|
|||||||
|
|
|
|||||
|
|
|||||||
|
|
|||||
 |
 |
 |
 |
 |
 |
Master Plan Project of Qeshm Island
Existing
Economic and Social Conditions
Industrial
Development Strategy
Future
Employment and Population
Financial
and Economical Analysis
Qeshm Free Area (QFA) was created in August 1990. The purpose behind the establishment of a free trade zone is to create conditions favorable for foreign and domestic in vestment using locational advantages as well as the availability of large energy sources on the island and in the region. It was realized that the envisaged large scale investments in industry, infrastructure and community development would require coordinated efforts from QFA as well as from all other parties concerned in order to optimize the results of development efforts. To this end QFA, with assistance from SWECO, entered an agreement for the preparation of a Master Plan for development on Qeshm Island.
The Purpose of the Master Plan for Qeshm Free Area is to provide the overall framework and guidelines for development on the island, to be used by QFA and all other parties involved and participating in different aspects of the development activities. From the outset it has been emphasized that the Master Plan will provide framework for development, which is flexible and encourages further elaboration. In conclusion, Qeshm Island may, with the support of the tailor-made and yet flexible Master Plan outlined in this report, with strategic priority development of infrastructure realize its potential.
Overall goals for the development on Qeshm Island have been summarized as follows:
An optimal utilization of Qeshm Island's potential and comparative advantage, primarily consisting of availability of natural resources, in particular hydrocarbons, its population and its geographic location, with the purpose of promoting economic and social development for the population of Qeshm Island as well as the whole of Iran. In this process the welfare and cultural heritage of the population as well as the preservation and enhancement of the natural environment should be given due consideration.
Compatible with the above mentioned goals, and relevant to the preparation of the Master Plan for development on Qeshm Island, is a set of major objectives in the fields of Cultural Environment, Human resource Development, Agriculture and Husbandry; Fishery; Industry; Service Sector, Tourism Development; Infrastructure Development; Community Development; Land Use; and environmental Protection. Major objectives pertaining to the above fields have been enumerated.
In 1991, the total population of Qeshm was estimated at 60,117, which corresponds to an average annual growth rate since 1986 of 3.0 percent. This may be compared with the period 1976-86 when the average growth rate was 3.2 percent. The total labour force in 1991 amounted to 14,371, of whom 12,510 were economically active and 1,861 were unemployed. The number of people recorded as economically active increased by, on average, 7.0 pr cent. Per annum between 1986 and 1991.
The economically active population in Qeshm (1991) was distributed between agriculture (27 percent), construction (22 percent)K public services (16 percent)K and wholesale and retail trade (9 percent) as the largest sectors. Only 2.1 percent of the economically active population were women. Of these, 61 percent were employed in the public services, social and personal services sectors.
Close to half the population was 14 years of age and below. The average size of households in terms of number of persons was 5.1. Some 90 percent of the households owned their own houses. Some 26 percent of the population lived in urban areas and 74 percent in rural areas. The educational level has also increased.
Agriculture
Agriculture on Qeshm Island is restricted by several factors. The land on the island is classified as marginal and soils are poor in quality. The lack of water is even more restricting.
Of the total arable land, some 80 percent is under cultivation. The remainder is left unused due to shortage of water and lack of funds. Of the total area of Qeshm Island, only 2.1 percent is under cultivation as crops and orchards. Irrigated crops include vegetables and summer crops. Non-irrigated land is in most cases used for the cultivation of barley.
Livestock products of the island consist mainly of milk, dairy products, meat and manure revenue from these activities comprise nearly two thirds of the net income generated from agriculture. Qeshm Island is rich in respect of forage production compared with the production of agricultural crops.
Nearly two thirds of the total net income comes from animal husbandry. The estimated annual wage per worker in agriculture is some IRI 1.5 million per year. This low income level leaves no room for savings and investments in the sector by the people involved. Unless technological and financial transfer is introduced, a decline of the sector is unavoidable.
Natural conditions are more suitable as regards animal husbandry, and should be utilized in a more rational manner. It has been estimated that the yield per hectare and the yield per cow may be almost doubled by improved agricultural technology and credit allocation without an increase in the number of farmers involved.
Fishery
The existence of the largest shrimp fishing grounds in the Hormuzgan province, as well as waters which harbour considerable amounts of commercially important migratory fish, make fishing an important economic activity. The waters to the north of the island are one of the main nursery grounds for the most commercially valuable fish and shrimp in the region.
Catches in Qeshm waters comprise fish, crustaceans and mollusks. Their estimated volume for 1992/93 is around 18,000 tons. Demersal species are by far the most important catch by weight (13,000 tons). With the exception of the latter group, there is no room for any other development of catches. Almost half the total fish caught in Qeshm waters (9,200 tons) are caught by Qeshmi fishermen.
Some 30 percent of Hormuzgan Province fishing vessels belong to Qeshm. The most important industies related to fishing on Qeshm Island are fibre-glass boat and wooden launch building yards. In total, some 350 employees are engaged in these activities (1991), most of them in launch building. At present there are only two cold storage units with freezers on Qeshm Island. The only industrial processin g unit on the island is a unit for shrimp.
Total employment in fishery and related activities in 1991 was more than 2,500 persons, of whom 80 percent were fisherment and the remaining 20 percent were workers in related activities. One out of five active persons are engaged in fishery and related activities. In planning for the future, two areas should be emphasized, viz improvements to current efficiency, and the creation of new capacities and exploitation of recently identified resources. Inaddition to the present canning factory, there is a good potential for processing plants.
Main areas of development in connection with fishing are better exploitation of small pelagic and cephalopods resources, and the cultivation of oystres and shrimp. Other potentials lie in the utilization of uneSeaof Oman.
Transit Trade
The transit trade system in effect on Qeshm Island is a result of the istory of customs regulations and tariffs, The location of the island and the dynamism of its population. The flow of goods has been from countries south of the Persian Gulf to mainland Iran and also in the other direction for exports. Almost all goods are imported from Dubai, including the direct import of goods from the country of origin, transit through Dubai to Qeshm, or direct purchase in Dubai's market and shipment to Qeshm.
