Documente Academic
Documente Profesional
Documente Cultură
August 2018
Prepared for,
Faisalabad Industrial Estate Development &
Management Company (FIEDMC)
Élan Partners (Pvt.) Ltd
Head Office:
4th Floor, 9 West Rizwan Plaza,
Jinnah Avenue Blue Area,
SectorF-6,Islamabad,Pakistan
Tel: +92 (51) 2272582-85
Fax: +92(51) 2272580
Peshawar Office:
2nd Floor, Azam Tower, Arbab Road Stop, University Road, Peshawar
Tel.: +92 (91) 5842009
Email: mail@elan.com.pk , Web: www.elan.com.pk
Lahore Office:
House # 39-C, Ahmad Block,
New Garden Town, Lahore. Telephone No: +92 (42) 35883839
International Office:
New Jersey
USA
Report disclaimer:
Élan Partners has prepared this document in accordance with the standard format for Faisalabad Industrial Estate
Development & Management Company (FIEDMC). Any other persons, companies, or institutions that use any information
contained herein do so at their own risk
Establishment of Allama Iqbal Industrial Estate
Near Sahianwala Interchange M-3 Motorway,
Faisalabad
EXECUTIVE SUMMARY
E.1. Introduction
An industrial estate of area 3432 acres approx. is being established on M – 3 Motorway
near Sahianwala Interchange under Public-Private Partnership mode. The proponent
of this project is Faisalabad Industrial Estate Development and Management
Company.
This document in hand is the Technical Feasibility report of the proposed project. This
report narrates those technical points and design parameters based on which this
industrial estate will be deemed viable in real case scenario.
The industrial development in Faisalabad is taking place in between the urban in an
un-organized manner. With many industries operating within the urban areas, the
quality of life is deteriorating gradually. Faisalabad Industrial Estate Development and
Management company has taken up the task to relocate existing industries outside
the city premises to ensure a healthy life style for urban dwellers. In this regard,
FIEDMC already has established two industrial estates i.e. M-3 Industrial City and
Value Addition City outside city at fringes. In continuity of this agenda, FIEDMC has
initiated their third project of establishing another industrial estate covering an area of
3432 acres near Sahianwala Interchange. Unlike previous projects, this industrial
estate will be established under Public-Private Partnership Mode which will be
regarded as Pakistan’s first ever industrial estate to be established under this mode.
Faisalabad Industrial Estate Development and Management Company (FIEDMC) has
been set up by Government of the Punjab for deliberate, rapid and planned
industrialization. FIEDMC has created biggest mechanical settlement of nation along
Motorway M-3 which is probably going to fall inside China-Pakistan Economic
Corridor. Administration of FIEDMC now has expectation to build up an Industrial
Estate (Area 3432 Acres approx.) near Sahianwala Interchange M-3 Motorway
Faisalabad.
E.2. Project Description
The proposed Project is the development of an Industrial Estate near Sahianwala
Interchange M-3 Motorway Faisalabad Punjab Province. The territory of this bequest
is roughly 3432 Acres. This project is part of Punjab Govt. Program i-e:
"Implementation of Other Development Program (ODP) 2016-17. The project has
been conceived on the following lines:
a) A State of the Art Industrial Estate under Public Private Partnership on an area
of 3,000 acres at the moment and likely to extend in near future;
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Establishment of Allama Iqbal Industrial Estate
Near Sahianwala Interchange M-3 Motorway,
Faisalabad
b) Funds for land, infrastructure along with utilities and construction of Industrial
Units and allied facilities would be arranged under Public Private Partnership
mode;
c) Environmental and social compliance would be ensured by this project.
E.3. Legal Framework
Compliance with all the applicable laws and rules is very important to make the
business successful in long term. Rules change over the time and also depends upon
the territory in case of business expansion. Rules also depend upon the type of
business you are dealing in. In case of proposed industrial estate, the legal framework
is developed after literature review of following rules and acts;
i. Punjab Government Rules of Business 2011
ii. Special Economic Zone Act 2012
iii. FIEDMC Building Bylaws
iv. FIEDMC Bylaws for VAC and M – 3 IC
v. National Reference Manual
vi. TMA Rules and Regulation
E.4. Contribution of Industry in Economy
The industry is the second largest sector of economy. This sector mainly comprises of
the textile industry, engineering and goods industry, agro based industry, chemical
industry and small & medium enterprises. This sector provides employment
opportunities to 15.3 percent of the total labor. The GDP growth rate is 5.7% according
to World Bank report.
i. Textile Industry
Pakistan has an inherent advantage of being 4th largest producer of cotton in
the world with a huge potential to further increase crop yield. The sector
contributes nearly one-fourth of industrial value-added and provides
employment to about 40 percent of industrial labor force. Barring seasonal and
cyclical fluctuations, textiles products have maintained an average share of
about 62 percent in national exports.
ii. Sugar Industry
The sugar industry is the second largest agro based industry after textiles.
Pakistan is an important cane producing country and is ranked at fifth in terms
of sugar cane crop acreage and 9th in sugar cane production. The share of
sugar industry in value added of agriculture and GDP are 3.2 and o.7 percent
respectively. The sugar sector constitutes the 4.2 percent of manufacturing.
iii. Cement Industry
Cement dispatches reached historic heights in March 2017 touching almost 4
million tons as the factories utilized their full production capacity to meet robust
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Establishment of Allama Iqbal Industrial Estate
Near Sahianwala Interchange M-3 Motorway,
Faisalabad
demand in the local market. The ever increasing domestic market has
vindicated the manufacturers thrust on adding new capacities.
while the plot sizes of 2 and 3 acres will cater for the development of medium size
industry.
The western block of the industrial estate has been given the name of Medium &
Large. This block will be comprised of industries of medium and large scale. The plot
sizes in this block is planned as 4 acres and multiple of 4 acres. However, in case of
area constraint, plots of sizes other than multiple of 5 i.e. 5 acres and 10 acres are
also given. The plot size of 4 acres will be available for medium size industry while plot
sized bigger than 4 acres will be utilized to establish industries of large scale. The
percentage of land uses is given in table below;
E.5.2 Amenities
Provision of services and utilities has been ensured by designing 3 Community Cores
and 6 services area. The community cores have been designed keeping in view all
sorts of work force needs. These community cores are planned at reasonable
distances making them readily accessible throughout the industrial estate. The
community core 1 will features following services;
E.5.2.1 Services in Community Core-I (CC-I)
i. FIEDMC office
ii. Jamia Mosque
iii. Hospital
iv. Central Weigh Station
v. Security Office
vi. Labor Club
vii. Ladies Club
viii. Open space
ix. Commercial area
The Community Core II and III will feature labor club and ladies club, open space and
commercial area but main hospital and jamia mosque will not be provided. Labor club
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Establishment of Allama Iqbal Industrial Estate
Near Sahianwala Interchange M-3 Motorway,
Faisalabad
and ladies club in community cores 2 and 3 will features internal space specified for
hospital/dispensary and prayer area. Apart from this, each community core 2 and 3
have space reserved for future development as well.
Recreational activities are of prime importance for healthy environment, which
ultimately enhance the working capacity of the workers. Keeping in view the
requirements of the project, Three Labor Clubs and Three Ladies Clubs (one in each
CC measuring 4 acres) have been proposed.
E.5.3 Utilities
The proposed industrial estate will provide following utilities to the industrialists;
i. Electric Supply System
ii. Water Supply System
iii. Combined Effluent Treatment Plant
iv. Solid Waste Disposal/Land fill site
v. Gas Distribution Centre
vi. Fire Fighting System
vii. Utility lines for electric, water, sewerage, gas and phone to be provided in
services corridor underground
E.5.3.1 Electric Power Supply
The main electric power supply moves along the adjacent M3- Motorway which
originates from the Liberty Power Plant. The liberty power plant touches the northern
boundary of the project site. Ascertaining the source location of the electric power
supply, the grid stations of the proposed industrial estate have been aptly placed at
multiple points.
E.5.3.2 Sewerage/Drainage System
The drainage system will be covered by the seepage drain which already exists in the
project site. The seepage drain flows across the project site and ultimately ends at the
main drain/nala Gojra Nala. Keeping in view the flow pattern of effluent and slope of
the site, the Combined Effluent Treatment Plant has been placed at the location which
is converging point for effluent flowing across the site area.
E.5.3.3 Water Supply System
The water requirements will be fulfilled by installing tube wells near RB canal. The
canal RB branch is present at mere a distance of 7.07 Km. The RB canal distributary
originates Chattan da Chak 145 and touches the southern boundary of M3-IC.
E.5.3.4 Natural Gas Supply System
The main natural gas supply line is present on the Chiniot-Jhumra road. The already
established M3 – Industrial City has taken input from this gas line through a SMS
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Establishment of Allama Iqbal Industrial Estate
Near Sahianwala Interchange M-3 Motorway,
Faisalabad
station located at the entrance point of the industrial estate. In case of proposed
industrial estate, the extension of gas supply line is quite viable because this SMS
station is only 1.76 Km away from the project site.
E.5.3.5 Solid Waste Management System
In case of proposed industrial estate, two types of solid waste will be generated. i.e.
Industrial waste and Municipal waste. The collection of both types of the wastes will
be done via centralized collection system. in case of industrial waste collection,
collection task will be assigned to a contractor after legitimate licensing process. In
case of municipal waste, door to door collection will be carried out. The recyclable
wastes will be recycled and rest of the collected waste will be taken to proper disposal
site present in the nearby vicinity of Faisalabad city.
E.5.3.6 Fire Fighting System
A well-equipped and pressurized water distribution system which will comprise of
pipes, hydrants, gate valves etc. has been proposed which will use water requirement
of 4000 gallons.
E.6. Sustainability and Performance Indicators
The projects which are socially acceptable, economically viable and environmentally
sound can achieve the sustainability. The proposed industrial estate will be made
sustainable economically, environmentally and socially through given below program;
E.6.1 Environmental Sustainability
The environmental sustainability of the proposed industrial estate will be ensured by
opting following parameters;
i. Sustainable use of natural resources (energy, water, resources)
ii. Reduction of emissions (air, water, ground, underground, noise,
electromagnetism)
iii. Reduction in waste production
iv. Sustainability for goods and people
v. Quality and diversity of habitat and landscape
E.6.2 Social Sustainability
The social sustainability of the proposed industrial estate will be ensured by adopting
following parameters;
i. Improvement in the working conditions
ii. Education and Training
iii. Reinforcing cultural identity and area’s vocation
iv. Equity, solidarity and social cohesion
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Establishment of Allama Iqbal Industrial Estate
Near Sahianwala Interchange M-3 Motorway,
Faisalabad
location of the electric power supply to the project area will have to be
identified/connected at later stage of electrical designing.
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Establishment of Allama Iqbal Industrial Estate
Near Sahianwala Interchange M-3 Motorway,
Faisalabad
operational cost. A small portion of this cost is spent before the warranty life of the
elements of industrial estate expires.
