Introduction:

In this course work therere fourth questions that available to answer it. The first question
is about preparing the process flow diagram of the acetylene plant and the complete list
of major equipment required for starting up the acetylene production plant to meet the
annual demand. The second question is to estimating of the acetylene plant to find the
{Fixed Capital Investment, Working Capital investment and Total Capital Investment}.
The third question is to estimating the total production cost {TPC} per kg of acetylene.
The last question is about calculating the Rate of Return {ROR} in this project.

Acetylene (C2H2) is the simplest of alkyne compounds, consisting of two hydrogen atoms
and two carbon atoms linked by a triple bond. Acetylene is a colorless, flammable gas
used in welding and in the preparation of other chemical compounds. In addition,
Acetylene gas is toxic if inhaled by one, and it is also an explosive mixture with the air.

ASMA MOHAMED HAMOOD AL HADHRAMI 1

 1. Prepare the process flow diagram and the complete list of major equipment
required for starting up the acetylene production plant to meet the annual demand.

Equipments in Acetylene production process by using calcium carbide:

1. Water tank: is a container for storing water, is used to provide storage of

water for use in many applications.

2. Carbide feed mechanism: include a plate or disc or other movable feed

element which controls the delivery of carbide from a hopper into the
water in the generator

3. Carbide buffer: is used to maintain a relatively stable pH, its function is

to minimize the change in pH.

4. Acetylene generator: The medium pressure UA acetylene generator is

stationary carbide to water automatic generator with twin hoppers.

5. Pulverize: is used to reduced size of the calcium carbide to fine powder.

6. Scrubber: it is used to remove pollutants, odors, gases, acid, and

chemicals wastes from the liquid streams.

7. Purifier: utilizes two layers of regenerative chemicals for removing

impurities. The purifying agent can be reactivated for re-use with the help
of atmospheric air.

8. Nitrogen cylinders: is used for storing the nitrogen.

9. Pumps: is a device that moves fluids (liquids or gases), or sometimes

slurries, by mechanical action.

ASMA MOHAMED HAMOOD AL HADHRAMI 2

 Acetylene production process by using calcium carbide

2. Based on the purchased equipment cost, prepare a study estimate of the acetylene
plant (with an accuracy of 30 percent).

Equipment cost of acetylene production of 210 ton per annual of acetylene {2009}
No. Quantity Equipments Equipment Equipment Equipment Cost
Cost Ethiopian Cost USD OMR
Birr
1 2 Water tank 44,650 1,629.57 627.037
2 1 Carbide 113,730 4,150.75 1,597.15
feed
mechanism
3 1 Carbide 61,240 2,235.05 860.018
buffer
4 2 Acetylene 91,860 3,352.57 1,290.03
generator
5 2 Pulverize 52,490 1,915.70 737.136
6 1 Scrubber 56,860 2,075.19 798.506
7 1 Purifier 34,990 1,277.01 491.377
8 15 Nitrogen 26,240 957.669 368.430
cylinders
9 3 Pumps 42,900 1,565.70 602.349

Equipment Cost OMR= 7,367.033

US Dollar = (0.384716) OMR
1 ETB Ethiopian Birr = (0.0364965) US Dollar

ASMA MOHAMED HAMOOD AL HADHRAMI 3

 Cost Index:

To find the slope and the intercept that required from the linear equation (Y=mX+c)
by using Excel Program.

To calculate the cost index for the next year {2017}, draw the graph by using the
relationship between the {year = X} Vs. {Process Industry = Y}

Year {X} Process industry{Y}

1 1987 830
2 1988 859.3
3 1989 905.6
4 1990 929.3
5 1991 949.9
6 1992 957.9
7 1993 971.4
8 1994 992.8
9 1995 1029
10 1996 1048.5
11 1997 1063.7
12 1998 1077.1
13 1999 1081.9
14 2000 1097.7
15 2001 1106.9
16 2002 1116.9

ASMA MOHAMED HAMOOD AL HADHRAMI 4

 The table below show the value of cost index of required years by using this linear
equation {Y=18.67 X+842.42}

Year(X) Process industry (Y)