On average, some 14,000 tons of goods per month have been brought to the island. The monthly average value of transit trade has been estimated at some USD 17 million. Compared with the total value of exports leaving Dubai for Iran during this period, QFA has transited 30 percent during 1991 and 1992. Traders take half, transporters 10 percent, and QFA almost 40 percent of the revenue generated from transit trade. In total, close to 5,000 people were involved in trade and related activities, of whom 94 percent in transport and unloading services, and the rest in wholesale trade.
Other Economic Activities
It has been estimated that some 3,700 people, or about 30 percent of the active population, work in the manufacturing and wholesale/retail trade sectors (1991). Manufacturing is made up of a multitude of small workshops generally employing less than five people, in the main related to construction and fishing.
Industrial Development Strategy
The studies for the development of industry on Qeshm Island comprise the following main parts:
Preconditions for Industrial Development on Qeshm Island
Iran appears to have a strong comparative advantage in the first stage processing of domestic natural resources as well as in energy-intensive manufacturing. In midstream processing activities the original comparative advantage from primary processing is being eroded somewhat, but appropriate technology acquisition, management services and training would costitute compensatroy means whereby internationally competive industries could nevertheless be established.
In typical downstream manufacturing operations, in particular labour-intensive manufacturing, Iran would enjoy a less pronounced comparative advantage. Downstream manufacturing operations consist of a broadrange of products with different market ad production characteristics. In those fields in which Iran would enjoy a comparative advantage it would not be so much based on domestic resources at low cost but more on specific skills or traditions.
Iran's strategic geographical position provides it with a comparative advantage with respect to cooperation in manufacture and trade with states of the former USSR, Afghanistan and, to a lesser degree, with countries around the Persian Gulf.
Qeshm Island enjoys much the same comparative advantage as outlined above for Iran as a whole. In comparison with locations in the northern and western part of Iran, Qeshm Island has certain disadvantages in being remote from major domesti markets, in lacking certain types of infrastructure and in having less developed support and service industries. Its superiority vis-à-vis locations in the north and west lies in its strategic location with regard to sea transport and international trade.
In comparison with Bandar Abbas, Qeshm Island has a competitive advantage in its potential to develop port facilities for larger ships. Since with the exception of the free trade concept, Qeshm Island and Bandar Abbas, offer many similar advantages, specialization and complementarity between the two areas seems advisable.
Basic Concepts for Industrial Development on Qeshm Island
Among business concepts for the industrial development of Qeshm Island, the most solid is based on the concept of upstream and midstream processing of abundant, low cost, domestic natural resources or the utilization of such natural resources in energy intensive industries. The major economic benefit to Iran would consist of net revenues generated from sales of such resources at a price exceeding the supply cost for the resources in question.
The concept of developing Qeshm Island as a distribution centre for the Persian Gulf region has its limitations, but as a gateway to the large Iranian market it may very well attract considerable direct foreign investment both in manufacturing and distribution activities.
The processing of imported raw materials and intermediates for re-export is not considered as a particularly strong business concept in the short and medium term for Qeshm Island. Only in such cases where the low cost of energy would offset costs of transportation for imports of raw materials and intermediates as well as exports of finished goods, would such projects be viable.
The free trade area (FTA) concept is most likely a prerequisite for the development of the island from the viewpoint of competitively attracting foreign investment, in particular during the period of establishment. However, it should nevertheless be recognized that this concept constitutes a "second best solution" which can never be a substitute for appropriate economic policies for the whole country. Nevertheless, it can reinforce such policies. As a first step in opening the country to foreign direct investment and increased international cooperation, the FTA concept may come to play a crucial role.
Qeshm Island thus has the potential neede to develop into a large-scale FTA, besed on its own concept as outlined above. It would, however, not be advisable to try to enter the stiff international competition among traditional export processing zones. Qeshm Island should be developed based on its own unique preconditions.
Potential for Industrial Development at Subsector and Project Level
In reviewing the potential offered by nine different manufacturing sectors, individual projects have been identified and screened within each of the sectors from a viability point of view.
The food, beverages and tobacco sector does not hold many prospects as regards locally grown agricultural products. However, as Iran is a major importer of food items, some production of such products may be viable based on imported raw materials and intermediates. Major projects that may be considered are a soya bean oil refinery, a sugar refinery, a wheat flour mill, a rice mill, a fish cannery, a animal feed factory and other related industry.
Upstream activities involving the production of synthetic fibres may very well be viable. Midstream and downstream manufacturing in the textiles, clothing and leather sector may offer some potential.
Some small-scale industries in the wood and wooden products sector, and also in the paper, cardboard and related products sector, are likely to be established with the general increase in business activities on Qeshm Island.
In the chemical sector, several major projects have already been proposed for the island. The boom in MTBE is also having a positive effect on the global demand for methanol, the main raw material for the production of MTBE. The worldwide market outlook for the 1990's regarding methanol therefore looks bright.
At present, there is a supply surplus in the wold market for nitrogen fertilizers, but beyond the mid-1990's new capacity will be required Volumes of urea and ammonia on Qeshm Island would have to be related to total imports by countries in South and East Asia, the most likely export markets for the island.
The proposed polyolefin complex for the production of LLDPE and PP also has to be given reasonable volumes Demand for LLDPE is rapidly increasing and will continue to gain ground at the expense of primarily LDPE.
An aromatics complex including midstream and selected downstream operations would be another area of interest to Qeshm Island. A plant of this type could feed a considerable synthetifibres indproproductsuch as acrylic, nylon and polyester fibres for export.
A petroleum refinery has been proposed for Qeshm Island Volumes involved would be quite moderate as compared with exports from other countries in the Persian Gulf. Nearby markets also exist for anode coke by the rapidly growing aluminium smelter capacity.
Annual imports of pharmaceuticals by Iran, GCC countries and Pakistan amount to about USD 1.25 billion, which would justify targeting international pharmaceutical firms for establishment on Qeshm Island.
