Question

Case 1:

Let’s assume that the government of Samoa would like to develop a project to increase the production of coconut oil to support 400 families who were affected by the Tsunami.

The government is proposing to rebuild the coconut oil industry by developing a program that will provide technical support and training to the 400 families to rebuild and increase production.

The cost of the program will total 25 Million Tala per year for 5 years. It is also expected that the program will increase production of coconut oil from 40,000 MT to 60,000 MT per year for the first 6 years and to 70,000 MT for the following 6 years. The Coconut oil can be sold in the local market or can be exported. There are export taxes of 2%.

Samoa is a net exporter of coconut oil to Australia. The CIF at Brisbane in Australia is AU$1850 per MT.

New infrastructure is required for effective implementation of the project at a total cost of 12 Million Tala and an annual maintenance cost of 3.5 Million Tala.

Currently the 400 families are costing the Samoan government 800 Tala per month per family from the government’s welfare program. The increase in family income for the 400 families will mean that they will not have access to the welfare program anymore.  

Part I:

Based on what you’ve learnt from this course, and your understanding of project evaluation,

A) Describe or summarize what you understand the issue to be (5)

B) What do you think should be the objective and sub-objectives? (5)

C) Do you see a rationale for public sector involvement? Explain (5)

D) Discuss the potential benefits? Be comprehensive (10)

E) Discuss the potential cost? Be comprehensive (10)

F) Are there any external impacts? Explain (5)

G) Identify the stakeholders and describe who are the winners and losers? (10)

Part II:

With the information above and any additional information you can find and your own reasonable assumptions, undertake a rough cost benefit analysis

A) How will you quantify and monetize all your identified (10)

1) Costs

2 ) Benefits

3) What time frame will you use and why?

B) With a spreadsheet estimate (30)

1) The Present Value Cost – Economic

2) The present Value Benefits – Economic

3) Discuss any qualitative costs and benefits

C) With the following criteria, determine whether the project is economically feasible (10)

1) Net Present Value Criteria

2) Benefit Cost Ratio

Answer 1

Part 1 :- Solution (A) The issues are related to the 400 companies who are affected by Tsunami . These 400 families are helped by government by giving a project of doing the production of coconut oil.

(B) The Objectives of the government by this is helping the 400 families by providing him work for earning money. The subobjective of it is to fullfill its responsibility by helping the needed people and also increasing the production that helps to increase the GDP.

And the one objective is that to provide relief of basic facilities of food and shelter.

(c) as the issue is a national issue hence the public sector involvement have the capacity to provide relief facilities.

(d) The potential benefits are heping the families to survive and also help in welfare activities . It is rightly said that rather than giving a fish it is more beneficial to teach how to catch a fish. As giving in the given question the 400 families that are affected by the tsunami are get benefited by this plan of production.

(e) The Potential Cost related to this program is 25 Million Tala per year for 5 years with also a export taxes of 2%

(f) yes , this have external impacts also that increase in production leads to benefits to the importers also. and also many other people outside it are get work due to this