2023

Public Private Partnership p

LEMI NATIONAL CEMENT PLC

FROM THE STRATEGIC DEPARTMENT

Introduction
This Report is prepared to analyze the government’s cooperation with our JV Company on
the percentage of Public Private Partnership programme. As it can be seen in the table
below we were requested to analyze the
 Total Plot size,
 Usable Plot size
 Plot Ratio,
 Land Usage (Zoning) and distribution,
 Number of Buildings and houses in one hectare,
 How many housing projects the land is expected to accommodate,
 Area of Land equivalent to the price of the Plot (380 hectares),
 Number of houses equivalent to the price of the Land and
 Proposal of government infrastructure construction of Roads and Electricity
omission.
Considerations
 The Total plot area is 380 hectares equivalent to 3.8 million square meters is
available, out of this total area of land considering the currents situation of the land
having gorges, streams, cross by access roads to and from the neighboring villages
and unusable lands we expect the land to be utilized 85% of the 380 hectares of land
which is 323 hectares.
 Another one is that we were asked to assume G+5 housing projects is to be
constructed in the area. So we used a design of G+5 with a total built up area of one
building to be 750m2.
 Zoning and land usage of the real estate was assumed to be according to the
Ethiopian standards but slightly modified considering the location and surrounding
area of land use and zonal expectations.
 Even though the currents market price of the real estate industry in Addis Ababa
exceeds 75,000 birr per square meters, as the main objective of the prefab housing
is to build low cost housing for Addis Ababa and neighboring cities we assumed the
selling price would be 55,000 birr per square meters.
  The average land lease price of Addis Ababa ranges from 279birr which is at the
outskirts of Addis Ababa to 39,999 birr in the inner city (which is at the center of
Addis
 Ababa. Accordingly the land lease price of our site is approximately 12,900 birr per
square meters.
 Net usable land is 3,800,000 * 85% * 70 %( Residential & Commercial) = 226.1
Hectare.
 Finally we have decided our single building area to be 750m2 with a total of eight
housing units comprising a type of one bed room, two bed room, and three bed
rooms to be included and a total of 48 units in a single building.
Zoning
Zoning is a legal requirement that establishes what kind of development is allowed on a
property. It divides the land into “zones” to control how much land is used, including how
much space can be built on it and what types of buildings are allowed there. Zoning rules in
Ethiopia are established by Region. Therefore, each Region has their own legal framework
for land use.
Understanding property zones

Zoning is one of the most important aspects of real estate. It affects property values,
development opportunities, and more. Understanding what zoning means for your property
will help you make an informed decision about buying or selling it.
There are several different types of zoning, but most of them have to do with whether or
not a particular parcel of land can be used for residential, commercial, Greenery,
transportation and access or Recreational purposes.
Zoning also determines whether or not you need approval from the council before making
changes to your property like adding more rooms or building an extension. Councils have
different zoning systems. So before you buy that property, identify what sort of zoning
exists in an area that can be found in your local council's planning scheme.
Common zoning categories

As mentioned earlier, each state or territory has their own zoning rules, but they also have
its own categorization of property zones. In this article, we break it down and simplify it into
four general categories to have a better understanding of the difference between each
zone.

Residential Zone

Residential zones are the most common zone and are used for single-family homes,
duplexes, and townhomes. It can be broken down into three sub-categories that are
determined by the density of its population. The single residential zone is where individual
family homes are located, which is often seen in the suburbs. A medium-density residential
zone is where residential development is allowed with a higher density than single
residential zones allow. This can be two or more detached houses on one lot, or row houses
that share walls and foundations with each other.

A high-density residential zone which we are using in our project is where multi-unit
buildings are permitted in addition to detached dwellings. It is usually three stories or taller
with parking spaces provided for each unit located within surrounding the building. And in
some areas, it would integrate retail or commercial spaces within the building, alongside, or
adjacent to it.

Commercial zone

Commercial zones are areas that have been designated for the construction of buildings and
facilities where businesses operate such as banks, grocery stores, restaurants, etc. These
are establishments meant to do business by selling goods or services. This also includes
office buildings that do not require manufacturing processes. Commercial zones are often
located in commercial strips or along highways, such as those that run through towns like
ours. They are also located near residential zones and industrial zones, but they're often
found near public-use and mixed-use zoning.

