Financial feasibility study of briquette production from used charcoal and tree branches in Kampung Oase Ondomohen Surabaya

Abstract

Population growth in Indonesia continues to increase from year to year. By 2035, it is predicted that 70% of Indonesia’s population will be urbanites. The potential for sustainable urbanization and regional development has encouraged the Surabaya City Government to turn some of its areas into foster villages, one of which is Kampung Oase Ondomohen. The village was named Kampung Oase because of the village’s high initiative to process waste into high-selling value products, one of which is briquettes that come from the waste from burning Sate Klopo Ondomohen and tree branches around the village area. Using charcoal and tree branches in making briquettes is the main focus of managing organic waste to be used as a renewable energy source. Before the mass production of briquettes, a study on feasibility analysis is needed, especially financial feasibility analysis, aims to assess whether a business can provide optimal financial benefits for its owners. The financial feasibility criteria used in this study are the Internal Rate of Return, Net Present Value, Payback Period, and Net Benefit/Cost Ratio. From the calculation of the four financial feasibility criteria, IRR value is 41,53%, NPV value is IDR 35,732,432.20, PBP is 2.81 years, NBC Ratio is 1.226, so the production of briquettes in Kampung Oase Ondomohen is feasible to run on a larger scale.