Among other chemicals, the production of synthetic soda ash may be an interesting alternative for the island as the raw materials, primarily salt and limestone, are available and production is energy-intensive.
Mid - and downstream chemical projects will not have the same competitive advantage (in terms of low cost of feedstock and energy) as upstream industries on Qeshm Island However, these downstream projects are higher value added industries, generate greater return on investment, and may be supplied feedstock produced at Qeshm Island on the basis of competitive hydrocarbon prices. The growing domestic market in Iran for such products should also be considered.
An LNG project has been discussed for Qeshm Island Considering the huge investments involved in such a project, some USD 2 to 4 billion, as well as the possibility of more profitable alternative uses for natural gas in other applications, the priority and timing of such a project should be carefully assessed.
The supply of natural gas to India from countries around the Persian Gulf, notably Iran, Qatar and Oman is under study. Should this project materialize, involving investments of the order of USD 15 to 20 billion according to one estimate, there may be options for Qeshm Island to evolve as a base for the production of pipes and steel structures, warehousing, construction and various services.
In the basic metals sector, the HBI project demonstrates many attractive features, in particular if fed with pellets based on domestic iron ore, in view of the availability of natural gas and electricity at competitive prices and a positive market outlook. A steel industry supplied by the HBI plant consisting of a mini-mill, an electric arc furnace, continuous casting, a rolling mill and finishing operations concentrating on one or two niche products, such as tubes and pipes, may very well be viable in the medium term.
Ferro-alloys present an area of interest to Qeshm Island considering the energy intensive nature of production. In the longer term, cooperation with neighbouring states, such as Uzbekistan and Kazakhstan, may offer opportunities for production of ferro-alloys. Raw materials from these countries could be combined with low cost energy on Qeshm Island and a favorable location in relation to potential export markets. Production of ferro-manganese and ferro-chrome is seen as possible projects once the market picks up again.
Considering the joint aluminium smelter capacity, which will probably be substantial in this part of the world by the mid-1990's, there may energy a sufficiently large regional market to justify a large-scale alumina refinery on the island. The refining process requires huge quantities of energy. Some of the bauxite required, and possibly alunite, could be sourced in Iran, but the bulk of the raw material would probably have to come from Ghana or Australia.
A project to produce titanium dioxide has been proposed, which may also be viable once the current market conditions have improved.
Despite some disadvantages resulting from trad barriers in the machinery and metallic equipment and products sector, certain areas that may be targeted have been identified.
Assessment of Scenarios and Infrastructure Requirements
Four scenarios for the industrial development of Qeshm Island representing a broad spectrum of different assumptions regarding volumes and timing of industrial investments have been prepared. They also include industry-related infrastructure investments. The scenarios cover the period up to the year 2005 and involve total investments of USD 16, 15, 12 and 6 billion, respectively, in the four scenarios. The scenarios also differ with regard to the pace at which investments would be made during the scenario period. The four scenarios are analyzed in respect of both job creation and infrastructure requirements.
In Scenario I, involving the largest total investment, direct emplyment would amount to about 14,000 persons in the year 2005. A separate planning scenario up to the year 2001 has also been prepared with a view of assisting QFA in its short and medium term planning. In this scenario, only those industrial projects deemed to have the highest relative likeelihood for implementation have been included. Within the time horizon of the Planning Scenario, industrial investments have been calculated at USD 2.4 billion and infrastructure investments at USD 0.8 billion.
Industrial Development Strategy
The industrial development strategy of QFA elaborates, inter alia, on issues regarding objectives; means to create confidence with investors, the need to demonstrate financial and economic viability; pricing; public versus private ownership; foreign investment policy; trade policy; tax policy; setting of priorities; and a risk strategy. Among major conclusions and recommendations is the observation that prevailing import duties in Iran and other countries in the Persian Gulf may hamper development of manufacturing on Qeshm Island and would require the future attention of QFA. Another conclusion is that QFA would need some formally established financial muscle to create confidence with potential investors. A formalized decision by Majlis regarding the allocation of natural gas resources for exploitation through QFA would also boost investor confidence.
A further conclusion is also that with an appropriately chosen risk strategy and strategically selected priority infrastructure investments, about 75 percent of manufacturing investments could be started with commitments in infrastructure investment limited to only 25 percent of the total value assumed in the same scenario.
Investment promotion Strategy
In the broadest sense, investment promotion consists of the entire spectre of activities needed to create a favorable environment for both domestic and foreign investment. In this context, the legal framework is a cornerstone. This would have to be further strengthened to provide improved reassurances to foreign investors.
Foreign investors attach great importance to the existence of bilateral investment protection agreements under international law between the host country for investment and the country of origin for the foreign direct investment. Iran does not have such agreements with those countries from which major potential investors may originate. Recently, new bye-laws have been ratified by Government, which deal with labour regulations, social security, the attraction of foreign investments, not included in previous laws, such as nationalisation, indemnification and appeal mechanisms, are now covered in these bye-laws. More flexible labour and social security regulations have also been adopted.
Guidelines regarding the targeting of sectors, targeting of countries and targeting of individual firms, as well as some recommendations regarding investment promotion techniques are provided.
Guidelines regarding the targeting of sectors, targeting of countries and targeting of individual firms, as well as some recommendations regarding investment promotion techniques, are provided.
Future Employment and Population
The basis for the projections of population and employment is provided by the four industrial development scenarios. In addition, population and employment projections have been prepared for the Planning Scenario.
Forecasts regarding the number of economically active people in the agriculture and fishery sectors are primarily based on the separate studies carried out in these fields. The number of economically active people in the water, electricity and gas sectors has been projected based on the futrue expected consumptiof gas in the scenarios. The number of construction workers has been based on forecasts in relation to civil works in industry, civil works in infrastructure and the future demand for housing.
The number of people economically active in the service sector has been projected based on historic development in Qeshm as well as on the service sector's share of total employment in the whole of Iran.
Other key assumptions have been a reduction in unemployment along with increased economic activity on Qeshm Island, an increase in the share of the labour force as a percentage of the total population, as well as a gradual decrease in the average size of households on Qeshm Island.
