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CONSTRUCTION Solution | Service | Delivery

HIDASE ECO INDUSTRIAL PARK PRE FEASIBILITY STUDY

K2N

CONSTRUCTION Solution | Service | Delivery

INDU STRIAL PARK O C EE S DA I H

INTROUDCTION According to the Central Statistical Agency (CSA) the current population of Ethiopia is about 90 million people and the urban area accommodates around 17 million. The current struggle to overtake mega projects which demands huge nance and political decisions shows the country's decision to topple poverty. This is witnessed by the case of the GERD construction and the likes. At the moment, this idealistic view is becoming reality which is guaranteed by the nation's dedication and ability to fund major projects from domestic source results in an astonishing growth trajectory of average GDP growth of 11 percent over the past 8 years. This enables to boost the lower contribution of the construction sector that was only 3% during the previous administration, to a yearly growth rate of 12.43 during the past 10 years and this shows a share of 5.3% of the country's GDP (ECIDP, 2014).

The total and urban population projection in 2020 is estimated to be around 100 million and 22 million respectively. To accommodate the demand of this population the government implemented GTP I and entering GTP II (Ethiopian Ministry of Finance and Economic Development, MFED, 2012; WHO, 2012). For this the government follows agricultural ledindustrialization which is linking agriculture with industry.

For this, it is a fact that the contribution of the construction sector to the country GDP becomes signicant and expected to increase within a short time. Accordingly, the contribution of the contractor and stakeholders shall bring out of the box solutions in order to support the ambition of the countries policy.

Hence, this project is created to ll the gap and bring sustainable development.

1.1 Eco-Industrial Park (EIP) An eco-industrial park or estate is a community of manufacturing and service businesses located together on a common property. Member businesses seek enhanced environmental, economic, and social performance through collaboration in managing environmental and resource issues. By working together, the community of businesses seeks a collective benet that is greater than the sum of individual benets each company would realize by only optimizing its individual performance.

The EIP's goal is to improve economic success of the participating companies and in the process minimize environmental impacts. Integral parts of this approach are green planning of infrastructure and business premises in the park, cleaner production, prevention of pollution, energy efciency and greater interentrepreneurial cooperation. The EIP seeks benets also for the local population and creates possibilities for new jobs.

The main priorities deriving from the denition of the EIP include the following: .Arranging the area in a way which preserves its natural and landscape characteristics, collecting and storing processing natural water, preserving vegetation and using indigenous plants where possible, etc.

Planning and building infrastructure and buildings in accordance with standards for efcient deployment of natural resources and by using renewable materials and energy.

Attracting companies who strive for efcient deployment of natural resources and minimal

pollution, including those which support basic industries in reaching these goals through the services and products they offer.

Management, which supports nancial, environmental and social success of the companies in the EIP. Strong connections with the neighboring communities through economic development and social and environmental programs.

1.2 Purpose and Goals of the project The main goal of the EIP is – with an ecological concept and sustainable arrangements – to create conditions for entrepreneurs and businessmen to develop their activities, which will in turn stimulate economic development at local, regional and international level.

Uniting of companies in the park's area reduces its operating costs and increases their competitive edge, since they operate in an ecological park, where facilities are arranged to be sustainable and in a way minimizing losses and environmental impacts. In this way economic development is stimulated, the good position in regard to transport in the wider area is taken advantage of, possibilities for employment are greater, the added value of eco-products increases, competitive edge of the economy improves through positioning high-tech activities and the current environmental conditions are improved. The goal of the arrangement is to preserve the existing landscape and natural-geographic characteristics. The preservation of landscape elements is included in the concept of a green system, which has a decisive role in planning of the EIP.

1.3 Key Stakeholders Analysis The concept of the EIP has developed by OVID Construction PLC and its partners based on Ethiopia's Industry Development Strategy. As it's well known, Ethiopia is set a vision to join middle-income countries by 2023. In order to achieve the set vision, one of the strategies devised by the government of Ethiopia is the industry development strategy. The government has supported the Industry Development Strategy with the following principles and directions.

