PT. Multi Guna Gas (MGG) is planning to construct its first oxygen gas filling station located in Brebek, Rungkut Industrial Estate, Surabaya. The assumption is that by having a filling station will help MGG to lower its cost of good sold by eliminating the filling cost which is charged by PT. Aneka Gas Industri (AGI). Eliminating this cost also means more price competitiveness that enabling MGG to supply the gasses to the private distributor and having more margins from its operation.



This report is a feasibility study to see whether the project of building is feasible or not. If it is feasible, the study then will be used as a base for the company to submit a project financing proposal to the bank. The study will analyze the macroeconomic of East Java, the microeconomic of the industry by using the Five Forces Analysis from Porter. The objective of this analysis is to see whether the investment climate is conducive by looking all internal and external factors such as GDP, interest rate, etc. Besides giving the investment climate for the business, Five Forces Analysis shows what are the key success factors (KSF) and the industry characteristics for the filling station.



The next part of the study will analyze the market of cylinder oxygen gasses condition, especially in Brebek and surrounding area. It was conducted by a survey directly to Brebek area. Based on company's information, the effective area to be covered with a Filling station is 50 kilometers. The distance of more than 50 kilometers will considered as non efficient in term of transportation cost. The result of the market assessment is whether the market is available for the new filling station after analyze the industry trend and current competition in this area. The financial analysis is then developed by looking into four financial scenarios. First scenario is buying all equipment and road tank, second scenario is by buying all equipment without road tank, third renting all equipment and buy the road tank, and the fourth scenario is renting all equipment without buying the road tank. The most feasible scenario will be the one that give the most profitable for the company giving the current market condition.



In addition, the study provides the analysis of what is the marketing mix using 4P's framework, the requirement human resource, design and development as well as implementation mapping of the filling station. The feasibility study recommend MGG to go with the project according to scenario 3 (Renting all equipment and buying road tank). This scenario will give the shortest payback period, the equal ROI to WACC (14%) and the lowest sales target, which are the closest to the predictive market volume.





Research Location: PT. Multi Guna Gas (MGG)

Supervisor: Dr. Junius Tirok

Accepted on April 2004



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