Project Appraisal Technique in the Public Sector: A Case Study of the Çaycuma Paper Mill Project

Date

1975

Author

Karataş, Cevat

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In the present paper an attempt will be made to examine the economic appraisal of the Çaycuma Paper Mill Project which was set up by SEKA, a public enterprise in Turkey. Our intention is simply to draw some attention to the defects of the project evalua tion method of SEKA which reflects more or less the general approach of most of the State Economic Enterprises (SEE), in par ticular prior to 1970. The criterion adopted by SEKA was the "accounting rate of return" rule which might be considered to be rather misleading and far from being reliable when projects are evaluated from the standpoint of economic evaluation. Therefore, this rule will be critically discussed and its theoretical and practical weaknesses will be elucidated. The project in question will then be analysed on the basis of both the internal rate of return and the social present value (SPV) rules so as to check its acceptability from the point of view of society. In this section the appraisal of the project will be based on the more accurate data provided by the SPO (State Planning Organisation) rather than the data given in the SEKA Report.

URI

https://hdl.handle.net/11511/112369

Collections

Department of Economics, Article