Elmreisa Free Zone Pre-Feasibility Report 15 December 2016 Tatweer Research
10 Fleet Place London EC4M 7RB United Kingdom T +44 (0)20 7651 0300 F +44 (0)20 7248 2698 mottmac.com Elmreisa Free Zone 339483 1 1 Pre-Feasibility Report Mott MacDonald 15 December 2016 Tatweer Research
Mott MacDonald | Elmreisa Free Zone Issue and Revision Record Revision Date Originator Checker Approver Description 1 20.05.2015 A Arnold N Pantechis M Bourke Draft for discussion N Pantechis M Bourke A Lai T Reale 2 04.11.2016 C Huang N Pantechis M Bourke Draft issue for client comment B Phillips 3 15.12.2016 C Huang N Pantechis M Bourke Final version Information class: Standard This document is issued for the party which commissioned it and for specific purposes connected with the above-capti oned project onl y. It shoul d not be r elied upon by any other par ty or used for any other purpose. We accept no r esponsibility for the consequences of this document being reli ed upon by any other party, or being used for any other purpose, or containi ng any error or omission which is due to an error or omission in data suppli ed to us by other parties. This document contai ns confi denti al infor mation and pr opri etar y intellectual property. It should not be shown to other parti es without consent from us and fr om the party which commissioned it. This report has been prepared solely for use by the party which commissioned it (the ‘Client’) in connection with the captioned project. It should not be used for any other purpose. No person other than the Client or any party who has expressly agreed terms of reliance with us (the ‘Recipient(s)’) may rely on the content, information or any views expressed in the report. We accept no duty of care, responsibility or liability to any other recipient of this document. This report is confidential and contains proprietary intellectual property. No representation, warranty or undertaking, express or implied, is made and no responsibility or liability is accepted by us to any party other than the Client or any Recipient(s), as to the accuracy or completeness of the information contained in this report. For the avoidance of doubt this report does not in any way purport to include any legal, insurance or financial advice or opinion. We disclaim all and any liability whether arising in tort or contract or otherwise which it might otherwise have to any party other than the Client or the Recipient(s), in respect of this report, or any information attributed to it. We accept no responsibility for any error or omission in the report which is due to an error or omission in data, information or statements supplied to us by other parties including the client (‘Data’). We have not independently verified such Data and have assumed it to be accurate, complete, reliable and current as of the date of such information. Forecasts presented in this document were prepared using Data and the report is dependent or based on Data. Inevitably, some of the assumptions used to develop the forecasts will not be realised and unanticipated events and circumstances may occur. Consequently Mott MacDonald does not guarantee or warrant the conclusions contained in the report as there are likely to be differences between the forecasts and the actual results and those differences may be material. While we consider that the information and opinions given in this report are sound all parties must rely on their own skill and judgement when making use of it. Under no circumstances may this report or any extract or summary thereof be used in connection with any public or private securities offering including any related memorandum or prospectus for any securities offering or stock exchange listing or announcement. 339483 | 15 December 2016 v
Mott MacDonald | Elmreisa Free Zone Contents Executive Summary 1 1 Introduction 12 1.1 The role of Mott MacDonald 12 1.2 The Free zone 12 1.3 Objectives and scope of the pre-feasibility report 13 2 The need for a Free Zone and opportunities 14 2.1 Socioeconomic impact of Free Zones 15 2.2 The Elmreisa Free Zone background 17 2.3 Diversity of business sectors 18 2.4 Current governance structure 19 2.5 The proposed site 20 3 The Free Zone vision 21 3.1 Free Zone vision 21 3.2 Free Zone objectives 23 3.3 Free Zone strategic alignment 25 4 Free Zone clusters 26 4.1 Financial cluster 27 4.1.1 Vision 27 4.1.2 Objectives 27 4.1.3 High level cluster aspirations 27 4.1.4 Alignment to the Free Zone objectives 27 4.1.5 Target business sectors 27 4.2 Hospitality and conference cluster 28 4.2.1 Vision 28 4.2.2 Objectives 28 4.2.3 High level cluster aspirations 28 4.2.4 Alignment to the Free Zone objectives 28 4.2.5 Target business sectors 28 4.3 Industrial - food processing cluster 29 4.3.1 Vision 29 4.3.2 Objectives 29 4.3.3 High level cluster aspirations 29 4.3.4 Alignment to the Free Zone objectives 29 339483 | 15 December 2016 vi
Mott MacDonald | Elmreisa Free Zone 4.3.5 Target business sectors 29 4.4 Industrial – general cluster 30 4.4.1 Vision 30 4.4.2 Objectives 30 4.4.3 High level cluster aspirations 30 4.4.4 Alignment to the Free Zone objectives 30 4.4.5 Target business sectors 30 4.5 Industrial – National Oil Corporation (NOC) cluster 31 4.5.1 Vision 31 4.5.2 Objectives 31 4.5.3 High level cluster aspirations 31 4.5.4 Alignment to the Free Zone objectives 31 4.5.5 Target business sectors 31 4.6 Media cluster 32 4.6.1 Vision 32 4.6.2 Objectives 32 4.6.3 High level cluster aspirations 32 4.6.4 Alignment to the Free Zone objectives 32 4.6.5 Target business sectors 32 4.7 Port, trading and transhipment cluster 33 4.7.1 Vision 33 4.7.2 Objectives 33 4.7.3 High level cluster aspirations 33 4.7.4 Alignment to the Free Zone objectives 33 4.7.5 Target business sectors 33 4.8 Technology cluster 34 4.8.1 Vision 34 4.8.2 Objectives 34 4.8.3 High level cluster aspirations 34 4.8.4 Alignment to the Free Zone objectives 34 4.8.5 Target business sectors 34 5 Existing site conditions and constraints 35 5.1 Geographic location 35 5.2 Site ownership and land acquisition 36 5.3 Site topography and key features 36 5.4 Geology 37 5.5 Environment 37 5.5.1 Flooding and rising sea levels 37 5.5.2 Earthquakes 38 5.5.3 Biodiversity 38 5.6 site infrastructure 38 5.6.1 Transport infrastructure 38 5.6.2 Utility infrastructure 42 5.6.3 Existing on-site and surrounding infrastructure 45 339483 | 15 December 2016 vii
Mott MacDonald | Elmreisa Free Zone 5.7 Infrastructure initiatives in the Benghazi region 45 6 Design principles and considerations 47 6.1 Key design principles 47 6.1.1 Accessibility 48 6.1.2 Sustainability 48 6.1.3 Integration with local community 49 6.1.4 Built environment and lifestyle 50 6.1.5 Functionality 51 6.1.6 Safety and Security 51 7 Preliminary cluster and infrastructure strategy 52 7.1 Cluster area allocation 52 7.2 Phasing requirements and timescales 53 7.2.1 Anticipated sequence of clusters based on readiness of each Sponsor 53 7.2.2 Land ownership and acquisition progress 54 7.2.3 Geographical location of development stages 54 7.2.4 Developing initial Free Zone critical mass 54 7.2.5 Establishing a reference landmark 55 7.2.6 Other phasing objectives 55 7.2.7 Phasing SWOT 56 7.2.8 Preliminary phasing approach summary 56 7.3 Cluster adjacency 57 7.4 Cluster layout 58 7.4.1 Civic and residential district 59 7.4.2 Industrial and port district 59 7.5 Transportation infrastructure 60 7.6 Utility infrastructure strategic options 62 8 Governance and management strategy 64 8.1 Proposed governance structure 64 8.2 Governance priority themes 66 8.3 Decision making and delegated authority 67 8.4 Proposed management structure construction 67 8.5 Programme structuring process and overarching strategies 69 8.5.1 Programme structuring process 69 8.5.2 Overarching strategies 70 9 Stakeholder considerations 74 9.1 Stakeholder mapping 75 9.2 Stakeholder engagement 77 10 Indicative programme and recommended next steps 80 339483 | 15 December 2016 viii
Mott MacDonald | Elmreisa Free Zone 10.1 Indicative programme 80 10.1.1 Strategic planning 80 10.1.2 Governance strategy 81 10.1.3 Land acquisition 81 10.2 Recommended next steps 82 Appendices 87 A. Clusters 88 A.1 Financial Cluster 88 A.2 Hospitality and conference cluster 89 A.3 Food processing industrial cluster 90 A.4 Industrial - general cluster 91 A.5 Industrial – petrochemical cluster 92 A.6 Media cluster 93 A.7 Port, trading and transhipment cluster 94 A.8 Technology cluster 95 B. Indicative programme 96 C. Programme risk register 97 339483 | 15 December 2016 ix
Mott MacDonald | Elmreisa Free Zone Executive Summary The Vision for the Elmreisa Free Zone The Free Zone will be a symbol of pride and hope for the future of Libya and its people. It will become a modern economic gateway between Africa and Europe and will assist in establishing the country as a progressive regional leader, and an economic engine of growth and prosperity for the people of Libya. The Free Zone will act as a key factor in enabling development of the Libyan economy beyond the traditional reliance of its oil economy, and make its mark on a global scale by creating opportunities for diversification in a wide range of business sectors and a shift towards a knowledge based economy. The Free Zone will provide quality employment opportunities for the local community; improve social mobility of local labour including factors such as chances in life, personal disposable income and create an environment that fosters skills and professional development that respond to the needs of the economy. Sustainability will be a priority theme for the Free Zone design, construction, and operation, placing emphasis on its resource efficient design. The above vision statement is intended to provide a clear statement for the desired outcomes of the Elmreisa Free Trade Zone (the ‘Free Zone’). It will have an impact on planning, design, implementation and operation of the Free Zone. To support this vision, key supporting Free Zone objectives (See Section 3.2) are proposed that seek to deliver the vision. 339483 | 15 December 2016 1