2009 23 1271.83

2017 31 1421.19

Cost index for process industry in 2009

Y= 18.67 X + 842.42
Y= 18.67 23 + 842.42
Y = 1271.83

Cost index for process industry in 2017

Y=18.67 X + 842.42
Y=18.67 31 + 842.42
Y= 1421.19

Scaling Factor:

By using the scaling factor role of [six tenth] to find the equipments cost of 9800 ton
per annual by using this formula:

Cost of future = [ ] Equipment Cost

Quantity Equipments Exponent

2 Water tank 0.57
1 Carbide feed mechanism 0.6
1 Carbide buffer 0.6
2 Acetylene generator 0.6
2 Pulverize 0.6
1 Scrubber 0.6
1 Purifier 0.6
15 Nitrogen cylinders 0.6
3 Pumps 0.33

ASMA MOHAMED HAMOOD AL HADHRAMI 5

 This table shows the Cost in 2009 {OMR}
Equipments Equation Cost in 2009 {OMR}

Water tank 9800 0.57 5605.66

] 627.037
210

Carbide feed 9800 0.6 16023.22

] 1,597.15
210
mechanism

Carbide buffer 9800 0.6 8628.03

] 860.018
210

Acetylene 9800 0.6 12942.07

] 1,290.03
210
generator

Pulverize 9800 0.6 7395.23

] 737.136
210

Scrubber 9800 0.6 8010.92

] 798.506
210

Purifier 9800 0.6 4929.68

] 491.377
210

Nitrogen 9800 0.6 3696.23

] 368.430
210
cylinders

Pumps 9800 0.33 2141.02

] 602.349
210

ASMA MOHAMED HAMOOD AL HADHRAMI 6

 To find the equipment cost in 2017 for each equipment, should use the formula below:

Cost in 2017= Original cost in 2009 [Index value in 2017 Index value in 2009]

Cost index for process industry in 2009, Y = 1271.83

Cost index for process industry in 2017, Y= 1421.19

The table below show the new equipment cost in 2017 {OMR}
Equipment Cost in 20009 Calculation the new cost using Cost in 2017
{OMR} formula {OMR}
Water tank 5605.66 5605.66 [1421.191271.83] 6263.97
Carbide feed 16023.22 16023.22[1421.191271.83] 17904.94
mechanism
Carbide buffer 8628.03 8628.03 [1421.191271.83] 9641.28
Acetylene generator 12942.07 12942.07 [1421.191271.83] 14461.95
Pulverize 7395.23 7395.23 [1421.191271.83] 8263.70
Scrubber 8010.92 8010.92 [1421.191271.83] 8951.69
Purifier 4929.68 4929.68 [1421.191271.83] 5508.61
Nitrogen cylinders 3696.23 3696.23 [1421.191271.83] 4130.30
Pumps 2141.02 2141.02 [1421.191271.83] 2392.45

Total cost of equipment in 2017 {OMR} 77518.89

ASMA MOHAMED HAMOOD AL HADHRAMI 7

 i) Determine the Fixed Capital Investment (FCI).
Components Range Selected Normalized Estimated
of FCI % FCI % FCI cost {OMR}
%

Direct Costs 77518.89

Purchased Equipment 15-40 25 22.7 77518.89

Purchased Equipment 6-14 9 8.2 28002.42
Installation
Instrumentation & Controls 2-12 10 9.1 31075.85
Piping ( installed) 4-17 8 7.3 24928.98
Electrical Systems ( Installed) 2-10 5 4.5 15367.18
Buildings (including services) 2-18 5 4.5 15367.18
Yard Improvements 2-5 2 1.8 6146.87
Service facilities 8-30 15 13.6
Land 1-2 1 0.9

Indirect Costs

Engineering and Supervision 4-20 8 7.3 24928.98

Construction expenses 4-17 10 9.1 31075.85
Legal expenses 1-3 2 1.8 6146.87
Contractors fee 2-6 2 1.8 6146.87
Contingency 5-15 8 7.3 24928.98
- - 110 100 -

Total Equipment Cost in 2017= 77518.89 OMR

Fixed Capital Investment {FCI} =77518.89 (100 22.7) = 341492.91 OMR
To calculate the Estimation Cost {OMR}= {FCI} {Normalized % 100}

ii) Determine the Working Capital Investment (WCI).