Recreational Zones

As the name suggests, Recreational zones zone refers to areas meant for reaction. These
areas have an environment that is conducive for recreation, children play grounds,
and .Their climate fits the requirements to plant certain crops or raise a certain breed of
livestock, and would often need a huge space to maximize production. Agricultural zones
are often located in rural areas. Accordingly we have divided the total plot of land as the
shown in the table below

Plot Usage Usage

Land Plot Ratio Distribution Residential Buildings 50%

Commercial Buildings 20%

Recreational Usage 18%

Transportation & Access 7%

Greenery or Beautification 5%

Total Available Plot of Land in Hectares 3,800,000 100%

Usage
60%
50%
50%
40%
30%
20%
20% 18%
10%
0% 7% 5%
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 Units Number Price of Land Revenue
Requested Assignment Type of Building G+5
Plot Ratio Distribution Total Floor Area / Land Area

Residential Number of Real Estates on 1 ha 50% of 10,000 sqm / 750 X 48 272 6 1,402,500,000

Commercial Number of Real Estates on 1 ha 20% of 10,000 sqm / 750 X 48 109 2 1,215,500,000

Total Income from Sales in 1 hactare 381 Total income 2,618,000,000

Price of 380 ha of Land From Government Current Price of Land=12900 380 49,020,000,000 Billion birr

Area of real Estate in reference to Price of Land Total Units 272+109 380 18.72 hactar

Area of real Estate of Land = Price of 380Ha land 1 Ha of Land Revenue 6.37 Billion 6.37 187,242 m2

Total Number of Residential Houses to be built in 380 hactares of land in Hectare 226 3,015 144,704 Houses(Units)

Total Area of developed Land Equivalent to the Price of the 380 Hectar of Land in m2 & % percentage 187,242 6.50
Number Of houses equivalent to Price of Land 7,134
Ratio Of Plot( 7 Building X 750m2 X 6 storey )/10000= 3

Findings
1- Total built up area in 1 hectare with 50% residential housing units would be
= (0.85*10,000) which is 8,500 square meters
50% for residential would 4,250 divided by 750(buildings area) = 6 (G+5) buildings
As described above a single building consists of 48 units
6 Buildings X 750square meters Area X 6 Storey X 55,000 Price/m 2 will be
1,402,500,000 birr
2- Total built up area in 1 hectare with 50% Commercial housing units would be
= (0.85*10,000) which is 8,500 square meters
20% for commercial would 1,700 divided by 750(buildings area) = 2 (G+5) buildings
As described above a single building consists of 48 units
2 Buildings X 750square meters Area X 6 Storey X 55,000 Price/m 2 will be
1,215,500,000 birr
3- The Total Income from 1 hectare of land consisting of a total 8 buildings will be the
summation of the above two which is 2,618,000,000 birr
4- The Total Built up area will be 3,800,000 X 85% X 70%(for the residential &
commercial) 2,261,000 m2 divided by 750 m2 for a sing building = 3015 (G+5
building)
5- Overall income from the residential and commercial buildings from the built up area
would be 3015 (buildings) * 750 m 2 * 6 storey * 55,000(price/ m 2 )
=745,965,000,000 birr (incomes from Recreation is not included)
6- The leased price of land 3,800,000 * 12,900 = 49,020,000,000 billion birr.
7- The percentage of the lease price over the total income now will be
 Price of Land/Total income = 49,020,000,000/745,965,000,000 = 6.5% of the total
income.
8- Or lease price of land 49,020,000,000/2,618,000,000(per hectare income) =18.72
and multiplied by 10,000(hectare) = 187,242 m 2 of land is required to compensate
the lease price. In other words 18.72hectare * 8(buildings) * 48(units) =7134 unit of
house
9- The total number of housing the land can accommodate is 3015 (G+5 buildings)
multiplied by 48 units in each building = 144,704 units of houses.
10- The plot Ratio = 8 buildings * 750 m2 * 6 storey per hectare is 3.

Conclusion
1- It is advisable to buy the land by lease price than public private partnership
cooperation with the government, since the maximum price we should pay would be
less than 6.5% of our total income and also the lease payment schedule is 20% of the
total amount (49,020,000,000 * 20%) = 9,804,000,000 birr up front and the
remaining will be in the next 20 years.
2- But if we are accepting the PPP (public private partnership) agreement we are
expected to pay 30% of our total income which is 223,789,500,000 birr in the next
years to come including the additional subsequent inflation rates.
3- Since the site is in the Addis Ababa region and got a major road next to it the
government will not be subjected to constructing new roads which makes it less
effort and support for the government to the JV Company. Same is with the power
and water distribution to the site.
4- Considering the Government will support the JV Company on other issues like,
licenses, communication with the authorities, foreign currency, exemption of some
governmental taxes etc… the JV can increase the percentage of the 6.5 to 10%
maximum and accept the PPP condition with restriction.

Note
The 15-20 hectares of land in the industrial park near the airport, for the prefabricated
house, assembled buildings, floor tiles, plastic steel doors and windows and commercial
mixed production bases factory purpose, we have communicated the Authorities and
they gave us a response that it is not owned by the city government of Addis Ababa. It is
a property of the Ethiopian Parks Management agency. Even though the park is for
Pharmaceuticals factor we were advised to contact the agency for confirmation. And we
will act accordingly the coming days.