KEBEDE MEKONIN LUBA

COAL EXPLORATION PROJECT CAPITAL GOODS

LEASING
BUSINESS PLAN

PROJECT LOCATION:

OROMIA REGIONAL STATE, EAST WOLLEGA ZONE,

HARO LIMU WOREDA, GORBA GUDINA KEBELE, GODO
RAASE LOCALITY

CONTACT PERSON: MR. KEBEDE MEKONIN LUBA

(0911-68-12-11)

JUNE, 2021
NEKEMTE, ETHIOPIA

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 Table of Contents

EXCUTIVE SUMMARUY...........................................................................................................................i
1. BACKGROUND INFORMATION...............................................................................................................1
1.1. The Promoter...................................................................................................................................1
1.2. The Project.......................................................................................................................................1
1.3. Current loans with other banks and MFIs:...................................................................................2
1.4. Purpose and Amount of the Lease Required................................................................................2
2. Project/Firm Description.........................................................................................................................2
2.1. Vision of the Project........................................................................................................................2
2.2. Mission of the Project......................................................................................................................2
2.3. The Project Goal..............................................................................................................................2
2.4. Project Objectives and Rationales................................................................................................2
3. Market Study............................................................................................................................................4
3.1. General Over View of the Market for the Products.....................................................................4
3.2. Marketing Analysis of Coal Mine....................................................................................................4
3.3. Marketing Segmentation.................................................................................................................4
3.4. Business Target................................................................................................................................5
3.5. Competition......................................................................................................................................6
3.6. Marketing strategy of the project..................................................................................................6
3.7. Marketing Strategy for Mining Company......................................................................................8
4. Technical Study........................................................................................................................................9
4.1. Area and Project location................................................................................................................9
4.2. Geology of the district.....................................................................................................................9
4.3. Climate, Rainfall and Soil................................................................................................................9
4.4. Machinery and equipment Requirements...................................................................................10
4.5. Pre-Operating Charges and Contingencies.......................................................................................10
4.6. Total Capital Cost.............................................................................................................................11
4.7. Operating & Maintenance Cost........................................................................................................11
4.8. Availability of utilities and infrastructure.....................................................................................11
5. Personnel plan........................................................................................................................................12
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 5.1. Company Staff................................................................................................................................12
6. Financial Study.......................................................................................................................................13
6.1. Total Fixed Cost.............................................................................................................................13
7. SWOT Analysis of the project..............................................................................................................17
8. Environmental Impact Assessment.....................................................................................................17
9. Socio- economic benefits.........................................................................................................................18
10. Conclusions and Recommendations................................................................................................19
10.1. Conclusions.................................................................................................................................19
10.2. Recommendation:......................................................................................................................19
Annexes..........................................................................................................................................................20

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EXCUTIVE SUMMARUY
Project Title: This project may be named as “Coal Exploration Project Capital Goods
Leasing Business plan”.
Project Owner: Kebede Mekonin

Project Description: This project Business plan assesses the viability of Coal exploration
Project Capital Goods Leasing Business. This coal exploration project capital Goods lease
project is found to be the most appropriate business through which Kebede Mekonin aims
to undertake the exploration of coal project, to play key role in implementing the Growth
and Transformation by taking the leasing service in the form of “Hire-purchase” to
stimulate the economy and improve livelihood, create economic asset by transferring
ownership at the end of the agreement period. Accordingly, this project calls for purchase
of Machineries, trucks and Vehicles.

Project Cost: During its first year of operation, the total project costs is estimated to be
Birr 33,702,212.00 consisting of Birr 29,100,000.00 as project capital costs, and Birr
4,602,212.00 as operating (working capital) costs.

Source of Fund: The above specified project cost is supposed to be financed as: 80
percent of the total capital (Birr 23,280,000.00 to be financed by bank through lease
financing, and the remaining 20 percent (Birr 5,820,000.00) to be fully financed by the
project promoter.