Mott MacDonald | Elmreisa Free Zone Background In 2007 the former Libyan General Public Committee formally accredited the development of a Free Zone, south of Benghazi. In 2012, a Free Zone Board of Directors was appointed, followed by the setup of the Founding Committee and Free Zone Authority. Mott MacDonald’s local presence combined with its global pre-feasibility, project and concept development experience in Special Economic Zone projects has led us to the appointment in 2014 by Tatweer Research to undertake a pre-feasibility assessment for the Free Zone. This report summarises the findings of the study and has been largely based on information obtained through a series of structured discussions with Tatweer Research, the Head of the Founding Committee and a two-day workshop in with primary stakeholders including the Head of the Founding Committee, the National Oil Corporation, Tatweer Research and the Benghazi Planning Authority. The main purposes of this pre-feasibility report are: ● To clarify the need for a Free Zone; ● To define the vision and objectives of the Free Zone; ● To establish the business areas that are to be located within the Free Zone and their associated vision statements and objectives; ● To identify the site conditions and constraints; ● To establish high level design principles and requirements for the Free Zone; ● To explore cluster adjacency and utilities infrastructure options; ● To present a flexible governance structure to ensure effective decision making and control; ● To identify the key stakeholders of the programme and their associated roles; ● To recommended next steps to be taken; and, ● To establish a preliminary programme risk register. Socioeconomic impacts of Free Zones Special Economic Zones (SEZ) are estimated to account for more than US$200 billion in global 1 exports and employ directly at least 40 million workers . The World Bank estimates that free zones account for just over 1.5% of national employment throughout the Middle East and North 2 Africa region . Free Zones have the potential to boost investment and diversify economies. In Sub Saharan Africa, Mauritius is an example where Free Zones are supporting a successful process of economic diversification and industrialisation . According to industry report, fDi intelligence (part 3 of the Financial Times), in Morocco, the award winning Tanger Free Zone (TFZ) has created an ecosystem of diverse activities, creating over 12,000 employment opportunities between 2013 and 2014 and is now recognised as a global leader in aerospace technology. 4 1 Farole, Thomas, & Gokhan Akinci (2011), eds. Special economic zones: progress, emerging challenges, and future directions. World Bank Publications. 2 Free zones: Benefits and costs, OECD observer, http://oecdobserver.org/news/archivestory.php/aid/3101/Free_zones:_Benefits_and_costs.html 3 Farole, Thomas, & Gokhan Akinci (2011), eds. Special economic zones: progress, emerging challenges, and future directions. World Bank Publications. 4 Cathy Mulllan, (2015) fDi Global Free Zones of the Year 2015 – Winners, fDi intelligence, http://www.fdiintelligence.com/Locations/fDi- Global-Free-Zones-of-the-Year-2015-Winners 339483 | 15 December 2016 2
Mott MacDonald | Elmreisa Free Zone The SEZs in Tubatse, Musina and Rustenburg in South Africa are forecasted to bring a great and long-lasting impact on the economic growth of the province. The SEZs will have a major positive impact on the economy in the region and unlock other opportunities that exist in the areas where they are located. Musina Special Economic Zone is expected to create 21,000 jobs 5 in the region once the projects are implemented in 5 years’ time . Whilst the main focus of the SEZ is on manufacturing, other sectors of the economy will be consequently revitalised due to the various needs of the companies located in the zones and the high number of people who 6 will be employed in the zones . A report by Plymouth University in association with Warwick Economics and Development Ltd suggests that the “The technology cluster in technology cluster in the Elmreisa Free Zone has the the Elmreisa Free Zone has potential of providing between 5,000 to 15,000 jobs by the potential of providing 2030 . between 5,000 to 15,000 7 jobs by 2030” A Cambridge University report issued in 2015 suggests that each job within a technology park can support up to 10.5 Plymouth University report additional jobs in the local community . “each job within a 8 technology park can Some previous Free Zones have brought undesired support up to 10.5 features such as, harsh employment conditions, negative additional jobs in the local environmental impacts and ineffective investment community” incentives. It is therefore crucial to develop a mitigation plan for each of the potential risks with the aim of eliminating or Cambridge University report minimising the likelihood of their occurrence and impact. The need for the Free Zone in Benghazi The development of the Free Zone is intended to address some of the critical challenges currently facing Benghazi and provide a platform to stimulate the wider Libyan economy through the following principle strategic aims: ● Create opportunities for business sector diversification of the Libyan economy; ● Create links with the local economy; ● Encourage regeneration of the local economy; ● Attract local and foreign investment; ● Enhance Libya’s manufacturing and export / transit-trade industries; ● Contribute towards the growth of Libya’s GDP; ● Create quality job opportunities for Libyans and skills development; ● Facilitate a shift towards a knowledge based economy; ● Disseminate technological innovation and modern administration practices; and, ● Improve infrastructure. An exciting new development for Benghazi to signal a new start 5 R40bn investment in Limpopo SEZ, South African Government News Agency - http://www.sanews.gov.za/south-africa/r40bn-investment-limpopo-sez 6 Special Economic Zones to Boost Economy of Limpopo, Department of trade and industry Republic of South Africa - https://www.thedti.gov.za/editmedia.jsp?id=3381 7 Balch, C. (2013) ‘Eden ecosystem project economic and market research’ Plymouth University in association with Warwick Economics and Development Ltd. 8 Dee, N. J. (2015). El-Mrissa Tech Park Tatweer Research, St John’s Innovation centre 339483 | 15 December 2016 3
Mott MacDonald | Elmreisa Free Zone The Free Zone aims to become a visionary and unprecedented development for Benghazi and Libya. It will be designed with the concept of boosting economic and social development in post conflict Libya with state of the art infrastructure implementing a sustainable method to optimise the benefits. Opening business opportunities across a wide range of sectors The Free Zone will include various sector focused clusters that will aim to attract local and foreign investment. This is anticipated to offer opportunities for diversifying Libya from a hydrocarbon based economy whilst complementing and supporting the industrial clusters, including the National Oil Corporation. Free Zone Clusters The Free Zone will comprise of 8 multi-specialised development areas, supported by 2 utility hubs and a Free Zone Authority hub. The multi-specialised development areas as clusters (Clusters) and will be individually delivered by Sponsors, may also be referred to as “Industry Cluster Owners (ICO’s), who will each focus on a range of business sectors. The clusters and sponsors identified are: Cluster Sponsors Financial Cluster Libyan Stock Market (LSM) Hospitality and Conference Cluster TBC Industrial Cluster – Food processing TBC Industrial Cluster – General TBC Industrial Cluster – National Oil Corporation National Oil Corporation Media Cluster TBC Port, Trading and Transhipment Cluster Port Authority Technology Cluster Tatweer Research It is worth noting that there are ongoing discussions with perspective ICOs including the Savings and Real Estate Investment Bank (Eddekhar Bank) in relation to the Hospitality and Conference cluster. Each cluster will develop its own vision and objectives that directly or indirectly contribute towards the overall Free Zone objectives. Provisional cluster sizes The following table reflects the cluster size expectations as established through discussion with Tatweer Research, the Free Zone Management, the Port Authority and other perspective ICOs Cluster Area Financial Cluster 50 ha Free Zone Authority 5 ha Hospitality and Conference Cluster 135 ha Industrial Cluster – Food processing 220 ha Industrial Cluster – General 165 ha Industrial Cluster – National Oil Corporation 125 ha Media Cluster 20 ha Port, Trading and Transhipment Cluster 240 ha (Land side area only, excluding the new commercial port) Technology Cluster 160 ha 339483 | 15 December 2016 4
Mott MacDonald | Elmreisa Free Zone It is recommended that cluster sizes should be consolidated in the Masterplanning stage and further refined if necessary with respective stakeholders. A new commercial port Situated on the coastline of North Africa on one of the world’s busiest shipping routes, Benghazi benefits from its geographic location which is an obvious first stop for traffic entering or exiting the Suez Canal. The Free Zone is anticipated to comprise of a new international transhipment hub which will provide an alternative transportation channel for goods and trade. The Free Zone and transportation infrastructure including the port, will provide opportunities for increased trade activities by boosting trade capacity and acting as an enabler for industrial development. The new commercial port is anticipated to act as a key enabler to attracting international organisations to set up operations within the Free Zone and attracting international investment providing growth and employment opportunities. State of the art infrastructure The Free Zone is intended to provide state of the art infrastructure, including world class transportation, utilities (power, water, waste management), telecommunications and data infrastructure that respond to the needs of modern knowledge based business and to support an appealing lifestyle for those for those who choose to visit or live in the Free Zone area. It is anticipated that the infrastructure developed within the Free Zone will catalyse the improvement of infrastructure in the wider Benghazi region. This will be achieved through the implementation of a hybrid infrastructure model that will incorporate a combination of standalone utility networks in conjunction with interfaces with existing infrastructure to improve redundancy and resilience. Existing site conditions The Free Zone is an approx. 1,200 hectare site, located South-West of Benghazi, in the eastern region of Libya. Benghazi is the second largest city in Libya and the capital of the country’s eastern region, with an estimated population of 650,000. The area of identified land earmarked for Free Zone development is 1,200 hectares. The titles for 505 hectares have already been secured. The acquisition of the remaining 695 hectares is 339483 | 15 December 2016 5
Mott MacDonald | Elmreisa Free Zone still in progress. It is important crucial for the Free Zone to continue with the acquisition of the remaining land until the entirety of the site is secured. Due to limited access, the geological and environmental assessment of the site was limited to the desktop review of information currently available in the 3GPP. The desktop review has identified areas that would require further site investigations in order to establish development viability and the need for any associated mitigation measures. It is therefore recommended that comprehensive geological and environmental assessments of the site are performed. It has been identified that various off-site infrastructure elements are likely to be critical for the success of the Free Zone. Further work is required to ensure that any proposed Free Zone design solution takes account of dependencies and constraints that are associated to off-site infrastructure plans. Free Zone design principles The primary aim of the design will be to develop a people-centric environment to meet the needs of the people who work, live or visit the Free Zone. The Free Zone will create an environment that instils pride in the local community, respects cultural sensitivities and presents a positive and inclusive image to everyone. Various key design priorities have been identified that are likely to directly affect the attractiveness of the Free Zone. These should be weighed upon heavily during the development of the Masterplan. The key design themes identified include: ● Accessibility; ● Sustainability; ● Integration with the local community; ● Built environment and lifestyle; ● Functionality and flexibility; and, ● Safety and security. Phasing the development The Free Zone implementation programme will be phased. A phased approach offers several benefits including optimising flexibility in the development planning, lessening pressure for initial capital investment and minimising dependencies on off-site works during the early phases of the development. During the next stage of Masterplan development each Sponsor should be consulted to understand issues such as: ● Interdependencies between different cluster operations; ● Critical infrastructure requirements; ● Envisaged commencement of operations for each cluster/establishment of presence; and, ● Expansion profile of its future operations. 339483 | 15 December 2016 6