E.10 PPP Proposal
Governments in the past have undertaken projects under traditional procurement mode
whereby capital and operating costs are paid for by the public sector and bears the risk
of cost overruns and completion delays. In Pakistan, private sector participation in
projects was witnessed in the power sector, where the Government first established
the “Hub Power Company (Hubco)” as the first independent power generation
company. Hubco became operational in 1994 and around that time, the first power
policy was also introduced, establishing a regulatory framework for private investment
in the power generation sector. Traditional procurement was thus superseded by Public
Private Partnership structures in the power sector. Subsequently various projects of
infrastructure development had been undertaken.
E.11 Public Private Partnership
FIEDMC intends to develop this proposed industrial estate under PPP mode. This will
be the very first industrial estate which is going to be to be developed under this mode
in country’s history. As there will be no involvement of Government in this case so
provision of subsidies is out of question. This has considerably increased the potential
of financial risk involved in the project. the investor will have to use his own capital to
develop the proposed industrial estate. Asp per scope of work, the financial model of
the proposed industrial estate will be developed on PPP mode. There are total 13 PPP
agreements and out of these 13 options after rigorous brain storming and discussion
with PPP experts, 2 options i.e. Joint Venture (JV) and Build and Transfer (BT) were
narrowed down.
After the comparison and evaluation of PPP options, the preferred option is the Option-
2 i.e. Build and Transfer, therefore, it is proposed to opt. The option can serve as a
sustainable model that can be replicated for all other similar projects.
E.12 Business and Financial Model
Scenario-1(Local Investment)
The development will be carried out in five years in the form of two packages namely
Package 1 which contains Small and Medium Industrial Plots and lies on the upper
side of the Chiniot road. The Package 2 contains Medium and Large Industrial Plots
and lies on the lower side of Chiniot road. In corresponding packages, civil and
electrical works will be conducted simultaneously to avoid wastage of resources.
Boundaries of packages are defined with the help of existing Sahianwala-Chiniot road
and main road of the proposed scheme. The summary is as follows;
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Establishment of Allama Iqbal Industrial Estate
Near Sahianwala Interchange M-3 Motorway,
Faisalabad
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Establishment of Allama Iqbal Industrial Estate
Near Sahianwala Interchange M-3 Motorway,
Faisalabad
In case of proposed industrial estate, the worst case scenario is assumed when the
IRR falls below the required rate i.e. 15% then amount from the VGF will be taken to
pay the grievances to the private party. After sensitivity analysis, the lowest IRR from
both scenario 1 and 2 comes out to be 11.89% and 6.27% respectively. On the basis
of these IRR values, the amount will be taken from VGF. The amount taken will depend
upon the budget allotted to the VGF which will be calculated in later stage of project.
1 INTRODUCTION
The document in hand is the Technical Feasibility report of project “Establishment of
Allama Iqbal Industrial Estate (Area 3432 acres Approx.) near Sahianwala
Interchange, M–3 Motorway, Faisalabad under Public-Private Partnership Mode”. This
report discusses those technical points based on which this proposed industrial estate
will be deemed viable in real case scenario. The main theme for the development of
the proposed industrial estate encompasses following aspects;
i. Arranging the area in a way which is not only viable for the interested investors
but also preserves its natural and landscape characteristics
ii. Planning and building infrastructure and buildings in accordance with standards
for efficient deployment of natural resources and by using renewable materials
and energy.
iii. Attracting companies who strive for efficient deployment of natural resources
and minimal pollution, including those which support basic industries in
reaching these goals through the services and products they offer.
iv. Management which supports financial, environmental and social success of the
companies
v. Strong connections with the neighboring communities through economic
development and social and environmental programs.
The technical feasibility of proposed industrial estate takes in account the following
criteria and conditions;
Table 1.1 Feasibility Criteria
Environmental
Transports environmental impacts transports
2 PROJECT DESCRIPTION
The Faisalabad region is rapidly growing as an economic base of Pakistan. Currently
there are 512 large Textile, 92 Engineering, 92 Chemicals & Food processing units
operating in the city. Other industries include hosiery, carpet & rugs, laundry soap,
pharmaceutical products and a sizeable packing industry.
The industrial development in Faisalabad is taking place in the urban vicinity in an un-
organized manner. With many industries operating within the urban areas, the quality
of life is deteriorating gradually. Faisalabad Industrial Estate Development and
Management company has taken up the task to relocate existing industries outside
the city premises to ensure a healthy life style for urban dwellers. In this regard,
FIEDMC already has established two industrial estates i.e. M-3 Industrial City and
Value Addition City outside city at fringes. In continuity of this agenda, FIEDMC has
initiated their third project of establishing another industrial estate covering an area of
3432 acres near Sahianwala Interchange. Unlike previous projects, this industrial
estate will be established under Public-Private Partnership Mode which will be
regarded as Pakistan’s first ever industrial estate to be established under this mode.
Faisalabad Industrial Estate Development and Management Company (FIEDMC) has
been set up by Government of the Punjab for deliberate, rapid and planned
industrialization. FIEDMC has created biggest mechanical settlement of nation along
Motorway M-3 which is probably going to fall inside China-Pakistan Economic
Corridor. Administration of FIEDMC now has expectation to build up an Industrial
Estate (Area 3432 Acres approx.) near Sahianwala Interchange M-3 Motorway
Faisalabad.
2.1 Project Introduction
The proposed Project is the development of an Industrial Estate near Sahianwala
Interchange M-3 Motorway Faisalabad Punjab Province. The territory of this bequest
is roughly 3432 Acres. This project is part of Punjab Govt. Program i-e:
"Implementation of Other Development Program (ODP) 2016-17.
The project has been conceived on the following lines:
d) A State of the Art Industrial Estate under Public Private Partnership on an area
of 3432 acres at the moment and likely to extend in near future;
e) Funds for land, infrastructure along with utilities and construction of Industrial
Units and allied facilities would be arranged under Public Private Partnership
mode;
f) Environmental and social compliance would be ensured by this project.
3 LEGAL FRAMEWORK
Compliance with all the applicable laws and rules is very important to make the
business successful in long term. Rules change over the time and also depends upon
the territory in case of business expansion. Rules also depend upon the type of
business you are dealing in. In case of proposed industrial estate, a legal framework
is being formulated which will not only cover the compliance currently applicable to the
industrial estate in the region but will also caters the bylaws which will be applicable
during different phases.
Mega projects like development of industrial estates are governed by multiple laws
and bylaws. In case of proposed industrial estate, the legal framework is developed
after literature review of following rules and acts;
i. Punjab Government Rules of Business 2011
ii. Special Economic Zone Act 2012
iii. FIEDMC Building Bylaws
iv. FIEDMC Bylaws for VAC and M – 3 IC
v. National Reference Manual
vi. TMA Rules and Regulations
3.1 Punjab Government Rules of Business 2011
Punjab Government Rules of Business define the distribution of functions among the
departments of Punjab Government and set out the procedure for disposal of work of
the Punjab Government. Punjab Rules of Business have eight main sections. These
sections are;
Table 3.1 Sections of Punjab Rules of Business
The Punjab Government Rules of Business have a statutory importance and are
intended to ensure the application of common standards and uniform procedure for
disposal of work by the civil servants in the province. Not only do these rules serve as
a measure of the performance of individual departments at the operational level, the
legitimacy of the democratic regime is equally validated, or undermined, by how their
application impacts day-to-day service delivery to the people.
Table 4.1 LSM contribution for July-March FY 2016 versus July-March FY 2017
Faisalabad is the major industrial sector in the heart of Pakistan with following
industrial units;
Table 4.2 Major Industries of Faisalabad
The growth of this sector is contingent on better availability of utility services, enabling
environment, credit to private sector, Foreign Direct Investment (FDI), capital market
gains etc. This sector suffered in the past due to non-availability of the desired inputs
for its growth. The major issue which hampered its growth was the power shortages.
The present government has made focused efforts to resolve this issue and developed
a road map to overcome the power crises on fast track and on a sustainable basis. As
a result, this sector started picking up its growth and contributed in overall economic
growth. The overall manufacturing sector continued to maintain its growth momentum
with more vigor during the current fiscal year.
Keeping in view table 3, table 4 and feedback from FIEDMC, it is decided to design
the medium and large scale area in proposed industrial estate considering the
requirements of Textiles, Engineering, Food Processing, Automobiles, Construction
Materials, Glass, Electrical and Electronics industry. It is expected that aforementioned
industry will be established in proposed industrial estate. however, plan is kept flexible
enough to incorporate new and innovative industries.
The comparative position of the production during the year July-March FY 2017 and
2016 FY is given in table below;
Automobile sector is among the top growth sectors in the large scale manufacturing in
Pakistan. As stated earlier, the negative growth in case of Light Commercial Vehicles
(LCVs) resulted from the discontinuation of Apna Rozgar Scheme but was
compensated by increased production of other models and growth in tractors and
trucks. The trucks production has risen due to economic activity in the country to meet
CPEC related material and freight transport needs. There is still enormous potential of
growth in buses, given an opportunity to local manufactures by the government and
serious measures taken in formulating and implementing urban transport schemes
along with replacing the old dilapidated buses presently plying on the roads of
metropolitan areas.
4.3 Fertilizer Industry
The fertilizer industry is an integral part of Pakistan’s economy. The Pakistan fertilizer
industry produces imports and distributes various types of fertilizers. The government
has pursued a policy of supporting the industry in the form of feed gas subsidies, GST
relaxation and increasing support prices for commodities. There are ten urea
manufacturing plant, one DAP, three NP, three SSP, two CAN and one plant of
blended NPKs having a total production capacity of 8,983 thousand product
tons per annum. Although, the installed production capacity for all products has
attained the level of 8,983 thousand tons per annum, the actual production for all
products remained at 8,015 and 8,065 (estimated) thousand product tones for 2015-
16 and 2016-17 respectively. The entire fertilizer products are manufactured by the
private sector.
The government has allocated Rs. 27 billion as cash subsidy on fertilizer sales in fiscal
year budget 2016-17 but it was discontinued as the entire amount was consumed.
Later on, Prime Minister of Pakistan directed that cash subsidy on fertilizer would be
continued till the end of fiscal year 2016-17. To support the domestic fertilizer industry,
the government this year has allowed the export of 300,000 tons of urea fertilizer
without the subsidy.
According to recent estimates, around 2,000 I\X! of electricity can be produced in the
country in 1.5--2 years, using bagasse in highly efficient boilers. This electricity would
however be available only for 3-4 months annually, after the crushing season. Most of
the sugar mills in Pakistan consume bagasse in heating inefficient boilers of 26 bar.
The Indian sugar mills have installed SO bar or above boilers that produce many times
more electricity.
