Economic feasibility of biodiesel production from Pongamia Oil on the Island of Vanua Levu

Abstract

This study presents the economic feasibility of biodiesel production from Pongamia oil, which can be potentially produced from approximately 58,897 ha of unutilized marginal lands available on the Island of Vanua Levu. The production analysis shows that approximately 488 million litres of Pongamia oil and 645 million litres of biodiesel can be produced from the total available land area. A cost–benefit analysis carried out to investigate the viability of such project displays a positive net present value and a benefit–cost ratio greater than 1 at all the discount rates up to 10%. The implications of economic feasibility for this project was investigated by carrying out sensitivity analysis, which shows that the project will be viable up to 5% discount rate with at least 5% increase in net present cost. The study projects large scale Pongamia biodiesel production from total available land area, however, such venture can be scaled down to some suitable scale of production at any lower costs upfront to substitute or blend Pongamia biodiesel with neat diesel for running inter-island shipping vessels, fishing boats and providing household electrification in the outer and remote islands of Pacific Island Countries.