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environment is under constant threat as a result of modernisation Essay

The environment is under changeless menace as a consequence of modernization, concern activities, changeless growing and development. All these are human activities that affect the immediate environment. The depletion in natural resources particularly by the oil and gas companies such as the Pipeline Product Marketing Company ( PPMC ) has resulted in serious environmental impacts. Therefore, the demand for sustainability and sustainable development can non be overemphasized as it has become more of import over the last two decennaries ( Micheal & A ; Lan, 2000 ; Carbon Trust, 2008 ; Hahn, 2001 ; Cunningham et al. , 2005 ) . These histories for the increasing force per unit area on authoritiess to develop a response to a assortment of jobs which range from the usage of natural resources to pollution control. In response, assortment of environmental protection statute law and ordinances were formulated with the purpose of protecting the environment ( Powley, 2004 ; IEMA 2005 ) . The addition in natural resources ingestion between 1961 and 1990 by 25 % every 10 old ages resulted in serious environmental impacts in the signifier of acerb rain. This leads to raising sourness in the dirt and H2O thereby doing harm to forest harvests, and freshwater fish and wildlife. Methane emanation and excavation waste, oil spills, air pollution by sulfur dioxide, nitrogen oxide and C dioxide as a consequence of burned coal, oil or gas including clime alteration are besides causes of environmental impacts ( Micheal & A ; Lan, 2000 ; Edwards, 2000 ; Jaccard, 2005 ) . PPMC is a subordinate of the Nigerian National Petroleum Corporation owned by the Federal Republic of Nigeria. The company is involved in oil processing, production and selling. PPMC was established to offer first-class client services by transporting rough oil to the Nigerian three refineries every bit good as traveling white crude oil merchandises to bing markets. Its chief aim is to productively and expeditiously market refined crude oil and petrochemical merchandises in the domestic market every bit good as in the ECOWAS sub part and besides provide Marine services ( PPMC, 2009 ) .

Investing Undertaking

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The PPMC ‘s monitory and review section has 36 vehicles, a vehicle in each of the 36 provinces of Nigeria. The vehicles are used as official autos by staff in order to travel mediate their offices, terminal and filling Stationss and proctor and inspect their day-to-day operational activities. Each auto covers 100s of kilometers day-to-day due to the long distance between their office, make fulling Stationss every bit good as terminals which are located far out of the metropolis for environmental intent. Every auto consumes about 50 liters of gasoline per twenty-four hours. However, it is environmentally unfriendly as they pollute the environment with C emanations. The company has set a mark to drastically cut down or if possible to halt fouling the environment. Therefore, the senior direction wants to carry through a feasible undertaking with a length of 4 old ages, to better their environmental public presentation and upgrade its corporate societal duty. This undertaking is expected to be a non-profit undertaking that could convey many nest eggs to the company and return the initial investing in 3 old ages in order to avoid hazard. The determination of anticipating the payback period of 3 old ages was made by the senior direction after careful consideration of the company ‘s payback standard which is 5yrs.

PPMC has a criterion of judging all its investings objectively, so as to find whether the payback period is good or bad thereby go throughing an nonsubjective opinion as to cognize if the investing is worthy to be taken or non. Reducing or halting the sum of gasoline that is used during their day-to-day activities, will back up the company to obtain good corporate image and cost nest eggs as each liter of gasoline is N65 ( Naira ) . In add-on the company spends an norm of N25, 000 monthly for care on every auto. PPMC is sing a great loss of resources as a consequence of this high gasoline ingestion every twenty-four hours at that place by fouling the natural environment. The vehicles have been used for about 6 old ages which has exceeded its warrant period of 1 twelvemonth. They are being used at maximal degree as PPMC operates mundane including weekends and public vacations due to their nature of work and immense demand for their supply. The company is presently passing N52, 920,000 yearly seeking to keep and fuel the old vehicles. The dislocation of these disbursals is shown below:

Annual cost of fuel and care ( Runing cost ) .

This includes running cost of fuel, fixs and monthly cheques.