1. Leading role of private sector, 2. Use of domestic materials (use of agricultural products as input), 3. Export orientated & import substituting, 4. Focus on labor-intensive industries, 5. Supportive role of state and 6. Contribute towards faster transfer of appropriate technology.

Focus areas of Industrialization 1. Micro and Small Enterprises development, 2. Medium and Large Industries Development, 3. Industrial Zones Development and 4. Privatization of Public Enterprises.

In order to facilitate one of the focus areas of the Industrialization process, the government setup an institution called Industrial Parks Development Corporation with the following purposes: To develop & administer industrial parks, lease developed land & lease or transfer, To receive land and serve as IP land bank, To make necessary infrastructure for IP developer, To outsource IP management contracts and

To sell and pledge bonds and to negotiate and sign loan agreement with local and international ď€ nancial sources.

Therefore, we consider Industrial Park Development Corporation as a key stakeholder.

K2N

CONSTRUCTION Solution | Service | Delivery

K2N AR & Eng Con

Technopac Mgt Consultant

OVID Construction

Products & Services

Products & Services

Products & Services

Engineering and Architectural design; Civil / structural design, Maintenance Management, Cost Estimating, Contract, Administration Tender Documents preparation, Bid evaluation, Pre investment studies, Regional development planning, Resources surveys, Urban planning, Construction Management and supervision, Project management, Soil investigations, Topographic Surveys, Construction supervision

Business strategy & Planning, Feasibility study, Market Feasibility study, Market Entry Study, Technology Selection, Design & Engineering, Machinery layout, Complete Project Management, Performance Monitoring, Process Improvement & Optimization.

Grade 1 construction Pre Engineered Building System, Concrete batching plant Construction machinery rental

Particulars Starting from 2008 K2N gave Architecture & Structural Services to more than 16 projects worth of 1.6 billion birr & 1.2 billion USD.

Roles & Responsibilities

Particulars Completed six integrated textile parks as PMCs. Completed four integrated textile parks as TCs. Four Integrated textile parks under progress.

Particulars BC-1 K-Span building system.

120m3/hr Batching plant.

Well structured.

More than 9 yrs experience in alternative blg system.

Roles & Responsibilities Project management Facilitate ď€ nance Engage in construction

Roles & Responsibilities Business strategy & Planning Feasibility study Market Feasibility study Market Entry Study

Design & Engineering Project management Supervision

Quick fact and Rolls & Responsibilities of the stakeholders

CONSTRUCTION Solution | Service | Delivery

1.4 Proposed working modality Developing an eco-industrial park is a complex undertaking, demanding integration across many elds of design and decision-making. Success depends upon a new level of collaboration among public agencies, design professions, project contractors, and companies locating in the park. The possible inability to overcome traditional fragmentation within and between these groups is a major risk.

Some of an EIP's benets may only become apparent when costs and savings are calculated in a longer time frame than is typical in industrial park nancing.

Developers may need to make a strong case for banks to nance a project with a longer payback period, such as inclusion of renewable energy for critical backup power. On the other hand, some options for infrastructure may actually cost less to build and maintain. Due to the involvement of Saygin Dima Textile and Technopac, we will able to get contracts with major companies to locate in your EIP, this will help prove the concept to nanciers. A developer with signicant signed leases has a bankable project.

securing nance, signing contract, design and build.

The second phase will involve main activities like marketing & promotion, training and bring the industrial park to life.

