Estimation of Production and Cost Functions For Giad Steel Meltshop Plant With Emphasis on The Effect of Electric Power Supply Mode

Abstract

The cost of producing steel bars in Sudan is one of the highest in the region due to the high cost of hydroelectric production in Sudan. This thesis aims, in order to reflect the importance of cost of electricity in production, to estimate the production and cost functions of steel billets and to suggest a feasible mode of electric power generation for melting scrap via applying econometric techniques. The case examines Giad Meltshop Plant, which is considered the only meltshop installed in Sudan thus far. The data used in this work were collected through out 31 months, from June 2005 unto December 2007 to from Giad Steel Industries Co. and National Electricity Corporation. This work also examines the nature of the production function of steel along with the classical form of steel cost function in Giad Steel, besides, it throws a light on some of the mechanisms used to test for stationarity in time series data. The methodology of analysing the main findings obtained at the end of this work aims to draw the attention to the necessity of investing on the nuclear resources of this country for the favour of cheap and therefore competitive Sudanese industrial products. It also shows that the pricing policy of electricity plays a key role in costing of any product.