, which is not surprising, of course, investment projects.
Beginning in 1959, with the establishment of socialist relations of production, the Cuban economy entered a stage characterized by the possibility of an accelerated rate of development of the productive forces. However, it was not until the 1990s that with the disappearance of the socialist camp, the introduction of foreign capital had to be taken as a measure to make investments in sectors such as tourism, energy, mining, etc.
At the end of these years, the first texts and procedures prepared by North American authors that addressed the subject of investments were introduced in the country, which meant that specialists in the field of finance and costs were overcome and began to introduce and apply the procedures for evaluating investments are correct.
Currently, the investment projects that are carried out must be preceded by an Economic Feasibility study that contains internationally used techniques such as:
- Recovery Period VATIRA Cost / Benefit Analysis Break-even Point
The evaluation of the effectiveness of projects already carried out is as important an aspect as the premeditated study that is usually carried out in our companies to decide whether or not to invest, since this process can help us define how effective a project was already carried out., which benefits and difficulties provided us both personally from the point of view of our knowledge and at the business level, in addition to allowing us to achieve the necessary experiences for the realization of future investment projects.
Scientific problem
The lack of a post-investment study to evaluate the effectiveness of the investments prevents the state in which they are in the Sugar Company Melanio Hernández de Sancti - Spíritus from being known.
Study Object
Sugar Company Melanio Hernández
Research objectives
General objective:
Carry out the evaluation of the effectiveness of an investment in the sugar sector in Sancti - Spíritus through a comparative analysis of the forecasts made and the actual results.
Specific objectives:
- Carry out a bibliographic study of the evaluation of investments in the sugar sector, the main researchers who carry out these evaluations of the methods to evaluate the effectiveness of investments already made. Carry out a study of the investments made in the Sugar Company Melanio Hernández de Sancti - Spíritus and They remain in operation. Select from the bibliography methods to evaluate the effectiveness of investments already made. Make an economic analysis of the effectiveness of an investment already made through a comparative analysis.
Action field
Investment Evaluation System in the Sugar Company Melanio Hernández.
Hypothesis
The existence of a post-investment study would allow evaluating the effectiveness of investments in the Melanio Hernández Sugar Company in Sancti - Spíritus.
Variables
Dependent variable:
Investment effectiveness taking into account existing methods.
Independent variable:
Study to evaluate the effectiveness of investments.
Kind of investigation
The type of investigation is exploratory.
Methods and Techniques
Methods:
- Theoretical: Hypothetical deductive, systematic Empirical: Observation and measurement Financial: Techniques and financial tools Statistics: Linear estimates Micro - Economic: Constraints or boundaries of possibilities Mathematical: Use of differentials.
Techniques:
- Document review Data comparison Computational Interviews Quantitative evaluation of qualitative criteria.
| DEVELOPING
Ex-Post Evaluation While supervision is in part a process of learning by experience, its primary purpose is to address the life span of a project in which its physical infrastructure components are built, equipment is purchased and installed, and new ones are commissioned institutions, programs and policies. Once these stages are completed and the loan or credit funds are fully disbursed, the level of supervision declines sharply. During the period of active supervision, attention tends to focus on the problems at hand. Although projects may be subject to observation and evaluation on the fly, the need for a much broader approach to evaluating project results has become apparent. In 1970 an ex post evaluation system was established as the final stage of the project sky. All projects receiving Bank assistance are now subject to ex post verification in order to guarantee their independence and objectivity. |
Definition:
Ex post evaluation involves knowing the impacts and results compared to what is planned, generating conclusions and corrections for new programs and projects.
The ex post evaluation should not focus solely on evaluating the fulfillment of objectives when executing a project (effectiveness), but also generate knowledge on which aspects of the design or management of the program have the greatest explanatory potential of the results achieved, that is, the relevance of these objectives and results given the problem that was decided to face.
The scope of ex post evaluation is broad and relates all stages of the life cycle of a project, from the identification of the problem, through the design and execution of the project to the results that are being obtained from its operation in normal and stable shape.
Objectives of the ex post evaluation
The main objectives of the ex post evaluation are:
- Know the effectiveness of the project, that is, if the goals proposed in the design stage were carried out in the quantity and opportunity with which they were programmed. In addition, the programmability and forecasting of the entity verified ejecutora.Precisar the impact at the macro level to which point the proyecto.Evaluar if the beneficiary groups (coverage) were planned and the benefit programada.Conocer dimension reached capacity Institutional to identify, carry out and follow-up of their Check the validity of ex ante projections and determine the results of investment initiatives Periodically feed back the ex ante evaluation system of investment initiatives DeriveCorrective actions to improve investment processes. The ex post evaluation constitutes the ex ante evaluation of a project that requires a term extension.
Types of ex-post evaluation
Simple ex-post evaluation: carried out once the execution of the project is finished, that is, when the works have been definitively received, - Ex-post evaluation in depth: it is carried out when the investment project is in the normal operation and This way it is possible to verify coverage, costs, operational costs, real maintenance costs, beneficiary population, prices, externalities (positive and / or negative), benefits and social costs, etc.
Ex-post evaluation methodology
The ex-post evaluation methodology can be divided into five stages that correspond to identification, measurement, comparison, explanation and disclosure.
