Japan International Cooperation Agency (JICA) Ministry of...

Japan International Cooperation Agency (JICA)

Ministry of Urban Development Affairs (MUDA) Dehsabz-Barikab City Development Authority (DCDA)

PROMOTION OF KABUL METROPOLITAN AREA DEVELOPMENT:

CAPACITY DEVELOPMENT IN BUSINESS DEVELOPMENT SERVICES

IMPLEMENTATION PLAN FOR INDUSTRIAL PARK DEVELOPMENT

IN DEHSABZ SOUTH AREA (PHASE 1) OF KABUL NEW CITY (KNC)

September 2013

RECS International Inc. Yachiyo Engineering Co., Ltd.

Nine Steps Corp.

No.

EI

JR

13-224

Japan International Cooperation Agency (JICA)

Ministry of Urban Development Affairs (MUDA) Dehsabz-Barikab City Development Authority (DCDA)

PROMOTION OF KABUL METROPOLITAN AREA DEVELOPMENT:

CAPACITY DEVELOPMENT IN BUSINESS DEVELOPMENT SERVICES

IMPLEMENTATION PLAN FOR INDUSTRIAL PARK DEVELOPMENT

IN DEHSABZ SOUTH AREA (PHASE 1) OF KABUL NEW CITY (KNC)

September 2013

RECS International Inc. Yachiyo Engineering Co., Ltd.

Nine Steps Corp.

Promotion of Kabul Metropolitan Area Development: Capacity Development in Business Development Services Implementation Plan for Industrial Park Development in Dehsabz South Area (Phase 1) of KNC

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Table of Contents

Chapter 1 Background of Industrial Park Development in KNC.........................................................1 1.1 KMA Development as National Project....................................................................................1 1.2 Objectives of KMA Development.............................................................................................1 1.3 Industrial Park Development in Phase 1 KNC Development ...................................................1

Chapter 2 Concepts of Industrial Park Development...........................................................................3

2.1 Development and Management of Industrial Parks in Phase 1 KNC Development.................3 2.2 Basic Development Concepts for Industrial Parks in Phase 1 KNC Development ..................3 2.3 Target Businesses in Industrial Parks in Phase 1 KNC Development.......................................4

Chapter 3 Project Scope and Locations of Industrial Parks .................................................................5

3.1 Existing Condition and Circumstances .....................................................................................5 3.2 Project Scope.............................................................................................................................5 3.3 Project Locations.......................................................................................................................5

Chapter 4 Industrial Park Development Project Plan ..........................................................................7

4.1 Design Criteria for the Project ..................................................................................................7 4.1.1 Land preparation..................................................................................................................7 4.1.2 Roads...................................................................................................................................7 4.1.3 Water supply........................................................................................................................7 4.1.4 Sewerage .............................................................................................................................8 4.1.5 Electricity ............................................................................................................................8 4.1.6 Telecommunications............................................................................................................8

4.2 Basic Design .............................................................................................................................8 4.2.1 Land use and land preparation.............................................................................................8 4.2.2 Roads.................................................................................................................................14 4.2.3 Water supply......................................................................................................................14 4.2.4 Sewerage ...........................................................................................................................14 4.2.5 Electricity ..........................................................................................................................14 4.2.6 Telecommunications..........................................................................................................16

4.3 Development Costs .................................................................................................................16 4.4 Financial Analysis ...................................................................................................................16 4.5 Environmental Impact Assessment .........................................................................................17

Chapter 5 Implementation..................................................................................................................19

5.1 Preparation of RFP Documents...............................................................................................19 5.2 Management............................................................................................................................19

5.2.1 Functions of management body ........................................................................................19 5.2.2 Selection of qualified investors .........................................................................................19

5.3 Operation and Maintenance ....................................................................................................20 Chapter 6 Recommendations .............................................................................................................21

6.1 Recommended Approach to Industrial Park Development in Phase 1 KNC Development....21 6.2 Selection of Sub-sector Industries to Be Established..............................................................21 6.3 Implementing Arrangements ...................................................................................................22 6.4 Support Measures by the Afghan Government .......................................................................22 6.5 Future Possibility of Medium/Large-scale Industrial Park Development ...............................22 6.6 Proposal for Formalization of Plan Changes, Approval and Revision....................................23

6.6.1 Formal treatment of changes in the Master Plan ...............................................................23 6.6.2 Regulation for further changes in the Master Plan ............................................................24 6.6.3 Approval and revision of the structure plan ......................................................................24


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List of Tables

Table 1 Super Blocks for Northern and Southern Industrial Parks ..........................................................5 Table 2 Land Use Distribution in Northern and Southern Industrial Parks..............................................8 Table 3 Quantities of Earthworks for Northern and Southern Industrial Parks......................................14 Table 4 Factory Lot Sizes in Super Blocks of Industrial Parks ..............................................................15 Table 5 Industrial Park Development Costs ...........................................................................................16 Table 6 Estimated Staff Size for Industrial Park Management and O&M .............................................16 Table 7 Estimated Revenues of Northern and Southern Industrial Parks...............................................16 Table 8 Developer’s Cash Flow for Industrial Park Development.........................................................18 Table 9 Possible Division of Approval for Different Changes ...............................................................24


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List of Figures

Figure 1 Locations of Planned Industrial Parks in Phase 1 of KNC Development ..................................6 Figure 2 Land Use and Preparation Plan for Northern Industrial Park in Super Block A........................9 Figure 3 Land Use and Preparation Plan for Northern Industrial Park in Super Block B......................10 Figure 4 Land Use and Preparation Plan for Southern Industrial Park in Super Block C......................11 Figure 5 Land Use and Preparation Plan for Southern Industrial Park in Super Block D1 ...................12 Figure 6 Land Use and Preparation Plan for Southern Industrial Park in Super Block D2 ...................13


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Abbreviations

AADT Annual average daily traffic ADB Asian Development Bank ANDS Afghanistan National Development Strategy BDS Business Development Services (sub-project) CCGKD Coordination Committee for the Greater Kabul Development DCDA Dehsabz-Barikab City Development Authority EIA Environmental impact assessment IDP Internally displaced person/people ISIC International Standard Industrial Classification IT Information technology JICA Japan International Cooperation Agency KCORR Kabul City Outer Ring Road KMA Kabul metropolitan area KNC Kabul New City MUDA Ministry of Urban Development Affairs O&M Operations and maintenance RFP Request for proposal ROW Right of way SB Super block UN United Nations


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CHAPTER 1 BACKGROUND OF INDUSTRIAL PARK DEVELOPMENT IN KNC

1.1 KMA Development as National Project

The Kabul Metropolitan Area (KMA) development was initiated by the Afghan Government in 2006, encompassing the existing Kabul city and a new city envisioned in Dehsabz and Barikab to the north of the city. The KMA development was officially recognized as a national project in the ANDS in 2008.

