Value For Money Analysis of Liquefied Natural Gas Storage Tank Construction Project

Abstract

This research article aims to (1) analyze the financial viability and sensitivity of projects under two investment models: Public Sector Comparator and Public-Private Partnership, and (2) study the appropriate partnership model between the Public Sector Comparator and the Public-Private Partnership in project implementation. This research is divided into two cases: Case 1: Project analysis is based on the overall total revenues and expenditures (base case). Case 2: Project analysis is based on the revenues and expenditures per single Liquefied Natural Gas (LNG) storage tank, through financial viability and sensitivity analysis. Data for this research was collected from estimates of the investment value for constructing LNG storage tanks, anticipated revenues, and projected operating costs. The result of the study found that 1) Based on the financial viability analysis for both Case 1 and Case 2, investing in the Public Sector Comparator model (PSC) is more financially viable than investing in a Public-Private Partnership (PPP) model. When PSC invests, the investment value is lower than PPP: by 661.10 million Baht in Case 1 and 745.83 million Baht in Case 2. Furthermore, sensitivity analysis revealed that: In Case 1, when the PSC project's revenue decreased by 2.00% and costs increased by 15.18%, the value of the PSC project became equivalent to the PPP project. In Case 2, when the PSC project's revenue decreased by 3.40% and costs increased by 48.14%, the value of the PSC project became equivalent to the PPP project. 2) Based on the study of appropriate joint venture models between PSC and PPP, Case 1 is more suitable than Case 2, considering the financial returns, as Case 1 takes into account the total project revenue.