The identification seeks to specify the project to be evaluated, indicating its objectives and the endogenous and exogenous factors involved. The essential idea is to identify what you want to measure, that the attributes are observable, that there are distinctive features, be precise, eliminate ambiguities, pay attention to regional, territorial and sectoral differences.
The measurement seeks to quantify the magnitude and order of the observed effects.
The confrontation aims to contrast the observed situation with respect to the situation that has been formulated for the investment project.
The explanation proceeds to the analysis and synthesis of the collected data. The aim is to find the causes that explain the differences between the formulated by the project and the observed results.
Disclosure corresponds to the dissemination of the results, providing information to decision-making levels in order to arbitrate the measures that are relevant to the project, as well as to improve future projects.
When is the ex post evaluation done?
To understand when it is appropriate to carry out an ex post evaluation, we resort to a graph that relates the life cycle of the project and its type of evaluation, as follows:
- in the project design stage an ex ante evaluation is carried out in the execution and operation stages we monitor the project in the operation stage it is recommended to apply an ex post evaluation (results or impact) at the end of the project an evaluation is recommended ex post that can be results or impact.
The ex post evaluation must be done in the operation and / or maintenance stage of the project, that is, when it is operating in a stable manner in terms of benefits, costs, effects and impacts. However, the monitoring will continue until the same concludes. Ex post evaluation may be done especially at the end of the project cycle.
According to the characteristics of the project, the need to apply an ex post evaluation will be identified in the design phase, and the cost will be included in the budget and the date in the schedule.
The computer system will promptly issue an alert to the analyst of the Undersecretary of Investments, when a project must carry out its ex post evaluation. The analyst will contact the project to find out the status of the contracting process.
Planning of ex-post evaluation of investment projects:
Ex post evaluation planning should be formulated during the project design stage. This design will require the identification of objectives and the construction of indicators, especially the indicators of effects (to measure the Purpose of the Project) and to the indicators of impacts (to measure the Development Objective) since it is on these that ex post evaluation is focused..
The ex post evaluation also focuses on aspects of project performance that have allowed achieving the results achieved, which is why it is necessary to have reports on follow-up, monitoring, evaluation and completion of project execution. Having a good system for monitoring and collecting information throughout the different phases the project goes through is essential for preparing the ex-post evaluation.
Before proceeding with the proposed methodology to start the ex post evaluation process, it is necessary to have the basic information, particularly the ex ante evaluation of the project. This will allow comparing the before-after information in light of the planned project results.
The main steps for planning an ex post evaluation are:
- Scope of ex post evaluation Define who performs the evaluation Analyze the objectives, variables and indicators Examine the available data Choose the evaluation design Sample selection Design the information collection instruments Information collection Processing and analysis Prepare evaluation reports
Ex post evaluation scope
It has been considered pertinent to combine the evaluation of results and impact, this is possible, since one is not a substitute for the other and rather the evaluation of results provides decisive information for the impact evaluation.
Impact evaluations are expensive and require highly qualified personnel to carry them out, therefore, the ex post evaluation will not be applied to all projects, but a sample will be selected for its application. The project will be hired by the entity or consultant to carry out the ex post evaluation.
- Define who performs the Assessment
The project must decide, according to its installed-technical capacity and costs, who will carry out the ex post evaluation.
The following types of evaluation can be distinguished depending on the people who carry it out:
Internal evaluations: Carried out by people belonging to the organization executing the program or project to be evaluated.
External evaluations: when the evaluation process is implemented by external teams, that is, by people who do not belong to the institution responsible for the project.
Mixed evaluations: when there is a combination of the previous two.
Participatory evaluation: one in which project beneficiaries also participate.
The project will analyze the best option after analyzing the advantages and disadvantages of each type of evaluation.
- Objectives, variables and indicators
One of the main functions of ex post evaluation is to determine the degree to which the project's objectives have been achieved, therefore, it must be verified that they are capable of being measured and analyzed, that is, translated into a series of variables and indicators.
We must have some clear concepts:
- Unit of analysis is the minimum element of study, observable or measurable, that corresponds to each of the objectives established in the project (in the case of the logical framework: development objective, purpose and results), and is structured through "Variables". Ejm: individuals, homes, farms, schools, health centers, etc. Variables: they are defined as the observable characteristics, qualities, elements or components in the population, which can be modified or vary over time. Depending on the nature of the attributes, the variables can be qualitative or quantitative. Qualitative variables are those that can only be classified but not measured. Eg: man, woman. The variables quantitativeThey are those that can be measured numerically such as for example the weight or the number of beneficiaries. These variables in turn can be discrete, that is, they take integer values, such as the number of beneficiaries, or continuous, whose measurement scale is infinitely divided, such as weight, height, or income. objective type or dependent variable, used as its name indicates to measure or evaluate the objective to be achieved, and explanatory or independent variables, which are all those factors that intervene, influence, influence or condition, directly or indirectly, the dependent variable. It is necessary to identify the variable that is considered most appropriate to the nature of the objective to be measured. exogenous variables (also called condition) and endogenous (or instrumental) variables, the former are environmental variables, over which the project has no control but which nevertheless influence its results. In other words, they are variables that, although they are relevant to the description and explanation of the problem, are not modified by the project. The endogenous variables, constitute the instruments used by the project in the transforming action to achieve its project objectives. In other words, they are the variables on which the project intervenes and which it intends to affect with its actions. Indicator is a measurement instrument that relates variables at different times in the project life cycle.