4.5 Cement Industry
Cement dispatches reached historic heights in March 2017 touching almost 4 million
tons as the factories utilized their full production capacity to meet robust demand in
the local market. The ever increasing domestic market has vindicated the
manufacturers thrust on adding new capacities. The cement industry is playing its due
role to get the momentum going and in April 2017 the industry dispatched 3.576
million tons of cement against 3.551 million tons dispatched during the corresponding
month of last year. In the first ten months of this fiscal year the industry has dispatched
33.880 million tons’ cement showing an overall growth of 6.21 percent over the
corresponding period of last fiscal year. During the period the domestic consumption
increased by 10.74 percent but exports declined by 18.63 percent. It is worth noting
that the domestic cement consumption during July-April FY 2017 increased by 10.22
percent in the North and by 13.14 percent in the Southern part of the country. In
contrast the exports from North declined by 14.42 percent compared with a decline of
26.19 percent in the South. This should be a matter of concern as in the past the South
based mills being nearer to sea were leading cement exporters. The capacity
utilization during first ten months of current fiscal is 87.64 percent. The domestic
dispatches in April 2017 were 9.53 percent higher than the dispatches in April 2016.
The exports in contrast declined by a whopping 50.75 percent. This massive decline
in exports reduced the dispatches growth in April 17 to only 0.70 percent. In the first
ten months of this fiscal year the domestic dispatches increased by 10.74 percent
while the exports registered a decline of 18.63 percent. The table shows the cement
production capacity and dispatches for TY 2016-17;
given. The plot size of 4 acres will be available for medium size industry while plot
sized bigger than 4 acres will be utilized to establish industries of large scale
5.3 Entrance Point
The entrance of the industrial estate has been designed at approximately near center
of the site. The entrance gate is a four pronged grandeur state of architecture. This
gateway will cover the entrances both from main artery of the estate as well as
entrance from Chiniot road. The four majestic pillars of the gateway will have admin
buildings at their base. Apart from the admin offices, the entrance will feature security
offices to conduct the security checks on the incoming and outgoing traffic. The entry
point of the proposed industrial estate will feature following elements’
i. Administration office
ii. Security Offices
iii. Car Parking Area
iv. Public/Private Offices
5.3.1 Road Network
The proposed industrial estate characterizes a very comprehensive road network. The
road network has been designed by keeping in view the current and future needs. The
designed road network also justifies the easy maneuvering of heavy traffic which will
flow after the establishment of the industrial estate. The main features of the road
network of the proposed industrial estate are explained below;
5.3.1.1 Link Road
The industrial estate is accessed through Chiniot road which originates from
Khurrianwala and passes through the center of the industrial estate’s site dividing the
area in to two parts. This division of the site in two parts is faulty and difficult to plan
but we have used this physical anomaly to our advantage while designing the land use
distribution. Currently, the width of Chiniot road is 30 feet but once remodeled, this
road will be widened up to 200 feet.
5.3.1.2 Main Artery
The road network features a main artery of 200 feet which circulates throughout the
industrial estate. The main artery features a service road of 24 feet on both sides. This
service road will be segregated from main road via 6 feet wide footpath. Provision of
service road will ensure the ease access of heavy traffic to respective industry. The
main artery characterizes a total of 6 lanes of width 12 feet each. This lane width will
ensure the easy maneuvering of heavy traffic. The road shoulders have been provided
for temporary parking of trucks prior getting entry to a specific industrial unit. The main
entrance to industrial estate has been designed on the main artery. The entrance is
designed in the form of a two pronged gate which will cover traffic from both Chiniot
road as well as main artery. Once constructed, the entrance gate will be a masterpiece
of architecture in its nature. The main entrance is located at almost the geographical
center of the estate which will be a complete stand out for people moving on Motorway
as well as Chiniot road. Kinks are provided on the main artery which will ease up the
movement of the heavy traffic in reaching the distant parts of the industrial estate. The
community cores which will include almost every type of services are placed on the
main artery and will be readily accessible. The cross-section of 200 feet main artery is
given in figure below;
Apart from these roads, 20 feet wide pedestrian corridors have been designed which
link with a 50 feet corridor running along the boundary of the proposed industrial
estate. The cross-sections of 20 feet and 50 feet road are given in figure below;
This land use distribution is governed by the land use principle of Chak Jhumra TMA
and SEZ Land Use Rules 2012 which are placed at Annexure C and D.
5.7 Amenities
Provision of services and utilities has been ensured by designing 3 Community Cores
and 6 services area. The community cores have been designed keeping in view all
sorts of work force needs. These community cores are planned at reasonable
distances making them readily accessible throughout the industrial estate. The
community core 1 will features following services;
5.7.1 Services in Community Core-I (CC-I)
i. FIEDMC office measuring 0.4 acres
ii. Jamia Mosque measuring 3.5 acres
iii. Hospital measuring 8 acres
iv. Central Weigh Station measuring 1 acre
v. Security Office 0.4 acres
vi. Labor Club measuring 4 acres
vii. Ladies Club measuring 4 acres
viii. Open space measuring 29 acres
ix. Commercial area measuring 31 acres
The Community Core II and III will feature labor club and ladies club, open space and
commercial area but main hospital and jamia mosque will not be provided. Labor club
and ladies club in community cores 2 and 3 will features internal space specified for
hospital/dispensary and prayer area. Apart from this, each community core 2 and 3
have space reserved for future development as well.
5.7.2 Services in Community Core-II (CC-II)
Community core – II will feature following services;
i. Labor Club measuring 4 acres
ii. Ladies Club measuring 4 acres
iii. Open space measuring 60 acres
iv. Commercial Area measuring 31.5 acres
v. Amenity area measuring 24 acres
5.7.3 Services in Community Core-III (CC-III)
Community core – III will feature following services;
i. Labor Club measuring 4 acres
ii. Ladies Club measuring 4 acres
iii. Open Space measuring 30 acres
iv. Commercial area measuring 48 acres
v. Amenity area measuring 22.7 acres
Four types of drain segments with varying slab thickness are designed. The cross-
section of drain designed for the proposed industrial estate are also depicted in the
figures below;
hydrant. As per standards of National Board of Fire Authorities, the water demand is
2000 to 4000 gallons. Being an industrial area, the high value of 4000 gallons will be
adopted to remain on the safer side.
Industrial City therefore, the extension of services like power supply, gas supply lines
etc. will be easier as well as economical.
5.8.5 Why PPP mode?
The proposed industrial estate will be developed under the concept of Public-Private
Partnership Mode. This will be the first ever industrial estate which will be developed
under this mode. Under PPP mode, the proposed industrial estate will exhibit following
major advantages;
i. Previously, alt the established industrial estates enjoyed the fruit of government
subsidy. Provision of these subsidies act as a burden on the government.
Therefore, in order to eradicate this concept, the proposed industrial estate will
be established under PPP mode which will not only create the air of market
competitiveness but will remove the liability of subsidies from the government.
ii. As funding will be obtained from a private investor, therefore, the infrastructure
constructed under PPP mode will be of improved quality. Also the construction
done will follow an allocated amount of budget and a timeframe. This will allow
the private sector to develop a more disciplined and commercial approach to
infrastructure development whilst allowing them to retain a strategic control of
overall project
iii. In PPP structures the risk of performance is transferred to the private sector.
The private sector only realizes its investment if the project develops according
to the contractual obligations. As the private sector will not receive payment
until the facility is available for use, the PPP structure encourages efficient
completion, on budget without defects
iv. There is evidence of better quality in design and construction than under
traditional procurement. PPP focuses on the whole life cost of the project not
simply on its initial construction cost. It identifies the long term cost and
assesses the sustainability of the project.
v. The expertise and experience of the private sector encourages innovation,
resulting in shorter delivery times and improvements in the construction and
facility management processes. Developing these processes leads to best
practice and adds value
7 FINANCIAL FEASIBILITY
The development of an industrial estate involves a number of key finance and
governance choices and options. These options should be considered in the context
of the country’s long-term strategies and goals for development. The strategy should
ensure broadening of country’s tax base, creating jobs, businesses, and economic
opportunities. This chapter of the feasibility study discusses some of the different
proposed industrial estate finance options available.
7.1 Project Components
An industrial estate comprises of several interrelated components and supporting
facilities. For the purposes of analyzing finance and governance options, the
components are categorized as follows:
i. Out of Boundary infrastructure
ii. Within Boundary infrastructure
iii. Land acquisition
iv. Amenities, Public Buildings and parking
Large industrial estates mostly take years to plan, construct, and colonize. This
analysis assumed that the costs for the proposed industrial estate will be phased in
over many years. The financial arrange for proposed industrial estate will be made
under Public Private Partnership. Construction phase investments by the private
investor will include the development of basic infrastructure. Each phase project and
each component of its feasible presents unique finance and governance challenges.
Therefore, different finance and governing strategies for individual components or
groups of components have been devised.
7.2 Project Capital Cost
The development of a major project like industrial estates, usually requires huge
capital cost. To efficiently manage the capital, this budget is divided into further
categories. In case of proposed industrial estate, the capital cost is categorized as
follows;
7.2.1 Upfront Cost
This is the cost which is required to deal with out of the boundary infrastructure. This
cost mostly covers the expenses of utilities connections, land acquisition etc. This cost
occurs in early stages of developmental project.
This cost occurs during routine maintenance of the project. It covers activities
like regular maintenance of machinery, elements of utilities services etc. The
maintenance cost takes as a result of routine checkup of developmental
project.
ii. Cost of maintenance at fault
This expense takes place when out of routine some maintenance needs to be
required. For example, if some underground water pipes burst due to burden
of heavy weight then repairmen of these damaged pipes will be covered by
cost of maintenance at fault
iii. Cost of replacement maintenance
This cost occurs when some items are need to be replaced after completing
their lifetime. The items suffering wear and tear and needed to be replaced are
covered by cost of replacement maintenance.
The industrial estates usually require sizeable up-front capital investment in
infrastructure. However, in case of proposed industrial estate, adequate infrastructure
facilities are present in the vicinity because of existing M3 – Industrial City. Therefore,
mediocre upfront investment is required. Although operating costs tend to be lower for
environmentally friendly infrastructure, but up-front costs may be greater. Total up-
front costs will be driven, to a large extent, by the types of green features.
As mentioned earlier, infrastructure funding will come from private sector. However,
as for as visualization about cost to be incurred is concerned, regardless of where the
funding comes from, it is vital that estimate of infrastructure costs be made as part of
scoping the proposed industrial estate.
To begin to evaluate potential cost and financing options for proposed industrial estate,
the study team has developed a simplified cost model which accounts for offsite and
onsite infrastructure construction, land acquisition and building construction. This
model can be adjusted for factors such as total developed acreage, total developed
square footage, total water demand, and total energy needs. This financial model will
be then get approved from PPP cell.
Given the current state of infrastructure (i.e., roads, water and sewer coverage, energy
transmission), it is likely that a reasonable amount of new and expanded infrastructure
will need to be put in place as a prerequisite to situating an industrial estate in the
identified area. Water supply, wastewater treatment and energy provision are the
largest cost contributors. Requirements of these are also the most variable as these
depend on industry type to be established. Therefore, financial feasibility is prepared
on the basis of certain assumptions and it will hold good only in case the assumptions
sustain. However, due flexibility is provided while allocating the areas for these utilities
and proposing the capacities so that unforeseen variabilities can be adjusted in next
20 years. The expected cost as per estimates is 29.9 billion. The development will be
in the form of two packages namely Package 1 which lies on the upper side of the
Chiniot road and contains Small & Medium Industrial Plots. The Package 2 contains
Medium and Large Industrial Plots and lies on the lower side of Chiniot road. In
corresponding packages, civil and electrical works will be conducted simultaneously
to avoid wastage of resources.
