FEASIBILITY STUDIES AS A DECISION TOOL

 

The Foundation for Investment, Business Expansion, and Bankable Financing

In investment and project development, failure rarely comes from lack of capital alone. More often, it stems from poor decision-making at the earliest stages—when assumptions go untested, risks are underestimated, and feasibility is treated as a formality rather than a strategic tool.

A well-prepared feasibility study (FS) is not a report to impress stakeholders. It is a decision instrument—designed to answer a simple but critical question:

Should this project or business move forward, be restructured, or be stopped before capital is at risk?

When done properly, a feasibility study protects investors, lenders, and sponsors from costly missteps and aligns projects with realistic financial, technical, and operational conditions.

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What a Feasibility Study Is — and Is Not

A feasibility study is often misunderstood.

It is not:

• A promotional document
• A business plan rewrite
• A fundraising brochure
• A justification written after decisions are already made

A proper feasibility study precedes commitment, not follows it.

At its core, a feasibility study objectively evaluates whether a proposed project, investment, or business expansion is:

• Technically achievable
• Economically viable
• Financially bankable
• Operationally executable
• Aligned with regulatory, environmental, and market realities

Most importantly, it identifies why a project might fail—before capital is deployed.

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Why Feasibility Matters for Investment Decisions

For equity investors and project sponsors, feasibility studies act as a capital protection mechanism.

An investor does not lose money when a project is rejected at feasibility stage. Losses occur when:

• Capital is committed too early
• Risks are discovered only after construction or scaling begins
• Exit assumptions prove unrealistic

A decision-grade feasibility study allows investors to:

• Validate demand and pricing assumptions
• Stress-test cost structures and margins
• Understand sensitivity to market, regulatory, and operational shocks
• Decide whether to proceed, pause, or redesign the project

In this sense, feasibility is not a cost—it is cheap insurance against irreversible decisions.

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Feasibility for Business Expansion and New Ventures

For entrepreneurs and corporate management, feasibility studies support strategic clarity.

Business expansion often fails because:

• Market size is overestimated
• Supply chains are fragile
• Operating costs scale faster than revenues
• Management capacity is overstretched

A feasibility study forces discipline by answering:

• Can this business scale sustainably?
• At what volume does it break even?
• What operational constraints will appear after expansion?
• Is organic growth or phased investment more appropriate?

Unlike a business plan, which assumes execution, a feasibility study questions the assumptions themselves.

This distinction is critical—especially for capital-intensive or first-of-a-kind ventures.

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Feasibility as a Requirement for Bank Financing

Banks and development finance institutions (DFIs) do not lend against ideas. They lend against risk-adjusted cash flows.

For loan applications, feasibility studies play a central role in:

• Credit risk assessment
• Debt service coverage analysis
• Technology and operational validation
• Regulatory and environmental compliance

From a lender’s perspective, a strong feasibility study answers:

• Can the borrower reliably service debt under downside scenarios?
• Is the technology proven and appropriate for local conditions?
• Are revenues resilient to price volatility or demand shocks?
• Are there execution risks that could delay cash flow generation?

Projects fail to secure financing not because banks are conservative—but because feasibility was treated superficially.

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Key Components of a Decision-Oriented Feasibility Study

A credible feasibility study integrates multiple dimensions:

1. Technical Feasibility

Evaluates technology readiness, process design, capacity assumptions, and operational reliability. It identifies whether the proposed solution works in practice, not just on paper.

2. Market and Demand Analysis

Assesses real demand, pricing dynamics, offtake risk, and competition. Conservative, evidence-based assumptions matter more than optimistic forecasts.

3. Financial and Economic Analysis

Models capital expenditure, operating costs, revenues, and sensitivity scenarios. The goal is not to show high returns—but to understand risk exposure.

4. Regulatory and Environmental Review

Identifies permits, approvals, compliance risks, and environmental or social constraints that could delay or derail execution.

5. Implementation and Execution Risk

Examines timelines, contractor capability, supply chain reliability, and management readiness.

A decision-grade feasibility study does not hide weaknesses. It surfaces them.

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The Value of Independence in Feasibility Work

One of the most overlooked aspects of feasibility is independence.

When feasibility studies are prepared by:

• Investors seeking to justify funding
• Vendors promoting technology
• Sponsors already committed emotionally or financially

…the objectivity of the analysis is compromised.