During evaluation planning, the dependent or objective variable must be defined and its independent endogenous or instrumental variables (on which the project will act) and which are exogenous or environmental independent must be determined. Likewise, hypotheses regarding which endogenous variables have greater weight or are more relevant to explain the dependent variable will have to be handled. These are considered key variables. Attention should be focused on correlated endogenous independent variables to take advantage of their multiplier effect.
Ex post evaluation report:
The ex post evaluation report must contain at least the following information (the project must take these points into account when preparing the terms of reference):
- Methodology used: synthesis of the application form and the results obtained The project as a solution to the problem (relevance). Project objectives (percentage of achievement of objectives). Coverage (coverage rates ex ante and ex post). Impacts and effects of project (changes produced). Deficit (index, deficit without project and with project). Project dimensioning (adequate, over or under dimensioning). Environmental aspects (ex ante and ex post analysis, ex post environmental balance). Institutional aspects (capacity for execution and for ex-ante and ex-post operation). Investment costs (cost index, compliance indicator). Fees or prices (Fixation, feasibility, updating and compliance). Additional financing efforts. Disbursements (degree of compliance) according to schedule and factor analysis).Schedule (temporary compliance index). Economic-financial evaluation (profitability indicators) Particular conditions required (in cases of special requirements). Sustainability (comprehensive analysis of continuity and expansion conditions). Community participation (changes produced) Difficulties and obstacles encountered and strategies to face them, mentioning only the most important obstacles and / or those that remain until the moment of the ex post evaluation. Conclusions and recommendations for the future regarding follow-up and new projects with similar characteristics.Community participation (changes produced) Difficulties and obstacles encountered and strategies to face them, mentioning only the most important obstacles and / or those that remain until the moment of the ex post evaluation. Conclusions and recommendations for the future regarding follow-up and new projects with similar characteristics.Community participation (changes produced) Difficulties and obstacles encountered and strategies to face them, mentioning only the most important obstacles and / or those that remain until the moment of the ex post evaluation. Conclusions and recommendations for the future regarding follow-up and new projects with similar characteristics.
- Economic - Financial Evaluation for the assembly of two 4 MW Turbo Generators.
Background
The Melanio Hernández Sugar Company has a potential milling standard of 4600 ted (400 m @ / d) and, based on the restructuring process of the Sugar Sector, is immersed in a project to modernize and evaluate productive efficiency.
Its Steam Generation area is in good technical condition, while the Tandem is being electrified in stages, with plans to replace the existing steam engine with an electric motor. However, the Power Plant presents its equipment in poor technical condition.
Current situation
Location:
Sugar Company Melanio Hernández:
The company has 1087.1 cab. (14589.6 ha) destined for the cultivation of sugar cane located in the municipalities: Taguasco and Sancti - Spíritus of the province of Sancti - Spíritus.
Relief:
The land is classified in its highest percentage between undulating and slightly undulating, which represents 69.3% of its cane area in mechanization.
Types of soils:
The main types of soils that are distributed in the sugarcane areas are:
| Soil Type | % | |
| one | Red Ferralitic | 1.0 |
| two | Quartzite Ferralitic | 5.8 |
| 3 | Red Brown Fercialitic | 7.7 |
| 4 | Brown with Carbonate | 44.4 |
| 5 | Brown without carbonate | 5.0 |
| 6 | Dark Plastic | 26.7 |
| 7 | Dark Gleather Plastic | 8.0 |
| 8 | Alluvial | 1.4 |
Current situation of the mill:
The Power Plant is made up of two General Electric Turbo Generators of 2 MW each, designed to work with saturated steam at 11 ata (140 psig). The first turbo has a damaged generator motor, while the stator shows deterioration in its winding, requiring both major repairs such as: rectifications, balancing, taping and varnishing. Your turbine is in good condition.
For its part, turbo number 2 requires the palletizing of the first stage of the turbine disk, due to the poor condition of its blades, to solve the same it is necessary to import them at an approximate cost of 10,000 USD. However, the generator is in good technical condition.
To further aggravate the situation at the end of the recently concluded harvest, the fire destroyed the entire power distribution slate of the mill, so the plant was in deplorable conditions, needing voluminous work and resources to restore its useful life and be able to face the next Bell.
As for the Tandem, with the assembly of the electric motor to replace machine No. 1, all the movement of the mills will be through three 6.3 KV electric motors, which require 0.48 KV transformers to feed on the existing slate until said voltage level.
The mill has four 142 t / h steam generation boilers, three of which are designed to work at 18 ata (250 psig), and have an efficiency module.
The process area is well equipped and its evaporation scheme is efficient, in addition to having applied most of the compaction measures.
The objectives for this investment are:
- Achieve energy self-sufficiency in the factory and the distillery, with a minimum consumption of the SEN and sale of the excess energy. Improve the reliability and operations of the Electric Plant. Delivery of excess energy to the SEN. Reduce the investment cost with the use of the existing turbine and generator. The energy and steam balance is better.