7.3 Project Costs Assessment
To ensure the systematic functioning of financial model, the estimated cost
assessment is further divide into sub-categories. This section of report gives us
justified financial calculations of proposed industrial estate.
7.3.1 Financial Calculations
The financial calculations of the proposed industrial estate have been sub-categorized.
a. Revenue Stream
The summary of revenue stream covers following aspects;
i. Land purchase
ii. Development Cost
To calculate the cost for the establishment of cost stream, it is required to know which
type of industry will be established on how much plots. A hypothetical percentage is
assumed for plots allocation to particular type of industry and is given in following table
as category wise;
8 REVENUE GENERATION
Every mega project is meant to generate revenue. This generated revenue not only
benefits the project owner but also contributes towards improved quality of life of
people associated with the project. The proposed industrial estate is meant to follow
the same tradition. Setting up of this industrial estate will boost economy in the region
and will provide employment opportunities to local skilled people. The proposed
industrial estate will generate two types of revenue.
i. One-time revenue
ii. Continuous revenue
One-time revenue is the revenue which occurs only one time in the life of project while
continuous revenue continues for the long term. These two types of revenue are
further subdivided into following means for proposed industrial estate;
i. Sale of Industrial plots
ii. Sale of Commercial plots
iii. Sale of Amenity plots
iv. Title transfer fee
v. Possession fee
vi. Scrutiny fee of building plan
vii. Conservatory charges
viii. Miscellaneous revenue
9 COST ESTIMATION
Mega projects involve different types of costs. This costs are estimated and calculated
with justified basis and reason. Before jumping to calculate the costs involved for a
project, one must develop sound and reasonable baseline on which these costs will
be calculated justifiably. The types of costs involved vary from project to project
depending upon the nature. The expected cost as per estimates is 29.9 billion and per
acre cost is 6,395,808 PKR. In case of development and infrastructure projects like
proposed industrial estate, following major costs are involved;
i. Land cost
ii. Development Cost
iii. Operational Cost
These estimated costs are given in the table below;
Table 9.1 Type of Costs
Total 29,911,933,856
After finalization of site for the proposed industrial estate, information has been
collected from the respective revenue department about the land price. As of now, the
land price set for each acre of land is 2 million PKR.
9.2 Development Cost
The development cost of any infrastructure and development project involves costing
of all utilities and services. It involves the cost of services laying and utilities
connection. In case of proposed industrial estate, around 663 industrial plots have
been designed. The plot sized are varying as they have been designed keeping in
view the scale of industries which are to be set up in future. Plots of varying sizes will
satisfy the needs of Small, Medium and Large enterprises. Therefore, before selling
of plots, services and utilities need to be in place for the customers. The development
cost will cover these expenses. The summary of estimated development cost of
proposed utilities of industrial estate is given in the table below;
Table 9.2 Summary of Development Cost
i. Data provided
ii. Load is calculated based upon load density in volt-ampere per square foot
(VA/sq. ft.) by referring Industrial Power System Handbook.
iii. The data collected from other sources (Industrial Estates).
On the basis of above assumptions and using the estimated load requirement of
different type of industry, commercial, amenities etc. has been calculated which is
shown in Table 9-3 as below
After preliminary estimation to cater the total requirement, 09 grid stations of 132/11
kV (07 of 2×20/26 MVA & 02 of 3×20/26 MVA) each have been proposed and aptly
placed at nine various points to make sure the design is precise and economical.
Four 132/11 kV (03 of 2×20/26 MVA & 01 of 2×20/26 MVA) grid station are to be
placed at north-east part of the project site to cater the load of small and medium
Industries. Whereas, five 132/11 kV (04 of 2×20/26 MVA & 01 of 3×20/26 MVA) grid
stations are to be placed at the south-west part of the project area to provide power
supply to Large industries. The location of grid stations is placed suitably, keeping in
view the load centers and to optimize the losses.
Electrical power to the consumers will be supplied using 11 kV overhead lines
emanating from the proposed nine 132/11 kV grid stations. The industries will have
their own 11/0.4 kV power distribution transformers as per their load requirement after
sanctioning of load and approval by the Competent Authority. These distribution
transformers will be supplied power from the overhead 11 kV network However, for
bigger loads, the industries will be required to get bulk supply at 132 kV level as per
PEPCO prevailing regulations.
The load growth is gradually increased in such industrial estate. Therefore, the
implementation of electrical plan will be in phases according to the growth rate of
industry in the project area. The provision is kept for 220kV grid station in future.
Electrical Work Cost. The 11 kV distribution network is planned keeping in view the
limitation of service corridor, load estimations of mix industries and layout plan of
industrial estate provided.
The electrical works cost is given in table below;
DB Cost including
No. 13,860 32 439,348
Installation & fixing
The proposed industrial estate features two types of street lights. Single pole road
lights will be installed on the road networks of the industrial estate. The boundary wall
street light will be erected along the boundary wall of the industrial estate.
9.2.4 Water Supply System
After power, the major requirement of any industry is the water supply. It is estimated
that approximately 110,000 labors force will be employed in the proposed industrial
estate. The proposed industrial estate will function in shifts with each shift featuring
about 36666 labor force. The average water consumption per capita per day is
estimated to be 50 gallons. These 50 gallons will be used for cooking, drinking and
bathing purposes. Therefore, to calculate the water requirement for labor force of
proposed industrial estate;
= No. of gallons per capita per day X Total labor force
= 50 X 36666
= 1833300 gallons per day
Four Over-head water Tanks are designed (Location is given in water supply map).
Average dia. of the pipe comes out as 3 inch.
In addition to these, 4000 gallons of water will be reserved for fire-fighting purposes.
Table 9.5 Water Supply System Cost
1 Excavation
Excavation and backfilling in Cft 26,529,319 10 265,293,188
all type of soil up to required
depth in foundation, trenches,
drains etc. and throw earth
clear of edges of excavation
including filling back in layers
to compaction as specified
and disposal of surplus
excavated skiff with in project
area complete or as directed
by the Engineer In Charge.
2 Sand Cushion
The water supply system cost has been calculated by multiplying the current market
rate with per running feet of pipeline of average diameter.
1 Excavation
Excavation and backfilling Cft 14,749,620 10 147496199
in all type of soil up to
required depth in
foundation, trenches, drains
etc. and throw earth clear of
edges of excavation
including filling back in
layers to compaction as
specified and disposal of
surplus excavated skiff with
in project area complete or
as directed by the Engineer
In Charge.
2 P.C.C (1:4:8)
Providing and laying 1:4:8 Cft 1,010,159 170 171726988
(1 cement 4 sand and 8
coarse aggregate) cement
concrete using graded
crushed stone 2 inch (50
mm) and down gauge in
foundation including
leveling, compacting and
curing etc. completed as
per plans, drawings &
specifications or as directed
by the Engineer in Charge.
3 R.C.C Work
Providing, and laying Cft 5,235,920 400 209436795
reinforced cement concrete 8
employing steel formwork
using Margalla screened
crushed stone graded
aggregate 3/4 inch (19 mm)
and down gauge having a
minimum cylinder crushing
strength of 30 Mpa (4000
psi) at 28 days with a mix
not leaner than (1:1-1/2:3)
including cost of form work
and its removal,
compacting, levelling and
curing etc., complete in all
respect as per drawing or as
directed by the Engineer in
Charge.
4 Reinforcement
Providing and laying M.S Ton 19,005 1000 190051538
deformed steel 00 8
reinforcement bars with
minimum yield stress of 415
Mpa (grade 60) and
including the cost of
straightening, cutting,
bending, binding, wastage,
over laps complete in all
kinds of R.C.C work and as
directed by the Engineer In
Charge.
TOTAL AMOUNT 4,314,106,532
Design and specifications of drainage is given in section 5.7.10. The sewerage design
of industrial estate is given in figure below;
Amount
Sr. No Items
(PKR Million)
1 Collection System 100
2 Transfer Station 50
3 Transportation till disposal site 201.5
Total Cost 351.5
The proposed industrial estate will feature Multi-Bin collection system. Different types
of wastes generated will be kept segregated using multi-bins. Separate collection of
every bin will be carried out. If people, follow the multi-bin system efficiently then
collected waste will be directly transferred to designated disposal site. However, in
case of vice versa scenario i.e. if there is intermixing of wastes at large quantity then
collected waste will be taken to a transfer station for proper segregation The collected
waste in the end will be transferred to a disposal site indicated by the District
Government via a fleet of vehicles.
9.2.7 Construction of Amenities
Cost of amenities like mosque, hospital, management office and 6 clubs is estimated
as 35000 per acre, 170000 per acre, 20000 per acre and 120000 per acre.
9.2.8 Road Works
The proposed industrial estate characterizes a very comprehensive road network. The
road network has been designed by keeping in view the current and future needs. The
designed road network also justifies the easy maneuvering of heavy traffic which will
flow after the establishment of the industrial estate. The cost estimate for pavement of
road network designed for proposed industrial estate;
1 Trench Excavation
2 Sub-Grade
by appropriate compaction
equipment and roller to required
lines, grade or chamber and
cross sections shown on
drawing or directed by the
Engineer In Charge.
6 Kerb Stone
7 P.C.C (1:4:8).
4,185,445,74
TOTAL AMOUNT
0
1 Excavation/cutting
2 Making Embankment
The cost of road pavement has been calculated by determining the total square feet
area of metaled portion of roads, service roads and shoulders. This total area is
multiplied with rate obtained through market rate to get the total cost of road pavement.
It is estimated that about 6.39 million per acre will be required as development cost for
provision of all services and utilities. The estimate edge inclines more to 5 million
because costing of these utilities and services may fluctuate. Therefore, 5 million
development cost per acre will not only absorb these cost fluctuations but is also
flexible and practical.
9.3 Operational Cost
The operational and maintenance cost occurs during the O&M Phase of the project.
The importance of operational and maintenance cost is not grave at the beginning of
the project because every installed element is in new condition. However, a certain
budget must be kept reserved. This reserved budget covers the operational and
maintenance expense when some unforeseen and unexpected event takes place.
Other than that, cash flows of operational and maintenance cost occur when installed
elements of a project suffer from wear and tear after completing their time period. An
estimated amount of 1% of development cost is reserved for the purpose of
maintenance and operational cost. It is expected that a small portion of this cost is
spent before the warranty life of the elements of industrial estate expires.