A study for the development of the KMA master plan was implemented, supported by JICA, during March 2008 through March 2010 with its extension. The Final Report of the study, containing the KMA development plan, was submitted in October 2009. The study continued through March 2010 to prepare a detailed plan for the initial development area of the new city in Dehsabz selected by DCDA and a construction plan for the Kabul new city (KNC) artery roads.

The JICA study proposed the KMA development plan for integrated development of the Kabul city and the new city with complementary strengthening of urban functions in these urban spaces under the four planning concepts: 1) economic efficiency, 2) complementary relationships between urban and rural areas, 3) recycle-oriented eco-city, and 4) cultural city.

Based on an early version of the KMA development plan, the master plan for the new city development was prepared, and formally adopted by the Afghan government with the Cabinet approval in March 2009. The revision of the Kabul city master plan was initiated as part of the JICA study, which continued under a separate project supported by the JICA technical cooperation.

During the JICA study, a Steering Committee was formed to promote the new city development by mustering supports of related organizations and donors. This was transformed in 2010 into the Coordination Committee for the Greater Kabul Development (CCGKD). The member organizations of the Coordination Committee include the Ministry of Finance, Ministry of Mines tasked to take charge of the economic and infrastructure cluster at the London conference in January 2010 and other ministries and organizations as well as the Ministry of Urban Development, Kabul Municipality and DCDA. In addition to JICA and ADB, other donors have expressed interest to join the Committee.

1.2 Objectives of KMA Development

The KMA development envisions the realization of the following:

1) Creation of a visible success model of Afghan reconstruction and development 2) Generation of a large number of lucrative employment opportunities 3) Provision of the driving force for sustainable economic growth 4) Capitalization of income and revenue for the Afghan people and Government 5) Development of the national capital as a symbol of national integration 6) Provision of permanent shelters and livelihoods for returning refugees, IDPs and the

impoverished urban population 7) Skills development and transfer of know-how and technology

1.3 Industrial Park Development in Phase 1 KNC Development

In the structure planning study, land use plan and urban functions in Dehsabz South area of KNC has been clarified. For all the urban functions requiring central location, the land area for all the related facilities is determined such as a core area or industrial estate. Planning for individual facilities within the respective land area should be undertaken separately through detailed planning for the core area or the industrial estate.

It is essential for KNC to offer a large number of employment opportunities to encourage a large number of residents coming into the city from an early stage of development. Employment opportunities to be offered by the new city should cater not only for the new residents and the returned


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refugees but also for activation of economic development in the country as a whole and even beyond. It is meaningful to establish a mechanism to allow early introduction of employment generating activities, once certain transport conditions are satisfied.

To realize this, the area reserved for industrial activities at the southeastern end of the Dehsabz South district has been included in the Dehsabz South area for early development. Since water availability is a serious constraint for initial development, economic activities not water-intensive such as logistic activities should be encouraged in this area and also along the KCORR to be developed earlier. These areas have potentials to develop earlier to become logistic centers due to their location, provided that sufficient land is made available. Therefore, large reserve land areas are secured for logistic and related light industrial activities. The land demand for these activities should continue to be examined through business planning.

These logistic and related light industrial activities will not generate much air pollution by increased traffic and economic activities. Adverse effects will be much smaller than the pollution by transit traffic.

The light industrial function should be allocated also to the southeastern part of the Dehsabz South area. This area may be further extended to the northwest, and will serve as a buffer to the military drill operation in the Afghan army ground to the south. As this area locates in the upstream of the planned residential areas, counter measures should be taken against possible water pollution.


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CHAPTER 2 CONCEPTS OF INDUSTRIAL PARK DEVELOPMENT

2.1 Development and Management of Industrial Parks in Phase 1 KNC Development

For the development and management of industrial parks by DCDA, the following alternatives may be considered:

1) Direct development and management 2) Co-development and management with AISA 3) Development and management by consignment to developers

For the alternative 1) or 2), the development budget is obtained from domestic financers or foreign donors. In the alternative 3), the developer is responsible for investing in the development of the respective industrial park. Also, the land ownership of the industrial parks needs to be examined. The period of land lease is typically 10-25 years in many countries. DCDA should review these issues carefully before planning industrial park development projects.

DCDA intends to develop and manage industrial parks in Phase 1 KNC development by consignment to developers (i.e., adoption of the alternative (3) above). Assuming that the industrial parks will be developed and managed by private entities, the implementation plan for the industrial parks in Phase 1 KNC development is examined in this chapter.

2.2 Basic Development Concepts for Industrial Parks in Phase 1 KNC Development

A preliminary questionnaire and interview survey was conducted on the development of a light industrial zone in December 2010 and January 2011. In the survey, a total of 118 local companies mainly in manufacturing and logistics industries were interviewed, consisting of 57 operating in the Pule Charkhi industrial park, 18 in the Juma Mohammad Mohammadi industrial park (Bagrami industrial park) and 43 outside these industrial parks.

