6 Project Justification
The object of the project evaluation is to ascertain the project viability. The financial analyses are conducted to study the financial soundness of this ship-breaking project to be operated by the self-sustained affiliated company of SCA.
The financial analyses of the Project are made under the following assumption:
(a) The prices are expressed in Japanese Yen.
(b) Applied exchange rate is assumed as follows:
(c) Approximately 85% of total cost for the Project will be raised through the Central Government of Arab Republic of Egypt by special conditions applied for environmental project. The interest is 0.75% per annum.
15% of the balance will be provided by the SCA.
The budget for operation will be provided by the SCA.
(d) Eight (8) VLCCs are expected to be scrapped form the first year of operation and going on during the lifetime of the Project.
(e) The Project cost is depreciated based on a straight-line basis over 40 years afier completion of the Project.
(f) The project life is assumed to be 40 years with the required renovation and renewal being taking into account after 20 years.
(g) The principle conditions for calculation of cash flow are as follows: