S.A. Business and Finance

Organizational

Mr. Mofokeng and the first group arrange the financing of the whole project. Therefore, it is not necessary for us to arrange any further funding from parties in the Netherlands or local parties.

The total costs that are made by the biogas plant when it is functional are discussed in the cost structure of the business plan.

The cost structure describes the most important costs that are made by this business model. There are five segments in the business model that have to be financed. These are value proposition (VP), key resources (KR), key activities (KA), customer relations (CR) and channels (C).

The costs are categorized per segment and divided in fixed costs and variable costs. Fixed costs are not dependent of the production volume. Variable costs, on the other hand, are costs that vary proportional with the production volume.

All amounts will be given in South African Rand (ZAR), the currency rates are given below.

1 euro  = 15,06 ZAR

1 dollar= 13,58 ZAR

(October 2015)

All costs are based on assumptions and estimates.

Fixed costs

The fixed costs that are for interest are given in the table below and will be explained further.

Table 1 Fixed costs

The depreciation costs of the biogas plant are very difficult to estimate. These costs depend on various factors, especially the following:

-          Construction costs

-          Permits cost

-          Costs by studentteam September – November

-          Costs by studentteam November – January

Part of the biogas plant costs will be financed by grants. Because these costs and grants are difficult to estimate, a rough assumption is made for the depreciation costs of the biogas plant. It is assumed that the total of the four costs described above minus the grants will be 250.000 ZAR. The biogas plants depreciates over 20 years, which will be 1042 ZAR per month.

Among maintenance resources of the biogas plant falls repair tools and materials. The costs of the maintenance resources are assumed to be 1000 ZAR per month.

The main operator of the biogas plant is an high educated employee, which has the responsibility of the monitoring, maintenance and repair of the biogas plant. His wage is assumed to be 7000 ZAR per month.

There are two workers employed that are responsible for the loading and unloading of the biogas digester,  de regular maintenance, the care of the cattle and other easy and practical tasks. The minimum wage of a landworker is 2606 ZAR per month (Randy Daily Mail, 2015). The wages of the workers on the farm is therefore assumed to be 3000 ZAR per.

In the diagram below the fixed costs distribution is made.

Figure 1 Fixed costs distribution

Variable costs

In the table below assumptions are given, that affect the calculations on the  variable costs

The variable costs are given in the table below and eventually explained.

The electricity usage is roughly one third of the electricity usage of the biogas plant. (Mehta, 2015) The electricity demand of the biogas plant is mainly built up by the mixing machines in the biogas digester that are needed for the process.

Total costs

In the table below the mean fixed and variable costs are summed.

Figure 4 Total cost distribution

Reflection

In the cost structure the assumption is made that biogas will produced from the 150 cattle on the farm of Mr. Mofokeng. However, it is known that biomass suppliers in the region are willing to supply biomass for the biogas plant.  This brings scalability possibilities with it. In this paragraph this scalability will be discussed.

The extra biomass which can be supplied is given in the following table.

This is 21 times as much as the current scale of 150 cattle. Since this scale is many times greater than the current situation,  there will not be made an extensive cost analysis. The costs that will be created or increased are the following:

-          Electricity usage of the biogas

-          Rent or depreciation of trucks

-          Fuel costs

-          Wages of workers

-          Biomass costs

Personal finance

On the farm is a car we can use for our own use and accommodation is free. The fuel is for our own costs if we use the car for our own use. If the car is used for visits regarding the project, it is uncertain if the fuel costs will be reimbursed. Mr. Mofokeng told us in a skype-meeting that the accommodation outside the farm will be reimbursed if they are made with regard to the project.

From what we are told by the first group, we expect to spend 10 euro’s per day on basic needs, such as food, drinks, fuel costs, and accommodation when in Johannesburg.