2 Elmreisa Free Zone Prefeasibility Study Report

Mott MacDonald | Elmreisa Free Zone 5.6.2 Utility infrastructure This section provides a summary of the existing utility infrastructure available in Benghazi. 5.6.2.1 Power/electricity infrastructure There is an existing power plant located north of Benghazi city, the Northern Benghazi Power Plant. This is the main source of electricity supply to Benghazi. 3GPP states that the capacity of the power plant is approximately 3x150 mw (fuelled by natural gas and light fuel). 3GPP states that the electricity distribution network comprises of: ● Three main stations rated at 400kV; ● Five transformer stations rated at 220kV; and, ● Several sub-stations rated at 30kV. However, there are ongoing power problems with regular power outages. It is not known whether the existing power infrastructure has the capacity to meet the requirements of the Free Zone. A new power plant is proposed in the 3GPP in Al Hulays (south of Bu Fakhra) to meet the future energy needs of the city. It is recommended that discussions are held with the authority responsible for the Northern Benghazi power station to understand the capacity of the existing infrastructure and its ability to support the Free Zone requirements. It is recommended that the authority leading the development of the new power plant is engaged to understand the status of this project, including expected designs (anticipated capacity and capability) and project timescales. It is recommended that in the context of the Masterplan development a study is undertaken to calculate the expected power capacity demand of the Free Zone. The results from the study will enable several options to be developed for the provision of reliable and resilient power supply to the Free Zone. These options could include on-site power generation, connection to the Benghazi grid and the use of renewable energy sources. 5.6.2.2 Telecommunications infrastructure High quality telecommunication solutions enable the transfer of information and knowledge. There are currently telephone exchange systems using digital technology in Benghazi and other types of telecommunication technologies. According to 3GPP, there are: ● Four telephone exchange systems; – City Centre Exchange – Eastern Fwaihat Exchange – Western Fwaihat Exchange – Al Sabri Exchange; ● There are two mobile phone operators who maintain infrastructure in Benghazi: – Al Madar – covering the whole Benghazi; and, – Libyana – covering all settlements in Benghazi. Mobile phone services are made available by four service providers (two of which are mobile virtual network operators) ● Data infrastructure which includes: – Microwave communication system; 339483 | 15 December 2016 42

Mott MacDonald | Elmreisa Free Zone – Coaxial cable network; and, – Fibre optic cable system. It is not known whether these systems have the capacity or coverage to meet the requirements of the Free Zone. The information available in relation to telecommunications infrastructure is limited. No information is available regarding local and international data connectivity of Benghazi. However, it is understood that internet connectivity is available. It is recommended that discussions are held with telecommunications service providers in Benghazi to understand the existing telecommunication capacity and status as well as any planned upgrades. It is recommended that as part of the Masterplan a study is undertaken to determine the telecommunication requirements of the Free Zone in order to establish the expected capacity demand. 5.6.2.3 Water infrastructure The existing water distribution network covers the developed areas in Benghazi. There are four different water sources in Benghazi: ● Underground water; – Banina Water Wellfield; – Sidi Mansur Water Wellfield; ● Surface water; – Ain Zaiyanah Springs; ● Desalinated water; and, ● Transported water. Based on the 3GPP, the closest water source to the Free Zone site is the Great Man-Made River Project (GMMR Project) which was initiated in 1980 to transport water from the desert to Benghazi and is believed to have the capacity of 2,200 million m³ per year. The existing water distribution network in Benghazi is believed to have a current capacity that is only capable to support domestic water use (identified in the 3GPP). It is not known whether the existing water infrastructure has the capacity to meet the requirements of the Free Zone. It is recommended that the Free Zone will require a water supply for domestic, industrial and manufacturing water use. In order to provide a reliable, sufficient water supply it is recommended that as part of the Masterplan a study is undertaken to determine the expected capacity demand and the requirement for stand-alone water desalination plant. It is recommended that discussions are held with the existing water providers in Benghazi to develop a better understanding of the existing water supply capabilities as well as any planned infrastructure upgrades. 5.6.2.4 Sewage infrastructure The existing sewage treatment plant in Benghazi was designed for the purpose of treating city sewage water and its current capacity is inadequate for the whole of the city. As stated in the 3GPP this has led to sewage being discharged in standing water in residential areas or in sabkhas and lakes which causes negative impacts on human health and environmental pollution. 339483 | 15 December 2016 43

Mott MacDonald | Elmreisa Free Zone Based on 3GPP, the Central Business District is served by a sanitary sewer network. The remainder of Benghazi is serviced by stand-alone septic tank systems that are connected to individual buildings. There is a sewage treatment plant south of Benghazi city. The plant was intended to treat city sewage water and reuse treated water for irrigation. However, it is currently not operated efficiently and there are plans to upgrade the plant. There are plans to expand the existing treatment plant and to develop a second sewage treatment plant which is intended to increase sewage treatment capacity to serve the whole city. It is unknown whether this includes the future capacity demand created by the Free Zone development. There are currently no sewage systems located on the Free Zone site. It is recommended that as part of the Masterplan a study is undertaken to determine the sewage requirements for the Free Zone with adequate capacity. It is recommended that discussions are held with the authority responsible for managing the existing sewage treatment plant to understand the status of the proposed improvement projects, including expected designs (anticipated capacity and capability) and project timescales. 5.6.2.5 Drainage infrastructure The Free Zone will require appropriate foul and surface water treatment and drainage (sanitary and rainwater) systems. Currently in Benghazi there are limited drainage capabilities and treatment plants. The current methods of sanitary drainage in Benghazi are: ● Suction pits; ● Drainage tanks; ● Public drainage tanks; and, ● Drainage network. There is currently no sanitary drainage or rain water drainage located on the Free Zone site. In order to provide effective and hygienic disposal of wastewater, surface water and all liquid waste from the Free Zone an adequate and reliable system will need to be put in place. It is recommended that as part of the Masterplan a study is undertaken to determine the future drainage requirements for the Free Zone and to calculate the expected capacity demand. It is recommended that discussions are held with the existing drainage providers in Benghazi to better understand the current drainage capabilities and anticipated future improvements works and timescales. 5.6.2.6 Solid Waste management infrastructure There is currently no solid waste system located on or within the vicinity of the Free Zone site. 3GPP does not describe any established arrangements or associated waste management infrastructure solutions. The reference to solid waste management is limited to the identification of four methods for managing solid waste, including: ● Dumping waste into open garbage sites; ● Burning or burying waste; ● Filling low level lands with waste (for example, sabkhas); or, ● Manufacturing the waste into organic fertilizer 339483 | 15 December 2016 44

Mott MacDonald | Elmreisa Free Zone This highlights that the majority of waste is not systematically managed in a sustainable and environmental friendly manner. The planning authority is currently considering the development of an integrated waste management system for the whole of Benghazi. It is recommended that as part of the Masterplan a study is undertaken to determine the solid waste management requirements for the Free Zone. It is recommended that discussions are held with the authority responsible for managing the existing solid waste management system s to understand the status of the proposed improvement projects, including expected designs (anticipated capacity and capability) and project timescales. 5.6.3 Existing on-site and surrounding infrastructure Existing infrastructure on-site and surrounding the Free Zone site are critical factors to be considered when developing the Free Zone programme. These existing infrastructure have the potential to have a large influence on the programme depending on factors such as their ease of acquisition, demolition plans or possible environmental conditions. Figure 5.8 identifies existing infrastructure within or in close proximity to the Free Zone site. Figure 5.8: Existing on-site and surrounding infrastructure Ref Infrastructure On-site / Off-site 1 Small Fishing Port Off-site 2 Al Naheel Beach Village Off-site 3 Beach Front On-site 4 Abandoned Military On-site Accommodation 5 Former Military Prison On-site 6 Sabkha Salt Marsh On-site 7 Industrial site On-site 8 Arabic Crude Oil Company Off-site Facilities 9 Housing Development Off-site 10 Existing Residential site Off-site 5.7 Infrastructure initiatives in the Benghazi region Significant infrastructure initiatives have been identified in the 3GPP that may have a direct or indirect impact to the Free Zone development. These are summarised in Table 5.1 below. Table 5.1: Infrastructure initiatives in Benghazi Ref Initiative Description Location Status a. North African Highway and Alternative route to the Coastal Highway. Parallel to the Unknown – National Railway Project Providing connections to Banina Airport Coastal deemed a Highway high priority project 339483 | 15 December 2016 45

Mott MacDonald | Elmreisa Free Zone Ref Initiative Description Location Status b. Banina International Airport Substantial restructuring and Banina Unknown – improvement works to increase the International deemed a capacity of the Airport. Airport high priority project c. Benghazi Port and Fishery Port Improvement works to the Benghazi Benghazi Port Unknown – Port. deemed a high priority project d. Sirt - Benghazi Passenger and Double-track railway with both Between Sirt Unknown Freight Railway passenger and freight capabilities to run and Benghazi in parallel to the coast line between Sirt parallel to the and Benghazi coast line e. Light Rail Transportation (LRT) Introduction of a metro/light railway A north-south Unknown – system to improve the inner-city directional deemed a transportation system (64km long) passing high priority through the project city centre. f. Solid Waste Treatment Plant An area of 30ha in Al Kwefiya has been Al Kwefiya Unknown identified for a new solid waste dumping site. g. Wastewater Treatment Plant An area of 40ha in Al Kwefiya has been Al Kwefiya Unknown identified for a new Sewage Treatment Plant to increase the total capacity of treatment plants to 360,000m³ h. Power Plant A new Power Plant in Al Hulays (south Al Hulays Unknown of Bu Fakhra) i. Al Guarsha Industrial Zone 900ha site intended for light industries Al Guarsha Unknown and warehouse capabilities. j. Housing Projects Housing projects to development Ganfounda, Al Unknown – additional homes to meet current and Guarsha, Bu deemed a future demand. Atni and Al high priority Kwefiya project k. University and Research Centre 197.2ha site designated for a new North of the Unknown university campus and research centre city (extension to the existing Garyounis University) l. Tourism Developments 1,690ha of land available for tourism Al Sabri and Unknown developments Garyounis m. Recreation Projects 650 ha allocated towards city parks, 190 Various Unknown ha allocated towards three sport centres (Al Kwefiya, Banina and Al Guarsha), waterfront recreation and resort areas Initial research on existing site conditions and constraints has not identified significant factors that would hinder the Free Zone development. However, more detailed research, analyses and conversations with the different authorities and stakeholders should be conducted in order to determine whether the Free Zone programme should continue to progress. It is recommended that a review is undertaken to: establish what developments are planned and/or are in progress across Benghazi; initiate early consultations with relevant stakeholders; and, understand the implications for the Free Zone. It is recommended that the relevant authorities responsible for the above developments are identified and discussions are held to understand the initiatives scope, status and anticipated timescales. The information can help determine if the initiatives will have an impact on the Free Zone in order to develop mitigation and strategic plans. 339483 | 15 December 2016 46

Mott MacDonald | Elmreisa Free Zone 6 Design principles and considerations It is believed that there are over a 1,000 Free Zones around the world. Every Free Zone is competing for business and striving to offer the most competitive incentives to attract tenants. Due to the highly competitive environment it is crucial for the Free Zone to differentiate itself from competition. The design principles that are defined at the outset of the programme will be important contributing factors to the achievement of this. 6.1 Key design principles Key design principles provide the necessary guidance to facilitate a consistent, balanced and flexible design that has the potential to meet the current and future needs of end users. The guiding principles that shall underpin the Free Zone design development approach are: ● The Free Zone should be complementary of the cultural heritage of Benghazi, while reflecting a contemporary, forward looking Libya; ● The Free Zone should be safe and pleasant; ● The Free Zone should be easy for people and merchandises to move around; ● The Free Zone should be welcoming and accessible for all; ● The Free Zone should be easily adaptable for different circumstances and market needs; and, ● The Free Zone should be resource efficient and sustainable. To support these guiding principles, six key design themes have been identified: Accesibility Safety and security Sustainability Key design principles Functionality Integration Built environment 339483 | 15 December 2016 47

Mott MacDonald | Elmreisa Free Zone 6.1.1 Accessibility Accessibility is amongst the most significant factors for the success of a Free Zone. The most successful Free Zones across the globe have Enhancing local, excellent transport links, whether that is by air, sea, road and/or rail. national and international Whilst geographical location is important, if the appropriate means of connectively for access are not available (or are of poor quality) the advantage of the people and goods will location could be significantly diminished. open up development and business Labour supply is often cited as the most important single factor in opportunities and business location and that the ability of employee and/or customer ultimately raise the access is perhaps the key consideration. image and profile of the proposed Free Transport infrastructure has an obvious role to play in reducing travel Zone. time and increasing the labour pool from which businesses can attract resources from. It is aspired for the Free Zone to provide means of access through: ● High quality, safe transport solutions; ● Integrated on-site and off-site transport solutions; ● A range of cohesive and affordable transport options for the local community; ● Sustainable transport options that have a minimal adverse impacts on the environment; ● Avoidance of transport bottlenecks; and, ● Improved national and international connectivity options. 6.1.2 Sustainability Due to growing global pressures, many Free Zones around the world are striving to achieve the highest level of sustainable practice A sustainable and responsibility on every aspect of their operations. As a result, strategy is embedding the use of sustainable practices has become a key imperative for the selling point for prospective tenants. reputation and economic success The Free Zone must successfully incorporate the following three of any development elements in its planning, implementation and operation: and will incorporate economic, social and environmental considerations. Economic Social Environmental 339483 | 15 December 2016 48

Mott MacDonald | Elmreisa Free Zone Table 6.1: Elements of Sustainability Element Environmental The Free Zone will create of a healthy environment that involves minimal ecological impact, minimal waste or pollution and maximum recycling, protection and enhancement of the natural environment, wildlife and biodiversity, so that all may enjoy environmental benefits such as greenery, careful planning for physical and social wellbeing, space to walk, cycle, meet, play, relax. Social The Free Zone will facilitate the achievement of social well-being that arises from a sense of security, belonging, familiarity, support, neighbourliness, cohesion and integration of different social groups, based on respect for different cultures, traditions and backgrounds. Economic The Free Zone will contribute towards the formation of a prosperous economy that generates wealth and long-term investment without destroying the natural and social capital on which all economies ultimately depend; minimises resource use and environmental impact; develops new skills through education and training; meets basic needs, through local jobs and services. The Free Zone design will promote sustainability through: ● Becoming a central test bed for global renewable energy and technology approaches; ● Source green energy and adopt appropriate energy management measures across the whole Free Zone; ● Seek to reduce waste by reviewing the volume and type of materials purchased and exploring the opportunities for refurbishment and recycling equipment, products and materials; ● Ensure goods and materials are sourced from natural sources where appropriate, do not have an adverse effect on the environment and comply with international trading rules; ● Employ appropriate noise, air quality, biodiversity, energy and waste strategies and sustainable corporate working practices; ● Examine environmental management practices on current and potential suppliers and tenants; ● Generating long term employment opportunities for the local community (on-site and off- site); and, ● Providing access to educational and health facilities that improve the quality of life for the local community. It is recommended that a socio-environmental impact assessment is carried out in conjunction with the development of the Free Zone Masterplan. 6.1.3 Integration with local community The architecture and design of the Free Zone should complement the cultural heritage of Benghazi, while reflecting a contemporary, forward Integration with the looking Libya. It should create an all-encompassing environment that local community and preservation of its instils pride in the local community, respects potential sensitivities and heritage and culture presents a positive and inclusive image to the local community. is essential for success. To facilitate integration with the local community, the Free Zone should: ● Create an inclusive environment for everyone; ● Create a positive image that instils pride for the Libyan community; ● Avoid obtrusive designs that contrast with the local infrastructure; ● Promote contemporary architectural designs that complement the local area; ● Ensure integration with the character of the local area and its cultural heritage; and, ● Respect cultural sensitivities. 339483 | 15 December 2016 49

Mott MacDonald | Elmreisa Free Zone 6.1.4 Built environment and lifestyle Design quality in the Free Zone will not only be about how buildings look. The quality of the Free Zone built environment shall be evaluated Optimum use of based on the added value it provides and how this value enhances the available space and quality of the lives of people who live and work there. The optimum built quality on-site environment shall create a space which supports people in every infrastructure has aspect of their lives; the ability to create and support a way of living that is desirable for its Living Working Playing tenants and customers. Investing in on-site infrastructure (quality transportation networks, office buildings, green spaces etc.) not only provides functional benefits but helps create a desired image and improve the quality of life. Historically, Free Zones were designed and built to be business-centric, placing significant emphasis on facilitating business functions. Whilst the focus to provide functional first-class business spaces and complexes remains important, it is considered of equal importance to develop a people-centric environment that is designed to meet the needs of the people living and working in the Free Zone. Environmental Value Physical Value Enhance a setting Efficient and responsible use of our resources Built Environment Quality Functional Value Social Value Meets and adapts to the long- Develops a positive sense of term needs of all users identify and community The Free Zone design should place emphasis on: ● Creating a safe, welcoming place where people would wish to return frequently; ● Reinforcing the Free Zone identity and instilling civic pride; ● Improving the quality and visibility of green spaces; ● Creating an inclusive and functional environment; ● Promoting active, healthy, inclusive lifestyle for the people; ● Creating an environment where people would want to live long term; ● Promoting and encouraging social interaction; and, ● Creating linkages with the local community. 339483 | 15 December 2016 50

Mott MacDonald | Elmreisa Free Zone 6.1.5 Functionality The design of the Free Zone should make optimum use of the available space, balancing the needs of all users and key A flexible and expandable stakeholders. The use of space should be maximised and design allows the infrastructure should be thoughtfully located to permit optimal development to respond functionality and possible future expansions. to current and future market demands. The site design shall: ● Facilitate efficient operations of the whole Free Zone and tenants; ● Ensure there is balance and consistency across the Free Zone; ● Set up spatial and functional relationships between various land use types; ● Ensure there is a balance between functionality and a design that is aesthetically appealing; ● Ensure optimum positioning of shared facilities; and, ● Remain dynamic, responsive and flexible to future growth opportunities. 6.1.6 Safety and Security Whilst it is recognised that security is important, any active or passive measures should be considered against the risk of being intrusive for those who live within the Free Zone and exclusive for the community outside the Free Zone. Safety and security within the Free Zone is of paramount importance. Safety and security provisions should be in place to; The optimum design solution for the Free ● Ensure a safe and welcoming environment; Zone should create a ● Provide suitable protection in regards to information, people feeling of a secure, and physical assets; organised, and safe environment for ● Provide assurance to potential businesses and visitors; and, everyone. ● Protect against potential environmental threats. Security is required for a number of reasons, including the control and management of goods being brought in and out of the Free Zone, as well as the security and wellbeing of businesses, workers and their families. The Free Zone will provide a safe and secure environment by designing facilities, infrastructure and services to help eliminate health and safety hazards during construction, operation, maintenance and decommissioning – and to meet the needs of operational security of the Free Zone. The Free Zone should demonstrate the following: ● Clearly defined site boundary; and, ● Measures that prevent unauthorised access to the Free Zone (noting that no fences will be required in phase 1 (see section 7.2.1) and so compromise the image of the Free Zone to the local community and visitors). 339483 | 15 December 2016 51

Mott MacDonald | Elmreisa Free Zone 7 Preliminary cluster and infrastructure strategy In order to facilitate strategic project planning and discussions with current and potential Sponsors and wider stakeholders it has been deemed necessary to establish: ● the boundaries of clusters within the Free Zone (cluster area allocation); ● primary access and circulation routes to and within the Free Zone; and, ● high level strategy for utilities distribution and transportation infrastructure. In order to optimise the above strategic design issues, cluster considerations and phasing requirements have been analysed in conjunction with infrastructure requirements in relation to transportation and utilities. This process is discussed in the sections below. 7.1 Cluster area allocation The Free Zone is comprised of 8 multi-specialised clusters, 2 utility hubs (power/water and waste) and an administrative area for the Free Zone Authority. 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. The remaining 85 hectares would be used to develop common infrastructure such as utility hubs and public transportation. Table 7.1: Cluster area Cluster Area Financial Cluster 50 ha Hospitality and Conference Cluster 135 ha Industrial Cluster – Food processing 220 ha Industrial Cluster – General 165 ha Industrial Cluster – National Oil 125 ha Corporation (NOC) Media Cluster 20 ha Port, Trading and Transhipment Cluster 240 ha (Land side area only, excluding the new commercial port) Technology Cluster 160 ha It is recommended that cluster sizes should be consolidated in the Masterplanning stage and further refined if necessary with respective stakeholders. 339483 | 15 December 2016 52

Mott MacDonald | Elmreisa Free Zone Figure 7.1: Cluster total area 7.2 Phasing requirements and timescales A phased approach will be adopted in the development of the Free Zone due to the many benefits it offers for a development such as the Elmreisa Free Zone. The main drivers of phasing the development are: ● Cluster sequence based on readiness of each Sponsor; ● Land ownership and acquisition progress; ● Geographical location of development stages; ● Initial Free Zone critical mass development; and, ● The advantage of establishing a reference landmark early on. 7.2.1 Anticipated sequence of clusters based on readiness of each Sponsor The phasing approach should be developed based on the cluster readiness and cluster evolution in development and operational stages across the Free Zone. Based on Table 7.2 Tatweer Research as the Sponsor for the technology cluster have been heavily involved in the development of this pre-feasibility study and are likely to take a leading role in the preparation of the Masterplan. Tatweer have already established a concept and strategy for the development of the technology cluster. The NOC and Port Authority have recently commenced the process of developing concept plans for their clusters. On the other hand, Sponsors for the media and industrial (general & food) clusters are still to be confirmed. 339483 | 15 December 2016 53

Mott MacDonald | Elmreisa Free Zone Table 7.2: Cluster Sponsor current planning progress Cluster Sponsor Progress Technology Cluster Tatweer Research Good progress towards cluster plan development Free Zone Authority Cluster Free Zone Authority Recently commenced the process of developing the cluster plan concept Industrial Cluster – National Oil National Oil Corporation Recently commenced the process of developing the Corporation cluster plan concept Port, Trading and Transhipment Port Authority Recently commenced the process of developing the Cluster cluster plan concept Financial Cluster Libyan Stock Market (LSM) Early engagement stage Hospitality and Conference Cluster Savings and Real Estate Early engagement stage Investment Bank (Eddekhar Bank) Industrial Cluster – Food processing TBC Currently negotiating with various companies to determine cluster Sponsor Industrial Cluster – General TBC Currently negotiating with various companies to determine cluster Sponsor Media Cluster TBC Currently negotiating with various companies to determine cluster Sponsor Based on the above it is anticipated that Tatweer Research and NOC are likely to be positioned to progress with the development of their respective clusters earlier. 7.2.2 Land ownership and acquisition progress Land ownership and acquisition were also taken into account when developing the various phasing stages. Most of the land within the Free Zone area is currently available for development. However, there are parcels of land that are still subject to final acquisition. The preliminary phasing approach takes into account the land availability. Project implementation of early phases can commence in areas where land acquisition has been completed whilst negotiations take place in parallel in the areas with more complex land ownership issues. 7.2.3 Geographical location of development stages Due to the large scale of the proposed development, it is sensible for the construction phases to follow an organised geographical progression. The phasing process should allow construction to be implemented in a structured manner that is aligned with the development of infrastructure such as utilities and transport. Planning the Free Zone development in neat geographical phases (where possible) could help the accumulation of critical mass (see Section 7.2.4), and also minimise construction-site disruption among facilities that are already in use, therefore avoiding the perception of a never ending construction-site. 7.2.4 Developing initial Free Zone critical mass Building and maintaining a strong momentum throughout the development phases of the project to continuously generate progress is anticipated to be a significant success factor. Developing an initial Free Zone critical mass to demonstrate the operational capability is likely to be an important factor building up this momentum. During the initial stages, congregating developments in close approximity as opposed to spreading out across the Free Zone site is more likely to create a more visible initial Free Zone presence. It is also useful to consider the speed of which each cluster is occupied when planning the various phases. As some sectors can naturally be mobilised faster than others, it would be reasonable to schedule the fast mobilising sectors in the earlier stages to demonstrate a high tenant occupancy rate as early as possible to create a stronger initial Free Zone presence. A robust initial presence is likely to 339483 | 15 December 2016 54

Mott MacDonald | Elmreisa Free Zone contribute towards a positive perception of progress and signal a strong commitment to implement the Free Zone programme. 7.2.5 Establishing a reference landmark Constructing a recognisable reference landmark, acting as a ‘feature icon’ for the Free Zone can be another strategy to provide confidence and contribute towards establishing a Free Zone identity. This reference landmark may serve as a representation and key attraction to the Free Zone, becoming the image and symbol of pride for the city of Benghazi. It is therefore likely to be beneficial both in terms of positive perception and also building momentum for the reference landmark to be included in the early phases of construction. The feature landmark may also function as an embracing destination for the local residents to enjoy, to be proud of and feel part of. In summary, developing initial Free Zone critical mass and constructing a recognisable reference landmark early on during the project can potentially: ● Generate continuous momentum for further progress; ● Create positive perception of progress and signal a strong commitment; ● Boost market, investor and stakeholder confidence; ● Aid the Free Zone ‘presence’ establishment as early as possible; and, ● Create and manage the desired perception of the Free Zone from day one. 7.2.6 Other phasing objectives Some other benefits of a phased development may be: ● Minimising dependence on implementation progress between different business clusters; ● Minimising capital investment by providing infrastructure / facilities on demand (rather than in advance); ● Optimising flexibility in development planning; ● Optimising responsiveness to market demand; ● Minimising dependency on off-site works during the early phases of the development; ● Reducing dependency on major elements of Free Zone development that are likely to take a long time to implement (such as the port); ● Minimising negative impact to property values (on and off-site); ● Minimising stakeholder risk by defining manageable stakeholder engagement strategies; ● Reducing technical construction risk by defining easily manageable work packages; ● Employing local construction firms by providing work packages of magnitude that fall within the local market capacity (volume); and, ● Achieve efficiencies and improve work quality by implementing a continuous improvement framework. 339483 | 15 December 2016 55

Mott MacDonald | Elmreisa Free Zone 7.2.7 Phasing SWOT A SWOT (strengths, weaknesses, opportunities and threats) analysis has been undertaken in relation to phasing the Free Zone development. This is summarised in the SWOT table below: SWOT of Phasing of development Strengths Weaknesses ● Profiled capital investment and less associated risk ● Perceived track record in consistency ● Improved ability to respond to changes in market trends ● A permanent construction-site ● Avoiding oversupply and associated detrimental impact to own or nearby property values ● Lower technical complexity ● Generate continuous momentum for the Free Zone development ● Higher occupancy rates Opportunities Threats ● Advanced planning and progressively optimise ● Initial set-up: not achieving the critical mass necessary ● Ability to be flexible in how the Free Zone is planned to support tenants needs or expectations and implemented ● Not gaining market’s confidence that the development ● Ability to capture and implement lessons learning will be implemented as planned ● ‘Just in Time’ approach ● Construction works cause unacceptable level of ● Offer tenants customised solutions disruption to tenants operations ● Employ local construction firms by providing work packages of magnitude that fall within to local market capacity (volume) It is recommended that during the development of the Masterplan each Sponsor analysis and understands 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. 7.2.8 Preliminary phasing approach summary Based on the phasing considerations discussed above, Table 7.3 below shows the preliminary phasing proposal for the Free Zone. Table 7.3: Preliminary phasing proposal Phase 1 Phasing description Free Zone Authority hub According to Sponsor readiness and phasing considerations, these Hospitality and conference cluster clusters and infrastructure, preliminary located on readily available Industrial cluster - NOC land are likely to commence with Masterplanning prior to other clusters. The development of later phases will to a certain degree rely Technology cluster on the development phase 1. Utilities hub – Water & Power Utilities hub – Waste Phase 2 Financial According to Sponsor readiness and phasing considerations, these Port trading and transhipment clusters are likely to commence with Masterplanning after phase 1 to enable development in the later phases. Phase 3 Industrial cluster – food According to Sponsor readiness and phasing considerations, these Industrial cluster – general clusters and infrastructure, are likely to commence with Media Masterplanning after phase 2. It is recommended that a viable phased approach is adopted for the development of the Free Zone. Land availability and acquisition issues along with environmental and momentum generation concerns should be considered to create a more elaborate phasing programme. 339483 | 15 December 2016 56

Mott MacDonald | Elmreisa Free Zone 7.3 Cluster adjacency Each cluster should be strategically placed to consider functionality, optimal use of space and optimum movement of goods and people around the Free Zone and to/from the Benghazi region. Factors considered in the process of allocating a preliminary location of clusters were: ● Functionality- natural site features and adjacency with other clusters to enable optimisation of synergies; ● Orientation; ● Type of use (Industrial vs office) – compatible and incompatible uses; ● Transport network; and, ● Phasing requirements and timescales. The clusters’ location and adjacency should: ● Enable separation of non-compatible activities (e.g. industrial activities from office and residential); ● Facilitate consolidation of similar or closely / functionally related uses (e.g. industrial / shipping / storage activities close (or with direct access) to the port); ● Optimise the use of the beach-front for hospitality and retail commercial purposes; ● Allow for flexibility (future changes of use i.e. expansion/reduction of particular uses); ● Provide ‘transition zones’ between different uses where necessary; ● Promote collaboration between different business disciplines; ● Facilitate appropriate control for the entry / exit of people to / from the Free Zone; and, ● Enable appropriate custom control of goods importing / exporting. The matrix below includes a preliminary assessment which provides scores for each cluster based on its desirability to be adjacent (or in close proximity) to another cluster. Each adjacency is given a score, 1 = very low adjacency desirability (or proximity) and 5 = very high adjacency desirability (or proximity). For example, it is desirable for the technology cluster to be adjacent to the media cluster but low desirability to be close to the industrial clusters. Table 7.4: Cluster adjacency matrix Media Hospitality Financial NOC Food General Port & Free Zone Industrial Industrial Industrial Trading Authority Technology 4 3 4 2 2 2 2 2 Media 3 3 2 2 2 2 2 Hospitality 3 1 1 1 2 2 Adjacency desirability Financial 2 2 2 3 2 NOC 2 2 3 1 Industrial Food 3 4 1 Industrial General 4 1 Industrial Port & 1 Trading Key: 1 = very low, 2 = low, 3 = neutral, 4 = high, 5 = very high 339483 | 15 December 2016 57

Mott MacDonald | Elmreisa Free Zone The cluster adjacency diagram below illustrates the same information as Table 7.4 in a graphical format (including only neutral and high adjacency categories). Figure 7.2: Cluster adjacency matrix diagram Based on the cluster area allocation, phasing considerations and cluster adjacency analysis, a preferred cluster adjacency option was developed. In the process of defining the cluster allocation options, the planned port has been a key anchor and factor in defining the adjacencies of the rest of the clusters. Due to the ports importance to the trade and economy development of the Free Zone and its magnitude, the port, trading and transhipment cluster had to be situated on the coastline. Corresponding infrastructure facilities and industrial clusters were also situated in close proximity with the port, trading and transhipment cluster to maximise the synergies. 7.4 Cluster layout Figure 7.3 Free Zone by type of use The Free Zone is divided into two main areas; the Southern area (shown in yellow on Figure 7.3) will be a civic and residential district comprising of the financial, technology, media, Free Zone Authority and hospitality and conference clusters. The Northern area (shown in green on Figure 7.3) will be an industrial and port district, comprising of the NOC industrial (food processing and general) and port, trading and transhipment clusters. The layout configures clusters for general public use in the civic and residential district and industrial clusters in the industrial and port district. This 339483 | 15 December 2016 58

Mott MacDonald | Elmreisa Free Zone minimises the interference between the two different functions and enables the general public to enjoy the civic benefits of the Free Zone without being disturbed by the industrial and port activities and vice versa. It allows separation of non-compatible clusters and optimises synergies between compatible clusters. Figure 7.4 Preliminary cluster adjacency 7.4.1 Civic and residential district Figure 7.4 illustrates the preliminary cluster adjacency. The technology cluster is located adjacent to the hospitality, financial and media clusters. This can facilitate the development of an integrated financial and technology innovation centre which has a hospitality and conference centre for business events and travellers. This location arrangement is anticipated to encourage and facilitate synergies between clusters for their mutual benefit. The hospitality and conference cluster is situated on the beachfront. It is likely that the destination landmark will also be located on the hospitality and conference cluster. This cluster along with the iconic reference landmark, marine and beachfront promenade can be grouped to function as a main attraction for locals and tourists. There is also a small area allocated for the NOC within the office district. It is understood that NOC may wish to locate some administrative functions in the Free Zone and propose to develop these functions in the allocated civic and residential district. 7.4.2 Industrial and port district According to the preliminary cluster adjacency (see Figure 7.4 Preliminary cluster adjacencyFigure 7.4), the Northern area will be an industrial district, comprising of the utilities infrastructure, NOC oil maintenance operations, industrial (food processing and general) and port, trading and transhipment clusters. The port, trading and transhipment cluster area is located on the coastline linked to the port. It will likely contain a rail dry port and will be fenced in to allow custom clearance of goods that are transferred into the Free Zone. The general industrial cluster situated next to the port allows flexibility of the fence to be extended to cover both clusters. The rationale is to increase efficiency by allowing goods that are imported, processed and then directly exported to be processed in the Free Zone without having to go through customs. 339483 | 15 December 2016 59

Mott MacDonald | Elmreisa Free Zone The offshore port is designed to reside slightly further away from the coastline. This decision (made by the Port Authority) takes into account bathymetric information gathered by the Port Authority. Extending the port further away from shore where the seabed is deeper can enable larger cargo ships to dock in the port. Moreover, the port design shields the coastline from tidal waves coming from the North, minimising tidal impacts to the Free Zone coastline. 7.5 Transportation infrastructure Transport connectivity is one of the key factors that will determine the success of the Free Zone. Maritime, road and railway are the main types of transportation channels planned within the Free Zone. Transport infrastructure should support optimum movement of goods and people within and to and from the Free Zone while prioritising safety and network efficiency. On-site transport infrastructure should seamlessly integrate with off-site transport infrastructure and should demonstrate: ● Integration of the Free Zone with the local transport infrastructure; ● Facilitation of a phased development approach; ● Appropriate design capacity provisions to meet future demand; and, ● Take account of transport infrastructure projects that are anticipated to be implemented in the Benghazi region. The following section discusses the objectives for each type of transportation and the preliminary layout of the transportation infrastructure. Port The geographical location of Benghazi makes it an advantageous area for developing a new commercial port in the Free Zone. The new commercial port could provide additional domestic and international trading capabilities in Benghazi. The proposed commercial port would also provide connectivity and logistical support to future commercial activities within the Free Zone. The new commercial port should: ● Be safe and functional; ● Provide adequate freight transportation and trading infrastructure; ● Facilitate phased development of the Free Zone; and, ● Ensure appropriate design capacity provisions to meet future development demands. Roads The Benghazi population is heavily reliant on private cars and taxis as a primary mode of transport and therefore the anticipated volumes of car usage within the Free Zone is likely to be high. The provision of roads within the Free Zone site should: ● Be safe and functional; ● Minimise land use; ● Have a clear way finding and orientation strategy; ● Minimise intersection or division of clusters; ● Provide appropriate separation of different types of traffic (commercial vehicles, passenger vehicles and pedestrian / cyclist); ● Facilitate phased development of the Free Zone; and, ● Ensure appropriate design capacity provisions to meet future development demands. 339483 | 15 December 2016 60

Mott MacDonald | Elmreisa Free Zone Railway A freight railway route is likely to be constructed within the Free Zone to serve the port and increase connectivity to and from the port. The railway line shall: ● Be safe and functional; ● Provide adequate freight transportation and suitable access to the port; ● Minimise possible disturbance to the clusters; ● Avoid intersection or division of clusters; ● Facilitate phased development of the Free Zone; and, ● Ensure appropriate design capacity provisions to meet future development demands. Figure 7.5: Preliminary transportation infrastructure layout Primary roads Secondary roads Ganfouda road Figure 7.5 shows the preliminary transportation infrastructure plan. Developing a new commercial port within the Free Zone leverages the geographical advantage of Benghazi. Positioned in the eastern Mediterranean, Benghazi has strong connections to the Middle East, Arabian Gulf and the North African region through the coastal highway. The new commercial port can increase transportation options to and from the Free Zone. Combined with the on-shore infrastructure the new commercial port can potentially increase its capacity for international trading even further. Four primary access roads (shown in orange and yellow in Figure 7.5) in each of the two districts form a network to serve the district and connect with the main Ganfouda road (shown in pink in Figure 7.5) which leads to Benghazi. The two Northern primary access roads will mainly be used to service the industrial districts and the port. It will be built for industrial purpose to accommodate heavy cargo vehicles to and from the port. The two Southern primary roads will 339483 | 15 December 2016 61

Mott MacDonald | Elmreisa Free Zone be used as general public access to the business/civic and residential district including the marina, beachfront and tourist destinations. Secondary roads (shown in blue on Figure 7.5) mainly run on the cluster boarders and between primary roads, neatly intersecting with them, facilitating network connectivity in the Free Zone. This road design can allow convenient access to all areas and provide several alternative routes to all sections of the Free Zone. It can enhance resilience of the transportation network, such as in the case of road closure, the road grid would enable traffic to continue on alternative routes and not prevent access to certain sections of the Free Zone. Designing the roads to reside on cluster boarders also allows maximum flexibility for the Sponsors to organise the layout of their own cluster area. The railway line is planned to enter the Free Zone from the North 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. It is recommended that the various transportation authorities in the wider Benghazi region are engaged to gain a more detailed understanding to their plans and timescales of their respective transportation infrastructure. This can allow the Free Zone to incorporate and mitigate for the possible shortfalls into the Free Zone feasibility and Masterplanning stages. 7.6 Utility infrastructure strategic options Utilities infrastructure should be of appropriate capacity, resilience and reliability to meet the requirements of the Free Zone. On-site utility infrastructure should demonstrate: ● Facilitation of phased development approach; ● Appropriate design capacity provisions to meet future demand; and, ● Take account of utility infrastructure projects that are anticipated to be implemented in the Benghazi region. It is recommended that utility providers in Benghazi are engaged in order to obtain information about the status of the existing infrastructure including capacity and availability. It is recommended that a Free Zone infrastructure strategy should be developed as part of the Masterplan. This should address all aspects of utility infrastructure design, implementation and operation (including considerations of service charges). In order to supply the Free Zone with essential utility services including power, water, internet, and waste treatment, three utility distribution options have been considered: ● Standalone/on-site – where the main utility hub is based on-site, utilities are distributed from the main hub to cover the Free Zone and waste is gathered and processed on-site; ● Distributed/off-site – where the main utility hub is based off-site, utilities are transferred into the Free Zone to be distributed and waste is collected and transferred to an off-site plant to be processed; and, ● Hybrid – where there are main utility hubs based both on-site and off-site, utilities are distributed though both hubs to cover the Free Zone and waste is collected and processed in both hubs. As the quality, resilience and reliability of the utility infrastructure is likely to be a critical success factor of the Free Zone, there is a strong desire to limit dependencies of the Free Zone programme to external factors. The default approach for utility infrastructure should be that it will be developed as a standalone solution to serve the Free Zone. However where potential 339483 | 15 December 2016 62

Mott MacDonald | Elmreisa Free Zone opportunities arise, the utility infrastructure should be connected with off-site infrastructure in order to enhance resilience and potentially to exploit commercial opportunities. Therefore ‘Hybrid’ was selected as the preferred option. Power Security and resilience of power supply is an imperative factor to sustaining development of the Free Zone. The hybrid solution considers a fully self-sufficient system, independent from any existing utility infrastructure but compatible to allow future connection to city-wide power network. It is a centralised option that provides reliable capacity for the Free Zone and has the potential to respond to the phased development approach of the site. Water The water infrastructure should provide a solution capable of meeting a total fresh water demand of the entire site. The hybrid solution aims to provide a fully self-sufficient water system for the Free Zone, independent form any existing water infrastructure but capable or connecting to city-wide water network in the future. It will likely be a centralised on-site water plant based on desalination of sea water. Wastewater & Solid Waste The wastewater and solid waste infrastructure should provide a strategy that enables the efficient collection and sustainable treatment of waste. The hybrid solution plans to deliver a self-contained waste collection and treatment system. There will likely be recycling and organic (composting) facilities located within the Free Zone (i.e. services compound) allowing comprehensive organic and waste management on-site, reducing external dependency of the Free Zone. It is likely that the Free Zone processing facilities will have the potential to integrate with the Benghazi city waste management system. Telecommunications It is highly likely that the Free Zone will require extensive fixed and wireless telecommunications services to support the new facilities and to meet demand for faster and wider connectivity. 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. Having a hybrid utility solution with on-site facilities enhances security and continuity of telecommunications services in the Free Zone. It is recommended that more detailed analysis is conducted upon the preferred utility options to better determine their suitability for the Free Zone. It is recommended that the relevant authorities responsible for the above developments are identified and discussions are held to understand the initiatives scope, status and anticipated timescales. The information can help determine if the initiatives will have an impact on the Free Zone in order to develop mitigation and strategic plans. 339483 | 15 December 2016 63

Mott MacDonald | Elmreisa Free Zone 8 Governance and management strategy This section sets out a high level governance and management strategy as currently envisaged for the Free Zone. At this pre-feasibility stage, the proposed strategy is intended to be regarded as a working draft which will be required to be further developed and refined as the programme progresses. 8.1 Proposed governance structure Good governance is essential in order to facilitate the successful implementation of the programme and to ensure the continuous alignment of the programme objectives with the overall business strategy. Figure 8.1 below sets out the proposed governance structure. This type of hierarchical structure in terms of responsibility is necessary in order to ensure a working solution is obtained which satisfies the needs of stakeholders whilst adhering to the underlying aspirations of the project. Figure 8.1: Free Zone Governance Strategy 339483 | 15 December 2016 64

Mott MacDonald | Elmreisa Free Zone The proposed governance structure is based on international best practice and adapted to reflect the existing stakeholder groups for Elmreisa. The governance structure aims to enhance accountability while remaining flexible to allow adaptation to ever changing environments. The role of each entity identified above is outlined in the following table: Table 8.1: Proposed governance structure 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 a Special Purpose Vehicle (SPV) to execute its Company obligations on behalf of FZA to deliver and operate the Free Zone; ● Under delegated authority, will act as an agent of FZMC to deliver the operational obligations of FZMC; ● Will provide the necessary executive functions for the operation of the Free Zone; ● Will act as management of the legal entity that will be established to enter into agreements with Sponsors and contractors; ● Will set investment criteria, and grant licenses and permits to operators within the Free Zone; ● 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 SPV’s; ● Will grant permits and licenses to Sponsors allowing them to offer a range of commercial propositions to their tenants and occupiers including: – completed buildings for purchase or lease – ‘Design & Build’ service for occupiers requiring bespoke property solutions – provision of ‘Serviced Plots’; ● Will provide Free Zone Utilities to each Sponsor to a pre-determined Service Level Agreement (SLA); and, ● Will be responsible for the implementation (jointly with Sponsorss), 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 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; ● Each Sponsor will be responsible for its own residential area; and, ● The exact makeup of the SPV that are to be established by the Sponsors for the implementation and operation of clusters is yet to be determined. 339483 | 15 December 2016 65

Mott MacDonald | Elmreisa Free Zone It is recommended that the proposed governance structure is reviewed and considered in conjunction with the development of the programme and wider legal and regulatory aspects. It is advised that governance accountability and delegation of authority are defined and aligned with the Free Zone objectives and operational strategy. It is recommended that stakeholders are consulted and once an agreement has been reached the proposed governance structure should be embedded into the programme. 8.2 Governance priority themes A number of priority themes have been identified. These priority themes are associated with areas that are 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. They will be achieved through the development of customised strategies for achieving the desired goal and objectives. The priority themes have been identified as follows: Table 8.2: Governance priority themes Priority Theme Description Transparent decision making The multi-tiered governance strategy will at all times seek to be transparent in its decision making process. It will be evidence based and have a clear and robust audit trail. Specific information needs will be identified early to enable decision-making and tracked to monitor project performance after decision-making. Accountability Accountability will be achieved through the establishment of an appropriate hierarchy of responsibility and delegation with reporting to flow accordingly at agreed intervals that can handle the complexity of the range of projects that are planned. Value for money Value for money will be achieved through the optimal use of resources to deliver the intended outcomes. A VfM framework and associated criteria and investment decision making will be implemented at agreed intervals to allow both testing and challenge. VfM will be ensured through Management Teams being proactive in collecting data, ensuring they have the right skills and using commercial awareness to obtain better deals. Knowledge transfer The proposed governance structure will encourage effective knowledge transfer through regular consultation and engagement across the programme, the use of mixed teams (international and local), availability of apprenticeships and joint local and international ventures. Particular focus will be paid in the interfaces between common service projects and adjacent clusters. Promotion of international best Identification and implementation of best practices across the whole range practice of activities within the Free Zone, including governance, management, construction, operation, health safety and environment etc. Particular focus will be paid to delivery to time and price, development of innovative solutions, efficient risk transfer and ensuring skills are recruited to match those of the implementation teams, pursuit of efficiencies and placing projects under continuous and systematic scrutiny. Health and Safety The Free Zone will at all times seek to promote a culture of health and safety and protect the welfare of people who live and work there. Health and safety will be a priority theme across all stages of design, implementation and operation. Proactive Risk Management Proactive risk and opportunity management will become a core element of day-to-day business. The implementation of best practice will be driven by the board but embedded at every level of the programme. It is recommended that the strategy chosen for each priority theme is considered in terms of; what is meant by the priority theme; the means by which it will be measured; and how specific measures will be implemented or accounted for. 339483 | 15 December 2016 66

Mott MacDonald | Elmreisa Free Zone 8.3 Decision making and delegated authority An outline of decision making and delegated authority principles is illustrated below.  Ultimate decision making authority Board of Directors  Acting under delegated authority from the Free Zone Board of Directors (within specified limits) for the implementation of the overall programme; and, Free Zone Authority  Gives approval to the Tatweer Management Company to proceed at key decision points.  Acting under delegated authority from the Free Tatweer Zone Authority (within specified limits) for the Management implementation of specific work packages. Company It is recommended that the proposed decision making and delegated authority principles are reviewed in conjunction with the proposed governance and management structure to ensure alignment and consistency. Clear mechanisms for delegating authority and key approval points could also be defined in accordance with the programme and project implementation procedures (e.g. Business case approval, investment decisions, authority to proceed to certain stages etc). It is advised that transparency, reporting schedule and potential conflicts of interest are considered when defining the proposed decision making and delegated authority principles. It is also recommended that detailed terms of reference (ToR) are developed to establish responsibilities and specified limits of authority. 8.4 Proposed management structure construction Figure 8.2 below sets out the proposed management structure. This is intended to be a dynamic approach that will allow for the implementation of a wide range of Free Zone development projects through a variety of procurement strategies. Both the Tatweer Management Company (TMC) and the Sponsors will act as intelligent customers in the procurement and management of projects. 339483 | 15 December 2016 67

Mott MacDonald | Elmreisa Free Zone Figure 8.2: Proposed Management Structure The roles of the various entities identified above are outlined in the following table. Table 8.3: Proposed Management Structure Management role Responsibilities Free Zone Development Programme Director Executive role with ultimate accountability to the FZA. Will act as an over-arching point of contact and authority between the Programme Manager, all Project Managers, Back Office Business Support Services, the Programme Management Office and Tatweer Management Company. Programme Management Office Will act as the centre of excellence that will provide expert advice across a wide range of fields including technical, financial, legal and commercial. Will act as a resource pool to complement project teams as necessary. Under instructions by the Programme Director, to oversee the compliance of cluster specific projects with the overall Free Zone principles agreed between the FZA and the Sponsors. Programme Manager Responsible for facilitating communication and coordination across projects and the overall programme. 339483 | 15 December 2016 68

Mott MacDonald | Elmreisa Free Zone Management role Responsibilities Oversee and manage the project managers whose role is to deliver common infrastructure projects and the off-site infrastructure co- ordination function. Ensures co-ordination and communication between cluster specific projects and common infrastructure projects. Project Managers Appointed for both common and cluster infrastructure (please see below). Responsible for the delivery of their pre-defined work-packages, but also for the management of interfaces and interdependencies of their own projects with others. – Project Managers: Off-site Responsible for the co-ordination of off-site infrastructure, as well as infrastructure and Masterplan the development and execution of the Masterplan. – Project Managers: Common Responsible for the delivery of their pre-defined work-packages Infrastructure providing common infrastructure to the Free Zone. – Project Managers: Clusters (Sponsors) Responsible for the delivery of their pre-defined work-packages for individual clusters. 8.5 Programme structuring process and overarching strategies 8.5.1 Programme structuring process It is anticipated that the programme structuring process for the Free Zone development is as follows: Now - Current stage Master- Identification Delivering Pre-feasibility Operation planning of work work packages packages Table 8.4: Programme and project structure Stage Objectives Pre-feasibility The pre-feasibility study shall establish the high-level strategic framework. It sets out to define: – The vision and objectives; – Key programme stakeholders and their associated roles; – High level design principles; and – Programme level risks. Masterplanning A Masterplan is an evolving, long term planning document that establishes a clear and consistent framework for how an area will be developed. A Masterplan describes and maps an overall development concept, including present and future land use, urban designed and landscaping, built form, infrastructure, circulation and service provision Successful Masterplanning will involve extensive engagement with all stakeholders to ensure varying needs and expectations are met and to employ a transparent approach in decision making. The priority design themes outlined earlier in the document are intended to help direct the Masterplanning process and thereby attempt to derive the most benefit from a perspective design solution. Identification of work Once an agreed Masterplan is in place for the Free Zone, the work packages, or packages projects, themselves need to be clearly identified and outlined. This will involve the active participation of stakeholders to ensure the scope of works for each package is suitably detailed. It is anticipated that there will be a number of work packages relating to the provision of on-site wide infrastructure and services. This could include: 339483 | 15 December 2016 69

Mott MacDonald | Elmreisa Free Zone Stage Objectives – On-site transport (including roads and parking spaces); and – Utilities infrastructure (including power, water, telecommunications etc). Some of these may be ‘enabling packages’ (i.e. without which the development of the clusters themselves may not be possible). Individual Sponsors will define and deliver their own work packages for infrastructure within the boundary of their cluster. The structuring of work packages will be determined by a wide range of factors including: – Phasing and demand for particular services; – Type of works (grouping); – Consideration of value for money aspects (economies of scale); and – Size and scale of work packages etc. The final Masterplan and agreed work packages will ultimately influence the procurement strategy to be adopted by the FZA and Sponsors. Delivering work packages Once work packages have been identified and agreed for the Free Zone, they will need to be delivered. The delivery of work packages is anticipated to incorporate three key stages; Detailed project definition – Definition of scope and objectives; – Production of a business case; – Linking work packages with wider programme (strategic alignment of objectives); – Development of commercial strategy; – Selection of procurement strategy; and, – Identification / establishment of project teams. Procurement – Development of tendering documentation; – Selection of preferred supplier(s); and, – Contract award. Implementation – Mobilisation; – Commencement of work; and, – Monitoring and quality control. Regular stakeholder consultation and engagement should be maintained throughout the delivery stage. Attention will be placed in incentivised delivery of projects to time and budget. Operation Once the project has been delivered it will transition into the operational and maintenance phase, which will include: – Maintenance and operation; and – Continuous performance review. It is recommended that through stakeholder consultation the programme structuring approach is further developed. This will include establishing processes and procedures with clear and transparent decision making and approval points that align with the governance and management structure and the delegated authority principles. It is also worth considering strategies in resolving potential conflicts of interest. 8.5.2 Overarching strategies For large scale projects, it is common to set standards in relation to the processes and procedures that are to be followed in the implementation of the overall programme and individual projects. This can ensure there is a robust and consistent approach to procurement, risk management and change across the programme. 339483 | 15 December 2016 70