Monthly cost of fuel = 50 ten 36 ten 30 ten 65 = N3, 510,000

Annual cost of fuel = N3, 510,000 ten 12 = N42, 120,000

Monthly cost of care = N25, 000 ten 36 = N900, 000

Annual cost of care = N900, 000 ten 12 = N10, 800, 000

Entire Annual Expenditure = N42, 120,000 + N10, 800, 000 = N52, 920,000

In order to work out the above mentioned issues, PPMC direction have decided to replace the old vehicles with trade name new electric autos. These electric autos use neither gasoline nor Diesel, they have zero emanation and their lone by merchandise is H2O. The auto is known as Honda FCX Clarity, it is a Fuel Cell Electric Vehicle ( FCEV ) . This vehicle has worn the universe green auto award, during the 2009 World Cars Awards in Newyork. This award has upgraded Honda ‘s corporate image by exposing its committedness towards a green environment. In add-on, Honda already has an first-class history of environmental leading as they are known to be industries of low emanation vehicles under an improved regulative demand ( Honda, 2009 ) . It is rated by the Union of Concerned Scientists ( UCS ) as the greenest car shaper for four different times in a row ( UCS, 2007 ) . The auto generates electricity through the V flow fuel cell stack and shops it by the usage of its extremely efficient Li ion battery, which helps retrieve energy. It besides monitors electrical flow through its power thrust unit and propels the vehicle ( Honda, 2009 ) .

Honda FCX Clarity has an improved safety steps such as the Vehicle Stability Assist ( VSA ) , Collision Mitigation Braking System ( CMBS ) , six air bags and a unit organic structure construction that is good reinforced. It besides has a ocular and audio qui vive which alert the driver in instance of any possible hit. Another safety safeguard programmed in the vehicle is the suggestion of the driver by the automatic jerk of the place belt in instance of an ineluctable accident it minimises the velocity by interrupting force to cut down the impact of hit. Furthermore, it has a really strong electric motor every bit good as groundbreaking new fuel cell stack. These safety steps have been tested by the United States Federal Safety Standards and it was a success narrative ( Honda, 2009 ) . The purchase of Honda FCX Clarity by PPMC will show the company ‘s committedness towards the decrease of Co2 emanation thereby protecting the environment. The company will besides be recognised as the first to present zero emanation autos to Nigeria and it will function as a solution that could convey cost nest eggs.

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Entire cost of investing

Number of autos to be purchased = 36 autos

Cost of each auto = N3, 000,000

Entire sum to be spent on autos = N3, 00,000 ten 36 = N108, 000,000

Cost of bringing ( Transporting ) = N300, 000 ten 36 = N10, 800,000

Entire cost of investing = N108, 000,000 + N10, 800,000 = N118, 800,000

Annual nest eggs

The investing is expected to salvage the one-year cost of fuel and care ;

N42, 120,000 + N10, 800, 000 = N52, 920,000

Since the vehicle besides comes with a free care bundle including running cost for 3years 6months in signifier of a warrant, as it is a freshly introduced vehicle. Honda Company is seeking to publicize this environmentally friendly vehicle to the universe and pulling clients by covering care and running cost. This is better compared to the warrant of the old vehicles which is merely 1 twelvemonth. N52, 920,000 will be saved in the first twelvemonth, while in the subsequent old ages N1 per liter will be added due to the projected one-year oil merchandise monetary value increase. Therefore the entire cost of investing will salvage the one-year cost of fuel and care. It is of import to observe that N65 is the current monetary value of the gasoline in Nigeria.

Investing assessment is a technique used by directors to accomplish their mark. It is the responsibility of the director to find and turn out the importance of the undertaking ( Akalu, 2001 ; Mulholland et al. , 2003 ) . Therefore, it is of import in the planning of this peculiar environmental undertaking.

PAYBACK Time period

The continuance of clip for the PPMC to derive its initiated investing of N118, 800,000 on execution is known as the payback period ( Layard & A ; Glaister, 1994 ) . The period of clip that hard currency influxs will go the same with hard currency escapes is besides known as the payback period ( ACCA, 2008 ) . However, it does non see clip value for money which expresses that, sum saved today is much more valuable than the same sum saved in 2 old ages. This is considered as one of the greatest reverse ( Dury, 1997 ) .