To calculate the Working Capital Investment {WCI}:
Working Capital Investment {WCI} = 10 20 % of Total Capital Investment {TCI}

WCI= 15% of TCI, so the WCI = 0.15 TCI

ASMA MOHAMED HAMOOD AL HADHRAMI 8

 iii) Determine the Total Capital Investment (TCI).
To calculate the Total Capital Investment {TCI}, should use the formula below:
Total Capital Investment = Fixed Capital Investment +Working Capital Investment
Fixed Capital Investment {FCI} = 341492.91 OMR
Working Capital Investment {WCI} = 0.15 TCI

TCI= FCI + WCI

TCI= 341492.91 + {0.15 TCI}
TCI {0.15 TCI} = 341492.91
TCL {1- 0.15} = 341492.91
TCL 0.85= 341492.91
TCL= 401756.36 OMR

WCI= TCI - FCI

WCI= 401756.36 - 341492.91
WCI= 60263.45 OMR

Total Capital Working Capital Fixed Capital Investment

Investment {OMR} investment {OMR} {OMR}
401756.36 60263.45 341492.91

Total Capital Investment with an accuracy of 30 percent.

{401756.36 0.3}+ 401756.36 = 522283.268 OMR
{401756.36 0.3}- 401756.36 = -281229.452 OMR

3. Estimated the total production cost (TPC) per kg of acetylene.

Manufacturing Cost TPC % Selected %

A-Direct Production cost 66 66
B-Fixed Charger 10-20 10
C-Plant Overhead Cost 5-15 9
*General Expenses 15-25 15

Total 100

ASMA MOHAMED HAMOOD AL HADHRAMI 9

 Manufacturing cost Range TPC Selection

1.Direct production cost 66% of TPC 66% TPC

Raw material 10-80% of TPC 45% TPC

Operating labor 10-20% of TPC 15% TPC

Direct supervisory &clerical labor 10-20% of TPC 0% TPC

Utilities 10-20% of TPC 15% TPC

Maintenance& repairs 2-10% of FCI 6% FCI

Operating supplies 0.5-1% of FCI 0.75% FCI

Laboratory charges 10-20% of 0%

Operating Labor

Patents &royalties 0-6% of TPC 3% TPC

2.Fixed charges 10-20% of TPC 10% TPC

Depreciation Building (5%) +Purchased (11%)

Local taxes 1-4 % of FCI 3% FCI

Insurance 0.4 -1% of TCI 0.70% FCI

Rent 8-12% of Rented 0%

Land and
Building

Financing (interest) 0-10% of TCI 5% TCI

3.Plant overhead cost 5-15% of TPC 9% TPC

*General Expenses 15-25% of TPC 15% TPC

A. Administrative cost 2-5% of TPC 3% TPC

B. Distribution and marking cost 2-20% of TPC 11% TPC

C. Research and development 5% of TPC 5% TPC

Considered General Expenses 15-25% of TPC 20% TPC

ASMA MOHAMED HAMOOD AL HADHRAMI 10

 Calculation of Manufacturing Cost:

Fixed charges Calculation of Manufacturing Cost

Building (5%) + Purchased (11%)
Depreciation = {(5/100) (15367.18)} + {(11/100) (77518.89)}
= 9295.44 OMR

3% FCI
Local Taxes = {(3/100) (341492.91)}
= 10244.79 OMR

0.70% FCI
Insurance = {(0.70/100) (342969.69)}
= 2390.45 OMR

5% TCI
Financing/ Interest = {(5/100) (401756.36)}
= 20087.82 OMR

Depreciation + Local Taxes + Insurance + Financing

Total Fixed Charges = 9295.44 + 10244.79 + 2390.45 + 20087.82
= 42018.5 OMR

Fixed charges=10% TPC

Total Product Cost Total Product Cost = {Fixed Charges (10/100)}
TPC = {(42018.5) (12/100)}
= 420185 OMR