Statement of Feasibility: - The financial projections computed reveals that the project is
financially viable and liquid enough to smoothly finance the planned operations. The
income statement exhibits a net profit during the first year of the project is birr
21,402,526. Overall, the project is found to be viable on all aspects of the study.

Recommendation: - considering the viability of the project, as aforementioned, the

project is recommended for implementation

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1. BACKGROUND INFORMATION

1.1. The Promoter

Name: Kebede Mekonin
Address:
 Region: Oromia National Regional State
 Zone: East Wollega Zone
 Woreda: Haro Limmu
 House No:
 Tel. (Office): P.O.Box:
 Mobile: 0911-68-12-11
 E-Mail: Fax:
 City/Town: Nekemte

1.2. The Project

Name of the project: Kebede Mekonin Coal Exploration Project
Address:
 Region: Oromia National Regional State
 Zone: East Wollega Zone
 Woreda: Haro Limmu
 Kebele: Gorba Gudina
 Project site: Godoo Raasee
Business License: -
Legal Form of Business: Sole Proprietorship
Data of establishment: -
Type of license: Exploration License
Licensing Organ: Oromia Mineral Development Authority
Date Licensed: 20/03/2021
License No: ORO/EL/00570/2020
Tax Paying Identification number (TIN): 0024589850
Value added tax registration number:
Registered capital of the project/company: Birr 33,702,212.00 (Thirty- three million
seven hundred two thousand two hundred twelve)

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 1.3. Current loans with other banks and MFIs:
Kebede Mekonin Coal Exploration Project is a newly established Organization and there
has been no any history of credit from any financial institution as of to date

1.4. Purpose and Amount of the Lease Required

The lease finance is required to explore coal mineral on a land size of 0.58km 2 (58 ha).
The amount of lease finance required for the intended project is birr 23,280,000.00.
The required lease finance amount is to purchase capital goods/machineries, trucks,
equipments and vehicles to enhance the exploration to be profitable in lease financing
modality.

2. Project/Firm Description
Kebede Mekonin Coal Exploration Project is a private-owned organization in sole
ownership legal form. After getting license from Oromia Mineral Development Authority,
the organization has already secured land size of 58 hectares from East Wollega Zone,
Haro Limmu Woreda, Gorba Gudina Kebele, Godo Raasee Locality.

2.1. Vision of the Project

Kebede Mokonin Coal Exploration project aspires to be one among the leading suppliers
of quality coal mineral in Ethiopia.

2.2. Mission of the Project

Kebede Mokonin Coal Exploration project’s mission is to produce coal of high quality
through motivated employees in an environmentally sustainable manner to ultimately
satisfy the need of different factories and institutions in the country.

2.3. The Project Goal

The goal of this project is to generate sustainable profit by boosting the exploration of
the coal from western part of Ethiopia and increases the number of customers/buyers
served by the firm and thereby creates employment opportunity for individual residing
in and around the woreda and other areas base dons the availability of expertise and
experts.

2.4. Project Objectives and Rationales

The primary objectives of the project are to maximize the wealth of the promoter.
Specifically, up on the successful implementation, the project is expected to have the

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following strategic objectives. These objectives are also considered as justifications
(Rationale) for giving priority of these projects.

The key to bringing the Ethiopian economy into the 21 st Century is the development of
a reliable power generation system that has adequate electrical power to supply the
needs of the population and attract industry to the country. Without a reliable and
expandable power generation system, the country cannot support modernization or
industrialization. The benefits of the revitalizing of the Ethiopian coal industry and
expanding the electrical generating capacity can therefore be evaluated in terms of the
contribution it will make to:
 increased job opportunities and employment;
 increased national income via corporate and personal income tax and
increased capacity utilization of existing industries;
 reduced deforestation by discouraging cutting of trees through burning of
coal as an alternative to wood for fossil fuel; and
 Added raw material base for enhanced electricity production for domestic and
industrial use that will enable Ethiopia to improve upon its performance in
many sectors of its economy.
The project will also result in the improvement of infrastructure as well as the
enhancement of the social-economic structure in the surrounding communities, as it
will provide employment during its operational.