Independent feasibility advisory ensures:

• No financial interest in project approval
• No incentive to inflate returns or downplay risks
• Alignment with donor, lender, or investor standards—not sponsor optimism

Independence builds credibility—and credibility determines whether decisions are trusted.

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When to Conduct a Feasibility Study

Feasibility should be conducted:

• Before major capital commitments
• Before seeking bank loans or donor funding
• Before entering long-term supply or offtake contracts
• Before scaling operations or entering new markets

Importantly, feasibility is most valuable when “no” is still an acceptable answer.

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Conclusion: Feasibility as a Strategic Discipline

A feasibility study is not about proving a project is viable. It is about discovering whether it truly is.

For investors, it safeguards capital.

For businesses, it guides strategic growth.

For banks, it underpins credit confidence.

For donors and NGOs, it ensures funds deliver real, sustainable impact.

In an environment of tightening capital, increasing regulatory scrutiny, and complex execution risks, feasibility studies are no longer optional—they are fundamental to sound decision-making.

The question is not whether you can afford a feasibility study.

It is whether you can afford to proceed without one.

About the Author

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Ahmad Fakar is an independent feasibility and technical advisory professional specializing in climate, energy, and industrial projects. He supports project sponsors, NGOs, and development-oriented stakeholders with objective, decision-focused feasibility and risk assessments from early concept through bankability.

Through his work with Nurin Incorporation, he emphasizes disciplined assumptions, technical credibility, and alignment with donor, lender, and institutional standards—ensuring feasibility studies function as practical decision tools rather than promotional documents.

Independent Engineering Consultant, PT Nurin Inti Global, 

Email: afakar@gmail.com.

From Processing Plants to Energy & Value Hubs - Quantifying the Financial Value of Energy Efficiency, Zero Waste, and Near-Zero Emissions in Agro-Industrial Plants

 

Large agro-industrial plants such as Palm Oil Mills (PKS), sugar mills, and integrated processing facilities are no longer just cost centers. When waste streams and energy inefficiencies are properly utilized, these plants can generate USD 3–6 million per year in additional value per facility, depending on scale.

A structured Feasibility Study (FS) is the tool that converts this hidden potential into measurable, bankable outcomes.

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1. Why Plants ≥45 TPH Are Strategic Assets

This study focuses on existing agro-industrial plants equivalent to Palm Oil Mills with capacity ≥45 tons per hour, which dominate Indonesia’s processing sector.

These plants:

• operate continuously,
• consume large amounts of electricity and steam,
• generate substantial liquid and solid organic waste.

This combination creates ideal conditions for biogas, biomass fuel, and organic fertilizer projects—technologies that are already proven and commercially available today.

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2. Scale Determines Value Creation

Using standardized operating assumptions (20 hours/day, 300 days/year), the Feasibility Study compares three representative plant sizes.

Indicative Annual Throughput

• 45 TPH: ~270,000 tons raw material/year
• 60 TPH: ~360,000 tons/year
• 90 TPH: ~540,000 tons/year

As scale increases, energy surplus, waste availability, and monetization potential grow faster than capital costs.

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3. Quantified Energy & Emission Impact

Parameter	45 TPH	60 TPH	90 TPH
Electricity demand	~1.5 MW	~2.0 MW	~3.0 MW
Annual consumption	~7 GWh	~9 GWh	~14 GWh
Biogas power potential	~11.9 GWh	~15.8 GWh	~23.8 GWh
Energy status	Self-sufficient	Large surplus	Very large surplus
Emission reduction	~67,500 tCO₂e/yr	~90,000 tCO₂e/yr	~135,000 tCO₂e/yr

➡️ All plants ≥45 TPH can become energy self-sufficient.
➡️ Plants ≥60 TPH generate exportable energy and carbon value.

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4. Quantified Annual Value Creation (Key for Decision Makers)

Estimated Annual Financial Value per Plant

Source of Value	45 TPH	60 TPH	90 TPH
Electricity cost savings (biogas CHP)	USD 0.7 million	USD 0.9 million	USD 1.4 million
Biomass & pelletized fuel	USD 1.4 million	USD 1.9 million	USD 2.8 million
Organic fertilizer (internal & sales)	USD 0.6 million	USD 0.9 million	USD 1.3 million
Total annual value	USD 2.8–3.3 million	USD 3.7–4.5 million	USD 5.5–6.5 million

👉 At ≥90 TPH, projects clearly shift from cost reduction initiatives to new profit centers.

