This investment proposal summarizes a plan to construct two wood pellet production lines in western Ukraine with an annual production capacity of 50,000 tonnes of pellets. The total project cost is estimated at 2.6 million Euros and it is projected to have a payback period of 2.1 years. The proposal seeks full or partial equity investment and outlines key parameters such as planned production levels, equipment requirements, and financial forecasts.

1. Pellet Production Plant in Ukraine
Investment proposal
Kiev, 2012

2. Executive Summary
Project foresees construction of 2 wood pelletizing lines
with the capacity of 4 tonnes per hour each in Western
Ukraine.
Project cost – 2.6 million Euro
Project payback period – 2.1 years (including 8 months of
construction and preparation works).

3. Location
Project sites are located in Lviv and Rivne regions of Ukraine

4. Main Project Parameters
 biomass feedstock used for pellet production – mainly
hornbeam and beech in form of branches and logs
 annual pellets production – 50 000 tonnes
 each project site has the area
of about 4 hectares, electricity,
natural gas and water supply
and road infrastructure in
place

5. Undertaken Steps of Project Development
 land plots allowing industrial construction have been
identified and secured
 pre-feasibility study of the project has been developed
 local partners have been identified
 connections with biomass suppliers and regional state
authorities have been established
 sources of partial project finance have been identified
 equipment suppliers have been preliminary identified

6. Production Forecast
 annual average aggregate wood pellet production of two
pellet lines – 50 000 tonnes
 annual wood feed stock consumption – about 100 000
cubic meters (wood residues could also be used)
 20 hours per day operation with the average production
capacity of 4 tonnes per hour for each pellet line
 pellet type – industrial pellets with the diameter of 6-8 mm
or other as specified by pellet consumers

7. Project Cost, Euro
 pellet producing lines – 953 781
 construction works – 294 242
 start up operational costs – 741 070
 other costs – 573 403
Total project cost – 2 562 496

8. Financial Indicators
 payback period (including 8 months of construction
and preparation works) – 2.1 years
 IRR (for 10 years period) – 109%
 NPV (for 10 years period) – 11 572 542 Euro
 pellet production cost – 70 Euro per tonne
 assumed pellet price – 110 Euro per tonne DAT
(Hrubieszow or Przemysl, Poland)

9. SWOT Analysis

10. Investment Proposal
Up to 100% project equity investment is thought.
After priority investment pay-back, which is expected
after 2.1 years from project investment start, project profit
will be distributed between project partners according to
the agreed equity structure.
The size and forms of project partners’ investments is the
subject for negotiations.

11. Contacts
LLC “KT-Energy”
04119, 15b/22 Biloruska str., Kiev, Ukraine
info@kt-energy.com.ua
http://kt-energy.com.ua/en/
Kyryl Tomlyak, Director
Tel.: +(38 050) 443 22 69
ktomlyak@kt-energy.com.ua