Market study
Currently the products that are produced for sale are fundamentally raw sugar, rums, alcohols and with the investment, electric energy is increased with great prospects, although the main objective is to lower the costs of future products that are intended to diversify.
The relationships between supply and demand in the company that justify the investment are essentially based on the electricity demand of the industry and those that will generate turbogenerators that make a potential of 2325 KW to sell to the SEN, with this investment 6270 KW will be generated at no cost additional except investment, it would also be produced with biomass that is renewable energy.
Agricultural Party
- To guarantee the planned sugarcane increase we propose: Gradual increase in agricultural productivity. Increase and enhance the selected agricultural area, covered with sugarcane. 25% replacement programs and 15% demolition. Seed improvement plan. Comply with the program of SERFE. Priority attention to the soils A1 and A2. Attention in time of the cultivation work. Correct handling of the vines. Framing of the varieties according to the soil.
The behavior of the estimated sugarcane growers in recent years is shown below:
| YEAR | DEAR | REAL |
| 1991 | 506178.3 | 629582.5 |
| 1992 | 486818.0 | 556002.0 |
| 1993 | 383748.1 | 372314.8 |
| 1994 | 271059.6 | 308013.7 |
| nineteen ninety five | 248524.2 | 238213.3 |
| nineteen ninety six | 319879.4 | 337422.7 |
| 1997 | 340863.5 | 389045.0 |
| 1998 | 345625.6 | 402845.0 |
| 1999 | 366695.9 | 339773.3 |
| 2000 | 328671.2 | 333835.8 |
| 2001 | 330181.1 | 311845.5 |
As generally observed, it is a compliant company.
Industrial part
Base 96 performance has behaved as follows:
| YEAR | PERFORMANCE B 96 |
| 1991 | 11.34 |
| 1992 | 11.25 |
| 1993 | 10.85 |
| 1994 | 11.12 |
| nineteen ninety five | 11.23 |
| nineteen ninety six | 12.23 |
| 1997 | 11.87 |
| 1998 | 10.21 |
| 1999 | 12.12 |
| 2000 | 12.32 |
| 2001 | 11.25 |
| 2002 | 10.79 |
From the above data, it can be deduced that this is a high-yield plant, obtaining an average of 11.45 over the last ten years.
Industrial production forecasts based on available cane volumes are as follows:
| INDICATORS | Um | Base Year | 2003 | 2004 | 2005 | 2006 |
| Total Ground Cane | m @ | 31847.0 | 28459.1 | 31398.3 | 33165.6 | 35200.0 |
| Yielded Industrial | % | 10,793 | 10.9 | 10.9 | 10.9 | 10.9 |
| Recovered | % | 86 | 86 | 86 | 86 | 86 |
| Operational Ground | 267480 | 320000 | 320000 | 320000 | 320000 | |
| Zafra days | Days | 119.1 | 88.9 | 98.1 | 103.6 | 100.0 |
| Sugar | TM | 39528.3 | 35673 | 39358 | 41573 | 44123 |
| Annual Generation | MW | 8114.7 | 10706.3 | 11812.0 | 12476.9 | 13242.2 |
| Generation to SEN | MW | 795.5 | 3970.0 | 4380.1 | 4626.6 | 4910.4 |
| Leftover Bagasse | Ton | 0.0 | 4909.2 | 5416.2 | 5721.1 | 6072.0 |
| Total Ing. X Invers. | Thousands | 0.0 | 333.9 | 368.4 | 389.1 | 413.0 |
Project Engineering
The assembly of a 4 MW Russian turbo generator, projected from a paralyzed power station, is projected on the foundation of one of the General Electric turbos, adding two columns on the side of the turbine. He himself will work at 18 ata pressure and give his escape to the general high line.
For its part, the GE No. 1 turbine will be taken and the GE No. 2 generator will be assembled to form a turbo generator in good condition, which will continue to work with the current steam parameters (11 ata).
The PQS and Villa Clara boilers will be replaced with valves and accessories that allow them to be operated at 18 ata (250 psig), in addition to taking advantage of the two existing direct steam lines, with the change of some of their components. As for the VTI of the PQS boiler, it is expected to be replaced by one of 265,000 cubic meters / hour. For the water supply to boilers there is a pump that gives the operating parameters to 18 ata, but a spare needs to be installed.
In order to fully exploit the generation of electrical energy, the assembly of an exhaust steam line to the distillery (diameter 400 mm) is planned, leaving the option of giving it direct steam for the inactive period with the current interconnection.
In order to produce alcohol for the longest period of time with biomass and to decrease the amount of honey to buy in the complexes, it is assumed to extract B honey from the process, which implies a significant increase in the bagasse surplus during the harvest, which is projected to be stored in a Jibacú dish close to the mill. At the end of it, it will be combusted in the Evelma boiler, passing the direct steam through the turbo of the distillery and the escape of this anger into the alcohol process. The replacement of the water to feed the boiler will be taken from the existing treatment plant.