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5. Financial Feasibility and Bankability

Despite higher capacity, total CAPEX grows non-linearly, while revenue and savings scale up significantly.

Indicator	45 TPH	60 TPH	90 TPH
Estimated CAPEX	USD 5–7 million	USD 6–8 million	USD 8–11 million
Indicative IRR	14–18%	16–22%	18–25%
Payback period	4–6 years	4–5 years	3–4 years
Bankability	Good	Very strong	Excellent

These metrics make the projects highly suitable for green loans and sustainability-linked financing, where 70–80% of CAPEX can be funded by banks when supported by a credible Feasibility Study.

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6. ESG, Carbon, and Long-Term Value

Beyond financial returns, these projects deliver:

• elimination of open wastewater ponds,
• drastic methane emission reduction,
• 100% renewable electricity for operations,
• full utilization of solid and liquid residues.

For plants ≥60 TPH, emission reductions of 90,000–135,000 tCO₂e per year open opportunities for:

• voluntary carbon credits,
• ESG performance monetization,
• group-level net-zero roadmaps.

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7. What the Feasibility Study Actually Delivers

A professional FS:

• quantifies technical potential,
• validates financial returns,
• identifies risks and mitigation,
• supports funding and investment decisions.

It transforms sustainability from a compliance narrative into a measurable business strategy.

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Board-Level Takeaway

Large agro-industrial plants are not just processing units. They are scalable platforms capable of generating USD 3–6 million per year in additional value per plant, while strengthening energy security, ESG performance, and long-term competitiveness.

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About the Author

This article reflects the perspective of an Independent Engineering Consultant with experience in feasibility studies, energy optimization, and waste-to-value projects across the agro-industrial sector, supporting owners and management teams in developing technically sound and financeable investments.

— Ahmad Fakar

Independent Engineering Consultant

 

Feasibility Study (FS): A Strategic Instrument for Owners and Directors to Unlock Value from Waste and Energy Inefficiency

 

Across the agro-industrial sector, many processing facilities operate with high energy intensity while generating significant volumes of organic waste. Wastewater, biomass residues, and process by-products are often treated as unavoidable operational burdens, while energy systems remain inefficient and costly.

From an engineering and investment perspective, this represents not only a technical challenge—but also a missed strategic opportunity.

A well-structured Feasibility Study (FS) provides a practical pathway for owners and directors to transform waste streams and inefficient energy use into bankable investment opportunities, while supporting long-term operational resilience and sustainability.

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Reframing the Role of Feasibility Studies

In many organizations, FS documents are still perceived as technical reports prepared to justify equipment selection or process changes. In reality, their true value lies elsewhere.

For decision-makers, an FS should serve as:

• a decision-support tool before committing capital,
• a structured assessment of risks and returns,
• and a bridge between engineering solutions and financial realities.

A credible FS answers the questions that owners and boards ultimately care about:

• Is this investment technically proven and operationally reliable?
• Will it generate measurable cost savings or new revenue?
• How resilient is the project under conservative assumptions?
• Can it support access to external financing?
• Does it strengthen the company’s long-term sustainability and ESG profile?

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Turning Waste and Energy Inefficiency into Strategic Assets

Most agro-industrial facilities—whether in food processing, plantations, sugar, starch, pulp, or bio-based manufacturing—share common characteristics:

• continuous or semi-continuous operations,
• substantial demand for electricity and thermal energy,
• steady generation of organic waste and residues.

These conditions create strong potential for:

• on-site renewable energy generation,
• energy efficiency improvements,
• conversion of waste into usable energy or marketable by-products.

However, potential alone does not justify investment. Only a disciplined FS process can determine whether such initiatives are technically feasible, economically viable, and operationally sustainable.

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FS as a Foundation for Project and Green Financing

From a financing standpoint, the role of an FS is often underestimated.

For banks and financial institutions—particularly those offering green loans or sustainability-linked financing—an FS is a critical reference document. It demonstrates that:

• the project has been properly evaluated,
• risks have been identified and mitigated,
• projected cash flows are realistic and defensible.

For energy efficiency and waste-to-value projects in agro-industry, a bankable FS can be used as a key supporting document for project financing, where debt portions of approximately 70–80% of total CAPEX are commonly considered, subject to lender policy and credit approval.

Importantly, a sound FS does not promise financing. Instead, it positions the project to be financeable, which is precisely what lenders expect.