Having said that, we propose the following modality for the rst phase of the project, model er 100% T m Loan

OVID & Partners

Financer

IPDC

Contract

Finance Design & Build Marketing & Promotion

Figure 1: First Phase Modality of EIP Some eco-industrial parks may cost more to develop than traditional parks, depending upon the design choices in a project. Added costs may come from the design process, site preparation, infrastructure features, construction processes, and aspects of building design. When this occurs, the additional costs may or may not be offset by savings in operating the park as an EIP, given the payback period acceptable to the developer. Public development authorities may be better prepared to bear this possible increase in development costs than private developers. The EIP project will be executed in two phases. The rst phase is the development of the park, which will include but not limited to signing MOU with IPDC, securing land,

As illustrated on the above model, Ovid and its partners will facilitate nance and as a result will take the project based on design and build construction contract. So far, we have been discussing with various nanciers and we have moved by a serious interest revealed by the nanciers to nance the project. The involvement will not be limited on the design and construction phase rather will be continued on the second phase of the project

ANALYSIS OF THE SITUATION 2.1 Adjusting the investment project with development strategies The Pre-feasibility study for the EIP takes into account starting points and goals from the following national documents: ·Ethiopia's Industrial Development Strategy, ·Ethiopia's rst Growth & Transformation Plan, ·Industrial Park Development Corporation Establishment Council of Ministers Regulation and ·The regional development program.

All the mentioned programs dene competitive edge of the economy and faster economic growth, efcient creation of two-way ow and use of knowledge for economic development and quality jobs, higher employment and integration of measures for achieving sustainable development.

2.2 Work force analysis and impact on employment from economic and social point of view The majority of working population in Addis Ababa is looking for job opportunity, which is the capital city of the country. Apart from Addis, important employment centers are also expected to be developed in various regional industrial zone developments. In view of the extent of its locality, the size of its population and trafc position within the wider area, the potential for development of the EIP is great. From the point of view of economic and social structure of the society, positioning of the park in the area of Addis Ababa represents an important developmental impulse for the domestic population, particularly in regard to creating new jobs, improving educational structure of the population, better standard of living, improving the existing infrastructure, new green surfaces for resting, recreation and sports, as well as better control of environmental protection.

Job creation is very much dependent on various sectors and other factors. If the EIP assigned for garment parks, the job opportunity that will be created will be as follows: 1 person per 5 m2 200 000 m2 = 40,000 employment opportunity

2.3 Planned Activities in the EIP The planned arrangements in the area of the EIP will through the ecological concept and sustainable manner of building create conditions for entrepreneurs and businessmen to develop their activities, which will stimulate economic development on local, regional and international level. For this purpose the new park plans the following activities, information and communication activities; expert, scientic and technical activities and other various business activities. The EIP can accommodate the following industrial and processing activities; ·Garment ·Textile ·Treating and processing wood; ·Products made of wood and cork ·Furniture manufacturing; ·Products made of rubber and plastic materials, ·Metal fabrication, ·Computers, electronic and optical products; ·Electric appliances; ·Motor vehicles, trailers and semitrailers; other vehicles and vessels; ·Other various processing activities; Besides the mentioned activities, the park will also provide maintenance and repair of motor vehicles. The supply in this area will be provided, apart from those already mentioned, also by possible catering activities – serving food and drink.

location

Starting yr

Size

Primary Investor(s)

Addis Industrial Village

Addis Ababa (center)

2003

8.75 ha ~2,000 Employees

Chinese Eastern Industrial Zone

Addis Ababa (38km from center)

2009

Turkish Zone

Sandafa(28km from A.A

Huajian Zone

Sector focus

Status

Mainly local

Garments

Operational

Phase 1:200 ha Phase 2:300 ha ~900 employees

Chinese

Shoes, Cement, Gypsum

Operational

2009 present

100 ha

Turkish

Unspecied

Financing fell through, now starting smaller self nanced zone

Addis Ababa (Center)

2011

300 ha

Chinese

Shoes for export

MoU signed

Bole Lemmi

Addis Ababa (Center)

2012

342 ha (146 in phase 1)

South Korean

Textiles, garments,shoes

Design Completed, road Construction begun

Kalinto

15km from A.A

2013-15

143 ha

tbd

-

Selecting Consultant to design zone

Drie Dawa

Drie Dawa 2013-15 586km from AA

1,051 ha(500 in phase 1)

tbd

Agro, metal, chemicals

Tender has oated for design contractor

Kombolcha

Kombolcha, 2013-15 600km from AA

1,123 ha

Indian

Textiles

Tender has oated for design contractor

Hawassa

Hawassa, SNNPR

-

tbd

Agroproccessing, chemicals

Searching for new area as pervious plot was too close to lake

Table 1: Assessment of Existing parks

2013-15

2.4 Marketing Analysis 2.4.1 Assessment of Existing parks The two operational Industrial zones provide the industrial facilities to the users based on rental basis.

