• Date: Jun 2016

Plastic to oil conversion is a promising technology addressing the difficulties around plastic waste management in a potentially profitable way. The Green Public Procurement in Bhutan (GPP Bhutan) project has provided advisory services on a planned post-consumer waste plastic to fuel facility of Thimphu Thromde (municipality). A financial feasibility assessment of the proposed plant has identified potential areas of risks that need attention in order to realize the expectations of Thimphu Thromde and of the Bhutanese people. This would be a Green Field investment (see box for Green field investment definition) structured as a Public Private Partnership (PPP). The construction costs are estimated to be Nu. 200 Million. MK Aromatics Limited in India would be responsible for the construction and operation of the asset.


What is a 'Green Field Investment'?

A green field investment is a form of foreign direct investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up. In addition to building new facilities, most parent companies also create new long-term jobs in the foreign country by hiring new employees.

Source:  Green Field Investment downloaded from http://www.investopedia.com/terms/g/greenfield.asp 








The main output of the plant would be crude oil, but if less suitable plastic is used it would produce coke and wax instead. Only certain types of plastic have the required 70-75% yield to make the operation of the plant economical, these include carry bags, plastic sachets and other thin plastic films.

In order to ensure the financial viability of this type of projects, it is necessary that appropriate measures are implemented to address uncertainties with the input (i.e. plastic feedstock) and output (i.e. energy) of the plant. Also, as a precondition for any successful PPP, the underlying project risks need to be allocated to the partner (public or private), who is the most suitable to manage such risks. This risk allocation needs to be reinforced by an appropriate capital structure and revenue allocation. 



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