10 PPP Proposal
Governments in the past have undertaken projects under traditional procurement mode
whereby capital and operating costs are paid for by the public sector and bears the risk
of cost overruns and completion delays. However, changes in international trends have
led to increase private sector participation in infrastructure and other multi-nature
projects. the traditional procurement generally characterizes following attributes;
i. The public sector procures assets from the private sector instead of services
ii. The procures assets are input specifies and public sector carries a design
analysis prior to procurement
iii. The project management is generally associated with the public sector
iv. Similarly, the project associated risks remain with public sector which includes
cost, over-run, delays etc.
In Pakistan, private sector participation in projects was witnessed in the power sector,
where the Government first established the “Hub Power Company (Hubco)” as the first
independent power generation company. Hubco became operational in 1994 and
around that time, the first power policy was also introduced, establishing a regulatory
framework for private investment in the power generation sector. Traditional
procurement was thus superseded by Public Private Partnership structures in the
power sector. Subsequently various projects of infrastructure development had been
undertaken.
user levies under the PPP agreement. The title of the project always vests in the
Government Agency in this arrangement.
11.1.7 Contract-Add-and-Operate (CAO)
A contractual arrangement whereby the private party expands an existing
infrastructure facility, which it leases from the Government Agency. The private party
operates the expanded project and collects user levies, to recover the investment
over an agreed period. There may or may not be a transfer arrangement with regard to
the added facility provided by the private party.
11.1.8 Develop-Operate-and-Transfer (DOT)
A contractual arrangement whereby favorable conditions external to an infrastructure
project, which is to be built by the private party, are integrated into the PPP agreement
by giving it the right to develop adjoining property and thus enjoy some of the benefits
the investment creates such as higher property or rent values.
11.1.9 Rehabilitate-Operate-and-Transfer (ROT)
A contractual arrangement whereby an existing infrastructure facility is handed over
to the private party to refurbish, operate and maintain it for a specified period, during
which the private party collects user levies to recover its investment and operation
and maintenance expenses. At the expiry of this period, the facility is returned to the
Government Agency. The term is also used to describe the purchase of an existing
facility from abroad, importing, refurbishing, erecting and operating it.
11.1.10 Rehabilitate-Own-and-Operate (ROO)
A contractual arrangement whereby an existing infrastructure facility is handed over
to the private party to refurbish, operate and maintain with no time limitation imposed
on ownership. The private party is allowed to collect user levies to recover its
investment and operation and maintenance expenses in perpetuity.
11.1.11 Management Contract (MC)
A contractual arrangement whereby the Government Agency entrusts the operation
and management of an infrastructure project to the private party for an agreed period
on payment of specified consideration. The Government Agency may charge the
user levies and collect the same either itself or entrust the collection for consideration
to any person who shall pay the same to the Government Agency.
11.1.12 Service Contract (SC)
A contractual arrangement whereby the private party undertakes to provide
services to the Government Agency for a specified period with respect to an
infrastructure facility. The Government Agency will pay the private party an amount
according to the agreed schedule.
Apart from advantages of PPP mode, there are also some downsides which public
sector need to addressed before commencing the project. These are listed in the table
below;
income consumers in order to allow full cost recovery by the private service
provider.
iii. Enhanced accountability in service delivery by linking service provision to a firm
contractual arrangement. The service levels will be defined clearly in the PPP
agreements in terms of outputs and outcomes required from the private sector.
The government agencies will be required to put in place strict monitoring
mechanisms. Poor performance by the private service provider will be
penalized and may result in contract termination.
iv. Public sector management shift from budget expenditure to whole life cycle cost
management. Most of the services in the public sector are of poor quality
because government agencies take a short-term viewpoint without considering
whole life costing of assets, with the result that once these are commissioned
they are not maintained and refurbished or upgraded in time. Since the focus
in engaging with the private sector is on services it provides during the entire
concession period, the private investors will have the incentive to ensure that
the underlying assets are of good quality and adequately maintained.
11.5 Diligence for Success of PPP Mode
To ensure that project under PPP mode is successful, certain due diligence will be
carried out. This working will include taking inputs from independent experts and
advisors of different field. It is assumed that experts of following fields will be consulted
in this regard;
i. Technical: Sectoral Experts capable of project management including
quantitative and qualitative accomplishment of development and operation of
works.
ii. Legal: For looking into regulations and policies to timely handle the legal
issues which may arise during different stages of the project
iii. Financial: To structuralize the PPP ensuring adequate source of funding
including model audit mechanism, conducting NPV etc.
iv. Insurance: These experts will look into appropriateness of insurance cover,
adequacy of pricing, provision and suitability of risk sharing mechanism
11.6 Previous PPP Options
In previous PPP Proposal, based on certain scenarios, Build-Lease-Transfer (BLT)
mode was selected. This was because in 2017-2018, the FIEDMC’s request for loan
was not entertained in Annual Development Plan. therefore, it was envisaged that all
the cost for purchasing and developing the land will be bear by Private Party. Hence,
initially BLT was scrutinized in previous PPP proposal. However, in year 2018-19, the
FIEDMC’s request for loan has been approved. Here it gives us two options. Either
use this amount as an equity and form a JV collaboration with private party or use this
amount to purchase land and invite private party for task of financing and construction
only i.e. go for Build and Transfer option.
11.7 Scrutinized PPP Options
Understanding the concept of PPP mode, FIEDMC intends to develop this proposed
industrial estate under PPP mode. This will be the very first industrial estate which is
going to be to be developed under this mode in country’s history. As there will be no
involvement of Government in this case so provision of subsidies is out of question.
This has considerably increased the potential of financial risk involved in the project.
the investor will have to use his own capital to develop the proposed industrial estate.
Asp per scope of work, the financial model of the proposed industrial estate will be
developed on PPP mode. There are total 13 PPP agreements and out of these 13
options after rigorous brain storming and discussion, Élan has selected 2 most
applicable and appropriate options in case of proposed industrial estate. These two
options are explained below;
i. Joint Venture (JV)
ii. Build and Transfer (BT))
2 Risk Management
The extent to which each procurement option provides incentives effectively 8 7
and efficiently to manage and reduce risks, thereby minimizing the whole-of-
life-cost to the government
4 Market Interest
The extent to which each procurement option assists in maximizing market 6 8
interest amongst the appropriate market participants with the relevant skills,
expertise and capacity to deliver the project
6 Budget Certainty
The extent to which each procurement option assist in providing earlier budget
8 8
certainty to the government
9 February 2018
PP18-V01-FIEDMC
Establishment of an Industrial Estate near
Sahianwala Interchange, M-3 Motorway
Faisalabad
9 Overall Rating 64 51
Evaluation Results 2nd Preference 1st Preference
10 February 2018
PP18-V01-FIEDMC
Establishment of an Industrial Estate near
Sahianwala Interchange, M-3 Motorway
Faisalabad
product in the form of developed industrial plots. Per acre investment for private party will be around 6.9 million. Therefore, BT
ensures better money value than J.V in this regard.
vi. This factor is equally in both options. Ideally, the budget will available on time in both cases because there will be no procedural
delay. However, due to unforeseen factor or mishap, we assume that 20% maybe there for delay budget.
vii. In this regard, BT has more flexibility because issues fluctuation in taxes, rates etc. are well tackled by the government agency.
In J.V, due to shared controlling, these issues may face delay due to collision of interests.
viii. This factor affects the both modes equally. In JV, the private sector has better flexibility to tackle the stakeholders while
Government departments are equipped with better regulatory tools to handle the stakeholders, So, this factor affects the both
modes in the same way.
11 February 2018
PP18-V01-FIEDMC
Establishment of an Industrial Estate near
Sahianwala Interchange, M-3 Motorway
Faisalabad
1 Package 1 495
3 Package 2 168
The business plan formulated for proposed industrial estate will allow a costumer to
book a plot by paying a 20% down payment. The rest 80% of the payment will be
recovered through eight equal quarterly installments. The selling of developed
commercial plots will be carried out from year 5 to year 8 in parallel with industrial
plots. Possession of the plots will be available from 5 years after commencement of
development work.
Customers who will give early advance payment will enjoy a rebate of 2%. In case of
delay in payment, a deferment charge on per day basis will be imposed whose amount
will be decided by FIEDMC Board.
It is expected that buyer will start construction works within the two years from date of
taking possession. Buyers should have to take possession within one month after
submission of all installments and/or availability of possession. Otherwise, the
possession will be considered automatically transferred to the buyer.
Amenity area and open space are generally non-saleable areas. However, some
amenity plots like petrol pump, weighing station, loading/unloading platforms etc. and
some part of open spaces can be sold. Therefore, 31% of amenity area and open
space area is included in cash flow table for sale in 13th and 14th year when industrial
estate would have become fully operational. In this way, the sale will bring appropriate
revenue. Some of the amenity area e.g. petrol pump plot, weighing station plot would
be required to be sold in parallel to start year of the industrial activity. Therefore, one
third of saleable amenity/open space area would be offered for sale in 4th year and
remaining will be sold in 13th and 14th years.
The continuous revenue will also be part of the business plan. This revenue is
recurring in its nature. It includes; title transfer fee, possession fee, scrutiny fee of
building plan, conservatory charges and miscellaneous revenue. Whereas, in addition
to it, 35% of commercial area is reserved for continuous revenue. FIEDMC will get
constructed the buildings on this area and will rent out for continuous revenue.
However, this unsold commercial area has been considered as revenue in cash flow
table at 15th year of the sale.
Upon recovery of investment of Private party, the party will transfer the project to the
FIEDMC.
It is pertinent to mention here that public consultation from people residing in vicinity
of project site revealed that people want such industrial setup which promotes green
businesses, healthy ecology, social justice and fair wages.