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Aligning Engineering Decisions with ESG and Long-Term Strategy

As ESG considerations increasingly influence corporate governance and access to capital, companies are expected to demonstrate tangible improvements—not just commitments.

An FS provides a structured and quantifiable framework to:

• measure energy savings and renewable energy contribution,
• quantify emission reductions and waste minimization,
• translate sustainability initiatives into operational and financial metrics.

In this way, engineering decisions become aligned with broader business strategy, rather than remaining isolated technical upgrades.

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The Value of Independent Engineering Perspective

The credibility of any FS depends not only on the data it contains, but also on how it is prepared.

An FS developed by an Independent Engineering Consultant offers:

• objective and conservative assumptions,
• technology selection based on proven performance, not vendor bias,
• transparent identification of technical and financial risks,
• balanced projections that decision-makers and lenders can trust.

This independence is critical for owners and directors who must commit capital and remain accountable for long-term operational performance.

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Conclusion

In today’s agro-industrial landscape, a Feasibility Study is no longer a secondary technical exercise.

It is:

• a strategic tool for owners and directors to make informed investment decisions,
• a foundation for accessing project and green financing,
• and a disciplined approach to turning waste and energy inefficiency into sustainable value.

When approached correctly, an FS ensures that investments are not only technically sound, but also financially viable, bankable, and aligned with the future direction of the business.

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About the Author

This article reflects the perspective of an Independent Engineering Consultant with experience in feasibility studies, energy optimization, and waste-to-value projects across the agro-industrial sector, supporting owners and management teams in developing technically sound and financeable investments.

— Ahmad Fakar

Independent Engineering Consultant

 

Strengthening Early-Stage Feasibility for Clean Energy, Climate, and Waste Projects

 

Developing projects in clean energy, climate action, and waste management often begins with a strong idea—but many promising initiatives face challenges long before implementation. At the early stage, unclear technical assumptions, limited data, and unrealistic system boundaries can significantly increase project risk, delay progress, or lead to underperforming outcomes.

Independent feasibility and technical advisory support plays a critical role in bridging the gap between concept and implementation. By conducting early-stage feasibility studies (FS) and technical assessments, project sponsors, NGOs, and philanthropic programmes can better understand whether an idea is technically viable, scalable, and aligned with environmental and climate objectives.

Feasibility support at this stage does not replace detailed engineering or procurement. Instead, it focuses on upstream technical logic: system configuration, indicative energy and emissions pathways, feedstock availability, infrastructure readiness, and operational risks. This approach helps decision-makers identify constraints early, prioritize the most effective interventions, and avoid costly redesigns later.

For clean energy and climate-related projects—such as waste-to-energy, methane reduction, distributed renewable energy, or productive use of energy—early technical screening is especially valuable. These projects often operate in complex environments, with variable waste quality, evolving policies, and diverse local conditions. A well-structured feasibility assessment can clarify realistic performance expectations while highlighting co-benefits such as improved air quality, health outcomes, and livelihoods.

Independent, vendor-neutral feasibility studies also support transparency and credibility. For philanthropies and NGOs, they help ensure funding is directed toward technically sound and implementable initiatives. For developers, they improve investment readiness and internal decision-making.

By strengthening technical foundations early, feasibility support enables climate and environmental projects to move forward with greater confidence—turning well-intentioned ideas into practical, high-impact solutions for people and the planet.

“This article reflects practical observations from early-stage technical advisory work and is intended to support informed discussion rather than prescribe a single approach.”

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If you require technical feasibility support, advisory assistance, or potential collaboration related to clean energy, climate action, or waste management projects, please feel free to contact:

📧 Email: afakar@gmail.com

EPC Contracts Explained: What Project Owners and Investors Must Review

Engineering, Procurement, and Construction (EPC) contracts are widely used in industrial, energy, and infrastructure projects because they promise simplicity: a single contractor responsible for delivering a complete facility at an agreed price and schedule. For project owners and investors, EPC contracts are often perceived as a way to transfer risk and achieve cost certainty.

However, many projects experience cost overruns, delays, and disputes despite being executed under EPC arrangements. The reason is simple: an EPC contract only works as intended when it is properly structured, clearly defined, and thoroughly reviewed before approval.

This article explains the key elements that project owners and investors must review before signing an EPC contract—and why independent EPC reviews are critical to protecting capital.

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What Is an EPC Contract?

