**3.2 Loan financing and economic feasibility of a biomass combustion and gasification based plant**

The net present value (NPV), internal rate of return (IRR), and payback period (PBP) has been re-calculated if half of the total investment is taken as loan from a


#### **Table 6.**

*NPV, IRR, and payback period of a typical biomass combustion-based power plant with 50% loan at 3% p.a. [12].*

financing company (bank, government subsidy or other stake holders of the concern). The earnings before interest and tax which is called EBIT are calculated by deducting the operating cost from the gross profit. The current earnings are discounted cash to calculate the net present value of the total plant. The NPV, IRR and PBP period is seen to have changed significantly. The detail cash flow analysis for a typical biomass combustion power plant and a typical biomass gasification power plant is presented in **Table 6**.

The loan financed project seen to have NPV, IRR, and PBP values MYR 1.16 million, 4.32%, and 10.34 years respectively for the combustion-based plant. The changes in economic performance parameters are significant and can not be accepted from economic viability point of view.