Mott MacDonald | Elmreisa Free Zone Provisional cluster adjacency A preferred cluster adjacency has been identified and interpreted to form a conceptual base for the Masterplanning stage. The overall Free Zone layout was developed by considering functionality, optimal use of space, movement of goods and people around the Free Zone and to the Benghazi region. A cluster adjacency matrix in conjunction with cluster area apportionment information was established through consultation with Sponsors by considering activities that are likely to take place in the Free Zone, operational and commercial opportunities. The preferred cluster adjacency aims to separate geographically civic and industry districts. It also aims to enable maximum inter-cluster synergies, optimum use of space and to facilitate phasing of the development. Utilities infrastructure strategy Utilities infrastructure options including power, electricity, telecommunications, water, waste water and solid waste infrastructure, were also considered in the development of the preliminary adjacency and area allocation. To enable maximum potential capacity, resilience and reliability to meet the requirements of the Free Zone, three options were considered: ● On-site standalone main utilities hub; ● Off-site distribution main utilities hub; and, ● Mixed hybrid utilities distribution option with utilities hub both on-site and off-site. The preferred mixed hybrid option is believed to offer advantages such as providing reliable and resilient on-site utilities and reducing dependency on off-site supply whist also taking advantage of the local existing infrastructure. The hybrid option can also provide flexibility for expansion and connect with external interfaces for future needs. An area of particular focus is telecommunications infrastructure. To achieve world class telecommunications and connectivity, it is likely that the site will require new fibre optic cabling infrastructure to provide resilience and redundancy and to satisfy increased demand during full occupancy. Transportation infrastructure Preliminary transportation infrastructure layout Transport infrastructure should support optimum movement of goods and people within and to and from the Free Zone Primary roads while prioritising safety and network efficiency. On-site transport infrastructure Railway line should seamlessly integrate with off-site transport infrastructure. Road Several transportation options were considered. The preferred transportation Secondary roads option comprises of primary and secondary roads along with a railway line. Primary roads will enable major traffic and Ganfouda road port access whilst secondary roads will mainly be for civic and public use. The two types of roads complement each other and enhance the road network to provide 339483 | 15 December 2016 7
Mott MacDonald | Elmreisa Free Zone a resilient road grid. They connect with the main Ganfouda road and provide access to and from Benghazi city centre. The primary and secondary roads also aim to allow maximum flexibility for each Sponsor to design and position their own infrastructure. In addition, a railway line is planned to run within the Free Zone to increase connectivity with the port and Benghazi city centre. Railway The railway line is planned to run along the North side of the Free Zone and lead up to the port, trading and transhipment cluster to enhance freight transport capacity and the Free Zone connectivity with the wider rail network. This preferred transportation option considers transport infrastructure projects that are anticipated to be implemented in the Benghazi region. It provides adequate freight transportation and suitable access to the new commercial port, minimises land usage and delivers resilience and functionality. A well connected transportation infrastructure is vital to reducing travel time and increasing job creation and is likely to bring desired economic benefits to the Benghazi region. Governance and management The figure below sets out the proposed governance structure. The proposed governance structure is based on international best practice and adapted to reflect the existing Free Zone stakeholder groups. 339483 | 15 December 2016 8
Mott MacDonald | Elmreisa Free Zone The role of each entity identified above is outlined in the following table: Entity Indicative role/responsibilities Board of Directors BoD ● Provides the mandate for the Free Zone. Free Zone Authority FZA ● Overall management and development of the Free Zone; and, ● Holds overarching legal powers and responsibility for the implementation of the Free Zone in terms of both the development and operational phases. Free Zone Management FZMC ● Responsible for ensuring the Free Zone fulfils its strategic objectives, Committee ● Overseeing and coordinating the implementation of the pre-feasibility stage of the programme; and, ● Overseeing and coordination and the development of the Masterplan. Free Zone Advisory Board FZAB ● Provides specialist advice and guidance to the FZA (FZAB comprises of a group of academics and economists whom have been appointed by the BoD). Tatweer Management TMC ● Will seek to create an SPV to execute its obligations on behalf of FZA to Company deliver and operate the Free Zone; ● Will act as management of the legal entity that will be established to enter into agreements with Sponsors and contractors; ● Provide a “one stop shop” for issue of licenses and permits to all compliant Free Zone occupiers on behalf and at the request of their lead Sponsor; and, ● Will be responsible (jointly with Sponsors) for the implementation, installation and operation of common infrastructure elements that are to be provided in the Free Zone to enable the timely development of clusters. Sponsors ● Sponsors will work jointly with their chosen Capital Partner to create a Special Purpose Vehicle (SPV) to establish and own the assets of their Cluster; ● It is envisaged that Sponsors will be able to enter into agreements with the third parties such as construction contractors, service providers and in the future during the Free Zone operation, with Free Zone tenants; and, ● Each Sponsor will be responsible for its own residential area. A number of governance priority themes have been identified. They are areas considered of significant importance in terms of the planning, implementation of the works, the operation of the Free Zone and the associated realisation of benefits. The priority themes are: ● Transparent decision making process; ● Accountability; ● Value for money; ● Knowledge transfer; ● Promotion of international best practice; ● Health and safety; and, ● Proactive risk management. Stakeholder management strategy Key programme stakeholders have been identified and mapped based on a preliminary analysis to outline the strategic engagement planning that will be required. There are a number of facets of stakeholder engagement that require to be considered. Further work will be needed to develop a comprehensive stakeholder management strategy to align interests for success. 339483 | 15 December 2016 9
Mott MacDonald | Elmreisa Free Zone Potential high impact risks According to the preliminary programme risk register, there are 4 potential risks of high impact even after applying mitigation actions. These high impact risks are: ● Programme delays due to civil unrest in Libya; ● Inability to acquire remaining land needed for the Free Zone; ● Viability of the new commercial port; and, ● Misalignment with off-site infrastructure, reducing the opportunity to maximise connectivity and additional benefits. These high impact risks should be mitigated and closely monitored throughout the stages of planning and implementation of the Free Zone. Programme progress The Free Zone programme progress is shown below. Masterplanning stage will follow after pre- feasibility analyses are completed in early 2017. The infrastructure work stream will start earlier than the cluster work streams, as basic enabling infrastructure needs to be set up before cluster specific construction can commence. Phase 1 construction on-site can commence in early 2018. Current stage Key recommended steps This pre-feasibility report identifies some key recommended steps to be taken in the next stages of feasibility and Masterplanning of the Free Zone development. These key steps are summarised as follows: a. Develop business cases for the overall Free Zone and for each Cluster and supporting socioeconomic cases with complementary analysis from previous Free Zones; b. Progress with the development of the Free Zone Masterplan to inform, shape and crystallise the cluster requirements to inform the adjacencies, develop the supporting infrastructure and interface with external projects including the desired Sirt Benghazi Railway alignment; c. Continue with the remaining land assembly to allow investigations to be undertaken; d. Proceed to undertake a feasibility study to further identify engineering site conditions and constraints including an appraisal of the new commercial port development; e. Consolidate cluster arrangements in the Masterplanning stage and further refine if necessary with respective stakeholders; f. Conduct a socioenvironmental impact assessment to further consider the current position and impact of the proposed Free Zone to gain a more profound understanding of the environmental conditions to implement appropriate mitigation procedures and develop robust environmental and employment policies; 339483 | 15 December 2016 10
Mott MacDonald | Elmreisa Free Zone g. Develop a detailed delivery programme to examine interdependencies and identify the key elements to execute the development of the Free Zone in a timely manner including consideration of the effects of delay due to continued civil unrest; h. Develop the governance and management strategy for the Free Zone programme delivery including the identification of sponsors for the industrial (food and general) and media clusters, examination of sponsor capabilities and their procurement and execution strategies; i. Engage the project stakeholders throughout the development of the proposed governance structure and Free Zone development including local transportation and utility authorities in the wider Benghazi region to recognise their planned strategies and timeline in order to incorporate these in the Free Zone development strategy; j. Develop a comprehensive risk management strategy for planning and mitigation of risks and how they will be managed throughout the Free Zone development; and, k. In line with legal advisor recommendations, develop best practice policy framework guidelines for the Free Zone. Conclusion Libya has many advantages meant for a modern age. In a time of increasing economic globalisation, Libya’s geographical position and proximity to the Suez Canal makes it a natural central point for connecting with markets in Europe, Africa and the Middle East. It has access to a growing and diverse population and an abundance of sought after natural resources. The development of a Free Zone in Benghazi has the potential to provide a platform that will enable the public and private sectors to work closely to harvest the opportunities that evolve from the wide range of advantages that Libya has to offer. The people-centric approach that is adopted by the Free Zone Committee, places emphasis on the improvement of the lives of not only the people who live and work in the Free Zone but also the wider population. The report has demonstrated the potential advantages that a swift approach to the Free Zone development can bring. Maximum benefits can be realised by developing a concurrent programme and parallel execution plans to enable early operation and fast tracking the Free Zone development. Further site surveys are recommended to validate any assumptions made during the pre- feasibility stage, to identify technical risks and to develop mitigation measures for technical aspects such as geology, environmental constraints and existing infrastructure within the Free Zone site and the wider Benghazi region. Based on the findings of the present report it is considered appropriate that the Free Zone development project continues towards the Masterplanning stage. 339483 | 15 December 2016 11
