Sardar sarovar Narmada Nigam Limited

8/7/2019 Sardar sarovar Narmada Nigam Limited

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Sardar sarovar Narmada Nigam

Limited

S.Manish-09ac22

T.Vinoth Kumar-09ac45

K.Mangala- 09ac21

M.Kowsalya Suganthi-09ac19

K.Priyadarshini-09ac29


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Sardar Sarovar Dam


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UNIDO approach

Stage 1 Calculation offinancial profitability of the project measured at

market prices.

Financial profitability is indicated by the Net Present Value

(NPV) of the project, which is measured by taking into

account inputs (costs) and outputs (benefits) at market price.

!

!n

1tt

t outlayinitialk)(1

CFNPV


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Benefits in market price

Electricity

River bed power house and canal head powerhouse generates electricity with an installedcapacity of 1200 MW and 250 MWrespectively(58 crores)

Fishery

The project involves fresh water reservoirswhich supports fish culture and the incomefrom fishery amounts to 40 crores every year


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Financial profitability

Life time of the project=50 years

Initial cost outlay=Rs.2106 crore

Value of output every year=98 crores Discount rate is assumed as 10 percentage

NPV= (98 crores-2106 crores)

------------------------------- =-11,34 crore

(1+10)^50


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Economic Benefit

Stage 2

The main economic benefit that arises out of Sardar Sarovarproject is listed as follows:

Irrigation

Flood control

Water supply and urban developments


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Irrigation and Flood control

Irrigation Facilities

18.45 lakhs ha. of land

3112 villages of 73 talukas in 15 districts of Gujarat

irrigate 75,000 ha. of land in the desert districts of Barmer

and Jallore in Rajasthan

37,500 ha. in the tribal hilly tract of Maharashtra.


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Flood Control

The Sardar Sarovar dam project provides flood

protection to :

210 villages

Bharuch city

4 lakhs people in Gujarat.


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Water supply and Urban development

The Sardar Sarovar project provides water facilities to :

135 urban centres and 8215 villages

18 millions of people in Gujarat

villages affected by salinity and fluoride in North Gujarat will

be benefited

Industries


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Calculation of Economic Benefit

Benefit type Nature Social Benefit

(in Rs)

Irrigation and flood

control

Annual 834.42 crore

Water supply and

development Annual 1457.99 crore


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Net present value of the project from the social angle is

calculated as follows:

Vt = Shadow price ofBenefit at time t = 2292.41 crore

Ct = Shadow price of Operating Expenses at time t = 1601.5

crore

K = Social Discount Rate = 10% (assuming)

T = Lifetime of the project = 50 years

I0 = Initial cost at the start of the project = 2106 crore


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Therefore,

NPV = {(2292.41 1601.5)(PVFA 10%, 50) 2106}

= {(690.91)(9.915)-2106)}

= 4744.37 crore


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Adjustment for the impact of the

project on Savings & Investment

STAGE 3


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PURPOSE

Determine the amount of income gained orlost because of the project by differentincome group other than business

Evaluate the net impact of these gains andlosses on savings

Measure the adjustment factor for saving and

thus the adjusted values for savings impact Adjust the impact on savings to the net

present value calculated in two stages


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MEASUREMENT GAIN OR LOSS

No of workers=5000

Minimum wages=RS.110Wage paid by ssnnl=RS.100

Gain of workers= (110-100)*5000

= RS.50, 000 per day


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Evaluation of net impact of savings

Net Savings Impact of a project =

Yi = change in income of group i as a result of

the projectMPSi = marginal propensity to save of group i

income gained or lost in income group

Worker=RS.2175croresWorld Bank=RS.2018crores


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Foreign exchange=-rs.29.81crores

MPSw = 0.14, MPSwb= 0.21, MPSf= 0.1

Net savings impact of a project

={0.14*2175+0.21*2018-0.1*29.81}

=RS.725.299 crore


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Adjusted factor for savings

Mpc=0.75

Mps=0.25

average productivity of capital=17.6

Consumption rate of interest=9.76

AFs=0.75 * 17.6/9.76-(0.75*0.25)

=1.378


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Adjusted value of

Saving = (net impact of saving *AFs)

=725.299*1.378

Adjusted value of saving =RS.999.46

Adjusted net profit =999.46+4744.37

=RS 5743.83 crore


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Adjustment for the impact of the

project on Income Distribution

Stage 4

It is calculated to know how the project influences

the income

A project can have various sources of income

Using those sources the weight of the income can be

determined


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Methods ofCalculation ( 1 of 2 )

To be considered,

When only two groups are given

When more than two groups are given


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Methods ofCalculation ( 2 of 2 )

If only two groups are involved:

Bottom-up approach

If more than two groups are involved:

Weight is calculated using the elasticity of

marginal utility of income


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Calculation of Weight ofIncome

The formula used is as follows:

Where,

wi = Weight of income at ci level

Ci = Level of income of group i

b = Base level of income that has a weight of 1.00

n = Elasticity of the marginal utility of income


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Project Calculations ( 1 of 4 )

According to the project the following details are given:

Three sources ofIncome are taken,

1. Agricultural Production = Rs. 1600 cr

2. Power Generation = Rs. 400 cr

3. Water Supply = Rs. 175 cr

The above incomes are taken as b = Base level of income

that has a weight of 1.00


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According to the project the following details are given:

The total income of the project for a year (Ci) = Rs.2175 cr

Elasticity of marginal utility of income (n) = 0.20*

*Regarding the elasticity of marginal utility of income, it is not given. Therefore it is assumed to be 0.20


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Income Distribution:

1. Agricultural Production:

Wi= (1600/2175).20

= .94

So, value of the impact of the project on agricultural production = ( 2175 * 0.94)

= 2044.5 cr

2. Power Generation:

Wi= (400/2175).20

= .71


= 1544.25 cr


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Income Distribution:

3. Water Supply:

Wi= (175/2175).20

= .60


= 1305 cr


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Total Income Distribution

Income Distribution Rs. (in crores)

1.Agricultural

Production

2044.50

2.Power Generation 1544.25

3.Water Supply 1305

Total 4893.75


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Calculation of NPV

NPV got from Stage III = 5743.83

Adjusted NPV = 5743.83 + 0.049

= 5743.879


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Conclusion

When taking the percentage of the incomes.

It is found that the income from agriculture has

73.56% impact

18.39% is contributed by the power generation

The least impact is done by water supply which is

about 8.05%


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Sardar sarovar Narmada Nigam Limited