Initial investing

Annual nest eggs

Table 1

Payback period

A A A A A A A A A A A A A A A A A A A A A Cash flow A A A A A A A A A A A A A A A Cumulative hard currency flow

Initial Investment A A A A A A A ( 118,800,000 ) A A A A A A A A A A A A A A A A ( 118,800,000 )

Savingss

Year 1 A A A A A A A A A A A A A A A A A 52,920,000 A A A A A A A A A A A A A A A A A A ( 65,880,000 )

Year 2 A A A A A A A A A A A A A A A A A 42,768,000 A A A A A A A A A A A A A A A A A A ( 23,112,000 )

Year 3 A A A A A A A A A A A A A A A A A 43,416,000 A A A A A A A A A A A A A A A A A A 20,304,000

Year 4 A A A A A A A A A A A A A A A A A 44,064,000 A A A A A A A A A A A A A A A A A A 44,064,000

Entire nest eggs A A A A A A A A A N183, 168,000

Initial Investment = N118, 800,000

Year 1 and Year 2 nest eggs A A A A = A A A 52,920,000 + 42,768,000 = N95, 688,000

Year 3 = N43, 416,000

In order to cipher the payback period with preciseness and truth, the twelvemonth 3 nest eggs should be broken down to monthly by spliting it by 12 and so the cumulative nest eggs for twelvemonth 1 and 2 should be subtracted from the initial investing. The consequence should so be divided by the monthly nest eggs of twelvemonth 3 to hold the existent figure of months ( Mclaney, 1994 ) . This is calculated below:

Savingss per month for twelvemonth 3 = N43, 416,000/12 = N3, 618,000

N118, 800,000 – N95, 688,000 = N23, 112,000/N3, 618,000 = 6.38

Approximately 6 months.

Payback period is 2years 6 monthsA

Net PRESENT VALUE ( NPV )

NPV is realised by utilizing a price reduction rate to find the current value of future nest eggs and deducting the capital cost ( Hannagan, 2008 ) . This method accepts with undertakings that have positive NPV. The method besides makes comparing between present value of hard currency escapes and influxs from an investing ( ACCA, 2008 ) .

The tabular array below shows the figure of old ages ( 4 ) , future value ( FV ) , hard currency flow, price reduction factor ( DF ) 15 % and the present value ( PV ) . The first measure in ciphering NPV is to multiply the hard currency influx ( nest eggs ) by the DF of each twelvemonth to acquire the PV. Then, sum up the PV and subtract the initial investing from the entire PV to get at the NPV ( Mclaney, 1994 ) . 15 % DF was selected non to do net income but to avoid hazard ; it was selected after sing the current base rate of the Central Bank Nigeria which is 13.2 % as the base rate supports appreciating every twelvemonth ( CBN, 2009 ) . Inflation rate in Nigeria additions, hence oil merchandise monetary value will besides appreciate.

Table 2

NPV computation

A A A A A A A A A A A A A A A A A A A A CF in Naira ( N ) A A A A A DF ( 15 % ) A A A A A PV in Naira ( N )

Initial investing A A A A A A A ( 118,800,000 ) A A A A 1.000 A A A A A A A A A ( 118,800,000 )

Savingss

Year 1 A A A A A A A A A A A A A A A A A 52,920,000 A A A A A A A A A A A A 0.870 A A A A A A A A A A 46,040,000

Year2 A A A A A A A A A A A A A A A A A A 42,768,000 A A A A A A A A A A A 0.756 A A A A A A A A A A 32,333,000

Year 3 A A A A A A A A A A A A A A A A A 43,416,000 A A A A A A A A A A A 0.658 A A A A A A A A A A 28,568,000

Year 4 A A A A A A A A A A A A A A A A A 44,064,000 A A A A A A A A A A A A 0.572 A A A A A A A A A 25,205,000

Entire nest eggs A A A A A A A A A A A 183,168,000 A A A A A A A A A A A A A A A A A A A A A A A A A 132,146,000

NPV = Total PV of nest eggs – PV of investing

N132, 146,000 – N118, 800,000 = 13,346,000

The undertaking has a positive NPV as such it should be undertaken.

INTERNAL Rate OF RETURN ( IRR )

IRR is a really of import technique that influences the determination devising as to whether or non an investing should be approved. It is interested in undertakings whose IRR are greater than the mark rate of return. It besides considers clip value for money ( ACCA, 2008 ) . In order to hold preciseness in ciphering the IRR similar stairss will be taken as how the NPV was sorted. However, it will necessitate computations at two different phases ( NPV1 and NPV2 ) with two different DFs and usually both DFs should be greater than the DF used to find the NPV. Finally the IRR expression will so be applied.