Mott MacDonald | Elmreisa Free Zone 1 Introduction 1.1 The role of Mott MacDonald Mott MacDonald has a strong tradition and legacy of providing consultancy services in northern Africa. We trace our roots back 120 years to the work done by Sir M MacDonald & Partners in Egypt, in particular on the Aswan Dam project. We have been involved in a number of projects in Libya such as the Great Manmade River and more recently, the port of Sirt, the Tripoli Library and a number of hotel projects. Mott MacDonald has been involved in numerous Special Economic Zone projects in South Africa. We have been appointed to conduct a pre-feasibility study of the eThekwini Eco- Industrial Park in Cornubia, South Africa and have completed feasibility studies, project and concept developments for the Kathu Mining Supplier Park in South Africa and Tsumeb Logistics Hub in Namibia. Our previous experience in Special Economic Zone projects along with our involvement in areas such as the London Docklands and Dubai Hamriyah Free Zone demonstrates a solid record of accomplishment. Mott MacDonald has been appointed by Tatweer Research, on behalf of the Elmreisa Free Zone Authority, to provide technical advisory services for the preparation of this pre-feasibility report for the Elmreisa Free Trade Zone. 1.2 The Free zone The Elmreisa Free Trade Zone (the ‘Free Zone’) is a proposed development of an approx. 1,200 hectare site, South-West of Benghazi, with convenient access to the Mediterranean sea and Northern Africa. Figure 1.1: El Mreisa Free Zone geographical location 339483 | 15 December 2016 12
Mott MacDonald | Elmreisa Free Zone For the purpose of this report, a Free Zone is defined as a designated geographical area where unrestricted activities of industry, commerce, trade and construction take place. 1.3 Objectives and scope of the pre-feasibility report The objective of the pre-feasibility report is to determine the suitability (in terms of technical viability) of proceeding to the next stage, feasibility analysis and Masterplanning, with the development of a Free Zone. The pre-feasibility report scope is: ● To clarify the need for a Free Zone (see section 2); ● To define the vision and objectives of the Free Zone (see section 2.5); ● To establish the business areas that are to be located within the Free Zone and their associated vision statements and objectives (see section 4); ● To identify the site conditions and constraints (see section 5); ● To establish high level design principles and requirements for the Free Zone (see section 6); ● To explore cluster adjacency and utilities infrastructure options (see section 7); ● To present a flexible governance structure to ensure effective decision making and control (see section 7.6); ● To identify the key stakeholders of the programme and their associated roles (see section 9); ● To recommended next steps to be taken (see section 10); and, ● To establish a preliminary programme risk register (see Appendix C). 339483 | 15 December 2016 13
Mott MacDonald | Elmreisa Free Zone 2 The need for a Free Zone and opportunities Libya has many advantages meant for a modern age. It has: ● A central location for connecting with large markets in Europe, Africa and the Middle East; ● A natural location close to the Suez Canal on main international shipping corridors and a potential gateway to land locked countries in sub Saharan Africa; ● Access to a relatively small and diverse population with limitless potential capability of the growing number of young; and, ● An abundance of sought after natural resources. However, these opportunities often remain underutilised and this has frequently hindered the Libyan economy. The main driver and primary source of revenue for the Libyan economy is the oil industry, with the National Oil Corporation (NOC) and its subsidiaries dominating the market place. Despite the international economic sanctions being lifted in 2003 which, at the time, encouraged foreign and international investment, there remains a risk to the country’s economy due to its reliance on the oil industry. The ongoing civil unrest in Libya has also had a detrimental effect on the country’s infrastructure (for example, the road network system and the local and international airports) and in many circumstances the infrastructure has been left to fall into disrepair. Benghazi is the second largest city in Libya and the country’s economic capital. From the limited information available on its demographic and socioeconomic status, it is possible to conclude that there is a high unemployment rate. Despite the level of education being greater than that in Tripoli (the country’s capital city), unemployment is amplified by the growing youth population and restricted by the limited employment opportunities. The lack of diversification in the market place, coupled with the current infrastructure and social challenges emphasises the need for Benghazi to make a positive change and to seek new The lack of diversification in the market place, opportunities. There is a pressing need for diversifying the coupled with the current economy and encouraging new industries and trade, such as infrastructure and social manufacturing, technology and business services. It is also challenges emphasises important to regenerate the local infrastructure to provide the the need for Benghazi to necessary building blocks to support the economy to grow. make a positive change These changes, paired with stability and security, have the and to seek new potential to encourage local and foreign investment and to opportunities. create greater employment opportunities for a wider demographic. Post-revolution, the Libyan government has aspired to improve the economy of Libya. To accomplish this, several important projects were endorsed. 339483 | 15 December 2016 14
Mott MacDonald | Elmreisa Free Zone rd The Benghazi 3 Generation Planning Project (3GPP) sets out a vision for Benghazi and Libya. It identifies policies and physical development plans designed to stimulate the local economy. One of the key strategic development elements of the 3GPP is to create a Free Zone in the south of Benghazi. A number of wider important projects are considered to be key ‘external’ enabling projects for the Free Zone. 2.1 Socioeconomic impact of Free Zones There is strong empirical evidence indicating that Free Zones can help grow and diversify an economy. In Sub Saharan Africa, Mauritius is an example of Zones supporting a highly 9 successful process of economic diversification and industrialisation . Special Economic Zones are estimated to account for more than US$200 billion in global exports and employ The World Bank estimates directly at least 40 million workers . The World that free zones account for 10 Bank estimates that free zones account for just over just over 1.5% of national 1.5% of national employment throughout MENA as a employment throughout whole . As of 2008, free zones in Egypt employed MENA as a whole. 11 nearly 136,000 people. Statistics show that in 2007/2008 they accounted for 20.3% of Egypt's total exports, and 12 FDI in free zones represented 9.5% of Egypt's total FDI in 2007/2008 . According to fDi intelligence, in Morocco, the award winning Tanger Free Zone (TFZ) has created an ecosystem of diverse activities, creating over 12,000 employment opportunities 13 between 2013 and 2014 and is now recognised as a global leader in aerospace technology. The high-tech industry requires highly-skilled In Azerbaijan’s development, workforce to handle products and services that need high-tech and ICT has played an a large proportion of research and development. In important role in boosting both Azerbaijan’s development, high-tech and ICT have the economy and the process of played an important role in boosting both the establishing an information economy and the process of establishing an society in the country. information society. The Special Economic Zones (SEZ) in Tubatse, Musina and Rustenburg in South Africa are forecasted to bring a great and long-lasting impact on the economic growth of the province. The SZEs will have a major positive impact on the economy in the region and unlock other opportunities that exist in the areas where they are located. Musina Special Economic Zone is expected to create 21,000 jobs in the region once the projects are implemented in 5 years’ time . Whilst the main focus of the SEZ is on manufacturing, other sectors of the economy will 14 9 Farole, Thomas, & Gokhan Akinci (2011), eds. Special economic zones: progress, emerging challenges, and future directions. World Bank Publications. 10 Farole, Thomas, & Gokhan Akinci (2011), eds. Special economic zones: progress, emerging challenges, and future directions. World Bank Publications. 11 Free zones: Benefits and costs, OECD observer, http://oecdobserver.org/news/archivestory.php/aid/3101/Free_zones:_Benefits_and_costs.html 12 Free zones: Benefits and costs, OECD observer, http://oecdobserver.org/news/archivestory.php/aid/3101/Free_zones:_Benefits_and_costs.html 13 Cathy Mulllan, (2015) fDi Global Free Zones of the Year 2015 – Winners, fDi intelligence, http://www.fdiintelligence.com/Locations/fDi- Global-Free-Zones-of-the-Year-2015-Winners 14 R40bn investment in Limpopo SEZ, South African Government News Agency - http://www.sanews.gov.za/south-africa/r40bn- investment-limpopo-sez 339483 | 15 December 2016 15