3. Market Study
3.1. General Over View of the Market for the Products
Ethiopia uses coal in its cement and textile factories by preserving heat at times of
power interruption and to replace charcoal by coal (briquette) and for the production of
fertilizers currently in Oromia region, 
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Inter-Trappean coal and oil shale deposits are distributed on the South-Western and
Central Plateau of Ethiopia (Delbi-Moye, Yayu, Lalo-Sapo, Sola and Chida, Chilga, Nejo,
Mush Valley Basins) (Figure 1). Coal and oil shale-bearing sediments were deposited in
fluviatile, lacustrine and paludal depositional environments.
3.2. Marketing Analysis of Coal Mine
While Kebede Mekonin is thinking about owning a coal mine and selling coal products
as business, he must first carry out a detailed marketing analysis. Marketing analysis
can help the owner in knowing the current status of similar businesses and ongoing
trends in his target market. Moreover, it can help him explore what challenges he can
face while working for his target market.

3.3. Marketing Segmentation

Target customers identified by Kebede Mekonin coal exploration are given here. Anyone
looking for how to start coal business can benefit from here.

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 3.3.1. Power Production Companies: The biggest consumer of our processed
coal will be power production companies. As bituminous coal, sub-
bituminous coal and anthracite are used as thermal coal to produce steam.

3.3.2. Steel Manufacturers: 70% of the steel manufactured uses coal. As

coking coal is essential for steel manufacturing thus such companies will be
a target group for us.

3.3.3. Cement Manufacturers: Another group of our target customers will

comprise of cement industries as coal is mainly used as an energy source
for cement production.

3.3.4. Chemical Companies & Medical Facilities: Several companies such as

those producing shampoos, dyes, paints, etc. will be needing our products.
Moreover, pharma industries and medical facilities will need coal as coal
products are used in processes like Charcoal Hemoperfusion

3.3.5. Others: Individual buyers and other companies who require coal products
will also be our target customers.

3.4. Business Target

Clearly stating coal mining business targets in your business plan coal mining company
can help you in taking suitable measures to achieve them.
Business targets set by Kebede Mekonin are given here:
 To generate a net profit margin of birr 70,000 per month by the end of the first year
 To maintain the amount of minimum cash balance
 To lower the wastage of resources by 15% every year by increasing work efficiency
 To increase our sales by 25% every three months

The overall plan of the market for the products is to sale 80 percent of the project
output in the international market and the remaining will be provided to the domestic
market. To access the proper market, the promoter will make detail assessment on
marketing destination.

Table1: Type and price of products

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 Table 1 ፡ Projected annual Sales revenues
Description 1 2 3
Coal Price (Birr) 2200 2200 2200
Production (ton) 20,000 20,000 20,000
Sales (Birr) 44,000,000 44,000,000 44,000,000

3.5. Competition
There is no barrier to entry in the industry; as a result, firms that have taste towards
coal mining could meet the industry provided that they fulfill the requirements.
Concerning existing firms in the industry, when compared with the existing market
potential, competition among them could not be a threat for the profitability of this
project. On top of that the promoter has developing relevant experience that helps the
project to become competitive enough in the industry.

3.6. Marketing strategy of the project

Marketing is an essential role of every business organization and marketing activities

must be performed, to some extent, for the survival of every business organization.
Although many factors affect an organization’s marketing strategy, all marketing
decision-making can be classified into four strategy elements, sometimes referred to as
the marketing mix or the four P’s: product, price, place (distribution) and promotion.
While these four factors are important alone, their real significance lies in the mix, the
unique way they are combined into a careful plan or strategy. The combination of these
four factors is the foundation of any marketing plan.

3.6.1. PRODUCT

Product quality is the basic and most important marketing mixes that affect the success
of a product. Product quality has two dimensions, i.e., level and consistency. Level
means the producer must first choose a quality level that will be acceptable in the
target market and in a level that comply with the quality of competing products.
Consistency refers to the consistent delivering of ones established quality through strict
quality control measures.