In order to facilitate the solution of providing power to all the electrical loads of the.engine with the required quality and a level of investment as low as possible, it was conceived, for this transitional stage with two turbogenerators at two different voltage levels, a distribution of electrical energy shown in the attached monoline diagram and whose main characteristics are as follows:
The section of the existing 0.48 KV bar will be used to supply the loads in the manufacturing area, whose general circuits, including their ive switches are in good condition. The 2 MW / 0.48 KV ¨General Electric¨ turbogenerator is connected to this bar, as well as the link bank with the SEN, which is proposed to be maintained by this bar to avoid the investment that a new 6.3 / 33 KV for this harvest. The main switches of the generator and the output for the link bank have their solution level in the province.
There will also be a 6.3 KV bar to which the Russian 4 MW turbogenerator will be taxed and whose output, control and protection panels will be purchased together with the turbogenerator.
The electric motors of the mills and the cane chopping blades will be fed from this bar, as well as all the electrical load in the boiler and tipper mill area, for which two substations of 1 MV A each, 6.3 / 0.48, will be installed. KV. These transformers are found in ingenuity.
For the interconnection of the 6.3 KV and 0.48 KV bars, those that would be located in the power plant itself and its location will be in the province. This bank is foreseen with sufficient capacity to be able to assume the full load of the 6.3 KV bar.
In order to analyze the investment, the cost sheet for the base year was modified only in two parameters: energy savings purchased for a total of 7599.23 pesos, since shutdowns will be reduced with the investment, due to an increase in the percentage of exploitation and the savings due to additional maintenance expenses, exceeded by technical conditions of the existing turbos that according to calculations amounted to 62001.54 pesos.
Execution schedule
| Concept | AND | F | M | TO | M | J | J | TO | S | OR | N | D |
| Technical Doc | X | |||||||||||
| equipment | X | X | ||||||||||
| Const. Y Assembly | X | X | X | X | twenty | |||||||
| Testing and Commissioning | X | X |
CURRENCY SAVINGS
| TM of Sugar | Before Investment | After Investment | Investment Savings | Total saving |
| Unit cost | 94.78 | 94.19 | 0.59 | 18.43 |
TOTAL CURRENCY SAVINGS
| TM of Sugar | Before Investment | After Investment | Investment Savings | Total saving |
| Unit cost | 324.52 | 324.21 | 0.31 | 56.21 |
NET INVESTMENT SAVINGS CALCULATIONS
| Year | Tons of sugar | Savings Pesos | Savings USD M $ / TM | Savings USD | Savings USD / TM |
| 2002 - 2003 | 39528.3 | - | - | - | - |
| 2009 - 2010 | 44123.2 | 0.31 | 13.8 | 0.59 | 26.1 |
Results of the Economic - Financial Evaluation
Financing conditions
We point out that income taxes are 35%, the contingency reserve is 5% of total gross profits, also considering 25% of the increase in the salary expense item for the Balance program. We worked with the direct costs of the currency. The conditions for financing the investment's currency have an interest rate of 15%, the credit term is three years with no grace year. The financing conditions of national currency in the investment have an interest rate of 6%, the credit term is 5 years without a grace year. Investment year is one. The official exchange rate is $ 1 = 1 USD. The working capital is assumed by the company and its finances. It is evaluated according to that reflected in the base year modified by investment, the others are for reference.The price of sugar was considered 170 USD / MT and 335.05 pesos / MT.
| Total Currency | Badge | |
| Rent. Investment | Rent. Investment | |
| Internal Rate of Return (IRR) | 153.2 | 5330.2 |
| Net Present Value (NPV) | 12540.1 | 6631.6 |
| Recovery Period (PR) | 1.66 | 1.02 |
| VAN Ratio (RVAN) | 7.00 | 282.37 |
| Oper Cost. / Entry | 0.81 | 0.42 |
| Total Cost / Income | 0.99 | 0.55 |
The cane considered is the company's own, with it we would only have 110 harvest days in 2006. After this analysis we see that the investment recovers in a very short period of time in both currencies, the Net Present Value is high, the ratio of the NPV is very beneficial, the IRR is between the parameters in the national currency and the costs / income are below unity.
If in addition to the sugarcane considered, an increase is managed in the province with the allocation of another company, to reach 110 harvest days, then it gives us as economic results the following table where we also see that the investment recovers in a period of very short time in both currencies, behaving slightly better.
| Total Currency | Badge | |
| Rent. Investment | Rent. Investment | |
| Internal Rate of Return (IRR) | 156.6 | 5664.2 |
| Net Present Value (NPV) | 12642.9 | 6734.4 |
| Recovery Period (PR) | 1.64 | 1.02 |
| VAN Ratio (RVAN) | 7.05 | 286.75 |
| Oper Cost. / Entry | 0.81 | 0.42 |
| Total Cost / Income | 0.99 | 0.55 |
Explanatory Note: It is valid to clarify that the feasibility study that was previously exposed was carried out with values of a single turbo generator, but in fact two with identical characteristics and forecasts were set up in the entity.
Analysis of the fundamental indicators to compare.
The assembly of two Electricity Turbo Generators in the Melanio Hernández Sugar Company in the province of Espirituana, brought with it a series of positive consequences that directly influenced both within the entity itself and outside it.