Mott MacDonald | Elmreisa Free Zone be consequently revitalised due to the various needs of the companies located in the zones and 15 the high number of people who will be employed in the zones . A report by Plymouth University in association with A Cambridge University Warwick Economics and Development Ltd suggests that report suggests that each the technology cluster in the Elmreisa Free Zone has the job within a technology park potential of providing between 5,000 to 15,000 jobs by 16 can support up to 10.5 2030 . A Cambridge University report issued in 2015 additional jobs in the local suggests that each job within a technology park can community. support up to 10.5 additional jobs in the local 17 community . A report by Plymouth University in association with Warwick Economics and Development Ltd has estimated that the technology cluster in the Elmreisa Free Zone should work on the basis of 18 providing employment in the 5,000 to 15,000 range by 2030 . The report found that adopting an assumption of creating 10,000 jobs as a starting point for the feasibility stage of the Elmreisa Free Zone. As evidenced in other examples, Free Zones can contribute towards diversification and boosting of the domestic economy. However, whilst there maybe benefits, it is worth noticing that there can also be drawbacks. Table 2.1 provides some examples of benefits and drawbacks that can be associated with Free Zones. Table 2.1 Socioeconomic impact of Free Zones Benefits Narrative Attracting foreign direct Free Zones can provide investment incentives to attract foreign direct investment. These investment incentives may come in various forms, such as taxation benefits, preferential policies, usage of well-developed infrastructure and facilities. In many Free Zones, the authorities 19. act as a one stop shop and simplify administrative procedures In study published by the World Bank, it is found that on average, a 1 percentage point increase in the tax rate 20 reduced FDI by 3.3 percent. These incentives provide a better-integrated business zone and often help to open up the local economy and attract more foreign investment. Providing jobs and As foreign direct investment enters the Free Zone demand for labour is likely to increase, increase employment creating job opportunities for the local economy. Employment generation at this scale has opportunities the potential to contribute towards the alleviation of unemployment challenges for the local economy. Creating income for local Standardised and sustainable employment opportunities for the workforce can create economy and improving income for the local economy. This creates the potential to improve social mobility of social mobility local labour including factors such as chances in life, personal disposable income, education, skill set and future employment opportunities. High concentration of One of the possible benefits of Free Zones is the high concentration of skills and skills and technology technology. With the abundance of foreign investment and government emphasis on technology learning and innovation, the Free Zone is likely to become a centre of knowledge and technology generation, adaptation, diffusion, and innovation . This can 21 15 Special Economic Zones to Boost Economy of Limpopo, Department of trade and industry Republic of South Africa - https://www.thedti.gov.za/editmedia.jsp?id=3381 16 Balch, C. (2013) ‘Eden ecosystem project economic and market research’ Plymouth University in association with Warwick Economics and Development Ltd. 17 Dee, N. J. (2015). El-Mrissa Tech Park Tatweer Research, St John’s Innovation centre 18 Balch, C. (2013) ‘Eden ecosystem project economic and market research’ Plymouth University in association with Warwick Economics and Development Ltd. 19 Bost, F.(2011) 'Are economic free zones good for development?', Sahel and West Africa Club Secretariat. https://www.oecd.org/swac/publications/49814045.pdf 20 James, S.(2009) ‘Tax and Non-Tax Incentives and Investments: Evidence and Policy Implications', Investment Climate Advisory Services of the World Bank Group. http://www.un.org/esa/ffd/tax/sixthsession/UseOfTaxIncentivesALL.pdf 21 Zeng, D. (2015) 'Global Experiences with Special Economic Zones', Policy Research Working Paper, http://documents.worldbank.org/curated/en/810281468186872492/pdf/WPS7240.pdf 339483 | 15 December 2016 16
Mott MacDonald | Elmreisa Free Zone Benefits Narrative improve local labour market skills and enable better technology transfer to domestic markets. Better infrastructure and Free Zones are likely to attract government and public attention, thus the basic policy development infrastructure development and policy instrument for promoting regional development are 22 strategically planned and better implemented . Drawbacks Narrative Ineffective investment Some studies have shown that investment incentives result in higher cost for the incentives government and insufficient benefits in return. In some cases, incentives for attracting foreign investment may result in foregone public revenue and add to the fiscal burden of governments. Harsh employment Labour market conditions is a controversial topic for Free Zones. There are examples conditions where some zone employees are poorly paid and experience poor employment conditions. In a high unemployment area where most employees are of lower education 23 levels, labour is easily replaceable thus significantly reduces their bargaining power . Negative environmental Negative environmental impact of Free Zones is another risk. Rapid development often impact brings along increase in waste and pollution. Insufficient waste management and processing procedures can cause serious environmental damages to the local ecology. In some cases inadequate government regulations and negligent monitoring has also raised concern . 24 In summary, Free Zones have the potential to boost investment and diversify economies. However, there can be drawbacks. It is therefore important that such potential drawbacks are carefully studied in order to further determine the feasibility of the Free Zone and to develop suitable mitigation plans with the aim of eliminating or minimising the likelihood of their occurrence and impact. It is recommended that cost-benefit analyses are carried out in order to inform the scoping of the economic activities incorporated in each cluster. It is also recommended that previous Free Zone examples are analysed to develop a robust environmental and employment policy and a detailed plan of how the policies will be enforced. 2.2 The Elmreisa Free Zone background The development of a Free Zone in Benghazi has been a long term aspiration of both the local administration in Benghazi and the Central Government of Libya. In 2007, the former General Public Committee (under the resolution no.744) formally accredited the creation of a Free Zone. This was shortly followed by the Libyan Urban Planning Department approving a Technical Status for the Free Zone (no.1054/5/7). A resolution was issued by the Minister of Economy to form a Free Zone Directors Board and a Founding Committee. In 2012, the Free Zone Directors Board was established and by 2013 the Founding Committee was formed with the mandate to prepare an implementation plan for the development of a Free Zone. 22 Bost, F. (2011) 'Are economic free zones good for development?', Sahel and West Africa Club Secretariat , https://www.oecd.org/swac/publications/49814045.pdf 23 Borozan, Đ., & Klepo, Ž. (2007). Free Zone – The source of Socio-Economic Benefits. Interdisciplinary Management Research III, Available at: http://www.efos.unios.hr/repec/osi/journl/PDF/InterdisciplinaryManagementResearchIII/IMR3a3.pdf 24 Borozan, Đ., & Klepo, Ž. (2007). Free Zone – The source of Socio-Economic Benefits. Interdisciplinary Management Research III, Available at: http://www.efos.unios.hr/repec/osi/journl/PDF/InterdisciplinaryManagementResearchIII/IMR3a3.pdf 339483 | 15 December 2016 17
Mott MacDonald | Elmreisa Free Zone In 2014, Tatweer Research, on behalf of the Free Zone Committee, was given the authority to procure technical, legal and economic advisory services to support the preparation of a pre- feasibility study. 2.3 Diversity of business sectors To support the diversification of Benghazi’s economy, the Free Zone is required to generate opportunities for a variety of business sectors, including trading, industry and research. Some of the most prominent organisations in Libya have joined forces to bring together a diverse range of skills, knowledge and experience that will lay the foundations for the successful implementation of the Free Zone programme. It is envisaged that each organisation acting as a ‘Sponsor’, may also be known as “Industry Cluster Owners (ICO’s), will lead the development of a section of the Free Zone, a ‘cluster’. Each cluster will specialise in a field that is pertinent to that Sponsor’s traditional business field. A summary of the proposed clusters and associated Sponsors is provided below: Table 2.2: Proposed Clusters and Sponsors Cluster Sponsors Financial Cluster Libyan Stock Market (LSM) Hospitality and Conference Cluster TBC Industrial Cluster – Food processing TBC Industrial Cluster – General TBC Industrial Cluster – National Oil Corporation National Oil Corporation Media Cluster TBC Port, Trading and Transhipment Cluster Port Authority Technology Cluster Tatweer Research The role of the Sponsors is anticipated to include: ● Consider the design configurations and phased delivery of asset requirements of each Cluster and procurement strategies to deliver the asset requirements; ● Identify long-term operational service needs of each Cluster; ● Provide input through their technical know-how and expertise for the development of a Free Zone design that is able to meet current and future operational requirements for the own organisations but also prospective tenants; ● Establish good contract management procedures to realise the vision and objectives for each Cluster; ● Take a lead role in the provision of infrastructure and other business support services for their respective Clusters; ● Act as anchor tenants and promote the Free Zone locally and internationally in order to encourage businesses to move their operations and/or make use of Free Zone services; ● Take a lead role in the day-to-day running of their respective clusters and participate in the governance and management of the overall Free Zone; and, ● Contribute through their commercial awareness in their particular fields of expertise in defining the scope of development in their Clusters but also the wider Free Zone by identifying interdependencies and opportunities for synergies. 339483 | 15 December 2016 18
Mott MacDonald | Elmreisa Free Zone The Sponsor would then form a capable Special Purpose Vehicle (SPV) who will promote, develop and implement services identified for each cluster. There are ongoing discussions for the identification of Sponsors to support the development of the two industrial clusters, the media cluster and the hospitality and conference cluster. 2.3.1.1 Programme key stakeholders Table 2.3 includes a list of the identified key programme stakeholders. A wider stakeholder analysis has been conducted. This is summarised in Section 9 of this report. Table 2.3: Key Programme stakeholders Core (internal) ● Cluster Sponsors ● Free Zone Authority ● Free Zone Board of Directors ● Free Zone Founding Committee ● Free Zone Committee ● Free Zone Advisory Board ● Libyan Stock Market (LSM) ● National Oil Corporation (NOC) ● Port Authority ● Savings and Real Estate Investment Bank (Eddekhar Bank) ● Tatweer Research 2.4 Current governance structure The existing Board of Directors have Figure 2.1: Free Zone Governance Structure established the governance structure (Figure 2.1). Board of Directors The Board of Directors (BoD) was established in 2012 by the PM resolution. The role of the BoD is to provide the mandate Advisory for the Free Zone. Board The Free Zone Founding Committee (FZFC) was established by the Ministry of Economy Free Zone Founding through a resolution in 2013. The role of the Committee Management Committee FZFC is to manage the Free Zone on a temporary basis. It is envisaged that, subject Source: Tatweer Research to the relevant BoD resolution, the FZFC will be replaced by the Free Zone Management Committee. The Free Zone Management Committee (FZMC) was established by the FZFC in 2013. The FZMC is responsible for the overall management and development of the Free Zone. The Free Zone Advisory Board (FZAB) comprises of a group of academics and economists that have been appointed by the BoD. The role of the FZAB is to provide specialist advice and guidance to the FZMC. Whilst this structure is suitable for this stage of the programme, the governance and management arrangements will evolve as the programme progresses. This is discussed later on in this report (Section 7.6). 339483 | 15 December 2016 19