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 3.6.2. DISTRIBUTION

Distribution refers to the distribution of the product to the consumers by the producer
while channel of distribution is the network of producer through whom the products
flows till it finally reaches to the hands of the actual buyer or consumers.

3.6.3. Product PRICING

Pricing a product is an important and critical activity since it is the major factor in
determining revenue. If a lower price is fixed, it will affect the profitability of the
company, and if a higher price is fixed, the product will not be able to stand in market
competition and may be forced out of the market. Therefore, the right price has
depended on the timely market of the product. Our prices are almost the same as our
competitors. However, we’ll provide a 10% discount on our products for the first three
months. Under the going market price condition, it is evident that profits will depend
very largely on the project’s ability to minimize costs.

3.6.4. PROMOTION

Market promotion is an important part of the marketing mix, as it is required to create

and increase consumer awareness, knowledge and readiness to buy through media
communications (advertising) and through special offers to trade and / or consumers
(sales promotion).

However, it is important to realize that, on its own; market promotion will not replace
selling, change long-term trends, or build long-term customer loyalty. It has to be
supported by quality and quantity efficiency.

3.7. Marketing Strategy for Mining Company

Developing marketing strategy for mining company is an extremely important step as it

is the only thing that can help you get introduced with your customers. In your business

7
plan for a major coal development company, you must clearly list the methods, you’ll
adopt to reach out the groups of your target customers.

3.7.1. Competitive Analysis

Our biggest competitive advantage is that the market in which our products are
demanded is really large. Though there are other already-established coal companies
near us, still we hope to get customers as the need for coal is increasing with the
passage of time. Moreover, Kebede is already in contact with people who can need us
for coal supply.
Secondly, we own the best equipment, highly qualified and skilled staff, which is
efficient in all the works from blowing a mountaintop to generate coal tar from coal.
Lastly, only we in the whole market provide online ordering and payment options.
Through the services of our web-developers, we’ll enable our consumers to order us for
delivering their desired products at the said time.

3.7.2. Sales Strategy

We will introduce our startup to the groups of our target customers by sending letters
and brochures about us. We will ensure strong social media and web presence. Lastly,
we will provide several discounts to encourage more and more customers to make a
purchase.

4. Technical Study

4.1. Area and Project location

Haro Limmu is the district found in East Wollega zone. It is located at about 165
kilometers to the west of zonal town, Nekemte town. This district is contiguous with
Limmu in the east, Benshangul Gumuz Regional state in west and Anger River in the
south and Ebantu district in the north of the district. It is divided in to 15 farmers
associations and one urban center having the capital town named Haro. Hence, the
proposed project is located in Haro Limmu Woreda, approximately 493 km away from

8
Finfinne and 165 km away from the Nekemte to the West north. The specific site of the
project is Gorba Gudina Kebele, Godo Raasee locality at 22 km from Woreda (Haro).
The project will be established on 58 hectares.

4.2. Geology of the district

Haro Limmu is divided into three distinct geographical areas with different proportion;
namely, the highland 20.00 percent having six (4) rural peasant associations, the
midland 27.00 percent having six (9) rural peasant associations and the lowland 53.00
percent holding 2 rural peasant associations. The general altitude range of the district is
1000 meters above sea level to 2,330 meters above sea level.

4.3. Climate, Rainfall and Soil

Climate, the long-term effect of the sun's radiation on the rotating earth's varied
surface and atmosphere. It can be understood most easily in terms of annual or
seasonal averages of temperature and precipitation. Most areas of Haro Limmu are
situated at an altitude greater than 1200 meters above sea level, the district is
characterized as tropical and sub tropical types of climate. The mean annual
temperature ranges between 130c and 350c and mean annual rainfall ranges between
1200mm and 2600mm in 2001 and 2002 E.C.
There are four types of soils suitable for agriculture in the district namely: Sandy (52%
spatial distribution), Clay loom (6% spatial distribution), Salty (12% spatial distribution)
and loom (28% spatial distribution) of which the loom is very important (suitable) for
crop cultivation. Clay with spatial coverage of 2% is less suitable type of soil exist in the
district.