An EPC contract is a project delivery model where a single contractor is responsible for:

• Engineering and design
• Procurement of equipment and materials
• Construction, installation, and commissioning

In theory, the EPC contractor delivers a “turnkey” facility that meets agreed performance requirements at a fixed price and schedule. In practice, the effectiveness of an EPC contract depends heavily on how risks, scope, and responsibilities are defined.

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Why EPC Contracts Often Fail to Deliver Expected Outcomes

EPC contracts fail not because the model is flawed, but because they are often:

• Based on incomplete FEED or poorly defined scope
• Negotiated under time pressure
• Structured with unbalanced risk allocation

When uncertainties are pushed into the contract rather than resolved upfront, disputes become inevitable during execution.

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Key EPC Contract Elements Investors Must Review

1. Scope of Work Definition

The most critical part of any EPC contract is the scope of work. Investors should verify:

• That the scope aligns with FEED deliverables
• Clear definition of battery limits and interfaces
• Explicit inclusions, exclusions, and assumptions

Ambiguous scope leads directly to change orders and claims.

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2. Contract Price Structure

While EPC contracts are often labeled as “lump sum,” investors should understand:

• What assumptions underpin the pricing
• Whether escalation, taxes, and duties are included
• How contingencies are handled

An unrealistically low EPC price is often a warning sign rather than a benefit.

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3. Risk Allocation

One of the most misunderstood aspects of EPC contracts is risk transfer. Investors should carefully review:

• Who bears design risk
• Who is responsible for regulatory changes
• Force majeure and change-in-law provisions

Risk should be allocated to the party best able to manage it. Unbalanced risk allocation often results in disputes rather than risk elimination.

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4. Schedule and Liquidated Damages

Schedule commitments are critical to project economics. EPC contracts typically include:

• Key milestones
• Guaranteed completion dates
• Delay liquidated damages (LDs)

Investors should assess whether the proposed schedule is realistic and whether LDs are sufficient to compensate for delays without incentivizing claims-driven behavior.

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5. Performance Guarantees

Performance guarantees define whether the completed facility meets agreed output, efficiency, or quality targets. Investors should review:

• Clear and measurable performance criteria
• Testing procedures and acceptance standards
• Remedies if performance is not achieved

Weak or poorly defined guarantees expose investors to long-term operational underperformance.

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6. Change Management and Variations

Even well-prepared projects experience changes. EPC contracts must clearly define:

• How variations are initiated and approved
• Pricing mechanisms for changes
• Impact on schedule and guarantees

Poorly defined change management processes are a major source of cost escalation.

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The Link Between FEED Quality and EPC Success

Strong FEED significantly improves EPC outcomes by:

• Reducing uncertainty in scope and pricing
• Allowing fair comparison of EPC bids
• Minimizing post-award changes

Projects that move into EPC without adequate FEED often pay for that decision through claims, delays, and strained relationships.

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Common EPC Contract Red Flags

Investors and project owners should be cautious if they encounter:

• EPC contracts based on incomplete or conceptual FEED
• Excessive exclusions hidden in appendices
• Performance guarantees without meaningful remedies
• Aggressive schedules unsupported by execution logic
• Limited transparency in cost assumptions

These red flags often signal future disputes and budget overruns.

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Why Independent EPC Contract Reviews Matter

EPC contracts are typically drafted by contractors or project sponsors with commercial objectives. Independent EPC reviews provide:

• Objective assessment of technical and commercial risks
• Verification of alignment with FEED assumptions
• Benchmarking against industry best practices

For investors, lenders, and joint venture partners, independent EPC reviews are a critical part of technical due diligence.

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Conclusion

EPC contracts can be effective tools for delivering complex projects—but only when they are properly structured and reviewed. For project owners and investors, the key is not to assume that an EPC contract automatically transfers risk, but to understand where risks truly reside.

Thorough EPC contract reviews, supported by strong FEED and independent expertise, are essential to protecting capital and achieving predictable project outcomes.

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How Our Consulting Services Support EPC Reviews

At Engineering Projects & Industry Review Hub, we support investors and project owners through:

• Independent EPC contract reviews
• Technical and commercial due diligence
• Risk allocation and scope validation
• EPC readiness and bid evaluation support

Our focus is to help decision-makers enter EPC contracts with clarity, balance, and confidence.

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How We Support Investors and Project Owners

We provide independent feasibility preparation & reviews, FEED advisory, and EPC risk assessments to support informed investment decisions.

📩 Contact us: afakar@gmail.com

WhatsApp: +62 813-6864-3249