66% TPC
Direct Production = {(66/100) (420185)}
Cost TPC = 277322.1 OMR

9% TPC
Plant overhead cost = {(9/100) (420185)}
= 37816.65 OMR

Direct Production cost + Total Fixed charges + Plant

Manufacturing cost Overhead cost
= 277322.1 + 42018.5 + 37816.65
= 357157.25 OMR

ASMA MOHAMED HAMOOD AL HADHRAMI 11

 Calculation of General Expenses:

15% TPC
= {(15/100) (420185)}
= 63027.75 OMR

Calculation of Total Product Cost {TPC}:

Total Product Cost TPC= Manufacturing Cost + General Expenses
= 357157.25 + 63027.75
= 420,185/ ton
= 420,185 OMR/ ton
= 420,185/ (9800 1000)
= 0.05 OMR/ Kg
= 0.1 OMR/ Kg

4. Determine the Rate of Return (ROR) the project. Comment on whether this ROR is
justifiable to undertake the project.

Calculation Rate Of Return (ROR) in the project

Sales of Acetylene in 2009 = 10.65 ETB/ Kg

= 0.1 OMR/ Kg

Cost in 2017 = {1421.19/ 1271.83} 0.1

= 0.111 OMR/ Kg

The selling price of 1 ton of acetylene = 0.111 1000 = 111/ ton

Total Capital Investment {TCI}= 401756.36 OMR

Capacity= 9800 ton per annual

Total Product Cost {TPC} = 0.1 1000 = 100 OMR/ ton

ASMA MOHAMED HAMOOD AL HADHRAMI 12

 1. Return:
= Selling price - Total Product Cost {TPC}
= 111 100
= 11 OMR / ton of Acetylene

To calculate the Return/ year = 11 9800

= 107800 OMR/ year

2. Estimation of the Rate of Rent {ROR}:

= {Return / Total Capital Investment (TCI)} 100
= 107800 / 401756.36 100
= 27 %

Comment:
A Rate of Rent should not exceed 30 percent of the adjusted income of any
project, so that mean when the Rate of Rent is less than 30% the project will be
successes. This paper develops and estimates the Rate of Rent {ROR} is equal to
27 %, which is an acceptable value in this project.

ASMA MOHAMED HAMOOD AL HADHRAMI 13

 Conclusion:

In this coursework, all the questions have been answered, which applied all the required
conditions. From this coursework has been gained a lot of information which didn't know
about it before. Also, got an experience how to calculate the {Fixed Capital Investment,
Working Capital investment, Total Capital Investment, Total Production Cost and the
RoR}. In this coursework several steps have been taken to obtain solutions to all
requirements. First of all, has been converted the cost to the OMR to stare doing the
calculation. After the calculation the value of {Fixed Capital Investment = 341492.91
OMR}, {Working Capital investment = 60263.45OMR} and the value of {Total Capital
Investment = 401756.36 OMR}. In addition the value of the Total Production Cost has
been calculated which was equal to 420185 OMR. Finally, the RoR has been calculated
which equal 27 % (is an acceptable value in this project).

ASMA MOHAMED HAMOOD AL HADHRAMI 14

 Reference:

Books

Couper, J.R.,2003. Process Engineering Economics (Chemical Industries Series), Marcel

Dekker.

Peters, M.L. & Timmerhaus, K.D.,1991. Plant Design and Economics for Chemical
Engineers, Fourth Edition, McGraw Hill Inc.

Websites

Anon. 2009. 106. PROFILE ON ACETYLENE PLANT. Available from:

http://www.ethiopianembassy.org/AboutEthiopia/InvestmentProjectProfiles/Manu
facturing/Chemicals%20and%20Pharmaceuticals/Acetylene_Plant.pdf. [Accessed
24th Oct 2017].

Engineers Guide. n.d. Acetylene production process using calcium carbide.

Available from: http://enggyd.blogspot.com/2012/03/acetylene-production-
process-using.html. [Accessed 5th Nov 2017].

Omar, Samah. 2010. Production of Acetylene. Available from:

http://rouba.ahlamountada.com/t728-topic. [Accessed 6th Nov 2017].

ASMA MOHAMED HAMOOD AL HADHRAMI 15

 Turnitin:

ASMA MOHAMED HAMOOD AL HADHRAMI 16