4.4. Machinery and equipment Requirements

Machinery and equipment required by the proposed project are shown in table

Table 2: List and cost of planned machinery, vehicles / capital goods

S/No Items Quantity Unit Cost Total Cost

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 I Machineries
1 Excavator 1 10,000,000 10,000,000
2 Loader 2 3,000,000 6,000,000
Sub-Total 16,000,000
II Vehicles
3 Tipper Sino truck 2 3,500,000 7,000,000
4 3F double Cabin Pickup 1 2,500,000 2,500,000
5 Truck 1 3,600,000 3,600,000
Sub-Total 13,100,000
Total Fixed Cost 29,100,000

4.5. Pre-Operating Charges and Contingencies

Pre operating charges include feasibility study, design consultancy fees, project
management costs, administrative costs, and charges payable to civic authorities,
publicity and advertisement expenses, marketing expenses, miscellaneous expenses.
Such costs are usually determined to be a minimum of 2 percent of the estimated
project capital cost. Accordingly, a lump sum provision of birr 728,898 (including
compensation payment if any, project feasibility study, design works, lease application)
is assumed to cover all pre-operating cost which will be amortized over the 10 year
period.

4.6. Total Capital Cost

Total capital investment cost includes all cost components supposed to be incurred for
the setting up the coal exploration project. The following table summarizes the total
lease capital and operating costs of the enterprise.

Table 3: Summary of total project cost

Existing
S.No Description Planned (Birr) Total (Birr)
(Birr)
1 Machinery and equipments 16,000,000.00 16,000,000.00
Vehicles (Trucks & Toyota 3F
2 13,100,000.00 13,100,000.00
land cruiser)
3 Total Operating Cost 4,592,212.00 4,592,212.00
Total 33,692,212.00 33,692,212.00

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 4.7. Operating & Maintenance Cost
Here, the operating costs refer to these costs which are not included in the project
capital costs and hence are not subjected to periodical depreciation. These costs include
such costs as labor costs, supplies costs, costs for equipment operations and
maintenance such as fuel cost and repair and maintenance costs; depreciation costs,
utilities expenses such as water bills, electricity bills, and telephone charges, employee’s
salaries and other miscellaneous expenses.

4.8. Availability of utilities and infrastructure

The infrastructure status of the exploration and surrounding areas is an extremely poor
in terms of communication, administrative government and public offices,
accommodation facilities, potable water supply, the availability of basic needs of health
and educational infrastructure and other related facilities. Among the administrative
government and public offices, there is kebele administration in locality and district
office found near mentioned accessible gravel road.

The major shelter of the area is a grass-roofed house that is used for protection hot
climate. There is no restaurant and hotels for logging and for food. However, the
residents of these villages are the most generous people to share what they have with
their guests.

5. Personnel plan

5.1. Company Staff

Kebede Mekonin will be the owner and CEO of the company. To run his coal mining
business he’ll hire the following people:
 1 General Managers to manage overall operations
 1 Accountants to maintain financial records
 3 machinery operators to operate the machines
 3 Assistant operators to assist/ help the operators
 3 Drivers
 1 Sales and Marketing Officer to discover new ventures
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  1 Technicians to maintain technical equipment
 6 Guards to safe guard the project site and machineries
Moreover, based on the seasonality of exploration the project will employ more than
personnel on causal basis and the number will be adjusted considering the workload
and activities to be performed.
Table 4: List of human resource requirement

S/N Job Title Number Salary/ month/ Total monthly Annual

employee Salary salary
1 General Manager 1 8,000 8,000 96,000
2 Accountant 1 5,500 16,500 198,000
3 Sales and Marketing officer 1 5,500 11,000 132,000
4 Machineries operators 3 1,500 3,000 36,000
5 Drivers 3 1,200 2,400 28,800
6 Assistant operators 3 1,000 2,000 24,000
7 Mechanic/Technician 1 3,000 15,000 180,000
8 Guards 6 1,200 4,800 57,600
Sub-Total 19 26,900 62,700 752,400
Pension Contributions 6,897 82,764
Employee benefits (2%) 538 1,254 15,048
Grand Total 19.00 70,851 850,212

6. Financial Study

6.1. Total Fixed Cost

The total cost of Capital goods leasing costs is estimated to be Birr 33,702,212.00 for
the machineries, trucks, vehicles and operating costs. The following table shows
sources of this fixed capital investment.