The survey results indicate that potential investors expect the following in the new industrial zone: 1) sufficient infrastructure (e.g., electricity, water, IT, etc.), 2) no corrupt developers involved, 3) access to roads/transportation, and 4) sufficient land area. The lots of the respondents vary in land area from 0.10 ha to 1.60 ha with an average of 0.39 ha. Land area required by the respondents varies from 0.25 ha to 13.4 ha with an average of 0.74 ha. The total land area required by the respondents is 71.35 ha.

From the survey results and the BDS team's assessment, the following basic concepts and recommendations for the industrial park development in Phase 1 of the KNC development are provided.

1) For those functions of an industrial park that need to be centrally located, all the related facilities are concentrated in one designated area just as in urban core development.

2) Substantive employment opportunities must be generated by industrial parks to attract a large number of people to move to KNC from an early stage of development.

3) The target industry for industrial parks in Phase 1 of KNC development is light industry.

4) Lots in an industrial park vary in land area from 0.32 ha (40m 80m = 3,200m2) to 2.56 ha (160m 160m = 25,600 m2).

5) External infrastructure to access to industrial parks is developed.

6) Internal infrastructure facilities such as roads, water supply, sewerage, domestic solid waste disposal, electricity, and telecommunication are equipped.

7) The period of land lease for the businesses is set for 10-15 years.

8) DCDA secures developers to fund, implement, operate and maintain industrial parks.


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2.3 Target Businesses in Industrial Parks in Phase 1 KNC Development

From the preliminary survey results and recent trends in both domestic and international industrial park developments, the light industrial businesses appropriate for industrial parks to be established in Phase 1 KNC development are as follows (UN ISIC codes, Rev. 4, in parentheses).

- Food product manufactures (C10) - Beverage manufactures (C11) - Textile manufactures (C13) - Clothing manufactures (C14) - Leather and leather product manufactures (C15) - Wood product manufactures excluding furniture (C16) - Paper and paper product manufactures (C17) - Printing and reproduction of recorded media (C18) - Rubber and plastics product manufactures (C22) - Fabricated metal product manufactures excluding machinery and equipment (C25) - Electrical equipment manufactures (C27) - Furniture manufactures (C31) - Retail traders excluding automobiles and motorcycles (G47) - Land/pipeline transport service providers (H49)

Of the above, food product manufactures, beverage manufactures, fabricated metal product manufactures, electrical equipment manufacturers, traders, and transport service providers require larger lots than do those in other types of business.


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CHAPTER 3 PROJECT SCOPE AND LOCATIONS OF INDUSTRIAL PARKS

3.1 Existing Condition and Circumstances

In Phase 1 (Dehsabz South) of the KNC development, 15 parcels with a total land area of 5,052 ha will be developed. Two parcels are given priority: Parcel 1 with a land area of 829 ha in the northern part of Phase 1 development area and Parcel 2 with a land area of 1,573 ha in the southern part of Phase 1 development area. Developers for these parcels will be contracted soon.

The land for industrial use in the Phase 1 structure plan is distributed along the KCORR in the northeastern side of Parcel 1 and the southeastern side of Parcel 2. Since the land has excellent potentials in terms of both marketing and location, DCDA has decided to give its development high priority.

3.2 Project Scope

The land use for industrial functions is distributed in the surrounding areas of the central urban area to generate employment opportunities and support construction activities. In early stages of urban development, industrial land development is essential and to be promoted along with housing development.

The industrial land designated in the Phase 1 structure plan is to be developed as industrial parks by consignment to developers as soon as possible. The land needs to be prepared with necessary infrastructure such access roads, water supply, drainage and sewerage system, electricity, and telecommunications.

3.3 Project Locations

Two industrial parks are planned in Phase 1, the Northern Industrial Park (40.8 ha) and the Southern Industrial Park (86.3 ha), as shown in Figure 1. The land areas of the super blocks for these industrial parks are presented in Table 1.

Table 1 Super Blocks for Northern and Southern Industrial Parks

Northern Industrial Park Southern Industrial Park Block Area (ha) Block Area (ha) Block Area (ha) Block Area (ha)

A1 4.7 B1 5.6 C1 21.9 D1 20.0 A2 4.9 B2 12.3 C2 19.1 D2 25.3 A3 7.6 - - - - - - A4 5.7 - - - - - -

Subtotal 22.9 Subtotal 17.9 Subtotal 41.0 Subtotal 45.3 IP total (ha) 40.8 IP total (ha) 86.3

Total of Northern & Southern IPs (ha) 127.1


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SB Area (ha)A1 4.7 A2 4.9 A3 7.7 A4 5.7 B1 5.6 B2 12.3 C1 21.8 C2 19.1 D1 20.0 D2 25.3

Figure 1 Locations of Planned Industrial Parks in Phase 1 of KNC Development

Northern Industrial Park in Dehsabz South Area

Southern Industrial Park in Dehsabz South Area

A1 A2

A3 A4

B1 B2

C1

C2

D1

D2


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CHAPTER 4 INDUSTRIAL PARK DEVELOPMENT PROJECT PLAN

4.1 Design Criteria for the Project

The design criteria for the industrial park development project in Phase 1 of the KNC development are set taking into account international standards and references and in accordance with the development guidelines in the Phase 1 structure plan.

4.1.1 Land preparation

Factory lots basically come in the following sizes based on the preliminary survey results and the recommended businesses for the industrial parks:

- 80 m 40 m = 3,200 m2 (0.32 ha) - 80 m 50 m = 4,000 m2 (0.40 ha) - 80 m 60 m = 4,800 m2 (0.48 ha) - 80 m 80 m = 6,400 m2 (0.64 ha) - 100 m 80 m = 8,000 m2 (0.80 ha) - 120 m 80 m = 9,600 m2 (0.96 ha) - 120 m 100 m = 12,000 m2 (1.20 ha) - 160 m 100 m = 16,000 m2 (1.60 ha) - 160 m 120 m = 19,200 m2 (1.92 ha) - 160 m 160 m = 25,600 m2 (2.56 ha)

The ground levels of factory lots should be higher than those of the front roads with the following condition:

- Minimum elevation difference between factory lot and front road: +300 mm - Maximum elevation difference between factory lot and front road: +1,500 mm