IRR = NPV1 x ( B – Angstrom ) + A

NPV1 – NPV2

Table 3: IRR computation

Old ages A A A A A A A A A Cash Flows A A A A A DF ( at 18 % ) A A A A A A PV

Year 0 A A A A A A A A A ( 118,800,000 ) A A A A A A A 1.000 A A A A A A A A ( N118, 800 Initial investme-+nt )

Year 1 A A A A A A A A A A 52,920,000 A A A A A A A A A 0.847 A A A A A A A A A A A A 44,823,000

Year 2 A A A A A A A A A A 42,768,000 A A A A A A A A A A 0.718 A A A A A A A A A A 30,707,000

Year 3 A A A A A A A A A 43,416,000 A A A A A A A A A 0.609 A A A A A A A A A A A A 26,440,000

Year 4 A A A A A A A A A A 44,064,000 A A A A A A A A A A 0.516 A A A A A A A A A A 22,737,000

Entire nest eggs A A A A 183,168,000 A A A A A A A A A A A A A A A A A A A A A A A 124,707,000

NPV1 = 124, 707,000 – 118, 800,000 = + 5, 907,000

Table 4: A A A A A A A A A A A A

Old ages Cash flow A A A A A A A A A A DF ( at23 % ) A A A PV

Year 0A A A A A A ( 118,800,000 ) A A A A A A A A A A A A 1.000 A A A A A A A A A A A A ( 118,800,000 )

Year 1 A A A A A A A A A A A A A A A 52,920,000 A A A A A A A A A A A A A A 0.813 A A A A A A A A A A A A A 43,024,000

Year 2 A A A A A A A A A A A A A A A 42,768,000 A A A A A A A A A A A A A A 0.661 A A A A A A A A A A A A A A 28,270,000

Year 3 A A A A A A A A A A A A A A A 43,416,000 A A A A A A A A A A A A A A 0.537 A A A A A A A A A A A A A A 23,314,000

Year 4 A A A A A A A A A A A A A A A 44,064,000 A A A A A A A A A A A A A A 0.437 A A A A A A A A A A A A A A 19,256,000

Entire nest eggs A A A A A A A A 183,168,000 A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A 113,864,000

NPV2 = A A 113,864,000 – 118,800,000 = – 4,936,000

IRR computation: A A A A A A A A A A 5907A A A A A A A A A A A A A A A A A A A A A A A A x ( 23 – 18 ) + 18

A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A 5907 – ( – 4936 )

A A A A A A

A A

A A A A A A A A A A A A A A A A A A A A A A A A A A A A A IRR=20.7 %

NON – FINANCIAL FACTORS

The cardinal intent of an environmental enterprise harmonizing to Sheldon and Yoxon ( 2003 ) is to cut down environmental impacts of an administration in ways which makes concern sense. The direct consequence of this provides administrations with benefits which include the usage of alternate beginning of energy to increase in an administration ‘s efficiency, therefore supplying the administration with a competitory border. In add-on, it ensures conformity with environmental ordinances and increases administration understands of how its activities impact the environment ( Brady, 2006 ) . PPMC has a batch to profit apart from the fiscal nest eggs. The administration will be lending its ain quota towards accomplishing sustainability. This will ensue in environmental public presentation betterment through the enterprise of buying trade name new autos to cut down or halt C emanations. The enterprise will cut down pollution, minimise waste, protect the natural environment and supply better corporate societal duty every bit good as good corporate image to the administration. Furthermore, position of the company ‘s repute will be upgraded as it is promoting green environment and legal conformity ( Aslaksen & A ; Synnedstvedt, 2003 ) . It will besides aids in the execution of environmental policy, while bettering conformity with statute law and corporate image ( Sheldon & A ; Yoxon, 2003 ) .

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Furthermore, PPMC will show good operations within a safe and clean environment thereby making a friendly environment for staff and the populace ( Edward, 2004 ) . This will assist screen out societal affairs and better wellness and safety. Since, the electric autos have a extremely improved safety steps that could supply ways of pollution control to protect the people and their environment ( Edward, 2004 ) . The company could besides profit from alterations within the administration, by presenting this environmental enterprise that trades with environmental impacts such as clime alteration and planetary heating caused by their emanations ( Murray, 2003 ) . In add-on, it will back up the company to place and understate its impacts on the environment so as to heighten its corporate societal duties through the usage of an alternate beginning of energy. This will non merely advance their concern environment but will advance the planetary environment at big. Buying the zero emanation vehicles will pave manner for the administration to accomplish sustainable development since it is a scheme that could see maximal public-service corporation of resources. In add-on, the undertaking is non aimed at net income devising but returning of initial investing.