12,000.00
10,000.00
8,000.00
6,000.00
4,000.00
2,000.00
-
Year 0
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
Year 11
Year 12
Year 13
Year 14
Year 15
Year 16
Year 17
Year 18
Year 19
Year 20
TOTAL CASH REVENUE INFLOW TOTAL CASH OUTFLOW
80,000.00
60,000.00
40,000.00
20,000.00
-
Year 0
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
Year 11
Year 12
Year 13
Year 14
Year 15
Year 16
Year 17
Year 18
Year 19
Year 20
(20,000.00)
(40,000.00)
Total 88,712.52 2,547.32 2,668.62 2,395.03 2,947.73 4,746.67 7,083.84 8,477.00 14,929.70 6,632.40 7,185.10 7,737.80 11,641.29 4,455.00 5,265.00 - - - - - -
Sale of Land Cash Revenue Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20
S&M Industrial
Plots 29,944.77 239.67 730.43 1,206.86 1,230.21 1,352.07 1,681.42 2,080.10 2,478.79 2,808.14 3,068.15 3,328.17 3,903.45 3,646.69 2,190.62 - - - - - -
M&L Industrial
Plots 33,707.75 269.79 822.22 1,358.52 1,384.80 1,521.97 1,892.71 2,341.50 2,790.28 3,161.02 3,453.71 3,746.40 4,393.97 4,104.95 2,465.90 - - - - - -
Total 88,712.52 509.46 1,552.65 2,565.38 2,615.01 3,086.44 4,494.53 6,427.60 9,210.28 10,689.16 10,061.86 7,074.56 8,297.42 8,642.64 7,491.52 3,888.00 2,106.00 - - - -
Other Revenue Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20
Continuous Revenue from Land 18,302.49 - - - - - - - - - 987.66 1,086.43 1,195.07 1,314.58 1,446.03 1,590.64 1,749.70 1,924.67 2,117.14 2,328.85 2,561.74
Title Transfer Fee Revenue
(One Time) 522.00 0.00 0.00 48.52 48.52 36.85 38.65 39.21 41.57 41.57 48.65 36.85 36.85 36.85 51.74 8.10 8.10 0.00 0.00 0.00 0.00
Title Transfer Fee Revenue
(Recurring) 15.72 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2.62 2.62 2.62 2.62 2.62 2.62
Possession Fee 2,088.00 0.00 0.00 194.08 194.08 147.39 154.59 156.83 166.27 166.27 194.59 147.39 147.39 147.39 206.96 32.40 32.40 0.00 0.00 0.00 0.00
Building Plan Scrutiny Fee
Revenue 1,305.00 121.30 121.30 92.12 96.62 98.02 103.92 103.92 121.62 92.12 92.12 92.12 129.35 20.25 20.25 0.00 0.00 0.00 0.00 0.00 0.00
Conservatory
Charges 3,740.38 24.26 48.52 66.94 86.27 105.87 126.65 147.44 171.76 190.18 208.61 227.03 252.90 256.95 261.00 261.00 261.00 261.00 261.00 261.00 261.00
Total 25,973.60 145.56 169.82 401.66 425.49 388.12 423.80 447.39 501.21 490.13 1,531.62 1,589.81 1,761.55 1,776.01 1,985.98 1,894.76 2,053.82 2,188.29 2,380.76 2,592.47 2,825.36
Maintenance Cost 5,980.05 230.48 242.00 254.10 266.81 280.15 294.16 294.16 294.16 294.16 294.16 294.16 294.16 294.16 294.16 294.16 294.16 294.16 294.16 294.16 294.16 294.16
TOTAL CASH OUTFLOW 36,986.76 11,923.02 5,070.55 5,082.65 5,095.35 5,108.69 294.16 294.16 294.16 294.16 294.16 294.16 294.16 294.16 294.16 294.16 294.16 294.16 294.16 294.16 294.16 294.16
12-5 March2018
ELN18-V01-FIEDMC
Establishment of an Industrial Estate near
SahianwalaInterchange,M-3Motorway
Faisalabad
12.1.3 Project Appraisal
Theprojectappraisal isdepictedinthetable12-3;
Table12.3ProjectAppraisal
Project Cash
Schedule Total Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20
Maintenance Cost (5,980.05) (230.48) (242.00) (254.10) (266.81) (280.15) (294.16) (294.16) (294.16) (294.16) (294.16) (294.16) (294.16) (294.16) (294.16) (294.16) (294.16) (294.16) (294.16) (294.16) (294.16) (294.16)
Revenue 114,686.12 - 655.03 1,722.47 2,967.05 3,040.50 3,474.56 4,918.33 6,874.99 9,711.49 11,179.30 11,593.48 8,664.37 10,058.97 10,418.65 9,477.50 5,782.76 4,159.82 2,188.29 2,380.76 2,592.47 2,825.36
NET CASH FLOW 77,699.36 (11,923.02) (4,415.52) (3,360.17) (2,128.30) (2,068.20) 3,180.41 4,624.18 6,580.83 9,417.33 10,885.14 11,299.32 8,370.21 9,764.81 10,124.49 9,183.34 5,488.60 3,865.66 1,894.13 2,086.60 2,298.31 2,531.20
Net Present Value
(NPV) 15,467.24 (11,923.02) (4,023.25) (2,789.67) (1,609.98) (1,425.52) 1,997.38 2,646.11 3,431.22 4,473.95 4,711.87 4,456.64 3,008.06 3,197.49 3,020.75 2,496.53 1,359.55 872.47 389.52 390.98 392.39 393.76
Internal Rate of Return
(IRR) 16.45%
Cumulative Cash Flow (11,923.02) (16,338.54) (19,698.71) (21,827.02) (23,895.21) (20,714.81) (16,090.63) (9,509.80) (92.47) 10,792.67 22,091.99 30,462.20 40,227.02 50,351.51 59,534.85 65,023.45 68,889.11 70,783.24 72,869.84 75,168.16 77,699.36
Payback Period (Years) 8.01 0 1 1 1 1 1 1 1 1 0.0084952 0 0 0 0 0 0 0 0 0 0 0
Cash Inflows 94,879.00 - 384.11 1,365.58 2,511.22 2,567.12 2,957.78 4,300.48 6,120.17 8,758.12 10,123.18 10,508.37 7,784.30 9,081.28 9,415.78 8,540.51 5,104.40 3,595.07 1,761.54 - - -
Net Cash Flow Before
Tax 70,736.29 (4,828.54) (4,444.43) (3,462.96) (2,317.32) (2,261.42) 2,957.78 4,300.48 6,120.17 8,758.12 10,123.18 10,508.37 7,784.30 9,081.28 9,415.78 8,540.51 5,104.40 3,595.07 1,761.54 - - -
Corporate Tax (22,012.74) - - - - - (739.44) (1,075.12) (1,530.04) (2,189.53) (2,530.79) (2,627.09) (1,946.07) (2,270.32) (2,353.94) (2,135.13) (1,276.10) (898.77) (440.39) - - -
Super Tax - - - - - - - - - - - - - - - - - - - - - -
Net Cash Flow 47,243.96 (5,124.46) (4,740.35) (3,758.87) (2,613.24) (2,557.34) 2,218.33 3,225.36 4,590.13 6,568.59 7,592.38 7,881.28 5,838.22 6,810.96 7,061.83 6,405.38 3,828.30 2,696.30 1,321.16 - - -
Net Present Value (NPV) 8,849.08 (5,124.46) (4,319.22) (3,120.68) (1,976.81) (1,762.67) 1,393.17 1,845.66 2,393.28 3,120.58 3,286.53 3,108.50 2,098.12 2,230.25 2,106.97 1,741.33 948.28 608.55 271.69 - - -
IRR 15.60%
Cumulative Cash Flow (5,124.46) (9,864.81) (13,623.68) (16,236.92) (18,794.26) (16,575.93) (13,350.57) (8,760.44) (2,191.85) 5,400.54 13,281.81 19,120.04 25,931.00 32,992.83 39,398.21 43,226.51 45,922.81 47,243.96 47,243.96 47,243.96 47,243.96
Payback Period (Years) 8.29 0 1 1 1 1 1 1 1 1 0.28869031 0 0 0 0 0 0 0 0 0 0 0
Government Cash
Flows: Total Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20
Cash Outflows:
Maintenance (5,980.05) (230.48) (242.00) (254.10) (266.81) (280.15) (294.16) (294.16) (294.16) (294.16) (294.16) (294.16) (294.16) (294.16) (294.16) (294.16) (294.16) (294.16) (294.16) (294.16) (294.16) (294.16)
Cash Inflows from
Project 114,686.12 - 655.03 1,722.47 2,967.05 3,040.50 3,474.56 4,918.33 6,874.99 9,711.49 11,179.30 11,593.48 8,664.37 10,058.97 10,418.65 9,477.50 5,782.76 4,159.82 2,188.29 2,380.76 2,592.47 2,825.36
Net Cash Flow from
Project 108,706.07 (230.48) 413.02 1,468.37 2,700.24 2,760.35 3,180.41 4,624.18 6,580.83 9,417.33 10,885.14 11,299.32 8,370.21 9,764.81 10,124.49 9,183.34 5,488.60 3,865.66 1,894.13 2,086.60 2,298.31 2,531.20
Payments to Private
Company (94,879.00) - (384.11) (1,365.58) (2,511.22) (2,567.12) (2,957.78) (4,300.48) (6,120.17) (8,758.12) (10,123.18) (10,508.37) (7,784.30) (9,081.28) (9,415.78) (8,540.51) (5,104.40) (3,595.07) (1,761.54) - - -
Net Present Value (NPV) (3,005.19) (7,094.48) 26.34 85.33 142.98 133.18 139.82 185.23 240.19 313.18 329.83 311.96 210.56 223.82 211.45 174.76 95.17 61.07 27.27 390.98 392.39 393.76
IRR 5.04%
12-10 March2018
ELN18-V01-FIEDMC
Establishment of an Industrial Estate near
SahianwalaInterchange,M-3Motorway
Faisalabad
Cumulative Cash Flow (7,094.48) (7,065.57) (6,962.78) (6,773.77) (6,580.54) (6,357.91) (6,034.22) (5,573.56) (4,914.35) (4,152.39) (3,361.44) (2,775.52) (2,091.98) (1,383.27) (740.44) (356.23) (85.64) 46.95 2,133.55 4,431.87 6,963.06
0.645891
Payback Period (Years) 16.65 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 3 0 0 0
12-11 March2018
ELN18-V01-FIEDMC
Establishment of an Industrial Estate near
Sahianwala Interchange, M-3 Motorway
Faisalabad
1 Package 1 495
3 Package 2 168
The business plan formulated for proposed industrial estate will allow a costumer to book
a plot by paying a 20% down payment. The rest 80% of the payment will be recovered
through eight equal quarterly installments. The selling of developed commercial plots will
be carried out from year 4 to year 5. Possession of the plots will be available from 3 years
after commencement of development work. Customers who will give early advance
payment will enjoy a rebate of 2%. In case of delay in payment, a deferment charge on
per day basis will be imposed whose amount will be decided by FIEDMC Board.
It is expected that buyer will start construction works within the two years from date of
taking possession. Buyers should have to take possession within one month after
submission of all installments and/or availability of possession. Otherwise, the
possession will be considered automatically transferred to the buyer.
Amenity area and open space are generally non-saleable areas. However, some amenity
plots like petrol pump, weighing station, loading/unloading platforms etc. can be sold.
Therefore, 25% of amenity area is included in cash flow table for sale in 3rd year when
industrial estate would have become fully operational. In this way, the sale will bring
appropriate revenue.
The proposed industrial estate will generate continuous revenue as well. This revenue is
recurring in its nature. It includes; title transfer fee, possession fee, scrutiny fee of building
plan, conservatory charges and miscellaneous revenue. It is expected at the rate of 10
million per year. Whereas, in addition to it, 35% of commercial area is reserved for
continuous revenue. FIEDMC will get constructed the buildings on this area and will rent
out for continuous revenue. However, this unsold commercial area has not been
considered as revenue in cash flow at the moment.
Upon recovery of investment of Private party, the party will transfer the project to the
FIEDMC.
It is pertinent to mention here that public consultation from people residing in vicinity of
project site revealed that people want such industrial setup which promotes green
businesses, healthy ecology, social justice and fair wages.