4.1.2 Roads

Roads inside the industrial parks are designed for the semi-trailer class with the following dimensions:

- Vehicle body length: 16.5 m - Vehicle body width: 2.5 m - Vehicle body height: 3.8 m - Distance between body front & front axle: 1.3 m - Distance between front & middle axle: 4.0 m - Distance between middle & back axle: 9.0 m - Distance between back axle & body back: 2.2 m - Minimum turning radius: 12.0 m

The right of way (ROW) of roads in the industrial parks is determined by traffic volume assuming that annual average daily traffic (AADT) is lower than 1,000 as follows:

- Collector road with both sides facing factory lots: 15.0 m ROW w/ 2 lanes* *Sidewalk/utility 2.0m + drainage 1.5m + shoulder 1.0m + 3.0m for roadway for 1 lane

- Collector road with one side facing factory lots: 13.0 m ROW w/ 2 lanes

4.1.3 Water supply

Industrial water demand by the light industry is calculated based on 40 m3/day per hectare of factory lot from the data of unit requirement of industry’s condition for survey report by the Industrial Location Center, Japan.

The minimum water pressure for water supply to factory lots should be 1.0 kg/cm2. The distribution mains of water are laid underground in the walkways of roads with the side of factory lots. Each factory shall connect to the distribution mains of water with the water toll meter.


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The maximum interval of fireplugs (fire hydrants) that locate in the walkway of roads is to be 100 m.

4.1.4 Sewerage

Wastewater volume is calculated as 90% of water supply volume for sewer pipe design. The maximum interval of manholes for sewerage is designed as follows:

- For pipe diameter smaller than 300 mm: 50 m - For pipe diameter between 300 mm and 600 mm: 75 m

Each factory shall connect to the manhole of sewerage for wasting domestic water. If polluted industrial water is discharged into the sewerage system, its first treatment is the respective factory's responsibility and needs to be up to par with the standard for domestic wastewater.

4.1.5 Electricity

Electrical sub-station and generator set are provided in the industrial park. Electricity is provided to each factory through underground cables laid underground in the walkways of roads that separates from the water main by 1.5m or more.

4.1.6 Telecommunications

A satellite base station for mobile phones and the Internet may be provided in each industrial park.

4.2 Basic Design

Based on the design criteria for the project, each industrial park is designed for implementation program.

4.2.1 Land use and land preparation

Land use and preparation are planned considering the primary and secondary road alignment and the topographic condition as shown in Figures 2 through 6 for super block A, B, C, and D. The distribution of land use by super block is presented Table 2:

Table 2 Land Use Distribution in Northern and Southern Industrial Parks

Super block Factory lot Collector road Facility Greenery Total Northern Industrial Park

A ha

(%) 20.02 (87.5)

2.16 (9.4)

0.56 (2.5)

0.14 (0.6)

22.88 (100.0)

B ha

(%) 15.95 (89.1)

1.54 (8.6)

0.41 (2.3)

0.00 (0.0)

17.90 (100.0)

Subtotal 35.97 (88.2)

3.70 (9.1)

0.97 (2.4)

0.14 (0.3)

40.78 (100.0)

Southern Industrial Park

C ha

(%) 37.78 (92.1)

2.11 (5.2)

1.12 (2.7)

0.00 (0.0)

41.01 (100.0)

D ha

(%) 42.21 (93.2)

2.54 (5.6)

0.55 (1.2)

0.00 (0.0)

45.30 (100.0)

Subtotal ha

(%) 79.99 (92.7)

4.65 (5.4)

1.67 (1.9)

0.00 (0.0)

86.31 (100.0)

Total ha (%)

115.96 (91.2)

8.35 (6.6)

2.64 (2.1)

0.14 (0.1)

127.09 (100.0)


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Figure 2 Land Use and Preparation Plan for Northern Industrial Park in Super Block A


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Figure 3 Land Use and Preparation Plan for Northern Industrial Park in Super Block B


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Figure 4 Land Use and Preparation Plan for Southern Industrial Park in Super Block C


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Figure 5 Land Use and Preparation Plan for Southern Industrial Park in Super Block D1


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Figure 6 Land Use and Preparation Plan for Southern Industrial Park in Super Block D2


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In the land preparation plan for the industrial parks, quantities of earth cutting and filling for each super block have been calculated as presented in Table 3.

Table 3 Quantities of Earthworks for Northern and Southern Industrial Parks

Super block Cut (m3) Fill (m3) Northern Industrial Park

A 210,000 220,000B 150,000 140,000

Subtotal 360,000 360,000Southern Industrial Park

C 540,000 550,000D 530,000 520,000

Subtotal 1,070,000 1,070,000Total 1,430,000 1,430,000

4.2.2 Roads

The lengths of collector roads in each super block of the industrial parks are presented in Table 4.

Super block Road length (m)Northern Industrial Park

A 1,285 B 1,105

Subtotal 2,390 Southern Industrial Park

C 1,540 D 1,865

Subtotal 3,405 Total 5,795

4.2.3 Water supply

Industrial water demand in each industrial park is assumed as follows:

- Northern Industrial Park: 1,400 m3/day - Southern Industrial Park: 3,200 m3/day

For water supply in the industrial parks, three 100m-deep wells are constructed, one in the Northern Industrial Park and two in the Southern Industrial Park. Water distribution pipes are provided for factory lots, laid underground of the walkways of collector roads. Each factory is connected to the distribution pipe with a water meter in the lot's frontage.

4.2.4 Sewerage

Sewer pipes are provided, laid under the walkways of collector roads with manholes. Each factory is connected to the manhole in front for discharging wastewater.

Sewerage treatment plants for each industrial park are provided with the following capacity:

- Northern Industrial Park: 1,300 m3/day - Southern Industrial Park: 2,900 m3/day

Activated sludge control method with oxidation ditch is proposed for sewerage treatment plants.

4.2.5 Electricity

A set of electrical substation and generator is installed in each industrial park. Electricity is provided for each factory through cables laid under the walkways of roads, which are at least 1.5 m away from the water main.