Mott MacDonald | Elmreisa Free Zone 8.5.2.1 Procurement strategy The procurement strategy adopted for the overall programme and individual work packages will be based on optimal value and efficient risk allocation for each project. The following qualitative factors should be considered when evaluating appropriate procurement strategies: ● Project Complexity; ● Ability to specify requirements; ● Scope for Contractor input in design development and innovation; ● Priority themes; ● Time constraints; ● Expertise and experience of the project team; and, ● Risk transfer and allocation. The illustration below provides examples of procurement options that may be considered for each project along with an indicative risk allocation scale. Client Risk Contractor Risk Public Private Partnership Design, Build, Finance and Operate Design, Build and Finance Design and Build Prime Contracting Traditional Management Contructing Construction Management For example, a power station for the Free Zone could be procured and operated through a public private partnership (PPP) in comparison to the implementation of the internal road network, which is more suited towards a traditional procurement route (due to its relative size and phased approach). It is recommended that the Free Zone should complete requirement setting and develop execution strategies for procurement to support the identification and selection of procurement process and to achieve benefits realisation. It is advised that risk allocation analysis is carried out to determine potential parties for risk allocation. It is also recommended that (where appropriate) processes and procedures are put in place to define key decision making criteria. 8.5.2.2 Risk management strategy The Programme will adopt a recognised best practice approach to risk and opportunity management, which is designed to: 339483 | 15 December 2016 71

Mott MacDonald | Elmreisa Free Zone ● Establish the risk context in relation to the external business and political environment that the programme operates in; ● Establish appropriate management structures to deal effectively with project risks, including the allocation of roles and responsibilities and provision of adequate governance; ● Develop and implement a structured series of actions to deal with the project risks including the ways in which risks are identified, assessed, addressed and reviewed and reported; and, ● Provide overall assurance on the risk management strategy, the controls that are in place and the adequacy of the review process. The management of risk for Figure 8.3: Risk management strategy the programme will be at two levels: Programme risk ● Individual project level; Programme risk register management strategy and, ● Programme level. Risks and implications arising within individual projects may not be limited by the boundaries of the project. Materialisation of risks may Project risk have an impact on the overall Project risk register(s) management strategy programme (and beyond the programme itself). It is therefore deemed essential that appropriate measures are taken to ensure that key project risks are communicated / escalated to a programme level. It is recommended that a risk management strategy is developed that defines how risks are to be managed throughout the programme. Clear procedures should be put in place that support the identification and assessment of risk, and then the planning and implementation of risk responses. 8.5.2.3 Change management strategy The successful delivery of the programme will rely upon an effective approach to change control being implemented by the project delivery teams. There are a number of factors that make change control one of the most important issues within the programme: ● The projects are being run to a fixed budget and timetable; and, ● There are multiple stakeholders with potentially conflicting requirements. For change management, project specific processes should be developed for: ● Identifying change; ● Assessing change; ● Implementing change; and, ● Changes in management. It is recommended that change management processes are defined. These should specify how change will be identified, assessed and controlled throughout the programme. 339483 | 15 December 2016 72

Mott MacDonald | Elmreisa Free Zone 8.5.2.4 Work package delivery strategy It is anticipated that there are four key stages to project delivery. Table 8.5: Work package delivery strategy Stage Objectives When Business case A business case will be developed for each project (or work To be developed at the development package) which outlines the project justification and alignment to beginning of the project the overall programme. It also captures estimated costs, risks and maintained and expected benefits. throughout Project control and Each project, or work package, will have a control and Needs to be agreed at management strategy management strategy which will set out the project controls, project initiation and systems and procedures and specific project delivery tools. enforced throughout. Project Plan A project plan will be developed for each project, covering key Needs to be agreed at milestones including; approval stages, design / planning, project initiation and commercial and construction stages. reviewed and updated The project plans will need to integrated with the overall throughout the project. programme plan and identify key milestones and interdependencies. Benefits Realisation Separate Benefit Realisation Plans (BRP) for each project, or Needs to be defined at Plan work package, will need to be developed. The BRP will set out project initiation; however the how the realisation of project benefits will be assessed and benefit realisation usually appraised, and will identify the accountable owners responsible doesn’t occur until after for monitoring and delivering the benefit realisation. the project has closed. It is recommended that through stakeholder consultation the project delivery strategy is further developed. This should include establishing processes and procedures, reporting cycles and approval points that align with the governance and management structure and the delegated authority principles as well as the project and programme implementation processes. 339483 | 15 December 2016 73

Mott MacDonald | Elmreisa Free Zone 9 Stakeholder considerations Stakeholder management is an essential tool used to identify, analyse and manage stakeholders that can affect, or be affected by a programme. Identify Analyse Effective stakeholder engagement is important in understanding the needs of the programme and ensuring the delivery and implementation of the right solution. The Free Zone development will have a broad range of internal and external stakeholders, each with varying expectations and needs, ranging from Engage Plan senior government officials to tenants and residents. Each stakeholder will require a different level of engagement and management. The known programme stakeholders have been captured and categorised (internal and external) below. Table 9.1: Programme Stakeholders and Categorisation Key Internal Direct External Indirect External Free Zone Board of Directors City and South Benghazi residents Benghazi Region Residents (general) Free Zone Committee site Land Owners Prospective Free Zone Tenants (local) Free Zone Advisory Board The Municipality Council Prospective Free Zone Tenants (international) Free Zone Authority Local Business Council (Benghazi Banina Airport Local Council) Cluster Sponsors Benghazi Environment Agency Benghazi Port ● Tatweer Research ● National Oil Corporation (NOC) ● Libyan Stock Market (LSM) ● Savings and Real Estate Investment Bank (Eddekhar Bank) Construction Companies Shipping Companies Facilities Management Companies Customs Fire Brigade and Police Department Ministry of Health Ministry of Education Utility Service Providers (power, water, sewage, drainage, telecommunications) Transport Department (local and national highways) Aviation Authority 339483 | 15 December 2016 74

Mott MacDonald | Elmreisa Free Zone It is recommended that once the authorities responsible for the infrastructure initiatives in Benghazi (section 5.7 of the report) are identified, they should be included in the stakeholder list and mapping exercise in Figure 9.1. Effective stakeholder engagement is key to the success of major programmes of work. Given the challenging political and environmental background, lack of stakeholder buy-in and failure to secure their agreement could result in delays for the Free Zone development. Therefore it is important each stakeholder is engaged and management accordingly to increase the chances of success for the Free Zone. 9.1 Stakeholder mapping A commonly practiced and highly effective mapping method is the Stakeholder Interest / Power Matrix, which allows you to understand: ● The level of interest that the stakeholder has in the programme; and, ● The level of power that the stakeholder holds over the programme. Understanding a stakeholder’s level of interest in, and the amount of power over, a programme can be very helpful in identifying possible supporters or blockers to the programme and mitigate accordingly. Having identified the long list of stakeholders, an indicative / preliminary programme Stakeholder Map has been developed below (Figure 9.1). Please note that this map is intended for use as a starting point for the programme and it should be expected that the list of stakeholders will continue to grow as the stakeholders may themselves identify further individuals or groups that need to be taken into consideration. 339483 | 15 December 2016 75

Mott MacDonald | Elmreisa Free Zone 76 Figure 9.1: Free Zone stakeholder map Consult Collaorate & Empower Interest High FZMC FZA FZBD FZC FZAB DevP ICOs Local Construc Tenants Tenants Council Com (Inter) (local) Land FM Bus. owners Com Council Shipping Customs comp. Utility Tranp. Resi. Dep Dep (local) MoE Airport MoH Power Low High Resi. (General Aviation Enviro Dep Fire & Police Port Industry Cluster Operators Key Internal Stakeholders Direct External Stakeholders Inform Low Involve & Consult Indirect External Stakeholders 339483 | 15 December 2016

Mott MacDonald | Elmreisa Free Zone It is recommended that a ‘target’ level stakeholder map is developed by the Free Zone Authority by identifying each stakeholder’s current position on the stakeholder map and identifying their desired ‘target’ positions. A ‘target’ map is an effective way of developing an engagement and management plan. 9.2 Stakeholder engagement The stakeholder positions on the stakeholder map can be used to determine the level of engagement and communication that is required with each stakeholder. The following diagram explains the different quadrants of the Interest / Power matrix and how each quadrant relates to the level of stakeholder engagement that is needed. Based on the indicative stakeholder map the Free Zone stakeholders fall under the following quadrants: Table 9.2: Free Zone Stakeholders Collaborate and Involve and Consult Consult Inform Empower Free Zone Board of Environment Agency Free Zone Advisors Board Benghazi residents Directors (general) Free Zone Authority Prospective tenants Fire and Police department (international) 339483 | 15 December 2016 77

Mott MacDonald | Elmreisa Free Zone Collaborate and Involve and Consult Consult Inform Empower Free Zone Committee Prospective tenants (local) Aviation department ICOs Banina Airport Benghazi Port Local Council Shipping companies Land owners Construction companies Business Council FM companies Customs Customs Benghazi residents (local) Transport Department Utilities Department Ministry of Education Ministry of Health The Stakeholder Engagement Spectrum outlined below suggests different ways to engage stakeholders according to each of the five engagement levels mentioned above (i.e. Inform, Consult, Involve, Collaborate and Empower). Stakeholder engagement Promise to stakeholders Methods of engagement goals To provide balanced, objective, We will keep you informed. Fact sheets accurate and consistent Newsletters and bulletins information to assist stakeholders Websites to understand the problem, Inform alternatives, opportunities and/or solutions. To obtain feedback from We will keep you informed, listen to Focus groups stakeholders on analysis, and acknowledge concerns and Surveys Consult alternatives and/or outcomes. aspirations, and provide feedback Public meetings on how stakeholder input influenced the outcome. To work directly with stakeholders We will work with you to ensure Workshops throughout the process to ensure that your concerns and aspirations Focus groups that their concerns and needs are are directly reflected in the Surveys Involve consistently understood and alternatives developed and provide Forum groups feedback on how stakeholder input considered. influenced the outcome. To partner with the stakeholder We will look at you for advice and Workshops Collaborate alternatives, making decisions and and incorporate your advice and Facilitated consensus building including the development of innovation in formulating solutions Focus groups the identification of preferred recommendations into the forums for deliberation and outcomes to the maximum extent solutions. decision-making We will implement what you To place final decision-making in possible. Dialogue with stakeholder the hands of the stakeholder. decide. We will support and Local governance Empower enabled/equipped to actively Joint planning Stakeholders are complement your actions. Provision of data contribute to the achievement of Capacity building outcomes. As the Free Zone is an emerging programme, stakeholder engagement methods have yet to be put in place. It is recommended that a communications plan will need to be developed which will highlight the method of engagement to be used for each stakeholder depending upon their position and the target level required. 339483 | 15 December 2016 78