SUGGESTIONS/DISCUSSIONS AND CONCLUSION.

The rate of involvement at which the investing cost leads to investing benefit is known as the IRR. This means that, all investing additions are with the clip value for money and at the involvement rate, the investing has a nothing NPV ( ACCA, 2008 ) . This investing assessment has demonstrated the usage of IRR to value the hard currency flow and raise it as a effect of the investing while finding it with rising prices ( ACCA, 2008 ) . For illustration, a higher mark rate of return was chosen, so that even in a state of affairs where the rising prices rate rises the company will still salvage cost. Interest rate may lift to 15 % during the life clip of the undertaking due to the increasing rising prices rate in Nigeria, as history has shown that Nigerian base rate rises up to 0.45 every twelvemonth. Therefore, hazard is incorporated and the undertaking is considered less hazardous. The IRR is 20.7 % , this has shown a really good hazard border sing the Nigerian economic instability. Furthermore, the advantage of the IRR being 20.7 % is that, even if the involvement rate increases the undertaking will still be economically good.

Base rate of the Central Bank of Nigeria was used to find the cost of capital and cipher the initial NPV. The base rate was besides used to integrate rising prices by dismissing hard currency flows to acquire the hereafter value. Inflation alterations value for money, this is the chief ground for utilizing the base rate in finding the price reduction factor for the NPV computation. Two price reduction rates were used to work out the equation of IRR which assumes that NPV alterations with price reduction rate but this is non the instance in world. The positive consequence of the NPV means that the undertaking should be accepted and the chosen price reduction rate of 15 % helped place the existent value of the nest eggs to be made, based on the fact that the undertaking is anticipated to do an overall nest eggs. However, the existent value of IRR is more of import as it considers the current economic clime and the future involvement rate of Nigeria. The consequence has shown that the IRR is higher than the mark rate of return. It is of import to observe that, base rate is used to find NPV non IRR while IRR assumes that NPV is zero.

The nest eggs to be realised by PPMC as a consequence of the new enterprise every bit good as the indicant of an attractive Payback period upon investing is clearly exposed. Payback period 2 old ages 6 months is a good payback period since, the standards requires payback of the initial investing in 5yrs. Hence, it would hold been a bad payback period if it exceeds 5years. Furthermore, PBP was used to back up other informations because it is non plenty to function as standards for investing. The company will go on to profit from the undertaking for old ages even after returning the initial investing. PPMC could see utilizing a different price reduction rate for this undertaking since it is aimed at put to deathing an environmental undertaking and non gain doing. This assessment has been exhaustively evaluated and has proven that the investing is sensible ( Mclaney, 1994 ) . Since, the company will pass merely N65, 880,000 more on the one-year care cost ( 52, 920,000 ) and salvage N52, 920,000 in the first twelvemonth and more in the subsequent old ages at the same clip halting the C emanations from the old autos.

In add-on, it is a mandatary for the company to run into up the authorities ‘s demand to cut down environmental impact and comply with the prevalent statute law. If the administration was non to put in this undertaking the money would hold been channelled to the federation history and budgeted to put to death other undertakings in other sectors or Nigerian ministries. However, PPMC has the authorization to utilize any sensible sum to better its environmental public presentation or put to death any feasible undertaking that will be good to the administration. Finally, the computation resulted in a less price reduction rate where NPV1 became positive and a greater price reduction rate where NPV2 remain negative and IRR fell in between the two price reduction factors ( ACCA, 2008 ) . The 3 investing assessment techniques were to the full utilised to find the undertaking ‘s viability. This has proven that the undertaking is economically feasible ( Mclaney, 1994 ) . In position of this, the investing assessment is low-cost and worthy of credence. Furthermore, the purchase of the electric autos is the best option, as it will non merely cut down C emanations but will halt the emanations from the old vehicles wholly, thereby upgrading the company ‘s image every bit good as heightening its overall environmental public presentation.

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environment is under constant threat as a result of modernisation Essay
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The environment is under changeless menace as a consequence of modernization, concern activities, changeless growing and development. All these are human activities that affect the immediate environment. The depletion in natural resources particularly by the oil and gas companies such as the Pipeline Product Marketing Company ( PPMC ) has resulted in serious environmental impacts. Therefore, the demand for sustainability and sustainable development can non be overemphasized as it has bec
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