Before the Turbos were assembled, in order for the productions carried out there to be carried out, it was necessary to buy the electrical energy from the National Electro-energetic System, which implied that a series of expenses were incurred, which were eliminated when put into practice. the investment in question. With the application of this project, far from having to pay for the energy necessary for its productions, then income is received from the sales made from this to the National Electro-energy System, which is nourished considerably by how much the Turbos generate.
With the investment made, the consumption of Fuel Oil decreased substantially, which constituted an appreciable disbursement for the entity taking into account the prices of the necessary product in the world market, as well as the blockade imposed by the North American state throughout all years of Revolution which prevents us from acquiring directly in this case such a precious product and necessary for the development of the economy of our country.
Below is the saving of Fuel Oil expressed in its value in National Currency in the years of operation of the Turbos including the base year:
| Year | 2002 | 2003 | 2004 | 2005 | 2006 | Average |
| Savings ($) | 96440.36 | 88403.66 | 114 040.72 | 150969.34 | 248591.1 | 139689.04 |
For the above calculations, the following formula provided by the energy department of the Sugar Company was used:
Days of Steam X 540 Hl. / day X 10.57 Gls / Hl. = Gls of fuel oil
Gls of fuel oil X 3,785 Lts = Lts of fuel oil
Lts of fuel oil X 0.186 $ / Hl. = Fuel oil savings ($ / Hl.)
As it could be seen in the previous data, the implementation of this project was extremely necessary since in the saving of Fuel Oil expressed in National Currency, considerable values were obtained, which contributed and even contributes to the profitability of both the company and the country. usually.
The assembly of these Generator Turbos also contributed to the reduction of the time lost in the company taking into account that those that were replaced were nothing more than an obsolete technology and therefore were in poor condition, after this process greater efficiency was appreciated in the entity as well as broad stability in production.
It was foreseen in the PRE-Feasibility Study that the total cost of the investment would be $ 1,792,500.00 for each of the Turbos, however we were able to specify in real terms that it cost the assembly of the two Turbos altogether $ 1,006 380.00. Through the above values, it can be seen that the real total cost of the investment was considerably lower than what had been anticipated, which had as a fundamental cause that the equipment that was going to be purchased at that time would be new, however for the benefit of the entity the mounted Turbos were bought second hand for the residual value that they had so far from the Sugar Company, Bolivia, which had been dismantled at that time.
According to a PRE - feasibility study carried out to evaluate the possible future results that the assembly of the Generator Turbos could provide, the cost of producing one Kw. / h of serious electrical energy of 1.5 cents from all the elements involved in the production process, however after the analysis of the cost sheet that the Accounting department carries out, what this production line really costs is 1.93 cents. As you can see the difference between these values is outside the margin of error of 10% of the initial value, This contradiction is fundamentally determined by the non-compliance of the quality indices and therefore the non-compliance in addition to the steam quality indices in addition of the lack of thoroughness when carrying out the study before assembling the equipment.
Comparative table of the Predicted and Actual Annual Generation indicators:
| Indicators | U / M | 2002 | 2003 | 2004 | 2005 | 2006 |
| Annual Gen. Expected | KW / h | 8114700.00 | 10706300.00 | 11812000.00 | 12476900.00 | 13242200.00 |
| Gen. Annual Real | KW / h | 8114700.00 | 8982000.00 | 15229161.70 | 11696976.00 | 11293200.00 |
As can be seen in the previous comparative tables, the annual generation of electricity was planned to reach a value between 8 and 14 million Kw. / h, which for the real results fundamentally remained except in the year 2004 in which it had an increase until reaching more than 15 million Kw. / h generated, which is a positive aspect for the company since the more production it has the more profit it will obtain.
Comparative Table of the indicators; Generation Delivered to SEN Planned and Actual:
| Indicators | U / M | 2002 | 2003 | 2004 | 2005 | 2006 |
| Gen. SEN Preview | KW / h | 795500.00 | 3970000.00 | 4380100.00 | 4626600.00 | 4910400.00 |
| Gen. SEN Real | KW / h | 795500.00 | 1723304.00 | 2921871.50 | 2150923.00 | 1525708.00 |
Furthermore, it can be seen from the table illustrated above that the delivery of energy to the National Electro-energy System was expected to behave with values of between 3 and 8 million Kw. / h, which did not really happen exactly, since as the years passed, this aspect gradually decreased, which is based on the fact that as time goes by despite the proper maintenance of the equipment They are losing their useful life as well as their performance, which constitutes a decrease in the profits obtained by this route in the entity.
Comparison Table of Expected and Actual Sales Price:
| Indicators | U / M | 2002 | 2003 | 2004 | 2005 | 2006 |
| Expected sale price | $ | 0.0 | 0.08 | 0.08 | 0.08 | 0.08 |
| Real sale price | $ | 0.05 | 0.06 | 0.05 | 0.06 | 0.06 |
The sale price of the energy produced by the turbos generators was expected to be 0.08 pesos according to the table of the planned data, we can also see in the table where the real data is shown that it decreased a little considerable considering that It was only 0.02 or 0.03 pesos, which although it does not constitute an irreparable loss for the entity, it is a loss that, however small it may be, is money that has been stopped being used in other matters that are considered necessary for the company..