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Table 4 Factory Lot Sizes in Super Blocks of Industrial Parks

Northern Industrial Park Southern Industrial Park SB* Lot # Area (ha) SB Lot # Area (ha) SB Lot # Area (ha) SB Lot # Area (ha)

A1-1 0.52 B1-1 0.97 C1-1 0.51 D1-1 2.47 A1-2 0.51 B1-2 0.92 C1-2 0.33 D1-2 1.18 A1-3 0.40 B1-3 0.48 C1-3 0.33 D1-3 1.09 A1-4 0.75 B1-4 0.47 C1-4 0.32 D1-4 1.20 A1-5 0.41 B1-5 0.52 C1-5 0.33 D1-5 0.85 A1-6 0.32 B1-6 0.38 C1-6 0.32 D1-6 0.81 A1-7 0.44 B1-7 0.35 C1-7 0.34 D1-7 2.00 A1-8 0.34 B1-8 0.62 C1-8 0.33 D1-8 1.27

Subtotal 3.69 B1-9 0.40 C1-9 2.21 D1-9 1.26 A2-1 0.44 Subtotal 5.11 C1-10 1.82 D1-10 1.03 A2-2 0.33 B2-1 0.36 C1-11 1.55 D1-11 1.15 A2-3 0.57 B2-2 0.37 C1-12 1.98 D1-12 1.19 A2-4 0.27 B2-3 0.55 C1-13 1.36 D1-13 1.19 A2-5 0.28 B2-4 0.33 C1-14 0.54 D1-14 1.17 A2-6 0.29 B2-5 0.46 C1-15 0.32 D1-15 0.92 A2-7 0.30 B2-6 0.35 C1-16 0.32 Subtotal 18.78 A2-8 0.42 B2-7 0.33 C1-17 0.32 D2-1 0.71 A2-9 0.42 B2-8 0.52 C1-18 0.32 D2-2 0.77

A2-10 0.73 B2-9 0.33 C1-19 0.95 D2-3 0.96 Subtotal 4.05 B2-10 0.33 C1-20 0.96 D2-4 0.32

A3-1 0.33 B2-11 0.32 C1-21 1.95 D2-5 0.31 A3-2 0.31 B2-12 0.58 C1-22 1.95 D2-6 0.41 A3-3 0.86 B2-13 0.84 Subtotal 19.36 D2-7 0.85 A3-4 0.31 B2-14 0.62 C2-1 2.11 D2-8 0.94 A3-5 0.36 B2-15 0.48 C2-2 1.70 D2-9 0.93 A3-6 0.79 B2-16 0.39 C2-3 1.59 D2-10 0.71 A3-7 0.97 B2-17 0.75 C2-4 3.02 D2-11 0.90 A3-8 0.40 B2-18 0.78 C2-5 2.51 D2-12 0.85 A3-9 0.40 B2-19 0.37 C2-6 0.80 D2-13 0.97

A3-10 0.68 B2-20 0.34 C2-7 0.65 D2-14 0.90 A3-11 0.31 B2-21 0.33 C2-8 2.87 D2-15 1.16 A3-12 0.65 B2-22 0.70 C2-9 3.17 D2-16 1.33 A3-13 0.36 B2-23 0.41 Subtotal 18.42 D2-17 2.30 A3-14 0.36 Subtotal 10.84 D2-18 2.52

Subtotal 7.09 D2-19 2.47 A4-1 0.32 D2-20 1.37 A4-2 0.33 D2-21 0.92 A4-3 0.33 D2-22 0.83 A4-4 0.31 Subtotal 23.43 A4-5 0.53 A4-6 0.44 A4-7 0.77 A4-8 0.38 A4-9 0.41

A4-10 0.39 A4-11 0.31 A4-12 0.67

Subtotal 5.19

A

Total A 20.02

B

Total B 15.95

C

Total C 37.78

D

Total D 42.21 A+B 35.97 ha C+D 79.99 ha Total 115.96 ha

*Super block


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4.2.6 Telecommunications

A satellite base station for mobile phones and the Internet may be provided in each industrial park.

4.3 Development Costs

Based on the basic designs of infrastructure, development costs of the industrial parks in Phase 1 of the KNC development are estimated as presented in Table 5.

Table 5 Industrial Park Development Costs

Infrastructure Northern IP (US$) Southern IP (US$) Total (US$) Land preparation 720,000 2,140,000 2,860,000 Road 2,630,000 4,120,000 6,750,000 Water supply 1,240,000 2,630,000 3,870,000 Sewerage system 2,250,000 3,650,000 5,900,000 Power supply 440,000 930,000 1,370,000 Telecommunications 80,000 170,000 250,000

Total 7,360,000 13,640,000 21,000,000

4.4 Financial Analysis

The operation and maintenance (O&M) cost of the infrastructure of an industrial park is assumed at 3.0% of the annual cost infrastructure. The repayment period for this industrial park is assumed at 12 years. The estimated staff size for management and O&M staff required in the Northern and Southern Industrial Parks to be developed in Phase 1 of the KNC development is presented in Table 6. Estimated revenues of the two industrial parks are presented in Table 7.

Table 6 Estimated Staff Size for Industrial Park Management and O&M

Staff Northern IP Southern IP Total Management 5 8 13 O&M 20 30 50

Total 25 38 63

Table 7 Estimated Revenues of Northern and Southern Industrial Parks

Rent US$/m2/yr - Northern IP A 9.00 - Northern IP B 9.00 - Southern IP C 8.00 - Southern IP D 8.00 Capitalized unit cost US$/m2 Factory lots (ha) Repayment period: 12 yrs - Northern IP A 61.00 20.02 Interest rate: 10%/yr - Northern IP B 61.00 15.95 Effective sales schedule - Southern IP C 55.00 37.78 Year 1 30% - Southern IP D 55.00 42.21 Year 2 40% Revenue US$1,000 Rent (US$/yr) Year 3 30% - Northern IP A 12,277 1,802 - Northern IP B 9,781 1,436

Total 22,058 3,238 - Southern IP C 20,594 3,022 - Southern IP D 23,008 3,377

Total 43,602 6,399

Cash flow with land sales and rents are shown in Table 8. If land prices are set at US$61.00/m2 for sales and US$9.00/m2 for rent for the Northern Industrial Park and US$55.00/m2 and US$8.00/m2, respectively, for the Southern Industrial Park, the IRR will reach 69.6 % for sales and 21.8 % for rent at the end of the 12 years.