In the fuor scenarios, total population is projected to increase by the year 2021 to between 395,000 and 176,000. The share of the labour force among the total population is assumed to increase from 28 percent to 33 percent, and unemployment is assumed to drop to 4 percent by the year 2021.
By the year 2021, the size of the economically active population is projected to have increased to between 125,000 and 56,000. Manufacturing will account for 31 percent of the economically active population in 2021 in the fastest growth scenario and 23 percent in the slowest growth scenario. On the other hand, in the fastest growth scenario only 6 percent will at the same time be involved in agriculture, while in the slowest growth scenario agriculture employment will account for 13 percent.
In the fastest growth scenario, the investment boom would peak in the second half of the 1990's, requiring for a few years some 25,000 construction workers, which would mainly have to come from outside Qeshm Island. In the slower growth scenarios, the investment boom is not quite so concentrated to a few years and the local construction industry would accordingly be given an opportunity to develop its capacity to meet demand.
The average annual growth rate is considerably higher in the period 1991-2001 than for the rest of the scenario period in Scenarios I and II, whereas in Scenarios III and IV a more even growth rate has been assumed for the entire period 1991-2011 before the rate of growth levels out.
Growth of the indigenous population has been assumed to be 4 percent for the period 1991-2001, 3.5 percent for 2001-2011, and 3 percent for he period 2011-2021. The natural growth of the 1991 indigenous Qeshm population will keep pace approximately with the overall population growth projected in the lowest scenario, with the result that 96 percent of the population in 2021 could be of Qeshm origin. In the other scenarios, considerable immigration would have to take place in order to arrive at the projected population growth.
The development of the agriculture, fishery and husbandry sectors of the economy has been assumed to be the same in all four scenarios. Increased production in agriculture and animal husbandry has been assumed to take place primarily by increased yields per hectare and increased productivity per employee. The number of persons employed in fishery, however, has been projected to grow from about 2,000 in 1991 to 6,500 by 2021.
In the four scenarios, employment in manufacturing has been projected up to the year 2005. These numbers have been used in the projections of population and employment, and have been complemented with simplified assumptions of growth beyond that year. As the first phase of development at Qeshm Island has been assumed to concentrate on relatively capital-intensive industry, it may be expected that more labour - intensive industries would follow. On the other hand, it is likely that less labour intensive technologies will be developed in more or less all industrial fields in the time prspective considered in the projections.
The service sector accounts for a larger share of employment than would normally be expected in countries at the same stage of development. This development is projected to be reinforced in future by the plans to develop tourism on Qeshm Island.
In future, the participation rate is projected to increase from 28 to 33 percent by 2021, much of which is assumed to beaccounted for by women. Unemployment dropped from 16 to 11 percent between 1986 and 1991, and is expected to further decrease gradually to about 4 percent.
In the Planning Scenario, the total population is projected to increase to some 100,000 by the year 2001, 28,000 of whom will be economically active. Of the total population, about 90 percent will consist of indigenous Qeshm population. For recruitment to job vacancies, however, a smaller share is likely to be experienced, as the qualifications of Qeshmis cannot be assumed to fulfil specific requirements. Between 1991 and 2001, the number of households in the Planning Scenario is projected to increase by about 9,000, which implies a corresponding need for additional housing. Most construction work could be corresponding need for additional housing. Most construction work could be carried out by indigenous Qeshmi workers.
The Weighted average annual wage and salary per full time employee in 1993 on Qeshm island has been estimated to be about IRI 2.7 million, corresponding to about USD 1,540. This corresponds to an average annual wage and salary per capita of about USD 380. In Scenario I, it has been assumed that real wages and salarie will increase by 10 percent per annum for the period 199302001, by 3 percent per annum for the period 2001-2011 and by 2 percent per annum for the period 2011-2021.
Per capita household incomes are projected to increase, in constant 1993 USD, in the fastest growth scenario to USD 810 in 2001, USD 1,100 in 2011 and USD 1,330 in 2021. In the slowest growth scenario, the per capita household income is projected to increase, in constant 1993 USD, to USD 450,600 and to 730 in the years 2001, 2011 and 2021, respectively.
Qeshm Island is situated in the Strait of Hormuz, at the entrance to the Persian Gulf from the Sea of Oman. The island is approximately 120 km long in an east-west direction, and between ten and thirty kilometers wide. The land area of the island is some 1,400 km2. The island comprises large flat areas closer to the sea, and hills and mountains of up to 400 meters in height. About one third of the land is relatively level, and the rest more or less mountainous, Rainfall is low, averaging 155 mm per annum.
There are considerable gas reserves on Qeshm Island. Production is focused on Gevarzin and there is a large field located below the western mountain range. There are oil reserves in the waters between Hormuz and Larak and between Larak and Hengam, as well as further out in the Hormuz Strait.
Results from geotechnical investigations in a number of locations in the eastern part of the island generally indicate that buildings of three to five storeys in height can be built without pile foundations.
Qeshm Island has been subdivided into three main units in the characterization of the environment, viz., the terrestrial environment, th intertidal areas and the marine environment.
The main part of the terrestrial environment is barren land of lwo direct environmental sensitivity. Apart from areas occupied by settlements, the agricultural areas represent th most sensitive parts of the terrestrial environment.
The ecologically most sensitive areas are located in the intertidal environments. This also applies to the mangrove area. Iran has ratified the Convention on Wetlands of International importance especially as Waterfowl Habitat, with inherent commitments. An area of 100,000 ha of wetlands has been set aside in the Khuran Strait, in particular for protection of waterfowl.
The environmental sensitivity of the marine waters varies from place to palce depending, inter alia, on water currents, bottom topography, biological life and current pollution levels.
The environmental impact of development on the island must be considered in a larger perspective than from the island alone. Water quality in the Khuran Strait is at present mainly affected by effluent from the mainland.
The environmentally most sensitive and valuable areas are located on western part of Qeshm Island, including Hara Protected Area, "Ramsar Wetland", and breeding sites for Green Turtles.