The Chinese Eastern Industry Zone renting the workshops between 16-24USD/sqm for the rst year with a potential increase of 33% every year. The utilization area of a workshop shall be 10,780 square meters. The construction area of a workshop shall be calculated to the middle of the road, the property management fee shall be equal to utilization area multiply 1.85 with overhead crane workshop, and the property management fee shall be equal to utilization area multiply 1.83 without overhead crane workshop.

The industrial zone put additionally fee for the following items; ·Factory Fence, ·Property Management Fee, ·Water Cost ·Electricity Cost ·Sewage Treatment ·Various Facilities All prices above are not included tax.

2.4.2 Pricing It is proposed the rent of the nished workshop facilities to be 5 USD per Meter Square for a month.

This price is 1/3 of the lowest rental fee set by Chinese Industrial zone. Due to the very competitive per square meter fee, it's expected to attract large size of investors

with a potential to revise in the future based on various factors. Due to the project's various advantages other than business benet, the land lease price is expected to be zero or at discounted rate.

CONCEPT OF EIP 3.1 Arranging the EIP (Proposed Land Location and Size) The proposed land for the project is located in the vicinity of Klinto Industrial Zone .It will cover 40 Hectare of land. Plot size shall be 500 mt by 800 mt.

Potentials of the Site 1.The proposed land is in close proximity to the national highway for import and export of goods (Addis Adama Express Way - Awash - Djibouti) 2. Availability of ground water in the area; 3. Availability of national electric grid line; 4. There is big residential development carried out by Addis Ababa Housing Development Project ofď€ ce

(AAHDPO) around klinto and Koye Feche area.

AAHDPO has built around 7000 Housing Units in Klinto. 60 000 Housing units are being built in Koye Feche. There will be good opportunity for the industries to ď€ nd workers in the near vicinity of the EIP. The development shall consist of two types of factories and other ancillary buildings

3.1.1. Factory Buildings There are two types of factory buildings namely Type-1 and Type-2.

No of Blocks

Area (M )

Total Area (M )

Type -1

6

20,952.00

125,712.00

Type -2

6

41,904.00

251,424.00

No.

Type

1 2

2

2

Grand Total

377,136.00

Table 3-1 Summaries of Factory Areas

Type-1: The building lies on 6,964.00 m2. It will have a width of 36 mt and a length of 194 mt. The building shall be G+2.

Structure of the building: The building shall be framed structure with pre cast concrete. Columns, beams and slabs shall be fabricated in a plant to be set up inside the industrial zone.

Wall material: The wall material for the Factory Type1 shall be either sandwich panel with a thickness of 50 mm or a pre cast concrete wall cladding with a thickness of 80 mm.

Roof Material: The roof system shall be k- Span.

Floor Finish: The oor nish shall be 5 mm thick epoxy on the top of ground oor and suspended slab.

Doors and Windows: All windows shall be done either with Aluminum or PVC. Electric driven shutter doors shall be installed at the entrance and exits of the Blocks. All re doors shall be rated for one-hour re resistance.

Type-2: The second type of factory building lies on 13,968 m2.

It will have a width of 72mt and a length of 194 mt. The building shall be G+2.

Structure of the building: The building shall be framed structure with pre cast concrete. Columns, beams and slabs shall be fabricated in a plant to be set up inside the industrial zone.

Wall material: The wall material for the Factory Type1 shall be either sandwich panel with a thickness of 50 mm or a pre cast concrete wall cladding with a thickness of 80 mm.

Roof Material: The roof system shall be k- Span.

Floor Finish: The oor nish shall be 5 mm thick epoxy on the top of ground and suspended oor slab.