Mott MacDonald | Elmreisa Free Zone 2.5 The proposed site The site identified for the development of the Free Zone was pre-selected by the Free Zone Authority prior to the commencement of any work in relation to the preparation of this pre- feasibility report. The site comprises of approx. 1,200 hectares, located roughly 20km south of the city centre of Benghazi. The Free Zone site is adjacent to the Mediterranean Sea and extends inland to the west to meet the existing coastal highway. The site comprises of numerous adjoining parcels of land that are currently under the ownership of various land owners including the state, local tribal groups as well as private individuals and businesses. 339483 | 15 December 2016 20
Mott MacDonald | Elmreisa Free Zone 3 The Free Zone vision The Free Zone vision provides the guiding Benefit principles for change that will have an impact on Continuous and realisation planning, design, implementation and operation systematic Project of the Free Zone. The vision provides a clear scrutiny operaton Project statement for desired outcomes and shall implementation remain constant throughout the development of Masterplanning & Feasibility the Free Zone. analysis There will be a principal vision for the whole Strategic alignment Pre-feasibility Free Zone, which will need to be reflected in the Objectives visions for the individual Clusters. Each Clusters vision statement will complement and Vision contribute towards the overall Free Zone. 3.1 Free Zone vision Below is the vision for the Free Zone. The Free Zone will be a symbol of pride and hope for the future of Libya and its people. It will become a modern economic gateway between Africa and Europe and will assist in establishing the country as a progressive regional leader, and an economic engine of growth and prosperity for the people of Libya. The Free Zone will act as a key factor in enabling development of the Libyan economy beyond the traditional reliance of its oil economy, and make its mark on a global scale by creating opportunities for diversification in a wide range of business sectors and a shift towards a knowledge based economy. The Free Zone will provide quality employment opportunities for the local community; improve social mobility of local labour including factors such as chances in life, personal disposable income and create an environment that fosters skills and professional development that respond to the needs of the economy. Sustainability will be a priority theme for the Free Zone design, construction and operation, placing emphasis on its resource efficient design. 339483 | 15 December 2016 21
Mott MacDonald | Elmreisa Free Zone Key vision phrases Features the Free Zone envisions to offer Pride The Free Zone will be an engineering marvel that fosters civic pride and aspiration for the people of Libya and the local community Hope The Free Zone represents positive change for a prosperous future Modern The Free Zone will offer state of the art, contemporary infrastructure and will represent a model for replication across the country Gateway The Free Zone will act as a gateway junction that connects Europe with Africa and the Middle East Engine of Growth The Free Zone will act as a catalyst; kick starting sustainable growth and development in Libya Prosperity The Free Zone will represent a new peaceful and prosperous era for the Libyan people Enabling The Free Zone will act as platform to encourage creativity and innovation, entrepreneurship and attract local and foreign investment Development Global Scale The Free Zone will place Libya at the centre of the international markets Diversification The Free Zone will enable Libya to develop new domestic markets and/or industries, and move away from its disproportionate reliance on the oil industry Knowledge Based The Free Zone will enable the transformation / shift towards a knowledge based economy that can drive productivity and economic growth whilst Economy stimulating innovation and entrepreneurship Quality Employment The Free Zone will attract many local and international companies to the area and significantly increase quality job opportunities for the local community Opportunities Social Mobility The Free Zone will improve social conditions in the local community in areas such as chances in life, personal disposable income, education, skill set and future employment opportunities Skills and The Free Zone will attract many technical experts to the area generating a hub for professional expertise. This will become an excellent environment for skills Professional development and professional learning and knowledge sharing Development Sustainability The Free Zone will strive to promote sustainable practices, ensuring a balance between economic, social and environmental considerations Resource Efficient During the design, procurement, construction and operation of the Free Zone emphasis will be placed on sustainably sourced resource Design 339483 | 15 December 2016 22
Mott MacDonald | Elmreisa Free Zone 3.2 Free Zone objectives The Free Zone objectives will describe specific, measurable outcomes that will support the accomplishment of the vision. The objectives have been specifically developed to be (where possible) SMART. Specific They will provide tangible steps that contribute Time scaled Measurable towards the overall programme plan and their SMART achievement shall be monitored and reported against on a regular basis throughout the programme lifecycle. These objectives have been identified through Realistic Achievable facilitated workshops with Tatweer Research and are as listed below: Create opportunities Facilitate a shift for diversification of towards a knowledge Create links with the the Libyan economy based economy local economy Enhance Libya’s Attract local and manufacturing and Encourage foreign investment export / transit-trade regeneration of the local economy industries Disseminate technological Create quality job Contribute towards the innovation and modern opportunities for growth of Libya’s GDP administration Libyans practices 339483 | 15 December 2016 23
Mott MacDonald | Elmreisa Free Zone rd Benghazi’s 3 Generation Planning Project (3GPP) was introduced to stimulate the local economy. One of the key strategic development elements of the 3GPP is to create a Free Zone in the south of Benghazi. Below is a representation of how the Free Zone objectives contribute towards and support the achievement of 3GPP goals. Free Zone Objectives Objective 1: Attract local and foreign investment Objective 2: Facilitate a shift towards a knowledge based Objective 3: Create links with the local economy Objective 4: Create opportunities for diversification of the Libyan economy Objective 5: Enhance Libya’s manufacturing and export/transit-trade Objective 6: Encourage regeneration of the local Objective 7: Contribute towards the growth of Libya’s GDP Goal 1: Maintain the role of economy industries economy Benghazi city as a Metropolitan centre of the sub-region Goal 2: Provide high quality urban services 3 rd Generation Planning Project - Goals Goal 3: Protect and preserve the metropolis cultural heritage Goal 4: Develop tourism sector by increasing the availability in tourism and recreation Goal 5: Maintain and improve a safe, efficient transport infrastructure network in the Benghazi metropolis Goal 6: Encourage commercial and industrial development Goal 7: Disseminate technologic innovations Goal 8: Develop the social, cultural and intellectual capital of the metropolis Goal 9: Ensure the protection and conservation of the metropolis valuable natural resources Goal 10: Maintain and Improve the Metropolis energy infrastructure Table Key Directly contributing towards the goals included in the 3GPP Indirectly contributing towards the goals included in the 3GPP 339483 | 15 December 2016 24
Mott MacDonald | Elmreisa Free Zone 3.3 Free Zone strategic alignment The development of a Free Zone in Benghazi provides the platform required to encourage diversification and stimulate the growth of the Libyan economy beyond the traditional reliance on oil. A Free Zone in Benghazi could help address the following strategic needs: Diversification ● Multiple clusters that promote a diverse ecosystem of business sectors; and, ● Promotion of knowledge based economy through: – Attraction of the right types of business (service sectors: finance, tech, shipping) – Encouraging collaboration of business with academia – Encourage entrepreneurship – Encouraging research and development – Business incubator – Encouraging training / knowledge sharing on a local and international scale Improving infrastructure ● Provide a model for modern infrastructure that can be replicated elsewhere; ● Contribute towards the reinstatement of infrastructure post conflict; ● Meeting the infrastructure gap; ● Providing reliable and efficient infrastructure; ● Expanding accessibility and eliminate regional disparities; and, ● Creating linkages with the local community; Generating employment and skills development ● Create opportunities for sustainable employment across a wide range of business sectors ● Increasing local employment rates through; – Creating jobs for the local community – Boosting labour productivity – Creating training/internship opportunities; ● Increasing opportunities to develop professional skills and qualifications; ● Skilled and unskilled employment opportunities; and, ● Growth in on-site and off-site opportunities across different occupational categories Attracting investment ● Offering the platform for local and international business to commence or expand operations in the region; ● Creating an attractive investment environment; and, ● Strengthen Libya’s reputation as a reliable investment destination. 339483 | 15 December 2016 25
Mott MacDonald | Elmreisa Free Zone 4 Free Zone clusters The Free Zone will comprise of 8 multi-specialised development areas, 2 utility hubs and a Free Zone Authority hub. The 8 multi-specialised development areas known as clusters, will be individually delivered by Sponsors who will each focus on a range of defined business sectors. A list of the clusters has been provided below: Table 4.1: Free Zone Clusters Cluster Financial Cluster Hospitality and Conference Cluster Industrial Cluster – Food processing Industrial Cluster – General Industrial Cluster – National Oil Corporation Media Cluster Port, Trading and Transhipment Cluster Technology Cluster Each cluster will have a vision statement and associated objectives that directly or indirectly contribution towards the overall Free Zone development. Preliminary ideas for these have been captured in the following sections. It is recommended that each Sponsor develops and refines its vision to ensure that it is aligned with their strategic objectives. 339483 | 15 December 2016 26
Mott MacDonald | Elmreisa Free Zone 4.1 Financial cluster 4.1.1 Vision Become recognised as the region’s top financial centre and a leader in Islamic banking. Create an environment that encourages collaboration and knowledge sharing between financial enterprises. 4.1.2 Objectives 2. Advance financial 1. Become a leading financial hub for the region services and products in Libya 3. Stimulate the 4. Attract internationally development of Islamic recognised financial banking services institutes 4.1.3 High level cluster aspirations ● Sophisticated, sleek design; ● Highly functional spaces that facilitate flexibility and productivity; and, ● Optimal use of exterior space. 4.1.4 Alignment to the Free Zone objectives Please see Appendix A - A.1.1. 4.1.5 Target business sectors Please see Appendix A -A.1.2. 339483 | 15 December 2016 27