In view of the large-scale developments considered for Qeshm Island, a suggested approach to the handling of environmental aspects has been formulated as follows.
"QFA wishes to promote a rational development of industry and infrastructure consistent with sustainable development and management of natural resources for the economic improvement and wellbeing of the inhabitants of Qeshm Island and the Nation. QFA endeavors to ensure that economic development promoted by it does not exceed the regenerative capacity of the environment".
It is proposed that QFA staff be responsible for the environmental assessment of projects. An Environmental Office within QFA should be established, located on Qeshm Island, with an in-house environmental competence.
Standards adopted by QFA should be based on the concept of sustainability, i.e. industrial and infrastructural development should be undertaken in such a way that renewable natural resources are maintained, not harmed or exhausted. In particular, this concerns the living resources of the marine environment.
Environmental work should become a continuous process during project preparation. Environmental criteria, based on facts from environmental assessment procedures proposed, should be included in planning, location and design decisions together with economic and engineering criteria from the outset of project preparation. It is suggested that environmental assessment be undertaken in three consecutive steps, the last two of which should be undertaken only if deemed necessary.
The selection of site locations plays an important role in determining the impact of discharges and waste disposal on the environment, and costs and methods of required pollution control. There are often alternatives available regarding the industrial technology and manufacturing processes to be used. Usually the most cost-effective choices are made. However, the potential use of alternative technologies or processes should also be included in the site selection process.
It is important that environmental knowledge be accumulated within QFA in a so-called institutional memory. The initiation of an Environmental Data Bank is proposed as the first step in this process.
Factors which have been mapped for work on land use planning include. Topographical conditions, areas for agriculture, existing settlements, environmentally sensitive areas, areas suitable for port and airport development, and areas of value for recreation and tourism.
Requirements developed in the industrial development strategy and population and employment studies have been identified with the purpose of establishing the basis for the planning of land uses, transport and utilities.
For the preparation of land use plans for Qeshm Island, it has been considered practical to consider two development stages, viz. Stage I, corresponding to the time when the industries identified in the industrial development strategy scenarios have been implemented (i.e. until the year 2005 or later), with a population of some 200,000 inhabitants. For Stage II, development up until the year 2021 according to Scenario I has been selected as the basis, leading to a population of some 400,000.
On the basis of the projections of population and employment, an estimate has been made of requirements on land for industry and residential purposes. In view of the requirements for environmental protection, relatively large areas will be set aside for this purpose. Additional areas should be reserved for the protection of their natural status and for use in connection with recreation and tourism.
Construction should not be allowed in any area not specifically dedicated to development. Areas in which development is positively indicated should be the subject of detailed planning, including planning regulations and development controls, before any development should be allowed.
The most environmentally sensitive and valuable areas are situated in the western part of the island. Location of the industrial zones in the eastern part of the island will thus decrease the risks for potential negative impact on these areas.
The overall land use plan covering the whole island is accompanied by land use plans for the major cities and industrial areas. In the preparation of land use plans for Qeshm Island, the provision of public facilities at different levels has also been considered, with the purpose of enabling an equitable provision in the communities on the island. Services are anticipated to be provided at different population and community levels in a hierarchical fashion. Studies have been made of the types and distribution of health, educational, cultural, recreational and commercial facilities between the different levels.
Tourism is seen as providing good opportunities for a rapid development of the economy on the island, while at the same time supporting transport infrastructure development, conservation and preservation efforts. Integrated tourism development is advocated as a basic concept. This implies that tourism should be an integral part of the communities on the island and form part of community life, On Qeshm Island, the major natural attractions include the sea, the beaches, the coast, and the Hara Forest mangrove area. The architecture of the island, such as the old fort in Qeshm Town, and several of the smaller villages constitute major cultural attractions.
Anticipated development on Qeshm Island will result in a rapid increase in transport requirements. A well-developed transport infrastructure is therefore necessary for development. Four different transport needs have been identified, viz. (1) local traffic on Qeshm Island, generated by population, industries and services; (2) traffic to and from the island by visitors and Qeshmi residents and for the import of consumer goods, (3) import and export of raw materials and industrial products produced on Qeshm Island; and (4) transshipment of import and export goods via the island to and from the mainland and neighboring countries in the north.
Local traffic generated on the island will grow in proportion to the development of the economy and the population, and will be met with and improved road network and extended road vehicle fleet. Passenger traffic will be provided in the form of private cars and public vehicles (bus and taxi) networks.
The construction of a new airport at Direstan is well under way, and operations are expected to start in 1994/95. The airport will be the major entrance to the island for long distance visitors, domestic and international.
For traffic between the mainland and Qehsm Island, ferry traffic will have to be improved with both high capacity vehicle ferries and high speed passenger ships. These services will give required access for vehicles and passengers to the island until the Persian Gulf Bridge is built. When the bridg has been built, only passenger ferries may be operated, in particular from the eastern part of the island. In order to meet the demand for considerable imports of raw material and exports of products, port facilities serving the industrial plants should be built. The policy in this respect should be to build, when feasible, quays and jetties specially designed for the purpose of each industrial pl, in locations convenient to the industries concerned.
A railway connecting Bandar Abbas with the mainland railway network will be opened to traffic in the near future, and will increase the capacity for the transport of goods to and from Bandar Abbas and Qeshm Island. It will also improve the possibilities for the countries north of Iran to utilize ports at Bandar Abbas and, eventually, on Qeshm Island for exports and imports. In the longer term, a railway between Bandar Abbas and Qeshm Island should be built to serve industry. In the Master Plan this potential is taken into account and land reserves are included for development of a large port for export and import as well as the development of a railway network on Qeshm Island.
Most passengers travelling between Qeshm Island and the mainland are expected to use a ferry or rapid boat until the Persian Gulf Bridge has been built. Initially, a ferry line is proposed between Bandar Dergahan and Bandar Abbas and passenger traffic between Qeshm Town and Bandar Abbas. Another ferry line is proposed between Laft peninsula and Pol Sharqi, to be operated until the Persian Gulf Bridge has been built.