Comparative Table of Total and Expected Total Income:
| Indicators | U / M | 2002 | 2003 | 2004 | 2005 | 2006 |
| Total Estimated Eng | $ | 0.0 | 333900.00 | 368400.00 | 389100.00 | 413000.00 |
| Real Totals Engineer | $ | 36190.00 | 110235.70 | 151007.80 | 123541.60 | 87779.69 |
To the extent that the amount of energy that had to be delivered to the National Electro-energy System was not complied with, in addition to having decreased over the years and non-compliance with the expected sale price, the total income that is obtained through the sales that are made. All this has a negative impact on the entity since the less income it makes, the less profit it will obtain, which does not prevent the business from continuing to be profitable.
Report of the ex-post evaluation of the investment made in the assembly of two turbo generators mounted in the Melanio Hernández Sugar Company:
Methodology used: synthesis of how to apply the results obtained.
The ex-post evaluation described above constitutes a comparative process between the forecasts made in the feasibility study corresponding to the assembly of two turbo power generators, at the Azucarera Melanio Hernández company in the province of Espirituana, and the actual data obtained as a result of a research carried out in the entity itself, resulting in some variations detected through the comparison in some important aspects such as: the amount of the investment, the unit cost of production, the generation of energy in the different years investigated, thus such as the one delivered to the National Electro-energy System, in addition to the sale price at which it was sold, which leads to considerable variation in addition to the total income obtained through this route.
The project as a solution to the problem.
The project in question generally gave a solution to the previously existing problem, which consisted fundamentally of the total dependence of the company on the National Electro-energy System to start up its productions through the energy it needed for it.
Project objectives (achievement of objectives).
The objectives that were set for the realization of this investment were:
- Achieve energy self-sufficiency in the factory and the distillery, with a minimum consumption of the SEN and sale of the excess energy. Improve the reliability and operations of the Electric Plant. Delivery of excess energy to the SEN. Reduce the investment cost with the use of the existing turbine and generator. The energy and steam balance is better.
They were completely fulfilled since with the assembly of the two 4 MW turbo generators each, a self-supply of the factory and the distillery was achieved with a minimum consumption of energy provided by the National Electro-energetic System; the reliability and operations of the power plant were improved since production, after the start-up of the investment, was not interrupted for at least long periods of time; I was also able to specify that the energy not used by the entity is sold to the National Electro-energy System, which also implies income for the company; with the application of this project the cost is reduced.
Impacts and positive effects (changes produced).
After the start-up of the investment that had been proposed at the time, several positive effects were obtained taking into account that the energy needed for the productions is no longer purchased, but is currently being sold to the National Electro-Energy System the one that is left over after having used the one you need, also has a very positive impact consisting of the savings that were produced from fuel oil in a considerable amount expressed in National Currency, the aspect of the efficiency of the production which had a substantial advance from the application of the project.
Environmental Aspects (Analysis of the environmental aspects that were taken into account).
In the feasibility study of this investment, the environmental aspects that influence it were not taken into account, which constitutes a serious deficiency since the Cuban environmental legislation raises the following in the Constitutional Reform law of 1992: “The State protects the environment and natural resources of the country. It recognizes its close connection with sustainable economic and social development to make human life more rational, and to ensure the survival, well-being and security of current and future generations. It is the responsibility of the competent bodies to apply this policy.
Institutional Aspects (Capacity for ex-ante and ex-post operation).
In the Melanio Hernández Sugar Company, the Feasibility Study necessary to launch the project in question was carried out, which provided a series of results necessary for the ex-ante evaluation of the investment, for which it provided the entity in charge with all the information necessary for the proper development of the assigned task. The same happened with the ex - post evaluation that was carried out for this project, where we obtained all the necessary data to fully comply with the fundamental requirements of this report.
Investment Costs (Cost index, compliance indicator).
If we talk about the cost of the investment, it can be said that it was extremely lower than that proposed in the feasibility study, after some calculations made, it is concluded that the real cost of the investment was approximately 28% of what was planned., which was prosecuted in the forecast was made for the purchase of new equipment and the second-hand turbos of the Bolivian Sugar Company that had been recently dismantled were actually rescued.
Rates or prices.
The rates or prices established for the sale of the product obtained through the operation of the turbo generators had a small variation taking into account that it was planned to establish a price of 0.08 pesos for the sale of 1 Kw, which was modified only by 0.02 and 0.03 pesos below, which despite not being a considerable decrease continues to be a smaller amount of income obtained in the entity.
Additional funding efforts.
Taking into account the data set forth above that allows us to know the decrease in the total amount of the investment, it can be specified that it was not necessary to resort to additional financing efforts, nor to exceed the budget that had been established for this purpose.
Execution schedule (temporary compliance).
Taking into account the execution schedule proposed in the Feasibility study, the turbos generators should be run between the months of June and December 2002, which constituted the base year, effectively as planned, this year the process was completely completed, which It allowed the equipment to be fully used for the 2003 harvest, providing benefits from this period to date, such as production effectiveness, less amount of time lost, fuel oil savings as well as a greater amount of income from concept entry of energy sales to the National Electro-energy System.
