The Feasibility Stress Test — South Pasopati Coal Project: Where the Capex Plan Really Breaks

Note: the paper's open-access HTML text was read through an automated extraction pass, not a manual page-by-page read. Two tables (real-option inputs and option values) and all figures were images and were not readable. Check any number against the paper before reuse.

The confirmed findings

USD 6.71 M

Base-route capex (alternatives: 8.26 and 7.29)

USD 7.10 M

Deterministic NPV, discount rate 11.42%, IRR 54%

7.19 / 13.3

Paper's Monte Carlo mean and SD of NPV (USD M, 10,000 iterations)

USD 0.95 M

Real-option value; ENPV 8.05; 38% chance of abandoning

Source: Trijayanto, T. & Hakam, D. F. (2025). Economic Viability and Flexibility of the South Pasopati Coal Project, Indonesia: A Real Options Approach Under Market Volatility and Carbon Pricing. Journal of Risk and Financial Management, 18(5), 225. doi:10.3390/jrfm18050225.

What the paper reports vs what the rebuild gives

Route	Paper NPV	Paper MC mean / SD	Rebuild MC mean / SD	Rebuild P(NPV < 0)
Base (east, capex 6.71)	7.10	7.19 / 13.3	6.6 / 13.3	28.6%
Alt 1 (west, capex 8.26)	4.47	4.49 / 0.94	3.8 / 13.5	36.4%
Alt 2 (east + carbon, capex 7.29)	1.32	1.24 / 1.09	0.3 / 13.9	45.8%

Honest caveat: the paper does not publish its cash-flow workbook, its Monte Carlo distributions or its coal-price regression. This page runs an illustrative reconstruction. Tax of 22%, straight-line depreciation, even four-year output and a 13% coal-price volatility are my assumptions, and I calibrated one OPEX ratio per route so the rebuild hits the paper's three NPVs, so that match is by construction. The rebuild does not reproduce the paper's Monte Carlo statistics or real-option values. Two things I cannot reconcile: the paper's tornado (a 20% price fall cuts NPV 72%, where the rebuild goes negative) and its west-route SD of 0.94, when identical price shocks give about 13.5 here. The paper reports no outcome after the decision.

Run your own simulation

Set the drivers, then run 5,000 trials. Coal price is sampled by Box-Muller normal and truncated at USD 20. OPEX ratio and capex are sampled by inverse-transform triangular. The inputs are independent, so there is no copula. The price-floor slider is my addition: an offtake floor with no premium and no counterparty cost, so it shows an upper bound on benefit. The paper has no floor.

Mean coal price (USD/t) 92.82

Coal price volatility (assumption) 13%

OPEX as share of base revenue 0.866

Capex, most likely (USD M) 6.71

Discount rate 11.42%

Price floor, % of USD 92.82 (my addition; 0 = none) 0%

Explore

View the full Python notebook View source on GitHub

The lesson

Capex is 5-7% of total cost in this project and OPEX is 83-89% of revenue, so the thin margin sits in the price. In the rebuild, NPV reaches zero at a coal price 7.5% below base, or at capex 127% above plan, and the rank correlation with NPV is 0.99 for price against minus 0.03 for capex. The paper reports no post-decision outcome, so what follows is illustrative: a board that sees this stops weighing a USD 1.5 million route difference and negotiates an offtake floor. A floor only helps once it sits above break-even (about 92.5% of base here), and a real floor has a cost this page does not model.