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4.5 Environmental Impact Assessment

An environmental impact assessment (EIA) for the development of the industrial parks is conducted through the following process:

(1) Review of environmental laws and regulations in Afghanistan (2) Examination of EIA procedures in Afghanistan (3) Administration of detailed EIA (4) Examination of a post-project environmental monitoring program (5) Formulation of environmental management plans for the respective industrial parks


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Table 8 Developer’s Cash Flow for Industrial Park Development

Cash Flow with Sales Investment Cost O&M Cost Revenue Net Cash Flow

Yr Northern IP Southern IP Total Northern IP Southern IP Total Northern IP Southern IP Total Northern IP Southern IP Total 1 7,360,000 0 7,360,000 0 0 0 0 0 0 -7,360,000 0 -7,360,000 2 0 13,640,000 13,640,000 940,800 0 940,800 6,617,389 0 6,617,389 5,676,589 -13,640,000 -7,963411 3 940,800 1,513,200 2,454,000 8,823,186 13,080,653 21,903,839 7,882,386 11,56,7,453 19,449,839 4 940,800 1,513,200 2,454,000 6,617,389 17,440,871 24,058,260 5,676,589 15,927,671 21,604,260 5 940,800 1,513,200 2,454,000 0 13,080,653 13,080,653 -940,800 11,56,7,453 10,626,653 6 940,800 1,513,200 2,454,000 0 0 0 -940,800 -1,513,200 -2,454,000 7 940,800 1,513,200 2,454,000 0 0 0 -940,800 -1,513,200 -2,454,000 8 940,800 1,513,200 2,454,000 0 0 0 -940,800 -1,513,200 -2,454,000 9 940,800 1,513,200 2,454,000 0 0 0 -940,800 -1,513,200 -2,454,000 10 940,800 1,513,200 2,454,000 0 0 0 -940,800 -1,513,200 -2,454,000 11 940,800 1,513,200 2,454,000 0 0 0 -940,800 -1,513,200 -2,454,000 12 940,800 1,513,200 2,454,000 0 0 0 -940,800 -1,513,200 -2,454,000 IRR (%) 63.89 74.68 69.63

Cash Flow with Rents Investment Cost O&M Cost Revenue Net Cash Flow

Yr Northern IP Southern IP Total Northern IP Southern IP Total Northern IP Southern IP Total Northern IP Southern IP Total 1 7,360,000 0 7,360,000 0 0 0 0 0 0 -7,360,000 0 -7,360,000 2 0 13,640,000 13,640,000 940,800 0 940,800 971,190 0 971,190 30,390 -13,640,000 -13,609,610 3 940,800 1,513,200 2,454,000 2,266,110 1,919,760 4,185,870 1,325,310 406,560 1,731,870 4 940,800 1,513,200 2,454,000 3,237,300 4,479,440 7,716,740 2,296,500 2,966,240 5,262,740 5 940,800 1,513,200 2,454,000 3,237,300 6,399,200 9,636,500 2,296,500 4,886,000 7,182,500 6 940,800 1,513,200 2,454,000 3,237,300 6,399,200 9,636,500 2,296,500 4,886,000 7,182,500 7 940,800 1,513,200 2,454,000 3,237,300 6,399,200 9,636,500 2,296,500 4,886,000 7,182,500 8 940,800 1,513,200 2,454,000 3,237,300 6,399,200 9,636,500 2,296,500 4,886,000 7,182,500 9 940,800 1,513,200 2,454,000 3,237,300 6,399,200 9,636,500 2,296,500 4,886,000 7,182,500 10 940,800 1,513,200 2,454,000 3,237,300 6,399,200 9,636,500 2,296,500 4,886,000 7,182,500 11 940,800 1,513,200 2,454,000 3,237,300 6,399,200 9,636,500 2,296,500 4,886,000 7,182,500 12 940,800 1,513,200 2,454,000 3,237,300 6,399,200 9,636,500 2,296,500 4,886,000 7,182,500 IRR (%) 20.04 23.02 21.82


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CHAPTER 5 IMPLEMENTATION

5.1 Preparation of RFP Documents

In order to secure developer(s) for the development and management of industrial parks, RFP (request for proposal) documents for bidding of developers are prepared with the following contents:

Volume 1

PART 1. Bidding Procedures Section I. Instruction to Bidders Section II. Bid Data Sheet Section III. Evaluation and Qualification Criteria Section IV. Bidding Form Section V. Eligible Countries

PART 2. Work Requirement Section VI. Works Requirements

1. Scope of Works 2. Development Guidelines 3. Specifications 4. Drawings 5. Supplementary Information

PART 3. Conditions of Contract Section VII. General Conditions of Contract Section VIII. Special Conditions of Contract for Land Lease

Volume 2

PART 4. Supplementary Information

Note: For Section VII. General Conditions of Contract, it is recommended to refer to Conditions of Contract for Design, Build and Operate Projects (1st ed., 2008), or the Gold Book published by FIDIC (International Federation of Consulting Engineers).

5.2 Management

For successful planning, design and implementation of the industrial parks, the management organization is of utmost importance. A careful study should be conducted on the establishment of a management body most appropriate for DCDA’s development policy on KNC.

