Economic Viability And Macroeconomic Impact Of The Burgas - Alexandroupolis Pipeline

Periklis Gogas, Ioannis Mourmouris and Theophilos Papadimitriou
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Ioannis Mourmouris: Democritus University of Thrace, Department of International Economic Relations and Development, Postal: Department of International Economics, and Development, University Campus, Komotini, 69100, Greece

No 1-2012, DUTH Research Papers in Economics from Democritus University of Thrace, Department of Economics

Abstract: This paper is a condensed version of an actual study commissioned in 2010 to the authors by the Administrative District of East Macedonia and Thrace. The proposed investment plan for the construction of the Burgas-Alexandroupolis Pipeline (BAP) is a significant energy transportation project for South-East Europe and for the local economies in Greece and Bulgaria. The BAP is designed to serve as a complimentary channel to the maritime route of transportation of crude oil from the Black and Caspian Sea to the international markets. The construction and operation of the pipeline is expected to have a significant direct and indirect impact on the national and local economies in terms of increased direct demand for goods and services and employment. In this paper, we thoroughly examine the financial viability of the BAP using an exhaustive number of alternative scenarios as it is a prerequisite for any favorable macroeconomic effects. In doing so, we employ the use of Cash flow analysis, the IRR, the NPV and Break-Even-Point analysis. Finally, after we establish the viability of the investment plan, we investigate its macroeconomic impact on local and national unemployment, GDP and local government revenue that appear to be significant especially on the local level.

JEL-codes: L95 M21 N64 O19 O22 Q43 R11 R42 R51 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2012-01-27
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