Freight will be transported by barge or ferry to and from Qehsm Island. Freight transport from the mainland will in the main comprise construction materials, consumer goods, raw material to the island, and products to the mainland.
Agricultural products, general consumables, construction materials and supplies to the service industry will be transported by truck on ferries.
When the Persian Gulf Bridge has been built, private car traffic is expected to increase and the number of passengers on ferries and rapid boats to decrease. More freight will be transported by road and rail. Freight transport by barge may also continue to be used between ports on the island and the mainland.
Construction of a railway connection is related to the construction of the bridge. The railway is anticipated to be used for freight traffic only. Most of the heavy dry bulk is assumed to be transported by rail, the rest by ship. Imports of raw material for industry, and for transit trade with states of the former USSR, will be made by sea. Coordination of sea and rail transport will therefore be important.
For the first phase of development, relatively few additions to and modifications of the existing road network will be required. A ferry line is proposed between Dergahan and Bandar Abbas. Ferry traffic between Laft peninsula and the mainland depends on development of the road network on the island and on the mainland.
Industrial Zones North and South are proposed eventually to be connected with the mainland by railway. Four marshalling yards will be needed when fully developed, two within Industrial Zone North, and two within Industrial Zone South. The railway system will require a single track railway line between Bandar Abbas and the industrial areas on Qeshm Island with crossing points of sufficient capacity.
The results of a traffic forecast indicate that total traffic will increase from some 10,000 trips per day at present to some 130,000 trips per day at Stage I and some 300,000 trips per day at Stage II. In Phase One the projected number of vehicles per average weekday is between 1,000 and 2,000 vehicles on most roads; in Stage I, the projected numbers are estimated at some 3,000 to 5,000 vehicles on most roads, in Stage II the projected numbers are some 8,000 to 12,000 vehicles on most of the main roads. On the Persian Gulf Bridge, the numbers are estimated at some 6,000 in Stage I, and some 15,000 in Stage II.
Estimates for Stage I indicate that single carriageways will be adequate on almost all roads. At the end of Stage II, most of the main roads on the eastern part of the island will have to be expanded to dual carriageways.
The public transport system on Qeshm Island should include both local and inter-regional systems. The three major regions, Qehsm Town, Dergahan and Shib Deraz, should have local passenger transport systems.
One of the preconditions for development is a well functioning trasport system, in particular for international contacts. Good access to international air connections is thus an important component of the transport system.
The functional role of the new airport on Qeshm Island will depend on the rate of development of different activities on the island. Initially, the airport is needed to replace the existing airfield. Increased air traffic demand is anticipated to be generated from planned industrial and infrastructural projects, and increased international trade resulting from the FTZ status of the island . This will generate the basis for domestic and international air traffic passenger and air cargo traffic. When development of industry has progressed, air traffic demand will increase further, and larger passenger and cargo aircraft may be required. When the infrastructure has been fully developed, including a new road and railway bridge to the mainland, Qehsm Airport may also take on a significant role as a regional airport. The question of transferring civil aviation traffic at Bandar Abbas Airport to Qeshm Airport may then be considered.
Industrialization, tourism, population, and income growth, together with airport travel fare and landing fee policies, and the airport functional role are the main factors affecting air traffic passenger growth. Air cargo growth depends primarily on the volume and composition of industrial activities and the Free trade Zone potentials and policies.
It is proposed that Qeshm Airport, in the ultimate stage, should be a Class 4E airport, with a 4,300 m long runway, sufficiently long to accommodate fully loaded Boeing B747 aircraft. First stage development should be based on the forecast air traffic volume and user aircraft types. Facility requirements are described for the staged development of Qeshm Airport.
Today Qehsm Island only has small port facilities which will have to be expanded to handle the goods volumes foreseen as a result of the development. Of industry and other activities on the island.
Three main transport needs using the port facilities have been identified, viz.: (i) transport related to the population of Qeshm Island and services for the population; (ii) goods transport related to planned and potential new industries; and (iii) transshipment of goods via a new large port on Qeshm Island.
The majority of the population's transport demands such as consumables, construction materials, petroleum products, etc., will be transported to the island by sea. Products from industry will also be shipped from the island. The total volume of goods expected to be transported to Qeshm Island to planned and potential new industries (i) is estimated at some 0.5 million tons per year in 2001, and 1.7 million tons per year in 2021. Transport from Qeshm Island is estimated at 0.1 million tons in 2001 and 0.4 million tons in 2021. This cargo is in the main anticipated to be transported by trucks brought to and from the island by ferries. Passenger traffic between the mainland and Qeshm Island is expected to increase considerably and is estimated to reach to about 25,000 persons per day by the year 2021. There is a need for regular large and rapid passenger ship services between the mainland and Dergahan and Qehsm Town. These services will consequently be needed on a continuous basis from the outset.
Goods related to industry (ii) will constitute the basis for the majority of forecast goods volumes and traffic to and from the island. By the year 2001, total imports are estimated at 5.5 million tons and exports at 5.8 million tons per year. In 2021 total imports are projected at 21 million tons and exports at 20 million tons. The transshipment of goods to and from mainland Iran and the countries north of Iran has been viewed as an important future potential. This will depend on the development of transport infrastructure in Iran and the economies of the states concerned. Total foreign trade with these countries in 1990 was about 20 million tons, of which some 3.7 million tonwas with Africa, Australia and Asian countries east of Iran, and thus suitable for sea transport via a transshipment port on Qeshm Island.
A number of possible port locations have been identified on the northern coast, allowing for ships of up to about 60,000 dwt (Panamax ship size) with only small dredging volumes.
Durring Phase One, the following ports are anticipated to be required:
(i) a dry bulk port, (ii) a multipurpose port, (iii) a port for agroproducts, (iv) a liquid bulk port, and (v) ferry terminals.
The most urgent facilities are ports which improve transport capacity between Qeshm Island and the mainland, and ports needed for industrial plants. High capacity ferry lines that can carry large trucks for containers and other goods will accommodate most of the transport needs for Phase One. A ferry terminal for this purpose is proposed in the western part of dergahan. Port facilities are also needed at Qeshm Town.