* CW=Civil Works *EW=Electric Works
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
Year 11
Year 12
Year 13
Year 14
Year 15
Year 16
Year 17
Year 18
Year 19
Year 20
TOTAL CASH REVENUE INFLOW TOTAL CASH OUTFLOW
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
Year 11
Year 12
Year 13
Year 14
Year 15
Year 16
Year 17
Year 18
Year 19
Year 20
(10 ,000.00)
(20,000.00)
(30 ,000.00)
Continuous Revenue from Land 35,041.46 - - - - - 1,102.89 1,213.18 1,334.49 1,467.94 1,614.74 1,776.21 1,953.83 2,149.21 2,364.14 2,600.55 2,860.60 3,146.67 3,461.33 3,807.47 4,188.21
Title Transfer Fee Revenue
(One Time) 517.80 0.00 0.00 158.53 158.53 178.34 11.20 11.20 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Title Transfer Fee Revenue
(Recurring) 37.10 0.00 0.00 0.00 0.00 0.00 2.47 2.47 2.47 2.47 2.47 2.47 2.47 2.47 2.47 2.47 2.47 2.47 2.47 2.47 2.47
Possession Fee 2,071.20 0.00 0.00 634.13 634.13 713.34 44.80 44.80 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Building Plan Scrutiny Fee
Revenue 1,294.50 396.33 396.33 445.84 28.00 28.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Conservatory Charges 4,881.20 79.27 158.53 247.70 253.30 258.90 258.90 258.90 258.90 258.90 258.90 258.90 258.90 258.90 258.90 258.90 258.90 258.90 258.90 258.90 258.90
Total
43,843.25 475.60 554.86 1,486.20 1,073.96 1,178.58 1,420.26 1,530.55 1,595.87 1,729.32 1,876.11 2,037.58 2,215.20 2,410.59 2,625.51 2,861.92 3,121.98 3,408.04 3,722.70 4,068.84 4,449.58
TOTAL CASH REVENUE
INFLOW 93,158.29 2,695.04 7,530.27 14,313.17 13,617.08 10,440.68 5,004.26 3,434.55 1,595.87 1,729.32 1,876.11 2,037.58 2,215.20 2,410.59 2,625.51 2,861.92 3,121.98 3,408.04 3,722.70 4,068.84 4,449.58
Development Cost Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20
Maintenance Cost 5,529.14 230.48 242.00 254.10 266.81 266.81 266.81 266.81 266.81 266.81 266.81 266.81 266.81 266.81 266.81 266.81 266.81 266.81 266.81 266.81 266.81 266.81
TOTAL CASH OUTFLOW 36,535.85 15,142.05 8,289.57 8,301.67 266.81 266.81 266.81 266.81 266.81 266.81 266.81 266.81 266.81 266.81 266.81 266.81 266.81 266.81 266.81 266.81 266.81 266.81
12-13 March2018
ELN18-V01-FIEDMC
Establishment of an Industrial Estate near
SahianwalaInterchange,M-3Motorway
Faisalabad
12.2.3 Project Appraisal (CPEC Investment)
Project Cash
Schedule Total Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20
Maintenance Cost (5,529.14) (230.48) (242.00) (254.10) (266.81) (266.81) (266.81) (266.81) (266.81) (266.81) (266.81) (266.81) (266.81) (266.81) (266.81) (266.81) (266.81) (266.81) (266.81) (266.81) (266.81) (266.81)
Revenue 93,158.29 - 2,695.04 7,530.27 14,313.17 13,617.08 10,440.68 5,004.26 3,434.55 1,595.87 1,729.32 1,876.11 2,037.58 2,215.20 2,410.59 2,625.51 2,861.92 3,121.98 3,408.04 3,722.70 4,068.84 4,449.58
NET CASH FLOW 56,622.44 (15,142.05) (5,594.53) (771.40) 14,046.36 13,350.27 10,173.87 4,737.45 3,167.74 1,329.06 1,462.51 1,609.30 1,770.77 1,948.40 2,143.78 2,358.70 2,595.11 2,855.17 3,141.23 3,455.90 3,802.03 4,182.78
Net Present Value
(NPV) 18,034.35 (15,142.05) (5,097.52) (640.43) 10,625.52 9,201.78 6,389.45 2,710.93 1,651.65 631.40 633.08 634.73 636.38 638.00 639.62 641.22 642.82 644.41 645.99 647.56 649.13 650.69
Internal Rate of Return
(IRR) 24.00%
Cumulative Cash Flow (15,142.05) (20,736.58) (21,507.98) (7,461.62) 5,888.65 16,062.52 20,799.97 23,967.71 25,296.76 26,759.27 28,368.57 30,139.35 32,087.74 34,231.52 36,590.22 39,185.34 42,040.51 45,181.74 48,637.63 52,439.66 56,622.44
0.5589117
Payback Period (Years) 3.56 0 1 1 1 5 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Cash Inflows 52,196.82 - 2,207.74 6,548.55 12,641.72 12,015.24 9,156.48 4,263.71 2,850.97 1,196.15 1,316.26 - - - - - - - - - - -
Net Cash Flow Before
Tax
28,054.10 (8,047.57) (5,839.83) (1,499.02) 12,641.72 12,015.24 9,156.48 4,263.71 2,850.97 1,196.15 1,316.26 - - - - - - - - - - -
Corporate Tax (10,860.13) - - - (3,160.43) (3,003.81) (2,289.12) (1,065.93) (712.74) (299.04) (329.06) - - - - - - - - - - -
Super Tax - - - - - - - - - - - - - - - - - - - - - -
Net Cash Flow
15,714.38 (8,540.77) (6,333.03) (1,992.22) 9,481.29 9,011.43 6,867.36 3,197.78 2,138.22 897.11 987.19 - - - - - - - - - - -
Net Present Value (NPV) 5,529.42 (8,540.77) (5,770.41) (1,653.97) 7,172.23 6,211.20 4,312.88 1,829.87 1,114.86 426.20 427.33 - - - - - - - - - - -
IRR 18.82%
Cumulative Cash Flow
(8,540.77) (14,873.80) (16,866.01) (7,384.72) 1,626.71 8,494.07 11,691.85 13,830.08 14,727.19 15,714.38 15,714.38 15,714.38 15,714.38 15,714.38 15,714.38 15,714.38 15,714.38 15,714.38 15,714.38 15,714.38 15,714.38
Net Present Value (NPV) 3,988.03 (7,094.48) 223.51 604.08 1,062.55 920.18 638.94 271.09 165.16 63.14 63.31 634.73 636.38 638.00 639.62 641.22 642.82 644.41 645.99 647.56 649.13 650.69
IRR 14.67%
12-14 March2018
ELN18-V01-FIEDMC
Establishment of an Industrial Estate near
SahianwalaInterchange,M-3Motorway
Faisalabad
Cumulative Cash Flow
(7,094.48) (6,849.18) (6,121.56) (4,716.92) (3,381.90) (2,364.51) (1,890.76) (1,573.99) (1,441.08) (1,294.83) 314.47 2,085.24 4,033.64 6,177.42 8,536.12 11,131.23 13,986.40 17,127.63 20,583.53 24,385.56 28,568.33
0.804593
Payback Period (Years) 9.80 0 1 1 1 1 1 1 1 1 1 45 0 0 0 0 0 0 0 0 0 0
12-15 March2018
ELN18-V01-FIEDMC
Establishment of an Industrial Estate near
Sahianwala Interchange, M-3 Motorway
Faisalabad
13 SENSITIVITY ANALYSIS
A sensitivity analysis is a technique used to determine how different values of an
independent variable impact a particular dependent variable under a given set of
assumptions. This technique is used within specific boundaries that depend on one or
more input variables, such as the effect that changes in interest rates have on bond
prices. Sensitivity analysis, also referred to as what-if or simulation analysis, is a way
to predict the outcome of a decision given a certain range of variables. By creating a
given set of variables, the analyst can determine how changes in one variable impact
the outcome.
In case of proposed industrial estate, the sensitivity analysis is accomplished in the
basis of following assumptions;
i. Test No.1: The Project cost increases by 10%
ii. Test No.2: The Project Revenues decrease by 10%
iii. Test No.3: The Project cost increases and revenue decreases occur
simultaneously
The sensitivity analysis is done for both scenarios keeping the assumptions constant.