5.2.1 Functions of management body

The management body should have the following functions:

- Investment promotion - One-stop-service center for assistance on legal application procedures, land lease agreement,

infrastructure services, etc. - Environment protection activities - Business support services - Amenity services - Habitation services

5.2.2 Selection of qualified investors

For the selection of investors qualified to participate in industrial parks, uniform application forms should be produced and used incorporating examination of the following:

- Type of business


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- Investor's (company’s) profile - Investor's (company’s) financial situation - Business plan - Employment situation - Factory layout and design - Transport conditions - Water use conditions - Power/telecommunication conditions - Environmental conditions (wastewater, solid waste, air pollution, hazardous industrial solid

waste, etc.) - Environmental management plan - Contribution to local community

5.3 Operation and Maintenance

The management body is responsible for the operation and maintenance of the following infrastructure inside industrial parks:

- Roads - Drainage - Water supply - Sewerage - Domestic solid waste disposal - Electricity - Telecommunications

The management body may set charges and fees for consumption, operation and maintenance of the industrial park infrastructure through agreement with investors.


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CHAPTER 6 RECOMMENDATIONS

6.1 Recommended Approach to Industrial Park Development in Phase 1 KNC Development

As presented in Section 2.1, there are three alternatives to industrial park (IP) development for KNC. They are (1) direct implementation by DCDA, (2) joint implementation with AISA and (3) implementation by private entities under DCDA's management.

Alternative (1) ensures full benefits of IP development projects in KNC to DCDA provided that they prove to be lucrative business undertakings as described in Section 4.4. This alternative, however, will impose substantive initial investment costs on DCDA as the implementing agency. Also, the implementing agency will have to bare all kinds of risk associated with developments. To reduce risks and realize cost-effective developments, various surveys may have to be undertaken in advance, including a detailed survey to determine sub-sector industries to be established in the industrial parks. Technical expertise necessary for planning, implementing and managing the IPs will have to be provided by DCDA directly or by contracted consultants.

Alternative (2) reduces the investment costs, risks and needs for surveys and technical consultancy services as they will be shared with AISA. In particular, AISA may provide all the technical expertise necessary for the IP development. Still, some of the initial investment costs will have to be borne by DCDA.

Under Alternative (3), the investment costs, risk management and technical expertise will be mostly provided by the private entities undertaking the development of IPs. For DCDA, it is necessary to ensure that proper businesses are established at the right time and the right locations in line with the Kabul city master plan, the Dehsabz South area structure plan, development guidelines and other conditions to be specified by DCDA.

It is DCDA's policy to entrust the new city development as much as possible to the private sector while DCDA itself is in the position to guide and control the private sector activities. Therefore, it is recommended that Alternative (3) be employed for the IP development in Phase 1 KNC development.

6.2 Selection of Sub-sector Industries to Be Established

Provided that industrial parks are developed under Alternative (3) in Phase 1 KNC development, the types of business (sub-sector industry) to be established in the industrial parks will be determined by the private implementing agency. DCDA, on the other hand, should provide guidelines for the selection of sub-sector industries to be established in view of the overall Kabul new city development.

The criteria that may apply to the selection of sub-sector industries are (1) water requirements, (2) labor-intensiveness, (3) likelihood of polluting environment, (4) value-addedness based on local resources, and (5) prospects for future development of related industries.

Criterion (1) is the most essential since water resources and the prospect there of are scarce in the Dehsabz South area, and the cost of water tends to be high. In Criterion (2), the more labor-intensive the businesses to be established are, the larger the number of employment opportunities to be generated. Criterion (3) should be closely monitored and strictly maintained to ensure pleasant living environment for the new city residents and visitors.

Criterion (4) should be satisfied as much as possible to support the development of the new city economy. Increased income levels of the residents will spur business and commercial activities in KNC thereby leading to generate more employment opportunities and to realize an economically active and lively new city.

Criterion (5) is potentially important for continued long-term industrial development in KNC. For instance, labor-intensive sewing factories may be established immediately, which may develop into garment industry and further into high value-added comprehensive apparel industry. In the same vein, automobile repair shops may turn into assembly factories and then develop into engineering industry, also logistics industry may start with warehousing companies that develop into sorting and


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primary processing and further into value-added processing.

6.3 Implementing Arrangements

With Alternative (3) described above, IP development projects in the Dehsabz South area are implemented by private entities under the control and guidance of DCDA. Separate private entities may be engaged by DCDA for the Northern Industrial Park and the Southern Industrial Park, respectively. For complementary development of the two parks with respect to a mixture of sub-sector industries to be established, it may be more desirable to engage one entity to take charge of both IPs. In case where two entities are engaged, DCDA will coordinate their activities to ensure the complementary development.

DCDA may contract private consultants to provide technical guidance to the selected private implementing agencies as necessary for surveys and selection of investors, planning and design of facilities, and construction works. DCDA may also consult with AISA on management and operation of IPs as necessary.

Infrastructure and utilities necessary for the IPs are provided by the selected private implementing agencies, covering roads within the IPs, water supply, sewerage, electricity and telecommunications. DCDA will provide guidance in the procurement of implementing agencies and service providers as necessary.

6.4 Support Measures by the Afghan Government

As the Kabul new city development itself is one of the most important national projects, the Afghan Government directly and through DCDA will provide various support measures necessary for the IPs development in the Dehsabz South area. Control and guidance by DCDA will ensure corruption-free implementation of the new city development in general and the IPs development in particular. This is an important condition for successful implementation of the project expressed by potential investors as clarified in Section 2.1.

Provision of land for the IPs at competitive prices is another support to be provided by DCDA. DCDA will provide guidance and advice on procurement of implementing agencies and service providers in consultation with AISA and other government agencies as necessary. DCDA will facilitate the provision of services by related government agencies as well.

Other support measures to be introduced by the Afghan Government may include (1) corporate tax reduction/exemption, (2) accelerated depreciation of investments, (3) reduction of import duties on construction materials and production input, and (4) financial incentives to encourage private investors to be involved in IP development, including new loan schemes.

6.5 Future Possibility of Medium/Large-scale Industrial Park Development

As in the other developing countries in Asia, demand for medium/large-scale industrial park developments involving foreign investment is expected to arise if the urban area and its economy properly develop in the national capital. It is assumed that medium or large-scale industrial parks with foreign investment will be developed for the following types of business (UN ISIC codes, Rev. 4, in parentheses).