Mott MacDonald | Elmreisa Free Zone A communication plan includes: ● Method of engagement to be carried out to obtain the target level for the stakeholder; ● Schedule of engagement – planned activities and their timing; ● Key messages to be delivered; and, ● Resourcing - responsibilities and engagement owners. 339483 | 15 December 2016 79

Mott MacDonald | Elmreisa Free Zone 10 Indicative programme and recommended next steps 10.1 Indicative programme Figure 10.1 is an indicative programme for the implementation of the Free Zone. The Masterplanning stage is anticipated to follow after the completion of pre-feasibility in early 2017. There are two main work streams for infrastructure and clusters. The infrastructure work stream will start earlier than the cluster work streams, as basic enabling infrastructure would be required to be in place before cluster specific construction can commence. Phase 1 infrastructure construction on-site could commence as early as the first quarter of 2018. For a more detailed programme please refer to Appendix B. Figure 10.1: Indicative programme Current stage 10.1.1 Strategic planning Much attention and effort would need to be put into the detailed strategic planning of the Free Zone in terms of the site as a whole and also within each cluster. Some of the aspects to consider are: Strategic advancement of the programme The Free Zone Authority, Free Zone Management Committee and Tatweer management should develop a strategic plan and structure for the successive progress of the Free Zone programme. At the cluster level, based on the vision and objectives of each cluster, the cluster sponsors should further develop detailed solutions for each cluster. These strategies could include: ● Detailed Masterplanning strategy; ● Comprehensive risk profiling and mitigation strategy; ● Procurement evaluation and work package identification approach; ● Extensive cluster management and operational strategy; and, ● Tenant management strategy. Cluster design Detailed cluster design would need to be produced in the subsequent Free Zone development stages to demonstrate cluster functionality and consider possible integration strategies with 339483 | 15 December 2016 80

Mott MacDonald | Elmreisa Free Zone neighbouring clusters. Enabling infrastructure designs could be prepared within each cluster to establish how they can be interfaced with the common infrastructure in the Free Zone. Cluster design may take account of interface issues in the Free Zone and develop alternative solutions to tackle the possible issues. Complete pre-feasibility recommendations The recommendations provided in this pre-feasibility report should be actioned upon in the coming months in order to gain a better understanding of the Free Zone feasibility and develop a more vigorous development plan and risk mitigation strategy. Risk mitigation strategy A risk register and mitigation strategy should be carefully developed and planned for by the Free Zone Authority for the Free Zone as a whole and also by each sponsor for their respective clusters. Risk context, appropriate risk management structure and strategy should be clearly identified. Procurement strategy A clear strategic procurement approach such as requirement setting and execution strategy could be developed as guidelines for subsequent procurement activities within the Free Zone and possibly for each cluster. These may include guidelines and recommendations on how to package parcels of work for procurement, defining procurement criteria in terms of risk allocation and value for money, identifying the procurement process and how to incentivise contractors. 10.1.2 Governance strategy The Free Zone Authority and each cluster sponsor should develop a detailed governance strategy. Governance setup at a Free Zone level and cluster management structure should be defined in the following stages of the Free Zone development. These can therefore identify the decision making authorities determine subsequent decisions. Factors to consider when defining the governance strategy include requirements setting, benefits realisation, delegation of authority, alignment with objectives and operating strategy and transparency of decision making. It is suggested that stakeholders are acknowledged and consulted in the development of the governance strategy. In addition, delivery capabilities should also be identified. Recognising the capabilities and the management approach of the Free Zone and each clusters can aid the identification of gaps that need to be bridged and also to determine how these capabilities can be managed. 10.1.3 Land acquisition Land acquisition is a crucial part of the development of the Free Zone. All site related access, inspection and construction can only commence after the land is acquired, hence it lies on the critical path of the indicative programme. As shown in the indicative programme, land procurement is recommended to be concluded in the next 12 months in order to perform early site setup works to enable subsequent commencement of construction. 339483 | 15 December 2016 81

Mott MacDonald | Elmreisa Free Zone 10.2 Recommended next steps There are many recommendations throughout this pre-feasibility report, below are key steps that summarises these recommendations: a. Finalise Regulatory Environment and develop business cases for the overall Free Zone and for each Cluster and also supporting sociaoeconimic cases with complementary analysis from previous Free Zones; b. Progress with the development of the Free Zone Masterplan to inform, shape and crystallise the requirements for clusters in order to inform the adjacencies, the supporting infrastructure and interfacing with external projects including the desired 3GPP Railway alignment; c. Progress 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 to be accounted for 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; g. Develop a detailed delivery programme to examine interdependencies and identify the key elements to execute the development of the Free Zone in a timeous 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. Table 10.1 below are the detailed next steps that are recommended to be taken to support the progress of the programme. Table 10.1: Recommended next steps Chapter Title Section Title Section Recommendation Reference in report The need for a Socioeconomic 2.1 It is recommended that cost-benefit analyses are carried out in order to Free Zone impact of Free inform the scoping of the economic activities incorporated in each cluster. Zones 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. 339483 | 15 December 2016 82

Mott MacDonald | Elmreisa Free Zone Chapter Title Section Title Section Recommendation Reference in report Free Zone Free Zone 4 It is recommended that each Sponsor develops and refines its vision to clusters clusters ensure that it is aligned with their strategic objectives. Existing site site ownership 5.2 It is recommended that the Free Zone Authority should continue the conditions and and land momentum to acquire the land required for the Free Zone development. acquisition constraints site topography 5.3 It is recommended that detailed topography surveys are carried out in order Existing site and key features to gain more detailed measures and analysis of the Free Zone landscape in conditions and order to determine the suitability of the site for further feasibility and constraints Masterplan development. Geology 5.4 It is recommended that geotechnical surveys are carried out in order to Existing site assess the soil conditions and impact of the salt marsh in order to assess conditions and suitability of the site for further development progress and establish constraints appropriate remediation plans as early as possible. Flooding and rise 5.5.1 It is recommended that a flood risk assessment is carried out to determine Existing site of sea levels and evaluate the risk of flooding in order to assess suitability of the site for conditions and further development progress and establish appropriate remediation plans. constraints Existing site Earthquakes 5.5.2 It is recommended that earthquake risks are considered during the design conditions and stage of the development. constraints Existing site Biodiversity 5.5.3 It is recommended that a socio-environmental impact assessment is carried conditions and out in conjunction with the development of the Free Zone Masterplan. constraints Existing site Environment 5.5 It is recommended that environmental assessments are carried out to conditions and establish potential direct and indirect impacts of the environment that may constraints 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. Sea transport 5.6.1.1 It is recommended that studies are undertaken to confirm the feasibility of the Existing site new port. conditions and It is recommended that the authority leading the improvement works at constraints Benghazi Port and the development of the new commercial port are engaged to understand their programme, including expected improvement works and timescales. Road/Highway 5.6.1.2 It is recommended that a transport assessment is carried out in order to Existing site transport establish the likely impact of the Free Zone to the existing road network and conditions and to determine the requirements for further capacity improvement works. constraints Existing site Road/Highway 5.6.1.2 It is recommended that the authority in charge if the development of bus conditions and transport terminals across Benghazi is engaged in discussions to understand the status constraints 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. Existing site Rail transport 5.6.1.3 It is recommended that the authorities leading the development of the heavy conditions and railway line are engaged in discussions to understand the status of the railway constraints project, including expected designs and timescales and to ensure that the routes are developed in conjunction with Free Zone requirements. 339483 | 15 December 2016 83

Mott MacDonald | Elmreisa Free Zone Chapter Title Section Title Section Recommendation Reference in report Existing site Air transport 5.6.1.4 A transport assessment is advised in order to establish the likely impact of the conditions and Free Zone to flight demand (domestic and international) at Benina Airport and constraints 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. Transport 5.6.1 It is recommended that transportation authorities are engaged to gain a more Existing site infrastructure detailed understanding to their plans and timescales of their respective conditions and transportation infrastructure. constraints 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. Power/electricity 5.6.2.1 It is recommended that discussions are held with the authority responsible for Existing site infrastructure the Northern Benghazi power station to understand the capacity of the conditions and existing infrastructure and its ability to support the Free Zone requirements. constraints It is recommended that the authority leading the development of the new power plant is engaged to understand the status of this project, including expected designs (anticipated capacity and capability) and project timescales. It is recommended that in the context of the Masterplan development a study is undertaken to calculate the expected power capacity demand of the Free Zone. The results from the study will enable several options to be developed for the provision of reliable and resilient power supply to the Free Zone. These options could include on-site power generation, connection to the Benghazi grid and the use of renewable energy sources. Existing site Telecommunicati 5.6.2.2 It is recommended that discussions are held with telecommunications service conditions and ons infrastructure providers in Benghazi to understand the existing telecommunication capacity constraints and status as well as any planned upgrades. It is recommended that as part of the Masterplan a study is undertaken to determine the telecommunication requirements of the Free Zone in order to establish the expected capacity demand. Existing site Water 5.6.2.3 It is recommended that the Free Zone will require a water supply for domestic, conditions and infrastructure industrial and manufacturing water use. In order to provide a reliable, constraints sufficient water supply it is recommended that as part of the Masterplan a study is undertaken to determine the expected capacity demand and the requirement for stand-alone water desalination plant. It is recommended that discussions are held with the existing water providers in Benghazi to develop a better understanding of the existing water supply capabilities as well as any planned infrastructure upgrades. Existing site Sewage 5.6.2.4 It is recommended that as part of the Masterplan a study is undertaken to conditions and infrastructure determine the sewage requirements for the Free Zone with adequate constraints capacity. It is recommended that discussions are held with the authority responsible for managing the existing sewage treatment plant to understand the status of the proposed improvement projects, including expected designs (anticipated capacity and capability) and project timescales. Drainage 5.6.2.5 It is recommended that as part of the Masterplan a study is undertaken to Existing site infrastructure determine the future drainage requirements for the Free Zone and to calculate conditions and the expected capacity demand. constraints It is recommended that discussions are held with the existing drainage providers in Benghazi to better understand the current drainage capabilities and anticipated future improvements works and timescales. Solid Waste 5.6.2.6 It is recommended that as part of the Masterplan a study is undertaken to Existing site management determine the solid waste management requirements for the Free Zone. conditions and infrastructure It is recommended that discussions are held with the authority responsible for constraints managing the existing solid waste management system s to understand the status of the proposed improvement projects, including expected designs (anticipated capacity and capability) and project timescales. 339483 | 15 December 2016 84