Maintenance Cost (5,980.05) (230.48) (242.00) (254.10) (266.81) (280.15) (294.16) (294.16) (294.16) (294.16) (294.16) (294.16) (294.16) (294.16) (294.16) (294.16) (294.16) (294.16) (294.16) (294.16) (294.16) (294.16)
Maintenance Cost (Increase by
10%) (6,578.05) (253.53) (266.20) (279.51) (293.49) (308.16) (323.57) (323.57) (323.57) (323.57) (323.57) (323.57) (323.57) (323.57) (323.57) (323.57) (323.57) (323.57) (323.57) (323.57) (323.57) (323.57)
Revenue 114,686.12 - 655.03 1,722.47 2,967.05 3,040.50 3,474.56 4,918.33 6,874.99 9,711.49 11,179.30 11,593.48 8,664.37 10,058.97 10,418.65 9,477.50 5,782.76 4,159.82 2,188.29 2,380.76 2,592.47 2,825.36
Revenue Increase by 10% 126,154.73 - 720.53 1,894.72 3,263.75 3,344.54 3,822.02 5,410.17 7,562.49 10,682.63 12,297.23 12,752.83 9,530.81 11,064.87 11,460.51 10,425.25 6,361.03 4,575.80 2,407.12 2,618.83 2,851.72 3,107.89
Revenue Decrease by 10% 103,217.50 - 589.52 1,550.23 2,670.34 2,736.45 3,127.11 4,426.50 6,187.49 8,740.34 10,061.37 10,434.13 7,797.93 9,053.07 9,376.78 8,529.75 5,204.48 3,743.84 1,969.46 2,142.68 2,333.22 2,542.82
NET CASH FLOW (Base Case) 77,699.36 (11,923.02) (4,415.52) (3,360.17) (2,128.30) (2,068.20) 3,180.41 4,624.18 6,580.83 9,417.33 10,885.14 11,299.32 8,370.21 9,764.81 10,124.49 9,183.34 5,488.60 3,865.66 1,894.13 2,086.60 2,298.31 2,531.20
NET CASHFLOW (Test 1) 74,000.68 (13,115.32) (4,922.57) (3,868.44) (2,637.84) (2,579.07) 3,150.99 4,594.76 6,551.42 9,387.91 10,855.72 11,269.91 8,340.80 9,735.40 10,095.07 9,153.92 5,459.18 3,836.25 1,864.72 2,057.18 2,268.90 2,501.78
NET CASHFLOW (Test 2) 89,167.97 (11,923.02) (4,350.02) (3,187.92) (1,831.60) (1,764.15) 3,527.86 5,116.01 7,268.33 10,388.48 12,003.07 12,458.67 9,236.65 10,770.71 11,166.36 10,131.09 6,066.88 4,281.65 2,112.96 2,324.68 2,557.56 2,813.73
NET CASHFLOW (Test 3) 62,532.07 (13,115.32) (4,988.08) (4,040.68) (2,934.54) (2,883.11) 2,803.53 4,102.93 5,863.92 8,416.77 9,737.79 10,110.56 7,474.36 8,729.50 9,053.21 8,206.17 4,880.91 3,420.27 1,645.89 1,819.11 2,009.65 2,219.25
Net Present Value (NPV) (Base
Case) 15,467.24 (11,923.02) (4,023.25) (2,789.67) (1,609.98) (1,425.52) 1,997.38 2,646.11 3,431.22 4,473.95 4,711.87 4,456.64 3,008.06 3,197.49 3,020.75 2,496.53 1,359.55 872.47 389.52 390.98 392.39 393.76
Net Present Value (NPV) (Test
1) 12,492.38 (13,115.32) (4,485.26) (3,211.64) (1,995.42) (1,777.64) 1,978.90 2,629.27 3,415.89 4,459.98 4,699.14 4,445.03 2,997.49 3,187.86 3,011.97 2,488.54 1,352.26 865.83 383.47 385.47 387.37 389.19
Net Present Value (NPV) (Test
2) 19,988.82 (11,923.02) (3,963.57) (2,646.66) (1,385.53) (1,215.95) 2,215.59 2,927.55 3,789.68 4,935.32 5,195.79 4,913.90 3,319.44 3,526.87 3,331.60 2,754.18 1,502.79 966.36 434.53 435.59 436.66 437.72
Net Present Value (NPV) (Test
3) 7,970.80 (13,115.32) (4,544.94) (3,354.64) (2,219.87) (1,987.21) 1,760.69 2,347.83 3,057.43 3,998.61 4,215.22 3,987.77 2,686.11 2,858.48 2,701.12 2,230.89 1,209.02 771.95 338.47 340.86 343.11 345.24
Internal Rate of Return (IRR)
(Base Case) 16.45%
Internal Rate of Return (IRR)
(Test 1) 14.84%
Internal Rate of Return (IRR)
(Test 2) 18.12%
Internal Rate of Return (IRR)
(Test 3) 13.12%
Cummulative Cash Flow (Base
Case) (11,923.02) (16,338.54) (19,698.71) (21,827.02) (23,895.21) (20,714.81) (16,090.63) (9,509.80) (92.47) 10,792.67 22,091.99 30,462.20 40,227.02 50,351.51 59,534.85 65,023.45 68,889.11 70,783.24 72,869.84 75,168.16 77,699.36
Cummulative Cash Flow (Test
1) (13,115.32) (18,037.90) (21,906.33) (24,544.17) (27,123.24) (23,972.25) (19,377.49) (12,826.07) (3,438.16) 7,417.56 18,687.47 27,028.27 36,763.67 46,858.74 56,012.67 61,471.85 65,308.10 67,172.81 69,230.00 71,498.90 74,000.68
Cummulative Cash Flow (Test
2) (11,923.02) (16,273.04) (19,460.96) (21,292.56) (23,056.71) (19,528.85) (14,412.84) (7,144.51) 3,243.97 15,247.04 27,705.71 36,942.36 47,713.07 58,879.43 69,010.51 75,077.39 79,359.03 81,472.00 83,796.67 86,354.23 89,167.97
Cummulative Cash Flow (Test
3) (13,115.32) (18,103.40) (22,144.08) (25,078.63) (27,961.74) (25,158.21) (21,055.28) (15,191.37) (6,774.60) 2,963.19 13,073.75 20,548.11 29,277.61 38,330.82 46,537.00 51,417.91 54,838.17 56,484.06 58,303.17 60,312.82 62,532.07
Payback Period (Years) (Base 0.008495
Case) 8.01 0 1 1 1 1 1 1 1 1 2 0 0 0 0 0 0 0 0 0 0 0
0.729680
Payback Period (Years) (Test 1) 8.73 0 1 1 1 1 1 1 1 1 58 0 0 0 0 0 0 0 0 0 0 0
0.848842
Payback Period (Years) (Test 2) 7.85 1 1 1 1 1 1 1 56 0 0 0 0 0 0 0 0 0 0 0 0
0.627703
Payback Period (Years) (Test 3) 8.63 1 1 1 1 1 1 1 1 96 0 0 0 0 0 0 0 0 0 0 0
13-1 March2018
ELN18-V01-FIEDMC
Establishment of an Industrial Estate near
Sahianwala Interchange, M-3 Motorway
Faisalabad
The detail working of sensitivity analysis for scenario 2 is given in table 13.4;
Maintenance Cost (5,529.14) (230.48) (242.00) (254.10) (266.81) (266.81) (266.81) (266.81) (266.81) (266.81) (266.81) (266.81) (266.81) (266.81) (266.81) (266.81) (266.81) (266.81) (266.81) (266.81) (266.81) (266.81)
Maintenance Cost (Increase by
10%) (6,082.06) (253.53) (266.20) (279.51) (293.49) (293.49) (293.49) (293.49) (293.49) (293.49) (293.49) (293.49) (293.49) (293.49) (293.49) (293.49) (293.49) (293.49) (293.49) (293.49) (293.49) (293.49)
Revenue 93,158.29 - 2,695.04 7,530.27 14,313.17 13,617.08 10,440.68 5,004.26 3,434.55 1,595.87 1,729.32 1,876.11 2,037.58 2,215.20 2,410.59 2,625.51 2,861.92 3,121.98 3,408.04 3,722.70 4,068.84 4,449.58
Revenue Increase by 10% 102,474.12 - 2,964.55 8,283.30 15,744.48 14,978.79 11,484.74 5,504.69 3,778.00 1,755.45 1,902.25 2,063.72 2,241.34 2,436.73 2,651.65 2,888.06 3,148.12 3,434.18 3,748.84 4,094.98 4,475.72 4,894.54
Revenue Decrease by 10% 83,842.46 - 2,425.54 6,777.24 12,881.85 12,255.37 9,396.61 4,503.83 3,091.09 1,436.28 1,556.38 1,688.50 1,833.83 1,993.68 2,169.53 2,362.96 2,575.73 2,809.78 3,067.23 3,350.43 3,661.95 4,004.63
NET CASH FLOW (Base Case) 56,622.44 (15,142.05) (5,594.53) (771.40) 14,046.36 13,350.27 10,173.87 4,737.45 3,167.74 1,329.06 1,462.51 1,609.30 1,770.77 1,948.40 2,143.78 2,358.70 2,595.11 2,855.17 3,141.23 3,455.90 3,802.03 4,182.78
NET CASHFLOW (Test 1) 52,968.85 (16,656.25) (6,423.49) (1,601.57) 14,019.68 13,323.59 10,147.19 4,710.77 3,141.06 1,302.38 1,435.83 1,582.62 1,744.09 1,921.72 2,117.10 2,332.02 2,568.43 2,828.49 3,114.55 3,429.22 3,775.35 4,156.10
NET CASHFLOW (Test 2) 65,938.27 (15,142.05) (5,325.03) (18.38) 15,477.68 14,711.98 11,217.93 5,237.88 3,511.19 1,488.64 1,635.44 1,796.91 1,974.53 2,169.92 2,384.84 2,621.25 2,881.31 3,167.37 3,482.03 3,828.17 4,208.91 4,627.73
NET CASHFLOW (Test 3) 43,653.02 (16,656.25) (6,692.99) (2,354.60) 12,588.36 11,961.88 9,103.12 4,210.34 2,797.60 1,142.79 1,262.89 1,395.01 1,540.34 1,700.19 1,876.04 2,069.47 2,282.24 2,516.29 2,773.74 3,056.94 3,368.46 3,711.14
Net Present Value (NPV) (Base
Case) 18,034.35 (15,142.05) (5,097.52) (640.43) 10,625.52 9,201.78 6,389.45 2,710.93 1,651.65 631.40 633.08 634.73 636.38 638.00 639.62 641.22 642.82 644.41 645.99 647.56 649.13 650.69
Net Present Value (NPV) (Test
1) 14,890.99 (16,656.25) (5,852.84) (1,329.65) 10,605.34 9,183.39 6,372.69 2,695.66 1,637.74 618.73 621.53 624.21 626.79 629.27 631.66 633.97 636.21 638.38 640.50 642.56 644.57 646.54
Net Present Value (NPV) (Test
2) 22,981.14 (15,142.05) (4,851.96) (15.26) 11,708.25 10,140.35 7,045.15 2,997.29 1,830.73 707.22 707.94 708.73 709.60 710.54 711.54 712.60 713.71 714.87 716.07 717.31 718.59 719.91
Net Present Value (NPV) (Test
3) 9,944.20 (16,656.25) (6,098.40) (1,954.82) 9,522.60 8,244.82 5,716.99 2,409.30 1,458.66 542.91 546.67 550.21 553.56 556.73 559.74 562.59 565.32 567.92 570.41 572.80 575.10 577.32
Internal Rate of Return (IRR)
(Base Case) 24.00%
Internal Rate of Return (IRR)
(Test 1) 20.48%
Internal Rate of Return (IRR)
(Test 2) 27.83%
Internal Rate of Return (IRR)
(Test 3) 16.93%
Cummulative Cash Flow (Base
Case) (15,142.05) (20,736.58) (21,507.98) (7,461.62) 5,888.65 16,062.52 20,799.97 23,967.71 25,296.76 26,759.27 28,368.57 30,139.35 32,087.74 34,231.52 36,590.22 39,185.34 42,040.51 45,181.74 48,637.63 52,439.66 56,622.44
Cummulative Cash Flow (Test
1) (16,656.25) (23,079.74) (24,681.31) (10,661.63) 2,661.96 12,809.14 17,519.91 20,660.97 21,963.35 23,399.18 24,981.80 26,725.89 28,647.60 30,764.70 33,096.72 35,665.16 38,493.64 41,608.19 45,037.41 48,812.76 52,968.85
Cummulative Cash Flow (Test
2) (15,142.05) (20,467.07) (20,485.45) (5,007.78) 9,704.20 20,922.14 26,160.02 29,671.21 31,159.86 32,795.29 34,592.21 36,566.74 38,736.66 41,121.49 43,742.75 46,624.05 49,791.42 53,273.45 57,101.62 61,310.53 65,938.27
Cummulative Cash Flow (Test
3) (16,656.25) (23,349.25) (25,703.84) (13,115.48) (1,153.60) 7,949.52 12,159.86 14,957.47 16,100.26 17,363.15 18,758.16 20,298.50 21,998.69 23,874.73 25,944.20 28,226.44 30,742.73 33,516.48 36,573.42 39,941.89 43,653.02
Payback Period (Years) (Base 0.558911
Case) 3.56 0 1 1 1 75 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0.800207
Payback Period (Years) (Test 1) 3.80 0 1 1 1 27 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0.340387
Payback Period (Years) (Test 2) 3.34 1 1 1 6 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0.126725
Payback Period (Years) (Test 3) 4.13 1 1 1 1 77 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
13-1 March2018
ELN18-V01-FIEDMC
Establishment of an Industrial Estate near
Sahianwala Interchange, M-3 Motorway
Faisalabad