3.2 Ancillary Buildings Ancillary buildings shall be Ofce, Mall, Sport center , Fire Brigade, Residence, Grand Entrance and Health Center.

Ofce Building: Two ofce buildings (G+4) with total oor area of 3,250 M 2.

Mall: The mall shall mainly serve as a display and sell point of products of the EIP. The mall shall be a G+4 building and will have total oor area of 3,250 M2. It will have rooms for supermarket and other social services.

Sport Center: The sport center shall incorporate Gymnasium, Indoor Games room (billiard, table tennis, Volleyball, basket ball), Swimming Pool, Children Play ground with different facilities.

Fire Brigade: A re brigade house shall be provided capable of residing two re cars. Total oor area shall be 550 m2.

Residence: The building shall be G+4 and it will have total oor area of 3000 m2. Four blocks shall be built.

Grand Entrance: Grand Entrance to enter and exit from the compound shall be built.

Health centers: The health center gives service to the EIP users. The health center shall have an area of 350 m2.

2 No of Blocks Area (M )

Total Area (M2)

No.

Type

1

Ofď€ ce Building

2

3,250.00

6,500.00

2

Mall

2

3,250.00

6,500.00

3

Sport Center

1

1,000.00

1,000.00

4

Fire Brigade

1

550.00

550.00

5

Residence

4

3,000.00

12,000.00

6

Grand Entrance

1

200.00

200.00

7

Health Center

1

350.00

350.00

Grand Total

27,100.00

Table 3-2 Summary of Areas of Ancillary buildings

3.2.1 Applying modern building techniques, new technologies and materials In order to save time and make the buildings cost effective, post tensioned pre cast concrete shall be established in the premises of the industrial zone. The plant shall produce structural elements as per the design and enable to complete the project in the intended time.

3.3 Infrastructures 3.3.1 Trafď€ c Infrastructure Inside the park, the following internal roads shall be introduced. All roads shall have a side vegetation to keep the walkways and cycle ways under natural shades.

A. Main road linking the park and the main access road - width of 32 mt.The road shall be two way each with a width of 10 mt. An island of 2mt is introduced for vegetation. On the sides, a green zone of 2 mts is provided followed by cycle way (2mt) and walkway (2mt); B. Internal roads - access from the main Eco Park road to the factory buildings ( 8 Mt) and other ancillary buildings; C. Loading and Unloading pavement around the factory Buildings;

D. Bi-Cycle Paths and walking paths / from factories to dormitories or out of the park; E. Parking Area for the park and each factory

3.3.2 Utilities 3.3.2.1 Water Supply Supply of drinking water for the buildings will be provided from wells to be dug inside the compound, which also serves as a hydrant network. Individual buildings will be outď€ tted with water works plumbing with external water meter on individual parcels.

Roof water (water harvesting) shall be used for supply toilet bowls and urinals, and watering external green surfaces).

3.3.2.2 Hydrant Network Hydrant network will be an integral part of the EFP. Hydrants shall be placed around the factories and will be mounted above the ground. The distance between the hydrants shall be 80 mts and 5 mt from the building.

TYPICAL LOCAL WASTE TREATMENT/COLLECTION Source (Comfort Station Washhouse Etc.)

TYPICAL CENTRAL WASTE TREATMENT

Soil Absorption (Leach Fields) Waterborne

Septic Tank Sub-Surface Sand Filters

Pit Privy or Vault Station

Nonwaterborne

Chemical Toilets

Complex Recirculating System

No Discharge (Physical-Chemical)

Preliminary Treatment

Lagoon (Oxidation Pond)

Polishing or Totally Evaporative Ponds

Aerated Lagoon Flow Equalization

Surface or Sub-Surface Sand Filters Trickling Filter

Chem.Coag Setting Extended Areation

Waterborne or Non Waterborne

Other Advanced Waste Treatment Process

Discharge to Surface Water Disinfection Land Treatment

Figure 4: Waste Treatment

3.3.2.3 Sewage System

Public Lighting

3.3.2.3.1 Waste Water

Due to lower power consumption of electricity and longer life span, the park will have will have public lighting lamps in LED technology

Wastewater treatment shall be provided to cleanse both residential and factory wastes using appropriate treatment system. The system shall include tertiary system so that grey water shall be used for gardening and toilets ( ushing).