Mott MacDonald | Elmreisa Free Zone 4.2 Hospitality and conference cluster 4.2.1 Vision Host the region’s top hospitality and conferencing businesses. Become a top tourist destination in the Mediterranean Sea and make a positive impact to Libya’s long-term economic growth prospects. Become a leisure and retail destination for the FZ residents, the Community of Benghazi, and the people of Libya. 4.2.2 Objectives 2. Provide recreational 1. Become the top tourist options for the local destination in Libya community 3. Attract high-end 4. Encourage retailers and international diversification in hotel groups conference services 4.2.3 High level cluster aspirations ● Contain key attraction and representational reference landmark; ● Create positive perception to aid the Free Zone ‘presence’ establishment; ● Accessible outdoor space that encourages interaction and collaboration; ● Stylish and modern architectural designs; and, ● Strategically placed to support and compliment other clusters. 4.2.4 Alignment to the Free Zone objectives Please see Appendix A - A.2.1. 4.2.5 Target business sectors Please see Appendix A -A.2.2. 339483 | 15 December 2016 28
Mott MacDonald | Elmreisa Free Zone 4.3 Industrial - food processing cluster 4.3.1 Vision Attract local and international food manufacturing companies to set up a regional distribution centre. Optimise operational services to cater for future food processing businesses. 4.3.2 Objectives 1. Support the 2. Attract international development of the local and regional food industry food manufacturers 4. Generate employment 3. Establish a regional opportunities in the food distribution centre industry 4.3.3 High level cluster aspirations ● Highly systematic use of space, optimising the movement of goods/materials; ● Independent and self-sufficient units; and, ● Flexibility and expandability in design to meet future demands. 4.3.4 Alignment to the Free Zone objectives Please see Appendix A - A.3.1. 4.3.5 Target business sectors Please see Appendix A -A.3.2. 339483 | 15 December 2016 29
Mott MacDonald | Elmreisa Free Zone 4.4 Industrial – general cluster 4.4.1 Vision Provide a range of versatile business solutions to support a range of industrial organisations. Offer flexible amenities that meet the needs of prospective tenants. 4.4.2 Objectives 1. Provide a flexible 2. Attract local and environment that accommodates a variety international industrial organisations of organisations 3. Encourage small and 4. Generate employment medium sized opportunities for the local manufacturing plants community 4.4.3 High level cluster aspirations ● Modular site / building configuration to allow for future demands; ● Agile work spaces ; and, ● Adaptable business solutions to meet the needs of a variety of industrial organisations. 4.4.4 Alignment to the Free Zone objectives Please see Appendix A - A.4.1. 4.4.5 Target business sectors Please see Appendix A -A.4.2. 339483 | 15 December 2016 30
Mott MacDonald | Elmreisa Free Zone 4.5 Industrial – National Oil Corporation (NOC) cluster 4.5.1 Vision Strengthen and protect Libya’s position as a leading North African oil producer. Provide state of the art infrastructure required by oil companies and other associated industry segments. Build a centre of excellence for all maintenance and refurbishment activities Create an environment that encourages the development of innovative technologies to improve services and products. 4.5.2 Objectives 1. Protect Libya’s position 2. Facilitate the expansion as a leading North African of the secondary oil oil producer products industry in Libya 3. Increase employment 4. Maintain close opportunities in the oil synergies with existing oil industry activities in Benghazi 4.5.3 High level cluster aspirations ● Multi-functional design that facilitates a wide range of activities within the cluster; ● Separated in three primary areas: – Light Industrial areas (a mix of large and small warehouse ‘type’ units) – Open maintenance and fabrication yards – Office and Administration units 4.5.4 Alignment to the Free Zone objectives Please see Appendix A - A.5.1. 4.5.5 Target business sectors Please see Appendix A -A.5.2. 339483 | 15 December 2016 31
Mott MacDonald | Elmreisa Free Zone 4.6 Media cluster 4.6.1 Vision Become a thriving business community hosting both global and regional media companies, including news agencies, publishing, online media, advertising, production, and broadcast facilities. Create an environment, where media companies and independent media professionals are enabled to operate in a collective and synergistic manner. 4.6.2 Objectives 2. Facilitate the successful 1. Attract international development of media media agencies start-up companies 3. Become a host of 4. Generate quality worldwide and regional employment opportunities media events/conferences for the local community 4.6.3 High level cluster aspirations ● Contemporary use of space to stimulate productivity, creativity and teamwork; ● Bold architectural designs ; and, ● Highly flexible to accommodate a wide variety of uses. 4.6.4 Alignment to the Free Zone objectives Please see Appendix A - A.6.1. 4.6.5 Target business sectors Please see Appendix A -A.6.2. 339483 | 15 December 2016 32
Mott MacDonald | Elmreisa Free Zone 4.7 Port, trading and transhipment cluster 4.7.1 Vision Become a key regional distribution hub and expand to become an internationally recognised maritime centre. Provide world class infrastructure to operate a wide range shipping and logistics services. 4.7.2 Objectives 2. Facilitate the 1. Become a key regional distribution hub development of the regional shipping industry 3. Enable international 4. Generate quality trade activities in the Free employment opportunities Zone for the local community 4.7.3 High level cluster aspirations ● Multi-functional design that facilitates the efficient flow of goods / materials; ● Configured for operation as a general commercial port (i.e. not only for Free Zone trading); and, ● Separated into the following areas: – Port, – Warehousing and Container terminals, and – Port administration and business services. 4.7.4 Alignment to the Free Zone objectives Please see Appendix A - A.7.1. 4.7.5 Target business sectors Please see Appendix A -A.7.2. 339483 | 15 December 2016 33
Mott MacDonald | Elmreisa Free Zone 4.8 Technology cluster 4.8.1 Vision Enhance Libya’s position as the region’s leading centre of technological excellence, innovation and entrepreneurship. Act as a catalyst for nurturing a knowledge-based economy in Libya and become a facilitator for the expansion of science research and development. Develop a centre for learning and collaboration between academia and the private sector. Become a business incubator for technology start-up companies and small and medium enterprises. 4.8.2 Objectives 1. Build up branches of 2. Stimulate the Research recognised international and Development sector research institutes in Libya 3. Facilitate interaction 4. Provide a technology between academia and test-bed for the industry through the creation of the Tatweer introduction of new Institute of Learning technologies in Libya 4.8.3 High level cluster aspirations ● Contemporary, innovative, inspirational architectural design to enhance creativity; ● Resource efficient designs; ● Open spaces and social areas that facilitate interaction, teamwork and knowledge sharing to energise creativity; and, ● Sustainable Living community for work and play with world class environmental standards. 4.8.4 Alignment to the Free Zone objectives Please see Appendix A - A.8.1. 4.8.5 Target business sectors Please see Appendix A -A.8.2. 339483 | 15 December 2016 34
Mott MacDonald | Elmreisa Free Zone 5 Existing site conditions and constraints 5.1 Geographic location The Free Zone site is located South-West of Benghazi, in the eastern region of Libya. Benghazi is the second largest city in Libya and the capital of the country’s eastern region, with an estimated population of 650,000. Figure 5.1 represents the geographical location of the Free Zone. Figure 5.1: Elmreisa Free Zone site geographical location The global position of the site and its location within Figure 5.2: Free Zone Location Libya generates several advantages for the development of a Free Zone: ● Second largest city in Libya; ● Economic capital of Libya; ● Largest city in the Eastern Region of Libya; ● Proximity to target markets, both local, national and international; ● Libya borders Egypt, Tunisia, Algeria, Sudan, Niger and Chad; ● Proximity to Suez Canal ● Central location close to the European and the Middle East trading markets; and, ● Maritime shipping and international navigation lines. 339483 | 15 December 2016 35
Mott MacDonald | Elmreisa Free Zone 5.2 Site ownership and land acquisition The site comprises of several adjoining parcels of land that are currently under different ownership. The land owners include the State, local tribal groups, private individuals, and private businesses. Under ministerial resolution, all parcels of land have been allocated for the development of the Free Zone. Known land owners have formed a committee with the objective to represent and negotiate the land acquisition with the State. It is understood that the Committee has recently agreed a price per square metre for the land. Of the 1,200 hectare site, 505 hectares have been secured and are available for the Free Zone development. There are ongoing discussions and negotiations with land owners in relation to purchasing the parcels of land. The remaining 695 hectares are mostly located where the land ownership is more complex. The process of the acquisition of the remaining 695 hectares is yet to commence. Land acquisition plays a vital role in the development of the Free Zone. Any delays or complications to the land acquisition could cause further suspension or disruption of the development. It is recommended that the Free Zone Authority should continue the momentum to acquire the land required for the Free Zone development. 5.3 Site topography and key features The Free Zone site is approximately 1,200 hectares (12.3 square km) and located adjacent to the Mediterranean coast and extends inland to meet the Libyan Coastal Highway. The site is located within the Bu Fakhra district and Benghazi planning zone 33. The site has an almost rectangular shape, as illustrated in Figure 5.3. Figure 5.3: Free Zone site location in Benghazi (indicative site boundary) The topography of Benghazi is largely flat and uniform as it is located on the coastal plain. The Free Zone site is located at near-sea level and has an elevation between 0-10m, as seen in the Figure 5.4 (the location of the Free Zone is identified by the red bold circle). 339483 | 15 December 2016 36
