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A project for a diesel power station has the following characteristics: Cost of the plant per kW = $400 (CIF); Capacity = 50 MW.
The plant has to be imported and installation charges would be equivalent to $200 per kW. 75% of the installation would be done by a local contractor and the rest would be spent on foreign contractors. The local contractor would engage unskilled workers for 35% of the work while the rest of the installation work by the local contractor would be done by semi-skilled workers.
The plant is expected to consume 1.7 barrels of diesel per MWh for the first 5 years and then the consumption would increase to 1.8 barrels/MWh for the next 5 years. Imported diesel costs $50 (CIF) per barrel while the domestic refineries sell diesel at local money (LM) 2,400 per barrel.

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