- Food product manufactures (C10) - Beverage manufactures (C11) - Textile manufactures (C13) - Clothing manufactures (C14) - Fabricated metal product manufactures excluding machinery and equipment (C25) - Computer, electronic and optical product manufactures (C26) - Electrical equipment manufactures (C27) - Machinery and equipment manufactures (C28) - Motor vehicle manufactures including trailers and semi-trailers (C29)


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- Retail traders excluding automobiles and motorcycles (G47) - Land/pipeline transport service providers (H49)

The required land area of a factory lot is 1-50 ha per investor. Thus, several hundred hectares of land need to be developed in total for industrial parks. Land for medium or large-scale industrial parks is carefully selected taking into consideration: (1) easy access to major arterial roads, (2) sufficient distance from urban centers, (3) sufficient buffer zones to be established with surrounding areas, (4) land with gentle slope for flexible large lots, and (5) sufficient infrastructure to be developed. Also, a detailed market survey on medium/large-scale industrial parks should be conducted for investors, and its results be reflected on future changes of land use in the Master Plan.

In formulating a medium/large-scale industrial park development plan, it is recommended to propose formal procedure for plan changes, approval and revision as described in the chapter 11 of Project Completion Report (March 2012) submitted by the JICA expert team for the previous capacity development project. The part of the chapter (Section 11.2) is excerpted in the section below.

6.6 Proposal for Formalization of Plan Changes, Approval and Revision

In preparing the Dehsabz South area structure plan, some changes have been made on the original Master Plan approved by the Cabinet in March 2009. To avoid confusions and prevent arbitrary changes in the Master Plan and the structure plan, formal procedure should be established and taken for the changes already made and to be made in the future. This involves the following:

1) Formal treatment of the changes made in the Master Plan during the preparation of the structure plan

2) Regulation of further changes in the Master Plan 3) Approval and revision of the structure plan

6.6.1 Formal treatment of changes in the Master Plan

The changes made in the Master Plan in preparing the Dehsabz South area structure plan are summarized as follows.

(1) Boundaries of the Dehsabz South development area

Boundaries of the Dehsabz South area have been defined by modifying the boundaries of the Dehsabz South district defined during the previous JICA study as shown in Figure 3.1 in the Dehsabz South area structure plan.

(2) Roads - The Symbol Road has been introduced as another primary city artery road. - The east-west artery roads, i.e. north and south roads, extending from the two circular areas

have been re-aligned to provide better links with the Paymonar area and the Kabul city.

(3) Land use plan - The park areas along KCORR have been changed to logistic, light industrial, and

institutional areas. - Residential areas and Commercial areas have been re-defined for more mixed-use areas. - Park areas have been more specifically designated, including the two circular parks as

originally planned by the Master Plan. - The network of parks and greenery has been planned in more detail, particularly with a large

water retention and infiltration area along the eastern border of the Dehsabz South area. - Residential areas along the southern borders with the Afghan army drill ground have been

changed into reserve land for light industrial, recreational and institutional uses.

These changes have been introduced to make the structure plan more implementable, while retaining the basic structure and land use distribution of the Master Plan. In fact, all the features incorporated in the Master Plan have been retained. Still, it is preferable that the Master Plan should be revised reflecting these changes, and formally adopted by the Cabinet as the latest version.


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6.6.2 Regulation for further changes in the Master Plan

It is quite common that development master plans of any sort are revised once in a while as conditions affecting the planned development change over time. In case of a strategic plan for a sizeable region, the plan is prepared usually for 20 years or so, and reviewed after five to 10 years for a major revision. Minor revisions may be made even more frequently. A procedure should be established for major and minor revisions of the Kabul new city master plan.

For the purpose of developing regulation for further changes in the Master Plan, it is useful to distinguish different kinds of changes as follows.

(1) Changes in boundaries of development areas

(2) Changes in roads - Changes in alignment of regional artery roads, primary and secondary city artery roads - Changes in alignment of secondary roads - Addition of new artery and secondary roads

(3) Changes in land use - Changes in land use classes, e.g. from residential to commercial land - Designation of more specific land use classes, e.g. institutional land to be specified for a

hospital

(4) Other changes - Modifications of distribution of social and public facilities - Introduction of specific land use, e.g. diplomatic district

Of these changes, some may be allowed by technical and professional judgments of DCDA, and others may require more formal approval by the DCDA Board, the Cabinet or even the President. Possible division of required approvals is shown in Table 9.

Table 9 Possible Division of Approval for Different Changes

Approval by Changes DCDA - Changes in alignment of secondary roads

- Addition of new secondary roads - Designation of more specific land uses - Modification of distribution of social and public facilities in neighborhood units

Board - Changes in alignment of artery roads - Changes in land use classes - Location of major social and public facilities - Introduction of specific land uses for minor functions

Cabinet - Addition of new artery roads - Introduction of specific land use for major functions

President Changes in boundaries of development areas

6.6.3 Approval and revision of the structure plan

The Dehsabz South area structure plan should be formally approved by the Cabinet just like the Master Plan. This is necessary because the structure plan incorporates changes categorized above as requiring the Cabinet approval.

The Cabinet approval will fix the following, which cannot be changed without another approval by the Cabinet or the President:

1) Boundaries of the Dehsabz South development area 2) Road network with regional artery roads, primary and secondary city artery roads 3) Land classification into 11 categories including reserve land

The following should be formally adopted as a matter of principle:

(1) Land use plan with distribution of land for different uses (2) Population distribution with population density in each neighborhood unit


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(3) Distribution of social and public facilities in neighborhood units (4) Other criteria and standards specified in the structure plan document

Future revisions of the structure plan will be subject to the approval procedure specified in the previous section. Those elements of the structure plan adopted by the Cabinet as a matter of principle may be changed if the approval procedure suggested in the previous section is followed, while the elements fixed by the Cabinet approval cannot be changed unless another approval is obtained by the Cabinet (artery road network and land classification) or the President (boundaries of development area).

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