Mott MacDonald | Elmreisa Free Zone Figure 5.4: Benghazi Topography and Elevation Zones Source: Benghazi Masterplan Report, 2009 It is recommended that detailed topography surveys are carried out in order to gain more detailed measures and analysis of the Free Zone landscape in order to determine the suitability of the site for further feasibility and Masterplan development. 5.4 Geology The 3GPP identifies that a significant proportion of the site falls within a sabkha. A sabkha, also known as a salt marsh, is a shallow landscape depression that lies back from the shoreline. There are risks associated with construction on salt marshes as mildly acidic salt and chemicals in the sea water attack the bonds that hold concrete together. However, developing sites of this type is not uncommon throughout the Middle East. Further assessment of ground conditions is required to confirm its suitability for development. It is recommended that geotechnical surveys are carried out in order to assess the soil conditions and impact of the salt marsh in order to assess suitability of the site for further development progress and establish appropriate remediation plans as early as possible. 5.5 Environment 5.5.1 Flooding and rising sea levels As highlighted in 3GPP, coastal settlements in Benghazi are affected by the rise of sea levels that cause flooding of the surrounding areas. A topographical site plan (provided by Tatweer Research) indicates the existence of a sea defence wall running along the northern edge of the existing port. Based on the proximity of the wall to the sea, it is believed this is a sea defence wall which could be used to protect against flooding and erosion. It is recommended that a flood risk assessment is carried out to determine and evaluate the risk of flooding in order to assess suitability of the site for further development progress and establish appropriate remediation plans. 339483 | 15 December 2016 37
Mott MacDonald | Elmreisa Free Zone 5.5.2 Earthquakes Figure 5.5: Earthquake areas in 3GPP states that Libya is not considered to have Benghazi high seismological activities and therefore overall there is a relatively low risk of earthquakes occurring in Libya. Benghazi falls within the region where seismological activity is considered to be low to medium, with a focal depth in the ground ranging between shallow to small and medium. In recent years, 70% of earthquakes in Libya took place within this region. Figure 5.5 represents risk areas in Benghazi. As highlighted (red bold circle) the Free Zone falls within a low earthquake risk area. The seismological data found do not indicate that the Free Zone should not be located in Benghazi. However precautions for earthquakes should be Source: Benghazi Sub-regional Plan Report, 2009 considered during the Free Zone design. It is recommended that earthquake risks are considered during the design stage of the development. 5.5.3 Biodiversity Little information is available on the maritime-life, wildlife and biodiversity in the Benghazi region. It is recommended that environmental assessments are carried out to establish potential direct and indirect impacts of the environment that may result in the development of the FZ. As a minimum, consideration should be given to the following factors: Human beings; Socioeconomic issues; Fauna and flora; Soil; Water, water sources; Air; Climate and landscape; Material assets; Cultural heritage; and, Interaction between all of the above factors. Consideration should also be given to the need to consultation with local and national stakeholders. 5.6 site infrastructure 5.6.1 Transport infrastructure This section provides a summary of the existing transport infrastructure surrounding the Free Zone site. 339483 | 15 December 2016 38
Mott MacDonald | Elmreisa Free Zone 5.6.1.1 Sea transport The existing Benghazi Port is the second largest port in Libya and widely considered as the most important trading port in the Libyan eastern region. Benghazi Port is located adjacent to the Central Business District in Benghazi city. According to the 3GPP, it is estimated that the water area of Benghazi Port is 1,900,000m² and the land area is 1,200,000m² and has the capacity of approximately 4,000,000 tons per year. The existing port primarily provides freight activities, for oil products and other goods. There are plans to limit the commercial activities at the existing port and develop a larger commercial port north of the Free Zone site. However plans and status for this development are unknown. Developing a new commercial port within the Free Zone could provide additional domestic and international trading capabilities in Benghazi. The proposed new commercial port would also provide connectivity and logistical support to future commercial activities within the Free Zone. It is understood that the Port Authority has already gathered bathymetric information for the sea adjacent to the Free Zone. Based on this information, it has been concluded that the development of the new commercial port is likely to be more economical if it is developed further away from the shore. Additional plans to develop a marina within the Free Zone (adjacent to the port) have been proposed in order to provide mooring access for small boats and yachts. A marina would provide recreational, property development and commercial development capabilities and attract both a local and wealthy international customer base. It is recommended that studies are undertaken to confirm the feasibility of the new port. It is recommended that the authority leading the improvement works at Benghazi Port and the development of the new commercial port are engaged to understand their programme, including expected improvement works and timescales. 5.6.1.2 Road/Highway transport Figure 5.6: Primary road networks connecting There are currently two primary roads linking the the Free Zone Free Zone to Benghazi city (and other destinations across Libya): 1. Ganfouda road (number 1 on Figure 5.6). – This primary road runs parallel to the main coastal highway (identified below). 2. Tariq Al’Arubah Al U’rouba Highway (number 2 on Figure 5.6). This is the main coastal highway (dual carriage way) and connects Benghazi to Tripoli and other major coastal cities in Libya. The coastal highway starts from Al Magroun in the 2 southwest and extends up to Al Aquriya in the 1 north, passing through Benghazi city. Some roads in the vicinity of the Free Zone site Key are known to get extremely congested during peak 1: Ganfouda road hours. 3GPP states that due to the lack of public 2: Al’Arubah Al U’rouba Highway transport there are a large number of private cars 339483 | 15 December 2016 39
Mott MacDonald | Elmreisa Free Zone which create significant traffic volumes and congestion during peak hours along the main coastal highway and other road networks. There are several plans within the 3GPP to strengthen the existing road network in Benghazi. They are expected to help alleviate some of the pressures currently experienced on the road network system. The plans consist of: ● Widening Ganfounda road to a two-lane road and installing traffic signs and road lighting; ● Improvement and maintenance works to Tariq Al’Arubah Al U’rouba Highway, including pavement work, road lighting and traffic signs; and, ● Extending the ring road network which surrounds Benghazi city centre. The Free Zone is likely to have a significant impact to the existing road network in Benghazi. It is anticipated that there will be an increase in commercial vehicle traffic due to the port and other commercial activities within the Free Zone. It is also anticipated that a significant amount of traffic will be generated by people commuting from Benghazi and travelling to and from Banina Airport. It is recommended that a transport assessment is carried out in order to establish the likely impact of the Free Zone to the existing road network and to determine the requirements for further capacity improvement works. Based on information included in the 3GPP it is considered likely that the number of bus terminals across Benghazi is inadequate. The 3GPP outlines plans to develop several bus terminals across key areas of Benghazi. One bus terminal has been identified to be approximately 3km away from the Free Zone site (please see the Figure 5.7 below). Figure 5.7: Proposed bus terminal Source: Benghazi Masterplan Report, 2009 It is recommended that the authority in charge if the development of bus terminals across Benghazi is engaged in discussions to understand the status of this project, including expected designs and timescales. It is recommended that discussions are held to optimise the positioning of the bus terminal to ensure proximity to the site. 339483 | 15 December 2016 40
Mott MacDonald | Elmreisa Free Zone 5.6.1.3 Rail transport There is currently no operational rail infrastructure in Benghazi. In 2008, an agreement was made with the Russian State Railways to construct a double-track railway with both passenger and freight capabilities. The planned railway offers the opportunity for connecting the Free Zone, the new commercial port and Benghazi. There are further proposals in the 3GPP for future extensions to extend the railway to Egypt and Tunisia. Russian State Railways began construction on a 554km double-track railway parallel to the coast line between Sirt and Benghazi. Due to the civil unrest in Libya the construction is currently on hold. The project status is unknown but it is understood that no works have been carried out in the Benghazi region. It is recommended that the authorities leading the development of the heavy railway line are engaged in discussions to understand the status of the railway project, including expected designs and timescales and to ensure that the routes are developed in conjunction with Free Zone requirements. 5.6.1.4 Air transport The closest airport to the Free Zone is the Benina Airport, located approximately 20km east of Benghazi city. The airport provides civil and military services. It supports primarily domestic and a limited number of international flights. However based on information included in the 3GPP, it is understood that its capacity is limited. Within 3GPP there are plans to restructure and upgrade the airport to meet the requirements of a modern international aviation hub. In 2008, the Libyan Aviation Agency announced plans to increase the capacity of Benina Airport to 1 million passengers per year by increasing the runway capability, increasing the number of available airbridges, increasing the size of the passenger terminal and providing additional cargo stations. The Free Zone is likely to have a significant impact to the existing airport. It is anticipated that there will be an increase in demand for domestic and international flights due to an increase in commercial and recreational activities within the Free Zone. A transport assessment is advised in order to establish the likely impact of the Free Zone to flight demand (domestic and international) at Benina Airport and to determine the requirements for further capacity improvement works. It is recommended that Benina Airport authority is engaged to understand their programme of work and future plans for the airport, including expected improvement works and timescales. Any anticipated impacts of the Free Zone to the Airport should be communicated and possible risks to be mitigated. Transportation infrastructure provides connectivity for people and goods to and from the Free Zone. It is a vital factor for the success of the development. Therefore, it is of strategical importance to involve the various Benghazi transportation authorities in the development stages of the Free Zone to ensure maximum connectivity for the Free Zone. It is recommended that transportation authorities are engaged to gain a more detailed understanding to their plans and timescales of their respective transportation infrastructure. It is recommended that the transportation plans in the wider Benghazi area are carefully analysed in order to incorporate and mitigate for the possible shortfalls into the Free Zone feasibility and Masterplanning stages. 339483 | 15 December 2016 41
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