Table 5: Summary of total project cost

S.No Description Existing (Birr) Planned (Birr) Total (Birr)
1 Machinery and equipments 16,000,000.00 16,000,000.00
2 Vehicles (Trucks & Toyota LC) 13,100,000.00 13,100,000.00
3 Total Operating Cost 4,602,212.00 4,602,212.00
Total 33,702,212.00 33,702,212.00

Table 6 ; Projected annual Sales revenues (at the production gate price in Birr)
Product 1 2 3

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 Price (Birr) 2,200 2,200 2,200
Coal Production (quint) 20,000 20,000 20,000
Sales (Birr) 44,000,000 44,000,000 44,000,000
Total Sales revenues 44,000,000 44,000,000 44,000,000

Table 7. Operating and working capital costs needed

Years 1 2.00 3.00
Employee salaries 850,212.00 892,722.60 937,358.73
Repair& maint. 582,000.00 582,000.00 582,000.00
Fuel and Lubricant 3,000,000.00 3,000,000.00 3,000,000.00
Utilities costs 20,000.00 20,000.00 20,000.00
Miscellaneous cost 150,000.00 150,000.00 150,000.00
Total Operating 4,602,212.00 4,644,722.60 4,689,358.73
Increase in Operating costs 0.00 42,510.60 44,636.13
Working capital needed 34,008.48 35,708.90 37,494.35

Table 8. Projected periodical loan repayment and interest expense

Years 1 2 3 4 5 6 7 8 9 10

Principal loan 26,961, 24,265, 21,569, 18,873, 16,177, 13,480, 10,784, 8,088, 5,392, 2,696,
outstanding at 770 593 416 239 062 885 708 531 354 177
beginning
Periodical loan 2,696,1 2,696,1 2,696,1 2,696,1 2,696,1 2,696,1 2,696,1 2,696, 2,696, 2,696,
repayments 77 77 77 77 77 77 77 177 177 177
Outstanding Loan at 24,265, 21,569, 18,873, 16,177, 13,480, 10,784, 8,088,5 5,392, 2,696, 0
the end 593 416 239 062 885 708 31 354 177
Periodical interest 3,100,6 2,790,5 2,480,4 2,170,4 1,860,3 1,550,3 1,240,2 930,18 620,12 310,06
expense 04 43 83 22 62 02 41 1 1 0
Total periodical 5,796,7 5,486,7 5,176,6 4,866,5 4,556,5 4,246,4 3,936,4 3,626, 3,316, 3,006,
payment 80 20 60 99 39 79 18 358 298 237

Table 9 Projected Annual Income Statement (all in Birr)    

Years 1 2 3
Total Revenues 44,000,000 44,000,000 44,000,000
Operating Expenses:      
Salaries Expense 850,212 892,723 937,359
Repair & maintenance 582,000 582,000 582,000
Fuel and Lubricant 3,000,000 3,000,000 3,000,000
Utilities Expense 20,000 20,000 20,000
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Miscellaneous Expense 150,000 150,000 150,000
Depreciation Expense 3,370,221 3,370,221 3,370,221
Interest Expense 3,100,604 2,790,543 2,480,483
Total Operating Expense 11,073,037 10,805,487 10,540,063
Income Before Income Tax 32,926,963 33,194,513 33,459,937
Income Tax (30%) 11,524,437 9,958,354 10,037,981
Net Income 21,402,526 23,236,159 23,421,956
Retained Earnings 21,402,526 44,638,685 68,060,641