When the northern coastal road has been upgraded between Qeshm town and Laft peninsula, and a high standard road is available between Bandar Abbas and Pol Sharqi, a ferry line may be established between Laft peninsula and the mainland.
The current water supply system on Qeshm Island is based on locally extracted ground water (which has now become too saline to be suitable for domestic consumption), and desalination by the MSF process. Available desalination capacity will be some 7,000 m3 per day when the current reconditioning programme has been completed. This covers the demand at a reasonable standard for some years to come, at least until industries requiring larger quantities of water have been established.
The four development scenarios elaborated in the Master Plan have been studied with regard to resulting demands on the water supply system. In Stage II, the water demand, related to population increase, has been calculated at 205,000 m3 per day. In addition, industrial water demand, estimated at between 55,000 and 190,000 m3/d should also be met. Domestic water demand is based on a per capita consumption expected to increase to 400 litre per capita and day in Stage II.
Possible sources of fresh water are the desalination of sea water and transmission of water from the mainland. Both sources will require further investigations before decisions are made on sources, locations, and the alignment of transmission lines. According to recent agreements, however, up to 4 m3/s can be made available on the mainland for transmission to Qeshm Island. According to minutes of understanding, however, in a first stage 0.5 m3/s can possibly be transferred from the Minab Dam via Bandar Abbas transmission system to Qeshm Island.
The RO-process is recommended for possible desalination plants, as this is the most economical process for plants of the required sizes at the present state of the art. Three sites have been considered for the location of desalination plants, viz. Close to Ramchah, west of Dergahan and at Shib Deraz. The plants should be connected with the whole island and with each other to secure a safe and economical supply to all parts of the island. For distribution of the water, a transmission line system has been studied.
The total cost of the RO-installations for Stage II has been estimated at USD 671 million for a system with three plants. Investments for a system with water transferred from the mainland has been estimated at some USD 370 million, based on conditioning of the water and, in the main, protected lines. A staged implementation of the facilities is recommended, regardless of the raw water source.
In Phase One, development, including industry, will be concentrated on the northeastern part of the island. Total water demand is in the order of 50,000 m3/d. Required water supply installations would comprise one desalination plant with an installed capacity of 55,000 m3/d and transmission lines to main development areas. Unless sea water investigations give other indications, this first plant should be located close to Ramchah. Alternatively, water demand for Phase One may be covered by a first stage transmission line from the mainland.
The total investment costs for Phase One have been estimated at USD 43 million for the transmission system, and USD 105 million for the desalination alternative. The transmission line system on the island will be similar in both alternatives.
For wastewater, a separate, conventional sewer system is proposed to convey the municipal waste-water to sites for treatment and disposal. It is proposed that the waste-water be led to two main sites for treatment. The municipal sewerage system should be intended for sanitary waste-water only with separate arrangements made for stormwater management.
Two development stages are proposed, for the handling of collected waste-water, viz. Firstly, the construction of facilities for pre-treatment of waste-water to make it suitable for disposal in the sea via an outfall pipeline and, secondly, the construction of facilities for additional treatment required to obtain effluent quality, sufficient for intended re-use. It is recommended that facilities for additional treatment be built when the quantity and quality of the waste-water, as well as the location and demands of customers for treated effluent, are known. This approach will provide the best basis for the design of additional treatment units.
Within industry waste-water, will be produced on a regular basis. Some processes, such as those used in the food industry, will also produce waste-water, similar to domestic waste-water. All such waste-water should be led to the municipal networks and treatment plants. Cooling water and similar "clean" waste-water can be discharged directly into the sea. Some industrial waste-water has to be pre-treated before it can be received in the municipal system. In some cases, industry will have to assume responsibility for the entire treatment and disposal of its waste-water.
Municipal solid waste is estimated at some 300 kg per person and year in Stage II. It is proposed that waste be disposed of at one (or two) sanitary landfills in such a way that the decomposed waste can later be excavated and used as soil conditioner, as it is foreseen that there will be a large demand for compost in agriculture, green areas, etc. In order to facilitate production of a high quality compost, it is proposed that separation of domestic waste at source be introduced with the intention of separating and collecting "wet" and "dry" fractions separately. Municipal waste also contains materials which could be separated and re-used, such as metal, lass, plastic and paper. However, before starting a programme to recover such materials, it is recommended than an investigation be made of the possible market for such products.
Power Demand
Power demand forecast for Phase one is estimated at some 500 MW, of which 50 percent is the demand from the manufacturing industry. Total power demand in Stage I is estimated at 1,700 MW, and in Stage II at 3,000 MW, of which 50 percent is that required by the manufacturing industry.
Power Generation
Qeshm Island is assumed, under normal conditions, to be self reliant in respect of electricity generation. The existing power plant on Qeshm island will already be inadequate in terms of capacity during Phase One of development.
The main power demand will be in Industrial Zones North and South. Power generation expansion will be required already in Phase One within industrial Zone North. Power generation plants should be located within or close to these areas to avoid transformer steps up and down, and to obtain higher availability. The power generation capacity should not exceed the sum of capacity of the interconnection line (400 MW) to the mainland and the peak power demand on Qeshm Island.
In all scenarios, the first power plant should be established in Industrial Zone North to meet the total power demand on Qeshm Island. The final capacity of this power plant should be at least 1,000 MVA.
The second power plant site should be established in Industrial Zone South when an additional kV transmission line hasbeen built. It may become necessary to establish a third power plant site when the total system demand is more than 2,000 MW. The third power plant site could be located close to Industrial Zone West and Shib Deraz New Town.
Land should be reserved for power generation facilities in three power plant locations.
Power Transmission
It is anticipated that the power transmission system will consist of 230 kV/63 kV lines for the basic need of electrical power and, where needed, 230 kV lines to support energy-intensive industry. It is anticipated that a loop of 63 kV lines encircling the eastern part of the island should be established.