Evaluation of fundamental economic aspects.
It is truly important at the time of writing this report to highlight that from the economic point of view, the investment did not provide the expected results in terms of generation and delivery of energy to the National Electro-Energy System, as well as the predetermined values of the sale price, starting From these analyzes we can conclude that the income that had been planned in the feasibility study was not fulfilled either. After having analyzed these three key factors to determine the result of the investment, it can be specified that despite having failed to comply with the aforementioned indicators, the project, after five years of operation, continues to be profitable and providing positive results to the company and the country..
Sustainability (Analysis of continuity and expansion conditions).
Regarding the sustainability of the project, it is valid to clarify that the company is in absolute conditions for an improvement in the conditions of both turbo generators as well as its restructuring if necessary, taking into account all the benefits it has provided from the point of view economic, in addition to the efficiency it has provided to carry out the production process with higher quality.
Community participation.
One of the fundamental difficulties is the non-participation of the community in the process of study and assembly of the turbo power generators, of which the community environment was one of the most benefited since the surplus energy of the production is delivered for the consumption of the National Electro-energy System. It is also found to be deficient that at the time of project evaluation the environmental impact that the implementation of this project may bring is not taken into account.
Conclusions of the Report:
By way of conclusion it is necessary to highlight that the investment made for the assembly of two electricity turbo generators was totally profitable in terms of the income obtained from the sale of energy to the National Electro-energy System, including within these indicators; generation delivered and the sale price used. After this analysis, it can be concluded that the proposed objectives were met taking into account that a total self-sufficiency of the energy needed for the company's productions was achieved, as well as the surplus energy was sold; the reliability of the operations of the power plant was improved; In addition, investment costs were reduced from the use of the turbine and a more efficient energy and steam balance was achieved.
Recommendations of the Report:
It is necessary to recommend after having reached conclusions that when carrying out a feasibility study of an investment, both environmental aspects and the participation of the community in its planning should be taken into account. They must also continue working in the same way so that the company continues to be profitable in terms of this production.
Investment News:
The investment analyzed in this work is highly current since there is talk of production of electrical energy with the aim of saving fuel, which fully corresponds to the Energy Revolution that is taking place in our country.
For Cuba, 2006 opens as the year of the energy revolution and, accordingly, a strategy is defined that conceives the assurance of supply by taking advantage of as many possibilities as possible. Although this investment has not been made precisely within this revolutionary process, it can be included in it, since the objectives correspond and also both fulfill the same functions.
There will be a before and after the Cuban Energy Revolution, from which useful lessons can be derived for the country and for the world, said Cuban President Fidel Castro.
With the current program that will radically transform the process of generating and saving electricity in Cuba, the country will save a billion dollars every year, Fidel added, noting that very soon.
The energy revolution represents considerable savings in convertible currencies. Electricity is a noble, safe and healthy fuel, without flames, without gas, without a bad smell or bad taste, while avoiding the inconvenience of frequent and unexpected blackouts, he said. Referring to the strategy of the current program, he said that it is, on the one hand, about saving and, on the other, increasing and transforming the system
Given these realities, the Cuban leader meant that the empire is at a disadvantage, because it is killing people around the world and we are saving lives.
CONCLUSIONS
After the investigation, we reached the following conclusions:
- The Company under study does not have tools that allow it to carry out evaluations of the effectiveness of the investments. It could be verified through the ex-post analysis of the proposed investment that the forecasts made in the feasibility study were not met, although the The results obtained show the financial and economic viability of the project. It was also possible to verify that there was a forecast in terms of the investment amount of 1.7 million pesos for each Turbo generator, however, both turbos really only cost 1.1 million pesos. The analysis carried out showed In addition, the cost of producing a KW / h was expected to be 1.5 cents and was actually 1.93 cents on average.It can also be concluded that there were variations between the forecasts and real values in the indicators of annual energy generation, its delivery to the SEN, its sale price, as well as the income obtained from the sale of electricity.
RECOMMENDATIONS
- The Company is recommended to carry out ex post analysis in the evaluation of its investments. Extend this analysis to other companies in the sugar sector.
BIBLIOGRAPHY
- Alvelo Figueroa, V. Notes of Conferences of Cuban Economy (Master of Economic Development) / V. Alvelo Figueroa, R. Sánchez Noda. UCLV. Conferences 1996. Castro Díaz Balart Fidel. Science, Innovation and Future. Cuban Book Institute. Special Editions. 2001. Curbelo Tribicio Irenio. Research Pre-project. Study of Prefeasibility and Financial Economic Feasibility of Investment Projects. SUSS. 2001. Dean J. Investment Policies. / J Dean. Barcelona: Labor, 1974. p 79 - 138.Fernández Álvarez, A. Introduction to Finance. / Ana I Fernández Álvarez. Madrid Editorial Civistas SA 1994 p 154.Fernández Blanco. M. Financial Management of the company. / M. Fernández Blanco. Madrid: Pirámide, 1992.González C. The Elasticity Coefficients of the Technical-Economic Evaluation of Investments. Economy and Development.Havana (45): 37 - 45, Jan - Feb 1978.
