O p e r a t i o n s E x c e l l e n c e, 2020, 12(2): 189-197 189 Analysis of capital budgeting investment projects substation 150 kV for the tires company Andi Setyawan 1 , Hasbullah Hasbullah 2 1 Engineering Department, PT Gajah Tunggal Tbk. 2 Industrial Engineering Masters Program, Universitas Mercu Buana, Jakarta, Indonesia Corresponding author: Andiesst@gmail.com Abstract. The electricity consumption continues to increase, even in Indonesia, where its average electricity consumption rises 6.86 % anually. In accordance with the ever-increasing production needs of companies needing more electrical power during these electrical disturbances which often occur due to power shortage. Therefore, the company proposes the investment of the construction of substations 150kV expecting to improve the reliability of electrical power supply. This research was conducted to analyze the value of investment carried out by tire companies make use of historical data and company forecasts by applying the technical method of economics to analyze its financial support. Based on the calculation result of the Payback period (PP) and Discounted Payback Period generates 5.35 years and 6.24 years. Meanwhile, in the calculation of net present value (NPV) was obtained favorable results in the 6th year of IDR 40,944,770,640.32, setting an interest rate of 5%. In the calculation of the internal rate of return (IRR), the result of 5.5% concluded that the project return is higher than the minimum attractive rate of return (MARR) of the company by 5.17% of the interest rate applyied by Bank Indonesia. In addition to that based on the sensitivity analysis was gained that the lower the interest rate on this project, the faster the return on the investment, or vice versa. The overall analysis of the scenario stated that the investment is worth running as it benefits the company. Keywords: Payback Period, Net Present Value, Internal Rate of Return (IRR), Capital Budgeting 1. Introduction Indonesia was one of the biggest electricity consumer in Asia as projected in 2018 of 239.3 watts per hour (twh) and in 2027 will reach 433.8 twh, or experiencing the average growth of 6.86 % in the next ten years 2027, sales electricity for household consumption is estimated at the point of 183.6 twh, and industry at the point of 132.9 twh. Furthermore, 88.4 this spent for business purposes and 28.9 twh is spent for public consumption. Owing to that reason more investment need to be made in building additional power station as well as maintaining electrical station to tackle the increasing usage of electrical power in Indonesia. Investment are the vital activities, money costly and give long term impact to a continuation effort (Giatman, 2006). The government will keep on promoting the industrial sector to compete with globally, this is due to the essential role of governments which sets this sector as a leading sector in encouraging the national economic growth as it takes the availability of sufficient electrical energy. To support it as one of the best sister company in Southeast Asia. It continues making an effort to develop various latest technology included in the process of developing the quality of the sister company which is capable of competing with the competitors. In the process of making the sister company having sufficient power to fulfill the energy needed in the process of production. Electrical power is a very crucial energy required in the production process. Electricity consumption of this company has reached 92.152,5 kva and the resources are based on energy and mineral resources no. 128 in the year of 2016 applied for companies whose electricity consumption are above 30.000kva which required to subscribe to use tariffs for category 4 subscriber in the industrial sector. Based on the data of production per year, the production process is improving in accordance with with its necessity to the climbing up demand of electrical power of the companies. Hence electrical power companies consider main station as a means of development in fulfilling the needs. However, in planning policy of developing main station, there has been no further economic feasibility study about development planning for the main station in 150 kV tire companies, as the construction of main station there has not yet been certainly giving benefits for the company.