Table 10. Projected Annual cash Flow Statement (all in Birr)

Years 1 2 3
1. Cash flows of Operating activities:
Cash Inflows:
Collections from Sales 44,000,000 44,000,000 44,000,000
Cash Outflows:
Salaries payment 850,212 892,723 937,359
Repair & maintenance 582,000.00 582,000.00 582,000.00
Fuel and Lubricant 3,000,000.00 3,000,000.00 3,000,000.00
Utilities Expense 20,000 20,000 20,000
Miscellaneous Expense 150,000 150,000 150,000
Interest payment 3,100,604 2,790,543 2,480,483
Income Tax (30%) 11,524,437 9,958,354 10,037,981
Working capital 34,008 35,709 37,494
Total cash outflows 19,261,261 17,429,329 17,245,317
Net cash provided by operation 24,738,739 26,570,671 26,754,683
2. Cash flows of investing activities:
Cash inflows:
Cash Outflows:
Project construction costs
Projected farm machine cost 33,702,212
Projected office equipments
14
Total cash outflows 33,702,212
Net cash used by investing -33,702,212
3. Cash flows of Financing:
cash inflows:
Owners' equity 6,740,442
Bank loans 26,961,770
Total cash inflows 33,702,212
Cash outflows:
Repayments of loans 2,696,177 2,696,177 2,696,177
Net cash flows by financing 31,006,035 -2,696,177 -2,696,177
Total Net cash flows 37,259,558 23,874,494 24,058,506
Cumulative cash flows 37,259,558 61,134,052 85,192,558

Table 11. Projected Balance sheet of the project (in Birr)

Years 1 2 3
Assets
Current asset
Cash (cumulated) 37,259,558 61,134,052 85,192,558
working capital (cumulated) 34,008 35,709 37,494
Total current assets 37,293,566 61,169,761 85,230,052
Fixed asset
Project construction costs 0 0 0
Projected accu. depreciation 0 0 0
Projected farm machine cost 33,702,212 33,702,212 33,702,212
Projected accu. depren 3,370,221 3,370,221 3,370,221
projected farm tools cost 0 0 0
Projected accu. depren 0 0 0
projected office equipments 0 0 0
Projected accu. depren 0 0 0
Total fixed assets 37,072,433 37,072,433 37,072,433
Total assets 74,365,999 98,242,194 122,302,486
Liability
Bank Loan 24,265,593 21,569,416 18,873,239
Capital
Owners' equity 6,740,442 6,740,442 6,740,442
Retained earning 21,402,526 23,236,159 23,421,956
Total capital 28,142,969 29,976,602 30,162,398
Total Liability + Capital 52,408,561 51,546,017 49,035,637
15
7. SWOT Analysis of the project
Table 11: SWOT Analysis

Strength Weakness/Limitations
The project has been initiated by an experienced Limitation of working capital
individuals and management engaged in related
activities
Strong collaboration with different service providers, In adequate profession in the project area
traders, business organizations
Opportunities Threats
Increase in population and urbanization would mean An expected Natural Calamity
a growing demand for the products under
consideration
To benefit from the development of the “gourmet” Market fluctuation/Inflation/deflation
market
Supportive government policy Low production due to unexpected change in
weather condition and inadequate facilities
Infrastructure: There is improvement in basic Increase in the incidence of pests and disease
infrastructural facilities in envisage project site which related to climate change
includes road, telecommunications.
High demand for the products Change in government policy
Increase in population Existence of competition/similar products
  Increase in labor cost

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8. Environmental Impact Assessment
Environmental Impact Assessment (EIA) is an integral part of the study of Coal
exploration of Mr. Kebede Mekonin Project. The main objectives of the project are; To
earn reasonable income from exploration of quality and demanded coal mineral, to
engage in the mining of standard quality coal mineral, to supply large volume of coal
mineral to address an increasing demand in the market, to create employment
opportunity to the local labor force, to generate revenue to the public and government.
The main potential benefits of the project are employment opportunities, improving the
economic growth, and improving living standards of the project area beneficiaries,
promote infrastructure of the area, tax revenue and promotion of linkage between
industries. Above all, the project helps in rising living standards of the people of the
project area and the promoter.
Conversely, construction and operation of the coal exploration project can result in
adverse environmental and social impacts. The major identified adverse impacts are
related to occupational health problems, airborne disease, downstream pollution,
impacts on environmental sustainability, etc. Off all, the major adverse impact is related
to soil erosion.