Mott MacDonald | Elmreisa Free Zone Chapter Title Section Title Section Recommendation Reference in report Existing site Infrastructure 5.7 It is recommended that a review is undertaken to: establish what conditions and initiatives in the developments are planned and/or are in progress across Benghazi; initiate constraints Benghazi region early consultations with relevant stakeholders; and, understand the implications for the Free Zone. It is recommended that the relevant authorities responsible for the above developments are identified and discussions are held to understand the initiatives scope, status and anticipated timescales. The information can help determine if the initiatives will have an impact on the Free Zone in order to develop mitigation and strategic plans. Design Sustainability 6.1.2 It is recommended that a socio-environmental impact assessment is carried principles and out in conjunction with the development of the Free Zone Masterplan. considerations Preliminary Cluster Area 7.1 It is recommended that cluster sizes should be consolidated in the cluster area allocation Masterplanning stage and further refined if necessary with respective adjacency and stakeholders. utilities infrastructure strategy Preliminary Phasing SWOT 7.2.7 It is recommended that during the development of the Masterplan each cluster area Sponsor analysis and understands interdependencies between different adjacency and cluster operations; critical infrastructure requirements; envisaged utilities commencement of operations for each cluster/establishment of presence; and infrastructure expansion profile of its future operations. strategy Preliminary Preliminary 7.2.8 It is recommended that a viable phased approach is adopted for the cluster area phasing development of the Free Zone. Land availability and acquisition issues along adjacency and approach with environmental and momentum generation concerns should be utilities summary considered to create a more elaborate phasing programme. infrastructure strategy Preliminary Transportation 7.5 It is recommended that the various transportation authorities in the wider cluster area infrastructure Benghazi region are engaged to gain a more detailed understanding to their adjacency and plans and timescales of their respective transportation infrastructure. This can utilities allow the Free Zone to incorporate and mitigate for the possible shortfalls into infrastructure the Free Zone feasibility and Masterplanning stages. strategy Preliminary Utility 7.6 It is recommended that utility providers in Benghazi are engaged in order to cluster area infrastructure obtain information about the status of the existing infrastructure including adjacency and strategic options capacity and availability. utilities It is recommended that a Free Zone infrastructure strategy should be infrastructure developed as part of the Masterplan. This should address all aspects of utility strategy infrastructure design, implementation and operation (including considerations of service charges). Preliminary Utility 7.6 It is recommended that more detailed analysis is conducted upon the cluster area infrastructure preferred utility options to better determine their suitability for the Free Zone. adjacency and strategic options It is recommended that the relevant authorities responsible for the above utilities developments are identified and discussions are held to understand the infrastructure initiatives scope, status and anticipated timescales. The information can help strategy determine if the initiatives will have an impact on the Free Zone in order to develop mitigation and strategic plans. Governance Proposed 8.1 It is recommended that the proposed governance structure is reviewed and and governance considered in conjunction with the development of the programme and wider management structure legal and regulatory aspects. strategy It is advised that governance accountability and delegation of authority are defined and aligned with the Free Zone objectives and operational strategy. It is recommended that stakeholders are consulted and once an agreement has been reached the proposed governance structure should be embedded into the programme. Governance Governance 8.2 It is recommended that the strategy chosen for each priority theme is and priority themes considered in terms of; what is meant by the priority theme; the means by 339483 | 15 December 2016 85

Mott MacDonald | Elmreisa Free Zone Chapter Title Section Title Section Recommendation Reference in report management which it will be measured; and how specific measures will be implemented or strategy accounted for. Governance Decision making 8.3 It is recommended that the proposed decision making and delegated authority and and delegated principles are reviewed in conjunction with the proposed governance and management authority management structure to ensure alignment and consistency. Clear strategy mechanisms for delegating authority and key approval points could also be defined in accordance with the programme and project implementation procedures (e.g. Business case approval, investment decisions, authority to proceed to certain stages etc). It is advised that transparency, reporting schedule and potential conflicts of interest are considered when defining the proposed decision making and delegated authority principles. It is also recommended that detailed terms of reference (ToR) are developed to establish responsibilities and specified limits of authority. Programme 8.5.1 It is recommended that through stakeholder consultation the programme Governance and structuring structuring approach is further developed. This will include establishing management process processes and procedures with clear decision making and approval points strategy that align with the governance and management structure and the delegated authority principles. Overarching 8.5.1 It is recommended that the Free Zone should complete requirement setting Governance and strategies and develop execution strategies for procurement to support the identification management and selection of procurement process and to achieve benefits realisation. It is strategy advised that risk allocation analysis is carried out to determine potential parties for risk allocation. It is also recommended that (where appropriate) processes and procedures are put in place to define key decision making criteria. Risk 8.5.2.2 It is recommended that a risk management strategy is developed that defines Governance and management how risks are to be managed throughout the programme. Clear procedures management strategy should be put in place that support the identification and assessment of risk, strategy and then the planning and implementation of risk responses. Governance Change 8.5.2.3 It is recommended that change management processes are defined. These and management should specify how change will be identified, assessed and controlled management strategy throughout the programme. strategy Governance Work package 8.5.2.4 It is recommended that through stakeholder consultation the project delivery and delivery strategy strategy is further developed. This should include establishing processes management and procedures and approval points that align with the governance and strategy management structure and the delegated authority principles as well as the project and programme implementation processes. Stakeholder Stakeholder 9 It is recommended that once the authorities responsible for the infrastructure considerations considerations initiatives in Benghazi (section 5.7 of the report) are identified, they should be included in the stakeholder list and mapping exercise in Figure 9.1. Stakeholder Stakeholder 9.1 It is recommended that a ‘target’ level stakeholder map is developed by the considerations mapping Free Zone Authority by identifying each stakeholder’s current position on the stakeholder map and identifying their desired ‘target’ positions. A ‘target’ map is an effective way of developing an engagement and management plan. Stakeholder Stakeholder 9.2 As the Free Zone is an emerging programme, stakeholder engagement considerations engagement methods have yet to be put in place. It is recommended that a communications plan will need to be developed which will highlight the method of engagement to be used for each stakeholder depending upon their position and the target level required. Programme risk Programme risk Appendix C It is recommended that the register is further developed and refined as the register register programme progresses. The key risks should be identified and allocated to individuals to monitor. Detailed mitigation plans for each risk should be developed. 339483 | 15 December 2016 86

Mott MacDonald | Elmreisa Free Zone Appendices A. Clusters 88 B. Indicative programme 96 C. Programme risk register 97 339483 | 15 December 2016 87

Mott MacDonald | Elmreisa Free Zone A. Clusters A.1 Financial Cluster A.1.1 Alignment with Free Zone objectives Free Zone - Objectives Objective 1: Attract local and foreign investment Objective 2: Facilitate a shift towards a knowledge based economy 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 industries Objective 6: Encourage regeneration of the local economy Objective 7: C Financial Cluster - Objectives for the region Objective 1: Become a leading finance hub Objective 2: Advance financial services and products in Libya Objective 3: Stimulate the development of Islamic banking services Objective 4: Attract internationally recognised institutes Table Key Directly contributing towards the Free Zone Objectives Indirectly contributing towards the Free Zone Objectives A.1.2 Target business sectors of cluster Target Business Sectors Banking & Islamic Banking Professional services ● Commercial banking ● Legal and consulting ● Investment banking ● Accounting and audit ● Trade and export finance ● Compliance ● Project and infrastructure funding ● Recruitment ● Treasury services ● Risk management ● Correspondent banking ● Data and research providers Insurance Wealth Management ● Underwriting Portfolio management ● M&A advisory ● Venture capital ● Private equity ● Private banking ● Trade finance ● Brokerage service 339483 | 15 December 2016 88

Mott MacDonald | Elmreisa Free Zone A.2 Hospitality and conference cluster A.2.1 Alignment with Free Zone objectives Free Zone - Objectives Hospitality and Conference Cluster - Objectives Objective 1: Attract local and foreign investment Objective 2: Facilitate a shift towards a knowledge based economy 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 industries Objective 6: Encourage regeneration of the local economy Objective 7: Contribu Objective 1: Become the top tourist destination in Libya Objective 2: Provide recreational activities for the local community Objective 3: Attract high-end retailers and international hotel groups Objective 4: Encourage diversification in conference services Table Key Directly contributing towards the Free Zone Objectives Indirectly contributing towards the Free Zone Objectives A.2.2 Target business sectors of cluster Target Business Sectors Hotel / Hospitality Tourism Conference and event facilities Retail Exhibitions Recreational and entertainment services 339483 | 15 December 2016 89

Mott MacDonald | Elmreisa Free Zone A.3 Food processing industrial cluster A.3.1 Alignment with Free Zone objectives Free Zone - Objectives Objective 1: Attract local and foreign investment Objective 2: Facilitate a shift towards a knowledge based economy 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 industries Objective 6: Encourage regeneration of the local economy Objective 7: Contribu General Industrial Cluster - Objectives Objective 1: Provide a flexible environment that accommodates a variety of organisations Objective 2: Attract local and international industrial organisations Objective 3: Encourage small and medium sized manufacturing plants Objective 4: Generate employment opportunities for the local community Table Key Directly contributing towards the Free Zone Objectives Indirectly contributing towards the Free Zone Objectives A.3.2 Target business sectors of cluster Target Business Sectors Packaging / re-packaging / labelling Equipment repairs / maintenance Goods manufacturing / assembly Goods storage Goods processing / manipulate 339483 | 15 December 2016 90

Mott MacDonald | Elmreisa Free Zone A.4 Industrial - general cluster A.4.1 Alignment with Free Zone objectives Free Zone - Objectives Objective 1: Attract local and foreign investment Objective 2: Facilitate a shift towards a knowledge based economy 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 industries Objective 6: Encourage regeneration of the local economy Objective 7: Contribu General Industrial Cluster - Objectives Objective 1: Provide a flexible environment that accommodates a variety of organisations Objective 2: Attract local and international industrial organisations Objective 3: Encourage small and medium sized manufacturing plants Objective 4: Generate employment opportunities for the local community Table Key Directly contributing towards the Free Zone Objectives Indirectly contributing towards the Free Zone Objectives A.4.2 Target business sectors of cluster Target Business Sectors Packaging / re-packaging / labelling Equipment repairs / maintenance Goods manufacturing / assembly Goods storage Goods processing / manipulate 339483 | 15 December 2016 91