Connections between possible power plant locations close to Industrial Zones North and South, are also recommended. The recommended future 63 kV network is adequate for supplying the new industrial facilities in the eastern part of Qeshm Island.
A 230 kV interconnection to the mainland grid from a 230/63 kV substation close to Industrial Zone North should be established before power demand reaches 60 MW. The first power plant on Qeshm Island should be connected via the 230 kV interconnection line to the mainland grid. There are different alternatives for the 230 kV network, depending on the location of power plants and future power demand. In Phase One, an interconnection to the 230 kV mainland system will have to be established.
The power demand in Stage I is estimated to be met from one power plant located in Industrial Zone North with a capacity of up to 1000 MVA. The first 230 kV line to Industrial Zone South will be needed when power demand within this area is more than 60 MW. A second line to Industrial Zone South (via Industrial Zone West) should be commissioned when power demand within the area is more than 400 MW. In Stage I, with a power plant located in Industrial Zone South, the first 230 kv line to Industrial Zone North will be needed when demand is more than 60 MW. A second line (via Industrial Zone West) should be commissioned when power demand is more than 400 MW. If the power demand is met from one large power plant located on the southeast coast, a third 230 kV line to Industrial Zone North should be commissioned when power demand is more than 800 MW.
If the power demand is met from two power plants in two locations, additional 230 kv transmission lines between Industrial Zone North and Industrial Zone South will not be required. In all alternatives, a second transmission line from Industrial Zone North to Qeshm Town should be commissioned when power demand within the area Kuveh-Qeshm Town has reached more than 400 MW.
Power Distribution
It is proposed that a 63 kV local looped network be installed to supply the major industries in Industrial Zones North and South. Other industries and large consumers will be supplied by a 20 kV intermediate voltage system, and small consumers by a 400/230 v low voltage three phase system. The low voltage distribution system will normally consist of underground cables. The location of underground cables should be coordinated with other utility systems.
Initially, the telecommunications network will provide support to the first construction efforts on Qeshm Island Later, it will serve industry and commerce, service companies, public utilities and households. During Phase One, a primary concern is to obtain functional telecommunications as soon as possible. In this situation, mobile telephone systems can offer wide coverage at reasonable installation costs. At a later stage, requirements in connection with data transfer and video will make it necessary to digitize and upgrade the PTT network. Expansion of the fixed network is estimated to continue until the year 2021. The fixed network will make a natural complement to the mobile telephony network.
GSM-technology is proposed as the standard for mobile communications. At present, the GSM-system is being expanded around the Persian Gulf and in turkey and Pakistan. A suitable way of joining the base station with the mobile telephony exchange is by radio links, which are cost-effective and can be readily established.
It is proposed that the mobile telephony network be built in three phases. The expansion will provide high capacity within the towns, i.e. many channels will be available within the same area. The GSM-systemis proposed with an ultimate maximum capacity of 50,000 subscribers. Total investment costs are estimated at USD 56 million.
Currently, there is an analogue telephone network with limited capacity on the island. The expansion phase will call for more services and a capacity far beyond that of the present network. The demand from facilities with extensive communications requirements, such as processing industries, the airport and the university, has been assumed to support the expansion of a digital telephony network, offering speech and data services. For the interconnection of towns, densely populated areas and industrial sites, it is convenient to build optical fibre cable rings. Telecom and data communications in the optical fibre network are managed by network switches, suitably located in the network to give subscribers efficient and economic access to the interexchange network.
Initially, the telecommunications system on Qeshm Island can be connected to the mainland PTT by a digital radio link. To meet increasing demands for transmission capacity, and to provide for reliable data transmission, an optical fibre cable should be established as a complement to the radio link at a later stage. International voice and data traffic, or the services of international network operators, can be obtained via Tehran with the help of the PTT.
It is proposed that sparsely built-up areas be connected to the interexchange network by a combination of ordinary point-to-point radio links and point-to-multipoint radio links. The radio links can thus connect smaller towns and villages to already existing local cables, or later to local area networks which are planned to be built. The investment cost for the expanded PTT telecommunication network up to 2021 with a capacity of 100,000 connected subscribers, is estimated at USD 45 million.
Financial and Economic Analysis
Calculations have been made as to the required investments for implementation of the industrial and infrastructural development programme described in the Master Plan projected total investments during the period 1995 to 2021 have been estimated at around USD 23 billion, about USD 8 billion of which as public sector investments and USD 15 billion as private sector investments.
Public sector investments are assumed to be financed through loans taken by QFA. Annual capital charges for these loans are assumed to be financed thorough revenues that QFA is expected to receive, from, among others, the following four main sources, viz. Dividends from major industries on Qeshm Island, according to QFA's share of the companies equity; fees from the leasing of land on Qeshm Island, import duties from goods brought to Qeshm Island; and charges from users of utilities and transport facilities.
Dividends from the major industrial projects are expected to be the major long range financing source for QFA in order to operate the public sector services on Qeshm Island. Annual cash flow calculations have been made for QFA for the selected future years 2001, 2011 and 2021 in order to provide indications on how it would be possible to obtain appropriate balanced budgets for QFA. According to these calculations, with the basic assumptions that have been made, adequate balances for QFA would be obtained.
Sensitivity analyses have been prepared for variations in the basic assumptions concerning QFA's revenues from dividends, infrastructure fee levies, and duties, as well as QFA's expenditures resulting from interest charges and infrastructure investment costs, and operational costs. Several combinations of these variables give positive or negative deviations from acceptable balances.
Calculations which have been prepared thus indicate that it may be possible for QFA to obtain balanced cash flows in the future, provided that pranticipated major industriesare established. The importance of inspiring confidence in the stability of the institutional and financial framework for investors is therefore again emphasized.
In the implementation process, QFA has also been advised to organise special and careful observation of investment thresholds, with a view to trying to avoid major investment and capacity thresholds. It has also been emphasized that it is necessary to keep a careful check on infrastructure costs and fees, and to plan and schedule large-scale infrastructure investments in stages, in order to avoid costly over capacities.
The major benefits from development at Qeshm Island have been summarized as follows.