To minimize and/or eliminate possible adverse impacts of the project on environmental

resources of the area; promoting efficient conservation practices, promoting project
area plantations and internalize environmental resources conservation through
promoting coordination and collaboration of the promoter, line sector and community.
The impacts on the socio-economic environmental components can be managed by
ensuring equal opportunities for both sexes and enhancing environmental sustainability.

The identified impacts were evaluated based on impacts type, duration, nature,
magnitude, reversibility and significance to determine effectiveness to minimize or
eliminate expected adverse impacts through the project development periods. The
study also investigated environmental monitoring plans based on the project area
environmental conditions.

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Therefore, this EIA study identified and evaluated those environmental impacts both
during construction and operation phase and suggested & recommended mitigation
measures for the sustainable use of resources and estimated the amount of budget
required for implementation. The overall, environmental cost is rated to be lower with
respect to the identified impact indicators. The environmental monitoring and auditing
strategies has also in placed in order to follow up for effective implementation of the
proposed mitigation measures.

9. Socio- economic benefits

The project will create employment opportunity, introduce new technology and builds
infrastructure on the project area. If the project is successful, it will contribute in
earning higher foreign exchange, since; this sector can produce a large amount foreign
exchange to the country.

10. Conclusions and Recommendations

10.1. Conclusions
The project consumes some of the area’s abundant resources (land, labor, money and
water) in a way that maximize the economic contribution of those assets to local
residents. When evaluated in terms of the project impacts on socio-economic, physical
environment and biological environments, the positive impacts of the project are long
lasting and have multiplicative characteristics while most of the undesirable impacts are
likely short term in nature and can be easily mitigated by proper implementations and
timely monitoring of the recommended environmental management plans. The strategic
objective of project is highly consistent with the national development objective which
calls to “Sustainably increase rural and national incomes, which embodies the concepts
of producing more, selling more, nurturing the environment, eliminating hunger and
protecting the vulnerable against shocks. Furthermore, this project is expected to create
job opportunities for these potential migrants at their nearby village and hence alleviate
the pushing factor for migrations. By and large, from financial perspective the project is

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very impressive when measured in terms of all forecasted financial statements as well
as ratios.

10.2. Recommendation:
Considering the Viability of the project, as aforementioned, the project is recommended
for implementation. Hence, the project deserves to get the necessary lease financing
and the technical assistance from the development Bank of Ethiopia.

Annexes
The investor has got exploration license on 58 hectares of coal exploration site from
Oromia Mineral Development Authority. Accordingly, project implementation is worked
out in the table below. The overall implementation schedule for each major activities of
the project is shown as below:
Table: Implementation Plan of the project

Work schedule of First Year

Period in Month
S/N Activities
1 2 3 4 5 6 7 8 9 10 11 12
1 Desk Work
2 Arial Photo Interpretation
Reconnaissance geological Mapping and Rock
3
sampling
4 Sample Analysis
5 Interpretation
6 First Year report

Work schedule of second Year

Period in Month
S/N Activities
1 2 3 4 5 6 7 8 9 10 11 12
1 Detailed Geological Mapping
2 Trenching
3 Pitting
4 Sample analysis
5 Interpretation
6 second Year report

Work schedule of Third Year

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 Period in Month
Activities
1 2 3 4 5 6 7 8 9 10 11 12
Topographic survey
Refinement of the detailed geological mapping
Trenching
pitting
Core drilling
Sample Analysis
deposit Evaluation
Feasibility Study
Third year progress report
Final Report

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