Electric Charging Sations

3.3.2.3.2 Solid Waste Collecting mixed communal waste shall be provided by appropriate locations at individual parcels by transporting to a damping site. Ecological islands are planned for separate waste ( glass , paper , metal , plastics) .

3.2.3 Power 3.2.3.1 Solid Waste The supply to the eco friendly park shall be from the EEPCO grid system .All the factories shall use the power supply from EEPCO. Individual tenants can use other backup systems as per their need. Other sources of energy shall be solar power.

Solar Power Station Solar power stations shall be installed in the park mainly to supply power to residential quarters, ofď€ ces, and show rooms and compound lighting.

There will be electric charge station for electric vehicles that shall be used to transport guests or factory workers inside the park.

3.2.4 Telecom network Each building in the park shall have pipes for telecommunication cable.

3.4 Project Costs Assessment Estimated project cost including the buildings and all the site works is 184,606,200.00 Mill USD.

Total 2 Area (M )

Cost/M2 in USD

Type -1

12,5712

450.00

56,570,400.00

2

Type -2

251,424.00

450.00

113,140,800.00

3

Ancillary building

27,100

450.00

12,195,000.00

4

Water Treatment

-

-

3,000,000.00

No.

Type

1

Total Cost

Table 3.3: Preliminary Project Cost Estimate

Total Cost in USD

184,906,200.00

FINANCIAL ANALYSIS 4.1 Projected Income The analysis took into account the following expected incomes, which will be created by the investment with the provision to generate additional income from managing the industrial park. 路Income from renting the premises available in the business administration building and the central service building and 路Income from renting the business administration building and the central service building, Accordingly the Eco Industrial Park will generate a total of 2,425,416.00 USD per month.

Total 2 Area (M )

Rent/M2 Total Income/month in USD in USD

No.

Type

1

Type -1

125,712.00

6

754,272.00

2

Type -2

251,424.00

6

1,508,544.00

3

Ancillary building

27,100.00

6

162,600.00

Total Revenue per month Total Revenue per year

2,425,416.00 29,104,992.00

Table 4: Project Cost summary of EIP

The following additional incomes will be exsercised in the actual Feasibility Study: 1.Income from managing the business administration building and the central service building 2.Income from selling plots of land with communal infrastructure

4.2. Project Economics The following indicators were calculated as the criteria for the investment's protability: ·The investment's nancial internal rate of protability, ·The investment's nancial net present value, ·The nancial internal protability rate of capital and ·The nancial net present value of capital.

In order to be illegible for nancing, the investment's net present value must be negative, while the investment's internal protability rate must be lower than the discount rate, which was used in the analysis.

This EIP project is going to be developed on the scenario that IPDC will carry out the said project through the nance, which is going to be facilitated,

by Ovid & its partners. Its assumed that IPDC will get the required funds fully from the nancier.

For the implementation of the ECO industrial park, IPDC will obtain a loan of USD 84,277,660.00 under the following conditions: Loan Amount: 84,277,660.00 usd Term: Ten (10) Years.

3.Income from the communal contribution Grace Period: One (1) Year 4.Income from management of the industrial park Interest: Fixed rate, 3 % per Annum.

One time Processing, Legal, Transaction & Service fee: 7% Principal + Interest + One time fee = ___% per Annum Yearly payment _____m$ + ____%=_______ Pricing/m2/month =_______

CONSTRUCTION Solution | Service | Delivery

HIDASE ECO INDUSTRIAL PARK P.O. Box 4172 Addis Ababa, Ethiopia Mobile:+251-911 218204/+251 - 912 615164 Tel: +251 118 959 448 Email: info@ovid-group.com Website: www.ovid-group.com